Shares of biotech company InterMune Inc. (NASDAQ: ITMN) more than doubled Tuesday after the company said its experimental drug pirfenidone, in a late-stage trial, reduced the progression of a disease that leads to loss of lung function. You would think a move of this magnitude is from the company being acquired. This is no M&A story at all, at least not yet.
The results will take the take the treatment closer to approval by the U.S. Food and Drug Administration (FDA). InterMune showed that the drug caused a significant reduction of the progression of idiopathic pulmonary fibrosis (IPF), an irreversible disease that causes progressive scarring of the lungs, when compared to a placebo.
A request for FDA approval likely will come in the third quarter, the company said. It is expected to be marketed under the name Esbriet. That is the name the company uses to market the drug in Europe, where it already has won regulatory approval.
24/7 Wall St. readers in biotech should not be entirely surprised here. We showed in early February that InterMune was given a $23 price target, a double at the time, by J.P. Morgan as its top pick in the sector.
InterMune shares were up $16.92, or 121.2%, to $30.88 in early Tuesday trading. The volume of more than 20 million shares was already more than 15 times normal trading volume, after only an hour of trading.
The shares have experienced heavy shorting, with short interest as high as 19 million shares in April 2013 — roughly 13 times its average daily volume. InterMune’s short interest would logically be playing a part in this move exponentially higher, but it turns out that the 9.94 million shares short as of the end of January is the lowest level in a year, and it is half of that April short interest.
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