How Insmed Is Capitalizing on Its Huge Late-Stage Success

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Insmed Inc. (NASDAQ: INSM) kicked off this week with an incredible gain — the stock more than doubled on Tuesday — and now management is looking to capitalize on this monumental move. The company has filed with the U.S. Securities and Exchange Commission (SEC) for a secondary offering.

No pricing details were provided in the filing, but the offering is valued up to $250 million. Keep in mind the company currently has a market cap of $1.68 billion, which was less than $800 million just last week. The amount raised in this offering would be equivalent to roughly one-third of the total market cap prior to the stock’s surge, but after the fact the offering is worth about 15% of the total market cap.

The underwriters for the offering are Goldman Sachs, Leerink Partners, Evercore ISI and Stifel.

What caused all this excitement surrounding the stock was late-stage results from its clinical study in the treatment of nontuberculous mycobacteria (NTM) lung disease. Specifically, Insmed’s Phase 3 Convert study demonstrated that the addition of ALIS to guideline-based therapy (GBT) eliminated evidence of NTM lung disease caused by MAC in sputum by month 6 in 29% of patients, compared to 9% of patients on GBT alone.

As a result, Insmed plans to pursue accelerated approval of ALIS. The U.S. Food and Drug Administration (FDA) previously granted this product breakthrough therapy designation and fast track status and designated ALIS as a qualified infectious disease product under the Generating Antibiotic Incentives Now Act.

The company said that it plans to use the net proceeds from this offering for the following:

  • To fund ongoing and future clinical development of ALIS for patients with refractory NTM lung disease.
  • To invest in increased third-party manufacturing capacity for and commercial inventory production of ALIS.
  • To fund further clinical development of INS1007.
  • To fund working capital, potential debt repayment, capital expenditures, general research and development, and for other general corporate purposes.

Shares of Insmed closed up 120% at $26.99 on Tuesday, with a consensus analyst price target of $37.38 and a 52-week trading range of $10.21 to $29.52. The stock was down just over 3% at $26.11 in early trading indications Wednesday.