Insmed Inc (INSM)

[ED20332]

Tobin Smith Recommendation is to Close the Position

Insmed (INSM): This niche biotech company is a hard one to figure. The news on Italy's request to make Iplex available to its doctors as an experimental treatment for Lou Gehrig's disease sounds great, but is very limited. The successful patent infringement lawsuit involving the same drug -- approved in the U.S. for children with a certain type of short stature disorder -- by competitors Genentech (DNA) and Tercica (TRCA) takes a lot of economics out of the stock as well.

If you were to hold Insmed for the long-term, and I mean extremely long-term, I think it has a 50/50 chance of getting into the market with drugs for insulin resistance, multiple sclerosis (MS) and HIV -- but the risk is the dilution in the stock as the firm raises more money to get to the finish line.

I've been patient as I can with INSM -- it's on our buy list as a legacy stock, which means a 3-5 year period -- but the recent news just does not make it the 10-bagger potential we are looking for. Time to sell and reinvest the cash.