InterMune Faces Tough Decisions, Long Wait, For Lung Drug

The Food and Drug Administration's rejection of InterMune Inc.'s (ITMN) lung treatment pirfenidone until further testing creates a lot of uncertainty for the company and investors, and for patients, many of whom have only a few years to live.

If the Brisbane, Calif., company chooses to keep developing the drug, it likely will have to conduct a multiyear study to show the drug's effectiveness, something that increases the clinical and commercial risk. The FDA's decision likely means the drug won't be available until 2013 at the earliest and further delays the first treatment of the fatal condition known as idiopathic pulmonary fibrosis.

"It's devastating news," said Teresa Barnes, vice president of patient outreach and advocacy at the Coalition for Pulmonary Fibrosis, noting that waiting for another trial isn't an option for many. "Frankly, a lot of patients will be dead by then."

InterMune will meet with the FDA "as soon as possible to understand their points of view and to determine the most appropriate path forward," spokesman Jim Goff said. He declined to comment on the company's commitment to developing pirfenidone, but he noted that there is a European regulatory decision coming in the first half of 2011.

Industry observers are doubtful about European approval after the FDA's decision, news of which reduced InterMune's valuation by three-quarters to $630 million.

The setback shouldn't be the end of InterMune. The company already sells Actimmune, which had $25.4 million in sales last year as treatment for an immune system disorder and bone disease. InterMune also is developing a hepatitis C drug with Roche Holding AG (RHHBY).

The company, though, may need to raise cash to conduct another clinical trial.

Some investors may look to the past struggles of Dendreon Corp. (DNDN) for encouragement. That drug maker's stock more than tripled when an FDA panel recommended approval of its prostate cancer drug Provenge, but it plummeted 70% when the agency rejected the application and asked for more data.

That request occurred almost exactly three years ago, but Dendreon worked with the agency and conducted another late-stage trial to prove the effectiveness of Provenge, which was approved last week. The stock is now at all-time highs.

Like Dendreon, InterMune is looking to treat patients with no remaining options, and the payout--many projected pirfenidone to have sales exceeding $1 billion--could be huge.

But the need for an additional clinical trial adds a substantial amount of risk for the company and investors. There is no assurance that a new study will prove successful, especially if the trial calls for the more difficult measure of patient survival.

The previous late-stage trials used a measure called forced vital capacity, a measure of lung function, and one of them failed to prove the effectiveness of the drug.

Aside from clinical risk, the delay could allow others to come to the market with a treatment and cut into potential sales. Other companies exploring treatments for the disease include Gilead Sciences Inc. (GILD), Actelion Ltd. (ATLN.VX) and Pfizer Inc. (PFE).

There is a chance, widely viewed as slim, that InterMune could submit data gathered by Shionogi & Co. (4507.TO), which sells the drug in Japan. Even if the FDA does accept that data, it still may not be viewed as adequate.

InterMune included a report on the data in its original application, but the FDA rejected it because it didn't include patient-level data. The FDA noted differences in the data between the Japanese trial and the U.S. trials, including diagnostic criteria, dosage, treatment duration and endpoint.

Regardless of the path forward for pirfenidone, a core issue is that a devastating disease still has no treatment. Idiopathic pulmonary fibrosis involves the scarring of the lungs, often from an unknown cause, which makes it hard for oxygen to enter the blood.

About 200,000 Americans have the condition, with about 50,000 new cases every year, according to the National Institutes of Health. It mostly affects people between 50 and 75 years old, and patients generally live three to five years after diagnosis.

Barnes at the Coalition for Pulmonary Fibrosis said patients have expressed shock at the ruling, mostly because they expected approval after the panel's decision in March. She said the organization is writing a formal response to the FDA to protest the decision, and is encouraging patients to do the same.

"We are concerned this could have a chilling effect on the industry and the research that's going on," Barnes said.

In a sign of the drug's importance, an IPF patient being treated at a New York City hospital called into a InterMune conference call Tuesday to ask if he would still continue getting the drug through a clinical trial in which he is participating. The 67-year-old patient reported no increase in lung scarring since beginning the drug in September 2008. InterMune officials said he would continue to have access to the drug.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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