It took a little longer than Idenix wanted, but the biotech managed to sell off its Phase II non-nucleoside reverse transcriptase inhibitor for HIV infection, IDX899, to GlaxoSmithKline. In exchange for worldwide rights to the drug, the drugmaker will pay Idenix $34 million upfront plus downstream development and commercial milestones and royalties.

Having obtained proof-of-concept for the NNRTI last year, Idenix originally hoped to find a partner for '899 by the end of 2008 (¹ Also see "Idenix Targets HIV Partner By Year End" - Pink Sheet, 29 April, 2008.). The Cambridge, Mass.-based biotech has tried to position the compound as an improvement on Bristol-Myers Squibb's Sustiva (efavirenz), offering less neurological toxicity and a higher barrier to resistance.

The Feb. 6 transaction with GSK provides the upfront payment as a 50/50 split between cash and the purchase of Idenix stock at $6.87 per share. In an interview, Idenix Chief Financial Officer Ron Renaud said GSK paid a double-digit premium on the average share price at closing over the 90 days prior to the deal.

Complicating the deal was the fact that Novartis owns a majority stake in Idenix, giving it right of first refusal on the biotech's entire pipeline up through proof-of-concept (² [See Deal]). Concurrent with the deal, Idenix restructured its agreement with Novartis so that it could pursue transactions that would dilute the Swiss pharma's ownership in Idenix below 50 percent, to as low as 40 percent.

Despite an interest in HIV therapeutics, Novartis ultimately passed on its option to acquire '899. "Clearly, they saw the importance of putting this in the hands of a company with an existing, well-established HIV franchise," Renaud said. "Novartis has the same vested interest that we have in making sure that this product has the best chance to succeed."

For Idenix's part, GSK was the ideal partner to maximize the potential value of '899, he added. In addition to the upfront payment, Idenix can realize up to $416 million in development, regulatory and commercial milestones under the license, along with double-digit tiered royalties on sales.

With GSK taking over development of '899, Idenix now has greater capacity to focus on its three hepatitis C programs, led by nucleotide prodrug IDX184, which moved into a Phase I/II proof-of-concept study in January.

Dosing study data increased partnering interest

Interest level from potential partners in '899 increased during the past year as the drug continued to demonstrate safety and efficacy while being tested in lower doses, Renaud said. During the proof-of-concept study, the drug was tested in daily doses of 800 mg, 400 mg, 200 mg and 100 mg. The 100 mg dose produced a mean viral load reduction of 1.87 log10 in HIV-1 infected patients, according to Idenix, with treatment effect increasing over the seven-day dosing period. There were no serious treatment-related adverse events in any of the dosing cohorts.

Idenix's goal was to get to a low-dosage formulation with a pill smaller than those currently on the market and the ability to co-formulate, Renaud said. In the end, the company met all its development criteria for '899.

Analysts expect GSK, which did the transaction through its Infectious Diseases Center of Excellence for Drug Discovery, to co-formulate '899 with its Phase II HIV integrase candidate, GSK1247303. In a Feb. 6 note on the deal, Lazard Capital analyst Gene Mack predicted the co-formulation and also said the deal provides a benchmark for Ardea's efforts to partner its own NNRTI, RDEA806.

Mack projected San Diego-based Ardea will license U.S. rights to '806 for $30 million upfront, plus $100 million in regulatory milestones. The GSK/Idenix deal could lay the groundwork for other milestones Ardea might get, he wrote.

Meanwhile, analyst Jason Kolbert of ThinkEquity said Idenix did well for itself in a Feb. 6 note. "Glaxo's extensive knowledge in HIV and comprehensive clinical plans (part of what impressed IDIX management) raise the probability of success and commercial potential," he wrote.

Goal for three clinical HCV programs this year

Idenix's primary goal now is to move all three of its HCV programs into the clinic this year. In announcing the initiation of the proof-of-concept trial for IDX184 last month, CEO Jean-Pierre Sommadossi said Idenix's goal is to be the first company with clinical candidates in three major classes of direct-acting HCV anti-virals.

Renaud said Idenix hopes to move IDX375, a non-nucleoside polymerase inhibitor, into Phase I by mid-2009, and one of two protease inhibitors - IDX136 or IDX316 - into the clinic by year's end.

Although Idenix has not released its full financials for 2008 yet, the company has said it had about $46 million on hand at the end of last year. With its proceeds from GSK, Renaud predicted Idenix has enough cash to fund operations through first-quarter 2010.

In the meantime, the restructured agreement with Novartis also gives Idenix the ability to seek additional capital. Renaud wouldn't say whether the biotech would be more likely to look to private or public markets, but emphasized the company would be "opportunistic" when market conditions improve.

-Joseph Haas (j.haas@elsevier.com)

GSK Pays $34 Million Upfront To License Idenix’s Phase II HIV Candidate

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