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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from to
 Commission File No. 0-50772
 INHIBITEX, INC.
  Delaware
    
    74-2708737(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)9005 Westside ParkwayAlpharetta, Georgia
    
    30009(Address of principal executive offices)
    
    (Zip Code)
 (678) 746-1100    Not Applicable
 þ o
 Yes o No o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




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TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 4T. Controls and Procedures
    
    
    15PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    16Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 6. Exhibits
    
    
    19Signatures
    
    
    20Exhibit IndexEX-31.1 SECTION 302 CERTIFICATION OF THE CEO & CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO & CFO
   2




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PART I
FINANCIAL INFORMATION
 INHIBITEX, INC.
 
 CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    8,486,293
    
    
    $
    11,507,137Short-term investments
    
    
    20,702,172
    
    
    
    21,634,880Prepaid expenses and other current assets
    
    
    557,731
    
    
    
    621,797Accounts receivable
    
    
    157,524
    
    
    
    108,558Total current assets
    
    
    29,903,720
    
    
    
    33,872,372Property and equipment, net
    
    
    2,137,074
    
    
    
    2,328,707Other assets
    
    
    32,533
    
    
    
    31,876Total assets
    
    $
    32,073,327
    
    
    $
    36,232,955LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,705,638
    
    
    $
    1,276,215Accrued expenses
    
    
    1,030,641
    
    
    
    1,001,047Current portion of notes payable
    
    
    312,500
    
    
    
    312,500Current portion of capital lease obligations
    
    
    190,718
    
    
    
    254,291Current portion of deferred revenue
    
    
    191,667
    
    
    
    441,667Other current liabilities
    
    
    204,031
    
    
    
    224,922Total current liabilities
    
    
    3,635,195
    
    
    
    3,510,642Long-term liabilities:Notes payable, net of current portion
    
    
    312,500
    
    
    
    390,625Capital lease obligations, net of current portion
    
    
    338,237
    
    
    
    387,892Deferred revenue, net of current portion
    
    
    200,000
    
    
    
    237,500Other liabilities, net of current portion
    
    
    1,238,376
    
    
    
    1,279,994Total long-term liabilities
    
    
    2,089,113
    
    
    
    2,296,011Total liabilities
    
    
    5,724,308
    
    
    
    5,806,653Stockholders equity:Preferred stock, $.001 par value; 5,000,000
shares authorized at March 31, 2009 and
December 31, 2008; none issued and outstanding
    
    
    
    
    
    
    Common stock, $.001 par value; 75,000,000 shares
authorized at March 31, 2009 and December 31,
2008; 43,509,860 and 43,380,570 shares issued
and outstanding at March 31, 2009 and
December 31, 2008, respectively
    
    
    43,510
    
    
    
    43,381Warrants
    
    
    13,742,231
    
    
    
    13,742,630Accumulated other comprehensive income
    
    
    54,689
    
    
    
    111,450Additional paid-in capital
    
    
    244,000,488
    
    
    
    243,825,057Accumulated deficit
    
    
    (231,491,899
    )
    
    
    (227,296,216
    )Total stockholders equity
    
    
    26,349,019
    
    
    
    30,426,302Total liabilities and stockholders equity
    
    $
    32,073,327
    
    
    $
    36,232,955
   3




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INHIBITEX, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 Three Months EndedMarch 31,2009
    
    
    2008Revenue:License fees and milestones
    
    $
    37,500
    
    
    $
    412,500Collaborative research and development
    
    
    250,000
    
    
    
    375,000Total revenue
    
    
    287,500
    
    
    
    787,500Operating expense:Research and development
    
    
    3,497,060
    
    
    
    3,406,047General and administrative
    
    
    1,071,490
    
    
    
    1,341,568Total operating expense
    
    
    4,568,550
    
    
    
    4,747,615Loss from operations
    
    
    (4,281,050
    )
    
    
    (3,960,115
    )Other income (loss), net
    
    
    (8,151
    )
    
