Insmed: Top-Line Data Should Rally Stock
Scott Matusow | May 14, 2013 10:36AM ET
The Orphan Drug Act was passed in January 1983 to encourage companies to develop drugs that treat rare medical conditions. Companies that receive Orphan Drug Status gain certain financial incentives such as a longer period of exclusivity, enhanced patent protection, clinical research financial subsidization, and even tax breaks. Additionally, companies have greater success in getting their Orphan Drugs approved because there is a significant need for its treatments.
Insmed ( ). Cornerstone had a gap down on gap down from about $6.20 to $5.10 on a negative Adcomm on September 13, 2012. Months later, this gap was filled and the price is currently at $8.79.
Conclusion
Insmed has positioned itself to capture market share for several indications with unmet needs. With a near term catalyst and another later on in the year, I expect that Insmed stock price will climb in anticipation of the clinical trial results. Insmed has experienced management and should be able to execute on its plan to make Arikace the leading treatment in its field.
My short-term price target is $11.00 per share. If Phase III results are positive my price target is $15+ per share. Negative results would likely see a stock price back under $5 a share.
Disclosure: I am long INSM.
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