Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) shares skyrocketed Tuesday after U.S. regulators allowed the company to restart clinical trials of new nuclear medication for hepatitis C. The Food and Drug Administration halted a trial of Achillion’s sovaprevir in September last year because of worries the drug might damage the liver, but the FDA has now decided the trial can resume. Sovaprevir is in the second of three clinical trial phases usually required before approval for sale.
Shares of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) are up almost 50% today on the news, and have almost doubled over the last two trading sessions. The stock is trading around $6.75 per share as of 1:15 PM ET today.
Analyst comments
Wells Fargo analysts Brian Abrahams published a note to clients regarding the deal this morning, where he pointed out the Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) – Merck deal “illustrates the appetite for, and scarcity value of, early stage nucs, and that a strategic premium is willing to be paid for them. We still await proof-of-concept from Achillion and reiterate nucs development carries significant risk.”
Asthika Goonewardene, an analyst with Bloomberg Industries, agrees with Abrahams. “The risk is definitely to consider,” he said in a telephone interview from London. “Nucs have a history of bad safety.”
Achillion could be buyout target
Abrahams and other analysts have also commented that Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) becomes a much more attractive buyout candidate with the promising trials back underway.
Despite the large market and unmet need, big pharma had been risk-averse in considering buying hepatitis C-focused biotechnology companies ever since Bristol-Myers Squibb Co (NYSE:BMY) bought Inhibitex LLC (NASDAQ:INHX) in 2012, and the trials of the firm’s hep C drugs had to be abandoned due to adverse side effects shortly thereafter.
Other companies developing hep C treatments include AbbVie Inc (NYSE:ABBV), Johnson & Johnson (NYSE:JNJ) and others in a market estimated at more than $20 billion. More than 170 million people worldwide are believed to be infected with hepatitis C.
