More details on recent upgrades
UPDATE: Achillion Pharmaceuticals (ACHN) Price Target Raised to $22 at Maxim Group
June 16, 2014 8:43 AM EDT Tweet Send to a Friend
(Updated - June 16, 2014 9:08 AM EDT)
Maxim Group maintained a Buy rating on Achillion Pharmaceuticals (NASDAQ: ACHN) and raised its price target to $22.00 (from $6.00).
Analyst Jason Kolbert said, "After last week’s dinner with ACHN management, we expect to see fundamental progress at the company. We see a viable protease inhibitor (sovaprevir/ACHN-2684), a best-in-class NS5A (ACHN-3102), and an exciting nucleotide program that could have proof-of-concept data in HCV patients by year end. In addition, we believe the issuance of IP around the nucleotide could be another catalyst for the company."
"Bears’ arguments? The HCV market will be gone (with everyone cured from existing regimens), Achillion’s nucleotide may not work, and it doesn’t have IP (yet). Protease inhibitors are a flawed class. NS5A is important but only on top of a nucleoside. We do not find these arguments credible," continued the analyst.
"Our valuation is based on our assumptions for the commercialization of an Achillion STR (NS5A/NS5B/PI) in HCV. We use a 30% discount rate in our FCF model to derive a $22.00 price target. Our increase is driven by the advance of the nucleoside into HCV patients, with data expected by year end. In addition, acquistion potential for Achillion remains high, in our opinion," he added.
UPDATE: UBS Upgrades Achillion Pharmaceuticals (ACHN) to Buy
(Updated - June 12, 2014 9:03 AM EDT)
UBS upgraded Achillion Pharmaceuticals (NASDAQ: ACHN) from Neutral to Buy with a price target of $11.
Analyst Andrew Peters said, "The recent acquisition of Idenix by Merck has shifted our view on what is needed to “de-risk” assets in HCV and now see the upcoming 7-day read-out as a key event that should drive strategic interest. Prior to the IDIX deal we had seen ph2 combo data as necessary to better define the clinical profile of a nuc, but think that asset scarcity may trump this view and believe pre-clinical and 7-day data may be sufficient to justify investment in the space. The competitive process behind the IDIX deal underscores our view that a nuc is needed to be successful in HCV, with the opportunity beyond GT1 a key focus. While we see differences between IDIX and ACHN (including nuc IP and insight into FDA nuc safety concerns and pre-clinical requirements), with a market cap of ~20% vs. the IDIX deal, we believe the discount may indeed be overdone."
"Despite the recent 100%+ move in ACHN shares, we still see material upside from current levels and view the current valuation as offering asymmetric risk/reward ahead of the near-term catalyst path. Our revenue estimates move higher on increased confidence in our base-case scenario and risk-adj. revenue from the nuc program," he added.
Baird Upgrades Achillion Pharmaceuticals (ACHN) to Outperform
June 11, 2014 6:27 AM EDT Tweet Send to a Friend
Baird upgraded Achillion Pharmaceuticals (Nasdaq: ACHN) from Neutral to Outperform and moves its price target from $14 to $12 ahead of MRK/IDIX merger docs.
Analyst Brian Skorney said, "Following the surprise news Monday of Merck's $3.85 billion acquisition of Idenix, we believe the valuation gap between the IDIX purchase price and ACHN's market price isn't justified based on the state of the company's respective assets. We like the risk/reward into two near-term catalysts that we believe could drive shares substantially higher, even with the recent move."
The analyst said preliminary evidence indicates Merck wasn't the only enthusiastic bidder. "Merck’s public justification for the Idenix purchase is based upon the nucs, IDX21437 and IDX21459 and the need for a nuc to achieve the goal of an ultra-short combo treatment for Hep C. If true, we believe multiple bidders may have been in the running to acquire IDIX. Initial sources in the press indicate that is the case. If there were multiple bidders, the only other company with a nuc in active clinical development is Achillion. It looks like our skepticism of the durability of the Hep C market is not shared by large pharma and, therefore, we believe Achillion would clearly be the next target for M&A."
