Wider Loss at Achillion in Q2

Zacks

Achillion Pharmaceuticals, Inc. (ACHN) recently reported second quarter 2013 loss of 21 cents per share, wider than the year-ago as well as the Zacks Consensus Estimate of a loss of 16 cents per share. The wider loss was due to higher operating expenses.

Achillion did not record any revenue in both the second quarter 2013 and in the comparable year-ago period.

In the second quarter of 2013, general and administrative expenses increased 37.4% to $3.5 million due to higher non-cash stock based compensation. Research and development expenses shot up 84.5% year over year to $16.6 million, reflecting higher pipeline investment and consulting fees.

Achillion primarily focuses on developing therapies for hepatitis C virus (:HCV) infection and other infections. Pipeline candidates for the treatment of HCV at Achillion include sovaprevir (phase II), ACH-3102 (phase II), and ACH-2684 (phase I).

In Jun 2013, the company received a setback when the U.S. Food and Drug Administration (:FDA) placed a clinical hold on sovaprevir after observing elevations in liver enzymes in a phase I study.

The company is working on resolving the issue and planning to submit the data requested by the FDA in Sep 2013.

A phase II 12-week study evaluating sovaprevir plus ACH-3102 and ribavirin in treatment-naive patients with genotype 1 HCV is ongoing with initial results expected to be revealed shortly.

We note that Vertex Pharmaceuticals' (VRTX) Incivek and Merck’s (MRK) Victrelis are approved for the treatment of HCV among others. Moreover, many large cap companies are developing drugs for the treatment of HCV

Achillion carries a Zacks Rank #3 (Hold). Right now, Actelion Ltd. (ALIOF) looks attractive with a Zacks Rank #1 (Strong Buy).

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