InterMune's Secret Drug Surprise

On Friday, shares of pharmaceutical company and Rule Breakers pick InterMune (Nasdaq: ITMN) were up nearly 30%, but there wasn't a buyout offer or a press release in sight. So what caused the surge? According to a Securities and Exchange Commission filing from InterMune, Japanese pharmaceutical company Shionogi released positive phase 3 clinical trial results for a compound named pirfenidone.

Still not understanding how this relates to InterMune? Well, InterMune owns the marketing rights to pirfenidone in treating fibrotic diseases in all areas of the world outside Japan, Korea, and Taiwan.

InterMune is also testing its already approved drug, named Actimmune, in treating idiopathic pulmonary fibrosis, or IPF. Results of a large phase 3 trial for Actimmune in this indication are expected in early 2008. It took InterMune nearly two and a half years to complete enrollment in this Actimmune trial, and based on the timeline and the relative sizes and number of clinical trial sites, my estimates are for both of the pirfenidone phase 3 trials to take 16 months to complete enrollment, with results expected approximately a year later. This puts the timeline for the phase 3 trial results announcement sometime in late 2009 or early 2010.

IPF is a deadly but relatively rare disease, with fewer than 100,000 sufferers in the United States. This doesn't mean that pirfenidone doesn't have blockbuster potential, though, since there are no approved treatments for IPF in the U.S. or the European Union, and the only treatment option for the illness is often a lung transplant.

Unfortunately, the patents on pirfenidone last only until 2011 in the U.S. Since IPF affects so few people, though, InterMune has been granted orphan drug status for pirfenidone, which will still give it at least seven years of marketing exclusivity to treat IPF in the U.S. and 10 years in the E.U. if the drug gets approved for this indication.

With two promising in-licensed drugs in pirfenidone and its potential hepatitis C treatment ITMN-191, InterMune has a management team that's shown itself to be smart in acquiring novel compounds from other companies. With the Actimmune trial results coming in approximately a year, we'll find out soon enough whether management runs pivotal clinical trials as well as it brings in new drug candidates.

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Fool contributor Brian Lawler owns shares of InterMune, a Motley Fool Rule Breakers recommendation, but of no other company mentioned in this article. The Fool has a disclosure policy .