November 9, 2011
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||Inhibitex (Nasdaq: INHX )
|Stock Price at Underperform Recommendation:
||Vertex Pharmaceuticals (Nasdaq: VRTX )
Gilead Sciences (Nasdaq: GILD )
Sources: S&P Capital IQ, Yahoo! Finance, and Motley Fool CAPS.
This week's pitch:
I'm a huge proponent of drug companies and success with new drugs. I wish Inhibitex Inc all the best in [its] development, approval and successful launch of a new Hep C drug. My issue is short term surrounding the 115% one day share price POP this past Friday, (11/4/2011). Positive results on safety and efficiency are welcoming news on the LONG ROAD to the FDA hearings and [judgment]. The questions of how much work is still needed, the risk, and the timeline sometimes escapes investors jumping on the biopharm bandwagon. The other question becomes competition, pricing, and the ability to launch the product or secure a buyout from a bigger firm. Dendreon (Nasdaq: DNDN ) , Savient Pharmaceuticals (Nasdaq: SVNT ) and Human Genome Sciences (Nasdaq: HGSI ) are recent examples that even if you successfully navigate the crooked [winding] road, the money is not waiting to be handed to you.
There are too many steps left in the [winding] road where results could temper the excitement and I expect a pullback.
Inhibitex has a lower market cap than competition Pharmasset (Nasdaq: VRUS ) , but that doesn't mean either will be approved or that both can share the market demand. Pharmasset is also sitting on about 4X more cash. Either way, it's not about comparing the two against each other, it's about Inhibitex Inc and its own [winding] road.
Again, all the best to them. No short here, just a short term CAPS play that there will be a cooling off play as the infectious outlook moves back into another waiting game.
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