Insmed Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Insmed (NASDAQ: INSM  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Insmed is a small biotech with big aspirations, as it aims to come up with treatments for niche lung diseases. With a promising inhaled therapy in late-stage trials, Insmed is hoping to hit the big leagues in the near future. Let's take an early look at what's been happening with Insmed over the past quarter and what we're likely to see in its quarterly report on Monday.

Stats on Insmed

Analyst EPS Estimate

($0.33)

Year-Ago EPS

($0.30)

Revenue Estimate

$0

Year-Ago Revenue

$1.4 million

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Insmed breathe easier this quarter?
Analysts have gotten some more optimistic about Insmed's earnings prospects in recent months. They've reined in their loss estimates by $0.02 per share for the just-ended quarter and by a dime for full-year 2013, but Insmed still has a long way to go before it can expect to generate any revenue. That's likely one reason why the shares have been largely stuck in neutral, rising about 4% since mid-December.

Insmed has had a long and storied history. For more than a decade, the company has struggled to get a product on the market, but so far, FDA approval has eluded all of its best attempts. With the repeated need to come back to the capital markets for new financing through secondary offerings, most recently last September with the sale of 6.3 million shares to three investors at $4.07 per share, Insmed's stock has lost more than 95% of its value over a 13-year span.

Yet more recently, Insmed has seen its prospects rise. Its Arikace treatment is being studied to treat lung infections for cystic-fibrosis patients and other lung problems, and a clinical trial halt back in 2011 has been lifted, allowing phase 3 trials to continue. The inhaled treatment allows for once-daily dosing, which is an improvement over current twice-daily medications. Novartis (NYSE: NVS  ) has turned its inhaled tobramycin Tobi into a successful treatment addressing a $1 billion market, but if Arikace proves superior and gains approval, Novartis may end up ceding that market to Insmed.

Insmed saw its chief scientific officer resign in October, raising some concerns about the prospects for the company's development program going forward. But with data expected on the cystic fibrosis trial later this year, an application for FDA approval could be forthcoming.

In its quarterly report, look for Insmed to detail any plans it has for expanding the potential target area for Arikace beyond its current indications. The more uses it can find, the better its prospects to gain approval in the long run.

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