Shares of InterMune dropped Wednesday after regulators asked the company to perform additional tests on its lung disease drug Esbriet, potentially delaying its approval by years.
Esbriet, also called pirfenidone, is intended to treat idiopathic pulmonary fibrosis, an often fatal lung disease for which there are no approved drugs. After the markets closed Tuesday, InterMune said the Food and Drug Administration asked for an additional study on human patients, which takes the longest and costs the most.
That presents a significant financial burden for InterMune.
One analyst said the company may even drop the drug, with prospects for approval uncertain.
Shares of InterMune Inc. plunged $35.32, or 77.7 percent, to $10.12 in morning trading. The stock has tripled in value over the last two months and set an annual high of $49.46 Monday.
Late stage clinical trial results of Esbriet were mixed. An FDA panel recommended on March 9 that the drug be approved, but panel members were divided on whether it provides a significant benefit.
Oppenheimer analyst Brian Abrahams said approval for Esbriet may not come sooner than mid-2013 if trials are successful. He said the FDA may ask InterMune to run a 48-week study. Enrolling patients would take another six months. He estimated such a trial could cost the company $60 million.
InterMune has only one product on the market: its immune system disorder drug Actimmune.
Abrahams said is hard to evaluate Esbriet's prospects without knowing more about what the FDA wants to see from the study.
He downgraded the stock to "Perform" from "Outperform" and removed a price target of $50 per share. He said Esbriet could still be approved in Europe, and without U.S. approval, InterMune stock is still worth $12 to $14 per share.
Jefferies analyst Eun Yang said the FDA may ask InterMune to test Esbriet's ability to delay disease progression or death. She said the odds of success are no better than 50 percent, based on the studies that have already been performed.
For that reason, Yang said, InterMune may decide to stop development of Esbriet completely and focus on other drug candidates.
She said the Brisbane, Calif., company has enough cash to last through 2011 without an additional Esbriet study.
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