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 biotechnology company Idenix Pharmaceuticals (NAS: IDIX) dipped as much as 15% earlier in the trading session following a mixed bag of news from the FDA and rival Gilead Sciences (NAS: GILD)
So what: I'm going to assume you'd like the good news first. The FDA today lifted its partial clinical hold on IDX-184, Idenix's lead hepatitis-C drug candidate. Lifting the hold allows Idenix to once again move on with its clinical studies. On the downside, Gilead Sciences released new data last night that GS-7977, its own hepatitis-C drug, when combined with ribavirin, completely eliminated the hep-C virus in genotype 1 hep-C patients after four weeks.
Now what: The logic here is pretty simple. If the combination of GS-7977 and ribavirin are all that's needed, then there's little to no room for Idenix's drug if and when it hits the market. I've vocally stated my distaste for the recent merger activity in this sector with Gilead ponying up $11 billion for Pharmasset and Bristol-Myers Squibb (NYS: BMY) paying $2.5 billion for Inhibitex (NAS: INHX) despite the fact that its lead drug candidate, INX-189, has only cleared phase 1 clinical trials. Idenix has a lot of froth built into its stock price in anticipation that another large pharmaceutical company will desperately make a bid for it. Crossing your fingers and hoping for a buyout is a poor investment thesis that you simply won't find me taking part in.
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At the time thisarticle was published Fool contributorSean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.Motley Fool newsletter serviceshave recommended buying shares of Gilead Sciences. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.
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