In an industry where the vast majority of companies have yet to book a dime of product sales, InterMune (Nasdaq: ITMN) would seem to be in good shape with a drug, Actimmune, that produced $141 million in sales last year. However, Actimmune (which helps boost the immune system of cancer patients and others) has been showing quarterly sales weakness since early 2003, a trend that now seems like it may continue into the future.
In January, management provided guidance for Actimmune sales of $130 million to $155 million this year. First-quarter sales of $32.9 million for the drug were reported yesterday.
If sales held steady at that level over the course of this year, they would come in at the low range of the original estimates. Since first-quarter sales of Actimmune were down 7% from the fourth quarter, it is not a certainty that sales are going to hold up. Yesterday, management retracted its initial sales estimates, possibly in expectation of additional sales weakness. This seems likely given the statement that new patient referrals are declining.
As could be expected, the market reaction is negative, with the stock down over 15% today to $15 and change. That's off substantially from the firm's 52-week high of $28.44.
The problem with Actimmune is that the vast majority of its sales has been in a disease for which the drug has not been approved by the Food and Drug Administration. The FDA has approved Actimmune for use in treating two very rare diseases: chronic granulomatous disease and osteopetrosis. Once a drug has been approved for any indication, physicians have the flexibility to prescribe the drug for other diseases when they think their patients could benefit. This is the case with Actimmune, as it is widely used in the treatment of idiopathic pulmonary fibrosis (IPF), a much larger indication.
Since Actimmune has not been approved for the treatment of IPF, InterMune is not legally allowed to promote its use in that disease. Marketing steps that would normally be implemented to boost sales cannot be put into practice. InterMune has its hands tied behind its back until it gets Actimmune formally approved to treat IPF.
Unfortunately, getting approval to treat IPF is not going to be easy or fast. Clinical data has been very controversial, though the drug appears to work in patients with mild to moderate IPF. InterMune is conducting another clinical trial to definitively demonstrate that Actimmune is effective in this patient population. This trial will take years to complete, and the market, with its short-term blinders on, is not that patient. Until Actimmune is approved for IPF, sales are likely going to fluctuate with physician sentiment toward using a drug in patients with a fatal disease who lack viable alternatives.
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Fool contributor Charly Travers does not own shares of any of the companies mentioned in this article.
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