Forward-Looking Statements

This Quarterly Report on Form 10-Q (the "Report") contains certain information regarding our financial projections, plans and strategies that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve substantial risks and uncertainty. You can identify these statements by forward-looking words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "could," "should," "continue" or the negative of such terms or similar words or expressions. These forward-looking statements may also use different phrases.

We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include, among other things, statements which address our strategy and operating performance and events or developments that we expect or anticipate will occur in the future, including, but not limited to, statements in the discussions about:

• product and product candidate development;

• sufficiency of our cash resources;

• future revenue, including those from product sales and collaborations, and future expenses;

• our research and development expenses and other expenses;

• the timing and payment of settlement amounts pursuant to our Civil Settlement Agreement with the government and potential restrictions on our business related to the Deferred Prosecution Agreement and Corporate Integrity Agreement with the government;

• the timing and payment of milestone payments under the Collaboration Agreement with Roche; and

• our operational and legal risks.

You should also consider carefully the statements under the heading "Risk Factors" below, which address additional factors that could cause our results to differ from those set forth in the forward-looking statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed in this Report, including those discussed in this Report under the heading "Risk Factors" below. Because of the factors referred to above, as well as the factors discussed in this Report under the heading "Risk Factors" below, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statement. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. When used in the Report, unless otherwise indicated, "InterMune," "we," "our" and "us" refers to InterMune, Inc.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. These estimates are the basis for our judgments about the carrying values of assets and liabilities, which in turn may impact our reported revenue and expenses. Actual results may differ from these estimates under different assumptions or conditions.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur periodically, could materially change the financial statements. We believe there have been no significant changes during the three month period ended March 31, 2009 to the items that we disclosed as our critical accounting policies and estimates under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the year ended December 31, 2008, except for our estimates as they relate to our adoption of FSP APB 14-1.

The FSP requires the issuer of convertible debt that may be settled in shares or cash at their option, such as our $85.0 million 0.25% convertible senior notes due March 2011 that are outstanding as of March 31, 2009, to account for their liability and equity components separately by bifurcating the conversion option from the debt instrument, classifying the conversion option in equity and then accreting the resulting discount on the debt as additional interest expense over the expected life of the debt. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar bond without the conversion feature, which required management to make estimates and assumptions regarding interest rates as of the date of original issuance.

Company Overview

We are a biotech company focused on developing and commercializing innovative therapies in pulmonology and hepatology. Pulmonology is the field of medicine concerned with the diagnosis and treatment of lung conditions. Hepatology is the field of medicine concerned with the diagnosis and treatment of disorders of the liver. We were incorporated in California in 1998 and reincorporated in Delaware in 2000 upon becoming a public company. During the past several years, we have reorganized our business by curtailing new investment in non-core areas and focusing our development and commercial efforts in pulmonology and hepatology. Subsequent to the discontinuation of our clinical trial of Actimmune for IPF in 2007, we now have the following key development programs in place: pirfenidone for IPF, the chronic hepatitis C virus ("HCV") protease inhibitor program and a new target in hepatology.

In February 2009, we announced results from the two Phase 3 CAPACITY studies for pirfenidone. The primary endpoint of change in percent predicted Forced Vital Capacity ("FVC") at Week 72 was met with statistical significance in CAPACITY 2 (p=0.001), along with the secondary endpoints of categorical change in FVC and progression-free survival ("PFS"). The primary endpoint was not met in CAPACITY
1 (p=0.501), but supportive evidence of a pirfenidone treatment effect was observed on a number of measures. Pirfenidone was safe and generally well tolerated in both CAPACITY studies. We are preparing a New Drug Application ("NDA") for submission to the U.S. Food and Drug Administration ("FDA"), to be followed by a Marketing Authorization Application ("MAA") submission to the European Medicines Agency ("EMEA").

In May 2008, we initiated a 14-day, Phase 1b study of ITMN-191 with standard of care therapy. In January 2009, we announced top-line results from all six completed dosage cohorts from that study. Viral kinetic performance and safety results were reported for three cohorts in each of which ITMN-191 was given every 12 hours (q12h) and every eight hours (q8h). This study demonstrated sufficient viral kinetic performance to warrant advancing ITMN-191 to a Phase 2b study, which will study both q12h and q8h regimens and both 12- and 24-week treatment durations. The Phase 2b study is anticipated to begin in the second quarter of 2009. ITMN-191 was generally safe and well tolerated. There were no serious adverse events ("SAEs") or Grade 4 adverse events ("AEs") during treatment with ITMN-191.

