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Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) Slumps 22%

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) shed 22.098% in market value after Johnson & Johnson (NYSE:JNJ) provided notice, for termination of a licensing and collaboration pact on the development of Hepatitis C drugs. The decision comes on the heels of the company’s subsidiary Janssen Pharmaceuticals discontinuing the development of investigational hepatitis C treatment regimen JNJ-478.

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)
One month ACHN stock price chart

Achillion Pharmaceuticals Big Loss

The news brought an end to the bullish run that had pushed Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) to the $5 per share mark. The stock has since gapped lower and traders are waiting to see if the trend will continue as it sits at a key support level. A close below the $3.70 level could see the stock end up at the $3.25 mark, which is this year’s low.

“We are disappointed by Janssen’s decision to discontinue HCV development given the positive data presented in phase 2a with JNJ-41781, demonstrating a 100% cure rate after only six weeks of therapy,” stated Milind Deshpande, Ph.D., President and Chief Executive Officer of Achillion

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) could come under pressure given what is at stake with the termination of the collaboration agreement with Johnson & Johnson. Under the terms of a deal reached in 2015, the company was entitled to $1.1 billion in clinical, regulatory, and sales milestones of hepatitis C drugs under development.

Johnson & Johnson (NYSE:JNJ) acquired $225 million worth of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) as part of the deal reached in 2015. It now awaits to be seen if the giant pharmaceutical company will sell its 18,367,346 shares in addition to ending the collaboration.

When Johnson and Johnson entered into a licensing and collaboration agreement with Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), there were few Hepatitis C Drugs in the market. Fast forward and things have drastically changed as patients now have multiple treatment options.

Achillion Big Plan

The end of potential Hepatitis C revenue is bad news for Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) and one of the reasons why the stock felt the wrath of the street. However, the company has also redefined its research and development pipeline as it sought to reduce its reliance on the partnership.

ACH-4471 is the company’s lead drug candidate as it looks for opportunities for the treatment of paroxysmal, a rare disease that destroys red blood cells. Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) had a strong balance sheet of $370 million, as of the end of June, which is more than sufficient to finance clinical programs even with the termination of the Johnson & Johnson pact.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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