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. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool has a disclosure policy.