Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Idenix Pharmaceuticals (NASDAQ:IDIX), a clinical-stage biopharmaceutical company focused on developing therapies to help treat human viral disease, advanced as much as 18% after announcing that it had raised $106.7 million through a registered direct offering.
So what: According to Idenix's press release, the Baupost Group has agreed to purchase $106.7 million worth of Idenix shares (16,420,241 shares) at a price of $6.50 per share, a slight discount to yesterday's closing value. Upon completion of the offering, Baupost, which previously owned 27% of Idenix's outstanding shares, will own 35% of the company's outstanding shares. Idenix notes that this added cash should sustain it through at least the second-half of 2015.
Now what: Clearly, there are two factors at work here. First, a single shareholder with a 35% stake in the company can lead to the interpretation that a takeover is a possibility. Given Idenix's recent pipeline struggles and ongoing losses, it wouldn't be out of the question. The other catalyst at work here is the fact that $106.7 million in fresh capital will now go toward helping Idenix develop its line of hepatitis C experimental drugs. Unfortunately, I feel Idenix might be way too late to the hepatitis C party if and when it's able to get a hepatitis C drug into late-stage trials. Let's not forget that Idenix has scrapped three of its lead compounds since 2010 and has another currently on clinical hold. In other words, just because Idenix has a fresh cash infusion doesn't mean a darn thing will change. Until Idenix delivers positive late-stage results, I'd suggest keeping your distance.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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