Insmed seen as potential target after inhaled antibiotic study succeeds

Insmed (INSM) has announced results from a phase 3 clinical trial, saying its inhaled antibiotic successfully treated patients with a rare lung disease caused by a bacterial infection.

Following the news, Citi analyst Liav #Abraham argued that the positive headline data could increase the likelihood of Insmed being a viable takeover target.

STUDY RESULTS

This morning, Insmed announced top-line data from its Phase 3 CONVERT study, saying it met its primary endpoint of culture conversion by month 6 with statistical and clinical significance.

The study demonstrated that the addition of ALIS to guideline-based therapy eliminated evidence of nontuberculous mycobacterial, or NTM, lung disease caused by MAC in sputum by month 6 in 29% of patients, compared to 9% of patients on GBT alone.

Insmed plans to pursue accelerated approval of ALIS under subpart H based on the data from the CONVERT study, which will be reviewed by the Division of Anti-Infective Products, the company noted.

TAKEOUT TARGET

In a research note this morning, Citi’s Abraham told investors that the positive headline data for Insmed’s ALIS for the treatment of NTM lung disease bode well for the potential approval of the therapy.

The analyst highlighted the clinical meaningfulness of the data, with a 20% difference in culture conversion reported between the active and control arms of the trial.

Additionally, Abraham pointed out that the debate on the stock is likely to shift to the commercial outlook for ALIS, with pricing also being key to the uptake of the drug. The positive headline data “could well increase the likelihood of the company as a viable takeout target,” she argued. Abraham reiterated a Neutral rating on the shares.

ACCELERATED APPROVAL

Also commenting on the announcement, Leerink analyst Joseph Schwartz told investors in a research note of his own that after achieving statistical significance in the primary endpoint for ALIS, Insmed’s management intends on pursuing accelerated approval, in line with the expectations laid out during the company’s recent analyst day.

The higher reported adverse events in the ALIS cohort were expected, and while the secondary endpoint of six-minute walk test did not achieve statistical significance overall, patients who culture converted showed a statistical significant improvement, which was a pre-specified analysis, #Schwartz contended.

The analyst reiterated an Outperform rating on the shares.

Meanwhile, his peer at #Evercore ISI increased his price target for Insmed to $40 from $28 following the clinical data. Analyst Josh #Schimmer noted, however, that the commercial outlook is still not well defined and will likely evolve over time as more is learned about the CONVERT study results, the companion 312 study and the company’s efforts to expand labelled use. Schimmer reiterated an Outperform rating on the shares.

PRICE ACTION

In Tuesday’s trading, shares of Insmed (INSM) are up $14 to $26.

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