What: Shares of Achillion Pharmaceuticals (NASDAQ:ACHN), a clinical-stage biopharmaceutical company focused on developing therapies to treat hepatitis C and other chronic bacterial infections, launched higher by 18% during the month of October, based on data from S&P Capital IQ, in anticipation of a November data release on ACH-3102 and ACH-3422.
So what: The primary boost to Achillion's stock came from an announcement on Oct. 8 that the company will be presenting four abstracts at the annual meeting of the American Association for the Study of Liver Diseases, which is being hosted between Nov. 7, 2014 and Nov. 11, 2014. The posters will include one on the sustained virologic response after 12 weeks of treatment for ACH-3102 in midstage studies in combination with Gilead Sciences (NASDAQ:GILD) Sovaldi (scientific name sofosbuvir) for patients with treatment-naïve genotype 1 HCV infection, as well as three highlighting a preclinical profile for ACH-3422, which is now in phase 1 development.
If you recall, in August Achillion and Gilead announced perfect results for their eight-week phase 2 study evaluating the combo of ACH-3102, an NS5A inhibitor, and Gilead's Sovaldi. All 12 patients tested had undetectable levels of HCV RNA four weeks after completing their treatment. Furthermore, the combo demonstrated good safety and tolerability.
Finally, Achillion has also benefited from Sovaldi's recent strong sales. I know that might seem counterintuitive considering that Achillion's product is two years or more away from pharmacy shelves, but there are enough HCV patients in the world that Gilead won't cure them all in two years' time. However, partnering up with Sovaldi and seeing how quickly physicians have latched onto the drug gives Achillion shareholders hope that a combo presented with Sovaldi will also be trusted by physicians.
Now what: Personally, I think investors have far too much riding on Achillion with a nearly $1.2 billion valuation when it's yet to get a single drug past midstage trials. Though its early stage data was impressive, we have to consider that it was a mere 12 patients, and they were treatment-naïve, which tends to deliver a more favorable SVR12 (at least based on Sovaldi's six late-stage trials they did!) Could Achillion impress in the upcoming week at the annual AASLD meeting? Absolutely. But, it's likely that optimism has already been baked into Achillion's share price.
Furthermore, I remain concerned about the company being two years or longer away from bringing a new HCV drug to market. By then there could be two or three well-established brands that do indeed scoop up significant market share. I simply can't get myself to go along with the buyout rumors surrounding Achillion and would suggest investors look elsewhere for HCV ideas.