ACHNAchillion Pharmaceuticals, Inc. (NASDAQ:ACHN) reported financial results for the three months ended September 30, 2016. For the third quarter of 2016, Achillion reported a net loss of $20.7 million or $0.15 per share, compared with net income of $26.3 million or $0.19 per share for the third quarter of 2015. Cash, cash equivalents, marketable securities, and interest receivable as of September 30, 2016 were $409.5 million.

“We continue to advance ACH-4471 and our platform of small molecule factor D inhibitors,” commented Milind Deshpande, Ph.D., President and Chief Executive Officer of Achillion. “Our strong balance sheet, together with our collaboration with Janssen who is developing JNJ-4178, a next-generation short-duration treatment regimen for HCV, enables us to focus on the discovery and development of what could be a game-changing approach to modulating diseases of the complement alternative pathway.”

Third Quarter Results

For the three months ended September 30, 2016, Achillion reported a net loss of $20.7 million compared with net income of $26.3 million during the same period of 2015.

During the third quarter of 2015, Achillion and Janssen Pharmaceuticals, Inc. (Janssen), one of the Janssen Pharmaceutical Companies of Johnson & Johnson, completed the closing of the collaboration providing Janssen with an exclusive, worldwide license to develop and, upon regulatory approval, commercialize HCV products and regimens containing one or more of Achillion’s HCV assets. Upon closing in 2015, Achillion received $225 million from Johnson & Johnson Innovation — JJDC, Inc. following the issuance of 18,367,346 shares of Achillion at a price of $12.25 per share.

Achillion recognized in the third quarter of 2015 revenue of $33.8 million under the Janssen Agreement, representing a portion of the premium paid by JJDC. No revenue was recognized during the three months ended September 30, 2016.

Research and development expenses were $16.7 million for the three months ended September 30, 2016, compared with $12.0 million for the same period of 2015. The increase for the three months ended September 30, 2016 was primarily due to increased manufacturing; clinical trial and consulting costs related to ACH-4471, partially offset by decreased manufacturing, clinical trial and consulting costs related to our HCV compounds which were licensed to Janssen in 2015.

General and administrative expenses were $4.8 million for the three months ended September 30, 2016, compared with $4.9 million incurred during the same period in 2015. The decrease for the three months ended September 30, 2016 was primarily due to decreased business development consulting fees and corporate legal fees related to the Janssen Agreement, partially offset by increased personnel and non-cash stock costs largely related to the addition of personnel.

Nine Month Results

For the nine months ended September 30, 2016, Achillion reported a net loss of $57.3 million, compared to a net loss of $22.0 million in the same period in 2015. During the nine months ended September 30, 2015, Achillion recognized revenue of $34.5 million under the Janssen Agreement, representing a portion of the premium paid by JJDC.

Research and development expenses were $44.1 million and $46.9 million for the nine months ended September 30, 2016 and 2015, respectively. The decrease for the nine months ended September 30, 2016 was primarily due to decreased manufacturing, clinical trial and consulting costs related to our HCV compounds, which were licensed to Janssen in 2015, partially offset by increased manufacturing, clinical trial and consulting costs related to ACH-4471. Personnel costs also increased due to the addition of personnel in our discovery and development groups.

General and administrative expenses in the period ending September 30, 2016 were $15.4 million, compared with $19.2 million incurred during the same period in 2015. The decrease for the nine months ended September 30, 2016 was primarily due to decreased consulting fees and corporate legal fees related to the Janssen Agreement, partially offset by increased personnel and non-cash stock compensation costs largely related to the addition of personnel.

Complement Factor D Platform

“ACH-4471 is the first factor D inhibitor to demonstrate complement alternative pathway inhibition in humans after oral dosing,” said Dr. Deshpande. “Through pioneering research in complement biology, and data emerging from the ACH-4471 clinical program, we are gaining important insights into PK/PD relationships as well as in vivobiomarkers to guide development in patients. Upcoming presentations at ASH will highlight groundbreaking research with ACH-4471 regarding complement biology and factor D inhibition.”

Phase I Clinical Program

In June 2016, Achillion initiated enrollment and dosing in an ongoing phase I multiple ascending dose (MAD) study of ACH-4471 in healthy volunteers. The goal of the MAD study is to evaluate safety and tolerability as well as to optimize the PK/PD profile and dosing regimens for further development in patients.

