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Idenix Pharmaceuticals, Inc. (NASDAQ:IDIX)

Oppenheimer 24th Annual Healthcare Conference Call

December 10, 2013 4:30 PM ET


Ron Renaud - President and CEO


David Ferreiro – Oppenheimer & Co.

David Ferreiro – Oppenheimer & Co.

Today is the 24th Oppenheimer Healthcare Conference. I'm David Ferreiro; one of the biotech analysts here. Very happy to have with us, Idenix Pharmaceuticals. And, with us from Idenix is CEO, Ron Renaud. Ron?

Ron Renaud

Thanks, David. Before I get started here, I just want to remind everybody that our presentation includes forward-looking statements about our business. There are risks and uncertainties also associated with our business, and these are detailed in our SEC filings.

So, a little bit of a preview here on this slide. Idenix is, right now, focused on advancing All-Oral, Pan-Genotypic combination regimens. Our focus right now is currently on nucleotide prodrugs. That being said, our lead clinical asset right now is IDX719, which we now call Samatasvir and is what I’ll refer to. I all ready told all I’ll refer to it in the rest of the presentation – which is in Phase II is an NS5A inhibitor and part of an ongoing collaboration with Johnson & Johnson.

But IDX21437 is now a Phase I/II nucleotide prodrug inhibitor candidate. It’s in an early single-ascending dose study in both healthy volunteers and HCV infected patients. I’ll talk a little bit more about that and how we expect to move into the multiple-ascending dose and beyond in the future.

We’re also continuing to focus on multiple earlier stage nucleotide prodrug candidates, and I think there’s a lot of questions about, you know, how the HCV market’s going to play out and why to continue to put resources towards discovering new candidates here.

But, we believe that there are opportunities -- continue to be opportunities to improve on the nucleotide prodrugs, and I’ll talk a little bit about that as well.

So, a little bit about the HCV marketplace, I was just having a brief discussion with David before we – before I came up on the stage and just talking a little bit about the marketplace.

And I think we all try to look at therapeutic areas and say okay – our therapeutic area, the one that we’re focused on is truly unique. It’s one that’s different than others. But, I believe in HCV and I think folks who are following this marketplace closely would agree with me that it is a truly unique marketplace.

It’s one that we don’t know a lot about today except we know about the disease, but we don’t know about what the market is going to look like over the next couple of years, and there’s a lot of reasons for that.

But, big picture, there are multiple genotypes worldwide. So, this virus manifests itself in a way or in multiple different genotypes, and these genotypes respond to treatment very differently depending on the genotypes. There are six different HCV genotypes worldwide, and those break down into sub-sectors of those genotypes and it becomes too numerous to count at this point.

But, I think an important point here that while most researched, while most clinical files and while most of the ongoing effort is focused on genotype one, it’s important to point out that roughly half of the world that has HCV are infected with a virus that is not genotype 1.

So, it’s something that goes beyond genotype 1, genotype 2, 3, 4, 5, and 6. And, over 90% of the worldwide population that is currently infected with HCV are in underdeveloped countries with a large majority – and this goes for the United States as well being undiagnosed. And, as I mentioned the current combinations, primarily address genotype 1.

So, we’re really looking for an approach that is convenient – because convenience will be important. It won’t be a sole selling factor – but, it’s important. What we really want to have is simplicity.

It’s about getting one pill, one per day for as many patients as possible, and we believe we can do this with nucleotide prodrug-based regimens.

So, next slide, it talks a little bit about our expectations for patient population in the marketplace, from 2010 up to 2025, in the U.S., E.U., and Japan, and I think compared to a lot of the (inaudible) out there, these patient numbers are very, very conservative. And again, this is a rough estimate from where we sit today – broken down between treatment naïve, and relapsed, and refractory patients.

But, I think there’s some – some pretty simple math. I think, you know, we’re seeing a lot of price times volume equations and I know, you know, recently there’s a lot of discussions around price. But, let’s just talk about the patients for a second, and I think this slide really shows us the potential of what could happen in the HCV marketplace.

In the United States alone, the estimate is that most patients with HCV that have ever been treated in one given year – it’s somewhere between 150,000 and 175,000 patients. So, you know, since then, we’ve never treated that many patients at once – or in one year.

But, what we do know now with the screening initiatives that are underway, is that there’s clearly a lot more patients than that. So, that’s not a surprise. I think what the surprise is is that most of those patients are baby boomers.

So, patients that are born between years of 1945 and 1965. And, if you think about that patient population, that’s about 100 million people in the United States. So, roughly, 25% of the population of this country, but in that patient population or in that population of people, it is about 75% of the HCV in this country.

