INSM

[David Randolph]

Here's the analysis made yesterday on INSM:

«1. Profile

Insmed (INSM) is a biopharmaceutical company focused on the discovery and development of drug candidates for the treatment of metabolic diseases and endocrine disorders with unmet medical needs. For more information, please visit www.insmed.com.

2. Technical Analysis

2.1. Long Term Chart



INSM is a publicly traded company since 1991. The stock now is near its long term lows.

2.2. Medium Term Chart



After making a not so low low, INSM has been trending higher lately. There can be strong resistance above $4.

2.3. Short Term Chart



INSM has a very attractive short term chart, exactly the kind that I want (it's a pity I didn't saw it earlier). Anyway, INSM is enjoying a nice bull trend.

3. Fundamental Analysis

The company is going from bad to worse on a financial perspective. The balance sheet is weak, the company almost has no sales, it is clearly one of those biotech companies, working and sucking capital for 20 years until it finally makes something valuable, or not.

But, INSM finally did it ! Please read this news:

FDA Approves Insmed's Orphan Drug, IPLEX, for the Treatment of Severe Primary IGF-1 Deficiency; The First Once-Daily Therapy for the Treatment of Severe Primary IFG-1 Deficiency

Some highlights:

- "We are very pleased IPLEX was approved, making IPLEX the only approved once-daily IGF-1 replacement therapy available to treat children with severe short stature," stated Geoffrey Allan, Ph.D., President and Chief Executive Officer of Insmed.
- This is also an exciting transition for Insmed as we now begin to focus on the commercialization of IPLEX, which we expect to launch during the second quarter of calendar year 2006."
- Andreas Sommer, Ph.D., Chief Scientific Officer of Insmed added, "This event marks the end of a long road and two decades of hard work by hundreds of dedicated people. I'm thrilled that our visionary efforts have now culminated in making available a novel therapeutic composition for the treatment of children who suffer from Primary IGFD."

I think IPLEX can be a blockbuster drug. This is a major milestone for this company with just $150M in market cap.

4. General Overview

I know many biotech stocks without any product ready for commercialization worth a lot more than INSM. I understand this IPLEX drug and I think its market is huge. Investors are buying the rumor that INSM will produce a lot more revenues and profits, going forward, after 20 years of efforts.

I'm willing to jump on board.»

Given this I'll buy INSM around today's open for the Stocks on Fire Portfolio, 10% of capital (now it is 10%, remember that).

[brandyjoco]

David,

Thank you for you work on insm.  I bought some this morning before it skyrocketed. I am so glad that you are open to pursuing different trading options: ie long term, fast, etc

[metro]

Good timing on this one David - thanks!

[shawFund]

Hi, David:

  Because you buy it using 10% of the portfolio capital, so the money spent will be around $29,000. Am I right?

  Previous picks are 6.67% of the capital (around $19,000).

  Because the portfolio has 10 picks now. Are you going to add more into the portfolio or wait untill you exit some of the positions before you add more position?

[berloga]

David, adding to shawFund's question: has the Long Term Portfolio emerged as a "spin-off" from the 3SOF Portfolio, i.e. do you intend to keep $190k in the SOF Portfolio and relocate $100k to the Long Term Portfolio? This way, each set of shares you buy will cost $19000 and $10000, respectively as of Jan. 2006. What's the truth? Thank you.

[David Randolph]

Hi, David:

  Because you buy it using 10% of the portfolio capital, so the money spent will be around $29,000. Am I right?

  Previous picks are 6.67% of the capital (around $19,000).

  Because the portfolio has 10 picks now. Are you going to add more into the portfolio or wait until you exit some of the positions before you add more position?

Good questions shawFund  Yes, I bought around $29,000 of INSM and other picks were and are just 6.66% of the portfolio. I'm thinking of selling some shares before I buy new ones.

David, adding to shawFund's question: has the Long Term Portfolio emerged as a "spin-off" from the 3SOF Portfolio, i.e. do you intend to keep $190k in the SOF Portfolio and relocate $100k to the Long Term Portfolio? This way, each set of shares you buy will cost $19000 and $10000, respectively as of Jan. 2006. What's the truth? Thank you.

The Stocks on Fire Portfolio started on April 2005 with $100,000. It is now about $290,000. Previously I bought 6.66% of the portfolio's capital on each position for a maximum of 15 positions at a time. From now on I'll buy 10% of capital in each position (INSM was already 10%, or about $29,000).

The Long Term on Fire Portfolio is a new portfolio, that started yesterday with $100,000. This is fresh new money to invest (half of the money belongs to Ramsburg). We'll buy 10% of the portfolio in each new position, as happened with GIGM and DIET yesterday. Look for the Long Term on Fire Portfolio details here.

Thanks for your questions 

[Lucas Scott]

I sold today at 3.05. Bought at 2.50 a week ago. Watching for reentry at the 9 ema for a quick trade.

[David Randolph]

INSM is falling back from an overbought condition, nothing to worry about. I believe I said on the newsletter this was a stock where I would be comfortable if it were to fall 5 or 10% below my buying price. So, here it is, down 3.53% from my buying price, and I feel comfortable holding INSM.

Why? Because, on the second quarter, the company will probably start the commercialization phase of a recently approved FDA medicine: IPLEX. Also because the trend is still bullish, TL2  today stands at $2.63, Friday's low.

I expect INSM to rebound from the last two day's sell off and make new highs soon, so I'll continue holding it.

[brandyjoco]

Hello... is anyone there.  Are we all still in this one?

[das317]

I just bought some more..hope I'm not crazy.

[brandyjoco]

I just bought more at 2.43 also.  Hope i'm not crazy.  Sure is a cheap market cap considering it is a Biotech with an FDA approved drug.

[netfishmademerich]

I recommend selling INSM.  It has fallen more than 20% off the 52 week high it had hit recently.  I believe the momentum has been lost.

[Lucas Scott]

Netfish, I respectfully disagree that momentum is lost. INSM bounced off the center BB/ 20 ema today and a lot of bullish stocks do that during their runs. I'll probably get back in tomorrow.   

[rickjust]

Netfish, I respectfully disagree that momentum is lost. INSM bounced off the center BB/ 20 ema today and a lot of bullish stocks do that during their runs. I'll probably get back in tomorrow.   

hi,
hope your right lucas. i hate starting a trade in the red!
maxi

[David Randolph]

INSM had 3 ugly red candles, which can be interpreted in two ways:

1) The stock was overbought, people are taking profits and the big fellas are shaking the tree.
2) The company itself is selling shares on strength, to capitalize itself.

The first interpretation is bullish, the second one is bearish, and it's hard to know which is which. When in doubt, I go back to read what led me to buy the stock in the first place. Are the arguments still valid? Are they not?

The most important argument that I found was:

«This is also an exciting transition for Insmed as we now begin to focus on the commercialization of IPLEX, which we expect to launch during the second quarter of calendar year 2006."»

This hasn't changed so people will probably buy the dips on INSM until the expectation turns into a fact.

I'll continue holding INSM.