West Coast Editor
With its hepatitis C virus protease inhibitor in Phase Ib trials, InterMune Inc.'s buyout of rights to pirfenidone for $13.5 million up front and as much as $53.5 million later puts the firm in position for another run against idiopathic pulmonary fibrosis (IPF) - the lung-scarring condition against which Actimmune failed earlier this year.
"We already had $7.5 million put aside in the third quarter, having to do with a milestone in the old deal," said Daniel Welch, president and CEO of Brisbane, Calif.-based InterMune.
"In terms of [profit and loss], what we're looking at is an additional $6 million," he added.
InterMune's stock (NASDAQ:ITMN) closed Monday at $15.77, down 21 cents.
In return for the $6 million, InterMune gets all rights to pirfenidone patents that it already had licensed from Marnac/KDL, plus other pirfenidone-related assets, and worldwide rights to intellectual property not licensed under the previous deal, including patents related to the TNF-alpha activities of the p38-gamma inhibitor.
The three-way deal between InterMune, Dallas-based Marnac Inc. and co-licensor KDL GmbH, of Basel, Switzerland, began in 2002, when the small molecule was still at the Phase II stage. (See BioWorld Today, April 9, 2002.)
Terms of the agreement were not disclosed at the time, but last year's annual report filed with the SEC by InterMune shows the firm paid $18.8 million up front, with potential milestone payments of as much as $14.5 million, based on clinical development, though none of those payments had been made as of the end of 2006.
Thus, with the buyout, InterMune dodges the $14.5 million payment due under the previous deal, and avoids paying the 9 percent royalty.
But the firm will owe more to Marnac/KDL if Phase III data from the current pirfenidone program are positive, and if the company registers the drug for approval in the U.S. and Europe.
"It's kind of a pay-forward deal," Welch said. "If we get success, they get another $53.5 million, pretty much in three big lumps" - on positive Phase III data in the ongoing trial called CAPACITY, with approval of the new drug application in the U.S., and with marketing authorization in Europe.
"We think the pricing [of pirfenidone] will be comparable to the pricing for pulmonary arterial hypertension, which is in the $30,000 to $40,000 per-patient, per-year category," Welch told BioWorld Today.
"It wouldn't take much in the way of revenues to very quickly break even on that 9 percent" royalty rate. Pirfenidone already has yielded positive Phase III data from a trial in Japan, he noted.
"Essentially, instead of getting their royalties over time, [Marnac/KDL] gets them pulled forward and discounted, clearly," Welch said. "If the drug never gets approved, what they have won is that additional $6 million."
Nothing is cleared for marketing anywhere in the world for IPF, which afflicts 200,000 patients in U.S. and Europe combined, and is deadlier than every cancer except lung cancer, which (like IPF) carries a five-year survival rate of about 20 percent. Welch called the IPF market "three to five times larger than multiple sclerosis, on an annual-incidence basis."
The changed Marnac/KDL agreements do not affect the rights to pirfenidone in Japan, Korea and Taiwan, for which rights are licensed by Marnac and its co-licensor to Shionogi & Co. Ltd., of Osaka, Japan.
Granted orphan drug status for IPF by the FDA and the European Medicines Evaluation Agency, pirfenidone works by inhibiting collagen synthesis, down-regulating pro-fibrotic cytokines, blocking TNF-alpha synthesis and decreasing fibroblast proliferation.
Data from one Phase III study and four Phase II trials in more than 400 patients suggested the drug helps lung function and slows progress of the disease.
Jennifer Chao, analyst with Deutsche Bank, called pirfenidone "a big if," and dubbed InterMune's buyout "an opportunistic move" that involves "small money, in the grand scheme of things."
In IPF, InterMune has the lead position, though Allschwil, Switzerland-based Actelion Ltd.'s approved PAH drug Tracleer (bosentan) has started a Phase III trial, and Novartis AG, of Basel, Switzerland, has Gleevec (imatinib), its compound approved for chronic myeloid leukemia, in Phase II against IPF.
InterMune's Actimmune, marketed for chronic granulomatous disease and severe, malignant osteopetrosis, has fizzled in Phase III trials against ovarian cancer (as well as IPF), and InterMune has stopped all oncology research with the drug. (See BioWorld Today, Feb. 6, 2006, and March 7, 2007.)
In March, InterMune made known its plan to get rid of half its staff to cut costs, laying off 116 full-time and contract positions, saving as much as $50 million in operating expenses by 2008. (See BioWorld Today, March 21, 2007.)
In the competitive HCV space, InterMune and partner F. Hoffmann-La Roche Ltd., of Basel, Switzerland, have ITMN-191 (also called R7227) in Phase Ib trials that will enroll about 40 afflicted patients.
The study will assess the effect of multiple doses of ITMN-191 as a monotherapy on viral kinetics, viral resistance, pharmacokinetics, safety and tolerability.
In the fall of 2006, Roche partnered with InterMune in a deal worth up to $530 million. (See BioWorld Today, Oct. 18, 2006.)
Although other potentially approvable HCV drugs are putting the squeeze on InterMune shares, CIBC World Markets analyst Brian Abrahams predicted in a research note earlier this month that the firm's stock is "likely to appreciate from currently depressed levels" when the Phase Ib pirfenidone data are disclosed in the first quarter of next year.
Welch acknowledged early stage HCV drug data from Medivir AB, of Huddinge, Sweden, during a recent scientific meeting.
The Medivir compound "could be a once-a-day pill, but still it would be used in combination with interferon and ribavirin." InterMune/Roche's compound "we hope would be twice a day, in combination," he added.