(TheStreet) -- Happy Valentine's Day. I send my love to all biotech investors. Let's get this week's Biotech Stock Mailbag started.
Samuel L. writes:
I'm an InterMune (ITMN) investor hoping you can help clear up some of the recent confusion or controversy surrounding its IPF drug and that of the competitor [Boehringer Ingelheim.] Obviously, the market seems worried about it with the stock [InterMune] being down, but is that justified?
Let's take a look at the InterMune chart.
ITMN data by YCharts
The sharp selloff on Jan. 31 was caused by an article from BioPharm Insight, a subscription-based research/news service catering to investment fund managers and hedge funds, reporting positive results from two phase III studies of Boehringer's idiopathic pulmonary fibrosis (IPF) drug nintedanib. Boehringer (BI) has not reported data from the nintedanib studies. Biopharm obtained the data from an unnamed source described as being "close to the situation."
I want to talk about InterMune's soon-to-be-completed phase III study of Esbriet, but first, is anyone else surprised by the leak of the BI nintedanib phase III data? This was not someone merely speculating about the study results. The level of detail reported suggests the source was a person inside BI with access to the nintedanib data, or one of a handful of outside study investigators who would have been briefed on the data by BI.
There is one other plausible explanation: An investor obtained the data from a BI employee or outside investigator and then shared it with Biopharm.
If you didn't get a chance to read the Biopharm story on the nintedanib data, here are the key paragraphs. The "he" is the unnamed source:
The pivotal INPULSIS1 and INPULSIS2 Phase III trials, with a combined total of 1,066 patients, produced identical and highly statistically significant results on its primary endpoint in annual decline of Forced Vital Capacity (FVC), the source said. Pooled data from both trials should also show positive data on secondary endpoints such as time to first acute exacerbation and respiratory mortality, he said.
Safety events were also negligible as the major side effect was diarrhoea, with 50% of patients experiencing at least one diarrhoea episode (compared to 35% in the placebo arm), and discontinuations due to this side effect was less than 5%, the source said. Discontinuations due to the drug was also very low, he added. These results are incredibly convincing from an efficacy and safety profile in IPF all comers, the source said. The data package will no doubt secure approval with two positive, well executed and adjudicated global Phase III trials, he said.
BI has been publicly silent in the wake of the nintedanib data leak, except for this tweet:
.@Boehringer does not support publication of INPULSIS IPF data before ATS in May. We are committed to confidentiality & data protocols.Boehringer (@Boehringer) January 31, 2014
I've tried to get someone, anyone, at BI to explain what the hell happened, but the company isn't returning my phone calls or emails. In private conversations, the company is reportedly telling people the data from the nintedanib phase III studies won't be presented officially until the American Thoracic Society annual meeting in May. Until then, BI has no comment.
It's difficult to fully evaluate nintedanib until we see the actual study results, but the level of specificity disclosed in the Biopharm report strongly suggests the data are positive and that the drug works in IPF. Can you imagine the shit storm if the nintedanib studies are actually negative?
The nintedanib side effect profile from the phase III studies described by Biopharm is a bit of a head scratcher. Why are 35% of IPF patients treated with a placebo reporting diarrhea? Seems high. We know nintedanib causes higher rates of diarrhea and other GI side effects from the phase II study. Discontinuations due to diarrhea in the phase III studies described as being less than 5% by Biopharm is good considering the discontinuation rate in the phase II study was 12%. Does this make sense?
And if the nintedanib phase III studies are positive, why did BI start another phase III study last November using an unconventional primary endpoint?
We'll have to wait until May for answers, unless more data leak.
Moving to InterMune, I'm bullish in that I believe the Esbriet phase III "Ascend" study will be positive and there's more upside than downside in the stock.
Recall, only one of the two phase III "Capacity" studies achieved the forced vital capacity (FVC) primary endpoint at 72 weeks with statistical significance. This led to FDA rejecting Esbriet. The Ascend study is InterMune's next shot at getting Esbriet approved in the U.S.
InterMune designed the Ascend study with knowledge of the mistakes made with the Capacity studies. Among the important changes: 1) More patients, better statistical powering, 2) 52 week duration instead of 72 weeks (Esbriet effect is stronger at 1 year); and 3) tightened enrollment criteria to capture patients with more progressive IPF and therefore more likely to benefit from Esbriet treatment.
Taken together, the design of the Ascend study increases the likelihood of Esbriet demonstrating a statistically significant benefit in FVC.