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Late Tuesday, an advisory panel of the Food & Drug Administration (FDA) voiced its approval for pirfenidone, the experimental lung drug from InterMune (ITMN). The panel voted 9-3 in favor of recommending pirfenidone to patients with idiopathic pulmonary fibrosis.
The FDA is expected to follow the advice of the advisory panel, although it's not required to do so. The regulatory agency is due to issue its final ruling on the drug's fate by early May.
Following the news, brokerage firms have bombarded ITMN with bullish notes. The stock has attracted price-target increases from Baird, Thomas Weisel, Lazard, Wedbush and Canaccord Adams at last check. Meanwhile, Wells Fargo and ThinkEquity have upwardly revised their opinions on ITMN to outperform and buy, respectively.
In a note accompanying its price-target boost, Baird seemed sheepish about missing the stock's major gains thus far. "We keep missing the good stuff for ITMN, but would recommend adding on any opportunities below $35," wrote the firm.
Early Wednesday, ITMN blazed to a fresh annual high of $39.50, marking its best price since February 2002. Short sellers are likely feeling the pain, as these bearish bettors have sold short a substantial 14% of the stock's float. At ITMN's average daily trading volume, this translates to roughly 4.3 days' worth of pent-up buying pressure.
Elizabeth Harrow is a senior equities analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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