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Idenix Hep C Fortunes Fade Fast

CAMBRIDGE, Mass. ( TheStreet) -- Idenix Pharmaceuticals (IDIX) shares fell 10% Monday after the U.S. Food and Drug Administration placed a second of the company's experimental hepatitis C drugs on clinical hold due to heart safety concerns.

Clinical development of both Idenix drugs -- IDX184 and now IDX19368 -- has been stopped because these hepatitis C "nucs" share structural similarities to Bristol-Myers Squibb's (BMY - Get Report) BMS-094, which caused heart failure in nine patients, one of whom died.

None of the patients treated with Idenix's IDX184 have shown heart-related toxicity to date but the company is currently subjecting more than 50 patients treated with the drug to additional echocardiograms, per FDA's request. IDX19368 has not yet been tested in patients, the company said.

Idenix shares fell 61 cents, or 10%, to $5.51 in early Monday trading. The stock has not trading this low since October 2011.

One feels a tinge of sadness for the investors who purchased the 22 million shares of common stock sold by Idenix at $8 per share on Aug. 2. Bad luck. Bad timing.

It was only last January when Idenix shares pushed through $15, bolstered by the frenzy of hepatitis C acquisitions -- Gilead Sciences (GILD - Get Report) buying Pharmasset for $11 billion and Bristol-Myers spending $2.5 billion to acquire Inhibitex.

Many Wall Street investors believed at that time that Idenix was the next hepatitis C takeout candidate, as evidenced by this buysiders poll taken by ISI Group analyst Mark Schoenebaum. Even I got caught up in the Idenix takeout speculation mania, tweeting about a conversation I had with a hepatitis C bull who predicted Merck (MRK - Get Report) would buy Idenix for $3 billion.

Almost nine months later, Bristol has written off its disastrous Inhibitex purchase and Merck did not buy Idenix (thankfully, for them.) The hepatitis C M&A rumor mill has gone ice cold and rightly so. Even if Idenix gets FDA clearance to resume testing of IDX184 and IDX368, the company will more than likely need to move forward on its own without a partner. (The money just raised will come in handy.) Achillion Pharmaceuticals (ACHN - Get Report) continues to wait at the altar, a groom nowhere in sight.

Meantime, Gilead continues to advance its hepatitis C nuc GS-7977 absent the concerns about cardiac toxicity. Gilead paid a hefty price for Pharmasset but in hindsight, the deal looks better and better. Not all hepatitis C "nucs" are the same, apparently.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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