    
    11,426Interest income, net
    
    
    93,518
    
    
    
    500,890Net loss
    
    $
    (4,195,683
    )
    
    $
    (3,447,799
    )Basic and diluted net loss per share
    
    $
    (0.10
    )
    
    $
    (0.08
    )Weighted average shares used to compute basic and diluted net loss per share
    
    
    43,427,976
    
    
    
    42,791,069
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INHIBITEX, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three Months EndedMarch 31,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (4,195,683
    )
    
    $
    (3,447,799
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    191,633
    
    
    
    211,359Share-based compensation
    
    
    178,374
    
    
    
    460,482Gain on sale of equipment
    
    
    
    
    
    
    (15,000
    )Amortization of investment premium or discount
    
    
    (25,442
    )
    
    
    (267,284
    )Changes in operating assets and liabilities:Prepaid expenses and other assets
    
    
    63,409
    
    
    
    82,217Accounts receivable
    
    
    (48,966
    )
    
    
    (179,061
    )Accounts payable and other liabilities
    
    
    366,914
    
    
    
    597,764Accrued expenses
    
    
    29,594
    
    
    
    (1,852,385
    )Deferred revenue
    
    
    (287,500
    )
    
    
    837,500Net cash used in operating activities
    
    
    (3,727,667
    )
    
    
    (3,572,207
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    
    
    
    
    (380,826
    )Proceeds from sale of property and equipment
    
    
    
    
    
    
    15,000Purchases of investments
    
    
    (7,648,611
    )
    
    
    (17,762,099
    )Proceeds from maturities and sales of investments
    
    
    8,550,000
    
    
    
    19,000,077Cash paid in connection with acquisition
    
    
    
    
    
    
    (77,606
    )Net cash provided by investing activities
    
    
    901,389
    
    
    
    794,546Cash flows from financing activities:Payments on promissory notes and capital leases
    
    
    (191,353
    )
    
    
    (270,348
    )Repurchase of common stock
    
    
    (3,213
    )
    
    
    Proceeds from the issuance of common stock, net of issuance costs
    
    
    
    
    
    
    4,283Net cash used in financing activities
    
    
    (194,566
    )
    
    
    (266,065
    )Decrease in cash and cash equivalents
    
    
    (3,020,844
    )
    
    
    (3,043,726
    )Cash and cash equivalents at beginning of period
    
    
    11,507,137
    
    
    
    14,178,143Cash and cash equivalents at end of period
    
    $
    8,486,293
    
    
    $
    11,134,417Supplemental cash flow information:Interest paid
    
    $
    19,655
    
    
    $
    17,791
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INHIBITEX, INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Operations
     2. Summary of Significant Accounting Policies
  Recent Accounting Pronouncements. Fair Value
Measurements Application of FASB Statement No. 157 to FASB
Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for
Purposes of Lease Classification or Measurement under Statement 13 Partial Deferral of the Effective Date of Statement 157
 Determining Fair Value of a Financial Asset in a
Market That is Not Active
 Determining Whether a Market Is Not Active and a
Transaction Is Not Distressed
  6




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Recognition and Presentation of
Other-Than-Temporary Impairments
 Interim Disclosures About Fair Value of
Financial Instruments
 3. Net Loss Per Share
 Earnings Per Share Earnings Per Share
  Three Months EndedMarch 31,2009
    
    
    2008Net loss
    
    $
    (4,195,683
    )
    
    $
    (3,447,799
    )Weighted average common shares outstanding used to
compute basic earnings per share
    
    
    43,427,976
    
    
    
    42,791,069Dilutive effect of:Stock options and restricted stock
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    Shares used to compute diluted earnings per share
    
    
    43,427,976
    
    
    
    42,791,069Basic net loss per share
    
    $
    (0.10
    )
    
    $
    (0.08
    )Diluted net loss per share
    
    $
    (0.10
    )
    
