The biotechnology sector really got hammered in 2018. In December the markets took many quality small cap biotechs down to historic low prices, observes Bill Mathews, small cap expert and editor of The Cheap Investor.
One of those stocks is Achillian Pharmaceuticals (ACHN), a biopharmaceutical company that discovers, develops, and commercializes small molecule drug therapies for immune system disorders in the United States.
Its lead drug candidate includes ACH-4471, an inhibitor of factor D that is in Phase II clinical trials for patients with paroxysmal nocturnal hemoglobinuria and C3 glomerulopathy.
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The company is also developing ACH-5228, a factor D inhibitor that is in Phase I clinical trial; ACH-5548, a factor D inhibitor; and other factor D inhibitors.
It has license agreements with GCA Therapeutics, Ltd. and Ora, Inc., as well as a collaboration arrangement with Janssen Pharmaceuticals Inc. to develop and commercialize drug candidates for the treatment of chronic hepatitis C virus.
We like ACHN because the company has several products in FDA Trials, collaboration agreements with pharmaceutical companies and a large amount of cash. As of the end of its latest quarter, ACHN has $283 million ($2.05 a share) in cash.
The company expects its burn rate to be about $63-65 million for the year, and at that current rate, it should have cash for about four years. ACHN has a book value of $2.02 and no debt.
The stock has huge institutional ownership, with149 institutions owning 79% of the float. Its two largest shareholders, Blackrock and Vanguard, each own about 12 million shares. We think positive FDA news could move the stock price up to the $3-5 level.
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