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Why Achillion Pharmaceuticals Stock Flew Higher Again Today

Keith Speights, The Motley Fool

What happened

Shares of Achillion Pharmaceuticals (NASDAQ: ACHN) flew 18% higher on Friday. Today's big jump continued the momentum from earlier this week when the biotech stock soared after the company announced positive results from a phase 1 clinical study for experimental oral factor D inhibitor ACH-5228. Achillion stock has skyrocketed nearly 69% higher since the company reported the news from its phase 1 study.

So what

You might be thinking that investors are experiencing a bit of irrational exuberance with Achillion. After all, the results were only from an early-stage study. There's a long way to go before ACH-5228 has a shot at winning regulatory approval.

Hand with marker and red line trending upward

Image source: Getty Images.

But as is often the case, good news on one front led to an increase in optimism on another. Investors were certainly thrilled over the potential for ACH-5228 to be a best-in-class inhibitor of the alternative pathway (AP) that's crucial in fighting immune diseases. However, good news for this early-stage pipeline candidate also appeared to boost investors' enthusiasm about Achillion's first-generation factor D inhibitor, danicopan (also known as ACH-4471).

Achillion plans to initiate a phase 3 clinical study of danicopan in early 2020. If all goes well, the biotech could be on track to launch its first drug on the market.

Now what

There are two key next steps for Achillion with respect to ACH-5228. The biotech plans to pursue advancing the drug to a phase 2 clinical study. Achillion also intends to meet with the Food and Drug Administration about starting a clinical study of ACH-5228 in the U.S. The phase 1 study that has generated so much excitement was conducted outside the U.S.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.