Ebb & Flow

InterMune (ITMN) lost $207 million of its value last week as investors dumped shares on rumors that the company was seeing a larger-than-expected dropout rate for its Phase III trial of Actimmune interferon gamma-1b in idiopathic pulmonary fibrosis (IPF). The Street chatter was that the company was seeing a dropout rate as high as 30%, in sharp contrast to the less than 5% dropout rate ITMN had seen as of Nov. 26, when it provided an update to analysts in New York.

However, the sellers will find out today the price of speculating on a rumor, as the company plans to announce that less than 5% of patients have withdrawn from the study prior to meeting the primary endpoint, which is time to disease progression, as measured by either a 10% decline in lung function or a 10% decline in oxygen in the blood, or death. ...