Idenix: New HCV Drug Could Be A Blockbuster

Idenix: New HCV Drug Could Be A Blockbuster

Cris Frangold

Seeking Alpha

Idenix Pharmaceuticals, Inc. (IDIX) recently announced encouraging initial results from Phase IIb results for the treatment - namely, IDX184 and IDX719 - of the hepatitis C virus (HCV). Some reports about HCV say that it affects more than 170 million people globally, including over 4 million Americans. The global market for an effective treatment could reach as high as $100 billion by the year 2020.

HCV infects people who come in contact with contaminated blood that carries the virus, and is one of the main causes of chronic liver disease, which may end up as liver cancer. The result is also an increase in the number of liver transplants for people who contract the disease. The present treatment, which includes injections of the drug interferon alpha, cannot be tolerated by some patients, and can result in side-effects such as fever and depression.

Experts in the field say that this is a landmark moment in the treatment of HCV, because these results show that it is possible to treat the disease without using interferon. There is potential that these two drugs, with complementary profiles, can be given orally and eradicate the virus. The stage has been set for devising a treatment for effecting a complete cure among a large number of people. Experts also feel that the IDX 184 drug from Idenix can be used as a patch, and may overcome its deficiencies if it is combined with another potent drug such as Merck's (MRK) MK-5172/Victrelis (boceprevir), which has already been approved by the FDA.

With so many companies developing and testing treatments for HCV, it is worth our time to briefly survey the current developments. Idenix itself has produced some encouraging news about clinical trials for one of its new hepatitis C drug treatments, IDX719. The study measured a number of things, including the interaction between patient safety and food, and the effectiveness of the drug treatment.

In all, 40 volunteer patients took part in the trial, of which eight were given IDX 719. The volunteers reacted well to the drug, and have provided the company with positive feedback so that the trials can be continued. The company has also planned to begin trials with a combination of IDX 719 and IDX 184 towards the end of this year. Meanwhile, clinical trials on both drugs will continue to enable the company to gather as much data as possible before applying for FDA approval.

So many big companies are now involved in developing and testing drugs for HCV, that investors are asking whether they should invest in smaller companies, like Idenix, or look to larger pharmaceutical companies. Obviously, with the successful clinical trials to date, Idenix has to be taken seriously, but it may be appropriate to examine what the competition is doing. HCV drugs have recently become popular with investors because of the size of the potential market and the problems with the existing treatments for the disease. A successful treatment that would kill the virus, or at least keep it dormant, will help millions of people, and be extremely profitable for the company concerned.

Abbott Laboratories (ABT) has recently provided information on its pipeline drugs. Two short studies have shown recovery rates that are significant among the participants. The studies showed cure rates of 95% and 93%, respectively, for patients taking other HCV treatments, and 47% of patients not taking any other treatments. A cure rate refers to stopping or slowing down the spread of the virus, though the damage the virus has already caused cannot be reversed with these drugs. The company has started Phase II clinical trials, and will proceed to Phase III clinical trials before applying for FDA approval to manufacture and sell the drug treatment.

Gilead Sciences (GILD) also has a drug called GS-7977, which it took over when it acquired Pharmasset in late 2011. Gilead, is best known for its HIV drug treatments, Truvada and Viread. This HCV drug could become formidable competition for Index and other companies if it performs well in upcoming clinical trials. Gilead is under pressure, however, as its HIV drug treatments will lose patent protection by the end of the decade, and become vulnerable to low-cost generic producers.

Vertex Pharmaceuticals (VRTX) and Merck, two other companies developing new drug treatments for Hepatitis C, are also powerful competitors, and the recent problems that Vertex has had in respect of its data on Incivek do not take away from the effectiveness of the treatment. Finally, Medivir (MVIRB), working with Johnson & Johnson (JNJ), has reported good results with its drug TMC435. The company conducted a trial that resulted in an 80% 'cure' rate for volunteers who took the drug for 48 weeks and, within 24-weeks post-treatment, the virus disappeared.

Idenix has a robust drug pipeline centered on treatments for HCV. The company is investigating three separate classes of drugs. It has already been successful in developing and launching the licensed hepatitis B drug candidate, Telbivudine. The company has collaborations with other well-known companies, such as Novartis (NVS) and GlaxoSmithKline (GSK). These collaborations have produced several drugs such as IDX375 and IDX136. The company's best chance for a blockbuster is IDX184.

I have never believed that promising biotech investments can be identified with the use of conventional techniques and ratios involving past financial performance. A new blockbuster drug can be a complete game changer for a company. The kind of returns that are possible can easily outweigh the high risk and the process of waiting on FDA approvals. Idenix has a good track record, as well as a stellar product that could be a breakthrough in the potentially enormous HCV treatment market. If you can tolerate the risk of biotech investments, I would strongly recommend buying Idenix now.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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