Monmouth Junction, N.J.-based Insmed Inc. has priced a $26 million direct public offering of approximately 6.3 million shares of its common stock at a price of $4.07 per share to certain affiliates of Ayer Capital, RA Capital and Quaker Partners.

The company also expects to offer for sale up to an additional $2 million of shares of its common stock to an investor, which is expected to close on or before Oct. 31.

"It is a very clean deal for the company with no discounts to our share price and reflects the continuing involvement of our insiders," Will Lewis, president and CEO, told BioWorld Today.

Lewis, a veteran biotech executive and former co-founder, president and CFO of Aegerion Pharmaceuticals Inc., has only been with the company for a short period, replacing Tim Whitten, who resigned as president and CEO earlier this month.

"Quite frankly the deal came to us as we weren't actively looking to raise capital," Lewis added.

The company reported that as of June 30 it had about $75 million in cash that would be sufficient to take them through the availability of top-line data for a Phase III trial and Phase II for its inhalation therapeutics for patients suffering from orphan lung diseases

In April, Insmed began a Canadian and European Phase III trial (CLEAR-108) of Arikace (liposomal amikacin for inhalation), for cystic fibrosis patients with Pseudomonas aeruginosa lung infections designed to enroll about 300 patients.

CLEAR-108 is a randomized, trial comparing Arikace, delivered once daily via an optimized, investigational eFlow Nebulizer system (PARI Pharma GmbH), to TOBI (inhaled tobramycin solution), which is a commercially available inhaled antibiotic that is delivered twice daily.

The primary endpoint will be change in pulmonary function (FEV-1) measured after three 28-day on-treatment and three 28-day off-treatment cycles (about six months). A key secondary endpoint will be time to pulmonary exacerbation.

Insmed has deferred plans to initiate its U.S. Phase III study until it reviews the top-line results from the Canadian and European trial. (See BioWorld Today, Sept. 6, 2012.)

Additionally, in June the company reported that it had dosed the first patient in a U.S. Phase II treatment with Arikace to realize greater efficacy trial (TARGET-NTM) in patients with nontuberculous mycobacteria (NTM) lung infections.

According to Lewis, the company expects top-line data from CLEAR-108 to be available by the middle of 2013.

The offering was well received by investors with Insmed's shares (NASDAQ:INSM) closing Friday at $4.55, up 48 cents, or 11.8 percent.