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 Inhibitex (Nasdaq: INHX ) , one of many biotechnology companies involved in hepatitis C research, jumped as much as 13% earlier in the trading session before giving up almost all of its gains.
So what: Ever since Gilead Sciences (Nasdaq: GILD ) agreed to purchase Pharmasset (Nasdaq: VRUS ) last week at a hefty premium, the sector has been abuzz with more buyout speculation. Optimists got more fuel for the fire earlier in the week when Inhibitex reported positive phase 2 results for INX-189, its experimental hepatitis C drug. Today's move appears to be a carryover effect of the bullishness from previous days.
Now what: To say that I'm not a fan of Inhibitex at its current valuation north of $1.1 billion might be an understatement. The company is going to face an onslaught of competition from Gilead and Pharmasset, but also from hep C drugs that are already approved by the FDA for sale, including Merck's (NYSE: MRK ) Victrelis and Vertex Pharmaceuticals' (Nasdaq: VRTX ) Incivek. Then there's the fact that Inihibtex has already sold 1.9 million shares of stock into this unbelievable rally. With its leading drug candidate only in phase 2 clinical trials, there are plenty of moves left to be played in this chess game before I'd declare Inhibitex a winner. I'm so confident Inhibitex is overvalued at these levels I'm willing to bet my CAPS points on it!
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