Come back AFTER there's been a proper p2 and a p3 has passed the mid-study futility analysis. Until then, you don't have a drug to talk about.
The settlement isn't as big a deal as the legal fees. I believe this ends the case entirely. Unfortunately, there's still a fight with Qualcomm ahead, and they are notoriously stubborn.
Ok, there's a theoretical possibility that FDA might not approve. But ASCEND really gave an incredible result, and the prior decision was close. Inevitable competition? IPF is as great an elephants' graveyard as Alzheimer's disease. What's hazy about revenue? Forecasts seem to have been accurate-to-conservative. Insiders sell. Way of the world. When you have penicillin (an effective drug...perhaps TOO strong an example), the previous disappointment and failure of lysozyme (arguably the first antibiotic; Flemings try before penicillin) is irrelevant.
Hy's law is a way to get an early warning. Pirfenidone has always been treated as if it carries a liver hazard. There3 is a comprehensive treatment registry that allows an upper limit to be set on liver risk, and it is unsurprisingly acceptable.
A lot of pharma analysts are used to looking at cancer drugs. Tumors shrink, the drug is widely adopted within the year and you can feel some satisfaction (sometimes, as with some tumor types treated with Avastin, subsequent analysis shows that the tumor shrinkage gave no benefit to the patients, but so what?). A problem we're fighting here is that IPF patients are sick. Give them pirfenidone and they stay sick. Either way, they get worse and then die. Nobody feels a whole lot of satisfaction, and drug usage doesn't expand like wildfire. But when you look closer, the patients treated with pirfenidone had N more months of mobility before they became bedridden (The peer-reviewed publication Management was protecting data for is likely to be our first official look at a serious estimate of N). And those extra months were added to total survival. Physicians notice. Drug use increases. Like it's doing in Europe right now.
So ther's the bull case, presented as a response to the bear case. What's not to like? I don't know how fast it should happen, but Intermune ought to be valued as the owner of a $1.5+ bln peak sales drug, and it isn't valued even close.
Historically, the bear case on Intermune has had these legs: pirfenidone doesn't work at all; if it does work, the benefit is not worth the "trouble" (expense, intrusiveness, side effects, etc) of taking it, the side effects are intolerable and anyway, there isn't enough REAL IPF to make a market. Oh!-and better drugs will be there early on.
Pirfenidone works. Add the ASCEND data set to existing data and that is clear. The benefit and trouble are hard to quantify, but over the last 4 years benefit estimates have been steadily increasing while trouble levels have lowered a bit (better management of side effects, more convenient dosage form expected). Absolute tolerability of side effects has a cultural component: Shionogi encountered the misfortune that The Japanese are less tolerant of indigestion than Europeans. Ascend results clearly show that the side effects are tolerable to a transatlantic subject population. The lowest defensible estimate of IPF prevalence in Intermune's territory is 170,000 (the patient association estimates over 300,000). At a treatment price over %50K/yr that is a big enough market. The only competitive drug that might be near approval is the BI one, and the best public information is that it is moderately inferior to pirfenidone. The new p3 enrolling suggests that marketing is several years off, at best.
So the classic bear case is demolished. There are some new elements: many otherwise-reasonable people are certain that the European introduction was disappointing. This is mostly because they believed the LIE that management had predicted $60MM of European sales in the first full quarter (I first saw it on Motley Fool, but it popped up EVERYWHERE). Management actually said that they hoped the introduction would track ahead of the acknowledged blockbuster Tracleer, which it did. The newest item is the single Hy's law (elevation of certain liver enzymes warns that a treatment is able to cause liver failure) case in ASCEND[more]
We really need a better class of basher. ASCEND is the name of a trial, not of a drug. It doesn't get approved.
It's a good report. Reading it, I'm struck by the degree to which Incyte is trying to look like a REAL drug company (so many development projects that no individual one is really critical to the company).. If you look at the nicely laid-out summary of ongoing projects, a lot of new-fangled jargon drops away. In highly toxic cancers, cachexia can kill all by itself; a "palliative" can be life-extending. But many of the combinations being tried share another theme--an old one. There's a hope that JAK inhibition can re-activate used-up chemotherapeutic agents (if not directly used-up ones, at least new ones with enough cross-resistance to the directly used up one so they'd be bad tries) The IDO inhibitor is hitting another old theme--it's an immune activator (or re-activator). Talk about it like that and it's more familiar, but the language isn't as hopeful as the language of "checkpoint inhibition." Talk about inhibiting checkpoints, and it sounds like a few combined ought to have a big effect. When you talk about removing the obstacles against immune attack, it sounds more like you'll need to hit most of some arbitrary number. Hence, all the collaborations.
