Chapter 3 · Moat
The moat is an
FDA approval
nobody can copy.
Approved drugs for rare diseases, protected by patents and the sheer cost of proving they work.
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✦ The bottom line
A biotech's moat is its approved drugs and the protection around them: patents, regulatory exclusivity, and the years and hundreds of millions a rival would need to run trials of their own. Insmed focuses on rare lung diseases — markets too small and specialized for most competitors to chase, but valuable to the patients who have no other option.
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✦ Teach me
Why an approval is a moat
To sell a drug, you must prove to the FDA — through long, expensive clinical trials — that it's safe and works. That approval, plus patents and regulatory exclusivity, legally blocks copycats for years.
Focusing on rare diseases deepens the moat: the patient populations are small, so few competitors bother, and Insmed builds deep relationships with the specialist doctors who treat them. Hard to enter, sticky once you're in.
Wall Street calls this
Patents / regulatory exclusivity
It explains why a money-losing biotech can still be valuable: an approved, protected drug is a durable, hard-to-copy asset — a legal monopoly for a time, in a market rivals can't easily contest.