InterMune Inc. (ITMN) posted fourth-quarter adjusted loss per share of 42 cents, wider than the Zacks Consensus Estimate of a loss per share of 39 cents. Earnings were, however, narrower than the year-ago loss per share of 62 cents.
InterMune reported revenues of $241.7 million in the fourth quarter, which included a one-time $175 million payment related to the sale of hepatitis C pipeline candidate danoprevir to Roche Holdings Ltd. (RHHBY) in October 2010 and a $57.3 million deferred revenue in connection with the termination of the 2006 Roche collaboration agreement. Excluding these extraordinary items, total revenue was $9.4 million, much below the Zacks Consensus Estimate of $40 million due to lower prescriptions for Actimmune for the treatment of idiopathic pulmonary fibrosis (IPF), which InterMune does not actively promote. Revenue was, however, higher than the year-ago figure of $6.6 million.
For full year 2010, InterMune reported a loss per share of $1.77, narrower than the Zacks Consensus Estimate of a loss per share of $1.92 and the year-ago loss per share of $2.02. Full year 2010 revenues of $259.3 million were above the year-ago figure of $48.7 million and the Zacks Consensus Estimate of $50 million. It should be noted that full year 2010 revenue includes Roche-related payments of $232.3 million.
Including the Roche payments, the company reported earnings per share of $3.34 in the fourth quarter and $2.13 in full year 2010.
Quarterly Details
During the reported quarter, research and development (R&D) expenses declined 22% to $16.6 million. The decrease was the result of the completion of trials of Esbriet and the divestiture of danoprevir.
General and administrative (G&A) expenses increased 58% to $16.8 million primarily in preparation of the EU launch of Esbriet.
Pipeline Update
In December 2010, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) issued a positive opinion recommending the approval of Esbriet for the treatment of mild-to-moderate IPF. The timing of the positive opinion was ahead of prior expectations. If approved, Esbriet would be the first available medicine for the treatment of IPF in the EU. The company expects final approval of Esbriet in the EU in February/March 2011.
However, in the US, Esbriet received a Complete Response Letter from the US Food and Drug Administration (FDA), which asked the company to conduct an additional efficacy trial for Esbriet. InterMune plans to conduct a phase III trial and plans to meet with the FDA in March 2011 to finalize the trial design. InterMune intends to provide financial guidance for 2011 after its meeting with the FDA.
In October 2010, InterMune sold the worldwide development and commercialization rights for its pipeline product, danoprevir, to Rochefor $175 million.
Our Take
We currently have a Neutral recommendation on InterMune. We consider the favorable CHMP opinion on Esbriet as a major positive for InterMune given fairly low expectations. However, we prefer to remain Neutral until visibility improves on US approval, which is now some years away.
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