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InterMune (NASDAQ:ITMN) scaled back its operations, two weeks after Actimmune failed a Phase III test for idiopathic pulmonary fibrosis. Actimmune is approved for two indications, both of which have small patient populations.

The company believes that most of its Actimmune revenue came from off-label use for IPF, which will now stop. InterMune will reduce its personnel count by 50% to 116, end the Actimmune trial, and reduce the SG&A costs associated with Actimmune.

The company has another drug in Phase III trials for IPF, and it is developing a protease inhibitor with Roche (OTCQX:RHHBY) for hepatitis C. The hepatitis C drug, ITMN-191, is in a Phase Ia test. The cutbacks will reduce spending by approximately $25 million in 2007. Despite the negative tone to the news, investors seemed pleased. InterMune moved 58 cents higher to $22.97.

MGI Pharma
(MOGN) reported Aquavan, an injection for moderate sedation during office procedures, met its endpoints in a Phase III trial. The drug, which was used during bronchoscopy procedures, successfully sedated 88.7% of the patients, against a 27.5% success rate in the placebo. Previously, Aquavan proved effective in another Phase III trial in patients undergoing colonoscopies. MGI will submit Aquavan for FDA approval in Q3. MGI gained 9 cents, ending at $21.09.

Cell Therapeutics
(NASDAQ:CTIC) will file for a Special Protocol Assessment to govern the design of a Phase III trial of Xyotax, a therapy for women with non-small cell lung cancer. Cell Therapeutics expects to have an interim analysis of 450 patients in the first half of 2008. In a previous trial, Xyotax increased the median survival time by 34% among pre-menopausal women. CTI edged 4 cents higher to $1.62.

Myriad Genetics (NASDAQ:MYGN) completed enrollment of 800 patients in a Phase III trial of Flurizan for Alzheimer’s disease. The participants will be followed for 18 months. In its double-blind Phase II trial, Flurizan reduced the rate of decline by 57%-72%, depending on the tests used to measure decline. Myriad closed at $33.26, a rise of 78 cents.

Corcept Therapeutics
(NASDAQ:CORT) reported that Corlux did not meet its endpoints in a Phase III test for Psychotic Major Depression, the last of three Phase III tests for the drug. The company noted that the drug did have positive effects on patients if the concentration in the blood was sufficiently high. Because of that finding, Corcept will put Corlux in another Phase III trial at the high dose of 1200 mg. Corcept fell 14 cents to $.90.

Sunesis Pharma (NASDAQ:SNSS) presented non-clinical data at two scientific meetings on an anti-cancer drug candidate known as SNS-314. In the tests, SNS-314 selectively inhibited Aurora kinases, halting cell division at the mitotic phase of the cell cycle in several different types of cancer. Sunesis intends to begin a Phase I trial of the compound in Q2. Sunesis was up 11 cents at $4.45.

GenVec (NASDAQ:GNVC) signed a Cooperative Research and Development Agreement with the National Institute of Allergy and Infectious Diseases division of the NIH to develop adenovector vaccines to prevent and treat respiratory syncytial virus [RSV]. GenVec is also working with the NIAID on vaccines for HIV and flu. GenVec climbed 29 cents to $2.81.

3SBio (NASDAQ:SSRX) received permission from Chinese authorities to begin marketing pre-filled syringes of erythropoietin [EPO] in four strengths between 2,000 IU and 10,000 IU. The company will use its brand name EPIAO. 3SBio markets its version of EPO to the Chinese market (see story) for patients with anemia from chronic kidney disease or chemotherapy. The new delivery method allows for self-administration. 3SBio shot up $1.09 to $12.40.

La Jolla Pharma
(NASDAQ:LJPC) will offer 5 million shares in a follow-on offering. In the past two weeks, the company’s stock has more than doubled in price following announcement of positive interim results from a Phase III trial of Riquent, a drug for lupus. The goal of Riquent is to reduce the incidence of renal flare in lupus patients. Before the results were released, La Jolla Pharma was trading just above $3 per share. Tuesday, the stock closed at $6.72, off by 22 cents on the day. Riquent received an approvable letter from the FDA in 2004, which requested additional trial data before it would grant final approval.

ViaCell (VIAC) began a clinical test to prove safety and efficacy of ViaCyteSM, a method for cryopreservation and thawing of human oocytes. The human eggs would be used during assisted reproductive technology. ViaCell expects to complete the trial in 2009. ViaCell was unchanged at $5.51.

Biotech had a positive session for the second day in a row. The Centient Biotech 200™ rose 24 points to 3860, a gain of .62%. So far this week, the CBT 200™ has climbed 58 points. The S&P 500 was .63% higher and Nasdaq was up by .58%.

Disclosure: none.

Source: Biotech Stocks: InterMune Retrenches