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Insmed Lung Antibiotic Passes Test But Falls Short of Investor Expectations

Stocks in this article: INSM GILD NVS

MONMOUTH JUNCTION, NJ ( TheStreet) -- An experimental, once-daily antibiotic from Insmed (INSM) was statistically equivalent to a currently approved, twice-daily antibiotic from Novartis (NVS) in treating cystic fibrosis patients with serious lung infection, according to results from a phase III study announced Monday.

Insmed intends to use data from the completed study to seek regulatory approval for the once-daily antibiotic known as Arikace in Europe and Canada during the first half of 2014. Insmed must conduct additional clinical trials of Arikace before seeking U.S. approval.

But Insmed's stock price is down 33 percent to $8 per share in Monday pre-market session because investor expectations for Arikace from this phase III study were higher and not met.

Cystic fibrosis patients are susceptible to lung infections, which makes regular antibiotic treatment very important. Novartis' TOBI and Gilead Sciences' (GILD) Cayston are both currently approved to treat cystic fibrosis patients with Pseudomonas aeruginosa (Pa) infection, although both antibiotics require multiple treatments per day.

In Insmed's phase III study, 302 cystic fibrosis patients with Pa infections of the lung were randomized to treatment with Arikace or TOBI for three cycles of one month on drug, one month off. After six months, Arikace was found to be statistically non-inferior to TOBI, based on relative change in patients' lung function.

Over the course of the study, patients treated with Arikace performed numerically worse on lung function tests compared to TOBI-treated patients, but the difference in efficacy between the two antibiotics was narrow enough to be considered equivalent statistically, Insmed said.

More Arikace-treated patients reported adverse events in the study compared to patients treated with TOBI. Eleven Arikace patients reported severe side effects compared to six patients on TOBI.

The phase III study was conducted outside the U.S. Here, Insmed is currently enrolling patients in a phase II study of Arikace for the treatment of non-tuberculosis mycobacteria (NTM) lung infections. The company has not yet announced a plan for getting Arikace approved in the U.S. but plans to meet with the FDA before the end of the first quarter 2014.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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