Chardan Capital Markets Upgrades Achillion Pharmaceuticals (ACHN) to Neutral Following Underperformance
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Chardan Capital Markets upgraded Achillion Pharmaceuticals (NASDAQ: ACHN) from Sell to Neutral with a price target of $5.00 share price underperformance relative to the XBI in the past three and a half months. The upgrade come ahead of 1H17 clinical catalysts in the multiple ascending dose (MAD) study of ACH-4471.
Analyst Madhu Kumar commented, "Over the past three and a half months (from market close 13 July to market close 3 November), Achillion shares have performed -52% (from $8.93/share to $4.32/share), in contrast to the SPDR S&P Biotech Index (-5%, from $56.23/share to $53.31/share). Based upon this relative underperformance, we upgrade Achillion to Neutral. Our Neutral rating reflects a balancing of our modest valuation for ACHN assets (NPV $1.43/share for ACH-4471 across multiple indications and $0.63/share for odalasvir in chronic hepatitis C) with the following concerns:
1. As discussed in our 3 November 2016 note, the disclosure of multiple instances of "grade 3/4 liver enzyme elevations during dose escalation in healthy volunteers reinforces our concerns about ACH-4471 moving forward in the complement therapy space, as safety concerns create a negative profile for the drug in the setting of a highly effective standard of care like Soliris from Alexion (unrated)."
2. As discussed in our 28 October 2016 note, the launch of pivotal trials for ALXN1210 from Alexion in complement C5-mediated diseases (CMDs) paroxysmal nocturnal hemoglobinuria (PNH) and atypical hemolytic uremic syndrome (aHUS) create a recruitment problem for drugs like ACH-4471, which are likely to face "significant delays in recruiting into clinical development programs in the CMD space."
3. Odalasvir, though largely successful in the ongoing phase IIa trial (as discussed in our 23 September 2016 note) is unlikely to provide substantial royalties for multiple reasons
Shares of Achillion Pharmaceuticals closed at $4.32 yesterday.
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