InterMune Inc. (ITMN) recently announced that it has sold the worldwide development and commercialization rights for its pipeline product, danoprevir, to Roche Holdings Ltd. (RHHBY) for $175 million. The candidate, which is currently in mid-stage trials for the treatment of hepatitis C, has demonstrated positive results in pre-clinical and early-stage trials.
Earlier, InterMune and Roche were developing danoprevir (also known as RG7227 and ITMN-191) under a collaboration agreement as signed in 2006. With the sale of the HCV drug rights, InterMune expects to end 2010 with a cash balance of about $290 million.
Danoprevir was the only other product in InterMune’s pipeline, the first being pirfenidone (Esbriet), in development for the treatment of idiopathic pulmonary fibrosis (IPF). The candidate is currently under review in Europe, with approval expected in the first half of 2011. However, in the US, pirfenidone received a Complete Response Letter from the US Food and Drug Administration (FDA), asking the company to conduct an additional efficacy trial for the drug.
InterMune currently generates revenues from the sale of its only approved drug, Actimmune, which is used for the treatment of chronic granulomatous disease and severe, malignant osteopetrosis. The company also used to receive a stream of revenues under its collaboration agreement with Roche, which has now been terminated with the sale of danoprevir.
Our Neutral recommendation on InterMune is presently supported by a Zacks #3 Rank (short-term Hold rating). We believe that the company’s decision to sell the rights to danoprevir will provide it with the much needed cash that can be utilized for the development and commercialization of pirfenidone. Moreover, InterMune has freed itself of the continuous investments that it would have had to make for the development and marketing of danoprevir.
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