The share price of Achillion Pharmaceuticals, Inc. (ACHN - Free Report) was up 5.14% after the company announced its second quarter results on Aug 7. Achillion reported a second quarter 2014 loss of 16 cents per share, narrower than the Zacks Consensus Estimate of a loss of 18 cents and the loss of 21 cents recorded in the second quarter of 2013.
Achillion did not record any revenues in the second quarter 2014 and so was the case in second quarter 2013.
Quarter in Detail
In the second quarter of 2014, general and administrative expenses increased a slight 1.2% to $3.6 million due to increased corporate legal and insurance costs. Research and development (R&D) expenses fell 26.5% year over year to $12.2 million, reflecting lower investment in pipeline.
Achillion primarily focuses on developing therapies for hepatitis C virus (HCV) infection. The company has initiated several studies on its HCV candidates including ACH-3102 (phase II), ACH-3422 (phase I/Ib ongoing, data should mature in fall of 2014) and sovaprevir (phase II).
In Jun 2014, the FDA removed the clinical hold on sovaprevir, which is an NS3/4A protease inhibitor. We remind investors that the regulatory body had placed a clinical hold on sovaprevir in June last year after observing elevations in liver enzymes in a phase I study. The FDA has now allowed Achillion to conduct studies with once daily sovaprevir (a maximum of 200 mg) in patients suffering from HCV and in single dose trials on healthy volunteers. However, the FDA maintained a partial clinical hold and stated that prior review and approval of the protocol will be required if the company needs to conduct multiple dose studies in healthy volunteers.
We believe that in the near term investor focus will be on Achillion’s HCV pipeline candidates. The HCV market is currently led by Gilead Sciences (GILD - Free Report) . Gilead’s HCV treatment Sovaldi (launched in Dec 2013) generated revenues of approximately $3.5 billion in the second quarter of 2014. Moreover, the company is looking to get a combination therapy of ledipasvir and Sovaldi approved in the U.S. and EU. Several big pharma/biotech including Merck & Co. Inc. (MRK - Free Report) and AbbVie Inc. (ABBV - Free Report) are developing therapies targeting the lucrative HCV market.
Achillion carries a Zacks Rank #3 (hold). Investors looking for better-ranked stocks may consider companies like Gilead carrying a Zacks Rank #1 (Strong Buy).