Download Idenix Pharmaceuticals, Inc. Rating: Hold

BIOTECHNOLOGY
Eugene Trogan, Ph.D.
212-218-3839
[email protected]
Andrew R. Peters
212-218-3992
[email protected]
Company Update
July 13, 2007
Key Metrics
$3.65
07/13/2007
NA
$11.21-$5.59
56.2
$205.1
488,938
25%
1.3%
NM
$3.71
1.0x
NM
NM
IDIX - NASDAQ
Pricing Date
Price Target
52-Week Range
Shares Outstanding (mm)
Market Capitalization ($mm)
3-Mo Average Daily Volume
Institutional Ownership
Debt/Total Capital
ROE
Book Value/Share
Price/Book
Dividend Yield
LTM EBITDA Margin
EPS($) FY: December
2006A
(0.31)
(0.26)
(0.35)
(0.42)
(1.34)
NM
1Q-Mar
2Q-Jun
3Q-Sep
4Q-Dec
FY
P/E
Prior
2007E
------
Idenix Pharmaceuticals, Inc.
Rating: Hold
FDA Puts NM283 on Clinical Hold; Idenix Suspends
Program - Maintaining Hold
Investment Highlights:
■
NM283 (valopicitabine) on FDA clinical hold. This morning, Idenix
announced that the FDA placed the development program of NM283
for the treatment of Hep-C on clinical hold in the U.S. based on what it
believed was an inadequate risk/benefit profile observed to date in
clinical testing. Management was not optimistic that it would be able to
reverse the decision, and in turn, has suspended the further development
of NM283.
■
NM283 buried; Loses most advanced value driver. We are quite
surprised with today's events, especially since the results of the
NM283-Ribavirin study, which were reported last month, and though
not spectacular by any measure, met the company's and partner
Novartis' (NVS - $55.06 - NYSE) internal criteria for continuing with a
NM-283/RBV/PEG-IFN triple combination therapy and had even
expressed plans for a potential protease inhibitor combo trial. On
today's conference call, the company indicated that the FDA's decision
was based on the drug's GI toxicity (previously more apparent at the
800 mg dose). However, at the 200 mg dose, only one patient (out of 39
patients in the NM-283 arm) discontinued due to GI toxicity. Though
anti-emetics were permitted, we believe, as a result of the FDA's stance,
that apparently the nausea and vomiting were not adequately controlled.
Though we await the full results, in the end, the FDA believed that it
did not make sense to permit the clinical development of the drug to
continue.
■
What remains? $160mm cash, Tyzeka, and early HIV pipeline.
With NM283 out of the picture, the company has $160mm in cash (as
of June 30th, 2007) or $2.85 cash per share (56.2mm shares out). The
company has guided for a year-end cash balance of between
$100-110mm and $20mm in worldwide sales of Tyzeka. Management
did not revise this guidance on the call, but will provide an update when
reporting 2Q07 earnings. We note that U.S. Tyzeka prescriptions have
been lackluster, averaging about 210/wk, according to IMS Health. HIV
candidate IDX-899, for which Novartis has a right of first refusal, is at
the early Phase I stage.
■
Maintain Hold. Recognizing that the stock is trading down ~35%
today, we believe that it is currently trading at fair value levels,
according to our estimates. We remind investors that Novartis owns
51% of the company, which may make it an acquisition target after the
standstill agreement expires in May 2008.
Curr.
Prior
Curr.
2007E
2008E
2008E
(0.21)A
--(0.23)E
--(0.37)E
--(0.37)E
--(1.19)E
-(1.11)E
NM
NM
Revenue($mm)
Prior
Curr.
Prior
Curr.
2006A
2007E
2007E
2008E
2008E
13.1
-24.8A
--19.3
-24.5E
--19.6
-19.3E
--15.3
-21.0E
--67.4
-89.6E
-131.8E
1Q-Mar
2Q-Jun
3Q-Sep
4Q-Dec
FY
1 Year Price History for IDIX
12
10
8
6
Q2
Q3
Q1
Q2
4
2007
Created by BlueMatrix
Company Description: Idenix is focused on the discovery,
development, and commercialization of treatments for viruses,
including hepatitis B, hepatitis C, and HIV. In May 2003, the company
entered into collaboration with Novartis to develop and commercialize
Idenix's hepatitis B drug candidates. Novartis also received an option
to participate in the development and commercialization of Idenix's
drug candidates in hepatitis C, which Novartis exercised in March
2006. The company completed its IPO in July 2004.
The Disclosure section may be found on pages 3 - 4 of this report.
Idenix Pharmaceuticals, Inc.
