By Saumya Joseph

(Reuters) – The U.S. Food and Drug Administration on Friday approved Insmed Inc’s lead drug to treat a rare, chronic lung disease, making it the first approved treatment in the United States for the condition.

The drug’s label contains a boxed warning – the FDA’s strictest — of increased risk of respiratory conditions, including inflamed lungs and tightening of the airway, the agency said.

The approval was largely expected after the FDA’s advisory committee backed the drug, Arikayce, in a meeting early last month.

The company said it expects the product to be available in select specialty pharmacies in the coming weeks.

The drug targets adults with treatment-resistant nontuberculous mycobacterial (NTM) lung disease caused by exposure to a specific group of bacteria.

Although the drug’s labeling restricts use to treatment-resistant patients, analysts expect some off-label usage in previously untreated patients and those with other variations of NTM.

“We have spoken to a number of key opinion leaders who have every intention of using it in first-line, if they can get the insurance companies to pay for it,” Cowen analyst Ritu Baral said.

NTM is a chronic infection and inflammation that leads to progressive irreversible loss of lung function. Insmed estimates between 10,000 and 15,000 treatment-resistant NTM patients in the United States in 2018.

The disease’s incidence is increasing worldwide, and its prevalence in the United States was found to have increased by about 8 percent every year, according to the company.

The drug fits well with several lung disease developers’ pipeline, making Insmed a likely acquisition target, according to analysts.

“Anybody with a COPD (chronic obstructive pulmonary disease) franchise… would be interested in a drug like this,” Baral said, adding experts attribute the use of steroids in COPD treatments as one of the reasons for the rise in NTM.

Cowen estimates the drug to bring in peak sales of about $890 million in the United States and about $700 million in the European Union by 2026.

Insmed’s once-daily inhaled drug is a liposomal formulation of the antibiotic amikacin and delivers the treatment directly to the location of the infection.

(Reporting by Saumya Sibi Joseph and Shanti S Nair in Bengaluru; Editing by Maju Samuel)