INSM

[usedcasting]

It appears as though INSM is selling 20m shares at $2.00. No confirmation yet. But alot of action.

uc.

[njshiva]

I was expecting this one to be priced much higher than 2bucks ...crap

"We have granted the underwriters the right to purchase up to 3,000,000 additional shares at the public offering price per share, less the underwriting discount, within 30 days of this prospectus supplement to cover over-allotments, if any.

The underwriters expect to deliver the shares against payment on or about March 15, 2006.
"
http://www.sec.gov/Archives/edgar/data/1104506/000119312506050360/d424b2.htm

[alien41]

Well, this has not worked out like I planned. I guess I should have sold just before earnings but decided to hold.  Was wondering if anyone might share their thoughts on the possibility that it might bounce up a little or should I consider selling on Monday.  Still learning.   Thanks in advance.

Alien

[Michael]

Hi Alien,

For what it is worth I bought INSM Friday so I would obviously not recommend selling

Even though I as usual mainly bought the stock for fundamental reasons I think this is a particular good entry point.

The public offering of 20 million shares is not only bad news. We will now have some serious investors that obviously have done a more thorough Due Diligence than we are able to. (not due to lack of skills but rather time and access to information). These investors believe that $2 is a great entry level and this should provide a solid floor under the stock. (even though it could spike down below in the very short term).



As said I mainly bought INSM for fundamental reason. Insmed is going through the transformation from a Biotech research company to a pharmaceutical company and I believe they have an excellent pipeline to complete this transformation:



I will focus on IPLEX as it probably has most impact on the stock price short term.

Primary IGFD

FDA approved IPLEX for the treatment of growth failure in children with severe primary IGF-1 deficiency (Primary IGFD) in December last year as an orphan drug, IPLEX is entitled to seven years of marketing exclusivity for the treatment of Primary IGFD.

There are approximately 30,000 children in the US with short stature due to primary insulin-like growth factor-1 deficiency (IGFD). These children have normal or elevated levels of growth hormone but due to a deficiency in insulin-like growth factor, they are unable to utilize the growth hormone resulting in short stature. 6,000 of these children have growth failure due to severe primary IGF-1 deficiency. Children with untreated severe primary IGFD have extremely short stature and may have an increased risk of other metabolic disorders such as lipid abnormalities decreased bone density, insulin resistance, and obesity.

I would expect the total number of children severe primary IGF-1 deficiency in the developed world to be around 7000.

I expect the price for an IPLEX treatment to be similar to a Growth Hormon Therapy ($20,000 per year)

This means that the potential market is around $140 million. This excludes potential off label usage for non-severe cases.

IPLEX is however a very versatile drug. The compound behind it can be used for several serous diseases. The company's is also in Phase II clinical trails for the treatments of myotonic muscular dystrophy; HIV associated adipose redistribution syndrome; and extreme insulin resistance. Some of these indications are significantly more commercially interesting than IGFD.

Myotonic Muscular Dystrophy

INSM is conducting a Phase 2 clinical study together with University of Rochester investigating the use of iPlex, for the treatment of myotonic muscular dystrophy (MMD), the most common form of adult muscular dystrophy.

It has been known for decades that MMD patients do not respond normally to insulin. Recent research has identified an abnormality in an insulin receptor protein as the underlying cause and IGF-1 as a potential remedy.

Myotonic dystrophy affects an estimated 40,000 individuals in the United States and causes progressive muscle wasting and weakness in the hands, forearms, legs, neck and face. It often involves many other systemic effects, including endocrine abnormalities, especially with respect to insulin, a regulator of blood sugar (glucose); neurological changes, including excessive sleepiness and apathy; cataracts, usually requiring surgical excision; gastrointestinal problems; and cardiac rhythm abnormalities, often requiring pacemaker insertion.

The disease can lead to severe disability, and death can result from respiratory muscle weakness or fatal cardiac dysrhythmias.

At present, there is no treatment to reverse the muscle weakness or wasting or the defective insulin utilization in MMD.

The market potential in the developed world would probably be around $1.3 billion if we assume that the patience would have to take the drug everyday for the rest of their life and the pricing again would be around $20,000 per year. I am not sure that these assumptions are correct!

