InterMune Skyrockets on Lung Disease Treatment

Joel Anderson  |

Pharmaceutical company InterMune (ITMN) soared on Tuesday with gains exceeding 165 percent on very heavy volume after revealing that it met its primary and secondary end points in its Phase III “Ascend” study for treating idiopathic pulmonary fibrosis (IPF) with pirfenidone, the lone therapy currently in its pipeline.

Chronic Lung Disease is Typically Fatal

"We are pleased to report these top-line ASCEND Phase 3 results," said Chairman, President, and CEO Dan Welch in the company’s news release.  "Based on the strength of the ASCEND results, InterMune is preparing a resubmission of our New Drug Application for pirfenidone to the U.S. Food and Drug Administration (FDA), which we expect to submit by early third quarter of this year. "

The study found that the portion of patients suffering a decline in forced vitality capacity (FVC) of 10 percent or greater or death was at 31.8 percent in the placebo group compared to just 16.5 percent in the pirfenidone group, a reduction of 47.9 percent. FVC is the amount of air that can be forcibly exhaled after taking the deepeest possible breath.

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IPF is a chronic and ultimately fatal lung disease most common among smokers and occurring most often in patients between 50 and 70 years of age. There are between 132,000 and 500,000 people in the United States currently suffering from IPF.

The study also hit two key secondary end points. A decrease of 50 meters or more in the distance a patient can walk is viewed as being a key indicator in mortality, and the patients taking pirfenidone saw a 27.5 percent reduction in those losing 50 meters or more from their walk distance as compared to placebo. The study also found that the drug reduced the risk of death or disease progression by 43 percent, satisfying the other secondary end point.

Big Gains on Big Potential Sales

While massive spikes on positive clinical data are nothing to new to anyone watching pharmaceutical stocks, a gain this big by a company with a market cap already north of $1 billion is an impressive one. What’s more, InterMune is not another small-cap biotech with no products or revenues. The company will most likely show at least more than $50 million in revenue for 2013 once its Q4 results are released.

However, a closer look reveals that the company’s revenue stream comes from the fact that pirfenidone has already been approved and registered in Europe as Esbriet, where the treatment currently costs between $33,000 and $47,000 per patient annually. With 30,000-50,000 IPF patients in the United States, and a chance for InterMune to mark up the drug by as much as 30 percent, the potential ring up over $1 billion in annual sales is there even if the company captures less than half of the market.

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