InterMune Inc.
(
ITMN
) 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
),
Sanofi
(
SNY
) and
Celgene Corporation
(
CELG
) 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
) and
Agenus Inc.
(
AGEN
) carry a Zacks Rank #1 (Strong Buy).
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INTERMUNE INC (ITMN): Free Stock Analysis
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