Replies to post #86661 on Biotech Values

[mcbio]

Re: VRUS/RG7128 vs. IDIX

Given the prior safety signal, passing the interim review and proceeding to the second stage of the phase-2b trial is a significant milestone for VRUS, and it’s surprising the stock rose only 1% today.

I totally agree and was quite surprised when I saw such a tiny move in the share price.

With an enterprise value in the $500-600M range, VRUS is overpriced (IMO), but the positive safety review for RG7128 means it’s less overpriced today than it was yesterday.

As we have discussed before, I also agree that the stock is overpriced in the $500-600M enterprise value range. I don't really have a ton of confidence as to where RG7128 fits into the intermediate to longer-term HCV treatment picture. Yes, RG7128 may be the first HCV nuke to make it to market but you can clearly tell that VRUS itself is anxious to bring 2nd gen and 3rd gen nukes quickly behind it. Given that the compound has to be given in relatively higher doses, how is this compound going to fit into the idea of co-formulation of HCV compounds? I assume it won't be able to and that's why we see VRUS so anxious to develop the follow-on 2nd gen and 3rd gen nukes that are much more potent. I've raised these similar concerns with respect to telaprevir as far as the HCV PIs go. Yes, short-term looks great, but what about intermediate to longer term when we think about co-formulation?

If one is not entirely confident as to where RG7128 fits into the intermediate to longer-term HCV treatment picture, then you're essentially left with a $500-600M enterprise value for a company mainly dependent on 2nd and 3rd gen nukes in early stage development. Contrast that with IDIX who also has its own 2nd gen HCV nuke already in Phase 2, which was in fact more potent than VRUS' nuke at the 100mg dose level in Phase 1, in addition to the 2nd gen HCV PI and non-nuke to follow plus the HIV compound for one-fourth to one-fifth the valuation of VRUS. All told, I can't envision any scenario where VRUS could be considered a better buy right now than IDIX.