InterMune Earnings Call NUGGETS: Patient Growth, Esbriet on the Path to Success

On Monday, InterMune, Inc. (NASDAQ:ITMN) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Patient Growth

Michael Yee – RBC Capital Markets: Two quick questions; one is on demand and sales numbers you gave the patient numbers for the quarters but can you just quantify or qualify patient growth in April, May and June and maybe comment about how you are seeing July are we already into the summer months of the slowdown of Europe? And then in terms of pricing can you remind us what process would happen once you reach €50 million, do we have any color there and are there specific countries that referenced this new German price and would that have any impact on those countries?

Daniel G. Welch – CEO and President: So, we gave a lot of detail on these quarterly calls, but not as much as you request at least on the first question. So, giving month-by-month patient adds we are not providing that. In terms of the second question what happens when we reach $50 million in the cost of the healthcare in any 12 month period what happens is the process begins again of the AMNOG process whereby the price would be revisited. There would another dossier to be submitted, another review to be conducted, and the steps that you heard, that you watched us take and other companies take through the AMNOG process would be repeated. On the third question in terms of referencing; yes, absolutely German – the price of pharmaceuticals in Germany are heavily referenced throughout Europe, this is why we think that getting what we believe is a fantastic price for Esbriet, especially in the economic situation that you all know about in Europe is not only good for its own case in Germany, but will set a bar or other countries and their pricing. Germany is used to be where Germany would set its price, you could set your price as a free price and the price wasn’t very negotiated. Germany has rapidly become one of the toughest countries in which to gain prices. You’ve all read the headless from various other countries – various other manufacturers and their products. So, a price negotiated in Germany under the AMNOG law and there are now only two drugs AstraZeneca’s BRILIQUE or BRILINTA and InterMune’s Esbriet, that have successfully gone through the entire process of AMNOG. So under this new more challenging system, I think other countries will view our price with the knowledge that was heavily negotiated and I think that makes a very important benchmark for other major countries and minor countries (with due) respect. So we believe this should have a positive effect on our negotiations in other major countries over the coming months.

Esbriet on the Path to Success

Brian Abrahams – Wells Fargo Securities: You mentioned that with your market research the awareness among physicians in Germany seems pretty high, but at this point only about 25% are considering it the treatment of choice. Did you get any sense any feedback on why some physicians may not consider Esbriet as the treatment of choice at this point and what are some of the things that you might be able to do specifically to try to improve this. I’m just wondering if you can maybe also remind us timing for the German pulmonology society guidelines and what the potential impact might be? Then I have a quick follow-up.

Daniel G. Welch – CEO and President: So, a little bit of background on how products launch and get taken up. The first step in any buying process is awareness, then there’s interest, then typically there is trial use, then there is assessment of that trial use, and then there is a determination of what they think of the product. We do that in pharmaceuticals, we do that when we buy an iPad, we do that – consumers do that all the time. So the first step being awareness, we’re very pleased, very, very high awareness and interest likewise is very high because we have tremendous attendance in all of our CME events, we’ve had well over 100, maybe in fact over 150 CME events since launch, so interest remains very high. And trial use is also very high where we’ve said that three-quarters of our targeted doctors have already used and after nine-months that’s very good in my 30 years experience in the pharmaceutical industry, that’s very good. So when you answer, what will it take to get there, it’s going to take time and we’re very confident that that’s we’ve made so far and Esbriet being among the top five or six most successful orphan drugs, and that includes oncology drugs by the way, and this includes something like 50 drugs altogether. Esbriet is among the most successful drugs taken up so far, so we can fix date and focused on consensus and we all respect that because we have worked very hard to come up with a consensus figure, but when you put it in the reality check of what new drugs do in Germany, in fact even in more liberal times of prescription and pricing, Esbriet ranks in the very best orphan drug launches including oncology launches ever in Germany. So biometrics of real life in the real country, Esbriet is doing fantastically well. So we are very confident that with time and continued message delivery, Esbriet is going to become a very important drug. We referenced Tracleer, we are doing far better than Tracleer after nine months and Tracleer is now a $100 million product, it takes time to build products in Europe, a theme that we’ve been sharing with all of you for well over a year now and the best metrics we can take – or the metrics in country those are the most (relevant). So, to answer your question that’s what it will take. And then reiterating another comment I know this is going to be 2,000 to 3,000 new IPF patients coming into the system each and every year that’s a number that’s about three times the number of patients that we currently have on medicine and that doesn’t even count the prevalence that we talked about between 8,000 and 12,000. There is a ton of patients out there and we believe the potential for Esbriet in Germany is remarkable. In terms of the German guidelines, we think this will be helpful they’ve been propagated and presented since April of this year by the IPF key opinion leadership. They started at the German pulmonology society in the spring, they continue to be presented since then and we expect them to be published in the fourth quarter. The guidelines essentially say that Esbriet is the medicine to use from mild to moderate patients which is a positive recommendation as opposed to the previous ATS/ERS guidelines which was a weak negative recommendation. So, this is a positive recommendation. So, I believe this plus the Sick-Fund press release today where they cited that this is the only drug approved, this is the only drug that in general will be reimbursed for IPF patients subject to the caveat that I made on the prepared comments those were both (helpful,) I believe, because it sets the stake in the ground to what is the standard of care. So, with the pricing clarified, with doctors particularly in the community in the Tier 2 centers who were concerned about the reimbursability of Esbriet going forward and with the treatment guideline with the Sick-Funds comments, I think, the conditions we believe the conditions are very, very right for a continued evolution of Esbriet sales going forward.

Brian Abrahams – Wells Fargo Securities: Just a quick follow-up then I guess on your last point. Can you talk about the impact of resolving this today versus mid-September. Should we expect any positive pull-through on prescribing habits or is that really not likely to change until September. Just remind me how quickly does that exemption to the budget get implemented is that something that gets implemented starting today or will that be starting in September?

Daniel G. Welch – CEO and President: We think the resolution of the very positive, strong price of Esbriet in Germany will have a read through across Europe in terms of our pricing and reimbursement. Had we waited until September that would’ve been two months deeper into the process and we are talking to many countries now and will continue. So, having this watermark we believe as a high watermark for Esbriet among the heavily negotiated countries. We think that’s going to be very, very good for the remaining countries, the top five countries we are focusing on and the remaining ones that we have not yet secured. In terms of your second follow-up question, I lost it. Does anybody remember help reminding me…?

Brian Abrahams – Wells Fargo Securities: The exemption to the budget, I know there was an issue among some of the Tier 3 physician?

Daniel G. Welch – CEO and President: The removal from the prescribers budget of the Esbriet line item, if you will, yes, that goes into effect on September 15th along with the price that goes into effect at the same time. However, the press release is out today which described – this press release went to all of the German media.