Let's take a closer look at three major biotech headlines this Wednesday morning -- Insmed's (NASDAQ:INSM) new breakthrough therapy designation, the end of Endocyte's (NASDAQ:ECYT) partnership with Merck (NYSE:MRK), and a new stock offering from GW Pharmaceuticals (NASDAQ:GWPH).

Insmed surges on a breakthrough therapy designation for Arikayce
Shares of Insmed are up 28% in pre-market trading this morning, after the FDA granted its only drug candidate, Arikayce/Arikace, a breakthrough therapy designation for the treatment of adults with nontuberculous mycobacterial (NTM) lung disease who are treatment refractory.

The designation, which will expedite the development and review of Arikayce, was based on positive data from Insmed's phase 2 clinical trial and an unmet need for NTM lung disease treatments. Insmed now intends to meet with the FDA to discuss the regulatory pathway for the drug. Arikayce is also being tested as a potential treatment for pseudomonas lung infections in both cystic fibrosis and non-cystic fibrosis patients.

Prior to today's announcement, shares of Insmed had fallen more than 35% over the past 3 months, mainly due to a setback in March when Arikayce failed to meet the primary objective in the double blind phase of the trial. However, additional data presented in May helped allay those initial fears, and now an FDA breakthrough therapy designation definitely leaves some more room for optimism.

Endocyte falls after Merck backs out of drug deal
Shares of Endocyte are down 14% in pre-market trading this morning, after its partner Merck announced that it would return the global rights of vintafolide (trade name Vyfinit), Endocyte's experimental cancer therapy, to the company.

The end of the partnership, which started in April 2012, is very bad news for Endocyte. Vintafolide is the company's second most advanced drug candidate, and Merck was its only major pharmaceutical partner. Without Merck's financial backing, which had been worth up to $1 billion, Endocyte is going to have a tough time completing clinical trials for its other pipeline candidates. To make matters worse, Endocyte's most advanced pipeline candidate, Folcepri, is actually a companion imaging test for vintafolide.

Investors should note that this doesn't necessarily mean that vintafolide is doomed. The drug met its primary endpoint for progression free survival during a mid-stage trial for non-small cell lung cancer (NSCLC) in March, and early overall survival trends were positive. However, the drug also failed a phase 3 trial for platinum-resistant ovarian cancer last month.

Endocyte finished last quarter with only $131.5 million in cash and equivalents -- a 29% drop from a year earlier. This means it might need to resort to additional stock offerings to fund upcoming trials or potential commercialization at some point in the future.

GW Pharmaceuticals announces public offering of 1.7 million shares
Last but not least, GW Pharmaceuticals, which rallied 16% yesterday on positive data for its experimental epilepsy drug Epidiolex, has now fallen 5% in pre-market trading after announcing that it will sell additional shares to fund pre-launch activities for Epidiolex.

GW plans to sell 1.7 million American Depository Shares (ADS). Each ADS represents ownership of 12 ordinary GW shares. GW will also grant the underwriters of the offering a 30-day option to purchase up to 255,000 ADSs at the offering price. The final price of the offering has not yet been determined.

GW has a single marketed product, Sativex, which is approved in Europe as a treatment for multiple sclerosis spasticity. The drug is being tested in phase 3 trials in U.S. and Europe as a potential treatment for cancer pain. Epidiolex is currently in phase 2 trials for two types of seizures. Both drugs, along with the rest of GW's pipeline, are notably cannabis-based drugs.

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