Insmed Inc (INSM)

[buy4long]

Here is my speculation:

I have no doubt that a settlement is in the works (i.e. these are not just 'scheduling' continuances). Given the previously displayed bad blood between these companies, neither would stipulate to a continuance to accomodate the other in the absence of negotiations.

I do think the settlement may not be as rosy as some here have predicted. INSM is on the short side of a jury verdict, and it will have to expend considerable time and money in an attempt to reverse, with no guarantee that they would be successful. Also, INSM will require cash to continue operations over the next few months.

Therefore, TRCA/DNA has substantial leverage in the near term. Their inferior product, lagging position in the EMEA race, lack of additional indications, and demonstrated inability to turn Increlex into cash limit this advantage somewhat.

My prediction: By COB next week, both companies announce a "partnership", revenue sharing agreement, cessation of attempts to injunct, future research collaboration.

This announcement will not move TRCA, but it will push INSM to approx. $1.70/share.