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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, 2011
 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
    
    (Zip Code)offices)
 (678) 746-1100
 Not Applicable
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company o(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Unaudited Condensed Consolidated Financial StatementsConsolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    3Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010
    
    
    4Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    15PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    16Item 6. Exhibits
    
    
    17Signatures
    
    
    18Exhibit IndexEX-31.1 SECTION 302 CERTIFICATION OF THE CEO & CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO & CFO
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ITEM 1. FINANCIAL STATEMENTS
 INHIBITEX, INC.
 
 CONSOLIDATED BALANCE SHEETS
 March 31, 2011
    
    
    Dec 31, 2010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    10,036,760
    
    
    $
    8,554,151Short-term investments
    
    
    3,001,485
    
    
    
    11,014,747Prepaid expenses and other current assets
    
    
    365,973
    
    
    
    599,042Accounts receivable
    
    
    82,730
    
    
    
    178,654Total current assets
    
    
    13,486,948
    
    
    
    20,346,594Property and equipment, net
    
    
    915,074
    
    
    
    1,090,029Other assets
    
    
    85,395
    
    
    
    52,514Total assets
    
    $
    14,487,417
    
    
    $
    21,489,137LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,795,289
    
    
    $
    2,768,020Accrued expenses
    
    
    3,656,534
    
    
    
    2,917,347Current portion of notes payable
    
    
    243,056
    
    
    
    243,056Current portion of capital lease obligations
    
    
    125,335
    
    
    
    180,792Current portion of deferred revenue
    
    
    341,667
    
    
    
    129,167Other current liabilities
    
    
    432,941
    
    
    
    238,703Total current liabilities
    
    
    6,594,822
    
    
    
    6,477,085Long-term liabilities:Notes payable, net of current portion
    
    
    243,055
    
    
    
    303,819Other liabilities, net of current portion
    
    
    802,698
    
    
    
    867,455Total long-term liabilities
    
    
    1,045,753
    
    
    
    1,171,274Total liabilities
    
    
    7,640,575
    
    
    
    7,648,359Stockholders equity:Preferred stock, $.001 par value; 5,000,000 shares authorized at March
31, 2011 and December 31, 2010, none issued and outstanding
    
    
    
    
    
    
    Common stock, $.001 par value; 150,000,000 shares authorized at March
31, 2011 and December 31, 2010, respectively; 62,439,215 and 62,423,358
shares issued and outstanding at March 31, 2011 and December 31, 2010
respectively
    
    
    62,439
    
    
    
    62,423Additional paid-in capital
    
    
    270,663,911
    
    
    
    270,187,742Accumulated other comprehensive income
    
    
    1,081
    
    
    
    542Warrants
    
    
    11,145,558
    
    
    
    11,145,558Accumulated deficit
    
    
    (275,026,147
    )
    
    
    (267,555,487
    )Total stockholders equity
    
    
    6,846,842
    
    
    
    13,840,778Total liabilities and stockholders equity
    
    $
    14,487,417
    
    
    $
    21,489,137
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INHIBITEX, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010Revenue:License fees and milestones
    
    $
    37,500
    
    
    $
    749,167Collaborative research and development
    
    
    250,000
    
    
    
    250,000Total revenue
    
    
    287,500
    
    
    
    999,167Operating expense:Research and development
    
    
    6,572,810
    
    
    
    4,789,615General and administrative
    
    
    1,197,183
    
    
    
    1,024,041Total operating expense
    
    
    7,769,993
    
    
    
    5,813,656Loss from operations
    
    
    (7,482,493
    )
    
    
    (4,814,489
    )Other income, net
    
    
    8,638
    
    
    
    3,520Interest income, net
    
    
    3,195
    
    
    
    17,816Net loss
    
    $
    (7,470,660
    )
    
    $
    (4,793,153
    )Basic and diluted net loss per share
    
    $
    (0.12
    )
    
    $
    (0.08
    )Weighted average shares used to compute basic and diluted net loss per share
    
    
    62,437,220
    
    
    
