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UPDATE 1-InterMune shares fall on hepatitis C drug concern

http://www.reuters.com/article/marketsNews/idUKN2341906920070723?rpc=44

Mon Jul 23, 2007 1:05PM EDT

(Updates with details, rival analyst comment)

By Toni Clarke

BOSTON, July 23 (Reuters) - Shares of InterMune Inc. (ITMN.O: Quote, Profile, Research) fell as much as 8 percent on Monday amid concern its experimental hepatitis C drug may face a development delay.

Leerink Swann analyst Howard Liang said in a report that InterMune's drug, ITMN-191, may begin an early-stage, or Phase 1b, clinical trial later than he had expected.

"Although it is still possible for Phase 1b to start within the third quarter, as guided, there has been at least a slight delay relative to our expectations," he said.

Officials at InterMune, which is developing the drug together with Switzerland's Roche Holding AG (ROG.VX: Quote, Profile, Research), were not immediately available for comment.

While Liang did not cite a specific source for his concerns, he said he believes it has been at least three months since the completion of an earlier trial and that the lag before starting the phase 1b is longer than he had anticipated.

He said new safety findings may be part of the reason for the delay.

InterMune's shares were down $1.76, or 7.1 percent, to $23.18 in early afternoon trading on Nasdaq after going as low as $22.89.

Investors are particularly sensitive to any potential delay, however slight, to InterMune's drug because a similar product that was under development by Germany's Boehringer Ingelheim was dropped because of cardiovascular toxicity.

Jason Kolbert, an analyst at Susquehanna Financial Group, said InterMune has tested ITMN-191 extensively in animals in order to check its toxicity and has so far seen no adverse cardiovascular events.

"The bottom line is that InterMune that has learned that it's better to slow down and get the right dosing than to rush to clinical trials with less than optimal dosing," he said.

Another reason for the interest in the trial is that it will give the first sense of the drug's antiviral activity, and that in turn could affect the stock of Vertex Pharmaceuticals Inc. (VRTX.O: Quote, Profile, Research), which is developing a rival product called telaprevir, or VX-950, that is further along in development.

Shares of Vertex were 27 cents lower, down nearly 1 percent, to $29.05 in early afternoon trading on Nasdaq.