Insmed Inc (INSM)

[ED20332]

For your information Avalon Pharmaceuticals'

http://www.wrhambrecht.com/research/biotech/avrx.html

08.10.06


avrx: EARLY SIGNS OF BIOLOGIC ACTIVITY OBSERVED IN PHASE I AVN944 TRIAL; CLINICAL DATA ON-TRACK FOR Q4:06
Avalon Pharmaceuticals' reported Q2 loss was roughly in line with expectations, but overall a non-event for AVRX shares. We believe the main driver to the story remains the company's lead product, AVN944, which we estimate could achieve peak sales of $500M and is 100% owned by Avalon. Specifically, enrollment in the Phase I trial is on track to yield efficacy data in Q4 that we expect will likely show signs of activity across a variety of hematological cancers. On the company's conference call Wednesday morning, management indicated that early signs of biological activity were observed across a variety of biomarkers. We believe the Phase I data will support the initiation of Phase II trials in hematological malignancies by YE:06 and solid tumors in H1:07. Given that AVRX shares are currently trading slightly above its cash position, we view current levels as reflecting a compelling risk/reward. We are reiterating our Buy rating and $13 YE:06 price target on AVRX shares. Full Report - PDF