InterMune  (NASDAQ:ITMN) is the leader in developing drugs to treat idiopathic pulmonary fibrosis and hepatitis C. The Fool's Brian Lawler recently interviewed Daniel Welch, InterMune's CEO, for our Motley Fool Rule Breakers newsletter service.

Brian Lawler: Can you explain what InterMune is and how it's different from other biotechnology companies?

Daniel Welch: Like many biotechnology companies, InterMune is focused on developing and commercializing new therapies that address unmet medical needs. What differentiates us from other biotechnology companies of similar size is that we only focus on deadly diseases treated by specialists -- and we focus on diseases of the lungs and liver. We have both a late-stage program, pirfenidone for the potential treatment of idiopathic pulmonary fibrosis [IPF], in phase 3, and an earlier-stage program, ITMN-191 in phase 1 for the treatment of patients infected with the hepatitis C virus, or HCV. We believe that each of these addresses potentially very large markets throughout the world. We also have several compounds in research.

IPF is a chronic, fatal disease that is characterized by inflammation and scarring or fibrosis of the lungs, hindering the ability to process oxygen and causing shortness of breath and cough. There is no known cause of the disease and no FDA-approved therapies. Survival rates are similar to those of the most difficult-to-treat cancers; only about 20% of patients survive at five years. We have completed enrollment in two large phase 3 trials of pirfenidone in this setting and expect to report data from the phase 3 program, referred to as the Capacity program, around the end of 2008. Shionogi & Co. of Japan recently completed a successful phase 3 study of pirfenidone in that country and in March of this year submitted to Japanese authorities their request to market the drug in Japan.

ITMN-191 for the treatment of HCV is one of a new class of drugs, referred to as HCV protease inhibitors, that has potential to dramatically change the treatment paradigm in this disease. We were excited to complete our first study of our protease inhibitor in humans in May of 2007 and currently expect to begin the next study in patients infected with the virus in the third quarter of this year. We expect to see the initial data on ITMN-191's ability to clear the virus in humans, [a process] referred to as "viral kinetic data," by the end of 2007.

Pirfenidone: patents and marketing
BL: Can you explain the patent and exclusivity period that pirfenidone will enjoy if it gains regulatory approval in the United States and the European Union?

DW: The exclusivity for pirfenidone will initially be provided by "orphan drug" status in both the United States and Europe. This status grants seven years of market exclusivity from the time of launch in the United States and 10 years of exclusivity in Europe. We've been working to develop additional intellectual-property protection for pirfenidone and have filed patent applications as a result of that work. If successful, this patent strategy would provide exclusivity beyond that provided by orphan drug status.

BL: What are your plans to market pirfenidone? Will InterMune seek a worldwide partner?

DW: Our current commercial plan is to market pirfenidone in the United States without a partner. Marketing to pulmonologists who treat IPF requires a relatively small commercial effort of approximately 100 field-based personnel, an effort that InterMune can very well manage on its own. We will need to develop a way to commercialize pirfenidone in Europe and the rest of the world, and we will likely license pirfenidone to a capable pharmaceutical company for those markets. However, we will likely not be making that decision in the near term, so as to maintain maximum corporate strategic flexibility.

ITMN-191: competitive advantage and timing
BL: Other companies are developing protease inhibitors as well, including Vertex Pharmaceuticals (NASDAQ:VRTX). Johnson & Johnson (NYSE:JNJ) [is developing] telaprevir, and Schering-Plough (NYSE:SGP) [is developing] boceprevir. If these competitors gain regulatory approval to treat genotype-1 hepatitis C, where might ITMN-191 fit in the HCV treatment paradigm? We know about the compound's potential dosing advantages, but what other benefits might the drug have over other products in development?

DW: Our preclinical studies suggest that ITMN-191 may be appropriate for twice-a-day dosing, rather than three times a day, which is the dosing advantage that you mentioned. In our recently reported phase 1a study in healthy volunteers, we somewhat unexpectedly saw higher exposure of the drug in patients who took it with food. That's going to allow us to explore lower doses than previously anticipated, with theoretical safety advantages.

In addition to dosing convenience, our preclinical studies have also shown that ITMN-191 is over 100 times more potent than other protease inhibitors in clinical development, which should translate to higher effectiveness and/or improved safety. We also believe that ITMN-191 is much more selective for the HCV protease -- it doesn't appear to inhibit any of the many other proteases in the body, which means we could see fewer side effects than [with] other less selective compounds. In addition, ITMN-191 appears to be active against mutant strains of HCV against which the Vertex and Schering compounds have weak efficacy.

In summary, ITMN-191 has the potential to be the most potent, most conveniently dosed, most selective, and broadest-spectrum HCV protease inhibitor. We hope to demonstrate this profile in our planned clinical studies.

BL: The clinical trial process often encounters delays or unexpected hitches, but if ITMN-191 proceeds smoothly through the development process, when is the earliest Roche could begin testing the drug in phase 2 studies?

DW: Drug development is indeed a complex and challenging process. InterMune is leading the phase 1 portion of the development program for ITMN-191, and Roche will be in the driver's seat, so to speak, starting in phase 2. At this point, we and our partner Roche have not yet indicated the potential timeline for the phase 2 program, though we of course will move as fast as possible, as the HCV protease inhibitor space is very competitive.

BL: A recent health-care conference reported that theories were being tested about whether the rash seen in studies of Vertex's telaprevir [is] a class effect across all protease inhibitors [or is] specific to telaprevir. What are your thoughts on whether the rash is a class effect, and when will results of these studies be known?

DW: The best answer to the rash question is provided by large, well-controlled clinical trials conducted on the various compounds so far. From phase 1 and phase 2 experience thus far, it is obvious that the Vertex compound has a rash that is troublesome for some patients, whereas the Schering compound appears to not have this issue after having exposed their compound to hundreds of patients for treatment periods of at least as long as those used for the Vertex compound.

So the available clinical data to date provide the most compelling argument against a class effect of protease inhibitors and rash. At this point, we have examined only a single ascending dose of ITMN-191 in healthy volunteers, so it is too soon to tell what, if any, level of rash is associated with ITMN-191. We saw no serious adverse events in our phase 1a study, and the range of doses that we expect to be therapeutically useful was well tolerated. We plan to start a multiple ascending-dose study of ITMN-191 in the third quarter, which we expect will provide much more safety data as well as the first viral kinetic data in patients infected with the hepatitis C virus.

InterMune's next opportunities
BL: When will more information be available on the undisclosed pulmonology and hepatology research candidates?

DW: Typically, we disclose information about research candidates as preclinical data is presented at medical conferences and as the candidates move closer to phase 1 clinical trials. We believe that we have some very interesting targets and compounds in our research portfolio. We look forward to describing those programs as we report our preclinical data at scientific conferences and move closer to the clinic.

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Fool contributor Brian Lawler owns shares of InterMune. The Motley Fool has a disclosure policy.