InterMune Slashing Staffing

It cuts 116 jobs as it seeks to reduce costs.
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InterMune (ITMN) will cut its staff in half in a bid to slash costs by $40 million to $50 million next year.

The Brisbane, Calif., biotech said the move will result in 116 job cuts. The move comes just two weeks after InterMune was forced to end a late-stage trial of its Actimmune drug for idiopathic pulmonary fibrosis after the drug failed to improve survival time in patients with mild to moderate impairment in lung function.

InterMune said it will focus on its Phase III Capacity program studying pirfenidone in idiopathic pulmonary fibrosis and on its HCV protease inhibitor, ITMN-191, currently in phase Ia development with its partner Roche.

InterMune said it projects that enrollment of the Capacity trials will be completed several months sooner than previous guidance anticipated, due to stronger-than-expected patient enrollment, and that the company will refine and expand the Capacity program to further enhance its ability to demonstrate clinically and statistically significant benefits for IPF patients.

The company also announced its current intention to retain all its territorial rights to pirfenidone to maintain maximum strategic flexibility.

In light of the Inspire study results, InterMune expects revenues from physician prescriptions of Actimmune for the treatment of IPF to significantly decline. Since InterMune does not promote Actimmune for IPF and has no visibility on revenues in that setting, the company has no basis on which to forecast revenue for the 2007 fiscal year.

InterMune currently expects that Actimmune revenues for the first quarter of 2007 will be in a range of approximately $19 million to $21 million, assuming that product returns in this quarter are no higher than those observed in previous periods. Revenues recognized during the fiscal year ending Dec. 31, 2007, from the Roche collaboration are expected to be approximately $13 million, based on amortization of previous collaboration payments already received and anticipated collaboration payments during 2007.

For 2007, R&D expenses are anticipated to be in a range of $100 million to $110 million, and SG&A expenses in a range of $25 million to $35 million. These ranges represent reductions in R&D and SG&A of $10 million to $15 million and $10 million, respectively, from the original 2007 financial guidance provided on Feb. 8. InterMune will record charges for restructuring-related expenses associated with these operational changes of approximately $3.5 million, which are expected to be recorded during the year. In addition, InterMune may incur charges related to various Actimmune assets. The company has recorded a $4.5 million Actimmune-related impairment as of Dec. 31, 2006.

InterMune currently expects to have between $205 million and $210 million in cash, cash equivalents and available-for-sale securities at March 31, 2007.