Idenix Pharmaceuticals Inc. boldly joined the growing movement to reconfigure the hepatitis C virus (HCV) market by terminating its 2003 HCV development and commercialization agreement with Novartis AG.

Regaining global development and commercialization rights to its HCV candidates provides Idenix with greater flexibility to optimize the value of its pipeline, Ron Renaud, the company's president and CEO, said in a conference call early Tuesday morning.

The 2003 deal potentially was worth at least $862 million to Idenix and gave Novartis a controlling interest in the biotech. Novartis, of Basel, Switzerland, acquired 51 percent of then-privately held Idenix and paid up-front licensing rights to two hepatitis B drug candidates under development. The pharma also assumed global clinical development costs for the candidates and responsibility for regulatory filings outside the U.S., while Idenix retained responsibility for U.S. filings. (See BioWorld Today, March 27, 2003.)

The companies subsequently co-developed and co-launched the nucleoside analogue Tyzeka/Sebivo (telbivudine), which was approved by the FDA in 2006 for hepatitis B. (See BioWorld Today, Oct. 27, 2006.)

In September 2007, in part to reduce cash burn in conjunction with a corporate restructuring that eliminated 100 jobs, Idenix transferred to Novartis worldwide development, commercialization and manufacturing rights and obligations to telbivudine in exchange for royalties based on net product sales of Tyzeka/Sebivo. (See BioWorld Today, Oct. 1, 2007.)

Idenix subsequently raised $26 million in 2010, $58.9 million in April 2011 and $61.1 million in November 2011 to continue to advance its HCV pipeline. (See BioWorld Today, April 30, 2010, April 11, 2011, and Nov. 17, 2011.)

"When the Novartis collaboration was established, the original agreement gave Idenix the resources necessary to support worldwide launch of our first product," Renaud explained. "We believe now is the ideal time to restructure our collaboration," he added, characterizing Idenix as "well positioned to develop pan-genotypic all-oral direct-acting antiviral combination treatments with potential collaborators."

Idenix, of Cambridge, Mass., now calls the shots in the global development and commercialization of IDX719, an NS5A inhibitor, IDX19368, a next-generation nucleotide inhibitor "and any future drug candidates," Renaud said.

The company has filed an investigational new drug application for IDX19368 and expects the compound to join IDX184 and IDX719 in the clinic by the end of the third quarter.

The progress of IDX184 has risen and fallen like a roller coaster. In February, the FDA removed a partial clinical hold, based on a recommendation from the data safety monitoring board, after interim data from an ongoing Phase IIb study showed the drug was well tolerated with no serious adverse events. (See BioWorld Today, Feb. 11, 2011, and Nov. 17, 2011.)

IDX719 has fast-track designation from the FDA, and Idenix plans to begin a Phase III study of the compound in combination with IDX184 later this year.

If Idenix commercializes any of the HCV candidates, the biotech will pay Novartis a royalty linked to the individual drug and based on worldwide product sales, unless the drug is used in combination with drugs from Novartis.

Novartis retained a nonexclusive option to conduct clinical trials evaluating any combination of drugs from Idenix's HCV pipeline in combination with one of its own, provided that Novartis candidates meet certain safety criteria. For example, a Novartis compound cannot be subject to any type of clinical hold, and the pharma must agree to a drug-drug interaction study of any proposed HCV combination, Renaud said.

The pharma's ability to initiate combination trials expires on the seven-year anniversary of the termination agreement. The companies agreed to keep their options open on negotiating future development and commercialization deals for potential combination drugs.

Idenix will no longer receive royalty or milestone payments from Novartis based upon worldwide product sales of Tyzeka/Sebivo in hepatitis B, which have averaged $1 million per quarter, according to Renaud. However, the pharma remains committed to reimburse Idenix for payments to third parties in connection with intellectual property related to Tyzeka/Sebivo.

Provided Novartis continues to hold at least 15 percent of the shares in Idenix, the pharma will have the right to designate one member on the biotech's board, down from two members. Novartis relinquished other corporate governance rights, including approval rights over the authorization or issuance of additional shares of stock as well as significant acquisitions and dispositions.

Currently, Novartis holds a 31 percent equity position in Idenix, and the pharma has the right to participate in future public or private offerings, Renaud said.

After the market's close Tuesday, Idenix disclosed it filed a shelf registration statement with the SEC seeking an underwritten registered public offering of $150 million of common stock to fund R&D expenses related to combination Phase IIb trials of IDX184 with IDX719, proof-of-concept and Phase IIa trials with IDX19368 in combination with ribavirin and proof-of-concept trials of one or more nucleoside/nucleotide drug candidates.

Investors appeared somewhat jittery on Tuesday's news. Shares of Idenix (NASDAQ:IDIX) lost 89 cents, or 8 percent, to close at $10.13.

The unease is likely due to concerns about whether, or how well, Idenix can maintain its footing in an increasingly crowded HCV space that is moving rapidly toward an oral, interferon-free treatment regimen. (See BioWorld Insight, July 16, 2012.)

Gilead Sciences Inc. is the clear frontrunner in those efforts. The Foster City, Calif.-based firm confirmed last week during its second-quarter earnings call that it plans to go it alone on Phase III trials of nucleotide NS5B inhibitor GS-7977, acquired in the $11 billion buyout of Pharmasset Inc., in combination with its NS5A inhibitor GS-5885 (See BioWorld Today, July 30, 2012.)

However, Idenix could provide a natural partner for a biotech such as Vertex Pharmaceuticals Inc. in seeking to combine a nuc with an NS5A, suggested RBC Capital Markets analyst Michael Yee.

Renaud alluded to that possibility. "Our priorities have not changed," he said. "What this changed collaboration affords us is the flexibility to have discussions that we couldn't have otherwise."