Seeking Alpha - Achillion Pharmaceuticals: Hope, Hype, And Hep C

An article appearing 3/27/12 by Stephen Simpson on Seeking Alpha.com - one of the more level-headed articles appearing on that particular site in recent months, IMO (admittedly, coming from me, that might not mean much!). It's very hard to be prescient in regards to Achillion's future in HCV, but with a wholly-owned, advancing pipeline diversified among viral targets, it has to be considered at least somewhat of a target of companies like Merck, J&J and Vertex that need to fill holes in their pipeline or need compounds with synergistic activity. Mr. Simpson also gives a quick rundown of what's happening in the HCV drug development marketplace as well as some apocryphal statistics on HCV infection within South America that could feasibly boost the value of the HCV market considerably by 2016 over current thinking, in his estimation.   


Achillion Pharmaceuticals: Hope, Hype, And Hep C

By Stephen Simpson - Seeking Alpha

I've followed biotech for a long time now, and I have a hard time thinking of an example of another addressable market like hepatitis C (HCV) where investor interest has just exploded in the space of about a year. Like antisense, monoclonal antibodies, RNAi, genomics, stem cells and every other hot property in biotech, there has been no end of hope, hype, and hucksterism. Although HCV is likely to grow into a very financially significant drug target in the coming years, it's worth wondering just how much of the frenzy today can be justified in long-term valuations.

In particular, I'm curious about Achillion Pharmaceuticals (ACHN) these days. I've watched this stock for a while now and came close to buying on multiple times in the pre-2010 pre-$2 level. I underestimated just how fast this market would heat up, though, and had to re-learn a painful lesson - sometimes, you snooze and you lose.

Achillion jumps out as the only serious HCV play I'm aware of with a market cap below $1 billion (while Idenix (IDIX) is hardly a giant at $1.1 billion). Not only is it relatively small, but it also may be one of the relatively few players with its own home-grown effective combination therapy.

Of course everything Achillion is working on in HCV is still in the clinic and as Gilead (GILD) showed so clearly recently, "surprising" clinical results are not always positive surprises. The end result, then, is that this may be the next Pharmasset or just another biotech destined to flame out.

The Good - Interesting Compounds All Their Own

Achillion has at least two HCV antivirals well worth watching - ACH-1625 and ACH-3102.

ACH-1625 is a potentially pangenotypical NS3 protease inhibitor (PI) that has shown both solid efficacy and encouraging safety in early studies. Showing both strong efficacy and safety thus far, it could perhaps be the backbone for future combination therapies. That said, pangenotypical efficacy is not yet established and the compound still has not gone through a pivotal Phase 3 study.

The good news with antivirals is that, unlikely oncology and anti-inflammatory drugs, efficacy signals in early pilot studies often hold up through pivotal studies. What's more, these studies are relatively easy to enroll and can be completed expeditiously. What that all means for investors is that ACH-1625 could have a relatively quick path to market.

Achillion is also developing ACH-3102, a NS5a inhibitor, and expects to put it in human studies soon. This drug looks like it should be less subject to resistance and the company (as well as bulls) seem more excited about this drug than the more advanced ACH-2928 (also a NS5a inhibitor). Coupled with ACH-1625, this could be a very interesting combo therapy, but it's worth mentioning that almost every drug is interesting to bulls going into Phase 2 studies.

These aren't the only drugs in Achillion's HCV pipeline, and the company does have identified experimental compounds targeting bacterial infections and HIV. It should be noted too that Achillion's HCV pipeline is wholly-owned.

The Bad - Competition, And Expectations, Left Right And Center

Achillion is very definitely not going to be the first company to market with new HCV drugs, and there is apt to be extensive competition in the market. That is not only going to place a premium on the SVR efficacy data and safety profile, but also potentially on the marketing muscle of the company in question.

Since its acquisition of Pharmasset, Gilead was put in the pole position in the race to develop blockbuster HCV drugs. That is, until the company reported Phase 2 data on the superstar-to-be '7977 that showed it is not 100% perfect. Specifically, this Phase 2 study indicated that '7977 may not be effective in null responders (patients who have failed to respond to earlier treatments), and may give new hope to alternate approaches that include a NS5a inhibitor or NS3 protease inhibitor.

That said, a little perspective is in order. Maybe '7977 isn't flawless, but SVR-12 rates of 91% in genotype 1 and 100% in genotypes 2 and 3 in a thus far safe drug is still pretty impressive. Moreover, Gilead is looking at a variety of combination possibilities and while the company would certainly love to have "the one antiviral to rule them all", being a part of a blockbuster combination therapy is not a bad consolation prize.

Along Gilead and Achillion is a host of companies developing therapies and a sea of drugs known more by number than by name.

