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Idenix Pharmaceuticals, Inc. (NASDAQ:IDIX)

UBS Global Healthcare Services Conference Call

May 21, 2013 8:00 a.m. ET

Executives

Ronald Renaud - President and Chief Executive Officer

Analysts

Matthew Roden - UBS

Matthew Roden - UBS

Good morning everyone. I am Matt Roden, biotech analyst here at UBS, and we are pleased to introduce our first speaker of the day. I am pleased and privileged to introduce Idenix Pharmaceuticals, an innovator in the field of hepatitis C direct antivirals. As you know, Idenix has one asset in Phase 2 testing and is starting trials with the second asset in the near term. Speaking on behalf of Idenix is President and Chief Executive Officer, Ron Renaud. Ron joined Idenix in 2007 as the Chief Financial Officer and ascended to CEO in 2010. Prior to that he was CFO of Keryx Pharmaceuticals and was a successful sell-side analyst covering all cap biotechnology.

Following the presentation there is going to be a breakout session across the way, and it is in Carnegie East. And with that I am pleased to hand it over to Ron. Ron?

Ronald Renaud

Thanks, Matt, and good morning. So before I begin I just want to remind folks that this presentation will include forward-looking statements about Idenix and our business. The risks and uncertainties associated with our business are detailed in filings that are on file with the SEC.

So for folks who don’t know about Idenix. We are a company focused on human viral and infectious disease. Right now we have an exclusive focus on hepatitis C virus. We are right now working on developing an all oral, pan-genotypic, HCV combination regimen. I will talk a little bit about the components of that regimen. What we are working on internally and what we believe we have in terms of participating in the HCV arena going forward.

Our clinical pipeline is led by IDX719. This is an NS5A inhibitor that is in Phase 2 clinical testing, is part of the Janssen collaboration, and I will share a little bit more about that in a moment. And then a little bit earlier, but probably the most significant part of our discovery engine, are multiple earlier stage nucleotide analog candidates. An IND for which our lead nucleotide candidate will be filed in the first half of 2013 and then two additional NUCs are currently in IND enabling studies.

So for folks who have not paid a lot of attention to HCV, which it's hard to do lately given a lot of the innovation. The HCV market represents a huge opportunity, multiple genotypes worldwide. I think we spend a lot of time here in the United States and in Western Europe focused on genotype 1 because that’s what the preponderance of genotypes are. But if you go worldwide, genotype 1 represents roughly half of the global genotypes and non-genotype 1 represents the other half. So a huge non-genotype 1 opportunity globally.

This is a significant problem globally. 170 million patients infected worldwide, it's an estimate. I think there is probably not a day that goes by now where you don’t see revisions to global estimates of HCV prevalence. And in fact I think the CDC has had some new numbers out in the last week, week and half, talking about underestimation of HCV even here in the United States. We will talk a little bit about where the current focus is for the development of direct acting antivirals and why it's important to be focused on developing a pan-genotypic approach.

So as I mentioned. Current DAA combinations you see here focused on genotype 1, largely on patients that are treatment-naïve. And I think clearly you want to have potency, safety and convenience. This is now very very commonplace in the post-interferon era of treating HCV. But where we are lacking are in these areas, the more difficult to treat patients. Pan-genotypic regimens, the no-responders, patients with advanced fibrosis, cirrhosis. And again the non-genotype 1 patients infected with HCV. We believe these represent a significant opportunity.

This is bit of a snapshot on this slide of how this evolved, and I don’t think I can recall another therapeutic area or many therapeutic areas that have evolved so rapidly. If you look prior to 2011, this was a pegylated interferon and ribavirin approach to treating HCV. And roughly half of the patients got cured in that setting. In very very short order, we are going to move to an all oral approach where the safety has improved, the time to treat patients and ultimately cure these patients has been cut fractionally. In some cases by half and in some cases by three- quarters in terms of timelines, and we are getting to much more broadly genotypic approaches.

So a little bit here about where we see the patient population going. Again, treated patients in the U.S., EU and Japan. We have shared these numbers at a number of meetings like this and a lot of folks will come back to us and say, these numbers will ultimately prove to be conservative. And in fact, they are conservative compared to some of the new guidelines -- I am sorry, some of the new estimates we have seen from the CDC and some of the European and Japanese estimates. But what we need to keep in mind here, there are new CDC guidelines, and these guidelines are really pushing toward a more proactive screening effort of people born in the United States between 1945 and 1965. It's estimated that about 75% of the people with HCV in the United States were born in this time period.