Severe Burn Injury

Severe burn injury is an additional treatment target. Annually, approximately 10,000 people in the United States (30,000 worldwide) suffer from traumatic burns over greater than 20% of their body surface. Major tissue damage along with, very low IGF-I levels, are associated with disruption of biological processes that are essential for efficient and successful healing and protection from burn complications. Furthermore, the length of time spent in a burn center and the time required to conduct the skin grafting required to cover the burn wound are directly related. Research has shown that IGF-I plays a significant role in tissue repair and that IGF-I supplementation can potentially promote the healing process and reduce hospital stay.
Additionally, data indicate that iPlexTM may have a positive effect on the immune system of severely burned patients. After severe burn, patients typically experience immune system deficiencies that impair their ability to resist infection as shown by an adverse shift in cytokine production by T lymphocytes. However, lymphocytes collected from six severely burned iPlexTM treated patients showed an approximately 280% increase in the production of interleukin-2, and a 25-90% increase in the production of interferon gamma, both vital immune system proteins. Thus, these changes may increase the ability of the burned patient to effectively be more resistant to infection.

If we assume that a treatment would cost $2,000 (5 weeks) the market would be around 60 million worldwide.


Osteoporotic Related Hip Fracture Surgery

There is approximately 350,000 hip fractures in US per year.

INSM has conducted a Phase II multi-center, double-blind, placebo-controlled study to evaluate safety and efficacy of iPlexTM in elderly female patients with recent hip fractures. As reported in the Journal of Clinical Endocrinology & Metabolism, iPlexTM was safe and well tolerated. iPlexTM has the ability to amplify bone metabolism and reverse the loss of bone mineral density that usually occurs following a hip fracture. These effects appear to be sustained for up to 4 months post-treatment. There also appears to be a positive trend in functional independence in patients treated with 1.0 mg/kg.

I don't want to speculate about the potential market for this indication.

Diabetes

INSM has conducted several trials showing that IPLEX improve the body's insulin sensitivity and glycemic control. Basically you can reduce the amount of insulin that the patience need to take. I am not sure how this can be commercialized. The Diabetes market is huge and growing so this could be a joker


The above is a layman's attempt to make some commercial sense of INSM's pipeline so there is most likely a number of mistakes in the above but I hope it give an illustration of the potential value of iPlex from an investment point of view.

Mike

[alien41]

Michael,

Thanks so much for your take on INSM.   As always, you are well informed about the fundamentals of the companies in which you choose to invest.  I am happy to hold this as a long term investment.

I would like to say that I have learned so much from all the well-informed investors and traders here at 3 Stocks on Fire.   

Thanks again,

Alien 

[422fwhp]

Should we be worried?   

[usedcasting]

Should we be worried?   

I don't think we need to worry to much. There's a bit of positive activity pre-market, and closing the 20M shares @ $2.00 plus the extra 3M optional bodes well here.

JMHO

uc.

[usedcasting]

This news will spook alot of timid investors. Down 5% pre-market.

uc.

Auditor Doubts Insmed Viability
Wednesday March 22, 8:16 am ET
Insmed Auditor Raises Question Over Company's Ability to Continue As Going Concern

RICHMOND, Va. (AP) -- Biopharmaceutical firm Insmed Inc. said Wednesday its independent accounting firm has raised doubts that the company will be able to continue as a going concern.

Insmed said the statement by Ernst & Young LLP is included in its annual report filed on March 6.

In the report, Insmed stated that the conditions leading to its auditor's uncertainty were the company's net loss position, its failure to become profitable and its dependence on financing.

On March 15, Insmed said it raised $42.8 million in net proceeds from a public offering of stock. Along with current cash on hand, the company said it will be able to cover its operational expenses through the second quarter of 2007.

On March 2, the company reported its fourth-quarter net loss more than doubled to $12.9 million from a year ago as interest and other expenses rose.

Insmed develops drugs to treat metabolic and endocrine diseases.

[alien41]

Was wondering what other's thought about this news.  Does seem to be a bit of a downer in the short term for sure. 

