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Insmed Incorporated Message Board

  • fudfighter4 fudfighter4 Mar 16, 2013 8:08 AM Flag

    Pneumonia is worth at least $250 a share today

    The finding from the study of beta-lactam / aminoglycoside combination therapy in healthcare-associated pneumonia was "a mean length of stay that was 1.83 days shorter than the non-combination therapy group".

    Delivery of the appropriate pulmonary antiinfective combination via inhaled liposomes would reduce the average length of in-patient stay by at least two days. The faster attainment of MIC in the lungs would by itself deliver that saving.

    Insmed has indicated that Arikace will be priced higher where there is no real competition. A four-week course of TOBI was priced at $5,776.40 when last I checked. $5,844.68 for Cayston. One assumes that a two-week course of the appropriate Insmed inhaled liposome antiinfective will be priced at a minimum of $3,000.

    The economic argument is simple. The Insmed therapy will be used if two days saved in in-patient care would otherwise cost at least $1,500 per day.

    When the length of stay is less than two weeks, a course of inhaled antibiotics could easily be completed at home - allowing an uncompromised regimen one assumes is often impractical with the emergency antibiotics currently delivered by injection. Improvements in efficacy and compliance would be crucial in countering the public health threat posed by the development of antimicrobial resistance.

    If Insmed was already supplying the one million-plus patients each year hospitalised in the US with pneumonia with a $3,000 course of therapy the market valuation would be well above $10 billion. The inclusion of sales in Europe would take that valuation to over $20 billion.

    Allowing four years for that to happen, $20 billion x 0.8 x 0.8 x 0.8 x 0.8 would give us a conservative present-day valuation of $8 billion.

    The only potential pitfall I see is an absolutely catastrophic dog toxicity study. One assumes such dire news would have leaked long ago.

    I'm already looking forward to a DETAILED explanation of why this won't happen.

    Cue the Weekend Loserfest :-)

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    • Two areas of greater visibility since I posted that valuation -

      1. The average daily cost of critical care five years ago was found to be $3,518.

      2. There was no evidence of neoplasia, squamous metaplasia or proliferative changes in the initial data from the nine-month dog study.

    • 1. The FDA's new powers -

      "The Secretary may approve an application for approval of a product for a serious or life-threatening disease or condition, including a fast track product, under section 505(c) or section 351(a) of the Public Health Service Act upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit ..."

      If the CF study proves that Arikace delivers an effective concentration of amikacin to a pulmonary pseudomonas infection, would not that convey a "reasonable likelihood" that Arikace will deliver an effective concentration of amikacin to any amikacin-susceptible gram-negative pulmonary infection?

      2. A forum likely to have been monitoring the progress of liposomal inhalation therapy -

      The Interagency Task Force on Antimicrobial Resistance was initiated in 1999 following a congressional hearing on the topic "Antimicrobial Resistance: Solutions to a Growing Public Health Problem." The Task Force brings together multiple federal agencies to address the complex issue of antimicrobial resistance.

      There are twelve member agencies, co-chaired by -

      Centers for Disease Control and Prevention (CDC)
      Food and Drug Administration (FDA)
      National Institutes of Health (NIH)

      From the Research focus area of their 2012 Action Plan -

      "NIH currently supports clinical trials aimed at identifying ways to reduce the use of licensed antibacterials in both community and healthcare settings. These trials focus on areas of greatest antimicrobial drug exposure, such as pneumonia"

      "Critical activities in this focus area include ... optimization of treatment for resistant pathogens, and translation of research findings into clinically useful products, such as novel approaches to ... treat antimicrobial-resistant infections."

      3. Lewis -

      "There's just a real need for anti-infectives generally and any arrow in the quiver is going to be welcomed by the regulatory authorities, we believe ..."

    • Rehdvm, surely a scientifically-literate individual such as yourself must be capable of contributing something of value here?

