InterMune's Esbriet to Launch in EU

InterMune Inc.(ITMN - Snapshot Report) recently announced that its lead drug Esbriet (pirfenidone), indicated for the treatment of idiopathic pulmonary fibrosis (IPF), will be launched in Germany on September 15, 2011. Germany will be the first country to witness the launch of Esbriet, which received marketing approval in the European Union (EU) in March 2011.

Management estimates that there are approximately 13,000 to 17,000 patients with mild to moderate IPF in Germany. InterMune hopes to set a gross ex-factory price for Esbriet in Europe at par with other oral pulmonary arterial hypertension (PAH) drugs at an annual cost in the range of $32,000 to $45,000 per patient per year. In Germany, the gross ex-factory price for Esbriet is set at 36,000 euros or roughly $51,000 per patient per year, higher than the above mentioned range. The net ex-factory price is 30,240 euros or roughly $42,638 after a government mandated rebate of 16%, which is 4% higher than the current price of Actelion’s (ALIOF) PAH drug Tracleer in that country.

Esbriet will subsequently be launched in France, Spain and Italy in the first half of 2012 and in United Kingdom in the third quarter of 2012. The company plans to launch Esbriet in all other major European countries by the third quarter of 2012. Esbriet is sold in Japan by InterMune’s partner Shionogi in the trade name Pirespa since 2008. In the US, the drug is in late stage testing.

The road has not been smooth for Esbriet in the US. InterMune began a late stage additional study (ASCEND; n~500) of Esbriet in the US for the treatment of IPF in July 2011. InterMune had received a complete response letter (CRL) from the US Food and Drug Administration (FDA) in early May 2010. The regulatory body had requested data from an additional clinical trial before considering the regulatory approval of Esbriet in the US. Accordingly, InterMune began the ASCEND study to meet the requirements of the FDA. The trial is expected to be fully enrolled by the first half of 2012 with data to be presented in mid-2013. InterMune intends re-submit the new drug application (NDA) in the second half of 2013, which will contain data from the ASCEND study.

Currently, there is no FDA approved therapy for the treatment of IPF in the US. With the EU approval of Esbriet, InterMune becomes the first company to offer an IPF medicine in Europe. Hence, we believe a huge market opportunity exists for the drug.

Our Recommendation

We currently have a Neutral recommendation on InterMune. The stock carries a Zacks #3 Rank (short-term ‘Hold’). We consider the EU approval of Esbriet as a major positive for InterMune. However, we prefer to remain neutral until visibility improves on its US approval.

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