He added, "We think a key catalyst for Achillion is the SEC filings that MRK and IDIX will provide that includes a background on the offer, generally including a description of the process, including other bidders. We expect these SEC filings to go public within the next three weeks. If these filings corroborate the press’ assertion that multiple bidders were involved right up until the end, we believe it would indicate a greater percentage of the IDIX purchase price was attributed to the nucleotides than the patent estate. The greater the number of players and the higher the bids made by other potential acquirers, the better this reflects on ACHN and the potential for them to get a premium bid. However if Merck was bidding against itself for a meaningful part of the process, we believe this attaches more weight to the patent value as it pertains to ongoing legal battles with Gilead, a process Achillion is not a part of and should not derive any valuation from."
Achillion (ACHN) Price Target Raised to $6 at Deutsche Bank
June 10, 2014 10:58 AM EDT Tweet Send to a Friend
Deutsche Bank maintained a Hold rating on Achillion Pharmaceuticals (NASDAQ: ACHN) and raised its price target to $6.00 (from $4.00).
"Progress on Nuke front along possibly increased focus from big pharma starts to make this story very interesting in the 2H14. We note that 3 month tox work is already complete for the Nuke. Data is expected in fall 2014. After yesterday’s M&A news with small cap HCV co IDIX, we think that investors will be very focused on the results from this trial. Removal of FDA clinical hold on Sovaprevir is also a positive. Overall, we see less risk to the platform as we think execution is improving at the co and we are reducing our discount rate to 12.5% (prev 14%)," said analyst Robyn Karnauskas.
"We think that ACHN and macro environment is moving in the right direction. We think data trumps all in this environment so we are waiting for the nuke data in the fall. We also think big pharma remains very interested in HCV and aggressive in acquiring assets. All of these factors are very favorable tailwinds for Achillion. Our TP of $6/sh is based on probability-adjusted DCF (Probability of success 30%, Discount rate 12.5% in line with small-cap peers and no terminal value as we model till patent expiry)," she added.
Wells Fargo Comments on Achillion (ACHN) After Dosing Begins for ACH3422
June 10, 2014 10:47 AM EDT Tweet Send to a Friend
Analyst Brian Abrahams of Wells Fargo noted the possibility for additional upside in Achillion Pharmaceuticals (NASDAQ: ACHN) based on HCV assets. This morning Achillion announced dosing of the first HCV patients for ACH3422. Achillion also announced today that the FDA has removed the clinical hold on sovaprevir, an NS3/4A protease inhibitor, to permit the conduct of trials in patients with HCV.
"Though nuc development still has risks and the road ahead is not short, this is positive progress towards constructing a potentially competitive HCV regimen long-term. We could see additional upside for ACHN in the wake of increasing recognition of the scarcity value of quality HCV assets," said Abrahams.
"The ph.I '3422 study that began at end of April is assessing single doses and 14-day dosing in healthy volunteers, followed by 7-day dosing in HCV patients, in a dose escalation, parallel cohort design. We anticipated dosing would begin in HCV patients as the study progressed; dosing in HCV now indicates no major safety signals have arisen, encouraging, though the study has only tested lower doses over relatively short time periods to date," continued the analyst. "ACHN aims to report proof-of-concept results by fall, and initiate all-oral '3422 combo studies year-end. Given the competitiveness of GILD's regimen, we believe '3422 or another nuc will be needed with ACHN's PI/NS5A to enable short treatment durations and prevent breakthroughs. Recall '3422 demonstrated a promising preclinical profile, with favorable properties including comparable potency to GILD's sofosbuvir and clean (mitochondrial) tox. While HCV nuc development through late stages has historically been challenging, we believe '3422 has reasonable chance of at least demonstrating good initial viral suppression and clean safety in ph.I."
Wells Fargo maintained a Market Perform rating on Achillion.
Achillion Pharmaceuticals (ACHN) Also an Attractive Acquisition Candidate - Maxim Group
June 9, 2014 2:15 PM EDT Tweet Send to a Friend
Maxim Group analyst Jason Kolbert weighed in on Achillion Pharmaceuticals (NASDAQ: ACHN) following Merck (NYSE: MRK) plans to acquire Idenix (NYSE: IDIX). He also sees Achillionon as an acquisition candidate in the HCV space with viable NS5A, Protease Inhibitors and Nucleosides in development.
"As they trade today (intra-day at $278M market capitalization with over $100M in cash), we see Achillion as a compelling valuation," Kolbert notes.
The firm reiterated a Buy rating and price target of $6.00 on Achillion. They also told investors Maxim is hosting the management of Achillion for dinner tomorrow (June 10, 2014).