In the three dose cohorts completed to date, strong complement inhibition using multiple in vivo as well as ex vivo assays was observed. The plasma trough concentrations of ACH-4471 exceeded the range the Company anticipates for potential treatment of patients. These current projections are based on emerging data including the benchmarking of ACH-4471 with eculizumab for inhibition of lysis of PNH red blood cells and the PK/PD profile of ACH-4471 from the phase I program. In the ongoing MAD study, Achillion is planning to assess additional dosing regimens to maintain the projected effective trough concentrations and safety of ACH-4471.

To date in the MAD study, ACH-4471 has been generally well tolerated across three dose cohorts (200 mg, 500 mg or 800 mg given every 12 hours) with no treatment-related SAEs reported. Two cases of self-limited, ALT elevations (Grade 3 and 4) were observed post-treatment in the mid- and high dose groups, respectively, with neither subject exhibiting signs or symptoms of hepatic decompensation. Both subjects’ ALT levels normalized without intervention during follow up. Further, no treatment-associated fever or infections were observed.
Achillion anticipates announcing interim results from this phase I study in the first half of 2017.

Upcoming Presentations at the 2016 Meeting of the American Society of Hematology

Today, the American Society of Hematology announced the titles of two ACH-4471 related posters to be presented at the 58th annual meeting in San Diego on December 3-6, 2016.

  • ‘Effect of complement inhibition by anti-C5 (eculizumab) or a small molecule inhibitor of Factor D (ACH-4471) on survival of meningococci in blood from vaccinated adults.’ These data will be presented by Dr. Dan M. Granoff, UCSF Benioff Children’s Hospital, a world expert on meningococcal infections.
  • ‘Evaluation of bacteria-mediated potential “Bystander” hemolysis of PNH red cells in vitro: No evidence of significant complement classical or lectin pathway-mediated hemolysis induced by microorganisms.’ These data will be presented by Dr. Xuan Yuan from the laboratory of Dr. Robert Brodsky, Johns Hopkins University, a leading PNH expert.

In addition, Achillion recently presented a poster at the XXVIth International Complement Workshop in Kanazawa, Ishikawa, Japan, demonstrating that ACH-4471 does not affect bacterial killing via lysis or opsonophagocytosis using E. coli as a test pathogen.

These data expand Achillion’s understanding of complement biology and demonstrate the potential advantages of inhibition of factor D in treatment of complement-mediated diseases.

Ophthalmology

Achillion’s leading research in medicinal chemistry and structural biology has led to the development of factor D inhibitors which also have properties appropriate for ocular delivery. The company is now advancing small molecule candidates with characteristics appropriate for treatment of dry AMD. Preclinical studies have demonstrated ocular safety and desirable tissue distribution. Achillion is working on approaches that could be used to deliver its small molecule factor D inhibitors to the eye less frequently than other treatments in development.

Janssen Collaboration

In September 2016, Achillion announced positive interim results from the Janssen-sponsored 604 phase IIa clinical trial of the triple combination of simeprevir, AL-335 and odalasvir, the combination now referred to as JNJ-4178, which achieved  100 percent SVR12, or sustained viral response 12 weeks after the completion of treatment, for both 8-week and 6-week treatment durations in HCV genotype 1 infected patients . Based on these positive results, Janssen plans to advance the triple combination in a phase IIb clinical study (OMEGA-1) in HCV patients along with the expanded 604 study. Janssen recently announced that enrollment in the phase IIb study is targeted to begin in the fourth quarter of 2016. (Original Source)

Shares of Achillion are currently trading at $4.90, down $1.14 or 19%. ACHN has a 1-year high of $10.95 and a 1-year low of $5.57. The stock’s 50-day moving average is $7.81 and its 200-day moving average is $8.47.

On the ratings front, Achillion has been the subject of a number of recent research reports. In a report issued on September 23, Jefferies analyst Brian Abrahams reiterated a Hold rating on ACHN, with a price target of $7.00, which implies an upside of 16% from current levels. Separately, on the same day, Chardan’s Madhu Kumar reiterated a Sell rating on the stock and has a price target of $5.00.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Brian Abrahams and Madhu Kumar have a yearly average loss of 5.2% and 16.3% respectively. Abrahams has a success rate of 32% and is ranked #3835 out of 4165 analysts, while Kumar has a success rate of 40% and is ranked #3848.

Achillion Pharmaceuticals, Inc. is a biopharmaceutical company that discovers, develops and commercializes innovative treatments for infectious diseases. The company is currently engaged in the development of antivirals for the treatment of chronic hepatitis C infection and resistant bacterial infections. Its products include ACH-3102, ACH-2684, Sovaprevir and ACH-3422.