Interim results from these arms of the study are expected later this month or in February and should provide investors with a better perspective on INX-189's safety profile. Importantly, it's hoped that the liver toxicity that doomed Pharmasset's PSI-938 doesn't make an appearance.

Inhibitex was one of the best-performing stocks of last year due to the optimism and potential surrounding INX-189. The company is regularly touted as a takeover target, but only if INX-189 remains a solid hepatitis C player.

Another possible reason for the Inhibitex sell off was an alert issued today regarding a significant sale of stock by the company's second-largest holder, the hedge fund QVT Financial.

QVT Financial initially reported the sale of 5.2 million shares of Inhibitex stock on Nov. 4, according to Bloomberg. But an alert on the sale was issued again Wednesday, possibly spooking other investors who wondered why the hedge fund was dumping stock ahead of the important INX-189 clinical data.

QVT still owns 2.5 million shares of Inhibitex and the hedge fund's cost basis is believed to be below $2 a share, according to a person familiar with the fund's holdings.

Inhibitex shares are rebounding from the morning sell off, down just 3.5% to $9.74.

--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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