Is InterMune (NASDAQ:ITMN) a Takeover Candidate?

InterMune (NASDAQ:ITMN) March 34 and 35 calls are active on total call volume 3,100 contracts (500 puts) on attracting takeover interest, Reuters says. March call option implied volatility is at 90, April is at 88, May and July is at 82; compared to its 26-week average of 90 according to Track Data. Active call volume suggests traders taking positions for price movement, according to

Brian Abrams, a Senior Analyst as Wells Fargo concurred that the company looks undervalued and could be a takeover target in a recent analyst note. Some other highlights of the note include:

InterMune (NASDAQ:ITMN) shares are trading up 14% this afternoon (vs. 0.4% for BTK biotech index) we believe based on a Reuters article saying that the company is attracting takeover interest from pharma companies, though a formal sale process is not under way and a deal is not imminent.

With robustly positive phase III ASCEND trial data. We continue to believe Esbriet has $1B worldwide potential in IPF alone (not including possible uses for Esbriet or nextgen versions in other fibrotic diseases), and while one of the limitations of the story has been the expenses required to maintain its EU infrastructure and build out a U.S. commercial presence, we believe a potential acquirer with an existing commercial infrastructure could generate considerable synergies and significantly improve potential margins for the drug.

We continue to believe shares remain fundamentally undervalued, either in takeover or standalone scenarios, and expect appreciation especially once we are through the competitor data overhang.

InterMune (NASDAQ:ITMN) is trading up 14.65% intraday.


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