Insmed Incorporated, a global biopharmaceutical company that primarily focuses on rare diseases, has been poised precariously in the stock market recently. Insmed’s recent inception into the pharmaceutical niche coupled with its keen concentration on providing therapies for unmet patient needs are both intriguing and complex elements that weigh into the stock’s current state.
Insmed, as many market analysts and investors would know, is fixated on the development and commercialization of Arikayce, a first-of-its-kind inhalation therapy for the treatment of nontuberculous mycobacterial (NTM) lung diseases. The drug has already been approved in several countries, including the U.S, where it has been marketed as ‘Arikayce Liposomal Inhalation Suspension.’ Arikayce has the potential to address a spectrum of serious pulmonary infections, a potential boon for the future profitability of the company.
Even with the innovative and promising nature of Arikayce, it is not the sole element teetering Insmed’s stocks. The company’s Q3 2020 report indicated an unexpected loss, aiming bitter arrows at the stocks. Consequentially, the company’s stock prices started to tumble downwards, riddling the short-term future of the stocks with uncertainty.
On the revenue front, Insmed’s Q3 report showed $43.8 million, beating the Zacks Consensus Estimate by 16.69%. The company’s revenues solely relied on Arikayce. While the results were, in fact, higher than the estimation, it still marked a 16.2% sequential decrease. The continuous, albeit fluctuating, generation of revenue from its lead product is positive. But, it doesn’t veil the fact that a robust financial standing necessitates diversified revenue sources.
The commercialization of Arikayce is still in its initial stages. Thus, the company’s advertising and promotional activities are predicted to have incurred substantial expenses, adding strain on the overall net returns. Moreover, Insmed is still investing in other potential pipeline candidates, pushing its operational expenses higher.
Considering these factors, Insmed’s current financial health appears shaky. For investors, these elements certainly introduce an element of risk, particularly in the short-term.
While elements of concern are present, it’s essential to balance them against the potential profitability that comes with pharmaceutical companies, particularly those like Insmed, which focus on rare-disease markets. This is because rare-disease drugs, like Arikayce, often come with high price tags and limited competition—factors that can significantly increase a company’s profitability.
Despite its current volatilities, Insmed is dedicated to the cultivation of a robust pipeline addressing various rare and severe diseases. This includes INS1007, another promising product in trial phases intended for individuals with non-cystic fibrosis bronchiectasis. The drug has shown potential to significantly impact the treatment of a disease that has very few therapeutic options, adding another potential revenue stream.
Taking stock of the SCTR report, Insmed represents a challenging duality for investors. While the company rests on shaky grounds with a lackluster quarter and a heavy reliance on a single product, the potential profitability of its current and future rare-disease products cannot be denied.
As things stand now, the state of Insmed’s stock remains a fine balance between potential reward and risk. Investors and market analysts are advised to keep a keen eye on Insmed’s upcoming financial updates and the progress of its developmental pipelines. Together, these factors will discern whether Insmed’s stock can withstand current market pressures or if it will briefly falter before rising as a profitable entity in the future.
