Monday, February 13, 2012

The Hepatitis C Gold Rush - Looking For The Right Fit For Idenix’s Drug IDX184

Source Seeking Alpha

The Hepatitis C Gold Rush - Looking For The Right Fit For Idenix’s Drug IDX184  
This article is a recap of events currently underway in the Hepatitis C arena compiled with facts from industry experts and articles over the last several weeks about what is currently talking place right now.

Hepatitis C virus (HCV) reports say that there about 170+ million people globally, including 4.1 million Americans, and annual projections range from $3 billion to $20 billion by 2020. Volume may be seen as high as $100 billion over the next decade according to Mark Schoenebaum of ISI Group. Mark Schoenebaum is a Senior Managing Director, heads ISI's Health Care Research Team and is ISI's Biotechnology & Pharmaceuticals-Major Analyst. He has been ranked Institutional Investor #1 biotechnology analyst for the past 7 years. In addition, Mark has been highly ranked in the Greenwich Associates survey for several years.

HCV spreads through contact with contaminated blood which is the most common form of the virus who carry the virus. It's by far the leading cause of chronic liver disease, and can lead to liver cancer. The current treatment includes treatment which is not tolerated by everyone and includes injections of the drug interferon alpha, which side effects include fatigue, fever and depression. Most liver transplants performed in the U.S. are due to progressive liver disease caused by the Hepatitis C virus.
We are on the threshold of a watershed moment in the treatment of Hepatitis C - according to a recent editorial in the New England Journal of Medicine. A world-renowned expert in the field, Raymond Chung, MD, from Massachusetts General Hospital and Harvard Medical School opines, "This is a watershed moment in the annals of HCV therapy because it shows that a sustained virologic response can be achieved without interferon. Implicit in this finding is the concept that 2 potent agents with complementary resistance profiles, given for a sufficient duration, can impose a stranglehold on viral replication and result in clearance of the virus." More significantly he suggests "Can we do even better? Certainly. with inclusion of "nucs"...nucleotide polymerase inhibitors, which are unique among direct-acting antiviral classes because they offer a high barrier to the selection of viral resistance we can anticipate regimens with substantially lower breakthrough rates. He concludes "We are on the threshold of a treatment revolution that will greatly improve the effectiveness of HCV therapy by dramatically increasing the number of persons treated. There has never been a more exciting time for patients and providers who grapple with this silent killer."

The stage has been set for effective a complete cure in a hitherto incurable and widespread disease by aggressive and judicious use of combination therapy with a regimen that includes distinct antiviral classes esp. nucleotide polymerase inhibitors, given their high genetic barrier to resistance and pan-genotypic coverage, will be a crucial ingredient in such combination regimens.

