Biotech Values

[DewDiligence]

IDIX – Morgan Stanley loved it at triple
the current price in late 2005. Below is
a summary of MS’ research report from
Oct 2005, when IDIX traded at $26. Since
then, there has of course been a setback
with NM283; however, Telbivudine—the
main value driver—remains on track with
NDAs having been submitted in all major
jurisdictions since this report was written.

http://www.forbes.com/markets/2005/10/04/idenix-pharmaceuticals-earnings-1004markets10.html

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Idenix May Have 'Best-In-Class' Hepatitis Treatment

By Peter Kang
10.04.05

Morgan Stanley raised the target price on Idenix Pharmaceuticals to $29 from $27 and said the biotech firm's experimental hepatitis B drug telbivudine has the potential to be a "best-in-class" drug, given recent data. Monday, the company reviewed data to be presented for telbivudine, as well as hepatitis B treatment NM-283, that will be presented at the American Association for the Study of Liver Diseases (AASLD) meeting on Nov. 11-15 [2005].

"The data were positive and give us confidence that both compounds are approvable and have a commercial role in hepatitis therapy," said Morgan Stanley. "Telbivudine will compete with Bristol-Myers Squibb's Baraclude, and today's Phase III data suggest the drug has the chance to be the best-in-class molecule based on its safety
and efficacy profile."

The research firm said that while NM-283 may not have the same efficacy as experimental drug VX-950, developed by Vertex Pharmaceuticals, the drug's "adequate activity" and safety will likely make it an important part of combination hepatitis C therapy.

"Most important, the operating leverage from the two compounds offers significant economic returns," it said. Morgan Stanley maintained an
"overweight" rating on the stock. "With two credible compounds in late-stage development, Idenix continues to offer significant opportunity for value creation," said Morgan Stanley.

"We view Novartis' NM283 in-licensing decision as the next inflection point for the stock and recommend investors stay long going into that event (early in 2006). Novartis' participation could push the stock past our price target into the low $30s." [NVS did in fact in-license NM283 on 3/28/06.]
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