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ITMN Concludes Sale of Actimmune

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InterMune Inc. recently completed the sale of its rights to Actimmune to Vidara Therapeutics International Limited for $55 million plus royalties. Vidara is part of an international group of companies operating in the US and Ireland.

The Agreement

As per the agreement, InterMune received $55 million in cash from Vidara. Moreover InterMune will receive royalty payments on Actimmune sales over a two-year period. InterMune expects royalty payments to be around $2–$4 million over the 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. Management nonetheless conceded that Actimmune has so far been the company’s tactical financial asset. We believe that the sale of Actimmune will allow InterMune to focus on marketing its lead drug Esbriet (pirfenidone in the US). Esbriet is available in Germany for treating patients suffering from idiopathic pulmonary fibrosis (IPF). Esbriet is expected to be launched in other EU nations during the course of the year.

Expense Guidance for 2012

Apart from announcing the closure of the divestment, InterMune also adjusted its guidance for operating expenses in 2012. The company currently expects research and development (R&D) expenses in the range of $90–$105 million (old guidance: $95–$115 million) this year. The increase was primarily attributable to the expenses expected to be incurred in relation to the phase III study (ASCEND) to support the approval of pirfenidone for treating IPF patients in the US. The enrollment for the study is expected to be completed by the end of this year. We remind investors that the US Food and Drug Administration (FDA) issued a complete response letter (CRL) in May 2010 for Esbriet. Moreover, the delay of investments related to certain non-Esbriet R&D activities also contributed to the increased guidance.

InterMune forecasts selling general and administrative (SG&A) in 2012 in the range of $110–$130 million (old guidance: $120–$145 million). The decrease was attributable to the pricing and reimbursement discussions for Esbriet in Europe.

Our Recommendation

We currently have a Neutral recommendation on InterMune, which carries a Zacks #3 Rank (short-term ‘Hold’ rating).

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