Insmed shares nosedive as regulators demand tox study on PhIII drug

Insmed's regulatory woes with the cystic fibrosis drug Arikace are continuing this morning with the news that the FDA will not release its hold on the late-stage trial for the treatment and is now demanding a new animal study to clear the air. The biotech's shares ($INSM), already battered in early August on the news of the original hold, took a fresh plunge today as investors caught wind of the ongoing agency clamp on the study. The stock has now shed about two thirds of its pre-hold value with regulators fretting over data from a long-term tox study in rats.

The agency now wants Insmed to conduct a 9-month tox study in dogs to resolve questions about the potential toxicity of the drug.  Regulators also asked Insmed to "propose a CF patient population/disease state where the risk-benefit profile of Arikace may be more favorable." And the continuing roadblock at the FDA is leading analysts to conclude that Insmed is looking at a lengthy period in limbo, undercutting confidence in the company when it's needed most.

"I think this represents a one-year to 18 months delay in the initiation of the clinical trial in cystic fibrosis," RBC Capital Markets analyst Jason Kantor told Reuters. Shares of Insmed were down about 30% this morning.

Insmed was inspired to merge with Transave late last year in order to gain control of Arikace, a reformulated antibiotic designed to be inhaled by CF patients suffering from lung infections as well as non-tuberculous mycobacterial lung disease. Investigators have designed late-stage trials for each condition, though the FDA has not updated Insmed on the hold for the study devoted to non-TB myobacterial lung disease.

"Insmed is in the process of assessing the impact that FDA's recent requests and the continuation of the clinical hold will have on our Phase III clinical trials for Arikace in CF," said Timothy Whitten, the CEO of Insmed.  "Once we have a better understanding of the FDA's requests and their implications, we will provide a further update to the market."

- here's the press release
- read the Reuters story