InterMune Inc.’s (ITMN) second-quarter adjusted loss per share of 70 cents was narrower than the Zacks Consensus Estimate of a loss of 69 cents but wider than the year-ago loss of 64 cents per share. The wider year-over-year loss was due to higher expenses.
Quarterly Details
InterMune reported revenues of $14.4 million in the second quarter of 2013, compared with year-ago revenues of $5.5 million. Revenues also increased 37% on a sequential basis.
The sharp increase in total revenues was primarily due to a boost in Esbriet (pirfenidone) sales. The drug was launched in Germany in Sep 2011. Revenues were above the Zacks Consensus Estimate of $13 million.
Esbriet was the sole contributor to InterMune’s total revenues in the second quarter of 2013. Esbriet is approved for the treatment of idiopathic pulmonary fibrosis (IPF), a fatal lung disease.
During the quarter, research and development (R&D) expenses increased 9.4% to $27.5 million. The increase in R&D was due to expenses associated with the ASCEND trial.
The ASCEND trial will support the filing of Esbriet for the treatment of IPF in the US. In Jan 2013, the company completed enrollment for the phase III study in the US. InterMune confirmed in its press release that the results from the ASCEND trial are expected in the second quarter of 2014.
Selling general and administrative (SG&A) expenses were up 45.4% to $37.3 million during the reported quarter. The increase in SG&A expenses during the reported quarter was primarily attributable to expenses related to the launch and pre-launch of Esbriet in the EU and Canada.
2013 Guidance
Apart from announcing its results, the company also updated its previously announced guidance for the year 2013. InterMune now expects Esbriet sales in the range of $55−$70 million (previous: $40−$70 million) in 2013. Total revenues for 2013 as per the Zacks Consensus Estimate are $59 million.
The company, however, maintained its 2013 operating expenses guidance at $245–$285 million. InterMune still expects 2013 R&D expenses in the range of $100–$120 million and SG&A expenses in the range of $145–$165 million.
Esbriet Update
To date, Esbriet is successfully priced and reimbursed in 13 European countries, namely, Austria, Belgium, Denmark, France, Germany, Iceland, Luxembourg, Norway, Sweden, Finland, Italy, England and Ireland. InterMune launched the drug in Italy earlier this month and expects to launch it in England and Wales by next month.
Moreover, the company expects to provide an update on pricing and reimbursement discussions in Spain and the Netherlands by the end of the year.
Our Take
Though Esbriet is the only approved medicine for IPF, companies like Novartis (NVS) and Sanofi (SNY) are developing therapies to treat IPF. We remain concerned about the fact that InterMune is dependent on a single product for growth. Meanwhile, we expect investor focus to remain on the pricing and reimbursement in the remaining EU countries.
InterMune, a biotechnology company, carries a Zacks Rank #3 (Hold). Other biotech stocks such as WuXi PharmaTech (Cayman) Inc. (WX) currently look better positioned carrying a Zacks Rank #1 (Strong Buy).
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