I believe the best investments in the biotech market are in companies focused on the treatment of chronic diseases. There are many people suffering from diseases for which there are no cures, but medical science has developed ways to manage these illnesses and make it possible to live a full life, even when a person is sick. One of the diseases that fit into this category is hepatitis C. There are several companies focused on the treatment and management of hepatitis C and its side effects.
Hepatitis C (HCV) is an infection that causes the inflammation of the liver. The only common link it has with other hepatitis infections is the fact that it is contagious. Hepatitis C is transmitted through contact with blood infected with the disease. The most common medical treatments for HCV are interferons and ribavirin, usually used in combination with one another.
Interferons are virus-fighting proteins and include medications such as Pagsys by Genentech, Roferon made by Roche (OTCQX:RHHBY), and Intron A, originally made by the Schering-Plough Corporation, but now sold by Merck (NYSE:MRK) following a 2009 merger of the two companies. Ribavirin drugs include Rebetol and Copegus, made by Schering-Plough and Roche Pharmaceuticals, respectively. When combined with interferons, ribavirins work much like antibiotics.
There are also several investigational drugs being studied in the treatment of HCV. Thymosin alpa-1 by SciClone Pharmaceuticals (NASDAQ:SCLN) works by enhancing the body's immune system, ISIS 14803 by Isis Pharmaceuticals (ISIS) disrupts HCS during cell division, and VX-497 by Vertex Pharmaceuticals (NASDAQ:VRTX) which is an interferon.
Idenix (NASDAQ:IDIX) is easily my favorite option for investors interested in companies that are focused on hepatitis C. Its current price is just under $9 and it is best known for its development of telbivudine, a drug marketed under the names Sebivo and Tyzeka. Idenix has five drugs in its pipeline focused on hepatitis C. Two are in Phase II trials and three are in the preclinical stage. Though preclinical drugs can be an iffy gamble, I am always excited by companies that understand the importance of a strong backup plan. Idenix also has an HIV drug in late phase two trials in its pipeline.
Another thing I like about Idenix is the agreement it shares with Novartis Pharmaceuticals (NYSE:NVS) regarding telbivudine. Idenix collects royalty payments from the sale of the drug that was developed through a joint relationship. This passive income from an already marketed drug is an earnings bonus, especially considering it bears little responsibility for marketing and selling the drug. Should a future drug in the pipeline fail, passive income can help keep your company strong.
More recently, Idenix received good news from the FDA in February concerning IDX 184. According to Idenix President and Chief Executive Officer Ron Renaud, "… clinical programs have made significant progress in the past few months. For IDX184, we are looking forward to initiating a combination study with a protease inhibitor and ribavirin in the near-term to establish the safety and potency of an all-oral IDX184-containing regimen, and, if successful, potentially support a phase III clinical program."
Like all biotech companies, Idenix does have some risk, but it is priced relatively low. This means investors stand to make a great deal from an investment, should any of the long-term treatments for hepatitis C gain a strong following. It could see ups and downs over the years in a volatile market, but I believe it will continue to earn steady if investors are patient.
A mid-April report boosted Idenix stock a bit based on successful Phase I clinical trials for IDX719. The treatment achieved the potent viral load reductions researchers had hoped for. Prices rose 7% to nearly $8.50 in response to the study.
Investors looking for a higher value stock than Idenix, but still interested in hepatitis C developments, should consider Vertex Pharmaceuticals. The Vertex drug Incevik is a prescription medicine currently on the market. It is used with the medicines peginterferon alfa and ribavirin to treat chronic hepatitis C infections in adults with stable liver problems. Vertex also has three drugs in its pipeline intended to treat hepatitis C. One is in Phase II trials and two are in Phase I trials.
There is some concern from investors that the new crop of hepatitis C drugs could potentially cure the disease. This would eliminate the lucrative market of chronic treatment, but would make a large temporary splash. Experts agree it will likely be at least a decade before there is an impact from these "cures," but it is information investors should keep on their back-burners. If the market continues to head in this direction, Idenix could go from a smart long-term investment to a big short-term money maker. Regardless, I think Idenix and Vertex are both good investments now.
Idenix should be considered one of the future heavy hitters in the HCV market. In February the company began a 30-patient, ongoing 12-week phase IIb study of IDX184, an HCV nucleotide inhibitor. The study uses pegylated interferon and ribavirin with IDX184. The drug continues to be safe and well tolerated, with no serious adverse effects reported. The study is currently blind, but further data is expected in the second half of 2012. Positive study results could produce a small bump, but I do not believe it will be a big enough ripple to affect buying or selling decisions.
If forced to pick between Idenix and Vertex, I would base my decision solely on how much I want to spend. Vertex is pricier, but both companies offer a lot of potential. Owners of Idenix should be very excited by the company's outlook for the future. Competition is often fierce in the biotech market, but Idenix is a strong contender and will be a steady earner in any portfolio. If you are looking to invest in a company focused on hepatitis C, Idenix is a great option.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.