    $
    (0.08
    )Number of antidilutive stock options and restricted stock excluded from computation
    
    
    4,776,564
    
    
    
    5,849,226Number of antidilutive warrants excluded from computation
    
    
    8,022,410
    
    
    
    8,535,097
  7




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4. Share-Based Award Plans
  Stock Options
  Three Months EndedMarch 31,2009
    
    
    2008Weighted average risk-free interest rate
    
    
    1.87
    %
    
    
    2.64
    %Dividend yield
    
    
    
    
    
    
    Expected weighted average volatility
    
    
    .69
    
    
    
    .68Expected weighted average life of options (years)
    
    
    4.0
    
    
    
    4.0Weighted average fair value of options granted
    
    $
    0.17
    
    
    $
    0.45
  Weighted Average
    
    
    Weighted-Average
    
    
    Aggregate IntrinsicNumber of
    
    
    Exercise Price
    
    
    Remaining Contractual
    
    
    ValueStock Options
    
    
    Per Option
    
    
    Term
    
    
    ($000)Balance at
December 31,
2008
    
    
    4,820,459
    
    
    $
    2.33Granted
    
    
    70,500
    
    
    
    0.32Exercised
    
    
    Forfeited or expired
    
    
    (114,395
    )
    
    
    3.72Balance at March 31,
2009
    
    
    4,776,564
    
    
    $
    2.27
    
    
    
    5.90
    
    
    $
    0
   8




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5. Comprehensive Loss
  Three Months EndedMarch 31,2009
    
    
    2008Net loss
    
    $
    (4,195,683
    )
    
    $
    (3,447,799
    )Change in net unrealized gains (losses) on
investments
    
    
    (56,761
    )
    
    
    49,708Comprehensive loss
    
    $
    (4,252,444
    )
    
    $
    (3,398,091
    )
 6. Fair Value Measurements
  Level 1
    
    Quoted prices in active markets for identical assets or liabilities.Level 2
    
    Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities.Level 3
    
    Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities.
  Quoted prices inactive markets for
    
    
    Significant other
    
    
    Significantidentical assets
    
    
    observable inputs
    
    
    unobservable inputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash equivalents
    
    $
    6,654,726
    
    
    $
    6,154,814
    
    
    $
    499,912
    
    
    $
    Short-term investments available-for-sale
    
    
    20,702,172
    
    
    
    251,905
    
    
    
    20,450,267
    
    
    
    Total
    
    $
    27,356,898
    
    
    $
    6,406,719
    
    
    $
    20,950,179
    
    
    $
    
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATIONS
 This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause actual
results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. In some cases,
you can identify forward-looking statements by terms such as may, will, should, could,
would, expect, plan, intend, anticipate, believe, estimate, project, predict,
forecast, potential, likely or possible, as well as the negative of such expressions, and
similar expressions intended to identify forward-looking statements. These forward-looking
statements include, without limitation, statements relating to:
 
    
    The anticipated completion of a FV-100 Phase II trial in shingles patients around the middle of next year;
    
    the anticipated amount of patients to enroll in the FV-100 Phase II trial;
    
    our plans and the length of time it may take to complete IND-enabling studies for our lead compound, INX-189
from our HCV polymerase inhibitor program in the first half of next year;
    
    the number of months that our current cash, cash equivalents and short-term investments will allow us to operate;
    
    our future financing requirements, the factors that may influence the timing and amount of these requirements,
and our ability to fund them;
    
    potential future revenue from collaborative research agreements, partnerships, license agreements, product
related revenue or materials transfer agreements;
    
    our product candidates may have the potential to address a number of current therapeutic limitations, such as
inadequate potency, diminishing efficacy due to the emergence of drug-resistant viruses, toxic or adverse side
effects, complex dosing schedules, and inconvenient routes of administration and other unmet needs in their
intended indications;
    