In November 2008, we, together with Roche and Pharmasset, Inc. announced the initiation of INFORM-1, a dual combination clinical trial investigating the combination of two oral antiviral molecules in the absence of interferon. The initial study evaluated the safety and combined antiviral activity of ITMN-191 (also known as R7227) and R7128, a polymerase inhibitor, in 14 days of combination therapy in treatment-naοve patients infected with HCV genotype 1. These results were announced in April 2009 and discussed at the EASL conference. Patients receiving the combination of R7227 and R7128 for 14 days - without pegylated interferon or ribavirin - experienced a median reduction in viral levels of -4.8 to -5.2 log(10) IU/mL in the highest doses tested. No treatment-related SAEs, no dose reductions and no discontinuations were reported in the study. Pharmacokinetic analysis confirmed that there were no drug-drug interactions between the compounds. The study was amended in April 2009 to include additional cohorts and study different treatment regimens.

Approved Product

Our sole approved product is Actimmune, approved for the treatment of patients with severe, malignant osteopetrosis and chronic granulomatous disease ("CGD"). For the nine month period ended March 31, 2009, Actimmune accounted for all of our product revenue, and substantially all of this revenue was derived from physicians' prescriptions for the off-label use of Actimmune in the treatment of IPF.

Results of Operations

Revenue

Total revenue was $6.9 million and $9.3 million for the three-month periods ended March 31, 2009 and 2008, respectively, representing a decrease of 26%. This decrease was attributable to a decrease in sales of Actimmune of approximately $2.5 million, or 29%. In early March 2008, we announced that our Phase III INSPIRE program for Actimmune in IPF had been discontinued and that future Actimmune revenue was expected to decline. For the three-month periods ended March 31, 2009 and 2008, sales of Actimmune accounted for all of our net product revenue. A majority of this revenue was derived from physicians' prescriptions for the off-label use of Actimmune in the treatment of IPF.

There are a number of variables that impact Actimmune revenue including, but not limited to, the discontinuation of the Phase III INSPIRE clinical trial, the level of enrollment in IPF clinical trials of other companies, new patients started on therapy, average duration of therapy, new data on Actimmune or other products presented at medical conferences and publications in medical journals, reimbursement and patient referrals from physicians. In light of the failure of the INSPIRE clinical trial in 2007, we expect that net sales of Actimmune for the year ended December 31, 2009 will continue to decline.

Cost of goods sold

Cost of goods sold included product manufacturing costs, royalties and distribution costs. Cost of goods sold were $2.9 million and $3.2 million for the three-month periods ended March 31, 2009 and 2008, respectively. The gross margin percentage for our products was 53% and 63% for these periods in 2009 and 2008, respectively. The decrease reflects the higher royalty rate payable upon an initial fixed amount of Actimmune product revenue. The decline in dollar value of cost of goods sold for the three-months ended March 31, 2009 compared to the same period last year reflects the declining Actimmune revenue.

Research and development expenses

Research and development expenses were $24.4 million and $27.2 million for the three-month periods ended March 31, 2009 and 2008, respectively, representing a decrease of $2.8 million, or 10%. The decrease primarily reflects the completion of the CAPACITY clinical trials late in 2008 and the amendment to the Roche collaboration agreement entered into in November 2008 whereby Roche funds certain of our research activities.

The following tables list our current product development programs and the research and development expenses recognized in connection with each program during the indicated periods. The category title "Programs-Non specific" is comprised of facilities, personnel costs that are not allocated to a specific development program or discontinued programs and $0.9 million and $0.7 million of stock-based compensation in 2009 and 2008, respectively. Our management reviews each of these program categories in evaluating our business. For a discussion of the risks and uncertainties associated with developing our products, as well as the risks and uncertainties associated with potential commercialization of our product candidates, see the Risk Factors below including those under the headings "Risks Related to the Development of Our Products and Product Candidates" and "Risks Related to Manufacturing and Our Dependence on Third Parties."

The following chart shows the status of our product development programs as of March 31, 2009:

                                                 Preclinical     Phase I     Phase II     Phase III

Pulmonology
Pirfenidone - Idiopathic pulmonary fibrosis
(CAPACITY)                                                                                        X
Anti-inflammatory/antifibrotic                             X
Hepatology
ITMN-191 - Chronic hepatitis C program;
protease inhibitor                                                     X
Next generation protease inhibitor                         X
Second Target in hepatology                                X

Our development program expenses for the three month periods ended March 31, were as follows (in thousands):

                    Development Program         2009       2008
                    Pulmonology               $ 15,161   $ 15,606
                    Hepatology                   6,305      8,127
                    Programs - Non-specific      2,961      3,448

                    Total                     $ 24,427   $ 27,181

A significant component of our total operating expenses is our ongoing investments in research and development and, in particular, the clinical development of our product pipeline. The process of conducting the clinical research necessary to obtain FDA approval is costly, time consuming, and variable with respect to the timing of expense recognition. Current FDA requirements for a new human drug to be marketed in the United States include:

• the successful conclusion of preclinical laboratory and animal tests, if appropriate, to gain preliminary information on the product's safety;

• the successful completion of adequate and well-controlled human clinical investigations to establish the safety and efficacy of the product for its recommended use; and

• the submission by a company and acceptance and approval by the FDA of an NDA or BLA for a drug product to allow commercial distribution of the drug for the approved indication.

