Biotech Values

[DewDiligence]

What’s up with IDIX?

I am surprised at the drop in price on what appears to be a good deal for a phase-2 drug. And it was not really expected as far as I know, so the sell-on-the-news investors shouldn't have built this into their strategy.

Hi, urche. The IDIX899 partnership announcement was expected—in fact, it was overdue insofar as IDIX originally guided investors to expect this deal in 2008. I don’t have an explanation for why the stock traded down 4.7% yesterday.

As you can probably tell from my posts, I like IDIX more today than I did two days ago. The deal with GSK solidifies IDIX’s finances for the short and medium term and it probably puts a floor under the share price, making it unlikely that we’ll see a return to the lows of Oct-Nov 2008.

Detailed analysis of the GSK deal must wait until IDIX files the license agreement with the SEC (as an attachment to the 2008 10-K report). I’m also curious to know how GSK intends to incorporate IDX899 into an HIV cocktail. As noted in a prior post, simply adding IDX899 to Epzicom or Combivir is not the answer, IMO.

With the new money from GSK, IDIX now has the flexibility to aggressively pursue its three-pronged (nuke, non-nuke, and PI) clinical program in HCV. No other company I’m aware of has HCV programs in all three areas.

If you’re long IDIX, you can look forward to a robust calendar of news flow this year on IDX184, IDX375, and IDX136/316, knowing that good data on any of them increase the likelihood that NVS will buy out the minority shareholders at a nice premium. Regards, Dew