Alien

[Michael]

Hi Alien and UC,

Kind of interesting reaction to a non-event 

Anybody who had just used 10 minutes to look at the P&L and balance sheet would have known that INSM needed additional capital to implement their business plan. It was also known that they have already raised that funding. So the only news is:

Subsequent to the filing of the 10K the Company was successful in completing a public offering on March 15, 2006 which, together with its current cash on hand, the Company believes is sufficient to cover the Company's operational needs at least through the second quarter of 2007. The Company raised net proceeds of approximately $42.8 million in the offering.

Now this is good news. They have resolved the issue with funding of the operation and INSM seems to have enough cash till at least Q2 2007 so we can assume that we will not have too much dilution in the meanwhile.

[jorgegr]

Michael,
Can we have a stop loss on this one, just like all others?? At least did'nt see it
on the daily updates. My concern is that volumes are'nt picking up and slowly
the price going down as per the following detail during March:

Date Open High Low Close Volume Adj Close*
21-Mar-06 2.12 2.12 2.06 2.07 1,234,000 2.07
20-Mar-06 2.13 2.14 2.06 2.12 1,890,900 2.12
17-Mar-06 2.09 2.12 2.04 2.10 2,062,700 2.10
16-Mar-06 2.05 2.12 2.01 2.03 3,108,000 2.03
15-Mar-06 2.08 2.09 1.96 1.96 3,575,300 1.96
14-Mar-06 2.08 2.11 2.04 2.06 1,470,900 2.06
13-Mar-06 2.08 2.18 2.05 2.06 2,354,100 2.06
10-Mar-06 2.04 2.14 2.01 2.06 8,774,300 2.06
9-Mar-06 2.25 2.26 2.16 2.19 1,137,600 2.19
8-Mar-06 2.18 2.23 2.12 2.18 1,050,200 2.18
7-Mar-06 2.14 2.23 2.12 2.18 1,063,700 2.18
6-Mar-06 2.17 2.31 2.12 2.19 2,868,700 2.19
3-Mar-06 2.42 2.44 2.27 2.37 3,227,400 2.37
2-Mar-06 2.73 2.79 2.52 2.56 3,183,500 2.56
1-Mar-06 2.52 2.66 2.48 2.65 2,372,400 2.65


Thx & Rgds

jorgegr

[Michael]

Hi Jorge,

It is funny you mentioned this. I had a discussion with eliteG a couple of days ago about the stop on INSM. I wanted to put a stop at 1.96 but he thought that was too tight (and I thought the TA guys were aggressive with stops  )

The reason for a tight stop was that the public offering at $2 should put a solid floor under the stock, which should only be breached if there were a significant change in the company's outlook.

We never finished the discussion and I postponed my update on INSM. I guess eliteG was right. The stop would have been triggered today and I think that would have been a mistake. From a fundamental point of view the news today was great but the headline AP's reporter choose did damage to the stock.

As part of the commercialization of iPlex INSM will incur significant costs, which will first be fully off-set by product revenue at a later stage. We now know that the expected negative cash flow from the start up of production, marketing and the cost of the further development of their Pipeline will not exceed $60 million in the next 5 quarters. I had personally expected this figure to be higher.

Technically we had actually started a small positive trend before today's news. I hope that this trend will resume when investors have had a chance to digest the AP story.

We do need a stop on INSM. Fundamentally that stop should be just below $2 but please allow me to talk to eliteG again and we will set a stop over the weekend. (this is the beauty of having a TA and FA team!)

[jorgegr]

Michael;

Thanks for the post. Your chart shows exactly what I was trying to bring to
discussion (the ascending TL was broken and headlines dont seem to help)

jorge gr

[jlong]

I would only be worried if it closed below 2.00, I think there is big money support at 2.00 and it will take some really bad news for it to do so. There was over 4 mil. traded today and only lost .07 cents. Big blocks were bought first hour, hopefully they got all they wanted. If so this should go up rather quickly. At least I'm hopeing because I bought a bunch at 2.05. I think 2.00 will be major support, like brvo at .50 (waiting for earning on brvo before re-buying).

[la-onda]

update from yahoo board:
NSM $2.0 SOLID AS A ROCK...A TRUE GEM
by: ivalexy
Long-Term Sentiment: Strong Buy    03/23/06 03:20 am
Msg: 108793 of 108794

INSM has survived a rush of negative publicity lately just for being professional and for providing maximum transparency.

