Idenix Pharmaceuticals (IDIX) will use the $107 million raised Tuesday to push ahead with the clinical development of hepatitis C drugs, despite the Street's perception that the company's efforts are too little, too late. The new cash also ensures Idenix's legal team has the resources necessary to continue patent litigation against Gilead Sciences (GILD - Get Report), says Idenix CEO Ron Renaud.
I reached Renaud by phone Tuesday morning. He sounded happy, which isn't surprising for a guy who's about to deposit a check into Idenix's bank account that will almost double the company's cash reserves.
The Baupost Group raised its ownership stake in Idenix from 27% to 35% by purchasing 16.4 million shares of common stock at $6.50 per share -- a 5% discount to Idenix's Monday close.
The registered direct offering raises $107 million for Idenix, which had $122 million in cash on hand at the end of 2013.
"I know there's a perception that we're late to [hepatitis C] but the market will take a long time to play out and there will be plenty of room to operate when we get there," said Renaud.
For Idenix, that means continuing the development of its lead nucleotide prodrug IDX21437 and the NS5A inhibitor samatasvir (also known as IDX719.) Renaud and his team are betting that these two drugs (or follow-on compounds in Idenix's labs) could be combined into a single, daily pill to treat all hepatitis C genotypes with a high barrier to resistance. The idea is not for Idenix to compete with Gilead, Abbvie (ABBV - Get Report) or Bristol-Myers Squibb (BMY - Get Report) today (way too late for that) but to leapfrog ahead and be ready to compete for hepatitis C patients in 2017-2018.
"We're running big programs so we need "big n" studies in order to catch up," said Renaud. By "big n", Renaud means Idenix needs to run large clinical studies with lots of hepatitis C patients enrolled.
What if Idenix can't catch up in hepatitis C? Is the company considering a Plan B?
"We need to stick to what we know," said Renaud, which means virology. "We're still committed to demonstrating strategic success in hepatitis C even though I know our track record there to date hasn't been great."
Renaud is starting to talk a little bit using the company's expertise in nucleotide and prodrug chemistry to possibly develop drugs in infectious disease and oncology. Renaud notes, for example, that patients with acute myeloid leukemia are already treated with a nucleoside that is toxic and relatively ineffective, which opens an opportunity for a prodrug which could improve exposure and/or the safety profile.
"We have an open mind about bolstering the pipeline. I know we're small and competing for good ideas but we're not opposed to anything that creates value to shareholders," said Renaud.
He adds: "I realize that sounds like a CEO cliche but it's the truth."