Insmed shares crater as FDA puts a clamp on Ph3 CF study

Just seven months after completing its takeover of Transave, Insmed is reporting that the FDA has put a clinical hold on the Phase III trial of Arikace, a late-stage cystic fibrosis drug that had inspired the deal. According to the Monmouth Junction, NJ-based biotech, regulators lowered a clamp on the study after analyzing interim results from a long-term rat study for cancer, in which rats had inhaled the therapy for two years. And investors wasted no time in reacting to the news, pushing Insmed shares ($INSM) down 42% in early trading.

Arikace relied on Transave's liposomal delivery technology to reformulate an antibiotic so it could be inhaled by cystic fibrosis patients, treating lung infections as well as non-tuberculous mycobacterial lung disease. By the time Insmed announced its deal to merge with Transave in a largely share-driven deal late last year, the developer had obtained proof-of-concept data and the drug was ready to begin Phase III in the second half of this year.

No patients had been dosed yet and the biotech put a freeze on any future enrollment for the study until it resolved the issue with the feds. The merger deal gave Transave's shareholders 46.7% of the company.

"We will work closely with FDA to provide the agency with all appropriate information and data required to expedite their review and evaluation," said Insmed CEO Timothy Whitten. "Once FDA has completed its review, we can better assess the impact this clinical hold might have on our Phase III clinical programs for Arikace in CF and NTM."

- read the Insmed release

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