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InterMune, Inc. Message Board

  • jacosa jacosa Aug 28, 2013 10:58 AM Flag

    What happens on the ASCEND readout?

    About 6 months off.

    First: an inconclusive [or slightly worse, negative] result would be plenty bad, but wouldn't drive the stock to the penny range. Esbriet is doing well enough to have substantial value. My best guess would be a drop to the $5 range followed by sale to a European company at a price not much lower than the present stock price.

    Now, suppose success. I doubt that it matters whether the result is barely statistically significant or hugely obvious. Either result satisfies the FDA checklist, and the earlier rejection went against advice of a panel, so it can be presumed that the last check is all that's needed for approval.

    Now the interesting part: does the stock go up 2-3 fold instantly? We've seen huge FDA-driven moves before, so I think potential buyers will be more cautious. I'd consider doubling an upper bound to the immediate reaction, with not much further movement pending FDA decision.

    Will there be further movement upon approval? I think so, but less than doubling: unlike the aftermath of the advisory committee recommendation, investors know that Esbriet needs a lot of selling support; this is not a drug that will jump off the shelves.

    Does Intermune get sold, and for how much? That being the $64 question, I'll pick $64 as a possible price. And I think that it depends mostly on the progress of "Son of Pirfenidone." If there's a really promising candidate, it makes sense to hold out and try to establish its value. Otherwise, I see advantages to putting Esbriet in the hands of a company with established selling muscle and no good argument against. Odds are against a new drug showing promise in this graveyard of drug candidates, so I don't expect Intermune to be independent come 2016.

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    • great post as always. and as i've said before, something is keeping this stock from going under $13 even in terrible market days.

    • Ran over the character limit.

      Suppose Intermune chooses to go it alone? I don't think cash on hand + that generated by Esbriet sales can support anything resembling a proper US rollout. Timing of any refinancing depends on guesses about Intermune's perceived creditworthiness and the course of interest rates. I'll guess that general business conditions will remain punk and interest rates will remain low for about another year. Meanwhile, Intermune's perceived creditworthiness will jump on success of Ascend and on FDA approval (call it a year or a little over). So there's a sweet spot in the time frame in cal Q4 of next year. I don't think there's much chance of Intermune being able to issue straight bonds on reasonable terms, but either a stock placement or a convertible issue could fit. If the market is at all frothy at that time, more "creative" possibilities exist.

 
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