Pirfenidone is an oral drug used by Idiopathic Pulmonary Fibrosis patients.
The disease, known as IPF, occurs when a person’s lung tissue becomes scarred and thickened, making it difficult for oxygen to reach the bloodstream. There is no known cure for the disease, and IPF patients typically don’t see five years beyond their diagnosis. Pirfenidone can alter that outcome and breathe new life into a person, making it something of a miracle for sufferers of the disease.
IPF is so scary because we still don’t know the cause of it, and the prognosis is always poor. It typically occurs in adults 40 to 70 years of age.
The drug has already shown success in Japan, sold by Shionogi (TYO: 4507) under the brand name Pirespa; in India by Cipla Ltd. (NSE: CIPLA) under the brand name Pirfenex, and in China by Shanghai Genomics. You can also find it in some European countries and in Canada.
One California-based company just completed an important milestone that could bring this drug to the US Market.
The Company
InterMune (NASDAQ: ITMN) started off the week with a huge bang. Shares in the biotech company more than doubled on Tuesday, hitting a two-year high off of the news that its IPF drug, Esbriet, had completed an important clinical trial.
Monday was like any other, closing at $13.96, but on Tuesday, BAM! The company stock shot up to $38.22, its highest price since May 2011. It would eventually close at $36.03, a more than 130 percent leap in a single day.
This goes to show just how hot a biotech company can be when it approaches market readiness, and why we should all consider sliding biotech into our portfolios.
This new drug, Esbriet, is a prime example. InterMune designed Esbriet to treat IPF, and patients treated for roughly a year double their chances of survival and lower the chance that their breathing will worsen.
Now, with U.S. clinical trial results in, InterMune is poised to market its breakthrough drug with approval here in the U.S.
Biotech in Your Portfolio
While the biotech industry as a whole may seem tough to navigate with all the academic, research, and regulatory layers, it’s not the time to put biotech on the back burner. Just look at InterMune — the fact is, breakthroughs like Esbriet’s happen ALL THE TIME.
Here in the U.S. — the leading consumer of biotechnology products in the world with more than 1,300 firms in the industry — there’s a surprisingly simple way to gauge how close a biotech company is to releasing a new product.
The biotech industry serves the medical, agricultural, and industrial sectors, and for as many that show promise, there are just as many that you might shy away from.
For any of them to reach market, they have to go through three phases of clinical trials. Most everything has a phase 1 trial with a tiny testbed of a couple dozen subjects who see if the drug is viable. If it makes it through this stage, it goes to phase 2 with up to 50 test subjects comparing the new drug to existing treatments. Phase 3 is essentially a full-scale test with as many as a thousand test patients. When phase 3 is completed, drugs are almost ready to go to market. This is the phase you should look for.
A casual search of “phase 3 clinical trial” will give you a snapshot of the drugs and products that could be the next big hit.
This is the milestone that made InterMune stock leap this week…
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The Future of the Medicine
Esbriet is InterMune’s only approved drug, and reported revenues from the drug were about $70 million in 2013.
InterMune itself is based out of Brisbane, California, and was incorporated on April 23, 2001 with sole focus on research, development, and commercialization of therapies in pulmonology and orphan fibrotic diseases.
If Esbriet is approved in the U.S., InterMune’s revenues will largely depend on one of its competitors, Boehringer Ingelhelm of Germany, who is developing a similar drug.
Depending on that, Esbriet could peak at $300 to $400 million a year. If the Germans are unsuccessful, Esbriet’s sales could reach as high as $500 million. It would need about $300 million to become profitable, which will likely happen regardless.
Intermune’s main competition: Actelion Pharmaceuticals, Ltd. (VTX: ATLN), Gilead Sciences, Inc. (NASDAQ: GILD), Boehringer Ingelheim, Celgene (NASDAQ: CELG), Janssen, Fibrogen, Sanofi (NYSE: SNY), Novartis (NYSE: NVS) and Stromedix.
Johnson & Johnson (NYSE: JNJ) is a big one to watch for…
InterMune is hovering right over that $30 mark right now, but what a week it’s been, and what a future it holds.
