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InterMune to Sell Actimmune Rights

ITMN

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InterMune Inc. (ITMN - Snapshot Report) recently announced that it has entered into an agreement with Vidara Therapeutics International Limited for the sale of its rights to Actimmune for $55 million plus royalties. Vidara is a part of an international group of companies operating in the U.S. and Ireland.

The Agreement

As per the agreement, InterMune is set to receive $55 million in cash from Vidara. Moreover InterMune will receive royalty payments on Actimmune sales over a two-year period.

Actimmune is approved for the treatment of chronic granulomatous disease (CGD) and severe, malignant osteoporosis. Actimmune sales for the year 2011 were $20.2 million. Notably, the company stopped its efforts for additional indications for Actimmune, as it turned its focus on its lead product Esbriet. Management conceded that Actimmune has so far been the company’s tactical financial asset. The deal is scheduled to close later this quarter.

Our Take

We believe that the divestment of Actimmune will be beneficial for InterMune, as the company can now focus totally on the development and commercialization of lead product, Esbriet. The agreement will also boost the company’s cash balance of $377.2 million (as of the end of the first quarter of 2012).

After the launch of Esbriet during the final quarter of 2011, all attention has been bestowed on the drug. The product is marketed in Germany and InterMune is looking to launch Esbriet in additional countries in the E.U.

We currently have a Neutral recommendation on InterMune, which carries a Zacks #3 Rank (short-term ‘Hold’ rating). Though the move to sell the rights of Actimmune will not only raise cash but also enable the company to pay more focus on Esbriet, pricing concern for the latter is still an issue.

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