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 (UNKNOWN:ITMN.DL), a biopharmaceutical company focused on developing therapies to treat orphan fibrotic diseases and other pulmonology-based diseases, soared as much as 16% after releasing data from its ASCEND phase 3 trial at the American Thoracic Society meeting in San Diego over the weekend.

So what: According to InterMune's press release, pirfenidone (also known as Esbriet in Europe), an investigational treatment for idiopathic pulmonary fibrosis, "significantly reduced decline in lung function as measured by change in percent predicted forced vital capacity (FVC) from Baseline to Week 52." Pirfenidone met the primary endpoint of reducing the risk of a meaningful decline (defined as 10% of more) in FVC from baseline to week 52 to just 16.5% of patients compared to 31.8% in the placebo group. As noted, 22.7% of patients experienced no decline in FVC at Week 52 compared to just 9.7% in the placebo group, for a 132.5% improvement. Supportive analysis in the New England Journal of Medicine came to similar conclusions that pirfenidone offered clear benefits to patients over the current standard of treatment.

Now what: Based on the additional data received this weekend it's looking more and more likely that pirfenidone will be approved within the U.S. Remember, this was an investigational drug that was rejected in 2010, so this would be some nice redemption for shareholders. While I would take nothing away from the therapy itself, I would urge caution from investors in that they're placing a nearly $4 billion valuation on a company with a drug that may only have peak sales potential of $600 million to $1 billion around the world. There's execution risk, pricing risk, and a number of other factors here that leave very little upside left in its share price at these levels. It's a game-changing drug, but InterMune's share price reflects that already. As such, I'd stick to the sidelines for the time being.

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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