By Brady Huggett

InterMune Pharmaceuticals Inc. acquired rights to the late-stage product oritavancin from Eli Lilly and Co. for at least $50 million, giving the company a product it said may become one-half ¿ the other half being Actimmune ¿ of a powerful revenue-generating duo.

Eli Lilly will receive $50 million up front, potential milestones and royalties on commercialized products. InterMune gets exclusive worldwide rights to develop, manufacture and commercialize oritavancin. Scott Harkonen, CEO, chairman and president of InterMune, said the acquisition made good business sense.

¿[Oritavancin] fits very well into our strategic focus in infectious disease ¿ we actually started as an infectious disease organization,¿ he said. ¿And we have strong infectious disease clinical and marketing capabilities. We have both ends well covered, which is one of the major reasons we were able to compete and acquire this.¿

Although InterMune, of Brisbane, Calif., would not discuss specific financial details of the deal, its chief financial officer, Tim Lynch, said the milestones are ¿very typical¿ of biotech deals and described the royalties as the same.

Oritavancin is a semi-synthetic glycopeptide in development for a range of resistant Gram-positive bacterial infections. It is designed to kill bacteria instead of just inhibiting them, and acts on cell wall synthesis and appears to have some binding properties that augment its effectiveness, said Steven Porter, vice president of clinical affairs at InterMune. It is in a Phase III trial now for the treatment of complicated skin and skin-structure infections, and in Phase II trials for bacteremia that should be completed in the first half of 2002.

¿[Oritavancin] has completed a Phase III, one of two, and we are completing the data analysis. We have initiated the second trial and that should be complete in the second half of 2002,¿ Harkonen said. ¿We are starting a Phase III in [bacteremia] in the second half of 2002.¿

InterMune already has products on the market: Actimmune (interferon gamma-1b) injection for the treatment of chronic granulomatous disease and severe malignant osteopetrosis, and Amphotec, a lipid-complexed form of amphotericin B marketed for the treatment of invasive aspergillosis. Actimmune also is in Phase III trials for the treatment of idiopathic pulmonary fibrosis and multidrug-resistant tuberculosis.

Actimmune generated about $7.3 million in revenues for InterMune in the second quarter, and the company saw total revenues of about $8 million over the period. The $7.3 million was a 140 percent increase over the $3 million Actimmune provided in the second quarter of 2000. Lynch said the estimate for Actimmune sales in 2001 is $31 million, with the company pulling in $35 million in sales overall. Next year, Lynch said, the company expects Actimmune sales to be at least twice as high, and overall, InterMune feels Actimmune could reach the vaunted blockbuster status. Toward this end, InterMune recently switched its manufacturing of Actimmune from Genentech Inc., of South San Francisco, to Boehringer Ingelheim Austria GmbH, of Vienna, Austria.

¿It gives us two things,¿ Lynch said. ¿One, capacity. Increased capacity for the billion-dollar revenue for this product. Two, a lower cost of goods.¿

Although the company has set its sights high for Actimmune, it expects similar results from oritavancin.

Porter commented that oritavancin gives InterMune two Phase III potential blockbusters brewing in its pipeline. David Cory, vice president of sales and marketing, said the product has a $300 million to $500 million opportunity because of both the vast market it was entering as well as the marketing team InterMune had gathered to sell it. And Harkonen called it ¿very promising in a growing market.¿

InterMune¿s stock (NASDAQ:ITMN) rose $1.17 Thursday, to close at $31.12.