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InterMune Reports 4Q Esbriet Sales

Zacks Equity Research

InterMune Inc. (ITMN) recently announced the preliminary fourth quarter 2012 net sales of Esbriet (pirfenidone) and its revenue and expense guidance for 2013. The company also provided an update on other development activities.

Preliminary Esbriet Update

InterMune reported fourth quarter 2012 unaudited Esbriet net revenues of $8.2 million, up 9.3% sequentially. Esbriet was the sole contributor to InterMune’s total revenues in the last few quarters. The drug, which was launched in Germany in September 2011, is approved for the treatment of idiopathic pulmonary fibrosis (IPF), a fatal lung disease.

For the full year 2012, Esbriet’s unaudited net sales came in at approximately $26.1 million, slightly above the higher end of InterMune’s 2012 Esbriet guidance range of $20–$25 million. The company mentioned that the fourth quarter Esbriet results include the 11% price decrease in Germany, effective mid-September 2012. Total revenues for 2012 as per the Zacks Consensus Estimate were $29 million.

We remind investors that Esbriet is now successfully priced and launched in 9 of its 15 targeted European countries, namely Austria, Belgium, Denmark, France, Germany, Iceland, Luxembourg, Norway and Sweden. Esbriet is also approved and launched in Canada, the ninth largest pharmaceutical market in the world.

Meanwhile, InterMune completed its enrollment process in the phase III ASCEND study to support Esbriet’s regulatory submission for the candidate in the US.

InterMune expects preliminary results from the 52-week ASCEND trial in the second quarter of 2014. The company expects to build the commercial infrastructure and commence pre-launch preparations for Esbriet in the US in 2013.

2012 Operating Expenses Guidance

InterMune also adjusted its 2012 operating expenses guidance. The company narrowed its total operating expenses guidance for 2012 to $205–$215 million (previous guidance: $200–$235 million).

InterMune’s 2012 research and development (R&D) expenses are expected in the range of $100–$105 million (previous guidance: $90–$105 million) and selling general and administrative (SG&A) expenses are expected in the range of $105–$110 million (previous guidance: $110–$130 million).

2013 Guidance

The company expects Esbriet sales of $40–$70 million in 2013. The guidance includes $40–$55 million from countries where the product is currently launched and the rest from the countries where it is yet to be launched. Total revenues for 2013 as per the Zacks Consensus Estimate are $71 million.

InterMune’s total operating expense guidance for 2013 is in the range of $245–$285 million including R&D expense guidance of $100–$120 million and SG&A expense guidance of $145–$165 million.

Our Recommendation

We believe Esbriet has significant commercial potential as it targets IPF which is an orphan indication. Though Esbriet is the only approved medicine for IPF, companies like Novartis (NVS), Sanofi (SNY) and Celgene Corporation (CELG) are developing candidates for IPF treatment. We remain concerned about the fact that InterMune is dependent on a single product for growth.

We currently have a Neutral recommendation on InterMune. The stock carries a Zacks #3 Rank (Hold). Meanwhile other pharma stocks such as Targacept, Inc. (TRGT) and Repligen Corporation (RGEN) carry a Zacks #1 Rank (Strong Buy).

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