Insmed Shares To Outperform Through 2018 After 'Slow Start,' Credit Suisse Says In Upgrade

Insmed Incorporated INSM announced in late March that it has submitted a new drug application to the FDA for a non-tuberculous mycobacterial lung disease treatment.

The Analyst

Credit Suisse analyst Martin Auster upgraded the shares of Insmed from Neutral to Outperform and increased the price target from $27 to $33.

The Thesis

A significant unmet need and high intent to treat from clinicians could serve as a meaningful offset against the uncertainty and commercial risk for Insmed's ALIS, Auster said. The uncertainty comes from payer control of access to treatment for NTM lung disease caused by mycobacterium avium complex, the analyst said.

ALIS is the standard of case for refractory NTM MAC, Auster said, citing results of a survey of 26 clinicians.

The symptomatic disease burden for severe NTM patients is comparable to idiopathic pulmonary fibrosis and cystic fibrosis, Auster said. Accordingly, the analyst projects ALIS commanding a premium price; Credit Suisse estimates the drug will sell for $108,000 per year.

Meaningful catalysts exist to drive upside for Insmed over the next six months, Auster said. The company is planning a strong presence — including a Phase 3 data oral presentation and several poster presentations — at the American Thoracic Society Conference May 18-23, the analyst said.

Credit Suisse said an advisory committee is likely later this year and could offer hints as to whether ALIS will receive a broad label when it is possibly approved in late September.

The sell-side firm increases its sales and bottom-line estimates for Insmed in 2019.

"We see a path for INSM to outperform over the balance of 2018 after a slow start this year," Auster said.