Timing of Insmed CEO departure becomes a subject after failed trial (INSM)

June 25, 2009 · Filed Under General · Comments Off

It may be coincidental that Insmed Inc. (Nasdaq: INSM) failed a critical Phase II trial for its IPLEX candidate this morning just two weeks after long-time CEO Geoffrey Allan resigned citing a health condition.

The close timing, however, is a topic of discussion among biotech traders this morning, as Insmed takes a 40% tumble in the premarket. The stock had been one of the fastest risers among all biotech names in recent months, up more than 5-fold since November 2008.

Optimism for Insmed has been running very high. Merck & Co. (MRK) agreed early this year to buy a pipeline of drug candidates from Insmed for $130 million, bringing the company needed cash. And the FDA announced in March that it would grant an investigational new drug application for Insmed’s IPLEX among patients with Lou Gherig’s Disease.

This morning, the anticipated Phase II trial of IPLEX in muscular dystrophy did not show a statistically significant improvement in the functional measure of endurance, muscle function, muscle strength, or quality of life in any of the tests utilized in the study.

IPLEX did, however, demonstrate improvements in standard measures of insulin sensitivity and reductions in fasting glucose, fasting insulin, cholesterol and triglycerides. The drug was well tolerated and demonstrated a safety profile consistent with previous studies.

Insmed plans to apply for a grant from the Muscular Dystrophy Association so it can run another Phase II trial focused only on a subset of muscular dystrophy patients with severe insulin resistance who may be more likely to benefit from IPLEX treatment. — Mike Tarsala

Tags: INSM, mrk