Staff Writer

InterMune Inc. is padding its coffers with a $68 million public offering to support a research and development pipeline that includes a late-stage compound for idiopathic pulmonary fibrosis and an early stage protease inhibitor program for hepatitis C virus infection.

The company agreed to sell 3.5 million shares priced at $19.50 apiece. Minus the underwriting costs, net proceeds are expected to total $63.9 million. The total would increase to $73.5 million if underwriters Goldman, Sachs & Co., Deutsche Bank Securities Inc. and CIBC World Markets Corp. exercise their 525,000-share overallotment option in full. InterMune, which reported a net loss of $40.6 million for the first half of 2007, had about $208 million in the bank as of June 30.

The latest cash infusion comes as the company gets back on track following its Actimmune setback six months ago. Approved for chronic granulomatous disease and osteopetrosis, the interferon gamma-1b compound failed to show benefit over placebo in patients with idiopathic pulmonary fibrosis (IPF) and InterMune halted a Phase III trial in March on the recommendation of an independent data monitoring committee. But the most damage was to InterMune's bottom line, since a large portion of Actimmune revenues had come from off-label use in IPF. Revenues dropped 40 percent in the second quarter of 2007 compared to the previous year. Following the Phase III miss, the Brisbane, Calif.-based company initiated a drastic restructuring process, eliminating half of its staff - about 116 employees - to focus resources on advancing the rest of its pipeline, which includes another shot at the IPF market with the late-stage drug pirfenidone. (See BioWorld Today, March 21, 2007.)

In-licensed from Osaka, Japan-based Shionogi & Co. Ltd., pirfenidone is an oral, small-molecule drug in two Phase III studies in IPF patients. InterMune designed its pivotal studies based on trials completed by Shionogi, which retains rights in Japan, Korea and Taiwan and recently submitted for regulatory approval in Japan, though InterMune anticipates a larger patient population and longer study duration to reach required statistical significance. The primary endpoint in both studies is lung function, as measured by change in forced vital capacity. Results from the trials, which finished enrolling a total of 779 patients in May, are expected in late 2008 or early 2009.

Earlier in its pipeline, InterMune is focusing on hepatitis C virus, and is one of several biotechs to catch big pharma's interest with their protease inhibitor programs. The firm landed a potential $530 million deal last October with Basel, Switzerland-based F. Hoffmann-La Roche Ltd. for an early stage HCV protease inhibitor program, led by ITMN-191, which is about to start a Phase Ib trial in HCV-infected patients.

Competitors in that space include Vertex Pharmaceuticals Inc., of Cambridge, Mass., which is partnered with Johnson & Johnson unit Janssen Pharmaceuticals Inc. to develop its protease inhibitor, VX-950, currently in Phase II. And a preclinical HCV protease inhibitor from Watertown, Mass.-based Enanta Pharmaceuticals Inc. is the center of a potential $307 million deal with Abbott, of Abbott Park, Ill.

Through its deal with Roche, InterMune is working on potential second-generation HCV compounds and, on its own, continues its ongoing research and preclinical efforts on other programs in the areas of pulmonology and hepatology.

Shares of InterMune (NASDAQ:ITMN) lost 6 cents Friday to close at $19.86.

In other financings news:

• Emisphere Technologies Inc., of Tarrytown, N.Y., filed a shelf registration statement to sell, from time to time over the next two years, up to 7 million shares of stock and warrants. The company expects to use proceeds for general corporate purposes, including further development of its lead clinical programs, capital expenditures and working capital. Use of proceeds would be specified further at the time of any offering. Shares of Emisphere (NASDAQ:EMIS) closed at $4.77 Friday, up 7 cents.

• MAP Pharmaceuticals Inc., of Mountain View, Calif., set the range for its proposed initial public offering announced in June. The company said it planned to offer 5 million shares priced between $14 and $16 each. At the midpoint price, the offering would bring MAP gross proceeds of $75 million, which it plans to use for development activities, including clinical trials related to aerosolized drugs UDB for asthma and MAP0004 for migraine. (See BioWorld Today, June 19, 2007.)

• MicroIslet Inc., of San Diego, said an existing investor agreed to lend the company $1 million to bridge its working capital needs until additional funding can be secured. MicroIslet focuses on transplantation therapy for people with conditions requiring cell-based replacement treatments, specifically Type I diabetes.