Insmed Update Target Price $30

INSM : NASDAQ : US$21.27
Target: US$30.00

Insmed is focused on developing novel, targeted inhaled
therapies for the treatment of serious orphan lung
diseases. Its lead product candidate is Arikace, a
liposomal formulation of FDA approved antibiotic,
All amounts in US$ unless otherwise noted.

Life Sciences — Biotechnology
Investment recommendation
Reiterate BUY, raising PT to $30 on Arikace’s increased potential in
nontuberculous mycobacteria (NTM). INSM’s lead drug Arikace is an
inhaled liposomal form of potent, FDA-approved antibiotic amikacin. We
expect positive data from a Ph2 US NTM trial in March. Our higher
pNPV-based $30 target is driven by a higher chance of success.
Investment highlights
 Based on proprietary analysis/KOL talk, we think INSM’s Ph2/3 NTM
trial has a good chance of success with late March top-line data. The
trial is powered to show a 1-point change on the 7-point semiquantitative
scale of NTM infection burden. We think a 1-point benefit in
these severe trial patients (whose baseline score we think will be ~5)
would correlate with a benefit in QoL and be clinically meaningful.
 More confidence on data variance and noise: interim look gives us
comfort on “neatness” of data and powering. INSM conducted an
interim blinded look at the variance of the data to determine if the Ph2
was adequately powered. The look indicated data dispersion/ variance
fell within trial powering assumption. We think it is unlikely INSM was
able to see graphical representation of the data dispersion during
variance calculation, which could have provided a “tell” on data.
 Unless we see cures in the Ph2/3, we think immediate US filing is
unlikely, no matter what KOLs agitate FDA for. Based on our KOL
conversations, we think FDA still has a lot to learn about NTM, having
been previously hung up on TB-like “cure” endpoints. Given trial patients
are end of the line, hard to treat, cures with only 3-mo Tx are unlikely.
INSM may decide to focus initial registration on a subset of patients
based on pre-specified stratification (CF; organism) depending on data.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s