Based on our existing budgeted programs and including the impact of SFAS 123(R), we expect research and development expenses to be in a range of $90.0 million to $100.0 million in 2009, net of development cost reimbursements under the Roche collaboration.

Acquired research and development milestone

The $13.5 million milestone payment in the first quarter of 2009 was made in accordance with the pirfenidone purchase agreement entered into in November 2007 and our decision in February 2009 to submit NDA and MAA filings for pirfenidone.

General and administrative expenses

General and administrative expenses were $8.5 million for the three-month period ended March 31, 2009 and $7.5 million for the same period in 2008, an increase of $1.0 million, or 14%. This increase is primarily attributed to legal expenses in connection with the lawsuits filed against the company earlier in 2008 and preparation costs related to the anticipated commercialization of pirfenidone. In 2009, including stock-based compensation under SFAS 123(R), we expect general and administrative expenses to be in a range of $35.0 million to $40.0 million, which includes up to $10.0 million for the above mentioned expenses.

Restructuring charges

In connection with the completion and announcement of our CAPACITY trials, we announced a reduction in force in February 2009. We expect to incur approximately $0.9 million of restructuring charges during 2009, of which approximately $0.6 million has been incurred through March 31, 2009 consisting primarily of severance payments to terminated employees.

Interest income

Interest income decreased to $0.7 million for the three-month period ended March 31, 2009, compared to $2.2 million for the three-month period ended March 31, 2008. This decrease primarily reflects decreasing investment yields on our cash and short-term investments resulting from lower market interest rates as well as lower average cash and investment balances.

Interest expense

Interest expense decreased to $2.7 million in the first quarter of 2009 compared with the $3.4 million for the first quarter of 2008 Each period reflects interest expense recorded in connection with our liability under the government settlement reached in October 2006. Interest expense in 2008 includes interest on our $170.0 million 0.25% convertible notes due in March 2011 (the "2011 Notes"), including the amortization of related debt issuance costs. On June 24, 2008, we issued $85.0 million in aggregate principal amount of 5.00% Convertible Senior Notes due 2015 (the "2015 Notes") to certain holders of our existing 2011 Notes in exchange for $85.0 million in aggregate principal amount of their 2011 Notes.

On January 1, 2009, we adopted Financial Accounting Standards Board Staff Position APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled In Cash Upon Conversion (Including Partial Cash Settlement)" (FSP APB 14-1) and recorded additional interest expense for the first quarter of 2009 of $1.5 million. FSP APB 14-1 requires retrospective application upon adoption; therefore, our net loss for the first quarter of 2008 has been adjusted from that which was previously reported to reflect additional interest expense of $2.8 million. The decrease in interest expense for the first quarter of 2009 compared to the same period in 2008 reflects the June 2008 issuance of the 2015 Notes in exchange for the 2011 Notes. The 2015 Notes may not be settled in cash upon conversion at the option of the issuer and thus do not fall under the requirements of FSP APB 14-1.

Other income (expense)

Other income for the three months ended March 31, 2009 consists primarily of a $6.0 million receipt from the sale of our shares of Targanta common stock. This compares with income of $0.3 million for the same period in 2008.

Income Taxes

The $2.2 million income tax expense for the three-month period ended March 31, 2009 relates to the gain on sale of our investment in Targanta common stock in March 2009.

Liquidity and Capital Resources

At March 31, 2009, we had available cash, cash equivalents and available-for-sale securities of $175.2 million compared to $154.7 million at December 31, 2008. The increase was primarily driven by the $63.4 million in net proceeds from our February 2009 public offering, partially offset by the use of cash for our operations.

