Leerink upgrades Achillion to OP

Leerink upgraded Achillion Pharmaceuticals (NASDAQ:ACHN) to “outperform” from “market perform” and raised its price target to $6 from $4. The stock closed at $3.78 on May 17.

Achillion has a portfolio of direct antiviral agents and complement factor D (CFD) inhibitors in clinical development.

“We believe there is an attractive risk/reward for Achillion shares at current levels, based on a ‘floor’ value of $1/share for the HCV partnership with Johnson & Johnson, plus the current net cash balance of about $387-million, as of the first quarter this year,” writes analyst Joseph Schwartz.

“At the current stock price, we believe that there is limited downside for investors even if complement fails, assuming the HCV partnership remains intact,” he added.

Mr. Schwartz said he has assigned a conservative 33% probability of success to Achillion’s nascent complement program due to the lack of precedent for an oral small molecule inhibitor of complement factor D (CFD) that is selective enough to avoid off target effects.

“We believe Achillion may be able to obtain a viable therapeutic index for its CFD program,” he added.


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