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InterMune Inc. Reports Operating Results (10-Q)

November 08, 2010 | About:

10qk

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InterMune Inc. (ITMN) filed Quarterly Report for the period ended 2010-09-30.

Intermune Inc. has a market cap of $780.46 million; its shares were traded at around $13.93 with and P/S ratio of 16.03. Intermune Inc. had an annual average earning growth of 2.1% over the past 10 years.ITMN is in the portfolios of Steven Cohen of SAC Capital Advisors, PRIMECAP Management.

Highlight of Business Operations:

Total revenue was $5.7 million and $27.3 million for the three-month periods ended September 30, 2010 and 2009, respectively, representing a decrease of 79%. In the third quarter of 2009, we received a $20.0 million milestone payment from Roche associated with the initiation of the Phase 2b clinical trial of danoprevir. Actimmune revenue declined approximately 26% in the third quarter of 2010 compared with the same period in 2009. Total revenue was $17.6 million and $42.1 million for the nine-month periods ended September 30, 2010 and 2009, respectively, representing a decrease of 58%. This decrease was attributable to a decrease in sales of Actimmune of approximately $4.5 million, or 23%, as well as the milestone receipt noted above. 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 nine-month periods ended September 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.

Research and development expenses were $15.6 million and $20.6 million for the three-month periods ended September 30, 2010 and 2009, respectively, representing a decrease of $5.0 million or 24%. Research and development expenses were $50.8 million and $68.0 million for the nine-month periods ended September 30, 2010 and 2009, respectively, representing a decrease of $17.1 million or 25%. The decreases in spending for the three- and nine-month periods ended September 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 $10.9 million for the three-month period ended September 30, 2010 and $9.9 million for the same period in 2009, an increase of $1.0 million, or 10%. For the nine-month periods ended September 30, 2010 and 2009, general and administrative expenses were $38.7 million and $26.9 million, respectively, representing an increase of $11.8 million, or 44%. The increased spending for the three- and nine-month periods ended September 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 $4.9 million of stock-based compensation expense during the nine-month period ended September 30, 2010 compared with $3.4 million during the nine-month period ended September 30, 2009.

Interest expense decreased to $2.1 million in the three-month period ended September 30, 2010, compared with $2.7 million for the three-month period ended September 30, 2009 and decreased to $6.3 million in the nine-month period ended September 30, 2010 from $7.9 million in the nine-month period ended September 30, 2009. The decreases reflect a decline in the amortization of the debt discount on our 0.25% convertible notes due in March 2011 (the 2011 Notes). Beginning in April 2009 and continuing through October 2009, we retired approximately $40.0 million in principal value of our 2011 Notes in exchange for shares of our common stock, which resulted in the reduction of a portion of our debt discount amortization. As a result, in the first nine months of 2010, debt discount amortization was approximately $2.8 million, compared to $3.7 million recorded in the first nine months of 2009.

At September 30, 2010, we had available cash, cash equivalents and available-for-sale securities of $133.5 million compared to $99.6 million at December 31, 2009. The increase of $33.9 million was primarily driven by the $106.8 million in net proceeds from our January 2010 public offering, partially offset by the use of cash for our operations, as well as a payment of approximately $9.2 million to pay our remaining obligation to the Department of Justice under the terms of the Civil Settlement Agreement. Our cash, cash equivalents and available-for-sale securities balance at September 30, 2010 does not include the $175.0 million proceeds from the sale of our rights to danoprevir to Roche, which was completed on October 6, 2010.

Cash used in operating activities was $81.3 million during the nine-month period ended September 30, 2010, comprised primarily of a net loss of $83.7 million and a decrease in other accrued liabilities of $9.5 million, partially offset by decreases in accounts receivable and inventories of $2.0 million and $0.8 million, respectively. The decrease in other accrued liabilities reflects the accelerated payment of $9.2 million made to the U.S. Department of Justice in February 2010. Details concerning the loss from operations can be found above in this Report under the heading Results of Operations.

Read the The complete Report

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