Insmed Inc (INSM)

[coinstarz]

I understand your pain and mine too. Yesterday's court decision was a surprise. I thought it would come out in Sept. I think two key issues in this stock need to be addressed. First is sales number of iPlex and the other is litigation outcome. The most important factor is sales of iPlex. Without sales number, even though Insmed wins lawsuit, the PPS will go nowhere.

A. Sales number...

I think 2Q sales number will beat analyst's estimate (low bar estimates because they thought iPlex launch in June-July). I believe iPlex has sold 60-100 patinets from May 24 to June 30. LCM estimated 30-40 numbers in its report. What we look forward is 3Q sales numbers. Some large health Ins will cover iPex starting in July. Reimbursement takes 30-45 days, and some cases are even longer (60-80 days). The year-end-target is about 600-800 patients. If Insmed can reach 600 patients by the end of year, that is a good number and will support PPS.

B. Patent Litigation

This is anyone's guess. It is in jury's hands. The worst senior is Insmed loses all the cases. If it happens, Insmed will pay 10%+/- loyalty to TRCA. And I think Insmed will win some and lose some. For ex, Insmed may lose 2 cases in '414 and win '515 and '287. If Insmed loses, iPlex will not be stopped since Celtrix owns the right. As long as iPlex can be made and sold, Insmed will be fine but the recovery time will be longer.

Let's look at INSM PPS again. Last August when TRCA got approval and Insmed got approval letter, the PPS was around 1.20+/-. Few people thought FDA would approve iPlex. 1.20 without iPlex in Aug-Dec 2005. Now, today is 1.20+ with iPlex approval but attached litigation lawsuit. Is today's Insmed business better than last August before FDA approval? If you think it is better than last year, then you should hold shares but don't add anymore. If you think it is NOT better than last August, then sell and move on.

I firmly believe no one can stop iPlex. Insmed may lose case but someone will buy it out for the iPlex.