What happened

Shares of Insmed (NASDAQ:INSM) jumped 43% on Monday, following the company's announcement of preliminary fourth-quarter sales of $9.2 million for its Arikayce antibiotic. Most of the sales came from the U.S. following an FDA approval on Sept. 28, but $0.6 million of the total originated in France, through a temporary authorization for use.

So what

On the surface, sub-$10 million in sales is hard to get too excited about, but reading between the lines, it appears sales were accelerating at the end of the fourth quarter. Insmed noted that more than 500 patients in the U.S. had initiated treatment with the drug, which treats a lung infection caused by Mycobacterium avium, but approximately 600 doctors in the U.S had written at least one prescription for the therapy by the end of 2018. Presumably, that means there are quite a few patients who have prescriptions in hand who will be starting therapies shortly.

The large base of prescribers is also a good sign, as getting doctors to try a new therapy is often the hardest step in the selling process. Once doctors gain experience with a drug, they're likely to prescribe it to additional patients, especially for a drug like Arikayce, which is approved for use in patients who have "limited or no alternative treatment options."

Doctor showing a patient in a bed a chest X-ray

Image source: Getty Images.

Now what

In the coming quarters, investors should look for Insmed to continue expanding the base of doctors prescribing Arikayce. The prescriber number is likely to be an early indication of future prescriptions and, ultimately, sales numbers. Management should give more details on 2019 plans when it presents at the J.P. Morgan Healthcare Conference on Wednesday.

Beyond the U.S., Insmed is looking to expand into Europe and Japan with marketing applications set to be submitted in mid-2019 and the first half of 2020, respectively.

And to really expand sales, Insmed will need to move into first-line treatment of the lung infection; the design of a clinical trial for newly diagnosed patients is scheduled to be finished in the first half of this year.

Check out the latest Insmed earnings call transcript.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.