For instance, the announcement yesterday, that there was a "going concern" clause in the last 10-Q, and that it has been quickly addressed by obtaining $42.8M recently, is something that most biotecs don't do. Take GNBT, for instance, if you read their 10-Q, they have the "going concern" clause in every quarter. But they never release that information to the public. They never even release formal earnings PR's. Heck, most biotecs have similar clauses on their 10-Q/K's and never disclose that.

Now you know what happened yesterday, most of the over-reaction was caused by the criminal AP article that did not mentioned a word that INSM already addressed the issue. INSM has been penalized for being up and up with everything.... good or bad.

FYI, INSM has one of the highest Corporate Governance Quotient (CGQ) in the industry. As of March 1, 2006 INSM's CGQ was better than 95.7% of CGQ Universe companies and 86.7% of Pharmaceuticals & Biotechnology companies. As a comparison, GNBT's is the lowest (in the low teens).

I can sleep at night holding a bunch of INSM shares because management is doing the right things for the long-term appreciation of my investment in this company.

I am reposting this summary from Ivalexy because it highlights important highlights of INSM as an investment:
- INSM WILL LAUNCH IPLEX, ITS FIRST FDA-APPROVED DRUG, IN 2Q 2006.
- Also in June 2006, INSM will present results of Phase 2 using iPlex to treat Severe Insulin Resistance (of of many new applications of iPlex). This is a multi-billion dollar market
- INSM HAS a STRONG BALANCE SHEET....$61M IN CASH. No further dilution this year. Will start generating revenues in 2Q 2006.
- RICH DRUG PIPELINE ADDRESSING AILIMENTS FROM CANCER, TO INSULIN RESISTANCE, TO MUSCULAR DISTHROPHY, TO MUSCLE/BONE WEAKNESS, TO HIV......etc...etc....

++++++++++INSM will use its cash to:+++++++++

*** Accelerate the comercial launch and manufacturing of iPlex, its first drug approved by the FDA. The company plans to launch iPlex during 2Q 2006.
*** Continue pursuing the marketing authorization for IPLEX in Europe. The company will submit a formal application to the EMEA (the European equivalent of the FDA) any day now.
*** Continue clinical studies of the various drug candidates like iPlex for Severe Insulin Resistance, iPlex for Miotonic Muscular Dystrophy, small antibody molecule INSM-18 currently in Phases I/II to combat prostrate cancer, and several other drugs.

The following are a few highlights related to INSM's HUGE drug pipeline

** On March 7, the Business Intelligence firm La Merie S.L. reported that antibodies are at the forefront of novel cancer therapeutics targeting the insulin-like growth factor-1 receptor (IGF-1R).The report states that INSM along with giant Pfizer are among the leaders in this promising oncology research area. INSM-18 is a dual inhibitor of IGF-1R and Her2/neu and is the only clinical stage IGF-1R small molecule antagonist (phase I/II in prostate cancer).

http://www.pr.com/press-release/7579

** INSM recently initiated Phase 2 Clinical Trials of iPlex for the treatment of Myotonic Muscular Dystrophy (MMD), the most common form of adult muscular dystrophy:

http://biz.yahoo.com/bw/060104/20060104005653.html?.v=1

......MARCH 2, 2006 BUSINESS UPDATE.

Immediate Company Focus: Three major areas:

iPlex Comercialization
iPLex Manufacturing
Pipeline Clinical Develoment

DETAILS BELOW:

http://insmtotewnty.blogspot.com/

update:
INSM: FY 2005 Results Include Going Concern
Wednesday, March 22, 2006 08:03 ET

Insmed Incorporated (INSM) announced that in its 10K filed for the year ended December 31, 2005, the Company's auditor had modified their audit opinion due to a going concern uncertainty. The Company has completed a $42.8 million public offering on March 15, 2006 which, together with its current cash on hand, the Company believes is sufficient to cover its operational needs at least through the second quarter of 2007.


TA Link:
http://www.stockta.com/cgi-bin/analysis.pl?symb=INSM&num1=3&cobrand=windchart&mode=stock