Published at Retail Inestor 360: Sunday, 24 August 2014 21:16 Written by Doctor Hung V. Tran, MD, MS. Disclosure: We are long on ITMN, and we do not have financial relationship with any company we cover.
The Story. The Swiss Pharmaceutical Giant, Roche (VTX:ROG), has agreed to acquire InterMune Inc. for $8.3 billion in cash. InterMune (ITMN) is a biopharmaceutical company, based in Brisbane California, specializing in the development and commercialization of medicine to treat fibrotic lung diseases. The company's lead drug, pirfenidone, is indicated for the treatment of a progressive lethal lung disease called idiopathic pulmonary fibrosis (IPF). The drug had been approved and increasingly prescribed in more than 29 European countries under the trademark, Esbriet. In Japan and South Korea, Shionogi & Co. marketed the drug as Pirespa.
More Insights. Pirfenidone's sales have been increasing drastically over the last several years as InterMune transitioned to become a powerful growth company. For the second quarter of 2104, Esbriet recognized $35.7 million or 148 percent increased as compared to the similar period in 2013. Revenue also increased sequentially from previous quarter earnings of $30.3 million or by 18 percent. As we stated in our research, "pirfenidone increasing sales are reflective of InterMune's new identify as a growth biopharma."
InterMune's portfolio is not one with stacked with many drugs, but the company focuses on quality rather than quantity. InterMune is "establishing complete dominance by improving the company's current drug." One of the characteristics of a successful biopharmaceutical company is the desire to further their research efforts in improving their current drug. That being said, InterMune is already working to produce a newer generation of pirfenidone. The second-generation drug tends to exhibit greater safety and efficacy.
Even More. Similar to other successful pharmaceuticals like JAZZ and Questcor, InterMune is also focusing on expanding pirfenidone indications, which is a cost-efficient growth strategy. Accordingly, InterMune has initiated the aforementioned effective approach in the latter part of 2013 with the initiation of the LOTUSS trial – to study systemic sclerosis-related interstitial lung disease (“SSc-ILD”). SScILD is an orphan disease with a prevalence approximately as large as that of IPF and no approved therapies. In November 2013, the FDA granted pirfenidone orphan drug status for the treatment of SScILD in the United States.
On July 2014, InterMune received the FDA's fast track designation for pirfenidone. This is great news for countless patients suffering from IPF because there is no effective pharmacotherapy to treat the disease. Current treatments solely address symptoms, and most patients with IPF eventually die within five years. Based on the stellar ASCEND trial results, our integrated investing research model forecasts that pirfenidone has more than 85 percent chances of FDA approval. We hope that the Agency will deliver this much-needed therapy in bringing hope to patients and their loved ones.
Bottom Line. Investors who exercise diligence, perseverance and patience to ignore the market's noises and invest in InterMune are handsomely rewarded. We have been fighting for another stellar company, MannKind Corporation, that is quite similar to InterMune, and our extensive research suggested that the market has miscalled MannKind – there is much untapped potential in the company's lead drug, Afrezza, as well as the company's proprietary Technosphere novel drug delivery platform. While we could neither guarantee that MannKind nor any one of our recommendations will earn investors multi-baggers investment profits, we notice that, as long as we continue to push our limits of diligence and exercise humility, the good Lord tends to send us blessings. On the final note, if InterMune is trading less than $74 per share in the pre market or regular market tomorrow that would be an arbitrage situation, and investors should take full advantage and purchase shares.
Catalysts revealed. Vincata Equity Research (360 Biotech) insights have been leveraged among the pros and retails to forecast trials data such as the Flint Trials for Intercept, the ASCEND trials for InterMune, or the Affinity Trials MannKind. Investing in biotech is highly risky, but it can be quite rewarding when investors have an edge in data analysis. Physicians who are rigidly scientific tend to lack the analytical prowess of financial experts. Conversely, Wall Street financiers usually do not possess a physician's medical expertise. Likewise, PhDs are skillful in data analysis but these scientists might not be familiar with physicians' prescribing patterns, which give the foresight to successful investing in biotech. Hence, experts will improve their analytical skills, as well as, forecasting accuracy if they leverage on each other complimentary skills. Vincata Equity Research's strength is our Integrated Research approach – leveraging on our hybrid backgrounds as MDs, researchers, and financially analysts. SIGN UP as a registered member to enjoy the full benefits of our tireless diligence in delivering market intelligence ahead of Wall Street to you, the pros and the everyday investor. We tipped our registered users about InterMune when it was selling below $10, as well as, exciting companies before they took off such as MannKind,Intercept, JAZZ, Regeneron, Amphastar, FONAR, GT Advanced Technology,Chipotle, Tesla, Green Mountain Coffee, Sun Power and etcetera. … There are great companies with brewing catalysts and you do not want to miss the train!
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