And this represents roughly 100 million people in the United States that were born between 1945 and 1965. And if you take rough estimate of 1% to 3% of those people having HCV, you can see how the numbers get very big very quickly compared to the forecast here. We believe this is going to take a significant amount of time to find these patients. Interestingly, most of these patients, a large majority of these patients, don’t know they have HCV. So the most significant part of this patient population are the patients that are probably not high on the symptom chart, not high on the fibrosis chart, not the ones that are actively being treated for their HCV.

So, again, this is going to take some time to find these patients, and we believe Idenix will play a significant role once we find those, in treating those patients. Here is a snapshot of what we are working on this year in the way of our pipeline. Up top is a quick look at our collaboration with J&J. I will talk a little bit more about that. You can see our expectation for Phase 2 study. Looking at a combination of our NS5A inhibitor, IDX719 with simeprevir formerly called TMC435, which is J&J's protease inhibitor, plus ribavirin. And then shortly after that we plan to start a triple combination approach. Looking at our NS5A inhibitor 719 with simeprevir, and then their non-NUC which is 647055. And those studies will be with and without ribavirin.

And then internally, we are planning to start a healthy volunteer study followed by a proof-of-concept study with our new uridine nucleotide pro-drug. We will do the proof-of-concept study and then it's our intention by the end of the year to combine that uridine NUC with our own NS5A inhibitor. As we know we have seen very promising studies, some of the most promising clinical trials in HCV using a NUC and an NS5A inhibitor. So we are excited about getting that started before the end of this year. And then as I mentioned at the outset, we have got additional nucleotide pro-drugs that are in IND enabling testing.

So a little bit about IDX719. We believe this has the potential to be a best in class NS5A inhibitor. What we saw pre-clinically was a potent, pan-genotypic compound with activity in-vitro. It appeared to be clean from a safety perspective. Very very low in the way of cytotoxicity or any kind of preclinical toxicity and low potential for drug-drug interactions. I will talk a little bit about the proof-of-concept study that we did across the four genotypes, genotypes 1 through 4, in 64 HCV infected patients. And we completed the three-month toxicology and [solid] dose formulation work to start our Phase 2 clinical trials. And as I mentioned, we expect to get those -- the initial trials with J&J underway shortly.

So a little bit here from the previous slide. As I mentioned, the proof-of concept study where IDX719 was given as monotherapy. It was well tolerated with no treatment emergent serious adverse events. You can see here very nice pan-genotypic activity. Activity across all four genotypes. Not much of a difference between genotypes 1a and 1b. And then more importantly I think where we see some weaknesses in the NS5A class is genotype 3 looked very good as the genotype 4.

So as far as being a potential best in class, to the best of our knowledge when we look at other NS5A inhibitors, and there is a lot of them out there, we believe we are the only ones. We are not aware of any other NS5A inhibitors that have looked across all the four genotypes. So we believe that at least from a clinical perspective, we are in very good stead with IDX719 as far as having a high potential for pan-genotypic activity. And again I will talk a little bit about the NUC, but as folks know, NUCs are also very well known for being pan-genotypic with a high barrier to resistance. So we believe this has the potential to be a very good combination approach with our NUC going forward.

A snapshot here of the collaboration we have with Janssen or with J&J. This as I mentioned is with our NS5A inhibitor 719 with their protease inhibitor simeprevir and their non-NUC which is TMC647. These trials are being conducted by Idenix. We are the sponsor for these trials. So we are responsible for the full conduct of these studies. As I mentioned, we had to do, as a pre-agreed part of the collaboration, to do drug-drug interaction studies. Those have been completed between 719 and 435 and so we are really just waiting to get the Phase 2 studies, started in the combination of those two. And then in the third quarter, we will get the triple combination study started in a broader patient population and, again, both of these studies will be in -- the first study will be in genotype 1b and genotype4, the second study will be in genotypes 1 and 4 and these will be 12-week studies.

So switching away from our lead clinical candidate which I mentioned was IDX719 to our lead uridine nucleotide candidate. While this is a little bit later in terms of the clinical pipeline, this, as I mentioned, represents the most significant part of our discovery effort over the last 24 to 30 months at Idenix. I will talk a little bit about the screening campaign that we have run over that time period to get to these new NUCs. But the compound that we have as the lead uridine nucleotide candidate, pre-clinically has generated some very impressive liver triphosphate levels.

This is what we believe will generate potent pan-genotypic activity. We have seen this in vitro and we have extensive in vitro and in vivo toxicity studies. As many folks know, Idenix has been developing nucleoside and nucleotide pro-drugs for quite some time. We have had a pretty close up front row seat on everything that’s happened with nucleoside and nucleotide pro-drug over the last six to 12-months, and we have learned a lot about toxicity of these compounds. And as we putting together the IND for this next uridine, there is a lot of work that we knew we were going to have to do to prove that these are safe compounds. Probably more work, more preclinical toxicity work then we have ever done with any other nucleoside that we have worked on. And to that point, extensive preclinical cardiac tox work, preclinical mitochondrial tox work. And I am happy to say that for all the work that we have done above and beyond your standard GOP IND enabling work, this next uridine nucleotide candidate looks very clean on those markers.