    61,561,030
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INHIBITEX, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (7,470,660
    )
    
    $
    (4,793,153
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    174,955
    
    
    
    161,908Share-based compensation
    
    
    464,857
    
    
    
    134,835Amortization of investment premium or discount
    
    
    13,801
    
    
    
    158,154Changes in operating assets and liabilities:Prepaid expenses and other assets
    
    
    200,188
    
    
    
    (18,355
    )Accounts receivable
    
    
    95,924
    
    
    
    (65,923
    )Accounts payable and other liabilities
    
    
    (843,250
    )
    
    
    753,926Accrued expenses
    
    
    739,187
    
    
    
    203,859Deferred revenue
    
    
    212,500
    
    
    
    (37,500
    )Net cash used in operating activities
    
    
    (6,412,498
    )
    
    
    (3,502,249
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    
    
    
    
    (42,848
    )Purchases of investments
    
    
    
    
    
    
    (2,312,338
    )Proceeds from maturities
    
    
    8,000,000
    
    
    
    3,250,000Net cash provided by investing activities
    
    
    8,000,000
    
    
    
    894,814Cash flows from financing activities:Payments on promissory notes and capital leases
    
    
    (116,221
    )
    
    
    (127,780
    )Proceeds from the issuance of common stock
    
    
    11,328
    
    
    
    2,209Net cash used in financing activities
    
    
    (104,893
    )
    
    
    (125,571
    )Increase (decrease) in cash and cash equivalents
    
    
    1,482,609
    
    
    
    (2,733,006
    )Cash and cash equivalents at beginning of period
    
    
    8,554,151
    
    
    
    11,290,332Cash and cash equivalents at end of period
    
    $
    10,036,760
    
    
    $
    8,557,326Supplemental cash flow information:Interest paid
    
    $
    5,716
    
    
    $
    10,960
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INHIBITEX, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Operations
     2. Summary of Significant Accounting Policies
   Recent Accounting Pronouncements.
    6




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3. Net Loss Per Share
   Three Months EndedMarch 31,2011
    
    
    2010Net loss
    
    $
    (7,470,660
    )
    
    $
    (4,793,153
    )Weighted average common shares outstanding used to
compute basic and diluted earnings per share
    
    
    62,437,220
    
    
    
    61,561,030Dilutive effect of:Stock options
    
    
    
    
    
    
    Warrants
    
    
    
    
    
    
    Shares used to compute diluted earnings per share
    
    
    62,437,220
    
    
    
    61,561,030Basic net loss per share
    
    $
    (0.12
    )
    
    $
    (0.08
    )Diluted net loss per share
    
    $
    (0.12
    )
    
    $
    (0.08
    )Number of antidilutive stock options excluded from computation
    
    
    6,853,650
    
    
    
    5,720,937Number of antidilutive warrants excluded from computation
    
    
    12,868,100
    
    
    
    14,047,015
 4. Comprehensive Loss
  Three Months EndedMarch 31,2011
    
    
    2010Net loss
    
    $
    (7,470,660
    )
    
    $
    (4,793,153
    )Change in net unrealized gains (losses) on investments
    
    
    539
    
    
    
    (14,467
    )Comprehensive loss
    
    $
    (7,470,121
    )
    
    $
    (4,807,620
    )
 5. Fair Value Measurements
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Quoted prices inactive markets for
    
    
    Significant other
    
    
    Significantidentical assets
    
    
    observable inputs
    
    
    unobservable inputsMarch 31, 2011
    
    Total
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Cash equivalents
    
    $
    9,600,559
    
    
    $
    9,600,559
    
    
    $
    
    
    
    $
    Short-term investments available-for-sale
    
    
    3,001,485
    
    
    
    
    
    
    
    3,001,485
    
    
    
    Total
    
    $
    12,602,044
    
    
    $
    9,600,559
    
    
    $
    3,001,485
    
    
    $
    
   Unrealized
    
    
    UnrealizedMarch 31, 2011
    
    At Cost
    
    
    Gains
    
    
    (Losses)
    
