Idenix down; Novartis won't license drug candidate

NEW YORK - Shares of Idenix Pharmaceuticals Inc. fell Friday after the company said Novartis AG will not exercise an option to license the company's lead drug candidate, aimed at treating hepatitis C.

The stock fell 38 cents, or 15.2 percent, to $2.12 in afternoon trading. Shares have traded between $1.86 and $6.82 over the last 52 weeks.

Wall Street had been anticipating a decision from Novartis on IDX-184 since Idenix reported positive "proof-of-concept" data several months ago.

"While the Novartis decision is clearly not positive for the stock, it may not have been the best partner for IDX-184's commercial potential," said Leerink Swann Research analyst Howard Liang in a note to investors.

Other attractive partners for Idenix could include Merck, Boehringer Ingelheim or Johnson & Johnson, Liang said.

"We continue to see IDX-184 as an attractive asset in the potentially strategically important class of nucleoside-based Hepatitis C (treatments) polymerase inhibitors," Liang said. He kept an "Outperform" rating on the stock.

"This is a disappointment, however, the company has indicated that there are other interested parties in this highly potent nucleoside compound that has demonstrated a strong safety profile so far," Caris analyst David Moskowitz wrote in a research report. "We continue to believe that Idenix's core competency of antiviral drug development, its pipeline of hepatitis C compounds, intellectual property, and partnership with GlaxoSmithKline have value beyond the current share price."

He did voice some concern over the company's funding situation, acknowledging that management has said it has enough cash to fund operations for at least the next 12 months.

"But, perhaps, a sale of the entire company and its assets makes the most sense at this point," he said.

Moskowitz cut his ratting to "Above Average" from "Buy" and reduced his price target to $5 from $16.

Idenix is developing IDX-184 against several other strong contenders for the future hepatitis C treatment market. Vertex Pharmaceuticals Inc. is conducting midstage studies on its potential hepatitis C treatment telaprevir, while ZymoGenetics Inc. recently moved its potential hepatitis C treatment IL-29 into midstage studies with partner Bristol-Myers Squibb Co.

Idenix also said Friday its loss narrowed in the third quarter as costs fell and revenue from partnerships rose.

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