So, what do you do if you want to get some exposure in the hot HCV space? A space where competition is steep and filled with big-time players such as Roche, JNJ (Tibotec), Bristol-Myers, Merck, Boehringer, and even Pharmasset at roughly $132/share (8/31/11; closer to $66 after the two-for one forward split, but still a ~ $5 B company)?

For the simple person (ahem, someone like me), who desires greater upside at value pricing, you have to look at smaller, riskier names, such as Idenix ($IDIX), briefly discussed the other day (found here). Another player here is Inhibitex ($INHX), who is also going after the NS5b HCV target.

Like $IDIX, $INHX is also developing a small molecule, guanasine-based, nucleoside-analog targeting the NS5b polymerase, but is a bit behind in its clinical development. On the flip side, $INHX also has a Phase IIb program (FV-100) in the works for treating shingles pain, which is caused by the chicken pox virus, varicella zoster virus (VZV). While I’m not sure how this asset will ultimately be developed for approval, it does show that $INHX has the in-house expertise for developing chain-terminating anti-virals. Of course, there are other small companies developing HCV therapies, such as $ACHN, which has a pan-genotypic protease inhibitor, and $ANDS, which is testing a NS5b non-nuc inhibitor, and I hope to post those at some time.

Source: Yahoo! Finance, 9/1/11

The 1-yr chart for $INHX generally looks pretty good for a biotech company, growing from $1.42/share on 8/31/10 to $3.41/share today (8/31/11), and even better if one goes back to their post-Lehman low of $0.20/share in 2008 (11/13/08). What happened in the past year to create value? Two data points.

The first data point was a short-term bump in value when, “promising top-line results from Phase II trial” of FV-100 were released December 2010. A bump because, to my eye, the data showed no efficacy advantage over current standard of care, valacyclovir, but has advantages with respect to dose, 200-400 mg versus 3000 mg daily, and schedule, once daily versus three times daily. They are currently chatting with the FDA on a Phase IIb design that could support an indication for the reduction of shingles-associated pain and/or incidence of PHN. I’ll have to look over the full data (has it been presented?) set at some point down the line, but hope that they just find a partner take over the program in order to focus on HCV.

The second data point has been better able to sustain value and was announced in April when they presented 7 day INX-189 P1b single agent data in HCV GT1 patients at EASL. When stacked up against their peers, this is what the data look like:

(Hmm…my table did not transfer. Not sure how to create a table here).

Mean HCV RNA reduction (log10 IU/ml), 3  or 7 days monotherapy

$INHX – INX-189, 100 mg QD
-1.53     3 days monotherapy
-2.33    7 days monotherapy

$IDIX – IDX-184, 100 mg QD
-0.74     3 days monotherapy
n/a        7 days monotherapy

$VRUS – PSI-7977, 400 mg QD
-3.65     3 days monotherapy
-4.69     7 days monotherapy

After 3 days of monotherapy, INX-189 looks better than IDX-184, but not as good as PSI-7977. After 7 days of treatment, PSI-7977 remains the leader, though we do not have IDX-184 data for a comparison. While PSI-7977 has not been discussed here, presentations of their data can be found on their website. PSI-7977 does appear to be the undisputed leader at present, with 12-wk exposure data in combination with pegylated interferon/ribavirin, robust and sustained efficacy in patients, as well as activity across multiple genotypes, GT1, 2, and 3.

INX-189 monotherapy data is promising, but does require additional study. For instance, they have not reached the maximum dose – it is not known if doses greater than 100 mg could have resulted in increased viral load reduction. Safety and efficacy of triple therapy (combination with standard of care, pegylated interferon/ribavirin) at any time point is not known; are there changes in viral kinetics? As an example, IDX-184 had the least impact on viral load after 3-days of monotherapy; however, after 14-day triple therapy, viral load was reduced by -4.2 log. As we add in standard of care, we are also entering uncharted territory from a safety and tolerability perspective.

To me, the development process feels a bit rushed. $INHX initiated a 12-wk Phase II trial in GT2/3 HCV patients mid-August, with only 7d monotherapy data, and expects to get interim RVR (after 4-wks of dosing) data 1Q12. (It is too bad they decided not to test a higher dose cohort during the trial.) This will be our first look at safety and efficacy in triple combination therapy. The magnitude of viral load reduction will be important for competitive reasons, but given the limited patient exposures, safety and tolerabiliity will be on the top of my list – let’s hope we see no difference with standard of care. Thus far, IDX-184 (through 14 days) and PSI-7977 (through 12 wks) look safe and tolerable.

Using $IDIX as reference, can I estimate what $INHX should be worth today, without building an rNPV model? $INHX currently has a market cap of $275 MM ($3.51/share, 9/1/11 x 78.2 MM shares outstanding, 2Q 10Q 8/4/11) versus $IDIX, whose market cap is $534 MM ($5.55/share, 9/1/11 x 96.2 MM shares, 2Q 10Q 7/22/11).

Prior to the IDX-184 clinical hold AND 14-day data presentation, $INHX was worth c.$437 MM, with 3-day HCV data (and potentially value attributed to their partnered HIV program). As they made progress in the clinic and along the regulatory front, they traded between $200-300 MM. It certainly feels like $INHX is getting the benefit of doubt for safety and efficacy; perhaps that’s what you get for riding the $VRUS train. I’m not a buyer here and will see how IDX-184 interim data fares later this year; I’d also like to see how any back-up compounds are proceeding in the lab.

No current positions in $INHX, $IDIX.