Clearing the way to place its complete focus on idiopathic pulmonary fibrosis candidate pirfenidone, InterMune sold all development and commercialization rights to Phase II hepatitis C drug danoprevir (RG7227/ITMN-191) to Roche for $175 million. The biotech announced the deal - which greatly strengthens its cash runway - Oct. 6.

The transaction seems to be a coup for InterMune in that the biotech gets a hefty sum of cash in exchange for an asset for which some industry analysts had attributed little or no net present value in an increasingly competitive space. At the same time, it also increases the company's dependence on pirfenidone, a drug that failed to pass FDA muster earlier this year.

Roche and InterMune had been partnered on development of danoprevir, a protease inhibitor, since 2006 with Roche paying $60 million upfront and InterMune covering one-third of development costs ("[See Deal]).

In a same-day investor call, InterMune CEO Dan Welch noted that the deal should enable his firm to end 2010 with about $290 million in cash, enough to either launch pirfenidone in Europe, where a regulatory application is pending, or fund an additional Phase III trial if one is required to obtain a U.S. approval. The company had $150.7 million in cash and equivalents as of June 30, but has $45 million in debt due in 2011.

"The decision to divest our rights to danoprevir was made after concluding a very careful review of our corporate strategy and our financial position and projects," Welch told investors. "The transaction eliminates our obligation to make significant ongoing investments related to the further development and commercialization of danoprevir. These investments would have totaled approximately $50 million to $60 million between now and the end of next year alone."

The competitive landscape in HCV factored into InterMune's thinking, he added, as the company noted there are more than 50 drugs in clinical development for that disease going into the American Association for the Study of Liver Diseases meeting later this month.

Roche is already a player in HCV, with Pegasys, one of two pegylated interferons paired with ribavirin as the current standard of care. In an Oct. 7 note, analyst Thomas Russo of Robert W. Baird & Co. suggested Roche had paid a price that "far exceeds what we/The Street had ascribed to danoprevir" in exchange for flexibility to test the protease inhibitor in a number of STAT-C (specifically targeted antiviral therapies for hepatitis C) combinations.

The Swiss pharma's pipeline includes three other molecules in clinical development for HCV in addition to danoprevir. Roche is partnered with Chugai on a Phase I transferase inhibitor, with Pharmasset on a Phase II polymerase inhibitor and with Ligand Pharmaceuticals on a Phase I nucleoside analogue.

Pirfenidone Now A "Make Or Break" Proposition

With no other programs in the clinic, the transaction clearly places all of InterMune's hopes on pirfenidone, despite the fact that FDA issued a "complete response" letter in May requesting an additional efficacy trial for the dual inhibitor of TGF-beta synthesis and TNG-alpha synthesis (Also see "Despite Positive Advisory Committee Vote, InterMune Gets Complete Response For Pirfenidone" - Pink Sheet, 4 May, 2010.).

If approved, pirfenidone would be the first drug indicated for IPF, an orphan condition for which the current standard of care is lung transplant. The drug received a positive recommendation for approval in March from FDA's Pulmonary-Allergy Drugs Advisory Committee, even though that panel voted only 7-5 that a pair of Phase III trials had demonstrated efficacy (Also see "InterMune Likely First To Market In IPF, But Other Firms Poised To Follow" - Pink Sheet, 22 March, 2010.).

InterMune filed a marketing authorization application with EMA for the drug in March and plans to answer the agency's so-called 120-day questions (a standard part of the European approval process) this month, putting pirfenidone, to be marketed as Esbriet, on track for a marketing approval opinion during the first quarter. The Brisbane, Calif., biotech is anticipating a second-quarter launch for Esbriet, Welch said.

The decision to divest danoprevir now could suggest InterMune has some sense that pirfenidone will be approved in Europe. But Russo cautioned that while "some may interpret this as a bullish all-in bet on pirfenidone," the deal just as likely covers InterMune's downside if it needs to perform another Phase III trial.

Analyst Howard Liang of Leerink Swann, however, opined in an Oct. 7 note that InterMune must have gotten positive feedback from EMA, which led it to place such a heavy wager on pirfenidone.

"It seems implausible to us that [InterMune] management would choose to bet the farm on pirfenidone if it has gotten a clearly negative feedback from the EU regulatory authorities," he wrote. "Our understanding ... is that by day 120 of the EU review, sponsors typically have a very good sense of where the application is heading. Therefore, in our opinion, the sale of danoprevir rights reflects positively on the regulatory outlook of pirfenidone."

InterMune has not yet decided how to comply with FDA's complete response. One potential remedy it is considering is asking the agency if it can use a Phase III trial conducted in Japan by its partner Shionogi, which got pirfenidone approved in Japan, where it is marketed as Pirespa. A report on Shionogi's trial was included in the pirfenidone NDA, but not the patient data. Welch said InterMune will announce its U.S. registration strategy later this year or early in 2011.

-Joseph Haas (j.haas@elsevier.com)

InterMune Wagers On Pirfenidone With Sale Of Full Danoprevir Rights To Roche

More from Archive

More from Pink Sheet