Achillion in prime position to develop its own all-oral hepatitis C treatment

Investment Commentary
Source - The Pharmaletter.com

Achillion a good candidate for collaboration or takeover based on hepatitis C candidate, says Edison     
US-based Achillion Pharmaceuticals (Nasdaq: ACHN) is in a prime position to develop its own all-oral hepatitis C treatment as it is the only standalone biotech company with drug candidates in three key classes for the indication, says Edison Equity Research, which has valued the company at $1.42 billion, or $14.5 per basic share.

The firm's all-oral, once-a-day, interferon- and ribavirin-free single pill hepatitis C treatment could be as competitive as current market leader, US biotech major Gilead Sciences’ (Nasdaq: GILD) SOF/LDV fixed-dose co-formulation.

Achillion’s offering is showing promising efficacy in early stages of development, and additional efficacy and safety data in more patients from later stage clinical trials will add value to the pipeline, and Edison believes this could lead to a possible corporate partnership deal.

The company has discovered inhibitors of three key enzymes of HCV replication: nucleotide NS5B polymerase, NS5A and NS3/4A polymerase. Early studies have shown the candidates to be equally as potent, if not more, than candidates developed by competitors including Gilead. More Phase II trials will give greater proof of the drugs’ efficacy and safety profile, and will lead to Phase III confirmation trials required for market approval.

This makes Achillion a prime candidate for a big pharma company still interested in the hepatitis C market but lacking the necessary components to create a competitive oral drug for the indication. Idenix, in possession of drug candidates in two key classes, was acquired by pharma giant Merck & Co (NYSE: MRK) for $3.9 billion, highlighting the importance of these drugs to big pharma.

Based on this, Edison has derived a valuation of $1.42 billion or $14.5 per share, and says a major value inflection point would be a positive Phase II result of the combination of ACH-3422 and ACH-3102, which is similar to Gilead’s SOF/LDV fixed-dose co-formulation.