Insmed Inc. (INSM) Message Board

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Biotech / Medical : Insmed Inc. (INSM)

INSM 189.60

-2.4%

Oct 31 9:30 AM EST

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From: mopgcw	6/25/2004 9:38:36 AM
	of 136

From Yahoo: Biotech Insight by: rstor1 (44/M/NY) 06/25/04 07:39 am Msg: 19392 of 19394 I subscribe to Biotech Insight, published by Ron Garren. It is a pay subscription and you can get the details at www.biotechinsight.com. This was sent this morning: Another nondescript day for biotech but in general prices advanced this week. One reader asked me to comment on Tercica (TRCA)—I wasn’t following TRCA but researched it after the inquiry –I like their story a lot. There was a very informative analysts meeting today --- it’s on their web site and I would recommend interested readers listen to it. The bottom line is that I am adding 2000 shares of TRCA to the Model Portfolio. TRCA is a new IPO (March 2004) so we can expect some volatility when the 6 month lockup expires. However the expiration will also create more liquidity which could in the long-run is necessary to drive the stock higher. The TRCA story is IGF-1 for small children. Basically recombinant IGF-1 (rhIGF-1) was developed at Genentech and eventually licensed to TRCA along with an extensive patent estate (including binding protein 3) and a history of clinical trials. To simplify a long story, the company is managed by ex-Genentech and big pharma personnel who are at home in the arena of short statue. Today the only product for kids with short stature is daily injections of recombinant human growth hormone (rhGH). This molecule is deficient in many children of short statue and is an approved treatment that pediatricians are comfortable with. The only problem is that for many children it doesn’t work very well. Over the years it has become apparent that GH drives growth by increasing levels of IGF-1 (insulin like growth factor 1). There is a long history of biology and experimental data that verifies this conclusion. In a nut-shell knock out mice experiments confirm that it is the IGF-1/IGF-1 receptor system that drives postnatal growth. There is a rare human genetic mutation in the GH receptor called Laron syndrome in which children are extremely small. These children don’t respond to rhGH and have been treated in trials with rhIGF-1 with spectacular results. It is postulated that many of the very short children with inadequate responses to GH are actually deficient in some part of the downstream IGF signaling system. TRCA has a completed Phase III trial which should be enough to get IGF-1 approved for a restricted subset of very short children. The real question is how broad the label will be. If it is just the Laron type patients the market could be quite small (in the hundreds) but if it is a larger subset with very short statue then it could be in the thousands. The company plans to file a BLA in early ’05. In any event TRCA is planning a Phase IIIb study to help define the larger subset of growth deficient children in which IGF-1 will work. My gut is that there will be many thousands of children that qualify and that this drug will gradually work its way into a much broader market. TRCA’s market cap is $218 million with about $80 million in cash etc. They plan to charge about $20,000/year for therapy and children will have to be on drug at least until their bones stop growing and probably through adulthood as well. The company would need $40 million in sales to justify the current market cap (using a conservative multiple of 5X sales). They would need to treat 2000 patients/year to reach this goal. IGF-1 has a long safety record and has been used in a number of children for over 7 years. IGF-1 has designer drug potential with wealthy parents of short children being will to try it off-label. I think the chance of a successful Phase IIIb is likely and would expand the label considerable. IGF-1 also has general metabolic effects in adults and will almost certainly be tested in patients with severe insulin resistance. I can also see it being used to maintain muscle mass in aging adults—in fact this could be a tremendous off-label use and would rival the off-label use for growth hormone. It is very likely that in adults with normal IGF binding proteins it could be dosed once-a-day just like rhGH. It would certainly be a more direct if not more effective way to maintain muscle mass. One question that may plague long-term adult use is the worry of driving the growth of cancers (GH also has this concern) but most of the evidence except for prostate cancer does not support this. In any event monitoring IGF levels could mitigate that risk (the risk of injury from falling because of musculoskeletal problems is far greater than the risk of cancer). Insmed (INSM) with a market cap of $83 million is a competitor. They are in trials for Laron syndrome patients with a combination IGF-1/IGF-1 binding protein 3. They are also going after the insulin insensitive market. One big problem for Insmed is they only have a few hundred patients that have been on trials and none more than a few months. TRCA can field data on 1500 patients for a safety database. TRCA also has patients on drug for up to 10 years. Further complicating the INSM story is the difficulty of getting two new products through the FDA—guess you can tell I’m not buying this stock. The bottom line is that I see little danger that IGF-1 will not get approved for at least a limited indication. The question is how much they can expand and grow the market. I am addint 3000 shares of TRCA to the Model Portfolio at the closing price ($9.89).

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