Insmed stock hit a record high Tuesday after the Food and Drug Administration approved its drug, brensocatib, for patients with a devastating lung condition.
The approval came on time and sent shares up 8.1% to 122, at the close.
Brensocatib, now called Brinsupri, is the only FDA-approved treatment for non-cystic fibrosis bronchiectasis, or NCFB. The condition is progressive and can lead to permanent lung damage.
This is the first approval for brensocatib, which Chief Executive Will Lewis calls a "skeleton key" for numerous inflammatory diseases. He pegs Insmed's opportunity in NCFB as being worth $5 billion, and that's without adding new uses for the drug.
Insmed Stock Win Price-Target Hike
RBC Capital Markets analyst Leonid Timashev hiked his price target on Insmed stock to 138 from 120. He says the label for Brinsupri represents a "best-case scenario." The FDA approved both doses and didn't add any major warnings. The agency also included data on secondary goals of Insmed's studies.
"While the approval was largely anticipated, we think attention can now shift towards a potentially rapid launch, leveraging both a new indication with no approved therapies and a high degree of commercial preparedness from the company," he said in a report.
Timashev sees a potential for Brinsupri sales to reach $3.8 billion in the U.S. with a total of $6 billion-plus worldwide.
Notably, the FDA didn't include an exacerbation cutoff. This adds flexibility into how the drug can be used long-term. In the near term, Timashev expects payers to require two or more exacerbations — period of time when symptoms are worse — for them to reimburse patients for the cost of Brinsupri.
The drug costs $88,000 a year, 10% ahead of Timashev's expectation for $80,000.
"We do not necessarily anticipate payer pushback on pricing given there are no other approved treatments," he said. "If anything, we see a favorable setup with payers as well, with accounts covering (roughly) 90% of Medicare and commercial lives already engaged."
Ongoing Development For Brinsupri
Insmed is also testing the drug in patients with a lung disease called chronic rhinosinusitis without nasal polyps and the skin condition called hidradenitis suppurativa. The drug works by blocking DPP1, an enzyme that plays a role in inflammation and immune response.
"When we saw that universal response, we knew we had one of those skeleton key mechanisms of action that are rare in biotechnology, where the fundamental disease progress is affected at its point of origin," Lewis told Investor's Business Daily in a recent interview.
Insmed stock has skyrocketed this year, in part on enthusiasm for brensocatib. Shares have soared almost 64% this year, as of Monday's close. The stock ranks in the leading 5% of all stocks in terms of 12-month performance, as measured by the Relative Strength Rating.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
