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EvaluatePharma on IDIX

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http://www.evaluatepharma.com/Universal/View.aspx?type=Story&id=177143§ionID=&isEPVantage=yes

Headline: Idenix should be able to keep the good news flowing
Source: EP Vantage
Company: Idenix Pharmaceuticals
Related: GlaxoSmithKline
Date: February 09, 2009

"Idenix Pharmaceuticals clinched a highly anticipated deal with GlaxoSmithKline over its novel phase II HIV candidate IDX-899 last week, pocketing $34m upfront, useful funds that will be put to good use this year.

The cash will be spent developing the group’s expansive hepatitis C programmes and if all goes well further positive headlines should emerge soon to keep investors interested. Novartis, which owns a 56% stake in the US-based company and two seats on the board, also has the right to first refusal over its entire pipeline. Considering the pharma giant’s clear commitment to the anti-infectives space Idenix has a ready made partner waiting in the wings for anything that does start to look promising.

Anticipation of a deal over IDX-899, a novel non-nucleoside reverse transcriptase inhibitor (NNRTI), helped make Idenix shares one of the best-performing healthcare stocks in 2008 (Emergent tops slim list of stock market winners for 2008, January 9, 2009). Despite suffering heavily in October when global stock markets went into meltdown, the shares managed to more than double last year.

Restructure and focus

In part, the company was bouncing back after a disastrous 2007, which saw its lead compound valopicitabine stall in a phase II trial for hepatitis C. The setback prompted a significant restructuring; its newly launched hepatitis B candidate Tyzeka was sold to Novartis in return for a royalty stream on sales, allowing the group to size down considerably and focus attention on its early stage hepatitis C and HIV programmes.

There can be little doubt that the refocusing helped usher in this deal with Glaxo. As well as the $34m upfront, split between a cash injection and stock purchase, Idenix could receive up to $416m in milestones, plus double-digit royalties. Glaxo, with its strong HIV franchise, was an obvious partner.

The move also means Idenix will be even more sharply focused on hepatitis C, an extremely hot area of both research and licensing deals (Bristol-Myers, Zymo deal shows interest in hep C remains high, January 13, 2009).

Broad pipeline

The group’s programme is impressively broad; it has two research projects, five preclinical candidates and a phase I compound, a nucleoside analogue called IDX-184, under investigation. A proof of concept study for the latter started last month, and by the end of the year Idenix hopes to become the first company to have innovative drugs from three major classes of direct-acting hepatitis C antivirals in clinical development.

With $46m in the bank at the end of 2008, plus the cash from Glaxo, Idenix should be able to make quick progress this year. That should be enough to keep shareholders interested, who will be looking for news on the pipeline to boost the stock back up to last year's levels. Shares in the company closed Friday at $6.14, and have not moved much on the Glaxo deal, possibly because it has been so well flagged. The stock touched $9.48 last September, an 18-month high.

With Novartis owning such a big chunk of the company and having first dibs on anything interesting, the chances of a buyout at this stage look fairly limited; a third party would not get involved and there is little reason for the Swiss company to consolidate its ownership just yet. However, there is no doubt Novartis will be watching closely, and if progress is made with the other candidates, Idenix should have no problems negotiating another licensing deal."