Bristol-Myers Squibb (BMY) has its NS5a inhibitor daclatasvir well along in studies, a PI ('032), and the NS5b inhibitor it acquired with the Inhibitex deal, as well as other earlier stage compounds. The NS5a inhibitor has shown solid efficacy, and its PI/NS5 combo showed 100% SVR without PEG-interferon or ribavarin.

Of course there are many more. Abbott (ABT) has its own all-oral combination (NS5a and PI), as does Roche (RHHBY.PK), although the efficacy in the Roche compounds has not been as encouraging. Johnson & Johnson (JNJ) has its TMC435 PI that it in-licensed from Medivir, and Boeringher Ingelheim has its PI as well. Indenix has a nucleotide inhibitor and NS5a inhibitor in trials and a non-nuc in preclinical development.

Last and not least are Vertex (VRTX) and Merck (MRK). These companies have brought the two newest HCV drugs to market (Incivek and Victrelis, respectively). Vertex has a PI in trials and two nucleotide inhibitors licensed in from Alios, while Merck's PI has seen a significant setback tied to safety issues.

A Quick Rundown On The Market, Prospects, And Deals

The oft-repeated statistic on HCV says that there are between 130 million and 170 million infected persons around the world. Approximately 4 million of those are in the U.S., with another 5 million the EU. By way of comparison, Brazil is thought to have at least 7 million HCV patients, India at least 10 million, and China 43 million.

Untreated HCV offer leads to severe chronic liver disease (including cirrhosis), but the long-used PEG-interferon and ribavirin therapy (dominated by Roche and Merck) has had success rates of below 50% in long-term usage.

That efficacy underlies a lot of the market expectation on HCV drugs. While the pre-Incivek/Victrelis HCV market was estimated to be about $3 billion (with $2.5 billion of that going to PEG-inteferon), analysts believe better efficacy could drive that figure close to $10 billion in 2016.

Admittedly, that's a large number. It may not be completely out of line, though, if these 90%+ SVR rates hold up in pivotal studies. Offer people with a serious lifelong illness a safer, more effective drug that is also easier to take and you can almost always charge a premium for it. Also, think about it this way - the U.S. and European insurance/payer systems are willing to pay several tens of thousands of dollars for cancer therapies that offer a few extra months of median survival benefit, so there's clearly a willingness to pay for better clinical outcomes.

What's this all mean for Achillion?

I could see ACH-1625 garnering perhaps up to a billion in sales if the early results hold all the way through studies. Moreover, there's the potential to be had from the combo therapy; whether that's in combination with another Achillion drug or a rival compound (like, say, Gilead's '7977). If Achillion could garner $1 billion in sales, that would translate into a fair value of $13 to $18 per share today based upon your forward multiple estimate (6x or 8x).

I'm sure $1 billion in sales will sound too small to Achillion bulls. Fair enough; if the early results hold up, maybe it's an even bigger blockbuster, but it looks like there are going to be a lot of competing therapies on the market and good marketing is going to deliver sales even in inferior compounds.

It may well be the case, though, that Achillion never makes it to the point where its sales matter. I would be quite surprised to see Achillion partner its drugs, but I think a buyout could well happen. Certainly there have been plenty of chatter on that subject, what with Gilead and Bristol-Myers paying up for HCV compounds (and Roche also making some deals of its own).

So how does the M&A scene break out? I don't think Bristol-Myers would need Achillion, and I don't think Gilead would go that route either unless a '7977/ACH-1625 really showed something special. Johnson & Johnson may think it needs non-PI partner compounds and may not want to pay for the overlap between their PI programs.

That said, I think there are a lot of names left that could be interested. Merck arguably needs a better protease inhibitor, and likewise Roche, Abbott, and Vertex may find that they need better compounds than they presently have. Companies like Sanofi (SNY) and GlaxoSmithKline (GSK) aren't doing much here today, but could find Achillion to be a ready-made HCV platform. Odds are, though, that Achillion holds out a bit for a desperate buyer - not because there's anything wrong with its pipeline, but because a desperate Merck or Roche may pony up a better deal if they feel pressure.

The Bottom Line

Taking a midpoint of that earlier $13-$18 range, I'd say Achillion may be worth about $15.50 a share today. Annoyingly, that's almost spot on with the current consensus number. I do believe there could be more upside as its pipeline matures and rivals run into problems, but I usually want more than 50% undervaluation before buying into a new biotech story.

Disclosure: I am long RHHBY.PK

Achillion Pharmaceuticals announces preliminary proof-of-concept data with HCV NS5A inhibitor ACH-2928...

Looks like Achillion Pharmaceuticals' NS5A inhibitor is bearing fruit, with the company releasing three-day monotherapy proof-of-concept data for it's first generation NS5A inhibitor ACH-2928 as well as naming a second generation compound ACH-3102, which is slated for early trials in Q1/Q2 next year. CE0 Michael D. Kishbauch is aiming for "a proprietary interferon-free DAA combination regimen for the treatment of HCV within Achillion's pipeline." Looks like Achillion will have plenty to present at EASL 2012, as well as an intention to evaluate an all-oral comb including one of their protease inhibitors and an NS5A inhibitors.