    and anticipated future and increased net losses from operations.
 These statements reflect our current views with respect to future events and are based on
assumptions and subject to risks and uncertainties including, without limitation: Wyeth not
terminating our license and collaborative research agreements; our maintaining sufficient
resources, including executive management and key employees; our ability to successfully develop
current and future product candidates either in collaboration with a partner or independently and
through the regulatory process; our ongoing or future preclinical studies or clinical trials not
demonstrating an appropriate safety and/or efficacy profile of our product candidates; our ability
to secure and use third-party clinical and preclinical research and data management organizations
and manufacturers not fulfilling their contractual obligations or otherwise performing
satisfactorily in the future; manufacturing and maintaining sufficient quantities of preclinical
and clinical trial material on hand to complete our preclinical studies or clinical trials on a
timely basis; failure to obtain regulatory approval to commence or continue our clinical trials or
to market our product candidates; our ability to protect and maintain our proprietary intellectual
property rights from unauthorized use by others or not infringe on the intellectual property rights
of others; our collaborators failing to fulfill their obligations under our agreements with them in
the future; our ability to attract suitable organizations to collaborate on the development and
commercialization of our product candidates; the condition of the financial equity and debt markets
and our ability to raise sufficient funding in such markets; our ability to manage our current cash
reserves as planned; changes in general economic business or competitive conditions; and other
statements contained elsewhere in this Quarterly Report on Form 10-Q and risk factors described in
or referred to in greater detail in the Risk Factors section of Form 10-K for the year ended
December 31, 2008. There may be events in the future that we are unable to predict accurately, or
over which we have no control. You should read this Form 10-Q and the documents that we reference
herein and have been filed or incorporated by reference as exhibits completely and with the
understanding that our actual future results may be materially different from what we expect. Our
business, financial condition, results of operations, and prospects may change. We may not update
these forward-looking statements, even though our situation may change in the future, unless we
have obligations under the federal securities laws to update and disclose material developments
related to previously disclosed information. We qualify all of the information presented in this
Form 10-Q, and particularly our forward-looking statements, by these cautionary statements.
 Inhibitex ® , MSCRAMM ® and Aurexis ® are registered trademarks of
Inhibitex, Inc. MSCRAMM is an acronym for Microbial Surface Components Recognizing Adhesive Matrix Molecules.
 The following discussion should be read in conjunction with the financial statements and the notes
thereto included in Item 1 of this Quarterly Report on Form 10-Q .
  10




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Overview
  ®
   Recent Developments
 FV-100  
 nd
 HCV Nucleoside Polymerase Inhibitors nd
  11




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NASDAQ Listing Transfer 
 Critical Accounting Policies
   
    
    Revenue Recognition
    
    Accrued Expenses
    
    Share-Based Compensation
  Fair Value
Measurements and related FASB FSPs 157-1 through 157-3
 Results of Operations
 Three Months Ended March 31, 2009 and 2008
 Summary.
 Revenue.
 Research and Development Expense.
  12




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March 31,2009
    
    
    2008(In millions)Clinical, preclinical and manufacturing-related expenses
    
    $
    1.5
    
    
    $
    1.2Salaries, benefits and share-based compensation expense
    
    
    0.9
    
    
    
    1.1License fees, patent-related legal fees and other expenses
    
    
    0.6
    
    
    
    0.6Depreciation and facility related expenses
    
    
    0.5
    
    
    
    0.5Total research and development expense
    
    $
    3.5
    
    
    $
    3.4
 General and Administrative Expense.
  March 31,2009
    
    
    2008(In millions)Professional and legal fees
    
    $
    0.3
    
    
    $
    0.3Salaries, benefits and share-based compensation expense
    
    
    0.5
    
    
    
    0.7Other expenses
    
    
    0.3
    
    
    
