Idenix Pharmaceuticals, Inc.
) climbed more than 17% to close the trading session on Jan 28,
2014 at $8.04 per share. The jump followed the news that Idenix
would raise $106.7 million (net) through a registered direct
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In a move aimed at strengthening its balance sheet, Idenix agreed
to sell 16,420,241 shares of its common stock to a hedge fund,
the Baupost group, at $6.50 per share. Idenix said that the move
will take care of its cash related worries until the second half
The Baupost group, which owned 27% of Idenix, prior to the
transaction, will have a 35% stake in the biopharmaceutical
company following the closure of the sale expected shortly.
Idenix intends to utilize the funds to develop its struggling
pipeline which includes candidates like IDX21437 and samatasvir,
being developed to treat patients with hepatitis C virus (HCV)
infection. The lucrative market already has big players like
Gilead Sciences Inc.
) with biopharma companies such as
Bristol-Myers Squibb Company
) developing candidates targeting the space. Idenix's HCV
candidates, which are some way away from approval, will jostle
for market share in a crowded market in the event of clearance
from regulatory authorities.
Idenix also intends to make use of the funds to cover its legal
costs. We note that Idenix filed a patent infringement and
interference lawsuits in the U.S. late last year against Gilead
related to the latter's HCV treatment Sovaldi, which has
We believe that the impending 8% rise in Baupost group stake in
Idenix highlights the hedge funds' faith in the latter's
pipeline. The possibility of Idenix being ultimately acquired by
the group also cannot be ruled out.
Idenix carries a Zacks Rank #3 (Hold). A better-ranked stock in
the biopharma space is
) with a Zacks Rank #1 (Strong Buy).