Inhibitex Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Inhibitex (NAS: INHX) , one of many biotechnology companies involved in hepatitis C research, jumped as much as 13% earlier in the trading session before giving up almost all of its gains.

So what: Ever since Gilead Sciences (NAS: GILD) agreed to purchase Pharmasset (NAS: VRUS) last week at a hefty premium, the sector has been abuzz with more buyout speculation. Optimists got more fuel for the fire earlier in the week when Inhibitex reported positive phase 2 results for INX-189, its experimental hepatitis C drug. Today's move appears to be a carryover effect of the bullishness from previous days.

Now what: To say that I'm not a fan of Inhibitex at its current valuation north of $1.1 billion might be an understatement. The company is going to face an onslaught of competition from Gilead and Pharmasset, but also from hep C drugs that are already approved by the FDA for sale, including Merck's (NYS: MRK) Victrelis and Vertex Pharmaceuticals' (NAS: VRTX) Incivek. Then there's the fact that Inihibtex has already sold 1.9 million shares of stock into this unbelievable rally. With its leading drug candidate only in phase 2 clinical trials, there are plenty of moves left to be played in this chess game before I'd declare Inhibitex a winner. I'm so confident Inhibitex is overvalued at these levels I'm willing to bet my CAPS points on it!

Craving more input on Inhibitex? Start by adding it to your free and personalized watchlist.

At the time this article was published

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