Idenix Will Sink Without Drug Success, Partnership
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I don’t expect anything positive from Idenix Pharmaceuticals (NASDAQ: IDIX) this year. If you have money invested in its stock, I think it is time to cut the losses and get out because there will not be a turnaround anytime soon. Idenix has been developing drugs for hepatitis virus B and C. The frontrunner of its pipeline is a hepatitis C drug IDX184. The results of the most recent clinical trial of IDX184 showed that the drug destroyed the virus during treatment, but it returned at full force around 12 weeks after the trial ended. This relapse has caused its share price to fall continually since the news came out. Idenix is now faced with a tough choice.
With three other hepatitis drugs in its pipeline does Idenix scrap IDX184 and spend its money on developing the other three hepatitis drugs, or does it take IDX184 back to development and spend its money attempting to make the drug more functional? Chances are Idenix will not be so willing to accept failure. It is important to point out however that there are many reasons for which a drug, no matter how much it is tweaked and revised, may never work. Intrinsically, the drug molecule may not do what the scientists originally had hoped or the virus may have a survival mechanism to render the particular molecule ineffective. I think that Idenix will continue to sink its money into IDX184. Just because Idenix has faith, doesn’t mean you should follow suit.
Idenix has a 52 week range of $4 to $15 and a market capitalization of $875 million. Competition will be brought to Idenix by Gilead Sciences’ (NASDAQ: GILD) hepatitis C drug GS-7977. Gilead has a 52 week range of $34 to $57 and a price to earnings ratio of 12.88. Gilead has a market cap of nearly $35 billion. Idenix will also see competition from Bristol-Myers Squibb (NYSE: BMY) and its hepatitis C drug Daclatasvir. Bristol-Myers has a 52 week range of $26 to $35 and a price to earnings ratio of 15.07. Bristol-Myers has a market cap of $55 billion. Due to the poor results of Idenix’s IDX184, Bristol-Myers and Gilead have a much better standing in the hepatitis C market.
Bristol-Myers Squibb has a hepatitis C treatment currently undergoing phase 3 clinical trials. The most recent phase 3 trial of Daclatasvir was aimed at researching the effectiveness of Daclatasvir when compounded with tenofovir, an antiretroviral drug effective in treating HIV patients. The study revealed there are no undesirable drug-drug interactions in the patients that are hepatitis C and HIV co-infected. The release of this study shows the flexibility of Daclatasvir in comparison to the hepatitis C drugs of Idenix. This could possibly influence doctors to choose the more versatile Daclatasvir to treat co-infected patients or just hepatitis patients in general. The fact that IDX184 is not going to pass FDA approval any time soon solidifies Bristol-Myers dominance over Idenix. However, just because Bristol-Myers is in better standing does not mean it is invincible in the hepatitis market. Treatment for hepatitis C is a highly desirable area in medicine and many companies are pushing to develop new and cutting edge treatments.
Gilead’s hepatitis C drug, GS-7977, is currently in phase 3 trials and showing somewhat mixed results. News was recently released that GS-7977 in compound with the drug ribavirin, has cured a group of 8 infected hepatitis C patients that have been unresponsive to any other types of hepatitis C treatments. However, after multiple weeks, 6 of the 8 patients have relapsed. The other two patients have only just passed the two week mark since discontinuing treatment, so it has yet be seen if the treatment was 100% effective in destroying the virus. While normally a relapse would indicate bad news and the stock to decline, there are certain factors to consider in this situation. GS-7977 has been shown to be effective for patients that have exhausted all other treatment possibilities. Gilead will continue to focus developing its product for the genotype 1 hepatitis C patients that other drugs cannot be prescribed for. If a successful drug combination is found for GS-7977 Gilead will have a serious advantage over its competitors. This could take extensive amounts of time to find this perfect drug cocktail, not to mention GS-7977 may fail to gain FDA approval. I believe it would be wise to keep an eye on the clinical trial studies of GS-7977 over the next year, but there is no reason to invest in Gilead stock at this point in time.
Idenix is a sinking ship. Its hepatitis C drug has failed trials and it has nothing to fall back on, except for the hepatitis C drugs in pre-clinical and phase 1 trials. It will not be able to stand up to any competition within the next year or two and it will not be making any capital unless Idenix can find a partner to help fund its pipeline. This is highly unlikely and I would avoid having anything to do with Idenix. Bristol-Myers is currently poised to become the best investment compared to Gilead, but I suggest waiting until the FDA approves Daclatasvir before investing.
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