Idenix Pharmaceuticals: Go Short Or Bet Long With The Insiders?

| About: Idenix Pharmaceuticals, (IDIX)
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Even if you're late to the break-out party, Idenix Pharmaceuticals (NASDAQ:IDIX) is still an intriguing market mover worth watching. Read More

On Thursday, we told our subscribers that shares of Idenix had seen over $200K worth of insider buying during the month of November- making it one of the most purchased stocks by insiders in biotech. By Friday, the stock broke out and led all gainers in healthcare after shares traded as high as $8.51 before closing 8% higher at $8.22 +0.62.

Shares of Idenix Pharmaceuticals hit new highs after 1,221,246 traded hands (148% of the daily average). Still, it appears a growing number of traders are starting to feel that IDIX shares are now overbought as 5.2M of the stocks 56.5M shares are now positioned to the short side. With Idenix now priced more than 25% above its average consensus analyst price target, who could blame them? Still, there is more to this equation.

Investors who are long the stock may be a little on edge after the 42.73 % Daily Short Sale Volume on Friday. This figure was calculated using the daily aggregate reported share volume of executed short sale trades during regular trading hours and the daily aggregate reported share volume of all executed trades during regular trading hours. That being said, the shorts have approximately six days to cover their positions, so if any important news or developments are announced during that time we could see some heavy covering.

As we look at the BioMedReports FDA Calendar and World Wide Regulatory Catalyst Tracker for hints of any pending news, we see several listed milestones which are supposed to take place in the short term and could come into play to catch shorts off-guard.

For example, one of those catalysts involves an announcement made in early August, in which Idenix stated that it had selected IDX719 as the lead candidate for its NS5A program. The NS5A program is another focus of Idenix’s Hepatitis C virus (HCV) discovery efforts. The company states that it has identified NS5A compounds with multi-genotypic activity and favorable pharmacokinetics. Two candidates have been selected for preclinical development, their website as well as a recently filed SEC document indicate that the company plans to file an IND.

IDX719 showed potent activity and broad genotypic coverage in preclinical studies. The planned Investigational New Drug Application remains on track, and the company expects to submit regulatory filings by year-end 2011 and begin the clinical program in early 2012.

Idenix shares are trading much higher than their levels of support at the 50-day ($6.02) and 200-day moving averages ($5.05). Both of those averages have moved 1.82% higher and 2.38% higher over the past week, and shares are now trading 59% higher than when we told our readers (on October 18th) that hepatitis C drug developers were seeing shares rise after Swiss drugmaker Roche (OTCQX:RHHBY) agreed to buy Anadys Pharmaceuticals (NASDAQ:ANDS) for $230 million. IDIX shares were then priced at $5.51 per share.

Idenix is engaged in the discovery and development of drugs for the treatment of human viral diseases. Like shares of Achillion Pharmaceuticals (NASDAQ:ACHN) and Inhibitex (NASDAQ:INHX), IDIX shares have continued to climb much higher in the last couple of months.

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Idenix has a robust pipeline focused on agents for advance treatment of hepatitis C. As we mentioned, they have an ongoing HCV development and discovery program building a critical mass of candidates in three different classes of drugs, including: nucleoside polymerase inhibitors, non-nucleoside polymerase inhibitors and protease inhibitors.

Its pipeline products include: IDX375, a lead clinical candidate from its HCV non-nucleoside polymerase inhibitor discovery program, IDX136, a novel macrocyclic HCV protease inhibitor being developed as oral formulation for the treatment of hepatitis C, IDX316, a novel macrocyclic HCV protease inhibitor being developed as oral formulation for the treatment of Hepatitis C. etc. The company co-developed and co-launched the licensed hepatitis B drug candidate, Telbivudine. The firm has collaborations with Novartis Pharma AG (NYSE:NVS), ViiV Healthcare, GlaxoSmithKline plc (NYSE:GSK), Sareum Ltd, Galapagos nv (OTCPK:GLPYY), Microbiologica Quimica e Farmaceutica, Ltda., Institut Pasteur, National Center for Scientific Research, and others.

From a financial perspective, in the firm's November 10Q filing, management stated "We believe that our current cash, cash equivalents and the expected royalty payments associated with product sales of Tyzeka®/Sebivo® will be sufficient to sustain operations into at least the second quarter of 2012." In mid November, Idenix announced the pricing of an underwritten registered public offering of 9,393,416 shares of its common stock at a public offering price of USD 6.50 per share. All of the shares were sold by Idenix.

Prior to that, in early April, Idenix Pharmaceuticals, Inc. announced the pricing of an underwritten registered public offering of 18,310,000 shares of its common stock at a public offering price of USD $2.80 per share.

As reported by the Motley Fool when shares rose on Friday, IDX184 is Idenix's greatest hope for a future blockbuster and the drug candidate is currently in Phase 2b trials. "The oral drug is designed to enhance the efficiency of other medications. Idenix doesn't have a big-name partner for the endgame yet and might end up arm-in-arm with J&J (NYSE:JNJ) or Bristol-Myers (NYSE:BMY)."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.