Achillion Announces Preliminary Phase 1b Proof-of-Concept Data With ACH-2928 NS5A Inhibitor for the Treatment of Hepatitis C

Achieves 3.68 Log10 Reduction in HCV RNA After Three Days of Treatment

NEW HAVEN, Conn., Dec 5, 2011 (GlobeNewswire via COMTEX) -- Achillion Pharmaceuticals, Inc. ACHN +1.61% , a leader in the discovery and development of small molecule drugs to combat the most challenging infectious diseases, today reported proof-of-concept data from its Phase 1b clinical trial of ACH-2928, a first-generation NS5A inhibitor, demonstrating that patients treated with ACH-2928 achieved a mean maximum 3.68 log10 reduction in HCV RNA after three-day monotherapy of 60 mg once daily. The compound also demonstrated good safety and tolerability both in healthy volunteers and in patients with chronic hepatitis C (HCV).

ACH-2928, Achillion's first generation inhibitor of the NS5A protein, was discovered through the Company's NS5A inhibitor program. Achillion also recently nominated a second-generation NS5A inhibitor, ACH-3102, which is currently undergoing IND-enabling studies and is expected to be advanced into clinical trials during the first half of 2012.

"We believe NS5A inhibitors have emerged as an important component for an all-oral, direct acting antiviral (DAA) regimen," commented Michael D. Kishbauch, President and Chief Executive Officer of Achillion. "Furthermore, NS5A inhibitors, when combined with a protease inhibitor, have achieved sustained viral responses in clinical trials in tough to treat genotype 1 HCV populations. We believe this highlights the potential to form a proprietary interferon-free DAA combination regimen for the treatment of HCV within Achillion's pipeline."

ACH-2928 Phase 1 Program

In July 2011, Achillion initiated dosing in a randomized, double-blind, placebo-controlled phase 1a/1b clinical trial to investigate the safety, tolerability, pharmacokinetic profile and antiviral activity of ACH-2928. The trial consists of three segments: assessment of single ascending oral doses (SAD) in healthy volunteers, evaluation of 3 days of oral repeat doses in subjects with genotype 1a or 1b HCV, and a 5-day multiple ascending doses segment in healthy volunteers.

During the oral repeat doses segment in subjects infected with HCV, a total of 10 patients were enrolled with 2 patients (genotype 1a) receiving placebo and 8 patients (7 genotype 1a and 1 genotype 1b) treated with 3 doses of 60 mg ACH-2928 administered once daily. No serious adverse events (SAE) were reported and there were no patient discontinuations during treatment. The mean maximum HCV RNA decline during therapy was 3.68 log10 compared to a 0.54 log10 decline for patients receiving placebo. There were no viral breakthroughs observed during ACH-2928 monotherapy.

Preliminary data from the SAD trial segment demonstrated ACH-2928 was well tolerated at all doses evaluated up to and including the maximum dose of 500 mg. There were no serious adverse events, no clinically significant changes in vital signs, electrocardiograms (ECGs), or laboratory evaluations. All reported adverse events were classified as mild or moderate, and were transient in nature.

Based upon these preliminary results, the ongoing Phase 1 study will continue to evaluate the pharmacokinetic, pharmacodynamic, and antiviral profile of ACH-2928. These Phase 1 results have been submitted for presentation at a medical meeting being held during the second quarter of 2012. In parallel, Achillion is advancing its second generation NS5A inhibitor ACH-3102 through IND-enabling studies and the Company expects to initiate clinical development during the first half of 2012.

"As we continue to evaluate ACH-2928 in this Phase 1 study, we are also working rapidly to advance ACH-3102, which has shown in preclinical studies to possess the same potent activity against genotype 1a HCV as ACH-2928, as well as enhanced activity against resistant HCV mutants that have been observed in this patient population," stated Milind Deshpande, PhD, President of Research and Development and Chief Scientific Officer. "We believe these results validate our NS5A development program, and look forward to developing an all-oral combination for clinical evaluation that includes one of our protease inhibitors and an NS5A inhibitor next year."

About NS5A Inhibitors

The NS5A protein is a clinically validated target that serves multiple functions at various stages of the HCV life cycle including involvement in virion production, interaction with host proteins and association with interferon-resistance. Achillion's NS5A inhibitors, including ACH-2928 and ACH-3102, possess potent in vitro activity against all HCV genotypes and demonstrate, in preclinical studies, additive to synergistic activity when combined with NS3 protease inhibitors, NS5B polymerase inhibitors, and ribavirin. In preclinical studies, ACH-2928 and ACH-3102 have demonstrated excellent potency, in the pico-molar range, against HCV RNA replication, including potent activity against genotype 1a while ACH-3102 has been shown to possess enhanced activity against recognized genotype 1 resistant variants.

