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.DL), 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.