Insmed Falls After Lung Drug Trial Results Disappoint

Insmed Inc., a developer of inhaled medicines for lung diseases, fell the most in almost two years after its leading drug candidate didn’t perform better than a competitor in a clinical trial.

Insmed’s Arikace met the primary endpoint of non-inferiority to Novartis AG’s Tobi in a late-stage study of cystic fibrosis patients with the bacterial infection Pseudomonas aeruginosa, the Monmouth Junction, New Jersey-based company said today in a statement. Earlier study results suggested the drug might establish superiority as a treatment compared with Novartis’s therapy, said Gregory R. Wade, an analyst at Wedbush Securities Inc.

“That would have done two things: it would have improved its competitiveness in the marketplace, and it would have sped the rate at which it can make a registration filing in the United States,” Wade said.

Insmed declined 19 percent to $9.72 at the close in New York, the biggest single-day fall since October 2011. The company’s shares have increased 45 percent this year.

In March, the FDA approved a new inhaler delivery system for Tobi, the Novartis-made cystic fibrosis treatment. The clinical trial results announced today showed one daily dose of Insmed’s medicine was as effective over the course of 24 weeks as a twice-daily dose of its competitor. Cystic fibrosis is an inherited chronic lung disease that affects as many as 100,000 Americans.

Insmed also announced that the U.S. Food and Drug Administration granted Arikace Fast Track designation for the treatment of non-tuberculous mycobacteria lung infections and named it a qualified infectious disease product for the infection.

The fast-track and product designations prompted Joseph Schwartz, a Leerink Swann & Co. analyst, to predict FDA approval for Arikace in non-tuberculous mycobacteria, reiterating his buy recommendation for the company.

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