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Setback for Achillion

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Achillion Pharmaceuticals Inc. (ACHN) recently announced that the U.S. Food and Drug Administration (:FDA) has decided to retain the clinical hold on its hepatitis C viral infection (:HCV) candidate, sovaprevir. We expect investors to react negatively to the news.

We note that the FDA had placed a clinical hold on sovaprevir after observing elevations in ALT liver enzymes in a phase I healthy subject drug-drug interaction study in Jun 2013. The phase I study was being conducted to evaluate the effects of concomitant administration of sovaprevir with Norvir (ritonavir)-boosted Reyataz (atazanavir).

While imposing the clinical hold, the FDA had requested Achillion to submit reports from two drug-drug interaction studies along with an integrated safety analysis of ongoing sovaprevir studies. Despite submitting the requisite data and addressing all issues raised by the FDA, the regulatory authority decided not to lift the clinical hold on the candidate.

Meanwhile, Achillion announced interim data from a 12-week phase II study evaluating sovaprevir plus ACH-3102 and ribavirin in treatment-naive patients with genotype 1 HCV. The combination regime demonstrated promising efficacy, safety and tolerability.

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 primarily focuses on developing therapies for HCV and other infections. Pipeline candidates for the treatment of HCV at Achillion include sovaprevir (phase II), ACH-3102 (phase II), ACH-2684 (completed phase I) and ACH-3422 (phase I expected to be initiated in the first half of 2014). Additionally, the company also plans to initiate a study evaluating ACH-3102 in combination with ACH-2684 with results expected next year.

 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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