After all these years with commercialization still 2 years away, I can sympathize with slighting Bari...but I still think it's a mistake. Pfizer gave itself a sucking chest wound underweighting joint anatomy in their registration study. If they had done it right, Xeljanz would be a great success and analysts would be attaching a much higher eventual value to the superior Baricitinib.
A sentence worth quoting from the report: "Based on our experience covering biotechnology stocks in the high growth phase, companies that are nearing profitability and have limited financing risk are viewed more attractively by potential investors."
Still reading. There's a lot to it. But it'll take a couple reports before I know how much to trust the new guy. FWIW, there are the usual signs that he wanted to give a bigger number but had to stop adding parts to his sum.
Yahoo has truncated ancient news, but reading Intermune releases and free associating, I think the last time Intermune dropped below 8 was when Spain missed a confidently-predicted approval date. Shortly after that, France approved a little earlier than expected and the stock price went up a bit.
Spain, of course, still hasn't approved.
Intercept is actually less attractive from an investment standpoint. Their breakthrough result came about as a result of a third-party trial. A lot of commercially valuable information simply wasn't gathered. The company had not worked itself into anything resembling preparedness to take advantage of the success.
Intermune ran its own trials and obtained results it is prepared to act on. Intercept skyrocketed because its spectacular result was a surprise to most observers. Intermune ought to grow going forward because its spectacular result is near the top of an anticipated range.
My time horizon is relatively long, but Intercept is likely to take longer than I like to wait to grow into its shoes (alternatively, to get the best price in a buy-out it helps to look prepared to go it alone--a potential acquirer of Intercept could step back for a couple of years; Intermune is ready to go in about a year).
If you'd take the (slight) trouble to look up the news around those prior huge up and down moves you would understand that ASCEND has delivered what was only hoped for in the past.
I was there when it did those jumps and dives. I got crushed in a small way by most of them trying plausible option strategies. I've learned to keep it simple.
I can't believe that FDA will be any obstacle at all after a result as compelling as this in a trial that was meant to be the tie breaker. They ALWAYS want mortality endpoints, but they also know perfectly well that requiring them is unreasonable for chronic diseases of any rarity. Management would be criminally stupid to say this, but FDA already looks bad in the face of 2 years of satisfactory European experience and a very favorable meta-analysis.
I'm overcommitted to this one issue. I'll sell soon in my IRAs, which are supposed to be exclusively closed-end funds (very easy long-term strategy; see "A Random Walk Down Wall Street") Probably sell a little in regular accounts to pay off margin, but keep selling puts into ongoing disbelief. Today wasn't most of the money to be made, but it was the easy, don't need a strategy part.
The ATS conf could be a positive catalyst if BI reports an AE profile anything like what they had in p2. I really can't see FDA convening another expert panel, but if they do, that could be another opportunity. It's possible that in the next few Qs we'll hear about increased European sales...that would be positive, especially if total European sales pass $60MM a quarter (a stretch for the next year, but still very symbolic).
My biggest payday in 40+years of investing. Special situation that was easy to predict if you knew to look, but scary because of all sorts of irrelevancies (see Scott Harkonen, the details of charges in the SAC mess, maybe Google Intermune together with IQWiG). Like INCY, the price is justified eventually, but there's some question about right now.
BoA/ML didn't actually cover ITMN, but neither did a lot of the other big boys, and all the rest of the gang were on the call asking questions.
Big doings with Intermune, another biotech that's turning into a real drug company (maybe), and again BoA/ML had nobody asking questions on the call.
That was one of the improvements in the ASCEND protocol: COPD progresses slower than IPF and doesn't respond to Pirfenidone. A greater effort was made to ensure that enrolled patients had IPF rather than a combination.
Dan Welch actually called it that on the brag call. Said to be 10x as potent on a weight basis and better tolerated. IND hoped for in about a year. If its clinical effectiveness is comparable to Pirfenidone it would rise to 'fair' in my estimation. More important for IPF patients, a more potent drug bespeaks better characterization of a target for the drug. It's a tenet of scientific medicine that understanding exactly what is going wrong can guide efforts to make it not go wrong.