InterMune and the Ten-Bagger Quest: Idiopathic Pulmonary Fibrosis (ITMN)

December 17, 2010 · Filed Under fda, Lung 

InterMune Inc. (NASDAQ: ITMN) was already known by many investors and was already a very volatile issue.  With shares having nearly doubled on key drug news, InterMune is back on the map.  You can almost hear the call for a ten-bagger alert from the year’s lows.

The stock is soaring on news out of Europe that the EMA adopted a positive opinion that actually recommends granting marketing approval for its Esbriet (pirfenidone) in adults.  The indication is for treating mild to moderate idiopathic pulmonary fibrosis, a fatal lung disease.  The FDA in the United States rejected the drug despite a positive indication in a panel review.

The benefits are a reduction in the rate of deterioration of lung function that is measured by a lower decline of what is called the “percent-predicted forced vital capacity.”  Also shown was a benefit in the six-minute walking test.

Pulmonary fibrosis causes progressive scarring of lung tissue.  As far as overall pulmonary fibrosis without getting into the various stages of the disease, the National Heart Lung and Blood Institute said that there is no cure and that many still live 3 years to 5 years after being diagnosed.

We wanted to know how many people have IPF… The Pulmonary Fibrosis Foundation notes, “There is a lack of newly published data to demonstrate an accurate estimate for the incidence of idiopathic pulmonary fibrosis in the United States. The most recent estimates indicate that approximately 128,000 Americans have IPF, although there are published estimates that suggest the number may be as high as 200,000. Varying terminology and lack of standard diagnostic criteria have complicated the accrual of accurate data.”  That is a U.S. figure, and we have been looking for data on the E.U. and rest of world figures (to be updated soon).

A ten-bagger implies a rise of tenfold… 1,000%.  It is rare to see such moves, but investors need to consider where InterMune has been. The 52-week trading range is $8.34 – 49.46 and yesterday’s close was $14.27.  InterMune shares went from $15 to almost $50 from March to May of this year, but by June shares were sucking wind and were under $10.00.

InterMune came public in 2000 and shares hit above $50.00 and $55,00 in late-2000 and went above $50 again in late-2001 and early-2002.  This might not quite fit the profile for a ten-bagger, but it all depends on how well the company can do ahead in its trials and bringing product to the market.

At 10:00 AM EST we have shares up 105% at $29.24 and we have already seen 8.3 million shares traded against an average daily volume of 940,000 shares.  Even after the pop today, InterMune is still a small cap to mid-cap stock with a $1.64 billion market cap.

JON C. OGG

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