Insmed's stock should triple after positive drug trial data, analyst says

By Tomi Kilgore

Non-cystic fibrosis bronchiectasis treatment brensocatib meets primary and several secondary endpoints

Shares of Insmed Inc. skyrocketed Tuesday, after the biopharmaceutical company said it plans to file a New Drug Application for its treatment of non-cystic fibrosis bronchiectasis following positive Phase 3 trial results.

The company said based on the drug trial results and pending regulatory approvals, it expects brensocatib to be launched in the U.S. in mid-2025, followed by launches in Europe and Japan in the first half of 2026.

The stock (INSM) soared 109.9% in morning trading, putting it on track to close at the highest price since Aug. 16, 2001.

The rally was also in line to be the stock's second-biggest since Insmed went public in June 2000, behind only the one-day record gain of 119.6% jump seen on Sept. 5, 2017.

Insmed said Tuesday that the Phase 3 Aspen study of brensocatib met its primary endpoint by demonstrating statistically significant reductions in the rate of episodes in which breathing becomes difficult. The study also met several secondary endpoints.

"These findings not only underscore our belief that brensocatib has the potential to transform the treatment landscape for bronchiectasis, but they also further validate DPP1 inhibition as a mechanism that may hold promise in other neutrophil-mediated diseases," said Insmed Chief Medical Officer Martina Flammer.

The company noted that brensocatib has received Breakthrough Therapy Designation from the U.S. Food and Drug Administration and was granted Priority Medicines access by the European Medicines Agency.

Evercore ISI analyst Liisa Bayko said the trial data marked the "best-case scenario" for Insmed, as it puts brensocatib on the path toward being the first drug approved in bronchiectasis. Bayko believes the stock is now worth triple Friday's closing price of $22.

Bayko added that the trial results was "great news" for the sector, as the Aspen trial was a "highly controversial and well trafficked topic" among biotechnology investors.

Mizuho's Graig Suvannavejh said given the trial data was "positive, and in a big way," so the stock should be up in a big way as well.

Suvannavejh said given that Insmed has a "considerable amount of debt" - long-term debt totaled $939.1 million as of March 31 - he believes the stock's rally should provide an opportunity for the company to "think creatively" about potential financing options.

Insmed's stock has now run up 49% year to date, while the iShare Biotechnology ETF IBB has slipped 1% and the S&P 500 index SPX has gained 11.2%.

-Tomi Kilgore

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05-28-24 1009ET

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