May 12, 2010

Brisbane biotech company InterMune Inc. was hoping for FDA approval of its drug for idiopathic pulmonary fibrosis (IPF) but the agency instead is requiring another clinical trial.

It’s an unexpected blow to the company since the U.S. Food and Drug Administration’s Advisory Committee voted 9-3 on Mar. 9 to recommend approval of the new drug application for InterMune’s Esbriet.

Currently there are no FDA-approved drugs to treat the 100,000 people in the United States diagnosed with IPF, which is a progressive and ultimately fatal disease causing inflammation and scarring of the lungs. IPF afflicts about 200,000 people in Europe and the U.S. and about 30,000 new patients are added to that number annually.

Stephen Willey, a director of the investment banking firm Thomas Weisel Partners, headquartered in San Francisco, said he knows of no other companies testing IPF drugs in late stage clinical trials. In March biotechnology company Actelion Ltd. of Switzerland announced failed clinical trials of its bosentan drug designed to treat IPF.

If InterMune were able to get Esbriet approved, given the 200,000 patients in the U.S. and Europe combined and no competition in either country for at least seven years, Willey said Esbriet could easily become a billion dollar drug.

If the company has to do another phase III clinical trial, that would probably cost close to $100 million and would take at least a couple of years, Willey said.

Dan Welch, Chairman, CEO and President of InterMune, said, given the positive FDA Advisory Committee vote, the company was disappointed with the FDA’s recent decision.  “We will meet with the FDA as soon as possible to understand their points of view and to determine the most appropriate path forward to expeditiously make Esbriet available,” he said in a press release.

In a May 4 conference call Welch said it might take 60 to 90 days to meet with the FDA. In addition to requesting another clinical trial the FDA has some other requests of InterMune. But Welch said those were relatively small and added, “We are confident the resolution of those could be managed readily.”

Japan approved pirfenidone (Esbriet) in October of 2008 after a successful phase III clinical trial in Japan by Shionogi & Co. Ltd. Those studies showed Esbriet to be safe and have few side affects. Some of the side effects included photosensitivity rash and gastrointestinal symptoms. Pirfenidone was approved for marketing in Japan in October of 2008.

In its meeting with the FDA InterMune will determine if results of the clinical trial in Japan might satisfy the FDA, Welch said. A potential problem with that is that there’s a genetic component associated with IPF so the FDA may not accept that data, Willey of Thomas Weisel said. InterMune also applied for approval to market Esbriet in the European Union on Mar. 2, 2010. The European Medicines Agency has granted Esbriet orphan drug status.

“That’s the next big catalyst for them,” Willey said. “If the Europeans say yes then [InterMune] has no cash issue.” If they reject the drug, InterMune will probably have to raise more capital, Willey said. He does not own stock in the company and Thomas Weisel has not done business with InterMune in more than two years. But the company’s disclosure statement says it expects to receive or intends to seek compensation for investment banking services from InterMune over the next three months.

InterMune raised $106.8 million in a public offering this January. And as of Mar. 31 the company had cash, cash equivalents and securities available for sale worth roughly $178.3 million.

For its first quarter of the year ending Mar. 31 the company reported a net loss of $34.1 million, or 66 cents per share on total revenue of $6.1 million. That compares to a net loss of $42 million, or $1.03 per share on total revenue of $6.9 million for the first quarter of 2009.

InterMune trades on Nasdaq under the symbol ITMN. On Tuesday its stock closed at $10.76 per share. Over the last 52 weeks it has ranged from $9.75 to $49.46.

InterMune is also researching therapies for hepatitis C. It is working on danoprevir, a protease inhibitor for hepatitis C patients in collaboration with F. Hoffmann-La Roche Ltd.