    
    At Fair ValueMoney market funds
    
    $
    9,600,559
    
    
    $
    
    
    
    $
    
    
    
    $
    9,600,559Commercial paper
    
    
    2,498,525
    
    
    
    1,045
    
    
    
    
    
    
    
    2,499,570Corporate debt
    
    
    501,879
    
    
    
    36
    
    
    
    
    
    
    
    501,915Total
    
    $
    12,600,963
    
    
    $
    1,081
    
    
    $
    
    
    
    $
    12,602,044
 Unrealized
    
    
    UnrealizedDecember 31, 2010
    
    At Cost
    
    
    Gains
    
    
    (Losses)
    
    
    At Fair ValueMoney market funds
    
    $
    7,932,606
    
    
    $
    
    
    
    $
    
    
    
    $
    7,932,606Commercial paper
    
    
    6,494,842
    
    
    
    2,713
    
    
    
    
    
    
    
    6,497,555Corporate debt
    
    
    4,519,363
    
    
    
    221
    
    
    
    (2,392
    )
    
    
    4,517,192Total
    
    $
    18,946,811
    
    
    $
    2,934
    
    
    $
    (2,392
    )
    
    $
    18,947,353
  6. Research and License Agreements
 Out-licensing Agreements
 Pfizer (Wyeth).
  8




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7. Subsequent Events
   9




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL 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 time frame in which a Phase 2 clinical program of INX-189 can be initiated and the nature and extent of the
contemplated Phase 2 studies;
    
    the plan to nominate a second HCV nucleotide polymerase inhibitor for advancement into an investigational new
drug application (IND) enabling preclinical development in the second half of 2011;
    
    the timing of the strategic review and finalization of potential development plans for FV-100;
    
    our ability to successfully advance the clinical development of INX-189, FV-100, preclinical development of our
second HCV nucleotide polymerase inhibitor and any of our product candidates;
    
    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;
    
    our potential future revenue from collaborative research agreements, partnerships, license agreements, product
related revenue or materials transfer agreements;
    
    the potential of our product candidates to address a number of current therapeutic limitations, such as
inadequate potency, significant adverse side effects, complex and inconvenient dosing schedules and diminishing
efficacy due to the emergence of drug-resistant viruses; and
    
    anticipated future 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: that we, the FDA,
a data safety monitoring board, or an institutional review board (IRB) delaying, limiting,
suspending or terminating the clinical development of FV-100 or INX-189 at any time for a lack of
safety, tolerability, anti-viral activity, commercial viability, regulatory and manufacturing
issues, or any other reason; the safety or efficacy results of ongoing or future preclinical
studies and clinical trials of INX-189 not supporting its further development; FV-100 not
demonstrating sufficient activity or potential in reducing the incidence and severity of
shingles-related sub-acute pain ( PHN) to be clinically relevant or commercially viable; the
results of preclinical studies or clinical trials for our product candidates being unfavorable or
delayed; our capacity for recruiting and managing clinical trials; our ability to comply with the
extensive government regulations applicable to our business; our limited experience in the
development of small molecule antiviral product candidates and our ability to develop our product
candidates or manage our operations in the future; the Company not being able to identify and
nominate an additional HCV nucleotide polymerase to enter IND-enabling preclinical studies on a
timely basis, if at all; Pfizer not terminating our license and collaborative research agreements;
our ability to maintain 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; our ability to secure and use qualified third-party clinical and
preclinical research and data management organizations; third party manufacturers not fulfilling
their contractual obligations or otherwise performing satisfactorily in the future; our ability to
manufacture and maintain sufficient quantities of preclinical and clinical trial material on hand
to complete our preclinical studies or clinical trials on a timely basis; our ability, or that of
our clinical investigators, to enroll patients in our clinical trials or on a timely basis; our
failure to obtain regulatory approval to advance the clinical development of or market our product
candidates; our ability to protect and maintain our proprietary intellectual property rights from
unauthorized use by others or not
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infringing 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 (including the Risk
Factors section herein) and risk factors described in or referred to in greater detail in the
Risk Factors section of our Form 10-K for the year ended December 31, 2010. 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 which 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 ® and MSCRAMM ® are registered trademarks of
Inhibitex, Inc.
 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.
 Overview
   Recent Corporate Developments
 INX-189
for Chronic Hepatitis C:
  Public Offering
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Near-Term 2011 Goals
 
