From the Red Herring...
Intermune intercepts $76 million
Intermune Pharmaceuticals (Nasdaq: ITMN), a small biotechnology
concern sitting on a war chest of cash after a big March initial public
offering, has just closed a $76 million round of private equity funding.
The company is exploring the use of its drug Actimmune -- currently a
treatment for an immune system disease in children -- for various other
ailments. Intermune has exclusive U.S. rights for the drug, which it licenses
from Genentech (NYSE: DNA) through at least 2018.
Actimmune is proving to be more promising than previously anticipated.
When Intermune's former parent company Connetics cut the licensing deal
with Genentech in 1998, the bigger biotech didn't count on Actimmune's
potential for treating diseases with large markets, says Stephen Rosenfield,
Intermune's senior vice president of legal affairs.
But this January, two months before Intermune's IPO, Genentech teamed up
with several other venture investors in a $27 million round and bought
Intermune stock at $5.59 a share, a steep discount to the $20 a share the
company raised in the IPO. Genentech's 5 percent stake, which includes
equity in exchange for the licensing agreement, is currently worth $46
million.
Intermune has not yet disclosed the identities of the investors who paid $38
a share in the current private round. That stock is still unregistered with the
Securities and Exchange Commission, and the company will be required to
reveal the investors' names when it registers the stock. Intermune closed
Thursday at $41.62.
Even before the current round, Intermune was sitting on $128 million cash
thanks to its $125 million IPO. The private placement lifts the company's
cash hoard above $200 million. But Intermune will quickly begin spending
the money as it embarks on tests for new uses of Actimmune and begins
testing other compounds in its laboratories.
GASPING FOR DRUGS
Intermune plans to start phase III clinical trials this year on the drug's
effectiveness and safety to treat idiopathic pulmonary fibrosis, a disease of
unknown origin that causes death by a buildup of scar tissue in the lungs.
About 50,000 people in the U.S. suffer from idiopathic pulmonary fibrosis,
for which there is no effective treatment. Those diagnosed with the condition
usually die of suffocation in three to five years. Intermune figures if it could
charge $50,000 a year per patient, the drug's U.S. market potential could
be $2.5 billion, just for idiopathic pulmonary fibrosis treatment. It has also
been approved for osteopetrosis, a congenital disorder causing an
overgrowth of bone, which will bring in much more modest revenue.
The company thinks that the drug could deliver up to $3.5 billion in annual
U.S. sales if it is approved for other conditions for which it is currently being
tested. These conditions include tuberculosis and various infectious diseases.
The company has also obtained the rights to market the drug in Canada and
Japan.
For the quarter ending June 30, Intermune lost $6.9 million -- or 33 cents
per share -- on $3 million revenue. That compares with a $2.3 million loss,
or 44 cents per share, on no revenues for the same quarter last year.
The First Call consensus of financial analysts who follow the company
forecasts continued losses through 2002 and a profit of 40 cents per share
in 2003. Three of the four analysts who follow the company work for firms
that provided investment banking services in the latest transaction and would
not comment, citing a quiet period. The other analyst was unavailable.
But based on the analysts' estimates, which put the company's bottom line in
2003 at about $9 million, you can figure it will take many years -- if it is ever
to happen -- before the top line reaches $3.5 billion. |
