Idenix Pharmaceuticals Inc (NASDAQ:IDIX), a biopharmaceutical company, announced that the data from its phase 1/II clinical trial for its IDX21437 nucleotide for the treatment of Hepatitis C virus (HCV) infection is promising.

Idenix Pharmaceuticals

According to the biopharmaceutical company, patients infected with HCV genotype who received one, two or three doses of IDX21437 during the seven-day proof-of-concept portion of the phase I/II clinical trial showed viral reductions of mean maximum 4.2 to 4.3 log10 IU/mL.

Well-tolerated with no pattern of adverse events

Idenix Pharmaceuticals Inc (NASDAQ:IDIX) noted that the IDX21437 was well-tolerated and no pattern of adverse events or laboratory abnormalities was observed during the clinical study.

“Nucleotide-based treatment combinations are favored because of safety, efficacy, high barrier to resistance and low drug-drug interaction potential and we look forward to seeing further results from studies with IDX21437,” according to Professor Edward Gane, MD, Deputy Director and Hepatologist, New Zealand Liver Transplant Unit, Auckland City Hospital in New Zealand, and a clinical investigator in the IDX21437 proof-of-concept study.

Idenix Pharmaceutical Inc (NASDAQ:IDIX) is planning to initiate a combination clinical trial of IDX21437 and samatasvir, a pan-genotypic NS5A inhibitor in the middle part of this year. The biopharmaceutical company also selected a follow-on uridine-based nucleotide prodrug, IDX21459, from its ongoing nucleotide discovery program and initiated enrollment for the healthy volunteer portion of a phase I clinical trial.

Risk-reward unfavorable

The stock price of Idenix Pharmaceuticals Inc (NYSE:IDIX) surged more than 12% to $5.81 per share due to the promising data from the clinical trial of IDX21437.

However, Brian P. Skorney, an analyst at Baird Equity Research, expressed reservations regarding the safety of the drug under development citing that only sofosbuvir made it through development. According to him, the risk / reward on the biopharmaceutical company is unfavorable. “We still believe a long road lies ahead fraught with risks,” said Skorney.

The analyst emphasized that they want to see long-term safety data that would verify that the IDX21437 has no adverse effects or laboratory abnormalities given the safety issues associated with nucleotides. Skorney believed that matching safosbuvir’s safety/efficacy profile is a very high hurdle to meet to justify an upside on the stock.

FDA expected to apply a level of caution

Furthermore, Skorney suggested that the Food and Drug Administration (FDA) will allow studies for IDX21437 on sufficient safety database, but it would apply a level of caution because of its concerns over nucleotide analogs. He forecasted that enrollment for studies will not happen until 2015 and pegged the likelihood for commercialization on the programs of Idenix Pharmaceuticals Inc (NASDAQ:IDIX) at 2018 assuming that it does not experience any problem in the near-term.

Skorney recommended an Underperform rating with a $3 price target for the shares of Idenix Pharmaceuticals (NASDAQ:IDIX) despite the promising clinical trial data for the Hepatitis C virus treatment. He explained that the rating was based on his belief that the “assets in development do not support the current valuation and provide little upside opportunity.”

Baupost owns 35% stake in Idenix

Baupost Group, the hedge fund headed by Seth Klarman, is the largest shareholder of Idenix Pharmaceuticals Inc (NASDAQ:IDIX) with a 35% stake. The hedge fund increased its position in the company from 27.55% in January.  At the time, the hedge fund purchased an additional 16 million shares