And probably somewhere in the order of 75% of those people don’t even know they have the disease. And we have screening initiatives underway that are trying to find those patients and trying to bring them to a place where they can get the appropriate treatment for HCV.

Now, what’s interesting there is, if you’ve got 100 million people, and somewhere in the order of 3% of them are infected with HCV and 75% of them don’t know they have it, we’re talking about millions of patients that have HCV walking around today that are currently undiagnosed. And, I just told you that, the most patients that have been treated in one year is somewhere between 150,000 and 175,000 in the U.S.

So, there’s two things. It’s enormous product opportunity, but one that’s going to take a lot longer to play out than I think anyone expects. And, and again, I think there’s pent-up demand that we see today, and we’ll have a very good sense of how this plays out with the launch of new regimens that are happening in real time, but I think this is going to take a lot longer than most people expect it. You just think about the patient dynamics. They become even more complex once you get outside of the United States.

So, the next slide here, it’s just a bit of a snapshot on our view of what the landscape looks like for HCV in terms of the regimen. This is the slide we’ve been using for quite some time and what’s interesting is – is that it hasn’t changed too much. I think, we’ve probably tweaked the dates a little bit on the top. But, clearly here, we’re still in a direct acting anti-viral plus PEG/riba for a majority of the patient regimens set-up right now.

But, in relatively short order – we’re going to move to all oral (inaudible) for genotype 1. That’s going to happen over the next year – a year and a half. And, I think that’s not a surprise to anybody. I think the next, you know, the next inflection point for treating patients with HCV is whether or not we can take ribavirin or not of the combination.

Right now, ribavirin is still – still part of the mix. Again, we – we all try to understand exactly what ribavirin does and why the patients get that in the regimen – tends to do a little bit better than the ones that don’t. But, I think the countdown has probably started for ribavirin to come out of the – out of the combination given the potency that we see with the all oral combinations that are in the clinic today.

So, let’s talk a little bit on this slide about our nucelotide prodrug discovery program. This is really, what – what the company has been – was founded on – this is really where our core expertise comes from and this is something that we’ve used in the past. We’ve actually developed a Hepatitis B compound called telbivudine – some of you might remember – but, that’s the compound that really kicked-off our collaboration and our long, long, partnership with Novartis.

That product is now on the market in over sixty countries. I think it generates over $100 million in sales at this point, so not as competitive as some of the other HCV compounds. But, I think the point is that Idenix has demonstrated capabilities to discover, develop, and bring to approval a nucleotide compound in Hepatitis.

The current program that we have right now is looked at as identifying compounds in vitro in mouse and monkey. So, this is not very different than anybody else with a medicinal chemistry effort – you’re looking for safe, effective compounds, and you’re trying to get to as much of this information pre-clinically as possible.

But in HCV, this is – there’s a few things that we can get to pretty quickly as we evaluate these compounds that give us some sense of what these compounds might look like in the clinic. These are triphosphate production, kinetics of metabolism, and of course we want favorable safety and very low cytotoxicity.

And, the reason it’s important to get us at the levels of triphosphate, because triphosphate is the component of the nucleotide prodrug – the nucleotide prodrug gets converted to this triphosphate in the liver, and it’s this triphosphate that kills the virus.

We’re looking at a diverse spectrum of nucleoside and nucleotide prodrugs, so we’re – they just fall into categories called Purines and pyramidines. We’re looking at known and novel prodrugs, and we’re looking at making modifications on the sugars, ones that we’re using right now which are the 2’ Methyl sugars, and I’m looking at some novel sugars as well. So, these nucleotide prodrugs have really three components to it.

If you were to look at a picture of one – they look pretty simple. There’s the prodrug component, there’s a base and there’s sugar stuck right in the middle there. And, that’s how it’s delivered to patients.

We believe we have a very strong intellectual property position here. One that we will defend and we will continue to defend and assert when we feel necessary. And, this covers a diverse range of ten of the compounds in our R&D pipeline – Nucleotech, nucleotide and beyond. And, we believe our nucleotide discovery capabilities can also be a applied to non-HCV therapeutic areas.

So, if you think about how nucleotides and nucleotide prodrugs work – it’s incorporation into RNA and to DNA – there are clear applications for these kind of compounds beyond HCV.

The obvious are – are other virological applications, but they’re applications and anti-infective in the oncology setting – where we’ve seen nucleotides be approved. And so, we – we’re considering what our opportunities beyond HCV as we think about the future of Idenix where we could best leverage our capabilities and our screening library.

