The Baupost Group and Idenix Pharmaceuticals
Seth Klarman’s Baupost Group started new positions in Fidelity National Financial Inc. (FNF), Kindred Biosciences Inc. (KIN), and Alon USA Partners LP (ALDW) and increased its positions in Idenix Pharmaceuticals (IDIX) and PBF Energy Inc. (PBF).
Idenix Pharmaceuticals (IDIX) accounted for a 6.25% position in Baupost’s fourth quarter portfolio. The hedge fund increased its stock holdings in Idenix last month from 36,910,868 shares at the end of December 2013. The fund disclosed ownership of 53,331,109 shares, or around a 35% stake in Idenix, in a 13D filing.
Idenix is a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of human viral diseases. Idenix’s current focus is the treatment of patients with hepatitis C infection.
At the end of January, Idenix announced that it has entered into a definitive agreement with certain entities managed by The Baupost Group for the sale of 16,420,241 shares of its common stock. Baupost agreed to purchase the shares of common stock at a price of $6.50 per share, resulting in net proceeds to Idenix, after deducting estimated offering expenses of approximately $106.7 million. Baupost, which at that time owned approximately 27% of Idenix’s shares, will beneficially own approximately 35% of the company’s outstanding common stock upon completion of the offering.
Idenix said the proceeds of the offering will be used for general corporate purposes, including clinical trial costs and ongoing and future patent litigation expenses. Baupost is entitled to observer rights with respect to meetings of Idenix’s board.
In December, Idenix said it has filed two lawsuits against Gilead Sciences, Inc. (GILD), alleging that Gilead infringes two U.S. patents co-owned by Idenix that cover methods of treating the hepatitis C virus using 2′-methyl nucleosides and a separate patent that covers methods of treating the hepatitis C virus using 2′-methyl-2′-fluoro nucleosides. The patent battle surrounds Gilead Sciences’s hepatitis C drug sofosbuvir, which will be marketed as Sovaldi, and which received approval from the FDA. Idenix, Johnson & Johnson (JNJ), AbbVie Inc. (ABBV), and Gilead Sciences Inc. (GILD) are among drug makers developing treatments for hepatitis C virus (or HCV). Last year, Idenix shares fell after Johnson & Johnson (JNJ) subsidiary Janssen Pharmaceuticals, Inc., opted to acquire rights to develop and commercialize hepatitis C drug GSK2336805 from rival drugmaker GlaxoSmithKline (GSK).
For the fourth quarter ended December 31, 2013, Idenix reported total revenues of $0.5 million, compared to total revenues of $0.3 million in the fourth quarter of 2012. Net loss narrowed to $28.7 million (or $0.21 per basic and diluted share) from a net loss of $22.7 million (or $0.17 per basic and diluted share) for 4Q 2012. The change in net loss was mainly due to reduced revenue in 2013 as a result of the recognition of $36.1 million of deferred revenue in the first quarter of 2012 related to the termination of the license agreement with ViiV Healthcare Company and the recognition of $33.1 million of collaboration revenue in 2012 primarily related to the termination and revised relationship agreement executed in July 2012 with Novartis.
Management said that in the fourth quarter of 2013 and early part of 2014, Idenix made significant progress across all aspects of the business, the most important of which was to advance the nucleotide prodrug candidate IDX21437 into clinical trials, which will support Idenix’s ultimate goal of developing an all-oral pan-genotypic combination regimen for HCV. With the advancement of its two HCV clinical programs, the company remains on track to initiate an Idenix-sponsored combination clinical trial of samatasvir and IDX21437 by mid-2014.