    0.3Total general and administrative expense
    
    $
    1.1
    
    
    $
    1.3
 Interest Income, net .
 Liquidity and Capital Resources
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
    
    any changes in our strategy in the future;
    
    our development plans for our product candidates;
    
    the variability, timing and costs associated with conducting clinical trials, the rate of enrollment in
such clinical trials and the results of these clinical trials;
    
    the terms and timing of any collaborative, licensing and other arrangements that we may establish;
    
    the variability, timing and costs associated with conducting preclinical studies;
    
    the cost of manufacturing preclinical study and clinical trial materials for our product candidates;
    
    the cost to obtain and the timing of regulatory approvals required to advance the development of our
product candidates;
    
    the number of product candidates we may advance into clinical development;
    
    future payments we may receive or make under existing or future license or collaboration agreements if any;
    
    the cost to maintain a corporate infrastructure to support being a publicly-traded company; and
    
    the cost of filing, prosecuting, and enforcing patent and other intellectual property claims.
    14




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ITEM 4T. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   15




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PART II
OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
 You should carefully consider the following discussion of risks, together with the other
information contained in this Form 10-Q . The occurrence of any of the following risks could
materially harm our business, our ability to continue to operate our business, our financial
condition, or our ability to raise additional capital in the future or ever become profitable. In
that event, the market price of our common stock could decline and you could lose part or all of
your investment. The Risk Factors included in the Companys Annual Report on Form 10-K for the year
ended December 31, 2008 have not materially changed, except as set forth below.
 Risks Relating to our Development of our Product Candidates
 All of our product candidates are in the early stages of development and remain subject to numerous
clinical trials, preclinical studies and regulatory approval and the risk inherent in these
activities. If we are unable to successfully develop our product candidates, our business will be
materially harmed.
  
 
    
    offer therapeutic or other benefits over existing, comparable drugs;
    
    be proven safe and effective in clinical trials;
    
    have the desired effects or may include undesirable or unexpected effects;
    
    meet applicable regulatory standards;
    
    be capable of being produced in commercial quantities at acceptable costs; or
    
    be successfully commercialized by us or by collaborators.
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In order to develop our product candidates and support our operations beyond the next 15 months, we
expect that we will need to raise additional capital. Such capital may not be available to us on
acceptable terms, if at all, which could materially harm our business and business prospects, and
your investment could suffer a decline in value.
   
    
    our ability to successfully advance the development of our product candidates and programs;
    
    the time and cost to complete the requisite preclinical studies, clinical trials and
receive regulatory approval to advance our product candidates through the requisite phases
of clinical development;
    
    the amount of future payments, if any, received or made under existing or future license,
collaboration or similar arrangements; and
    
    the costs associated with protecting or expanding our patent and other intellectual property rights;
 We currently do not meet the standards for continued listing on The NASDAQ Capital Market, and we
cannot provide any assurance that we will meet these standards in the future. If we are delisted
from this exchange, the value of your investment may substantially decrease.
    17




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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Maximum NumberTotal Number
    
    
    (or ApproximateOf Shares
    
    
    Dollar Value) ofTotal
    
    
    
    
    
    
    Purchased as
    
    
    Shares That MayNumber of
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    under the PlansPurchased
    
    
    per Share
    
    
    or Programs
    
    
    Or ProgramsJanuary 1 through January 31
    
    
    10,710
    
    
    $
    0.30
    
    
    
    N/A
    
    
    
    N/AFebruary 1 through February 28
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/AMarch 1 through March 31
    
    
    
    
    
    
    
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    10,710
    
    
    $
    0.30
    
    
    
    N/A
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ITEM 6. EXHIBITS
  Exhibit No.
    
    Description31.1
    
    
    Section 302 Certification of the Chief Executive Officer and Chief Financial Officer
Required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer
  19




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SIGNATURES
  Date: May 13, 2009
    INHIBITEX, INC/s/ Russell H. PlumbRussell H. PlumbPresident, Chief Executive Officer,
Chief Financial Officer and Chief Accounting Officer  20




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EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    
    Section 302 Certification of the Chief Executive Officer and Chief Financial Officer as
Required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Section 906 Certifications of the Chief Executive Officer and the Chief Financial Officer
  21