Smooth Sailing For FV-100

It’s been smooth sailing so far for Inhibitex (INHX) in the phase II program on FV-100.  Since initiated in May 2009, the independent data safety monitoring board (DSMB) responsible for reviewing safety data from the trial has met three times to review 30-day follow-up safety data from the first, second and third quartiles. After each time, most recently as of July 22, 2010, the DSMB recommended the trial continue as planned.

We expect that enrollment at 350 patients should complete in the third quarter 2010, with top-line data to become available in the fourth quarter 2010. Back in April 2010, an independent statistician conducted a prospectively described interim analysis of the primary efficacy endpoint on the first half of the patients enrolled in the trial and recommended that the trial continue to completion as designed.

As a reminder, the phase II program, initiated in May 2009, is a well-controlled, double-blind, clinical trial evaluating FV-100 against an active control of Glaxo’s Valtrex (valacyclovir). Roughly 350 patients, aged 50 years and older, will be randomized to one of three treatment arms: 200 mg FV-100 administered once daily; 400 mg FV-100 administered once daily; and 1,000 mg valacyclovir administered three times per day. The primary endpoint of the trial is a reduction in herpes zoster associated pain and severity as measured by the Zoster Brief Pain Inventory (ZBPI) scale after 30 days of treatment.

The trial is 80% powered to detect an approximate 25% difference between the FV-100 and Valtrex cohorts. In addition to the primary endpoint, Inhibitex will also report: 1) reduction in ZBPI after 90 days, 2) incidence of post herpetic neuralgia (PHN), 3) mean time to lesion healing, and 4) use of concomitant pain medications. We are optimistic on the outcome of this trial and believe it presents management with a significant partnering opportunity in 2011.

The next step for management following completion of the phase II trial would be to schedule an End-of-Phase II meeting with the U.S. FDA in 2011. We expect that Inhibitex will look to push FV-100 into a pivotal phase III program shortly thereafter. Our best guess is that the phase III program will include two concurrent programs, with a total enrollment of around 1000 patients, and take an estimated two years to complete.

Therefore, if all goes well, we could be looking at a new drug application (NDA) on FV-100 around 2014, with U.S. FDA action in 2015. We note that management has mentioned being in discussion with potential partners on FV-100, and we fully expect a deal in 2011. However, at this point it remains to be seen whether or not a deal is signed prior to the initiation of a phase III program. We note the longer management waits to partner FV-100, potentially the better economics management can negotiate for shareholders.

INX-189 Phase I Underway

Management is progressing in a phase Ia single ascending dose study to evaluate the safety and pharmacokinetics of INX-189, the company’s nucleoside polymerase inhibitor under development for the treatment of chronic hepatitis C caused by the hepatitis C virus (HCV). The phase Ia trial will employ up to six escalating doses of INX-189, ranging from 3 mg up to 200 mg. Each dose cohort will include eight subjects, six of which will receive INX-189 and two that will receive placebo, for a total of 48 subjects. There will also be a food-effect study in one of the dose cohorts. We expect that this program will complete in the third quarter 2010.

Pending a successful completion of the above phase Ia program, we anticipate that management will seek to initiate a phase Ib multiple ascending dose, three day monotherapy study in genotype 1 naive HCV infected patients shortly after the top-line data has been released from the phase Ia program. On the second quarter conference call management noted that this program will probably study 4 or 5 doses, with 10 patients in each cohort, for a total of 50 to 60 subjects.

This trial should begin early fourth quarter of 2010, with top-line data from one or more cohorts potentially available before the end of the year. Full data from the phase Ib should become available in the first quarter of 2011.

Inhibitex has also initiated 28 day animal toxicology studies of INX-189 and plans to conduct longer-term toxicology studies, beginning shortly. Assuming successful completion of these chronic toxicology studies and favorable data from both the phase Ia and Ib trial, management should be in position to advance INX-189 in a phase II, 12+ week clinical trial in combination with standard of care and other complementary direct antiviral compounds in 2011. We expect that management will partner the candidate for the phase II program in 2011 assuming safety and proof-of-concept have been effectively demonstrated.

Preclinical data suggests that INX-189 has unrivaled potency in genotype 1 replicon assay. We believe that INX-189 is the most potent nucleotide polymerase inhibitor (“protide”) in clinical development. The preclinical profile of INX-189 suggests: rapid onset of anti-viral activity, a long half-life that could allow for once daily dosing, low toxicity, and a potential synergistic mechanism with ribavirin.

We believe this protide approach possesses several pharmacological advantages over earlier, first generation approaches that use the parent nucleoside (non-phosphorylated) alone. These include a significant increase in antiviral activity, higher concentrations of the anti-virally active triphosphate in liver, and potentially less toxicity due to reduced systemic exposure. This is certainly something to be excited about.

Cash Position OK

Inhibitex exited the second quarter 2010 with $29.3 million in cash and investments. This should be enough to fund operations, including completing the ongoing phase II FV-100 program and completing a phase Ia and phase Ib program on INX-189 in 2011.

We estimate that the company will still have roughly $18 million in cash on hand at the end of the year. Therefore, Inhibitex may be in need of cash at some point in 2011. However, with the potential to partner both FV-100 and INX-189, we believe there is significant opportunity to raise non-dilutive cash in 2011. If management does choose to raise cash through a secondary offering, we do not expect anything before the release of data on FV-100, and we do not expect it to be greater than a 20% dilution.
 
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