Biotech Values

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InterMune "ReadMe First"


InterMune http://www.intermune.com/

Pulmonology and Hepatology focus. In Pulmonology focused on Idiopathic Pulmonary Fibrosis (IPF) and in Hepatology have InterMune 191 recently submitted to European Union for clinical development (also an undisclosed preclinical compound)

IPF
• Scarring of lungs, unknown cause
• Median survival from diagnosis 2-5 years
• 83K US, 30K diagnosed each year, is what InterMune WAS using in their presentations…. “According to the new findings, pulmonary fibrosis now affects 128,000 people and more than 48,000 new cases are diagnosed each year. In 2000, the Consensus Statement of the American Thoracic Society estimated prevalence at approximately 50,000” http://biz.yahoo.com/prnews/061005/cgth065.html?.v=46&printer=1 or http://www.investorshub.com/boards/read_msg.asp?message_id=13818453 or http://ajrccm.atsjournals.org/cgi/content/abstract/174/7/810 (journal abstract)
• No approved therapy, steroid and immune suppressants used (such as Methotrexate and Prednisone) along with off-label use of Actimmune


Actimmune http://www.actimmune.com/
• Interferon Gamma 1B natural occurring protein administered by sub-q injection (200mcg, 3x week for IPF patients in protocol for INSPIRE study)
• IP Protection (http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=... announced today that it has been issued two composition of matter patents that together cover the manufacture, use and sale of Actimmune(R) (interferon gamma-1b) in the United States. These patents, USPN 6,936,694 and USPN 6,936,695, expire in 2022 and extend a portfolio of intellectual property rights relating to Actimmune(R), which includes another composition of matter patent that expires in 2014.
• Being studied for Idiopathic Pulmonary Fibrosis. Had failed prior phase 3 trial with composite endpoint and subject to controversial debate on benefits of interferon gamma results and letter in NEJM. INSPIRE Trial is current Phase 3 trial aimed at showing survival benefit in IPF patients. January 8, 2005 NEJM “A Placebo-Controlled Trial of Interferon Gamma-1b in Patients with Idiopathic Pulmonary Fibrosis” http://content.nejm.org/cgi/content/full/350/2/125. October 21, 1999 NEJM “A Preliminary Study of Long-Term Treatment with Interferon Gamma-1b and Low-Dose Prednisolone in Patients with Idiopathic Pulmonary Fibrosis” http://content.nejm.org/cgi/content/full/341/17/1264 criticism of the study http://content.nejm.org/cgi/content/extract/342/13/974
• Approved usage (Past 10-K’s) ACTIMMUNE has proven to be safe for patients since its approval in 1990 for the treatment of chronic granulomatous disease. There are an estimated 400 patients with chronic granulomatous disease in the United States, and there is no FDA-approved treatment for these patients other than ACTIMMUNE. Based on the indicated dosage levels, the annual cost per patient is approximately $25,000. There are approximately 400 patients with osteopetrosis in the United States. The FDA approved Actimmune for the treatment of this disease in February 2002. Based on expected dosing levels for osteopetrosis patients, we expect the annual cost per patient would be approximately $25,000.
• Method of Action: Immunomodulatory, Anti-fibrotic, Anti-infective – Antiviral, Anti-proliferative
• Pricing (Company presentations) based on dosing in INSPIRE for fully compliant IPF patient would equate to $60,000/patient for year of therapy. Medicare Part D would be operative because 70 percent of patients are over 65.
• Partner (http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=... outside US, Canada and Japan, Boehringer Ingelheim with InterMune option to promote where BI does not.
• Patient Population (Company presentations) When numbers were reported as 83K prevalence and 30K incidence in US company estimated that 50K would be mild to moderate and 80% of newly diagnosed patients would fall into that category. This is significant because the “mild-to-moderate” is what the company is targeting in the INSPIRE study.
Study ITT Patients Follow-up Duration No. of Deaths Actimmune® No. of Deaths Control Relative reduction P-value*
GIPF-0011 (NEJM, Jan 2004) 330 1.4 years 16/162
(9.9%) 28/168 (16.7%) 41% 0.08
Ziesche2 (CHEST, Nov 2002) 18 5 years 2/9
(22.2%) 7/9 (77.8%) 71% 0.01
Antoniou3 (ERJ, Apr 2006) 50 ~2 years 5/32
(15.6%) 7/18 (38.8%) 70% 0.028

INSPIRE Trial http://www.inspiretrial.com/
http://www.clinicaltrials.gov/ct/show/NCT00075998
• Randomized, Double-Blind, Placebo-Controlled
• ~81 Sites – U.S., Canada and Europe
• Primary Endpoint: Survival Time
o Greater then 90% power to detect 50% difference of mortality over 3 years
o Greater then 80% power to detect 40% difference in mortality over 3 years
• Patients – Mild to Moderate IPF (forced vital capacity ≥ 55% and carbon monoxide diffusing capacity ≥ 35%)
• 2:1 Randomization – Actimmune: Placebo
• Treatment Period: 2 Years after randomization of 600th patient. 600th patient enrolled in November 2005. Completed enrollment April 2006 (826 patients total)
• PR for rational of increasing enrollment http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=...