We believe this compound has the potential for high potency at very low once daily doses. We expect to be able to go in at less than 100 mg, hopefully less than 50 mg. And as I mentioned, when I was talking about our NS5A inhibitor, we believe this will be very suitable for fixed dose combinations with our NS5A as well as other DAAs. And as mentioned, also we have two other novel nucleotides that are in IND enabling studies and those are not 2'-methyl G nucleotide pro-drugs.

The graphic on this slide here just represents liver triphosphate levels. I am not sure if everybody can see this, but this is a slide that really shows liver triphosphate in the hepatocyte or triphosphate levels in the hepatocyte. And triphosphate is really what pre-clinically you can use to determine the potency of these nucleoside or nucleotide compounds. And here we see a comparison of our novel NUC to what the lead clinical candidate is, GS-7977, and we have seen some very, very impressive liver triphosphate levels in both monkey and mouse with our next uridine nucleotide candidate.

So how do we get here to this compound and to the other compounds that are in IND enabling testing. As I mentioned, this has been the most significant part of our discovery effort. We have synthesized well over 2000 nucleotide pro-drugs. And again these are fairly -- to look at the structures of these compounds, they are fairly simple. There is a pro-drug, there is a sugar, and there is a base. There is these three components of nucleotide pro-drugs. And what we set out to do is try to understand how tweaks to each component of the nucleotide pro-drug could actually result in improved potency as well as improved toxicity as measured by pre-clinical cytotoxicity.

So we ended up looking at almost 300 different nucleoside analogs. More than 30 different prod-drug types. Again this is a huge effort internally and we ended up down to about 950, just under 1000 individual pro-drugs, where we had the separated isomers. And then that went down to about 200 pro-drugs where we looked at liver triphosphate levels, and of course it's not worth having very high liver tri-phosphate levels unless you have very low cytotoxicty. And we ended up with about 15 of these drugs that we ended up testing in the monkey. So we believe these next generation NUCs really represent probably some of the best compounds we have ever worked on at Idenix.

As I mentioned here, we are focused on the triphosphate production. This has really resulted in a diverse spectrum of nucleotides. We have looked at purines and pyrimidines. We have looked at most of the know as well as novel prodrugs. And then we are looking at novel sugar approaches as well. And we believe this will ultimately lead us to have the opportunity to potentially put two NUCs together. And the importance for putting two NUCs together is they are generally very very potent. They have high barriers to resistance. They can be administered hopefully at very very low dosage, very low cost to goods sold. So as be able to put two NUCs together, much like we have seen in the HIV setting, it's something that we are going to continue to work on.

And this platform is going well beyond our lead uridine nucleotide analog. As I mentioned we are looking at purines and pyrimidines, so we will go beyond that. We will continue to leverage our strong intellectual property position. And I think something that we haven’t had much of an opportunity to talk about, just given the focus on getting our compounds in the clinic, is our discovery capabilities with nucleosides are going beyond the non-HCV therapeutic areas.

Most folks remember that prior to July of last year, Novartis had an option on every compound in our clinical pipeline after a successful proof-of-concept. We were able to successfully renegotiate our arrangement with Novartis where they now no longer have access to compounds in our pipeline. So these were ours free and clear. And when that became more well known or more public, we began to be approached by third-parties, by people with external interests in screening our library. And we had never really taken a hard look at it outside of virology internally at Idenix. So we went through a pretty significant effort to catalog the library. To really get it organized, see exactly what we had, and start looking at what might be in the library beyond HCV.

And we wanted to get a sense of what was in there before we let anybody else come in and look at it. And there is a lot of interesting non-HCV virology potential in there as well as going beyond virology, oncology, where nucleosides have played a role, as well as autoimmune and other very very interesting areas. So we will continue to take a look at that. Our primary focus is to get HCV right. This should not be construed as any kind of change in direction, it's something that’s there and something we are keeping an eye on. But HCV continues to be the primary focus.

On the financials side, we finished the first quarter with a very strong balance sheet, $205 million. As I mentioned, we have got a lot here going on. This $205 million will take us into the second half of next year, but importantly this will allow us to start and complete all the programs that I have just presented here. And then to close out here, these are our anticipated 2013 milestones. I am not going to read through these. I have basically hit on all these throughout the course of the presentation, but we believe if we hit all of these milestones, this represents a great opportunity for Idenix to be a significant player in the changing landscape of HCV.

Thank you for your time this morning. The breakout is in Carnegie. Thank you.

Question-and-Answer Session

[Question-and-answer session not available for this event]

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