InterMune more than doubles, hits 2-year high as lung disease drug meets goals in US trial

NEW YORK (AP) -- Shares of InterMune more than doubled in afternoon trading Tuesday after the company said its lung disease drug Esbriet met its goals in a late-stage clinical trial intended to help InterMune win marketing approval for the drug in the U.S.

InterMune shares rose to $36.03 after closing at $13.96 on Monday. The stock peaked at $38.22, its highest price since May 2011.

Esbriet is designed to treat a terminal lung disease called idiopathic pulmonary fibrosis, or IPF, which causes inflammation and scarring of the lung that makes it hard for patients to breathe. InterMune said that after a year of treatment, patients treated with Esbriet were about half as likely to die or suffer a significant decline in their ability to breathe. Patients treated with Esbriet were more likely to experience no decrease in breathing ability at all.

The most common side effects of treatment with Esbriet were gastrointestinal problems like nausea or indigestion and skin conditions like rashes.

The Brisbane, Calif., company said it plans to file for U.S. approval of Esbriet by the early third quarter.

InterMune began selling Esbriet, or pirfenidone, in Europe in September 2011. It is available in some European countries, and in other countries including Canada, China, and India. Esbriet is InterMune's only approved drug, and the company reported about $70 million in revenue from Esbriet in 2013.

RBC Capital Markets analyst Michael Yee said InterMune's sales of Esbriet could double if the drug is approved in the U.S. He said the drug's ultimate revenue will depend in part on a competing drug being developed by Boehringer Ingelheim of Germany. If Boehringer's drug works about as well as Esbriet, annual sales of Esbriet could peak at $300 million to $400 million a year. If the competing drug isn't successful, Esbriet sales could go as high as $500 million, he said.

Yee wrote that InterMune may need about $300 million in annual sales of Esbriet to become profitable. He rates the stock "Sector Perform."