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The National Institute for Health and Clinical Excellence (NICE), the health technology appraisal body in England and Wales, recently issued a positive Final Appraisal Determination (FAD) for the approval of InterMune Inc.’s (ITMN - Snapshot Report) Esbriet (pirfenidone). Esbriet is approved for the treatment of mild to moderate idiopathic pulmonary fibrosis (IPF).

Following the positive recommendation from NICE, InterMune now plans to launch Esbriet in these areas by the end of June this year. The company stated that around 6,100 to 9,500 patients suffer from IPF in England and Wales.

The list price of Esbriet as per the National Health Services (NHS) is around $39,350 per patient per year. The FAD is expected to be published in Apr 2013, and will be implemented within the next 90 days.

InterMune is working on the pricing and reimbursement process for Esbriet in the remaining EU countries. We believe that the company is on track to launch Esbriet in six more EU countries by mid-year, as notified earlier. The company has plans to complete pricing and reimbursement in Italy, Spain and other mid-sized countries by mid-2013.

Moreover, the company recently received encouraging news as the health authorities of the Pharmaceutical Pricing Board of Finland (HILA) agreed to price and reimburse Esbriet in Finland.

We note that Esbriet was launched in Germany for the treatment of IPF in Sep 2011. Esbriet is the sole contributor to InterMune’s total revenues for the last few quarters. As of 2012, Esbriet was priced and launched in nine European countries, namely, Austria, Belgium, Denmark, France, Germany, Iceland, Luxembourg, Norway and Sweden.

In Oct 2012, Esbriet was approved in Canada for the treatment of adults suffering from IPF. InterMune is running the ASCEND trial to support pirfenidone in the US for the treatment of IPF. In Jan 2013, the company completed enrolment for the phase III study in the US and some additional territories. Result from the ASCEND trial are expected in the second quarter of 2014.

InterMune recorded Esbriet sales of $26.2 million in the year 2012. The company expects Esbriet sales of $40–$70 million in 2013. The guidance includes $40–$55 million from countries where the product is currently launched and the rest from the countries where the drug is yet to be launched.

Though Esbriet is the only approved medicine for IPF, companies like Novartis (NVS - Analyst Report) and Sanofi (SNY - Analyst Report) are developing candidates for IPF. We remain concerned about the fact that InterMune is dependent on a single product for growth. Meanwhile, we expect investor focus to remain on the pricing and reimbursement in the remaining EU countries.

InterMune carries a Zacks Rank #3 (Hold). Other biotech stocks such as Cytokinetics Inc (CYTK - Snapshot Report) currently look more attractive carrying a Zacks Rank #1 (Strong Buy).

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