Insmed Inc. (Nasdaq:INSM) led advancing issues, more than doubling (+146%) over the week, to $30.25 as of Tuesday morning, September 12. The explosion began after the company announced that its new drug, an inhaled antibiotic known as Alis, successfully treated patients with a rare lung disease.
Alis met the main goal in a late-stage study involving 336 adult patients with nontuberculous mycobacterial lung infections. According to Bridgewater, NJ-based Insmed, the addition of the drug showed statistically significant reduction in bacterial density by month six in 29% of patients, compared to just 9% in patients receiving the standard treatment.
Nontuberculous mycobacterial lung infections are caused by a specific type of bacteria found in soil and water, which causes cough, fever and blood in the mucus. As of right now, there is no approved treatment for these types of infections. Based on the latest data, Insmed now plans to apply for accelerated approval for Alis.
According to the Financial Times, as of September 8, 2017, the consensus forecast among 9 polled investment analysts covering Insmed advises that the company will Outperform the market. This has been the consensus forecast since the sentiment of investment analysts deteriorated on June 9, 2014. The previous consensus forecast advised investors to Buy equity in Insmed.
Share price forecast
1-year price change: +118.40%
The 8 analysts offering 12-month price targets for Insmed have a median target of $38.00, with a high estimate of $54.00 and a low estimate of $17.00. The median estimate represents a 25.62% increase from the last price of $30.25.
This is a solid name, flying under the market’s radar for quite some time. It has a respectable market cap of $1.94 billion, just below the mid-cap category. It also has a soothing beta of 0.5302, meaning there’s not much volatility—-well, not until this massive move.
Even after the big jump last week, analysts see additional upside in Insmed’s share price of another 26%. With no medicines currently on the market for this condition, and its Alis treatment doing well in a late-stage study, this name is a rational Buy. But only for the risk-tolerant investor.
Ames, IA-based NewLink Genetics’ rally made up all the ground shares had lost earlier this summer when indoximod failed in a mid-stage, breast-cancer trial and former collaborator Roche Holding AG jumped ship on GDC-0919, a second-generation IDO inhibitor that put up lackluster efficacy data in trials. The trial was evaluating indoximod plus the popular PD-1 inhibitor Keytruda in patients with advanced melanoma.
The new data show an improvement in the percentage of patients receiving the two-drug combination who had a complete response versus what was reported in April. Specifically, the complete response rate increased to 20% from 12% previously. The overall response rate also improved to 61% from 59%.
Another big mover, but what do the analysts think?
As of September 8, 2017, the consensus forecast among 5 polled investment analysts covering NewLink Genetics advises investors to Buy equity in the company. The previous consensus forecast advised that NewLink would Outperform the market.
Share price forecast
1-year price change: +45.89
The 5 analysts offering 12-month price targets for NewLink have a median target of $26.00, with a high estimate of $29.00 and a low estimate of $19.00. The median estimate represents a 69.49% increase from the last price of $15.34.
NewLink has a market cap of $489.57 million, so it’s really in the small-cap category. It also has a beta of 1.1693, thereby demonstrating a correlation with the broader stock market.
The news, and the upgrades following it, appears to have caught short-sellers by surprise. The number of shares sold short had increased from fewer than 2 million in March to over 5.5 million recently.
The data now reassure investors that although indoximod may not work as well in other cancers, it appears to be quite effective in tough-to-treat melanoma. In 2017, roughly 87,000 new cases of invasive melanoma will be diagnosed in the US, and woefully, over 9,700 people will die from the disease.
There’s plenty of risk here, but the upside is nonetheless impressive. And since Roche bailed, there’s no current tie-up with an established big-cap player looking for an IDO inhibitor like indoximod. Do I smell a buyout? I think this name is a Buy, but not for the risk-averse investor.
But French cell-therapy specialist Cellectis SA (Nasdaq:CLLS) tumbled 16% to $27.07.
The company, which is developing a gene-modified cancer treatment like Novartis AG’s recently approved Kymriah, has been forced by the US Food and Drug Administration to suspend testing following a patient death. Cellectis said last Tuesday (September 5, 2017) it was working closely with the FDA to resume trials with a lower dose of the medicine UCART123. The hold was on two early-stage trials of the medicine in blood cancers.
Novartis made history the week prior when it won approval for its $475,000 drug Kymriah, the first in a new class of treatments called CAR-T immunotherapies that use modified disease-fighting T cells to attack cancer. UCART19 has already rescued two babies treated at London’s Great Ormond Street Hospital from previously incurable cancer.
While Novartis and rivals such as Juno Therapeutics Inc. and Kite Pharma Inc. use cells from the patient’s own body, Cellectis’s gene-edited cell therapy product offers an “off-the-shelf,” or allogeneic, option by deriving cells from healthy donors. It is designed to help patients with acute myeloid leukemia (AML) and blastic plasmacytoid dendritic cell neoplasm (BPDCN). However, the first patient treated in the BPDCN study, a 78-year-old man, died after experiencing cytokine release syndrome (CRS), a dangerous release of cell-signaling proteins.
The first patient treated in the AML trial, a 58-year-old woman, also experienced CRS and other symptoms but recovered.
Analysts: Front and center!
As of September 8, 2017, the consensus forecast among 6 polled investment analysts covering Cellectis advises investors to Buy equity in the company.
Share price forecast
1-year price change: +4.60%
Market cap: $946.49 million (small cap).
The 6 analysts offering 12-month price targets for Cellectis have a median target of $40.00, with a high estimate of $47.00 and a low estimate of $20.00. The median estimate represents a 46.20% increase from the last price of $27.46.
Jefferies analysts said there was a chance that the adverse CRS events could be mitigated by lowering the dose and treating symptoms more aggressively, but more information was needed to assess prospects for UCART123. The side effects could be caused in part by the fact that UCART123 cells come from a healthy donor, rather than the patient’s own body, they added.
Like NewLink, there’s a lot a risk with this name. But there’s outstanding upside if Jefferies’ is correct that lowering the dose and successfully managing side effects does address the safety issue for UCART123. I would wait until the FDA allows Cellectis to resume the two trials before jumping in. But this name is only for the risk-tolerant investor.