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Phase II FV-100 Trial Progressing as Planned

On January 11, 2010, Inhibitex ([url=http://www.zacks.com/stock/quote/inhx]INHX[/url]) announced that the independent Data Safety Monitoring Board (DSMB) met, as scheduled, in early December 2009 to review the 30-day follow-up data on the first quartile of patients enrolled in the company’s ongoing phase II clinical trial of FV-100.

Based upon its review, the DSMB unanimously recommended that the trial should continue, as originally designed, without modification. Although the data is only from the first 90 patients, we view this as good news for Inhibitex and the efficacy of FV-100 relative to Valtrex.

Management anticipates that an interim analysis of the complete 30-day follow-up data on the first half (~180) of patients enrolled in the trial will be completed in the next few weeks. The interim analysis will look at the primary endpoint of the program -- duration and severity of pain over the first 30 days of follow-up.

There are four potential scenarios that could play out following this interim analysis of the first 180 (~50%) patients:

1)     The trial is stopped due to safety concerns relating to FV-100.  We believe this is a highly unlikely outcome given that the DSMB unanimously recommended that the trial should continue after an interim analysis of the first 90 (~25%) patients.

2)     The trial is stopped due to futility. We believe this is also highly unlikely given the strong pharmacokinetic profile with FV-100 demonstrated in the phase Ib multiple ascending dose program from 2008.

3)     The trial is stopped because the FV-100 cohort achieved an approximate 25% improved difference between the Valtrex cohort on the primary endpoint of reduction in herpes zoster associated pain and severity as measured by the Zoster Brief Pain Inventory (ZBPI). We believe this is unlikely given the steep hurdle rate of p<0.001 that would need to be achieved during this analysis. Management intentionally set the bar high so that the trial would be completed as originally planned, with ~360 patients enrolled.

4)     The DSMB reviews the safety and efficacy data and recommends the trial continue (blinded) as planned. We believe this is the most likely outcome.

Enrollment at ~360 patients should complete in the third quarter 2010, with top-line data to become available in the fourth quarter 2010. 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 360 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.

FV-100 a Game Changer

Inhibitex's lead development candidate, FV-100, has the potential to be a game changer for the treatment of herpes zoster, or shingles. The current standard of care, Glaxo’s Valtrex (valacyclovir), with an estimated 55% market share, is dosed at 1000mg three times a day. Valtrex has improved lesion healing and pain indication reduction over older drugs Famvir (famciclovir) and Zovirax (acyclovir), but the treatment option can still be improved upon significantly.

Inhibitex is developing FV-100, a potential once-daily dosing agent, currently in a phase II trial. The trial is designed to show FV-100 is superior to Valtrex on pain and severity reduction after 30 days -- the primary endpoint -- as well as show superiority on key secondary endpoints including: pain after 90 days, incidence of post herpetic neuralgia (PHN), mean time to lesion healing and use of concomitant pain medications.

If successful, we believe that Inhibitex’ drug has $500+ million peak sales potential worldwide. However, even with efficacy only on par with Valtrex, we still believe that FV-100 has commercial potential given the reduction in dosing (improved compliance -- especially in the elderly population) from three times daily to once daily.

Cash Position Solid

Inhibitex exited 2009 with $37.9 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, through the end of 2011. Financial guidance for 2010 is for the company to exit the year with still $14 to $15 million in cash on hand.

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