Why InterMune Inc. Shares Exploded Higher By More Than 170%

InterMune shares soared after the company released positive late-stage trial data. Should investors jump on this runaway train or stay as far away from the tracks as possible?

Feb 25, 2014 at 1:13PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of InterMune (NASDAQ:ITMN), a biopharmaceutical company primarily focused on pulmonary and fibrotic diseases, skyrocketed by as much as 174% after a report of positive phase 3 results from its ASCEND trial involving pirfenidone (known as Esbriet in Europe) in idiopathic pulmonary fibrosis, or IPF.

So what: According to InterMune's trial results, pirfenidone met both its primary and secondary endpoints in the study. As InterMune noted, a 10% decline in forced vital capacity, or FVC, in an IPF patient is considered clinically meaningful. Just 16.5% of patients taking pirfenidone after 52 weeks had a 10% decline in FVC, or death, compared to 31.8% in the placebo group, demonstrating a nearly 48% reduction over the control arm for the pirfenidone intent-to-treat group. In terms of secondary endpoints, pirfendione "reduced by 27.5% the proportion of patients who experienced a decline in the [six-minute-walking-distance test] of 50 meters of greater." This is important as the test is a measure of exercise tolerance since the treatment was initiated. Overall, pirfenidone reduced the risk of death or disease progression by 43% relative to the control arm. InterMune plans to resubmit its drug for FDA approval in the third quarter.

Now what: Considering that pirfenidone received a complete FDA response letter rejection in 2010, it's surprising to see how strong the data was today. Obviously, nothing is a sure thing when it comes to the FDA, but the primary and secondary endpoint data looks pretty convincing regarding an eventual approval. Still, even with few IPF treatment pathways available, RBC Capital analyst Michael Yee pegged its peak sales at just $300 million to $500 million. With a market valuation of more than $3 billion at the time of writing, and generally weak sales of Esbriet in currently approved European countries, I believe investors may be wise to rethink their optimism.

InterMune has more than doubled today, but even it may struggle to keep up with this top stock in 2014
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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