The race to cure Hepatitis-C, a contagious liver disease with severe lifelong implications, has become a crowded market. But it’s tough to see how biotech company Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) will lose out.
Though ACHN stock has been volatile over the past couple of years, Achillion has several products in clinical trials, making ACHN tough to bet against. And despite its fourth-quarter earnings miss last week, which sent shares down more than 7%, there’s no better time to buy ACHN stock than now. Take a look at the chart.
Everyone knows investing in biotechs is risky, and you can see just how crazy it can get by looking at the spread between Achillion’s 52-week highs and lows. However, ACHN’s price has been much more normalized in the past six months, trading in a (relatively) smaller range of $10 to $15.
Not that you shouldn’t expect any more volatility, but you can feel better about using Thursday’s 7% pullback in ACHN stock as a buying opportunity.
Especially once you understand where Achillion Pharmaceuticals is going.
Achillion Pharmaceuticals (ACHN): ACH-3422 & ACH-3102
Achillion’s advances in developing treatments for Hepatitis C has been the major catalyst of is recent surge from its 52-week low. And despite competitive-pricing pressures from the likes of AbbVie Inc (NYSE:ABBV) and Gilead Sciences, Inc (NASDAQ:GILD), Achillion Pharmaceuticals’ breakthrough proprietary Hepatitis-C drugs — clinically named ACH-3422 and ACH-3102 — continue to gain momentum, suggesting that its stock gains has just begun.
In December, Achillion Pharmaceuticals announced positive results from two studies involving both drugs during six-week trials.
“We believe that achievement of 100 percent SVR4 in six weeks in the ACH-3102 proxy study, combined with the high potency and safety demonstrated by ACH-3422, highlights the ability of our exceptional, fully owned portfolio to excel in the HCV market,” CEO Milind Deshpande said in a statement.
Achillion Pharmaceuticals announced Thursday that it will begin clinical trials with both drugs for Hepatitis-C patients some time in the first half of 2015. These trials will last between six weeks to three months, with results expected in the second half of the year. This is an important development not only for the company but also consumers, especially since roughly 17,000 U.S. residents become affected with Hepatitis-C each year.
According to the Centers for Disease Control, an estimated 3.2 million people in the U.S. suffer from chronic Hepatitis-C, making it a potentially lucrative market for the drug company that can emerge as a leader. And the ongoing progress Achillion Pharmaceuticals continues to make suggests it will positioned to capitalize on that industry, boding well for ACHN stock.
ACHN stock certainly is providing something of a discount thanks to its 10% decline so far in 2015. Shares have a consensus “buy” rating and an average 12-month price target of $20.50, suggesting 85% gains from current levels.
I think it’s likelier we’ll see a more muted response to any positive results from Achillion’s trials — say, a move to $16 or $17. But even then, you’d be looking at roughly 50% gains for ACHN stock, plus the likelihood that Achillion would end up on the M&A radar for one of the major drug companies.
ACHN is an easy buy from here. Just make sure, as you should with most spec buys, to set stop-losses in case the floor falls out.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
