A little late to the story, but what a ride for $IDIX over the course of the year.

Source: Yahoo! Finance, 08-29-11

About this time last year, $IDIX was a $437 MM market cap company (c.73M shares outstanding x $5.99/share, 9/3/10) cruising along developing their lead asset, IDX-184, a liver-targeted guanasine-based pro-drug for HCV. What makes the story interesting is that they hit a bump in the road in September, when IDX-184 was placed on clinical hold, dropping its value 47% to $232 MM ($3.18/share, 9/7/10), and then continued to slowly erode over the next week or so, reaching a low of $198 MM ($2.72/share, 9/16/10).

Lucky (?) for shareholders, AASLD Liver Meeting abstracts were released just a couple of weeks later (10/1/10), and they were given an oral presentation to discuss 14-day combination data of IDX-184 + pegylated interferon/ribavirin. This allowed the stock to regain some of its value, reaching $306 MM ($4.20/share, 11/1/10) after the data was presented. The rise in market cap is somewhat misleading, in that value appears to have been been priced into the stock (since mid-Oct) and no additional gain was observed after the data were presented.

It is likely that without the clinical hold, additional value could have been created with the data set. So, what happened? The clinical hold was a result of a 14-day drug-drug interaction (DDI) study with IDX-320, a HCV protease inhibitor (now discontinued), where three serious adverse events (SAEs) of elevated liver function tests were reported while on study, but not on treatment. The SAEs were ultimately attributed to IDX-320, and not to IDX-184, but this still needs to be confirmed. I wonder if the combo trial was the smartest thing to do first, given that they had only recently begun a 3-day single agent Phase I/II trial with IDX-320.

Without diving into the 14-day combination data with IDX-184 + pegylated interferon/ribavirin, suffice it to say that the data presented appeared favorable and showed a 4-log mean reduction in HCV RNA and with up to 50% of the subjects achieving undetectable viral load when dosed with 100 mg IDX-184 QD. While viral load reduction was fairly consistent through 200 mg QD, the percentage of patients with undetectable HCV was just 25% at the higher dose – I would have liked to have seen 50%. Overall, the data was comparable to $VRUS PSI-7977, the cool kid on the block. IDX-184 also appeared safe and tolerable with an adverse event profile comparable to placebo. A potentially promising asset for someone who might lose out on PSI-7977.

The clinical hold was lifted in February this year, but the stock (surprisingly) lost value, losing about $75M in market cap (from $293 MM at $4.01/share on 2/9/11 to $219 MM at $3.00/share after the news on 2/10/11). While losing value on relatively positive news is a bit surprising, I guess the bad news of a clinical hold being placed on an out-licensed HIV program, announced at the same time, held more weight with investors.  In retrospect, if one believed in the 14-day data, news of the clinical hold being lifted to a partial hold, could have been a good time to buy some shares.  You know the phrase, the one about hindsight…

So at the end of the first quarter 2011, where did we stand? Positive clinical data for efficacy and safety. CHECK. Regulatory. CHECK. Funding. Uh-oh. At the end of 1Q11, they reported a cash balance of $31 MM, and with company’s cash burn of close to $20 MM/Q prior to the clinical hold, they needed to raise cash. And wouldn’t you know it, some smart investors believed in the data and financed the company with an additional $60 MM in April to give them $78M cash, as reported on their 2Q filing.

$IDIX is currently running a 100-pt Phase IIb trial in combination with pegylated interferon/ribavirin, with an interim analysis to be held after the first 30-pts have been treated for 28d, which is also a nice time point for RVR. More details about the clinical trial can be found here. Interim data is expected by year end, so we should get a sense for 4-wk efficacy and just at important, safety.

Two things do bother me about the trial. First, they are going straight into a 12-wk treatment course, skipping a trial testing the 4-wk treatment paradigm. You would have thought that after the 14-day DDI experience, they would have a bit more patience. Second, in their June presentation at the Jefferies conference, they presented an amended protocol, whereby some eRVR+ patients (those with undetectable HCV at wks 4 and 12) can continue on pegylated interferon/ribavirin under certain conditions. Just a few weeks earlier in their May presentation at the Bank of America conference, as long as eRVR was established after 12-wks, and following an additional 12-wks of pegylated interferon/ribavirin, patients were allowed to come off treatment and be followed for SVR. The protocol changes make sense, given their lack of 4-wk data, but amendments mid-stream always makes me more cautious.

I am also curious as to what $NVS do with their 35% $IDIX stake. They have already declined an opt-in to IDX-184 and are developing DEB025, a cyclophilin inhibitor, which was in-licensed from Debiopharm. Could they consider combining the two? Does it make sense to combine the two?

At the close today (8/29/11), $IDIX was priced at $6.05/share with c.96M shares outstanding, a $581 MM market cap. With a bit of dilution and 14-day data, $IDIX has created close to $144 MM in value.  If data are good at year end, could we have the early beginnings of another $VRUS?

No position in $IDIX.