Idenix Maintains HCV Hopes Despite FDA's No New 'Nuc' Attitude

| About: Idenix Pharmaceuticals, (IDIX)
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About a year and a half ago, the market drove shares of Idenix Pharmaceuticals (NASDAQ:IDIX) up to $14 on hopes it had struck Hepatitis Type C Virus [HCV] gold. That was before the death and injury of several patients during a clinical trial of Bristol-Myers Squibb's (NYSE:BMY) similar BMS-094.

After the 094 disaster, the FDA effectively put Idenix's lead compounds on hold. Rather than play the wait-respond-wait game with the FDA over IDX-184 and IDX-19368, Idenix decided it was better to shelve the projects and move on to a slightly different, but perceivably safer nucleotide prodrug.

FDA to Idenix, "No new nucs."

At the end of Q1 2013, Idenix announced its intention to file an investigational new drug [IND] application for uridine nucleotide prodrug, IDX20963, before the end of the first half of 2013. The company made good on its promise and the market rewarded it with a 57% share price boost from $3.36 on April 1, to $5.29 on June 19.

On June 20, the company announced that the FDA asked for additional preclinical safety information on IDX20963. Initiating clinical trials for this one will need to wait until the FDA is finished playing the wait-respond-wait game.

Idenix's recently shelved IDX20963 is a uridine nucleotide prodrug. Although Idenix insists that it is significantly different than BMS-094, I don't think the FDA is about to allow any "nucs" to enter clinical trials without excessive preclinical safety data. Luckily, Idenix is still in the HCV race with its NS5A inhibitor samatasvir.

Coming soon: all-oral pan-genotypic direct-acting antiviral combination

In late January of this year, Idenix announced a partnership with Johnson & Johnson's (NYSE:JNJ) R&D arm, Janssen Pharmaceuticals. The pair will collaborate on the "clinical development of all-oral direct-acting antiviral [DAA] HCV combination therapies." The Idenix compound in the mix is NS5A inhibitor samatasvir (IDX-719), its most advanced HCV candidate.

During a recent presentation, Idenix CEO, Ron Renaud, explained the nature of Janssen and Idenix's agreement. The two are obligated to complete trials for a double combination of simeprevir with samatasvir, and a triple combination which includes Janssen's non-nucleoside inhibitor TMC647055.

It's all on samatasvir

With its lead HCV nucleotide prodrug candidate, IDX20963, indefinitely shelved, Idenix has just one candidate in clinical trials, samatasvir (IDX-719). On May 30, 2013, Idenix announced the beginning of Helix-1. The Phase 2 clinical trial will evaluate an all-oral, DAA HCV combination regimen of samatasvir, and Janssen's simeprevir (TMC435).

The 12 week trial should enroll 90 treatment naive, non-cirrhotic, HCV patients infected with either genotype 1b or 4. Over the course of the 12-week, randomized trial, patients will receive 50, 100, or 150 mg of Idenix's samatasvir in combination with Janssen's simeprevir plus ribavirin. In the second half of 2013, Idenix and Janssen intend to initiate a Helix-2 trial of samatasvir, simeprevir and Janssen's non-nucleoside polymerase inhibitor TMC647055.

So far, samatasvir has proven itself effective, in vitro, against multiple HCV genotypes, not only the 1b and 4 genotype present in potential Helix-1 trial patients. More importantly, post BMS-094 disaster, samatasvir has proven well tolerated after single and multiple doses of up to 150 mg in healthy volunteers for up to 14 days duration, and up to 100 mg in HCV-infected patients for up to 3 days duration.

A glimmer of hope

The WHO estimates that about 3% of the world's population has been infected with the various genotypes of HCV. According to a presentation [PDF] given at the UBS Global Healthcare Conference in May 2013, samatasvir is the only NS5A inhibitor to show a high level of activity across HCV genotypes one through four. Idenix's trump card may be its opportunity to be part of an all-oral treatment that is effective for just about everyone with HCV, while only developing a single compound.

No revenues, but no debt and a pile of cash

Prior to July 2012, the company was recording royalty payments from Novartis (NYSE:NVS) for its only commercial stage product, Tyzeka (telbivudine). After the termination of the Novartis collaboration, Idenix has practically no revenue. For the entire first quarter of 2013 Idenix recorded revenue of just $852,000.

Idenix ended Q1 2013 with $205.3 million in cash and cash equivalents. According to company guidance, that should be enough to sustain its operations into the second half of 2014. That guidance was issued before the FDA asked Idenix for additional preclinical safety information on IDX20963 before approving its IND application.

Source: YCharts (blue-market cap, red-price, yellow-tangible book value)

Idenix has no long-term debt. At the recent closing price of $3.56, cash on hand at the end of Q1 2013 represents about 43% of the company's market cap. With respect to market cap, Idenix is right back in the range it traded in for most of 2006, after the first big collapse. This doesn't put me in the mood to start a long position. Although, if I were holding shares, I wouldn't let go of them at $3.56, not with a candidate in Phase 2.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.