We have added InterMune, Inc. (ITMN) to our evaluated company list. InterMune, with just under a billion dollars of market capitalization, is a late-stage biopharmaceutical company with two main drugs in development: Pirfenidone for the treatment of pulmonary disorders (mainly for idiopathic pulmonary fibrosis [IPF]) and ITMN-191 for the treatment of hepatitis C. Headquartered in Brisbane, California, InterMune went public in 2000, and the stock, which has oscillated between $10 and $50/share in the last seven years, recently closed at $25.85/share.

InterMune’s revenues have historically hailed from a third drug, Actimmune, a biologic long approved in two rare indications (chronic granulomatous disease and osteopetrosis). Actimmune had enjoyed broad off-label use in IPF and its sales reached $90.3 million in 2006. However, Actimmune recently failed a pivotal trial in IPF and the company expects these revenues to decline dramatically. InterMune, whose stock immediately fell by 30% on this data, has since slashed its staff by 50% and increased the size of Pirfenidone’s pivotal CAPACITY trials so as to increase the likelihood of them meeting their endpoint. The stock has responded and is now trading approximately 20% above its March 8th low of $21.86/share.

Broadly speaking, the company’s future will be revealed over the next two years. Initial viral load efficacy data from ITMN-191, expected in the fourth quarter of this year, will give an early indicator of the potential efficacy of this drug in an increasingly competitive Hepatitis C market. Top-line results from the pivotal CAPACITY trials of Pirfenidone in IPF, anticipated to be released late 2008 or early 2009, are even more fundamental to the company because if these data are negative – or in any way insufficient for FDA approval – InterMune would likely lose more than half its value.

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