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out today the price of speculating on a rumor, as the company plans to announce that less than 5% of patients have withdrawn from the study prior to meeting the primary endpoint, which is time to disease progression, as measured by either a 10% decline in lung function or a 10%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

Patients can elect to drop out of the trial if they hit either of the disease progression measures, but that would not affect the power of the study.

The rumor mill was fueled by a Dec. 18 research report from Sturza's Institutional Research, which began coverage with a "sell" rating. The report raised questions about ITMN's ability to expand the indication for Actimmune to include the IPF indication, which accounts for the majority of sales thanks to off-label use. The product is approved for both chronic granulomatous disease (CGD) and severe, malignant osteopetrosis; but of the $35-$36 million of Actimmune sales ITMN expects to post for 2001, about $30 million is from the IPF setting.

Sturza's main concern is that ITMN will announce a delay in the IPF program

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