Insmed (INSM) issued an early morning press release on Monday stating that the company, for the most part, will cease all operations regarding the advancement of IPLEX. The PR was accompanied by a trading halt that was in effect for about half an hour.
According to the report, the company will utilize the remainder of the existing stockpile of IPLEX to treat patients who are currently receiving the treatment.
For all intents and purposes, the advancement of IPLEX by INSMED is dead in the water, for the time being.
This news, which will most likely be perceived as terrible by investors, is not the typical news that you would see released on a Monday morning, a time usually reserved for the release of good news.
However, in VFC's opinion, I believe that the next piece of significant news from the company will be regarding a sale.
I don't believe that a partnership is in the works, this will be an outright sale and, judging by the Monday morning press release, I speculate that we will hear news soon.
The disappointing results from the MMD trial undoubtedly has knocked off significant value from any sale price and it was probably those last minute details that needed to be worked out before the sale could be finalized and a news release issued.
From an investors stand point, HOLD your shares and wait for news. Yesterday's PR is not the end of the cycle, in my opinion.
That being said, if further news is not pending, this PR will kill the share price.
I have not changed my position that, based on recent events - including the fact that there has yet to be a CEO named to replace Dr. Allan - I'm still under the impression that the company is going to be sold; and, given the time frame it will take an acquiring company to produce additional supplies of IPLEXm I have a feeling that a sale will come sooner rather than later.
That being said, nothing is a sure thing in the stock market and I think that my decision to call INSM a straight hold may have been a bit premature- to some extent.
For those shareholders that are sitting on gains right now, and there are plenty that bought INSM for under sixty cents earlier in the year, now would be a good time to sell some shares and realize some profits.
For those that bought at around $2 when the potential of IPLEX and the INSM stock looked a whole lot better than it does now, I'd still suggest taking a little bit off the table, but I also suggest holding some shares because INSM still has quite a bit of potential for the long term. It is a personal risk call and every investor should make that decision based on solid DD.
I see two courses of action taking place:
1. A sale of the company where I see the price being $1.50-$2 per share or
2. Insmed buys into another drug which will keep the share price hovering around a buck for a while, in my opinion.
That is all just my own speculation.
However, the fact that the IPLEX news came on Monday morning could mean that more news is to follow.
I'll be closely watching the trading action of the stock this week and I may take some profits off the table if there is no news of a buyout by Friday.
Disclosure: VFC is long INSM.