      One assumes that as you've commented upon my revenue projections, you first read the following article to which I drew the forum's attention -

      Aerosolized Antibiotics for the Treatment of Nosocomial Pneumonia (Klepser 9 Nov 2012)

      Here's a reminder of the most significant potential barrier suggested by Dr.Klepser -

      "delivery of antibiotics by inhalation may be associated with uneven distribution of the drug throughout the lungs. Inflammation, mucus, and fluids can all hinder the distribution of inhaled antibiotics to the infected sites in the lung."

      (I'm sure you'll agree that the risk of bacteremia he also mentioned would be countered with co-adminstration of the minimum inhibitory serum level of injected antibiotic).

      If we assume that the success of Arikace in treating pseudomonas infection in such a challenging environment as the lungs of an individual with Cystic Fibrosis would address any reservations regarding distribution within the lungs, what proportion of the million-plus patients hospitalised in the US with pneumonia four years from now are you assuming will NOT be treated with an inhaled liposome therapy?

      And why?

      Having factored in your argument for a smaller pneumonia opportunity we can then address the areas of less visibility -

      1. The additional revenue Insmed can reasonably expect from the use of its liposome inhalation therapies -

      ... a) in Cystic Fibrosis, Non-CF bronchiectasis, COPD, Asthma, etc.

      ... b) in the eradication of Latent TB infection in the two billion individuals Worldwide estimated to be infected.

      2. The sales multiple likely to be used for Insmed's market valuation when this all kicks off (nearer 6 than 3 would you expect?).

      For the benefit of the forum why not 'grasp the nettle' - despite the scary implications for the share price?

      • 1 Reply to fudfighter4
      • Re your -

        "This is a commitment of major research $$$ to blue sky, non-orphan therapeutics of the future. Only INSM senior management is going to know where this will go. But ask yourself the question, why would INSM commit a couple of $million to this type of effort if they did not believe they would develop new IP and open-up big new pulmonary therapeutic markets? Conceptually, I would go after asthma/OPD."

        - happily such decisions will be made by scientists of sufficient intelligence to see the potential of liposomal delivery of therapies for Tuberculosis - particularly for the estimated two billion individuals worldwide carrying latent TB infection.

    • Rehdvm - why don't you respond?

      You have a duty to your fans here to shoot down my argument by pointing out the flaws less knowledgeable people than yourself can't see.

    • Pneumonia might be worth $250 today, unfortunately, INSM is worth $6.57 today.

      • 4 Replies to kennethtdc
      • Satltsasw, your -

        "I do think that we could find a way into the pneumonia market if NTM works out nicely. I also greatly appreciate rehdvm's scientific analysis. He does know what he is talking about and he has the experience to back it up."

        - could almost have been written by Rehdvm :-)

        Neither of you seem to have the intelligence to make the connection between Phase III verification of the ability of Arikace to reduce pseudomonas density, and pneumonia caused by gram-negative pathogens such as pseudomonas.

        Or, for that matter, to be aware of the significance for Insmed of the recent CDC "Vital signs" report -

        "Action is needed now to stop these deadly infections. CRE germs have found ways to beat antibiotics.

        CRE infections are caused by a family of germs that are a normal part of a person's healthy digestive system. These germs can cause infections when they get into the bladder, blood, or other areas where germs don't belong.

        Some of these germs have become resistant to all or almost all antibiotics, including last-resort drugs called carbapenems. These resistant germs are called CRE.

        Almost all CRE infections happen to patients receiving serious medical care. CRE infections are hard to treat, and in some cases, untreatable. CRE kill up to half of patients who get bloodstream infections from them.

        In addition to spreading among people, CRE easily spread their antibiotic resistance to other kinds of germs, making those potentially untreatable as well."

        Carbapenem-resistant Enterobacteriaceae are multi-drug resistant gram-negative bacteria. Remember the four gram-negative pathogens named in the new legislation as having the potential to pose a serious threat to public health? -

        "multi-drug resistant ... Acinetobacter, Klebsiella, Pseudomonas, and E. coli species".

        Two of those are Enterobacteriaceae.

        All four cause pneumonia (e.coli rarely), one of the areas of greatest antibiotic use - and ineffective use, allowing antibiotic resistance to develop.