Pirfenidone
• Orally active small molecule administered as 3x day pill
• Acquired NA and EU rights from Marnac, http://www.marnac.com/ for Fibrotic Indications. (PR - http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=... and 10K’s) In March 2002, we licensed from Marnac, Inc., a privately held biopharmaceutical company, and its co-licensor, KDL GmbH, their worldwide rights, excluding Japan, Korea and Taiwan, to develop and commercialize pirfenidone for all fibrotic diseases, including pulmonary, liver and renal fibrosis. Under the terms of the agreement, we received an exclusive license from Marnac and KDL in exchange for an up-front cash payment of $18.8 million and future milestone and royalty payments.
• Method Of Action: Preferentially binds to and disables the kinase p38-gamma. Significantly inhibits TGF-beta synthesis (fibrosis), Also inhibits TNF-alpha synthesis (inflammation)
• IP Protection (Conference call) Older compound patent from Marnac licensed covering anti-fibrotic uses 2011 expires. Basis of exclusivity more on Orphan drug. Granted in US (7 years) and Europe (10 years) after approval.
• Being studied in a number of indications (not all by InterMune). InterMune is seeking approval in Idiopathic Pulmonary Fibrosis. It is also conceivable that they later seek a broader approval for Fibrotic disease of the lung. Most notably an NIH study in Hermansky Pudlak Syndrome.
• Shionogi Phase 2 Results PR http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=... Stopped after 6 months (efficacy). Treatment of 9 month. Observation/ Placebo/ Pirfenidone: Improved Minimal O2 Oximetry/6.1%/24.2% Declined Saturation/33.3/18.2% P=.016 Vital Capacity Improved/0%/9% Vital Capacity Declined/36.4%/13.4% P=.003
• InterMune Phase 2 Results PR http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=...


CAPACITY Trials, http://www.capacitytrials.com/
http://www.clinicaltrials.gov/ct/show/NCT00287729
http://www.clinicaltrials.gov/ct/show/NCT00287716 - Three Arm Study
• Primary endpoint is change in forced vital capacity (FVC) after 60 weeks of treatment
• Two concurrent, multi-national trials CAPACITY 1 and CAPACITY 2
• Approximately 580 patients
• Randomized first patient April 27, 2006
• Expect enrollment to conclude around the end of 2007, with top-line data expected in early 2009
• Exploring European partnering opportunities


InterMune 191
• Collaboration began with Array BioPharma http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=.... The royalties are described as “small”
• High affinity for and stability in the liver
• Favorable pharmacokinetic profile
• Potency of ITMN compound is maintained against mutations that show resistance to other protease inhibitors
• HCV replicon EC50 = ~2nM (VX-950=402nM, SCH-503034=200nM)
• Liver exposure in Rat/Primate (30 mg/kg) nM concentration 2,680/188 Log Drop in replicon RNA 3.23/2.08 (after 12 hours!)
• No observed toxicity in mammalian cells
• HCV protease selectivity is high
• Good safety margins for: Body weights, organ weights, Clinical chemistry, clotting parameters and hematology, Renal, neurologic, gastrointestinal, immune and cardiovascular systems
• There were no significant effects on microscopic histopathology on any organ or tissue, including heart and liver
• Potential BID dosing
• 9/26/06 CTA submitted to the French Medicinal and Biological Products Evaluation Directorate http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=...

Other Pipeline/Interests
• Early stage preclinical program partnered with Array (undisclosed indication in Hepatology)
• Equity interest in Targanta Therapeutics, http://www.targanta.com/ as a result of selling Oritavancin in December 2005. (http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=...
• Early stage work on PEGylated version of Actimmune (with Maxygen), does not appear to have much effort as this time. (http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ITMN&script=410&layout=6&item_id=...
• PEG-Alfacon (PEGylated version of Infergen) appears unlikely to be further developed.
•


Financials
• Cash 180 million (end of Q2)
• 170 million convertible low coupon, 2011 maturity (after 2 phase 3’s)
• 33 million shares outstanding
• Guidance
o Revenue 75– 100 million.
o COGS 21-23%.
o R&D 90-105 million (48 million first 6 month expect back weighted with CAPACITY enrollment and 191 ramp-up). Including 5-10 million for est. FAS 123R.
o SG&A 30-45 million including 5-10 million for FAS 123R (not including 30 million for settlement).


Time-Line
• Late Q4 ‘06/Early Q1 ’07 Shionogi Pirfenidone Phase 3 trial top-line results (InterMune has data sharing agreement but it is not clear if the results will be released to the public… the market will know!)
• Mid Q4 ’06 Hear back from EU about 191 submission.
• Late Q4 ‘06/Early Q1 ’07 Start dosing patients with 191
• ???? ’07 Interim look in INSPIRE. Company said likely would not disclose unless it was material (i.e. trial stopped)
• November ’07 INSPIRE trial ends (2 years after 600th patient enrolled)
• Q4 ’07 CAPACITY Trials enrollment targeted completion
• Q1 ’08 INSPIRE data released
• Q4 ‘07/Q1 ’08 CAPACITIY (Pirfenidone) treatment period ends
• Q1 ’09 Top line results from CAPACITY