What happened

Shares of Achillion Pharmaceuticals (NASDAQ:ACHN) are falling hard today after the company announced that Johnson & Johnson (NYSE:JNJ) has decided to sell 18.4 million of the drugmaker's shares. This public offering represents all of J&J's holdings in the small-cap drugmaker, and it will reportedly not yield any proceeds for Achillion. As of 11:48 a.m. EST, Achillion stock is down by 11.92% on heavy volume on this news. 

Man holding the back of his head in response to a falling stock

Image source: Getty Images.

So what

The timing of J&J's decision to dump its entire stake in Achillion is somewhat perplexing. Achillion, after all, just released positive early-stage data for its experimental kidney-disease treatment, ACH-4471, that could eventually be a big winner from a sales standpoint down the road. Apparently, J&J felt it was time to completely cut the cord after its hepatitis C development deal with Achillion fell apart due to the rapidly changing dynamics surrounding this shrinking market. 

Now what

With J&J calling it quits on its hepatitis C partnership with Achillion roughly two months ago, the drugmaker's core value proposition now revolves squarely around ACH-4471. While ACH-4471 is targeting a big market, the downside is that Achillion's lead drug candidate remains a few years away from producing results that could provide the basis for a regulatory filing. So, for now, investors may want to shy away from this falling knife.