The primary objective of our investment activities is to preserve principal while at the same time maximize yields without significantly increasing risk. To achieve this objective, we invest our excess cash in debt instruments of the U.S. federal and state governments and their agencies and high-quality corporate issuers, and, by policy, restrict our exposure by imposing concentration limits and credit worthiness requirements for all corporate issuers. At March 31, 2009, we held approximately $17.5 million of student loan auction rate securities (par value of $18.0 million), classified as long-term assets, and an additional $3.0 million valued at par and classified as current, which are substantially backed by the federal government. Beginning in February 2008, auctions failed for the entire portfolio of our auction rate securities and have continued to fail since. As a result, our ability to liquidate our investment and fully recover the carrying value of our investment in the near term may be limited or not exist. During the fourth quarter of 2008, we recorded an impairment charge of $3.5 million for the writedown of the carrying value of these securities as we believe the decline in market value is other-than-temporary in nature given the deteriorating credit and financial markets and specifically the auction rate securities market. All of our auction rate securities are currently rated AAA, the highest rating by a rating agency. If the issuers are unable to successfully close future auctions and their credit ratings deteriorate, we may in the future be required to record further impairment charges on these investments. Based on our expected operating cash flows, and our other sources of cash, including proceeds from our February 2009 public offering, and the recently announced results from our CAPACITY trials, we currently anticipate the need to liquidate these investments prior to maturity or estimated time to recovery in order to execute our current business plans. These investments were recorded at fair value as of March 31, 2009 based on a discounted cash flow analysis. In April 2009, one of our auction rate securities with an aggregate fair value of $3.0 million was redeemed at par value.

Operating Activities

Cash used in operating activities was $50.6 million during the three-month period ended March 31, 2009, comprised primarily of a net loss of $42.0 million and a decrease in other accrued liabilities of $10.0 million. This use of cash was partially offset by increases in accounts payable and accrued compensation of $2.9 million. The increase in accounts payable reflects the growth in our payable to Roche under the collaboration agreement. The decrease in other accrued liabilities partially reflects an accelerated payment of $4.4 million made to the U.S. Department of Justice in March 2009. Details concerning the loss from operations can be found above in this Report under the heading "Results of Operations."

Investing Activities

Cash provided by investing activities was $20.8 million during the three-month period ended March 31, 2009, comprised primarily of sales and maturities of short-term investments totaling $30.9 million, partially offset by $10.0 million of short-term investment purchases.

Financing Activities

Cash provided by financing activities of $63.7 million for the three-month period ended March 31, 2009 was primarily due to the receipt of proceeds from our public offering completed in February 2009.

We believe that we will continue to require substantial additional funding to complete the research and development activities currently contemplated and to commercialize our product candidates. We believe that our existing cash, cash equivalents and available-for-sale securities, together with anticipated cash flows from sales of Actimmune, will be sufficient to fund our operating expenses, settlement with the government, debt obligations and capital requirements under our current business plan through at least the end of 2009. However, this forward-looking statement involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed under "Item 1A. Risk Factors." This forward-looking statement is also based upon our current plans and assumptions, which may change, and our capital requirements, which may increase in future periods. Our future capital requirements will depend on many factors, including, but not limited to:

• sales of Actimmune or any of our product candidates in development that receive commercial approval;

• our ability to partner our programs or products;

• the progress of our research and development efforts;

• the scope and results of preclinical studies and clinical trials;

• the costs, timing and outcome of regulatory reviews;

• determinations as to the commercial potential of our product candidates in development;

• the pace of expansion of administrative expenses;

• the status of competitive products and competitive barriers to entry;

• the establishment and maintenance of manufacturing capacity through third-party manufacturing agreements;

• the establishment of collaborative relationships with other companies;

• the payments of annual interest on our long-term debt;

• the payments related to the Civil Settlement Agreement with the government;

• the timing and size of the payments we may receive from Roche pursuant to the Collaboration Agreement; and

• whether we must repay the principal in connection with our convertible debt obligations.

As a result, we may require additional funds and may attempt to raise additional funds through equity or debt financings, collaborative arrangements with corporate partners or from other sources. We have no commitments for such fund raising activities at this time. Additional funding may not be available to finance our operations when needed or, if available, the terms for obtaining such funds may not be favorable or may result in dilution to our stockholders.

Off-Balance Sheet Arrangements

We do not have any "special purpose" entities that are unconsolidated in our financial statements. We have no commercial commitments or loans with related parties.

Recent Accounting Pronouncements

In June 2008, the FASB ratified Emerging Issues Task Force ("EITF") Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock("EITF 07-5"). EITF 07-5 provides guidance on how to determine if certain instruments (or embedded features) are considered indexed to our own stock, including instruments similar to our convertible senior notes. EITF 07-5 requires companies to use a two-step approach to evaluate an instrument's contingent exercise provisions and settlement provisions in determining whether the instrument is considered to be indexed to its own stock and exempt from the application of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Although EITF 07-5 is effective for fiscal years beginning after December 15, 2008, any outstanding instrument at the date of adoption will require a retrospective application of the accounting through a cumulative effect adjustment to retained earnings upon adoption. The adoption of . . .