Idenix: Not Worth the Wait

Includes: GILD, IDIX
by: Chimera Research Group

The hepatitis C virus (HCV) is a highly lucrative space to be in right now- witness the huge spike in Pharmasset’s (VRUS) share price merely on the presentation of tantalizing Phase 1 data. An entirely new class of treatments are emerging, reshaping the HCV landscape and creating multi-billion dollar opportunities. The rush is on to create a better- no, the best- alternative to current standard of care. This would hopefully result in a new cocktail of direct-acting antivirals with high efficacy, low resistance, and no requirement for combination with interferon.

Idenix (NASDAQ:IDIX) was an emerging star in HCV research; it had compounds with multiple modalities, with one in Phase II, and was in the process of beginning combination trials with two of its wholly owned assets. One, IDX184, was a nucleoside polymerase inhibitor- a rare commodity due to the concentrated IP positions and difficult chemistry involved. IDX184 was tested with IDX320, a potent protease inhibitor in an early stage drug-drug interaction study.

Unfortunately, three cases of liver function problems led to a full clinical hold placed on both compounds by the FDA in September 2010. Since then, Idenix has convinced the FDA that liver issues were due solely to IDX320, the protease inhibitor, and not IDX184. It has been allowed to continue developing IDX184 under a partial hold.

What this means is the company is limited to conducting a set of pre-arranged studies outlined with the FDA. These include a bioavailability study and a 12 week combination study with ribavirin + interferon after the first study’s conclusion. Idenix will not be allowed to conduct other combination studies in the interim.

Together, this is a huge blow to the company and its development plans. Due to the delay from the clinical hold, it is possible no data from the 12 week study will be available this year. At most, investors will have a glimpse from a 28 day dataset. In any case, I believe investors will be more interested in direct acting drug combinations by this time.

It is true, Idenix has a compound to partner, one in a highly sought after drug class. But it may be Idenix that needs a partner more. IDX184, though technically cleared of liver toxicity, is still tinged. Drug companies are highly risk-adverse, and may not want to take any chances on the compound. Without a replacement protease inhibitor, Idenix is actively seeking a partner to further develop IDX184.

IDX184 still looks promising and may prove itself at the end of the day- the new HCV treatment revolution has just begun. However, it carries significant baggage that can only be resolved over time. For now, there are better plays in the HCV space.

Disclosure: I am long VRUS.

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