Before the Move: Watch Insmed ahead of FDA committee vote on ALIS
JMP Securities analyst Liisa Bayko downgraded Insmed (INSM) to Market Perform ahead of an FDA advisory meeting scheduled for this week, saying she has less confidence in Amikacin Liposome Inhalation Suspension after hosting a call with an ex-FDA Division Director who confirmed some of her concerns. Still bullish on the stock, her peer at H.C. Wainwright argued that the collective strength of ALIS data "essentially removes the regulatory risks." ADCOM MEETING: On Tuesday, the Food and Drug Administration's Antimicrobial Drugs Advisory Committee will discuss new drug application 207356, amikacin liposome inhalation suspension, sponsored by Insmed for the proposed indication of treatment of nontuberculous mycobacterial lung disease caused by mycobacterium avium complex in adults as part of a combination antibacterial drug regimen. JMP SECURITIES MOVING TO THE SIDELINES: JMP Securities' Bayko downgraded Insmed to Market Perform from Outperform after lowering her probability of success for ALIS to 60% from 80%. The analyst said that she has less confidence in ALIS after hosting a call last week with Lee Simon, an ex-FDA Division Director, who confirmed some concerns she had and "pointed out a few new insights" that left Bayko feeling more cautious. Simon discussed the lack of clinical benefit and high rate of adverse events, including 57% more hospitalizations on ALIS + GBT versus GBT alone, she noted. Simon admitted, however, that the outcome was hard to predict because of FDA's desire to bring drugs to market in areas of high unmet medical need. Regardless, Bayko thinks the panel may want to see longer-term data off treatment that could be addressed by the INS-312 extension, which is no longer referred to as examining the "confirmatory" endpoint, but rather as showing durability of effect. Any delay would be viewed as a setback, and one that would be costly given that the sales force is in place and ready to roll, she argued. POSITIVE ADCOM EXPECTED BY WAINWRIGHT: In a research note last week, H.C. Wainwright analyst Andrew Fein said he remained bullish on Insmed as he continues to believe the "collective strength" of the ALIS data essentially removes the regulatory risks, based on high unmet needs in the existing NTM space as no effective treatment is available and the FDA's motivation to address the unmet needs in the NTM treatment. Orphan, QIDP, and breakthrough designations should facilitate ongoing dialogue between the company and the FDA, allowing for few AdCom surprises, and, ultimately, a final approval of ALIS via Subpart-H, Fein told investors. He believes the AdCom could serve as an important positive catalyst for Insmed, and should the committee vote overwhelmingly in favor of the approvability of the Insmed application, the long simmering M&A thesis for the company is likely to shift to the front burner. The analyst reiterated a Buy rating and a $35 price target on the shares, adding that if he were to assume a 100% probability of success for ALIS, he "could easily justify" a valuation north of $50 per share. PRICE ACTION: In morning trading, shares of Insmed have dropped 8% to $24.03. "Before the Move" is The Fly's recurring series of exclusive stories that identify potentially market moving events, along with analyst predictions, ahead of the news.