Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

InterMune Inc. (ITMN - Snapshot Report) recently announced its intention to raise funds through concurrent underwritten public offerings. InterMune intends to offer convertible senior notes (due 2017) of around $85 million along with 12.5 million shares of its common stock.

Underwriters are expected to have 30-day options to purchase an additional $12.75 million aggregate principal amount of convertible senior notes plus up to 1.9 shares of common stock in association with the offerings.

InterMune had $351.4 million as cash, cash equivalents and available-for-sale securities at the end of September 30, 2012.

We note that InterMune exited third quarter of 2012 with outstanding 5.00% convertible senior notes (due 2015) of $84.1 million. The company expects to use the net proceeds from the offerings to repay its outstanding convertible senior notes.

Moreover, InterMune also intends to use the funds for Esbriet’s (pirfenidone) commercialization. We remind investors that Esbriet is now successfully priced and launched in 9 of its 15 targeted European countries. InterMune plans to start launching Esbriet in the remaining six countries in the EU by the middle of this year.

The company also intends to fund its ASCEND trial on Esbriet in the US from the proceeds. In Dec 2012, InterMune completed its enrollment process of the phase III ASCEND study to support Esbriet’s regulatory submission for the candidate in the US. InterMune expects preliminary results from the 52-week ASCEND trial in the second quarter of 2014. The company expects to build the commercial infrastructure and commence pre-launch preparations for Esbriet in the US in 2013.

The company may use a part of the funds raised for other corporate purposes as well. InterMune also has plans to spend a portion of its net proceeds for capital expenditures, for acquisitions or for other investments.

We remind investors that the company expects total operating expense for 2013 in the range of $245–$285 million, including R&D expense of $100–$120 million and SG&A expense of $145–$165 million.

Our Recommendation

We believe Esbriet has significant commercial potential as it targets idiopathic pulmonary fibrosis (IPF), which is an orphan indication. Though Esbriet is the only approved medicine for IPF, companies like Novartis (NVS - Snapshot Report), Sanofi (SNY - Analyst Report) and Celgene Corporation (CELG - Analyst Report) are developing candidates for IPF treatment. We remain concerned about the fact that InterMune is dependent on a single product for growth.

We currently have a Neutral recommendation on InterMune. The stock carries a Zacks Rank #3 (Hold). Meanwhile other pharma stocks such as Targacept Inc. (TRGT - Snapshot Report) and Agenus Inc. (AGEN - Snapshot Report) carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%