Idiopathic Pulmonary Fibrosis (IPF) is an uncommon but severe lung disease, with a median survival of only a few years. The estimated prevalence is 128,000 patients in the US, and while we have taken a more conservative approach to the overall patient eligible population, our estimated market still reaches over $1 billion in US sales by 2015.

Current standards of care (corticosteroids and immunosuppressants) were initiated before IPF was well distinguished from other forms of similar idiopathic lung diseases, and have never been convincingly proven to be effective in what is currently recognized as IPF. These treatments also have potentially severe side effects, contributing to the market need for better options.

There are two drugs currently in Phase III development for IPF. Pirfenidone (InterMune – ITMN) is undergoing two Phase III trials. It was shown to slow the decline in a test measuring lung volume in both a Phase II and a Phase III trial from Japan, though there has not been consistent support from other secondary endpoints. Results for the InterMune trials are not expected until 2009, but an approval decision in Japan should come earlier. While we think that it will be important to show some trends in the secondary endpoints for US approval, the FDA is likely to be somewhat lenient given the need for treatment. Hence we have a positive outlook for approval.

Another drug in Phase III development, Tracleer (Actelion - ATLN.CH) is already approved for pulmonary arterial hypertension. Patients with IPF do get pulmonary hypertension (PH) as the disease progresses, but Tracleer also is thought to have antifibrotic properties, and is being studied in patients without significant PH. Results in a Phase II trial were mixed, but there were some encouraging findings, particularly for a subgroup of patients with less extensive disease on imaging tests. While we do have some concerns about the drug, we also lean to the positive on its approval for IPF.

Other drugs in earlier stage development do not have significant clinical data yet. These include Gleevec (Novartis - NVS), Thalomid (Celgene - CELG, Pharmion - PHRM), and GC1008 (Genzyme – GENZ, AstraZeneca - AZN). Revatio (Pfizer - PFE), also already approved for pulmonary arterial hypertension, is also being studied in trials sponsored by government agencies and, if successful, could provide off-label competition.

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