Achillion Shares Rally Following JMP's Upgrade To Market Outperform

JMP Securities’ Liisa A. Bayko believes Achillion Pharmaceuticals, Inc. (NASDAQ: ACHN)'s stock valuation is compelling at the current levels and reflect the HCV opportunity to a large extent. Bayko upgraded the rating on the company from Market Perform to Market Outperform, with a price target of $13.

Source Of Upside

The analyst expects the Factor D program to be a potential source of meaningful upside for the stock, since the share price is tied largely to the HCV partnership.

Bayko noted that the first series of human studies for Achillion Pharma’s Factor D program was beginning to bear fruit, while stating “the program could be a game changer for the space as the first oral treatment option with unique pharmacological advantages and therapeutic applications.”

The first proof of concept data is expected by year-end 2016, which Bayko expects to derisk the asset.

If the results are positive, the company could undertake pivotal studies for ACH-4471 in 2017 for PNH and C3G, followed by other indications.

Fruitful Partnership

Achillion Pharma has partnered with Johnson & Johnson (NYSE: JNJ) for the HCV opportunity, and the analyst believes that the partnership could bring in up to $875 million in milestone payments, as well as $3.2 billion in projected royalty payments over the next 15 years.

The proceeds could be used to fund the Factor D program, “removing the need for outside financing, which is particularly attractive,” the analyst added.