Replies to post #73368 on Biotech Values

[DewDiligence]

Re: IDIX liquidity

what gives you such confidence a financing (even at depressed stock price) won't happen this year?

I didn’t say IDIX wouldn’t have a financing this year; rather, what I said (in #msg-35703674) is, “I don’t think shorting based on the expectation of a financing deal explains the recent share-price dynamics.”

licensing of IDX184: could this be a 2009 event?

Yes, it could.

how long does NVS have to exercise licensing after proof of concept?

90 days.

does the 3-day monotherapy constitute proof of concept or will they have to wait for the combo with SoC?

Surprisingly (at least for me), IDIX considers the “proof of concept” vis-à-vis NVS’ opt-in right to be the monotherapy study rather than the combo study. However, this distinction may be moot insofar as the combo study ought to be largely finished by the time NVS’ 90-day window to exercise its option runs out.

milestones from GSK: idix evaded all questions re timing of milestones which leads me to think not much near-term (maybe modest clinical milestone at start ph 2 this year?)

What is your definition of modest? Here’s the transcript (edited for brevity and clarity) from the portion of yesterday’s CC where the GSK milestone payments are discussed:

http://seekingalpha.com/article/121073-idenix-pharmaceuticals-inc-q4-2008-earnings-call-transcript?source=yahoo&page=-1

David Moskowitz (Caris): …when could we see the next potential milestone [from GSK]?

Ron Renaud (CFO): …as we mentioned a couple of weeks ago, with regard to the milestones and the timing of milestone payments, we are not at liberty to discuss that… to add a little bit of extra color to it, I would say that the milestone payments are split between regulatory, clinical, and sales milestones.

David Moskowitz (Caris): So there are opportunities for multiple milestones along the way?

Ron Renaud (CFO): Absolutely.

Jean-Pierre Sommadossi (CEO): …[at] every significant clinical development stage, there is a significant milestone associated with those objectives.

This sounds to me as though the milestones realized in 2009 could well be non-trivial.

You did not mention the IDX375 and IDX136/316 programs, either of which could conceivably be licensed during 2009. This is somewhat more likely for the former than the latter, IMO, because the HCV non-nuke class has so few industry-wide candidates and the IDX375 program is closer to an IND filing than the IDX136/316 program.

All told, I think IDIX’s $80M of pro forma cash at 12/31/08 (after adding the $34M up-front from GSK), its guidance for 2009 burn of less than $66M, and the likelihood of non-trivial 2009 cash receipts from milestones and/or new licenses makes IDIX’s liquidity much better than average for a small-cap biotech company.

[DewDiligence]

IDIX liquidity addendum: Thanks, dewo, for asking some good questions. I’m adding my reply to the ReadMeFirst, which had been a bit sketchy on the subject. Regards, Dew

[DewDiligence]

IDIX – selling tyzeka royalty stream

I don’t think this is in the cards unless a clever tax lawyer can figure out a way to make such a transaction more than a zero-sum game. Still, it’s worth estimating the fair market value of this asset. Given the low level of interest rates and the 10+ years remaining on the Tyzeka patent in the US and EU, I think the present value of the roughly $4M in annual royalties ought to be worth about $25M.