What happened

Investors in Insmed (NASDAQ:INSM) are having an incredible start to the short trading week. Shares of the rare disease focused biotech are up 110% as of 11:15 a.m. EDT, after the company announced upbeat top-line results from its phase 3 Convert trial.

So what

The Convert trial was designed to measure the effect of adding Insmed's drug Amikacin Liposome Inhalation Suspension (ALIS) to guideline-based therapy (GBT) in patients who have treatment-refractory nontuberculous mycobacterial (NTM) lung disease caused by mycobacterium avium complex.

Data from the 336-patient trial showed that ALIS was able to meet its primary endpoint. Specifically, the study showed that adding ALIS to guideline-based therapy eliminated evidence of NTM lung disease by month 6 in 29% of patients. That was a statistically significant increase when compared to the 9% of patients who received GBT alone.

This data was so encouraging that Insmed plans on pursuing accelerated approval for ALIS. The therapy has also already been granted both "breakthrough therapy" designation and fast-track status by the U.S. Food and Drug Administration.

Insmed's CEO Will Lewis stated:

We consider these compelling top-line data to be a remarkable accomplishment in a rare disease state with no currently approved therapies. We are particularly encouraged by the consistency of these data when compared with our Phase 2 study results and look forward to additional data as the CONVERT study continues over the next two years.

Given the upbeat clinical news, it is easy to understand why investors are cheering today.

Rocket made out of dollar bills and gold

Image source: Getty Images.

Now what

The only potential wrinkle in the data related to the drug's safety. The dropout rate for patients who used ALIS and GBT was 19.6%, which was a fair bit higher than the 9% dropout rate observed in the GBT group alone. Management stated that safety issues "were predominately mild or moderate in nature and generally declined after the second month of treatment."

To give investors more context on this issue, Dr. Paul Streck, Insmed's chief medical officer, offered this commentary:

The current guideline-based therapy to which we were compared in this study is not approved for the treatment of this disease, but is generally regarded as the best available option for these patients. Our drug candidate, ALIS, delivers high levels of an aminoglycoside directly to the lung macrophages and pulmonary tissue where the infection resides, and we believe this accounts for the significant impact on conversion that the drug demonstrated in these trial results.

All in all, today's clinical update clearly provides investors with reasons to be bullish on the future of Insmed. Risk-loving investors might want to consider putting this small-cap biotech on their watchlist.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.