Why Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) Stock Broke Resistance

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) stock price is up over 22% after the biotechnology company announced positive interim results for its drug candidate, ACH-4471. Also today the company reported financial results for the most recent quarter and six months. By 12:40 PM EST, ACHN shares had a volume of over 20 million shares, far exceeding their daily average of 1.5 million.

As of market close yesterday, ACHN shares were down YTD, but after news of the interim clinical trial results, ACHN stock gapped up to open at $4.70 then proceeded to blast through resistance just above $5.00. Shares of ACHN then hit an inter-day high of $5.66 before sellers came in and pushed the shares back below the $5.00 level. Analysts have given ACHN stock a price target of $6.75.

ACHN stock chart:

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

Achillion Pharmaceuticals Reports Interim Results

Achillion Pharmaceuticals released interim data from ongoing ACH-4471 trials that indicated the drug candidate had achieved clinically meaningful complement inhibition and demonstrated a favorable tolerability profile with no reports of clinically meaningful increases in liver enzymes. In this initial set of data, ACH-4471 improved LDH, hemoglobin, fatigue score, and other measures of response including PNH clone size. These interim results support Achillion’s global expansion plans for PNH clinical trials.

Achillion Pharmaceuticals Financial Report

For Q2 2017, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) reported a net loss of (-$22.5) million or (-$0.16) per share, compared with a net loss of $18.5 million or $0.14 per share for the second quarter of 2016. Cash, cash equivalents, marketable securities, and interest receivable as of June 30, 2017 were $369.9 million. Research and development expenses were $18.3 million compared with $14.2 million for the same period of 2016. The increase was primarily due to increased ACH-4471 clinical trial costs as well as increased manufacturing costs for ACH-5228. SG&A expenses were $5.4 million, compared with $5.2 million for Q2 2016. The increase was primarily due to increased legal and consulting fees.

For the six months ended June 30, 2017, Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)’s net loss was $42.7 million, compared to a net loss of $36.6 million for the first half of 2016. R&D totaled $33.8 million, compared with $27.4 million for the same period in 2016.

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: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Why Did Shares Of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) Plunge 9%?

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN)

What caused shares of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) to tank nearly 9% on Friday? The stock movement may be linked to a recent securities filing in which the company gave a notice of a plan to raise additional cash through the sale of new securities.

In a filing with the US Securities and Exchange Commission (SEC), Achillion informed the regulator of its intent to raise up to $250 million by securities offering. But it didn’t specify the nature, timing or pricing of the securities fundraiser. However, the market seems to believe the company is planning to dilute its stock, which could destroy value for existing shareholders. That may have sparked the selloff in the stock, which sent the shares down almost 9% on Friday to settle at $3.86.

Shares of Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) have retreated 6% year-to-date and are down more than 47% over the last one year.

Beating earnings

Before the issue of planned securities offering appeared to spoil the party, investors recently warmed up to shares of Achillion following the company’s a little upbeat 4Q2016 earnings. The company posted EPS loss of $0.03, better than EPS loss of $0.20 that analysts were expecting on the average. However, revenue of $15 million declined 52.5% year-over-year.

Though 4Q2016 may not have been the primary reason for investor optimism in Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN), the results offered hope of a bright future as the company continues to develop its pipeline. Additionally, several rating firms have recently commented positively on the prospects of Achillion.

For instance, Ladenburg Thalmann analysts initiated their coverage of Achillion with a BUY rating and 12-month price target of $10 on February 2. The analysts cited the company’s pipeline programs, and the various milestones and royalties bearing collaboration the company has with partners such as Johnson & Johnson (NYSE:JNJ)’s Janssen.

$900 million in potential milestones

The collaboration with Janssen involves development of a HCV drug and could yield more than $900 million in milestones for Achillion, and earn the company royalties in the range of mid-20%.

However, HCV is a highly competitive space and there can be no guarantee that Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) will hit the milestones and unlock the promised payments. The company’s planned securities fundraising could be a measure to raise additional funds that can be used to develop the pipeline so that the company doesn’t fall behind the competition in HCV and other product categories.

2/24/2017
Ticker Symbol ACHN
Last Price a/o, 4:02PM EST  $                       3.86
Average Volume (mlns) 1.57
Market Cap (mlns)  $                   579.50
Sales (mlns) $31.60
Shares Outstanding (mlns) 150.13
Share Float (mlns) 118.17
Shortable Yes
Optionable Yes
Inside Ownership 0.10%
Short Float 9.03%
Short Interest Ratio 6.8
Quarterly Return -8.31%
YTD Return -6.54%
Year Return -43.65%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.