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Why Achillion Pharmaceuticals Shares Dove

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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 hepatatis-C-focused biotechnology company, Achillion Pharmaceuticals (NASDAQ: ACHN  ) dipped as much as 12%, following its fourth-quarter earnings report and announcement of a share offering.

So what: For the quarter, the clinical-stage biotechnology company reported a loss of just $0.14, as compared to the loss of $0.18 reported in the year-ago period, and the loss of $0.20 that analysts had anticipated. For fiscal 2013, Achillion expects a loss of $0.75, right in line with expectations. Also, after the bell yesterday, Achillion announced that it commenced a $125 million offering for its stock. Achillion ended the quarter with $77.4 million in cash, cash equivalents, and marketable securities, but will need about $105 million just this year to cover operating expenses, as well as research and development costs.

Now what: Dilution, dilution, dilution! Don't say I didn't warn you, because I've been quite adamant that clinical-stage companies like Achillion love to raise cash whenever there's a sizable rally. With only enough cash on the books for nine months of R&D and operating expenses, and a pipeline that's still years away from marketability, I'd suggest looking elsewhere in the hepatitis-C space.

Craving more input? Start by adding Achillion Pharmaceuticals to your free and personalized Watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in biotechs like Achillion, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report, "3 Stocks That Will Help You Retire Rich," names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

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Related Tickers

9/27/2016 1:06 PM
ACHN $8.25 Down -0.09 -1.08%
Achillion Pharmace… CAPS Rating: ***