And our restructured agreement with Novartis – I mentioned a little bit about this partnership that we’ve had. We’ve restructured that agreement to eliminate some very onerous governance rights and rights to the pipeline a little over a year ago which gives us complete flexibility to work in these areas, outside of HCV.

So, going directly to our lead nucleotide prodrug candidate – this is IDX21437. This is a next generation uridine nucleotide prodrug currently in phase one to clinical testing. This trail has started in Canada. We announced this I think a little over a month ago. And this is a compound that in vitro has demonstrated potent Pangenous [ph] activity. And that we seen very impressive – liver triphosphate levels generated in dibo.

So, this gives us some confidence that in the human, in the clinical trial – we’ll see nice anti-viral activity. We’ll need to see the data before we can draw any hard conclusions on that but at least we like what we see pre-clinically at this point.

This potency leaves us to believe that we can generate this activity with lower doses than what we’re seeing with other nucleotide prodrug currently in the marketplace and will be suitable for combination with our NF V-A Semantics here as well as other DAAs [ph].

As I’ve mentioned, it’s got a favorable pre-clinical safety profile. We’ve seen very good safety margins for the doses that cleared to view – as in the clinic. Clean geno toxicity and cardiac safety assessments among other things that we looked at very extensively in our GOP proximity program to date.

So, here is the snapshot on this slide of what the clinical trials are going to look like. As I mentioned, the phase one, two studies starting with singles sending doses. We’re going to start – we started that study in healthy volunteers and we’ve since moved into HCV infected patients and we’ll have more of an update on the outcome from this program sometime in the early part of next year.

And then, we’ll move quickly into the multiple ascending doses – which is a seven day portion – also starting in healthy volunteers and then moving into treatment naive – genotype one through genotype six patients in the first part of next year.

We’ll also take a look at one subset of cirrhotic patients, genotype one treatment. I used cirrhotic patients to get a handle on what this looks like early on from a group of concept prospective in historical difficult to treat patient population.

So, this is a – is a pretty standard proof of concept program. But, one we’re trying to move through very quickly – I can say on a single dose component – at least from a PK perspective. We haven’t had any surprises and things are moving along – things are moving along well.

Shifting away from the nucleotides and the nucleotide prodrugs – I’ll talk a little about Semantics here – we believe that this is a best in class NS5A inhibitor for the treatment of HCV. Pre-clinically, it had a profile that we were very impressed with – and relatively we have good clinical results with potent – pangean [ph] statistics, which is important. Because as we think about combining all these compounds, all these classes of compounds – it’s very difficult.

The nucleotides and the nucleotide prodrug – just by their mechanism of action are widely accepted as pangeantific [ph]direct acting anti-viral. But, Proteus inhibitors non-nukes and the NS5A have largely been compounds that have had the most anti-viral activity in genotype one and in some cases genotype 4.

So then, having NS5A, which is potent and also Pangeanatific [ph] and have that be predicted by our pre-clinical model – was a – was I sell, come for.

This is the compound that’s been granted FDAs fast track designation. We had a three-day proof of concept study that we reported on early last year, in 65 genotype one through four HCV infected patients, I’ll show you that data in a moment. But, we start – a nice safety and Pangeantific [ph] profile.

And, really, that was the basic for discussions around the collaboration with Johnson pharmaceutical around our Helix One and Helix Two combination drug acting in our viral trials.

So, a little bit about those trials. This is the collaboration with J&J, it’s a non-exclusive HCV collaboration. Helix One is about putting two drugs together. So, our NS5A, inhibitor, Samatasvir and their pro-agent inhibitor’s recently been approved but the generic name for this, simeprevir, and then Helix Two is about putting three drugs together – which is Samatasvir, simprevir and then they have a ritonavir boosted non-nucleotide inhibitor which I’ll just call O55, it’s got a long name, but we’ll just call it O55 for now.

And, in each of those trials, we’re looking at the combination of those drugs dosed once daily.

Idenix is running these trials, we’ve moved through these programs relatively quickly. And both companies, retained all rights – this is a true non-exclusive – we run Helix One, we run Helix Two – no matter what happens with the results of the trials, there are no obligations by either – either side to do additional trials or rights any other compounds in the, in the identified pipelines.

And you can see here, we started with Helix One in May of 2013. And, I think it was just last week that we announced the initiation of Helix Two. So, this is in a – a terrific collaboration with J&J and we look forward to the results of this program.

