Additional Due Diligence on Insmed ($INSM)

• INSM announced their Q4:12 results, ending the quarter with $92.9 million in
cash and short-term investments. INSM anticipates that current cash will be
sufficient through Phase III CF and NTM trial data and into mid-2014. The
company guided to cash requirements in the $45-55 million range for 2013.
• Dog toxicity study shows no evidence of neoplasia, squamous metaplasia or
proliferative changes as a result of ARIKACE exposure. On the call
management announced that INSM has completed the 9-month dog toxicity study
and submitted preliminary results to the FDA. We believe that the dog-tox data
alleviates concerns regarding the 2/102 rats that showed tumors in earlier data and
also likely represented a significant overhang in INSM shares.
• INSM anticipates top-line results from their study of ARIKACE in
Pseudomonas aeruginosa lung infections in patients with Cystic Fibrosis
mid-2013. The ongoing Phase III study has enrolled 302 patients who have been
randomized 1:1 to either once daily 560mg ARIKACE or twice daily TOBI. The
primary endpoint of the trial is relative change in FEV1 from baseline and the study
is greater than 80% powered to demonstrate non-inferiority. Secondary endpoints
include change in pulmonary function, time to pulmonary exacerbation among
others.
• Management also announced plans to move ARIKACE forward
in Nontuberculous Mycobacteria with a filing for the QIDP designation under
the GAIN Act for NTM. The NTM opportunity remains underappreciated;
anticipate potential publication of a patient chart survey that defines the NTM
market size and extent of unmet medical needs.

In the above chart, we can see a nice continuation pattern occuring with an elongated wedge, The stock appears to be consilidating to the upside in a tightening range. I anticipate more institutional buying shortly as company has several key presentations upcoming.  I expect $11 a share or so by mid-June.