    
    Initiate a Phase 2 clinical development program for INX-189 in HCV genotype 1, 2 and 3
patients that demonstrates the compounds potent pan-genotypic antiviral activity and high
genetic barrier to resistance in combination therapy
 
    
    Nominate a second HCV nucleotide polymerase inhibitor for advancement into IND-enabling
preclinical development in the second half of 2011
 
    
    Complete the ongoing strategic review of and finalize potential developmental plans for
FV-100 in mid-2011 as a product candidate with the potential to reduce shingles-associated
post-herpetic neuralgia (PHN) and sub-acute pain
 Critical Accounting Policies
   
    
    Use of Estimates
    
    Revenue Recognition
    
    Accrued Expenses
    
    Share-Based Compensation
    Results of Operations
 Three Months Ended March 31, 2011 and 2010
 Summary.
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Revenue.
 Research and Development Expense.
 March 31,2011
    
    
    2010(In millions)Direct clinical, preclinical, manufacturing and milestone expenses
    
    $
    4.3
    
    
    $
    2.6Salaries, benefits and share-based compensation expense
    
    
    1.3
    
    
    
    1.0License fees, patent-related legal and other expenses
    
    
    0.5
    
    
    
    0.7Depreciation and facility related expenses
    
    
    0.5
    
    
    
    0.5Total research and development expense
    
    $
    6.6
    
    
    $
    4.8
  General and Administrative Expense.
 March 31,2011
    
    
    2010(In millions)Salaries, benefits and share-based compensation expense
    
    $
    0.6
    
    
    $
    0.4Professional and legal fees
    
    
    0.3
    
    
    
    0.3Other expenses
    
    
    0.3
    
    
    
    0.3Total general and administrative expense
    
    $
    1.2
    
    
    $
    1.0
  Liquidity and Capital Resources
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
    
    our development timelines and plans for our INX-189, FV-100 and any of our product candidates, including any
changes in our strategy;
    
    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 variability, timing and costs associated with conducting preclinical studies, and the results of these studies;
    
    the cost of formulating and manufacturing preclinical and clinical trial materials to evaluate our product
candidates;
    
    whether we receive regulatory approval to advance the clinical development of our product candidates in a timely
manner, if at all;
    
    the cost and time to obtain regulatory approvals required to advance the development of our product candidates;
    
    the scope and size of our research and development efforts;
    
    the terms and timing of any collaborative, licensing and other arrangements that we may establish in the future;
    
    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.
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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
  Foreign Currency Exchange Rate Risk
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
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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, 2010 have not materially changed, except as set forth below.
 Risks Relating to our Development of our Product Candidates
 In order to develop our product candidates and support our operations beyond 21 months from March
31, 2011, we expect that we will need to raise or secure 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.
   
    
    our development timelines and plans for INX-189, FV-100 and any of our product candidates, including any changes
in our strategy;
    
    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 variability, timing and costs associated with conducting preclinical studies, and the results of these studies;
    
    the cost of formulating and manufacturing preclinical and clinical trial materials to evaluate our product
candidates;
    
    whether we receive regulatory approval to advance the clinical development of our product candidates in a timely
manner, if at all;
    
    the cost and time to obtain regulatory approvals required to advance the development of our product candidates;
    
    the scope and size of our research and development efforts;
    
    the terms and timing of any collaborative, licensing and other arrangements that we may establish in the future;
    
    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.
  16




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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
  17




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SIGNATURES
  Date: May 6, 2011
    INHIBITEX, INC/s/ Russell H. PlumbRussell H. PlumbPresident, Chief Executive Officer,
Chief Financial Officer and Chief Accounting Officer  18




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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
  19