Intermune stock falls on warning
Brisbane biotech firm scales back sales projections for lung drug
Bernadette Tansey, Chronicle Staff Writer
Friday, June 13, 2003
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Intermune Inc. shares lost a third of their value Thursday after the Brisbane biotechnology firm said it had over-estimated the revenues it expects from its lead drug in 2003 by as much as $30 million.
Intermune stock dropped $8.36, or 33.31 percent, as investors reacted to a company announcement late Wednesday revising its April 29 guidance on the drug Actimmune, which is used against a deadly lung disorder. The shares closed at $16.74, skirting their 52-week low of $15.76.
Company officials said they had discovered inaccuracies in their prior reports on two factors that will affect Actimmune sales for the rest of the year. Intermune had overstated the number of patients receiving the drug by the end of the first quarter and had not noted that suppliers had built up $5 million inventory of Actimmune.
Intermune revised its 2003 Actimmune sales projections to $135 million to $150 million, down from the range of $160 million to $180 million it estimated in April.
Five investment research units downgraded the stock on the news, and analysts on a company conference call said they found it difficult to understand how Intermune officials could have missed such significant differences.
"In our opinion, last night's announcement calls into question management credibility and makes an already controversial stock too risky to continue to recommend," said Bank of America Securities analyst Michael King in a research note.
King withdrew his "buy" recommendation and changed his estimate of Intermune's net loss for 2003 from $3.40 to $4.35 per share. King doesn't own Intermune shares, but his firm makes a market in the stock and solicits investment banking business from Intermune.
Intermune Chief Executive Officer Scott Harkonen said the inaccuracies in public statements by the firm were investigated and reported as soon as they were detected. Harkonen said the company still believes demand for Actimmune will strengthen during the year, as physicians become aware of favorable results from lung studies.
Actimmune is approved to treat two rare disorders, but most of its sales come from off-label prescriptions for the life-threatening lung disorder idiopathic pulmonary fibrosis.
Market reaction to Intermune's financial projections eclipsed the company's report of favorable research results on an experimental remedy for complex skin infections.
E-mail Bernadette Tansey at btansey@sfchronicle.com. |
