March 5, 2010 / 1:30 PM / 9 years ago

UPDATE 3-InterMune shares soar despite U.S. FDA concerns

* Just one trial of lung drug showed efficacy-FDA reviewers

* Fewer deaths, but more trial dropouts over side effects

* InterMune cites medical need, side effects reversible

* Shares of InterMune up 56 percent (Adds reaction, updates shares)

By Susan Heavey

WASHINGTON, March 5 (Reuters) - U.S. health regulatory staff are concerned about unclear trial results and possible side effects with InterMune Inc’s ITMN.O drug for lung scarring, but investors who were braced for a more negative analysis sent the company’s shares soaring.

The experimental drug, known by its generic name pirfenidone, is a key product for the small biotechnology company. If approved by the U.S. Food and Drug Administration, it would be InterMune’s second U.S. product and a catalyst for a possible takeover of the company, some analysts have said.

InterMune is seeking FDA approval of pirfenidone to slow down worsening lung function in patients with idiopathic pulmonary fibrosis, a fatal condition in which the lungs scar with no apparent cause.

FDA reviewers, in documents released before a Tuesday public meeting to discuss the drug, said only one of the company’s two key trials showed efficacy, and “the clinical significance of the treatment effect size is uncertain.”

The staff reviewers also noted that while the two trials were adequate to assess safety, there are still concerns about side effects. Fewer deaths were seen in patients given InterMune’s drug compared to placebo, they wrote, but more pirfenidone patients dropped out of the trials over various complications.

Study results suggest possible safety problems with pirfenidone, including gastrointestinal issues, liver abnormalities, reactions to sunlight and rash, they said.

Still, several analysts said the FDA reviewers took a much milder tone than investors had expected.

“I think there were a number of short-sellers who had shorted the stock based on that thesis,” ThinkEquity analyst Brian Skorney said. “I think overall (the comments) were less negative than we’re used to seeing (in) FDA documents.”

On Tuesday, FDA officials will ask a panel of outside experts to weigh InterMune’s data and possible approval. A final FDA decision is expected by May 4.

Brian Abrahams of Oppenheimer and Co told Reuters that the FDA staff’s “tone was less negative than expected,” and that there appeared to be potential for ultimate approval.

InterMune, in separate documents released on Friday, said there was no current FDA-approved treatment for the roughly 90,000 Americans with the lung condition. Those people either go untreated or use risky, unapproved therapies, it added.

“While reversal of the disease may not be feasible ... the slowing of progression in loss of lung volume constitutes a clear benefit to patients,” the company said. It added that side effects were “readily monitored, are typically reversible, and nonlethal.”

Without treatment, pulmonary fibrosis can make it hard to breathe and cause coughing, getting progressively worse over time. Patients with the disease tend to live a median time of two to five years, according to the company.

InterMune has proposed to sell the drug under the brand name Esbriet.

After the FDA released its documents, shares of InterMune rose nearly 80 percent in premarket trading before later paring those gains. The shares were up 56 percent at $22.72 in afternoon Nasdaq trading. (Additional reporting Suzannah Benjamin in Bangalore; Editing by Lisa Von Ahn and John Wallace)

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