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"ITMN" : Big Catalyst Coming For "Intermune", Some Thoughts.

|Includes: InterMune, Inc. (ITMN)

ITMN is in a short-term rising channel, momentum drives the price to the upside, but what is really behind that move?

A big catalyst event is coming and it's the ATS, where detailed data about the competitor's drug nintedanib are going to be announced. The market is speculating that Esbriet is more advantageous, so if this comes true there is a lot of upside for the stock in the near future, and I explain.

According to ITMN's data, there are 70.000 cases of IPF in the US and with a price of 60-70.000$ that makes a 4-5bio total market for the drug. If it manages to catch the 20% of this, it would mean 1bio sales to ITMN from the US alone. Adding 200-300mio for EU sales that makes 1.5bio annual sales approximately. Looking at the pharma-sector established companies are valued at 8-10x their annual sales, which values ITMN at 10-15bio or 100-150$ company in 3-5yrs time frame.

All the above are valid under the following circumstances, which also represents the risks

a. Esbriet is getting approved from FDA as expected in the H1 or 2015

b. Most important is that Esbriet is far more superior than nintedanib, making it almost valueless for patients to obtain. (as when we are talking about life n death, take only the most effective drug matters)

From all the above we understand the importance of the ATS that is coming in few days. That's why ITMN stock is getting such an attention, especially after the positive top line data from P3 last February. In anticipation of all those, there is interest for buyout from larger established companies, with huge cash pile and flows. Rumors are out naming some possible interested companies. Personally I do not believe that a buyout is coming soon at least and I explain,

a. Intermune has already established a sales network all over Europe, through small local subsidiaries and already are infusing the market generating 140mio sales per year.

b. There is a lot of uncertainty regarding the status of Esbriet vs competition, something that is difficult to obtain as BI is a private company that has no obligation to make public trials information.

c. Lets say that in ATS is clear the superiority of Esbiet, then It would be very difficult for ITMN to accept a b/o offer as things are going to progress very favorably for , them, leaving no reason to sell.

What is more possible according to me, is the accumulation of shares through the open market, something like that is probably going on right now (price has risen almost 50% from April low of 24$) in speculation for ATS results. I wouldn't like to say more at this stage, I will come back in the end of May to comment the ATS effect. Good luck to all!