And, this is just a snapshot of what the trials look like. You can see here in Helix One, there’s a treatment with genotype I mutations, they were currently rolling Part B of this trial with the exploratory arms looking at safety and activity in additional, with additional doses as well as genotype dictations. And then, again, the objective here is take the tolerability, efficacy.

And, what we’ll report on probably – when we have the data in – outside in the end of the shift – what we’ll report probably sometime, early time next year is the SDF4 from the Helix One program. That’s the outpour is – are basically, the presentations that have undetectable virus four weeks after treatment has ended.

In Helix two, again, we announced the start of the study just last week. This is a three DA combination regimen. And, we’ll look at this in genotype one patients as well. And, we will add additional exploratory arms as we move to these trials.

I think, like a lot of other therapeutic in HCV, we learn about the results on these programs as we’re moving along. And, in terms of potency and safety, it allows us to be very flexible and we’ll retain that flexibility as we move to these trials and reserve the right to add additional arms as we, as we get results from the initial arms when we try to get off the ground.

I’m going to close on this slide, which is the financial highlight slide. A more of a housekeeping slide but we finished the third quarter which is just under $150 million. This $149 million we’ve said will take us through the end of 2014 and will allow us to continue to push forward with our 437 proof of concept program. a full 437 proof of concept program, the continuation of Helix one and Helix two trials, as well as a planned start of a combination study – looking at 437 as Samatasvir. And new NS5A, all Idenix study, that we believe we can get started some time by the middle of next year and report an F before the end or SPR data before the end of next year. As well, that also supports the aggressive investment in our legal strategy as well.

So, with that, I’m happy to take any questions that folks might have.

Question-and-Answer Session

David Ferreiro – Oppenheimer & Co.

Question. Any questions from the audience? I’ll ask the first one and a few more after. When you’re thinking about 437, what’s the hurdle for your continued development on say, (inaudible) viral reproduction, I mean where do you draw the line?

Ron Renaud

Yes. So, the question is about where would we draw the line, what – really, what you’re asking is – is what would be success in the proof of concept study that would give us a reason to move forward.

I think there’s some pretty good benchmarks out there, right? We know what – what a lot of the nukes look like in seven days, with seven days of treatment. We’ve seen, you know, anywhere from three to more than four logs of activity at seven days with some of the more promising nucleotide prodrugs that are out there.

So, you know, I can’t say exactly what would dictate success, because it is a combination of the anti-viral activity, safety, combined ability with other compounds. But, I think the standard benchmarks that are in place out there probably aren’t something that we are going to ignore at this point.

Unidentified Speaker

Hi. So, I have a question regarding the market, the size of the market – I mean, you know, I guess, you know, I’ve seen figures from analysts or whatever talking about in the U.S. about roughly 4 million patients, I’d be curious as to whether you’re sort of in there, if you are active in that ballpark. But, also, I mean, since a lot of people don’t have any symptoms or asymptomatic – that’s a big portion of them – what is, you know, how do you see that playing out in terms of, well if someone is asymptomatic, even if they’ve been screened and diagnosed, how compelled are insurance companies, the government, et cetera, to treat them? How does that – how does that dynamic work? I mean, are they required to treat them or say well, you’re asymptomatic?

Ron Renaud

Right. It’s a great question. And, I can’t say I have the answer to it right now. I have an opinion, I don’t have an answer. I think – no – could I believe that there are 4 million patients in the United States currently infected with HCV or as I pointed out, if the specifics from the screening initiative show that, you know, from 45 to 55, those – that first cohort – there’s 100 million U.S. citizens, and 3% of them are infected with HCV, that’s 3 million right there – some three-quarters of the way to your number.

If I go just from 1955 to 1970, the figure shows that there’s probably about another 600,000 patients in that cohort, and so on and so forth. And so, you know, first of all there’s not enough – I don’t think there’s enough hepatologists to even write the prescription for that many people.

And by and large, when the general practitioner sees these patients and they get this mandate to screen their patients born between 1945 and 1965, they’ll say – well, what am I going to do if I have a positive HCV RNA?

And so, we’re already seeing a screening initiative try to get traction at some of the major HCV centers here and beyond the U.S., and it’s exceptionally difficult. In some of these centers, the doctors get a big orange sticker on the front of their medical record that says, get an HCV RNA on your patient form between 1945 and 1965, and we’re seeing roughly 10% of the people actually being screened.

And this is with a government initiative now in place. Now, will that change as we add new treatment regimens and the visibility, it is higher and I’m sure there will be some privately sponsored screening initiatives to find these patients without a doubt.