Here are the facts as we know them:
1) T ROWE PRICE ASSOCIATES - 7.8% stock ownership - 8,336,002 shares
2) BAUPOST GROUP - 5.29% stock ownership - 5,665,000 shares
http://en.wikipedia.org/wiki/Baupost_Group#Investment_Strategy
  • On January 9, Idenix announced that its lead drug candidate for HCV, IDX184 showed No serious side effects in patients after 28 days of treatment
  • January 11, 2012 Merck announced that it may consider acquisitions to expand its Hep C drug lineup
  • January 13, 2012 Idenix announced that is open to find a partner to create a combination treatment to fight the virus with its drug candidate called IDX184, CEO Ron Renaud said.
  • January 20, 2012 ISI Group biotech analyst Mark Schoenebaum held a lunch meeting for 120 investors to discuss the current state of hepatitis C drug development. As part of his meeting, Schoenebaum surveyed his investor audience -- made up of 30% generalists, 20% arbs and 30% specialists -- on their views and opinions about the current red-hot topics in hepatitis C. Asked if Idenix Pharma has a greater than 50% chance of being acquired, 79% of the investors responded in the affirmative, 21% said no.
  • February 3, 2012 Idenix Says FDA Partial Hold On Hep C Drug IDX184 was lifted ...very good news
  • February 6, 2012...house cleaning...Idenix's building is sold to BioMet Realty? Is a move in the works?
  • February 6, 2012....more house cleaning... Idenix allegedly pushes out controversial long time director since 2003, Charles W. Cramb, after allegations regarding Avon stock http://www.forbes.com/sites/walterpavlo/2012/01/31/avon-vice-chairman-fired-amid-bribery-probe/
  • Analysts feel that IDX184 can be used as a "patch" and needs another potent drug to cover for its shortcomings. Combined drugs are desired because they attack different checkpoints for the HCV disease as they travel through the body. This last nuc could be the right patch?
  • Industry experts and our research suggests that it is very possible that Merck's FDA already approved drug MK-5172 / Victrelis (boceprevir) is the Best fit for IDX184
  • As suggested, the most notable drug in Merck's HCV pipeline is its FDA approved first-in-class, oral hepatitis C virus (HCV) NS3/4A protease inhibitor,MK-5172, a pan-genotypic protease inhibitor (PI). However MK-5172, despite high potency, has one potential drawback in that it may still select for fit mutations due to lower genetic barrier to resistance as compared to the nukes. It would hence make sense for this to be paired with a nucleotide polymerase inhibitors, given their high genetic barrier to resistance. A once daily PI + nuc combination of MK-5172+IDX184 might well be one of the attractive treatment options for Hep C infection. The fact is Merck desperately needs to find a nuc for MK-5172 to remain relevant in the field of Hep C, and IDX184 is now the only nuke left in the field that is in Phase II development.
  • Also noted, TheStreet Senior biotech columnist Adam Feuerstein commented that based on a conversation with a "Hep C bull" at the JP Morgan Healthcare conference and tweeted on Jan 13 a prediction that "Merck (MRK) would buy Idenix (IDIX) for $3B." Merck has made no secret for its desire to be at the forefront of the race to cure Hep C. "Our goal is to be a leader in hepatitis C, and we will do what it takes to get there," says Merck's (MRK) Roger Pomerantz, worldwide head of licensing and acquisitions, reports Bloomberg. "We would consider small deals to large deals, whatever is necessary to lead in hepatitis."
  • Bank of America raises its price objective on IDIX to $18 from $9 previously on much more attractive valuation following the INHX acquisition
  • Wedbush sets a new price target for IDIX at $24 on renewed takeover speculation sighting $MRK, $JNJ and $ABT as potential suitors
  • Geoff Meacham, senior biotechnology analyst at J.P. Morgan raised IDIX from $12 to $25 following their J.P. Morgan Health Care Conference in San Francisco, January 2012
  • February 7, 2012 Idenix Pharmaceuticals to Present at Two Upcoming Investor Conferences
    http://www.prnewswire.com/news-releases/idenix-pharmaceuticals-to-present-at-two-upcoming-investor-conferences-138877929.html
In conclusion: We are in the midst of a Hep C "Gold Rush" so to speak, and as industry experts feel, just as we do...it's really just a matter of time before we find out more about the right suitor for Idenix's nuc drug candidate IDX184. Remember, reports suggested that Inhibitex (INHX) was acquired for $2.5B for their 1 drug candidate and there were as many as 5 bidders, four who lost out, but may be eyeing Idenix? Further, Inhibitex only had 1 drug, but Idenix has at least "four" with a very strong pipeline. Here is a link to the Idenix pipeline according to their website:http://phx.corporate-ir.net/phoenix.zhtml?c=131556&p=irol-productpipeline

Disclosure: The editor of this article is long Idenix (IDIX) stock as well as many other biotech companies and may initiate adding to positions within the next 72 hours.
Credit Articles / News Services / Conferences / Research Firms:
  • Fda.gov/News Events/Newsroom/PressAnnouncements ...Media. Erica Jefferson Erica.jefferson@fda.hhs.gov
  • New Drug Combo for Hepatitis C Shows Promise by Mary Marcus, HealthDay Jan 18, 2012
  • Idenix Pharmaceuticals / Investor Page phx.corporate-ir.net/phoenix.zhtml?c=131...
  • Bloomberg news: Idenix Seels Partner for Hepatitis C Combination Drug, CEO Renaud Says
  • Benzinga News: http://www.benzinga.com/trading-ideas/long-ideas/12/01/2254086/going-nuc-lear-on-hepatitis-c-is-idenix-the-next-target
  • Reuters news
  • Biospace news
  • Forbes news
  • BusinessWire
  • Wedbush research
  • JP Morgan research
  • TheStreet, Adam Feuerstein - Biotechnology Columnist
  • JP Morgan Healthcare Conference / San Francisco January 2012
  • New England Journal of Medicine
  • Raymond Chung, MD, from Massachusetts General Hospital and Harvard Medical School
Disclosure: I am long IDIX.
Themes: MRK, JNJ, ABT, INHX, GILD, VRUS Stocks: IDIX

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