July 13, 2007
Idenix Pharmaceuticals, Inc. (NASDAQ: IDIX)
QUARTELY AND ANNUAL INCOME STATEMENT
Year Ending December
($ in 000s, except per share data)
Telbivudine- US
NM283 - US
Profit Share & Royalties
Milestones & Collaborative R&D- Novartis
Revenues
Cost of Goods Sold
Gross Profit
Operating Expenses:
SG&A
R&D
Total Operating Expenses
2005A
Year
0
0
0
64,718
$64,718
Interest &Other (Expense)
Pre-Tax Income (Loss)
Income Taxes (Benefit)
Net Income (Loss)
GAAP EPS - Diluted
Basic Shares Outstanding
Diluted Shares Outstanding
4QE
2,500
0
3,200
15,300
$21,000
2007E
Year
5,225
0
8,400
75,944
$89,569
0
0
0
13,111
$13,111
0
0
0
19,313
$19,313
0
0
0
19,645
$19,645
4QA
424
0
0
14,884
$15,308
0
0
0
0
62
62
70
160
300
500
1,045
64,718
13,111
19,313
19,645
15,246
67,315
24,736
24,303
19,000
20,500
88,524
10,640
22,068
32,708
12,163
24,812
36,975
15,924
26,083
42,007
18,227
23,067
41,356
56,954
96,080
153,096
15,840
22,554
38,464
16,632
23,543
40,335
17,464
25,550
43,314
18,337
26,420
45,257
68,272
98,067
167,369
(55,529)
(19,597)
(17,662)
(22,362)
(26,048)
(85,669)
(13,658)
(15,872)
(24,014)
(24,257)
(77,800)
4,038
2,135
2,519
2,563
2,270
9,487
1,978
2,432
2,510
2,510
9,430
(51,491)
(17,462)
(15,143)
(19,799)
(23,778)
(76,182)
(11,680)
(13,440)
(21,504)
(21,747)
(68,370)
(789)
(280)
(584)
(84)
(197)
(1,145)
(111)
(120)
(135)
(135)
(501)
(50,702)
(17,182)
(14,559)
(19,715)
(23,581)
(75,037)
(11,569)
(13,320)
(21,369)
(21,612)
(67,869)
($1.03)
($0.31)
($0.26)
($0.35)
($0.42)
($1.34)
($0.21)
($0.23)
($0.37)
($0.37)
($1.19)
49,369
49,369
55,891
55,891
55,991
55,991
56,058
56,058
56,078
56,078
56,005
56,005
56,126
56,126
56,687
56,687
57,254
57,254
57,827
57,827
56,974
56,974
MORGAN JOSEPH & CO. INC.
1QA
425
0
0
24,381
$24,806
2007E
2QE
3QE
800
1,500
0
0
2,200
3,000
21,463
14,800
$24,463
$19,300
3QA
Source: Company reports and Morgan Joseph & Co. Inc. estimates
2
2006A
Year
424
0
0
66,953
$67,377
2QA
33,657
86,590
120,247
Operating Income (Loss)
2006
1QA
Idenix Pharmaceuticals, Inc.
July 13, 2007
Required Disclosures
Rating and Price Target History for: Idenix Pharmaceuticals, Inc. (IDIX) as of 05-01-2007
12/05/06
I:Buy:$13
04/13/07
Hold:NA
32
24
16
8
Q1
Q2
Q3
Q1
Q2
Q3
2005
Q1
2006
Q2
Q3
Q1
0
2007
Created by BlueMatrix
I, Eugene Trogan, the author of this research report, certify that the views expressed in this report accurately reflect my personal views
about the subject securities and issuers, and no part of my compensation was, is, or will be directly or indirectly tied to the specific
recommendations or views contained in this research report.
I, Andrew Peters, the author of this research report, certify that the views expressed in this report accurately reflect my personal views
about the subject securities and issuers, and no part of my compensation was, is, or will be directly or indirectly tied to the specific
recommendations or views contained in this research report.
Research analyst compensation is dependent, in part, upon investment banking revenues received by Morgan Joseph & Co. Inc.
Morgan Joseph & Co. Inc. intends to seek or expects to receive compensation for investment banking services from the subject
company within the next three months.
Investment Banking
Services/Past 12 Mos.
Rating
Percent
Percent
BUY [B]
63.83
30.00
HOLD [H]
34.04
12.50
SELL [S]
2.13
0.00
Meaning of Ratings
A) Buy means reasonable outperformance relative to the market over 12-18 months.
B) Hold means market-type risk adjusted performance; potential source of funds.
C) Sell means expected to underperform the market.
Other Disclosures
The information contained herein is based upon sources believed to be reliable but is not guaranteed by us and is not considered to be
all inclusive. It is not to be construed as an offer or the solicitation of an offer to sell or buy the securities mentioned herein. Morgan
Joseph & Co. Inc., its affiliates, shareholders, officers, staff, and/or members of their families, may have a position in the securities
mentioned herein, and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own
accounts or for the accounts of other customers of the Firm from time to time in the open market or otherwise. Opinions expressed are
3
MORGAN JOSEPH & CO. INC.
Idenix Pharmaceuticals, Inc.
July 13, 2007
our present opinions only and are subject to change without notice. Morgan Joseph & Co. Inc. is under no obligation to provide updates
to the opinions or information provided herein. Additional information is available upon request.
© Copyright 2007 by Morgan Joseph & Co. Inc.
Morgan Joseph & Co. Inc.
600 Fifth Avenue, 19th Fl
New York, NY 10020
Tel. 212.218.3700
Fax. 212.218.3789
Sales and Trading
New York
Tel. 212.218.3767
Fax. 212.218.3705
Pittsford
Tel. 877.237.6542
Fax. 585.899.6029
4
MORGAN JOSEPH & CO. INC.