Event - InterMune races for open field with Tracleer failure

Analysis

The world may be InterMune’s oyster. Because of the failure of Actelion’s Tracleer trials in idiopathic pulmonary fibrosis (IPF), InterMune’s pirfenidone faces a wide-open IPF market provided it gets the blessing of an FDA advisory committee next week and final approval by its May 4 PDUFA date (Actelion stopped in its tracks with negative Tracleer data, March 1, 2010).

But the adcom meeting is being portrayed as a true binary event in the pharma world, with tremendous risk built in. The fate of the tumour necrosis factor alpha inhibitor will rest on whether InterMune can persuade the adcom to disregard a phase III trial that failed primary and secondary endpoints of improving subjects’ lung function and progression-free survival (PFS) (Mixed pirfenidone data improves InterMune’s capacity, February 3, 2009). Should the adcom want more data, lengthy and expensive trials await.

Product pirfenidone
Company InterMune
Market Cap $801m
Product NPV $2.26bn
% of Market Cap 282%
Event type FDA advisory committee
Date March 9, 2010
Could affect Letairis (Gilead Sciences)

Clinical need

There is no doubt about the clinical need for a drug to modify IPF’s effects. IPF is always fatal, with a median survival of two to five years, and currently only managed with corticosteroids (Therapeutic Focus -Behind Tracleer pulmonary fibrosis pipeline is a trickle, January 18, 2010).

With 100,000 patients in the US and a possible price of $40,000 a year, some analysts are projecting pirfenidone has the potential to be a blockbuster in this indication. EvaluatePharma’sconsensus estimate puts sales at $768m in 2014, well on its way to achieving blockbuster sales, although that estimate has fallen from $917m in January 2009, prior to when the mixed phase III results were announced.

The drug is already approved in Japan, where it is sold as Pirespa and expected to ring up $30m in sales this year for Japanese partner Shiongi, rising to $70m by 2014.

For InterMune, pirfenidone has a net present value of $2.26bn, according to EvaluatePharma's NPV Analyzer, nearly three times InterMune’s market capitalisation of $801m. If approved, it would be a good deal for InterMune, who purchased the rights to the drug from Marnac for $13.7m up front and $53.5m in milestones in November 2007 after Schering abandoned efforts to use the drug in multiple sclerosis in 2003.

Yet there is plenty of doubt about pirfenidone’s clinical effectiveness. The two large phase III trials, Capacity 1 and Capacity 2, came to different conclusions, with the 435-patient Capacity 2 resulting in statistically significant improvements in lung function and PFS, but the 344-patient Capacity 1 failing on both.

Adcom stance

Much will depend on the stance of the Pulmonary-Allergy Drugs Advisory Committee once it assembles March 9. Analysts suggest that the adcom may not consider forced vital capacity to be a useful primary endpoint. Tracleer’s failed phase III trial used disease progression or death.

In addition, analysts suggest that the decision may also depend on whether the panel adopts a physicians’ or a statisticians’ point of view, with the physicians focusing on patient need and the statisticians focusing on mathematical signs of effectiveness.

The blockbuster potential and the uncertainty about the data explain InterMune's share price volatility in the run-up to the adcom meeting – not to mention the failure of pirfenidone's chief rival, Tracleer. Shares in InterMune have been trending generally downward since early February, but spiked upward 7% yesterday to $14.64 on the news of Tracleer’s failure.

Analysts expect massive share movement following the adcom’s vote, with the price settling in the $20-$30 range on a positive adcom vote and in the single digits for a negative. Analysts at Jefferies, for one, are guessing that the mixed trials will result in a negative vote and have pencilled in a $6 price target. Conversely, Oppenheimer estimates a price in the high $30s on final FDA approval, while recognising a likely drop to single digits on rejection.

Should pirfenidone fail, it will clear a path for Letairis, the Gilead Sciences pulmonary hypertension product now in phase III trials for IPF, which is known outside the US as Volibris and marketed by GlaxoSmithKline. However, as an endothelin A receptor antagonist like Tracleer, Letairis may have the same challenges Tracleer did in treating IPF; phase III data is not expected until the end of 2012 or early 2013.

InterMune has been handed a gift with Tracleer’s failure in IPF. However, there are plenty of signs that it may be fate playing a joke on the California company, as hopes for a blockbuster drug could disappear quickly on mixed effectiveness data.

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