Achillion Pharmaceuticals (ACHN) Gets a Rating Upgrade from Chardan

By Carrie Williams

Drug capsulsShares of biopharmaceutical company Achillion Pharmaceuticals (NASDAQ: ACHN) had plummeted by more than 33% in the past weeks due to potential safety issues of its PNH candidate. ACH-4471 intended for the treatment of paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS), is orally administered. Achillion had also underperformed significantly compared to the S&P Biotech Index over the past three and a half months.

Despite the less-than-encouraging numbers, Chardan analyst Madhu Kumar seemed unperturbed about the stock and this morning upgraded its rating to Neutral from Sell. The price target however was retained at $5, which is still an upside of nearly 16% from the last close of $4.32. The stock had hit its 52-week low of $3.78 during its trading session recently before recovering back to the current levels.

The new rating on ACHN is based on the belief that the modest valuation for ACHN assets would offset the negative drivers like the safety concerns (occurrence of liver enzyme elevations in healthy volunteers of MAD trial) for ACH-4471, launch of trials by competitor drug ALXN1210 from Alexion, and lack of substantial royalties from ACHN’s Odalasvir (ACH-3102) despite its success in ongoing phase IIa trial. In addition, Madhu Kumar believes that a positive Phase II results for ACH-4471 in PNH could also prove to be major tailwinds for the share price of ACHN.

Meanwhile, 3Q earnings results for Achillion was issued yesterday. ACHN had reported a net loss of $20.7 million for the quarter and Q3 EPS of -$0.15 which was slightly higher than the estimates by $0.01. The company also provided the latest updates regarding its clinical programs. JNJ-4178, the HCV triple combination candidate developed jointly with Janssen (of Johnson & Johnson), reported 100% SVR12 after 6 weeks of therapy. Its global phase IIB study is slated to start by 4Q16. The company is also advancing the small molecule candidates intended for the treatment of dry AMD.

According to TipRanks.com, Achillion has an overall analyst consensus rating of a Moderate Buy. ACHN has an average analyst price target of $10.25, which is an upside of 137.27% from the current levels.