Nov 30
InterMune, Inc.
ITMN : NASDAQ : US$9.36
BUY Target: US$13.00
COMPANY DESCRIPTION:
InterMune is a development stage biopharmaceutical company focused on the development of drugs that address unmet medical needs in hepatology and pulmonology. The company is developing pirfenidone for the treatment of idiopathic pulmonary fibrosis (IPF).
Investment recommendation
Reiterate BUY, $13 target on improved EU Esbriet (pirfenidone) launch momentum. We think Esbriet, ITMN’s drug for idiopathic pulmonary
fibrosis (IPF; an orphan lung disease), has good peak EU potential. Esbriet launch has encountered marketing challenges, but appears to now be
trending positive. Still, we see headwinds from potential competitor data in late 2013. Our worldwide peak sales estimate is ~$2B in 2025, and our
target is based on a DCF and pNPV analysis.
Investment highlights
As expected, Esbriet gets an initial negative recommendation from NICE in appraisal first draft; we think price flexibility could lead to positive recommendation later in 2013. ITMN hinted in its Q3 call that it might receive a negative first round appraisal.
We think ITMN will exercise flexibility on price, allowing eventual launch in the UK. Based on conversations with UK IPF experts, we think the final UK price may be substantially lower than the $42K/year ITMN submitted to NICE, possibly as low as around $30K/year. Nevertheless, we expect
good UK uptake to be positive on UK IPF expert support.
ITMN expects final NICE appraisal in March 2013; we think NICE could stretch process in H2/13. After this recommendation, a ~1 month
consult period begins for comments on the first appraisal. After this, the committee may meet again, after which final guidance is published.
Given the consultation period falls during holiday season, ITMN cautioned review could stretch into Jan., with a meeting in late Jan. 2013 and final guidance in March. We see Esbriet as just the sort of drug NICE tortuously appraises, and expect a decision in H2/13.
Related articles
- Can InterMune Sustain Positive Momentum? (seekingalpha.com)
