Intermune's (NASDAQ:ITMN) long slog with Esbriet continues. Encouraging news from France last week, that the country's health authority has agreed the idiopathic pulmonary fibrosis (IPF) treatment should be reimbursed, was overshadowed by lengthening timelines to actually win final pricing decisions, in France as well as Italy and Spain.
Ever deepening austerity measures across Europe mean Intermune is trying to launch its expensive lung treatment at an incredibly difficult time. Meanwhile a confirmatory phase III study required by the FDA is also taking longer than expected to enrol, meaning a launch there before 2015 looks unlikely. Despite all this many analysts remain confident in the long term potential of Esbriet - the 75% collapse in Intermune's share price over the last 12 months suggests investors are more skeptical. Given the potential for further delays and disappointments, that caution looks justified.
Looking on the upside
The product was granted an "Amelioration du Service Medical Rendu" (ASMR) rating of level IV - indicating that the drug has been judged to represent a minor improvement over current therapies, the lowest rating that still garners reimbursement. It was also rated low on the Service Medical Rendu (SMR) scale, which looks at a product's risks and benefits. This would normally mean only 15% of the costs of treatment are paid for by the state - the fact that IPF is a rare and chronic disease overrules this so 100% of the cost will be reimbursed.
The regulator also noted that no other treatment provides evidence of a clinical benefit in IPF, but said the product it should only be reimbursed for patients with lung capacities specifically described on the label and recommended a patient registry collect information on the use of the drug in clinical practise.
This lukewarm view of the product's value reflects its reception in Germany, where a review by the country's health technology assessment agency, IQWiG, last year deemed it not to bestow any additional benefit over best supportive care. The judgement erased 40% from the company's share price last December as it implied the product was not eligible for reimbursement.
However in what was viewed as a positive outcome a subsequent report by the country's G-BA, which does rule on reimbursement, concluded the product does have additional benefit, although it is not quantifiable.
While not a ringing endorsement this decision meant Intermune could start price negotiations with Germany's insurance funds - the outcomes of those are anticipated around September. In the meantime the drug is on the market in Germany - sales reached $2.7m last year, after launching in September 2011 - but the final price negotiated by Intermune remains a closely watched outcome.
Hard to value
Of course this hard-to-quantify benefit, on the trial data generated by Intermune so far, was exactly the reason why the FDA refused to grant Esbriet approval back in 2010 (Intermune left gasping by FDA rejection of pirfenidone, May 5, 2010).
Only one of the two original pivotal studies succeeded and the regulator has requested another, which is under way. Called Ascend, enrollment is taking longer than expected and is not likely to complete until the end of the year, six months later than hoped. While the company blamed for holding back progress the rigorous enrollment criteria designed to ensure success, the emergence of unexpected generic competition in Latin America and competition for IPF patients from other experimental agents, slow recruitment is never an encouraging sign.
Over in Europe, the company blamed delays to final pricing decisions in France, Italy and Spain - now expected in September or October - on impending or recent changes in government and the approaching summer months, which tend to cause official channels to slow on the continent.
With a German decision due around the same time and the UK's Nice likely to rule in October, Esbriet's price point in Europe should be better understood by the end of the year, but further delays cannot be ruled out. All of which means more watching and waiting, and another delay to a vital revenue stream. But with regulators seemingly continuing to struggle to quantify the clinical benefits of this product, Intermune has its job cut out to justify its value.