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Idenix slapped with second FDA hold

by Ben Fidler | Published August 27, 2012 at 2:26 PM

The hits just keep on coming for Idenix Pharmaceuticals Inc.

The Food and Drug Administration has placed a clinical hold on the Cambridge, Mass.-based biotech's IDX19368, a nucleotide polymerase inhibitor for the treatment of hepatitis C, or HCV. The hold, which temporarily halts the development of the compound, is the second such action taken by regulators against Idenix in the past two weeks. The FDA placed a partial clinical hold on Idenix's IDX184, another nucleotide inhibitor for HCV, on Aug. 16.

Idenix shares opened down more than 10% on Monday morning, tumbling from $6.01 per share to $5.34 per share, its lowest levels since late October. But the stock recovered throughout the day Monday and was trading at $6.14 per share in the early afternoon.

The hold is once again tied to Bristol-Myers Squibb Co.'s disastrous $2.5 billion purchase of Inhibitex Inc. Bristol-Myers bought its own nucleotide inhibitor, BMS-986094, via that transaction, but the deal turned sour for the Princeton, N.J., pharmaceutical giant when a patient taking the drug in a Phase 2B study suffered heart failure and subsequently died. Eight other patients from the study also have been hospitalized. Bristol-Myers suspended the study on Aug. 2 and late last week terminated development of BMS-986094, taking a $1.8 billion impairment charge in the process.

Bristol-Myers has egg on its face from the Inhibitex buyout, but the failure of its drug has hit Idenix just as hard. Indeed, the news is the second sucker punch in less than a month for Idenix, which just seven months ago was one of the hottest stocks in biotech. Idenix was one of the key beneficiaries of the short-lived HCV bubble; its share price soared when it became apparent that Big Pharma was in the midst of a feeding frenzy for HCV drugs -- to the point that such companies were paying exceedingly high premiums for even Phase 2 compounds showing promise in treating the disease.

In two successive months, Gilead Sciences Inc. bought Pharmasset Inc. and its nucleotide inhibitor GS-7977, which at the time was in Phase 2, for nearly $11 billion in December. Bristol-Myers then shelled out $2.5 billion -- at a 163% premium -- for Inhibitex in January. Idenix's shares jumped from $7.05 to $9.66 the first trading day following the Inhibitex deal and closed at $14.89 on Jan. 24 as investors piled into HCV stocks in hopes of benefiting from the next buyout. Achillion Pharmaceuticals Inc., another biotech in the HCV game, saw a similar large spike in share price.

For Idenix, however, an offer never came. In fact, while investors in such biotechs waited with bated breath for the windfalls taken home by Pharmasset and Inhibitex shareholders, no other HCV buyouts have taken place since.

Still, Idenix appeared to be in decent position to capitalize on its goal to become one of the companies to create an all-oral regimen for HCV, a disease typically treated with injectable interferon-based therapies that are not effective for many patients and have substantial side effects. After severing ties with Novartis AG on a partnering deal in July, Idenix was left with full rights to IDX184 and IDX19368 -- two nonstructural nucleotide inhibitors -- as well as a third, different type (NS5A) of nucleotide inhibitor, IDX719, in Phase 1.

Unfortunately for Idenix, IDX184 and IDX19368 are the only compounds to date that have been handcuffed by the FDA, specifically because they are structurally similar to Bristol-Myers' BMS-986094 -- namely, they are all within the same class of nucleotide inhibitors, and the final active form of the drug is the same in all three.

Idenix, for its part, has been adamant that its drugs are different. In a conference call on Aug. 16, Idenix executives argued that IDX184 and BMS-986094 showed vastly different cellular toxicity levels in preclinical testing and have different methods of drug delivery.

Prior to the partial clinical hold, IDX184 was in Phase 2b trials. Idenix has been asked by the FDA to perform additional cardiac testing on the patients in that study and as a result has scheduled more than 50 echocardiograms. A few have been performed with normal results, Idenix said Monday.

IDX19368 is still a preclinical compound and hasn't been tested in patients.

While the severity of the developmental delays of Idenix's two NS5Bs is unclear, they may leave biotech in a financial lurch, at least in the near term. Barclays plc analyst Ying Huang and Leerink Swann LLC analyst Howard Liang each reasoned in recent research notes that the likelihood of a partnership for IDX184 in the near future has dwindled, meaning Idenix would have to cover the costs of longer trials.

In the meantime, Gilead has soared to the front of the pack in the HCV race, as GS-7977 is now in Phase 3 testing without any requests for further testing from the FDA to date. Abbott Laboratories is also viewed as a front-runner; the company released positive data in April on a study of a combination treatment including two of its own HCV compounds as part of an interferon-free regimen.

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