      • Rehdvm, re your -

        "If one simply takes $5 billion and divides that figure by $400 (the subsidized cost of a 28 day course of an inhaled antibiotic for CF) ..."

        - why such a stupid attempt to deceive investors?

        You're perfectly well aware of Whitten's guidance on pricing -

        "... the pricing for the Tobis and the Caystons of the world are in that kind of $4,000 to $5,000 range ... you would expect that we would be competitive in our pricing.

        We view NTM differently. While we don't have exact pricing, and it's way too early, we think the price point in NTM is potentially significantly higher for those patients than it is in CF. "

        Whitten was referring to the price of a 28-day course, just as you were. When I last checked, the Cystic Fibrosis Services Pharmacy was pricing four-week courses of Tobi and Cayston at $5,776.40 and $5,844.68 respectively.

        Why don't you stop running away from my invitation to comment on the suitability of Insmed's liposomal delivery for the treatment of the million-plus patients every year hospitalised in the US alone with pneumonia?

        You come across as a wannabe shyster. Give it up - the average investor is a lot more intelligent than you.

      • Unfortunately it's now worth over $7. Your target of $4 isn't looking likely to happen.

      • That's one of the reasons you failed as an investor Terry. Successful investors are always focussed upon the future share price.

        Hint: If somebody puts in a buy order on Monday morning for 500,000 shares - how many shares will actually be available for sale at $6.57?

    • Average daily cost in 2005 was $3,518 -

      "We analyzed hospital and critical care medicine beds, bed types, days, occupancy rates, payer mix (Medicare and Medicaid), and costs. Critical care medicine costs were compared with national cost indexes.

      Between 2000 and 2005, the total number of U.S. hospitals with critical care medicine beds decreased by 12.2% (from 3,586 to 3,150).

      Although the number of hospital beds decreased by 4.2% (from 655,785 to 628,409), both hospital days and occupancy rates increased by 5.1% (from 145.1 to 152.5 million) and 13.7% (from 59% to 67%), respectively.

      Critical care medicine beds increased by 6.5% (from 88,252 to 93,955), days by 10.6% (from 21.0 to 23.2 million), and occupancy rates by 4.5% (from 65% to 68%).

      The majority (90%) of critical care medicine beds were classified as intensive care, premature/neonatal, and coronary care unit beds. The percentage of critical care medicine days used by Medicare decreased by 3.8% (from 37.9% to 36.5%) compared with an increase of 15.5% (from 14.5% to 16.8%) by Medicaid.

      From 2000 to 2005, critical care medicine costs per day increased by 30.4% (from $2698 to $3518).

      Although annual critical care medicine costs increased by 44.2% (from $56.6 to $81.7 billion), the proportion of hospital costs and national health expenditures allocated to critical care medicine decreased by 1.6% and 1.8%, respectively.

      However, the proportion of the gross domestic product used by critical care medicine increased by 13.7%. In 2005, critical care medicine costs represented 13.4% of hospital costs, 4.1% of national health expenditures, and 0.66% of the gross domestic product."

    • Insmed's market valuation in that situation would in reality be based upon a sales multiple considerably higher than seen with established companies -

      Revenue ($) ......... Market cap ($) ... Multiple ... Company

      58,148,000,000 ... 187,633,438,080 ... 3.23 ... Pfizer, Inc.
      65,900,000,000 ... 187,396,076,770 ... 2.84 ... Johnson & Johnson
      57,212,000,000 ... 152,400,000,000 ... 2.66 ... Novartis AG
      49,240,000,000 ... 138,941,731,840 ... 2.82 ... Merck & Company, Inc.
      39,228,400,000 ... 108,723,459,520 ... 2.77 ... Abbott Laboratories

      The less near-term revenue growth expected, the lower the multiple. When I checked a couple of days ago I found an average sales multiple of 6 for the top 120 biotechs. I'm happy to provide the link to anybody wishing to see that firsthand.

      Please wake up before others eat our dinner.

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