InterMune second-quarter total revenue decreases to $5.9 million

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Jul 28 2010InterMune, Inc.

InterMune, Inc. (Nasdaq: ITMN) today announced results from operations for the second quarter and six months ended June 30, 2010. InterMune also highlighted its recent clinical development and business activities, and provided forward-looking financial guidance for 2010.

Dan Welch, Chairman, Chief Executive Officer and President of InterMune said, "Several important second quarter and first half events were related to the regulatory pathway for pirfenidone for the treatment of patients with idiopathic pulmonary fibrosis, or IPF. On March 9, 2010, an advisory committee to the U.S. Food and Drug Administration (FDA) recommended 9-3 in favor of the approval of pirfenidone to reduce decline in lung function. However, on May 4, 2010, the FDA issued a Complete Response letter requesting an additional clinical trial to support the efficacy of pirfenidone in IPF. While disappointed with this outcome, we remain committed to pirfenidone and will work diligently with the FDA to determine a path forward in the United States. Regarding Europe, our Marketing Authorization Application (MAA) for pirfenidone was validated on March 24, 2010, the review is proceeding as planned and we anticipate a decision on our MAA from the European authorities in the first half of 2011."

Mr. Welch continued, "We were pleased to report at EASL in April promising results of the multiple-ascending-dose study of ritonavir-boosted danoprevir with standard of care (SOC). The results confirmed that ritonavir boosting safely provides potent antiviral effects and offers attractive dosing convenience advantages when compared to un-boosted danoprevir. We also reported that the rapid virologic response (RVR) and complete early virologic response (cEVR) results from a Phase 2b study of un-boosted danoprevir with SOC were among the very best reported by any direct-acting antiviral compound to date, further reinforcing our view that danoprevir may play a meaningful role in the treatment of HCV patients."

Clinical Development, Business Highlights and Upcoming Milestones

Pirfenidone:

On March 9, 2010, the FDA's Pulmonary-Allergy Drugs Advisory Committee (PADAC) recommended by a vote of 9-3 that pirfenidone be approved for the reduction of the decline in lung function in patients with IPF. On May 4, 2010, the FDA issued a Complete Response letter for InterMune's New Drug Application (NDA) for pirfenidone for the treatment of patients with IPF to reduce decline in lung function. In its letter, the FDA requested from InterMune an additional clinical trial to support the efficacy of pirfenidone in IPF patients. An End-of-Review meeting with the FDA has been scheduled to be conducted on August 2, 2010.
InterMune's Marketing Authorization Application (MAA) for pirfenidone was validated by the European Medicines Agency (EMA) on March 24, 2010. Validation of the MAA by the EMA indicates that the application is complete and that the review process has begun. InterMune reported today that in accordance with standard EMA guidelines, it has received the Day 120 List of Questions assembled from the various members of the Committee for Medicinal Products for Human Use (CHMP).
Four abstracts concerning pirfenidone and IPF have been accepted for oral presentations at the Annual Congress of the European Respiratory Society (ERS) in Barcelona, Spain, September 18-22, 2010. The presentations and the presenters are as follows:

The Magnitude of Pirfenidone Treatment Effect in Patients with Idiopathic Pulmonary Fibrosis (IPF): A Pooled Analysis of Outcomes in the CAPACITY Studies (Dr. C. Albera)
Dose-response in Patients with Idiopathic Pulmonary Fibrosis (IPF): A Comprehensive Analysis of Outcomes in CAPACITY 2 (Dr. U. Costabel)
Percent Predicted Forced Vital Capacity (FVC) is a Reliable, Valid and Responsive Measure of Clinical Status in Patients with Idiopathic Pulmonary Fibrosis (IPF) (Dr. R. du Bois)
The Effect of Treatment with Pirfenidone on Death or Lung Transplantation in Patients with Idiopathic Pulmonary Fibrosis (IPF): Analysis of Outcomes in the CAPACITY Trials (Dr. D. Valeyre)

Danoprevir:

Danoprevir (also known as RG7227 and ITMN-191) is a protease inhibitor for the treatment of patients chronically infected with the hepatitis C virus (HCV) being developed in collaboration with Roche. The protocol of an on-going Phase 1b MAD study of ritonavir-boosted danoprevir therapy plus SOC has been amended to evaluate 12 weeks of therapy in prior SOC null responders. Patient enrollment began in late March and the study is progressing as expected.
A Phase 2b study of ritonavir-boosted danoprevir plus SOC is expected to begin in the fourth quarter of 2010; the exact timing will be determined with our collaboration partner Roche. Details of that study will be shared at the time of study initiation.
The next step in the INFORM direct-acting antiviral (DAA) program is planned to be a study combining the nucleoside polymerase inhibitor RG7128 with ritonavir-boosted danoprevir involving treatment durations of at least 12 weeks and evaluating sustained virologic response (SVR). The ritonavir-boosted DAA study to evaluate SVR is anticipated to begin in the first half of 2011; the exact timing will be determined with our collaboration partner Roche and will be based on emerging data from the on-going studies. Details of that study will be shared at the time of study initiation.

Second Quarter and First Half 2010 Financial Results (Unaudited)

InterMune reported total revenue in the second quarter of 2010 of $5.9 million, compared with $7.9 million in the second quarter of 2009, and total revenue for the first six months of 2010 of $12.0 million, compared with $14.8 million in the first six months of 2009. Total revenue in both the three- and six-month periods of 2010 reflect lower off-label physician prescriptions of Actimmune® (gamma interferon-1b) for the treatment of IPF, which InterMune does not promote.

Research and development (R&D) expenses in the second quarter of 2010 were $14.7 million compared with $22.9 million in the second quarter of 2009, a decrease of 36 percent. R&D expenses were $35.2 million for the six months ended June 30, 2010, compared with $47.4 million in 2009, a decrease of 26 percent. Lower R&D expenses in both periods reflect completion of the CAPACITY clinical trials in early 2009 and the timing of clinical studies of danoprevir in patients chronically infected with HCV.

General and administrative (G&A) expenses were $12.7 million in the second quarter of 2010, compared with $8.5 million in the same period a year earlier, an increase of 49 percent. G&A expenses were $27.9 million in the first six months of 2010, an increase of 62 percent from $17.2 million in 2009. The additional G&A expenses are primarily attributed to costs related to preparation for the potential commercialization of pirfenidone, which received a Complete Response Letter from the FDA on May 4, 2010.

Following the FDA's Complete Response, the company announced a workforce reduction in late May 2010, predominantly in the commercial and general and administrative areas. InterMune anticipates that this workforce reduction will result in a cost savings of approximately $12.0 million per year. In connection with this workforce reduction, InterMune recorded a one-time charge of $1.3 million in the second quarter of 2010 related to one-time termination benefits, which reflects cash expenditures associated with severance pay and the payment of COBRA premiums.

The net loss for the second quarter of 2010 was $25.3 million, or $0.46 per share, compared with a net loss of $36.7 million, or $0.81 per share, in 2009. Net loss for the first six months of 2010 was $59.4 million, or $1.11 per share, compared with a net loss of $78.7 million, or $1.83 per share, in the comparable period of 2009.

As of June 30, 2010, InterMune had cash, cash equivalents and available-for-sale securities of approximately $150.7 million.

Guidance for 2010 Revenue and Expenses

The company today provided financial guidance for revenue and operating expenses in 2010.

Revenue: 2010 revenue is expected to be in a range of approximately $22 to $27 million. Actimmune revenue represents approximately 85 percent of this revenue range.

Operating Expenses

R&D expense: anticipated to be in a range of approximately $80 to $90 million, net of development cost reimbursements under the Roche collaboration. Of this amount, approximately 65 percent is attributed to pirfenidone which includes expenses for RECAP, the preparation and support of NDA and MAA submissions and manufacturing. Approximately 20 percent of the R&D expense is attributed to the company's one-third share of all development expenses incurred by the collaboration with Roche on danoprevir.