About HCV

The hepatitis C virus infects the liver and is the most common cause of viral hepatitis, which is an inflammation of the liver. It is currently estimated that more than 170 million people are infected with HCV worldwide and The American Association of Liver Disease estimates that up to 80 percent of individuals become chronically infected following exposure to the virus. If left untreated, chronic hepatitis can lead to permanent liver damage, which can result in the development of liver cancer, liver failure or death. Few therapeutic options currently exist for the treatment of HCV infection. The current standard of care is limited by its specificity for certain types of HCV, significant side-effect profile, and injectable route of administration.

About Achillion Pharmaceuticals

Achillion is an innovative pharmaceutical company dedicated to bringing important new treatments to patients with infectious disease. Achillion's proven discovery and development teams have advanced multiple product candidates with novel mechanisms of action. Achillion is focused on solutions for the most challenging problems in infectious disease including hepatitis C and resistant bacterial infections. For more information on Achillion Pharmaceuticals, please visit www.achillion.com or call 1-203-624-7000.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other important factors, including statements with respect to the potency, safety and other characteristics of Achillion's NS5A inhibitors, which may not be duplicated in clinical studies, and Achillion's expectations regarding results, timing and duration of clinical trials and reporting of results from clinical trials of Achillion's NS5A inhibitors. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are risks relating to: Achillion's ability to advance the development of its drug candidates under the timelines it anticipates in current and future clinical trials; to obtain patent protection for its drug candidates, and the freedom to operate under third party intellectual property; to establish commercial manufacturing arrangements and to identify, enter into and maintain collaboration agreements with appropriate third-parties; and to raise the substantial additional capital needed to achieve its business objectives. These and other risks are described in the reports filed by Achillion with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and its subsequent SEC filings.

In addition, any forward-looking statement in this press release represents Achillion's views only as of the date of this press release and should not be relied upon as representing its views as of any subsequent date. Achillion disclaims any obligation to update any forward-looking statement, except as required by applicable law.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Achillion Pharmaceuticals, Inc.



CONTACT: Glenn Schulman
Achillion Pharmaceuticals, Inc.
Tel. (203) 752-5510
gschulman@achillion.com
Investors:
Mary Kay Fenton
Achillion Pharmaceuticals, Inc.
Tel. (203) 624-7000
mfenton@achillion.com
Media:
Christin Culotta Miller
Ogilvy PR
Tel. (212) 880-5264
christin.miller@ogilvy.com

Here they grow again: Achillion adds NS5A Inhibitor ACH-2928 to growing stable of anti-HCV candidate compounds

Achillion Pharmaceuticals Announces Nomination of NS5A Inhibitor as a Lead Clinical Candidate for Treatmentof HCV

ACH-2928 Demonstrates Excellent Potency Against HCV RNA Replication, Holds Potential for Combination Therapy

NEW HAVEN, Conn., Jul 22, 2010 (GlobeNewswire via COMTEX News Network) -- Achillion Pharmaceuticals, Inc. (Nasdaq:ACHN), a leader in the discovery and development of treatments for the most challenging infectious diseases, today announced the nomination of a lead clinical candidate in its fourth proprietary program against hepatitis C virus (HCV) infection. The candidate, ACH-2928, is an NS5A inhibitor that in preclinical studies has demonstrated excellent potency against HCV RNA replication, as well as good pharmacokinetic and safety profiles.

"The overall profile of ACH-2928 demonstrates that it is highly active and retains potency against HCV genotypes 1a and 1b, as well as across other genotypes. The compound's high potency, in the picomolar range, and its favorable pharmacokinetic properties strongly suggest once-daily dosing," said Milind S. Deshpande, Ph.D., Executive Vice President and Chief Scientific Officer of Achillion. "Importantly, we believe ACH-2928 is highly effective in combination with NS3 protease inhibitors, NS5B polymerase inhibitors, interferon and ribavirin."

Michael D. Kishbauch, Achillion's President and CEO, stated, "The nomination of this novel NS5A clinical candidate is both exciting and significant. The treatment paradigm for HCV is moving toward combination therapies, and we are now poised to pursue our own combination therapies, putting ACH-2928 together with our highly potent protease inhibitors, ACH-1625 and ACH-2684. The development of our fourth proprietary HCV program underscores the depth of our robust drug discovery expertise in this important therapeutic area. We have initiated IND-enabling testing of ACH-2928, and plan to initiate combination treatment in 2011."

"The nomination of ACH-2928 is further evidence of our expertise in HCV drug discovery and structure-based design. We continue to build discrete intellectual property estates to which we retain all commercial rights," concluded Kishbauch.