JMP Says Stepping To The Sidelines On Achillion
In a report published Wednesday, JMP Securities analysts downgraded the rating on Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN) from Market Outperform to Market Perform. The analysts prefer to stay in the sidelines while the company reinvents itself by outsourcing HCV and focuses on its preclinical assets.
"[W]hile the Factor D platform appears to have blockbuster potential, in our view, it remains early in development," the analysts said, while adding, ACHN announced that it has signed a worldwide collaboration with Johnson & Johnson (NYSE: JNJ) in return for: 1) a mid-teens to lowtwenties royalty on future HCV sales; 2) $875M in future milestones; and 3) a $225M equity investment."
Under this partnership, Johnson & Johnson will take on the responsibilities of R&D and commercialization, while Achillion provides the HCV assets.
"Our thesis for owning ACHN had been based on an outright acquisition, following data from its own HCV assets, for which it had one of each class. Given this deal, our thesis no longer holds and we now view ACHN as a company with the potential for a stream of payments from HCV, which it will reinvest into its interesting, but early stage, pipeline of Factor D compounds targeted at various rare diseases," the JMP Securities report stated.
The analysts believe that the stock is fairly valued at its current levels.
Latest Ratings for ACHN
May 2015 | UBS | Downgrades | Buy | Neutral |
May 2015 | William Blair | Upgrades | Market Perform | Outperform |
May 2015 | JMP Securities | Downgrades | Market Outperform | Market Perform |
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