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InterMune Inc. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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InterMune Inc. (ITMN) filed Quarterly Report for the period ended 2010-06-30.

Intermune Inc. has a market cap of $564.7 million; its shares were traded at around $10.2 with and P/S ratio of 11.6. Intermune Inc. had an annual average earning growth of 2.1% over the past 10 years.ITMN is in the portfolios of Stanley Druckenmiller of Duquesne Capital Management, LLC, Steven Cohen of SAC Capital Advisors, Andreas Halvorsen of Viking Global Investors LP, RS Investment Management, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, PRIMECAP Management.

Highlight of Business Operations:

Data from the 12-week regimens of the Phase 2b study of un-boosted danoprevir plus SOC were reported on April 14, 2010. Similar virologic response was observed in all danoprevir treatment groups throughout the 12 weeks and after 12 weeks of treatment. At a danoprevir dose of 600 mg twice daily, 86% of patients had levels of HCV RNA below the limit of detection (<LOD) at Week 4 (RVR) and 89% were <LOD at Week 12 (cEVR). At a danoprevir dose of 300 mg three times daily, 73% of patients achieved RVR and 88% achieved cEVR. Viral response of patients at the highest dose of 900 mg twice daily was not meaningfully different from that observed in patients who received 600 mg twice daily or 300 mg three times daily. Analysis of the safety data from the Phase 2b study is preliminary in nature and additional evaluation is ongoing. In the interim safety analysis, serious adverse events (SAEs) were generally balanced across all four treatment groups. The incidence of treatment-emergent Grade 4 (>10x ULN) ALT elevations was 0%, 1%, 6% and 0% in the 300 mg three-times daily, 600 mg twice daily, 900 mg twice daily and placebo groups, respectively. In the danoprevir treatment groups, these elevations occurred generally between weeks 6-8 or later and were reversible after discontinuation of danoprevir. Dosing of the 900 mg arm was stopped based on this safety signal. Treatment-emergent Grade 3 or Grade 4 neutropenia was reported in 24%, 25%, 31% and 16% of patients in the 300 mg three-times daily, 600 mg twice daily, 900 mg twice daily and placebo groups, respectively. The incidence of rash and anemia was comparable across all treatment groups, including the placebo group (SOC + placebo). A Phase 2b study of ritonavir-boosted danoprevir plus SOC is expected to begin in the fourth quarter of 2010; the exact timing will be determined with our collaboration partner Roche. Details of that study will be shared at the time of study initiation.

Total revenue was $5.9 million and $7.9 million for the three-month periods ended June 30, 2010 and 2009, respectively, representing a decrease of 26%. This decrease was attributable to a decline in sales of Actimmune of approximately $2.0 million. Total revenue was $12.0 million and $14.8 million for the six-month periods ended June 30, 2010 and 2009, respectively, representing a decrease of 19%. This decrease was attributable to a decrease in sales of Actimmune of approximately $2.8 million, or 21%. In early March 2007, we announced that our Phase III INSPIRE program for Actimmune in IPF had been discontinued and that future Actimmune revenue was expected to decline. For the three- and six-month periods ended June 30, 2010 and 2009, sales of Actimmune accounted for all of our net product revenue. A majority of this revenue was derived from physicians prescriptions for the off-label use of Actimmune in the treatment of IPF.

Cost of goods sold included product manufacturing costs, royalties, distribution costs and inventory write-downs. Cost of goods sold were $1.2 million and $1.9 million for the three-month periods ended June 30, 2010 and 2009, respectively. The gross margin percentage for our products was 77% and 74% for these periods in 2010 and 2009, respectively. For the six months ended June 30, 2010, cost of goods sold were $3.8 million compared with $4.5 million for the same period last year. The gross margin percentage for our products was 63% and 65% for these periods in 2010 and 2009, respectively. The decline in gross margin percentage reflects the $0.3 million charge we recorded in the first six months of 2010 related to excess Actimmune inventories. The decline in dollar value of cost of goods sold for the three- and six-months ended June 30, 2010 compared to the same periods last year reflects the continuing decline of Actimmune revenue.

Research and development expenses were $14.7 million and $22.9 million for the three-month periods ended June 30, 2010 and 2009, respectively, representing a decrease of $8.2 million or 36%. Research and development expenses were $35.2 million and $47.4 million for the six-month periods ended June 30, 2010 and 2009, respectively, representing a decrease of $12.2 million or 26%. The decreases in spending for the three- and six-month periods ended June 30, 2010 compared with the same periods in 2009 primarily reflect the completion of the CAPACITY clinical trials in early 2009 and the timing of clinical studies of danoprevir in patients chronically infected with HCV.

General and administrative expenses were $12.7 million for the three-month period ended June 30, 2010 and $8.5 million for the same period in 2009, an increase of $4.2 million, or 49%. For the six-month periods ended June 30, 2010 and 2009, general and administrative expenses were $27.9 million and $17.2 million, respectively, representing an increase of $10.7 million, or 62%. The increased spending for the three- and six-month periods ended June 30, 2010 compared with the same periods in 2009 can be attributed to costs related to preparation for the potential commercialization of pirfenidone, which received a Complete Response Letter from the FDA in May 2010. Additionally, we incurred $2.8 million of stock-based compensation expense during the six-month period ended June 30, 2010 compared with $2.3 million during the six-month period ended June 30, 2009.

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