12:00 AM
Jan 16, 2012
 |  BioCentury  |  Strategy

Going viral

How Inhibitex switch to antivirals turned penny stock into $2.5B takeout by BMS

Inhibitex Inc.'s decision to swap antibacterials for antivirals five years ago transformed the company from an invisible penny stock into a $2.5 billion takeout by Bristol-Myers Squibb Co. as the pharma looks to compete in the all-oral HCV cocktail arena.

Inhibitex completed its $38.7 million IPO in June 2004 with a post-money valuation of $122.5 million based largely on expectations for its portfolio of antibodies against microbial surface components recognizing adhesive matrix molecules (MSCRAMM).

The company's lead program, Veronate, was a polyclonal antibody against MSCRAMM that began a Phase III trial that year to prevent hospital-associated infections in very low birth weight infants.

When Veronate failed to show an improvement on the study's primary and secondary endpoints, Inhibitex shares fell 66% to $2.47 on April 3, 2006, leaving the company with a market cap of $74.7 million.

Starting over

By the end of 2006, Inhibitex had $61.4 million in cash and CFO Russell Plumb had taken over from William Johnston as president and CEO. Plumb shelved Veronate and went out in search of antiviral assets.

On Inhibitex's 4Q06 earnings call, he said the move into antivirals offered the company a chance to find "earlier stage opportunities that we feel can create significant value over a reasonable period of time."

Inhibitex announced three deals in 2007, each of which added a preclinical antiviral program.

First, Inhibitex acquired FermaVir Pharmaceuticals Inc. for $19 million in stock, gaining a preclinical bicyclic nucleoside analog to treat Varicella zoster virus (VZV) infection. Next, Inhibitex exclusively licensed a preclinical HIV integrase inhibitor from the University of Georgia Research Foundation...

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