Monday, January 9, 2012

Idenix Pharma (IDIX) - Multiple Hepatitis C Cures in the Works?

IDIX is trading $9.55, up 35.5% with IV30™ up 24.6%. The LIVEVOL® Pro Summary is below.


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Idenix Pharmaceuticals, Inc. (Idenix) is a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of human viral diseases with operations in the United States and Europe. The Company’s research and development focus is on the treatment of hepatitis C virus (HCV).

Today is a big day for potential Hepatitis C cures. First, IDIX released some good preliminary results, sending the stock soaring. Here's that news snippet:

Biopharmaceutical company Idenix Pharmaceuticals Inc. reported positive interim data from a clinical trial of its lead hepatitis C drug candidate and said it is advancing its hepatitis C development pipeline.

Source: via Yahoo!Finance Idenix Reports Positive Interim Data for Hepatitis C Drug, by
Ben Fox Rubin.

Perhaps the bigger news wrt this disease comes in the form of a takeover:

The big drug maker Bristol-Myers Squibb (BMY) is shaking up the race toward a new hepatitis C treatment, entering a field that’s already crowded with several top players. In a weekend announcement, Bristol-Myers said it will pay $2.5 billion to take over Inhibitex (INHX), a development stage drug company.

The $26 a share cash offer represents a 163% premium over Inhibitex’s closing stock price on Friday.

Source: Minyanville via Yahoo! Finance: Bristol-Myers Enters Hepatitis Drug Race with $2.5 Billion Takeover of Inhibitex, written by Brett Chase.

So there you go. Company specific news and industry wide news as well. Let's start with the Charts Tab (6 months) below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20 - blue vs HV180 - pink).

On the stock side, we can see the pop today pushing IDIX to a multi-year high. On the vol side, we can see that the implied tends to trade above both the short-term and long-term historical realized measures. In English, the option market tends to reflect elevated risk relative the actual stock movement. With the stock moving nearly 40% today and the industry at large, that kinda "makes sense."

Let's turn to the Skew Tab.

It's interesting how bid the Jan upside calls are relative to Feb and Apr. The crazy lookin' upside skew in Apr is simply a reflection of the $0.05 x $5.00 market in the Apr 17.5 and 20 strike calls -- i.e. it means nothing.

Let's turn to the Options Tab.

The order flow today has centered around the Jan 10 calls (see the Options Tab, above). At least 10,000 of those look like sales on the splits (@ $0.525). It's quite possible those traded tied to stock as the volume today is over 10 million shares on a daily average of 907,200.

It's interesting to see where the treatments got for this disease and if only one firm "survives."  From a strictly humanitarian standpoint, let's hope that both firms have compelling, effective and safe solutions to an otherwise deadly disease.

This is trade analysis, not a recommendation.

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