jabbonda...now that the litigation is out of the way the path is clear. As I see it...
To achieve it's potential Insmed needs to sell approximately 20,000 prescription of Iplex a year to be a $350 million company (20,000 * $ $35,000 / 2).
In addition, I believe in the science and fully expect that rhIGF-1/rhIGFBP-3 will far exceed 20,000 applications a year. It is just a matter of time.
The investment question is "can Insmed land a block buster indication in the next 1-2 years without significant dilution?" An indications that provides both cash flow and market evidence that Iplex works.
IMO the next major milestones are:
1) clarification on the terms of settlement. Currently the uncertainty of the details is causing a minor drag on share price.
2) Elimination of any possible class actions suits. This may not be an issue - in the likely case where doctors continue to prescribe Iplex it is good for Insmed for two reasons. It eliminates the overhang of more legal battles and provides cash to offset manufacturing cost. At this point any nickle they can get is good.
3) Short-term financing. Enough to eliminate the risk of running out of cash before there is an opt-in. If it comes from DNA I expect a significant price increase on its apparent merits. If it is dilution, which I suspect it is not, the price will go down, and with a loan I expect some price drop.
4) PII data for a broad indictation which compells DNA to Opt-in. This is the ultimate milestone for if/when it happens the price should soar.
5) Any study results along the way which supports the commercial viablilty of Iplex.
As an investor, halving the revenues with DNA is not so much an issue as achieving revenues. If revenues are acheived on abroad indiction, they will be significant and open the door to much more. IMO DNA has to opt-in before the end of 2008 for my investment to pay off.
