) posted fourth-quarter adjusted loss per share of 69 cents, wider
than the year-ago adjusted loss per share of 42 cents, afflicted by
lower revenues and higher operating expenses. The loss was,
however, narrower than the Zacks Consensus Estimate of a loss per
share of 71 cents.
InterMune reported revenues of $7.8 million in the fourth
quarter, way below the year-ago revenue of $241.7 million. The
year-ago revenue however included $232.3 million of one-time
Roche Holdings Ltd.
) following the sale of pipeline candidate danoprevir to the latter
and the recognition of deferred revenue in connection with the
termination of a research agreement. Excluding the one-time item,
fourth quarter 2010 revenue was $9.4 million. Revenues in the
reported quarter were still below the prior-year quarter due to the
absence of collaboration revenues. Revenues, however, edged past
the Zacks Consensus Estimate of $8.0 million.
In 2011, InterMune reported total revenue of $25.6 million below
2010 revenue of $259.3 million for the same reasons as discussed
above. In 2011, adjusted loss per share was $2.58 versus a loss of
$1.77 per share in 2010. The Zacks Consensus Estimate for revenue
was $26 million and loss per share was $2.59.
Revenue in the quarter included $2.7 million from sales of
InterMune's potential blockbuster drug Esbriet which was launched
in Germany in September last year. Esbriet is approved for the
treatment of idiopathic pulmonary fibrosis (
), a fatal lung disease. InterMune's other marketed drug,
Actimmune, recorded revenue of $5.2 million in the fourth quarter
of 2011 versus $4.9 million in the prior-year quarter.
During the reported quarter, research and development (R&D)
expenses increased 27% to $21.0 million in preparation of the
Selling general and administrative (SG&A) expenses shot up
60.0% to $26.9 million primarily from establishing the European
infrastructure (including increased workforce) to support the
commercialization of Esbriet.
At the preliminary fourth quarter conference call held in
January 2012, management issued its expense guidance for 2012.
R&D is expected to be in the range of $95-$115 million and
SG&A in the range of $120-$145 million. The guidance was
maintained at the fourth quarter earnings release.
Esbriet, already approved in the European Union (
), was launched in Germany in mid-September 2011. In Germany, the
initial price of a new medicine is set by the manufacturer on
launch and then the final price is negotiated over a 12-month
period under the new AMNOG law. In December 2011, the German
Institute for Quality and Efficiency in Healthcare (IQWiG) issued a
preliminary opinion saying that Esbriet did not demonstrate any
additional benefit over placebo. InterMune has submitted a response
to the preliminary assessment, disagreeing with it. InterMune
believes that all orphan drugs like Esbriet are deemed to have
added benefit. The final assessment of the IQWiG will come in March
2012, upon which the price in Germany will be established.
At the fourth quarter preliminary update, in January 2012,
InterMune announced that 1,022 new patients started Esbriet therapy
across EU during 2011. Of these 612 patients have been given
Esbriet in Germany and 410 patients have enrolled in the named
patient program (
) outside Germany. Under the NPP program qualified physicians can
make Esbriet available to IPF patients in EU (who meet certain
pre-specified medical criteria and conditions) free of charge until
Esbriet is commercially available in their country. Of the 612
patients in Germany, only 172 were transitioned from NPP, which
indicates that most of the growth is coming from new patients.
At the preliminary call, InterMune management had stated that
Esbriet was expected to be launched in France, Spain and Italy in
the second quarter of 2012 and in the United Kingdom in October
2012. However, at the fourth quarter conference call, management
tepidly announced that it expects to complete pricing and
reimbursement issues in those countries by the given timeline and
launch as soon as possible. We believe the pricing and
reimbursement uncertainty in Europe is the reason behind
management's cautious stance. The company also plans to launch
Esbriet in other mid-sized European nations through 2012 though
Esbriet usage in these countries is expected to gain momentum in
2013. Esbriet is sold in Japan since 2008 by InterMune's partner
Shionogi under the trade name Pirespa.
We currently have a Neutral recommendation on InterMune. The
stock carries a Zacks #3 Rank (short-term 'Hold' rating).
We believe Esbriet has significant commercial potential as it
targets IPF which is an orphan indication. Currently, there is no
FDA approved therapy for the treatment of IPF in the US. With the
EU approval of Esbriet, InterMune became the first company to offer
an IPF medicine in Europe. Hence, a huge market opportunity exists
for the drug. Nonetheless the pricing uncertainty in Germany as
well as in other EU countries remains a concern despite the drug's
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