Why Idenix Pharmaceuticals Could Dive Further
Bobby is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Currently, there are several pharmaceutical companies working on drug treatments for those with Hepatitis C. Among them is Idenix Pharmaceuticals (NASDAQ: IDIX). Its experimental drug, IDX 184, has undergone several preliminary tests over the past few months. The results have been less than stellar, however. Even though the drug helped fight the Hep C virus initially, patient relapse rates (usually within 12 weeks) could deter the drug from entering the market any time soon. This is a set back the company does not need right now, as it had performed consistently well for the past year. But when investors learned about the latest trial failures, company stock began to decline at a rapid pace.
Bad test results of experimental drugs don't always signal the end of a drug's development or company investment in research and further testing. What it does mean is more time spent testing, retesting, and hopefully finding that perfect combination that will help treat Hepatitis C and prevent it from returning. Unfortunately, without investors, raising the money to continue testing or developing new drugs becomes much more difficult.
In addition to poor test results for IDX 184, Idenix has to also worry about the competition. Abbott Laboratories (NYSE: ABT), another pharmaceuticals company working on a Hepatitis C drug treatment, has seen very positive results during its drug trials. During Phase II trials, the drug, an oral medication made up of a protease inhibitor called ABT-450, non-nuke polymerase inhibitor ABT -433, and a ritonavir booster, had a 'cure' rate of 93% for low dosage patients and 95% for high dosage patients. For an oral medication, these rates are impressive and only typically achieved through injectable medications.
The only hitch so far with Abbott's drug is the dosage. Patients have to remember to take multiple pills throughout the day for a 12 week period. For investors, it may be more profitable to wait until an oral medication with few dosage complications enters the market. And judging by the number of other companies with Hepatitis C drugs in various stages of testing, investors won't have to wait too long before a suitable competitor enters the market.
Hepatitis C is a virus that can severely damage the liver. Once the virus enters the bloodstream, it makes its way to the liver where it can cause damage over a long period of time. Because symptoms of Hepatitis C are minimal, many patients don't know they have the virus until liver damage occurs. By then, depending on the severity of the damage, patients may need to seek medical treatment such as antiviral medications or liver transplant in the most severe cases.
What's promising about the latest generation of Hepatitis C drug treatments is that many of these treatments can be taken orally instead of through a series of injections. This will make the drugs accessible to a larger number of people and will be less expensive to manufacture. This will help keep costs down for patients and health care professionals.
Also, by offering an oral medication, companies should see an increase in requests for the treatment as most people are more comfortable taking a pill than injecting themselves with medication for 6 months to a year or longer. The amount of time a patient has to take medication depends on the severity of the virus and how much damage it has done to the body.
Other companies developing Hepatitis C drug treatments include Bristol-Myers Squibb (NYSE: BMY) and Gilead Sciences (NASDAQ: GILD). Testing oral medications in early stage clinical trials, neither company had published its findings yet. The drug treatment from Bristol-Myers Squibb contains its own NS5a inhibitor daclatasvir (BMS-52) and Gilead's GS-7977. If successful, the company will switch from GS-7977 to nuke INX-189, added to the company's portfolio after acquiring Inhibitex. Bristol-Myers Squibb bought the company to gain access to Inx-189 for $2.5 billion in January 2012. This was a smart move and one that puts Idenix in a shaky position; even more so after its trial failures.
Gilead, meanwhile, is testing a drug treatment made up of GS-7977 and ribavirin. The company is conducting two studies using this drug combination and plans to divulge its findings in an upcoming press release.
With multiple companies trying to develop drug treatments for Hepatitis C, is it still a good idea to invest in a company like Idenix that has experienced repeated failures with its experimental Hepatitis C drug? The answer to this question really depends on how the company proceeds from here. Should it continue testing, a breakthrough may occur or the drug could end up being a complete failure. It's best for investors at this point to look at other companies developing similar drugs to determine where to invest.
Another component to think about when considering investing in a company like Idenix is time. Depending on how long it takes the company to develop a drug treatment that works, investors need to then consider the amount of time it will take for approval by the FDA. This process can take months as the company will have to prove time and time again that the drug is effective. If an investor has the time and wants to take the risk, then investing in a company like Idenix is fine. But for investors that don't want to invest in the long-term or don't want to take on that much risk, passing on this stock and finding a company developing drugs that test well is a better choice.
Failure to gain FDA approval could wreak even more havoc on Idenix stock prices. It is only through close monitoring of stock prices will investors know when the best time to pull out will be. Idenix stock prices started to fall immediately after word got out about trial failures, so it is reasonable to assume that stocks will fall even further if the FDA does not approve the drug.
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