Insmed shares surged after its iPlex (mecasermin rinfabate) therapy was approved in the USA for the treatment of growth failure in children who are deficient in a key hormone, and was awarded ‘orphan drug’ status despite the earlier approval of a competing drug.

iPlex has been cleared for treating children with insulin-like growth factor-1(IGF-1) deficiency, a condition which makes them unable to respond to the usual growth promoting stimulus of endogenous growth hormone. Insmed plans to launch the drug between April and June.

The award of orphan drug status – which provides seven years’ marketing exclusivity along with other benefits – is a crushing blow to rival company Tercica, whose Increlex (mecasermin) product was approved for the same indication in September. Increlex also has been awarded orphan drug status, but the US Food and drug Administration (FDA) has concluded that the two drugs are sufficiently different to both carry this status, setting up a head-to-head battle in the marketplace.

There appears to be little to choose between the two drugs in terms of efficacy, said analysts, although iPlex has the advantage of once-daily dosing compared to the twice-daily administration required for Increlex.

Last week, Tercica filed suit against Insmed, alleging that Insmed has been unfairly promoting iPlex as being safer than Increlex. Insmed had said the suit is without merit. Meanwhile, Tercica also has a patent infringement case in hand against Insmed which is due to go to court in November 2006.

Insmed said it would go ahead with a launch of its product in the second quarter of 2006, despite the legal challenges.