But to get to the real crux of your question is, you know, will the patient, will the asymptomatic patient that may be shows up or does have a positive HCV RNA test – will that patient get treated? I think we can look to Europe, and Europe would say, you know, in some European jurisdictions they’d say – well, not unless you have a high fibrosis score, you actually need to be treated today.

So, a lot of it is based on the therapy, the availability, and the adequacy of the current therapy regimens where a lot of it’s been, wait till you are symptomatic, wait till you have, you know, a bigger problem before you start treatment, before someone’s going to pay for it than where we are today.

I, you know, another thing, David, and I remember talking about before at the start of this discussion is – you know, whether or not price will have an impact in this, in this situation. I think we’re in some uncharted territory here. We can have this discussion until the cows come home about whether or not, you know, we’ve ever seen price compression, price competition in other therapeutic areas.

I’ll call it other therapeutic areas over the start of my career as well, and, rarely do you see, you know, people gave into pricing pressure. But, as I just pointed out, the patient numbers here are staggering. And, the price-time-volume equation is, you just do the simple math. What health system – what payer system is going to be able to handle this at the clip that we’re seeing, you now, let’s just views, even street estimate does as the base take.

I mean, we’re starting to get into some, you know, very uncharted territory here. So, we’ll have to wait and see. It could be a combination of, you know, it takes a lot longer to find new patients to begin with. Or, to get them on, you know, new regimens, so, that it probably may take care of itself, it may become a moot issue because of a slower than excessive ramp. Or, we’ll have to see, but we’re already having discussion with payers at then – and, we’re just starting Phase one with the new glis [ph] type co-drug.

And, I think, what we’re learning is that as a therapeutic area, this is going to be one of the most heavily managed therapeutic areas in – on the payer’s radar screen.

Unidentified Speaker

What’s [INDISCERNIBLE] the kinds of therapy that you are…


Ron Renaud

Today? In the United States?

Unidentified Speaker

Well, yes.

Ron Renaud

Well, today I see – based on the, you know, the approval, the most recent approval – you could end up on a nucleotide prodrug called Srivalvi [ph] and TERIVA if you’re a genotype one or genotype quotation. I don’t know the label by heart so – you have to go double check that. And for genotype two, three patients it’s a – it’s a – I think it’s a…

Unidentified Speaker

(Inaudible) do you think you can finish?

Ron Renaud

By and large, yes, yes. Because most of the time with – before the screening initiative, you were symptomatic by the time – by the time that – that’s what usually would trigger the screen or some other blood test. You could come back with elevated chemistries, elevated liver function tests and if you have an elevated liver function test – then the general practitioner is going to follow up and say okay what’s causing the elevated LFTs because those – you don’t normally have elevated LFTs.

And, if you’re – if you’re an IV drug user, if you were born between 1945, 1965 – your doctor has some reason to believe you might be infected – there’ll be very reasonable pull of cord.

David Ferreiro – Oppenheimer & Co.

So, you can comment on the ongoing litigation you have with Gilead, maybe expected time lines revolution. Anything you can say in regards.

Ron Renauld

Yes, we’re not going to say too much about the ongoing litigation with Gilead except to say that, you know, we filed two new legal actions that were announced. Two infringement cases, one in Massachusetts, one in Delaware – so, this just adds to the growing list of ongoing legal actions that – that we have with Gilead. We have – we now have two interferences in the past [INDISCERNIBLE] for them. Their invalidity actions that are ongoing outside of the United States. And then, we now have these infringement actions going on in the United States.

You know, what I will say about them is that – each of them, you know, are very – they’re very distinct in the process and the procedures that surround them in the interferences. Their very rigid procedures and what happens in the interferences – generally doesn’t have any bearing.

I think a lot of folks on the street have tried to say, okay, Idenix locked the first days in the interference with Gilead on the very first interference therefore we – you know, this had bearing on all the other legal cases that are out there.

Separate patents, separate patent families, separate issues completely. And so, you know, that’s a – that’s just not the case. But, what we’re learning as – in each of these litigations and given the processes and procedures that surround them – some of them, the processes, allow it discovery, some don’t. Some allow us expert testimony, some don’t.

And, so on and so forth, so there’s – there’s a lot of information both sides are gathering on this. But, in no jurisdiction at this point, do we really have a good ability to pull it all together. And, I, you know, I like the idea of getting in front of a jury and actually being able to pull everything together and clarify this and see where that goes.

But, I think, you know there are going to be a lot of small battles. And, what is very likely to be a very long and drawn out war.

David Ferreiro – Oppenheimer & Co.

Okay, fair enough. Thank you very much.

Ron Renaud

Okay, thanks.

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