H.C. Wainwright: Time To Buy Insmed

• Last week, H.C. Wainwright’s Andrew S. Fein attended an NTM-focused workshop at the meeting of the European Respiratory Society (ERS) in Amsterdam.
• After the event, the firm reiterated a Buy rating on Insmed Incorporated INSM, and raised its price target to $35.00.
• Shares of Insmed were down roughly 4 percent on Tuesday.

Fein noted that, in the ERS event, the panelists pointed new work on evaluating the prevalence of NTM, especially in Europe. The analysts at H.C. Wainwright believe that, “these and future European updates have now taken new significance following Insmed’s recent decision not to move forward with the Arikayce MAA for the treatment of Pseudomonas in CF (as per the EMA’s agenda for its September CHMP meeting).”

The firm has always favored a fully orphan-focused development strategy for Arikayce in both the US and EU as the best way to unlock value for shareholders. In fact, they “applaud the company’s management for its sustained exclusive focus on NTM, and its distancing from the low-hanging albeit dilutive CF MAA (where multiple existing antimicrobials which are used in a rotation treatment schedule would cap the EU pricing potential very low).”

To better reflect an EU regulatory and commercial strategy focused exclusively on NTM, H.C. Wainwright is changing its EU launch timeline and pricing assumptions, which leads to the revised price target of $35 -- up from $30.

Going forward, the analysts believe that, “unhindered orphan pricing optionality in the EU now strengthens the WW value proposition of Arikayce, and to that extent any incremental granularity on the EU NTM market is material to considerations of future topline revenue.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.