InterMune Soars on Mixed Lung Drug Data

Updated from 11:53 a.m. EST

InterMune shares rose Tuesday after the company reported mixed results from two pivotal clinical trials of the company's experimental drug pirfenidone in patients with idiopathic pulmonary fibrosis, a progressive and fatal lung disease.

The first phase III study of pirfenidone failed, yet the second, slightly larger phase III study yielded positive results.

InterMune said it believes the combined data from the two studies show that pirfenidone significantly slows the decline in lung function of patients with idiopathic pulmonary fibrosis, and the company plans to seek regulatory approval for the drug in the U.S. and Europe.

InterMune shares were up $4.24, or 35.8%, to $16.11 in recent trading, down slightly from the stock's opening bid and well off the high hit in pre-market trading, when the stock was up over 50%.

The intraday pullback probably represents some quick profit taking on the part of some investors, but also recognition that the mixed data picture for pirfenidone muddies the drug's regulatory outlook a bit. Even InterMune executives sounded a note of caution on a Tuesday morning conference call.

"We are optimistic given the totality of the data and the severity of the disease, but we also recognize that the challenge is not insignificant," said InterMune CEO Dan Welch.

The two pirfenidone studies represent high stakes for InterMune and its shareholders. If successful, pirfenidone is likely to become the first drug for idiopathic pulmonary fibrosis (IPF) approved by the Food and Drug Administration or its counterparts in Europe. With well over 200,000 IPF patients in the U.S. and Europe, InterMune could easily transform pirfenidone into a highly profitable drug with more than $1 billion in peak sales.