How Insmed Is Capitalizing on Its Huge Late-Stage Success

By Chris Lange Updated Jan 12, 8:29AM EST · Published Sep 6, 8:50AM EDT

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How Insmed Is Capitalizing on Its Huge Late-Stage Success — © Thinkstock

Insmed Inc. (NASDAQ: INSM) kicked off this week with an incredible gain — the stock more than doubled on Tuesday — and now management is looking to capitalize on this monumental move. The company has filed with the U.S. Securities and Exchange Commission (SEC) for a secondary offering.

No pricing details were provided in the filing, but the offering is valued up to $250 million. Keep in mind the company currently has a market cap of $1.68 billion, which was less than $800 million just last week. The amount raised in this offering would be equivalent to roughly one-third of the total market cap prior to the stock’s surge, but after the fact the offering is worth about 15% of the total market cap.

The underwriters for the offering are Goldman Sachs, Leerink Partners, Evercore ISI and Stifel.

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What caused all this excitement surrounding the stock was late-stage results from its clinical study in the treatment of nontuberculous mycobacteria (NTM) lung disease. Specifically, Insmed’s Phase 3 Convert study demonstrated that the addition of ALIS to guideline-based therapy (GBT) eliminated evidence of NTM lung disease caused by MAC in sputum by month 6 in 29% of patients, compared to 9% of patients on GBT alone.

As a result, Insmed plans to pursue accelerated approval of ALIS. The U.S. Food and Drug Administration (FDA) previously granted this product breakthrough therapy designation and fast track status and designated ALIS as a qualified infectious disease product under the Generating Antibiotic Incentives Now Act.

The company said that it plans to use the net proceeds from this offering for the following:

To fund ongoing and future clinical development of ALIS for patients with refractory NTM lung disease.
To invest in increased third-party manufacturing capacity for and commercial inventory production of ALIS.
To fund further clinical development of INS1007.
To fund working capital, potential debt repayment, capital expenditures, general research and development, and for other general corporate purposes.

Shares of Insmed closed up 120% at $26.99 on Tuesday, with a consensus analyst price target of $37.38 and a 52-week trading range of $10.21 to $29.52. The stock was down just over 3% at $26.11 in early trading indications Wednesday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.