EDISON EQUITY RESEARCH - ACHILLION PHARMACEUTICALS

EDISON EQUITY RESEARCH: ACHILLION PHARMACEUTICALS - FROM TAKEOUT TO TAKING IT ON

Achillion’s collaborative deal with Janssen Pharmaceuticals (Johnson and Johnson), announced 19 May, repositions Achillion as a viable, independent concern with a high-potential Hep-C franchise, a small molecule programme targeting the complementary Factor D pathway and noteworthy research platform. The agreement lays to rest any speculation as to an outright company takeover. The deal, entailing up to $900m in milestones and a $225m equity investment, is value enhancing on our analysis, moving our valuation to $2.3bn from $1.9bn as Janssen takes on all R&D costs, paying royalties on sales from mid-teens to low twenties.

Achillion is a biopharmaceutical company engaged in the discovery and development of treatments for chronic hepatitis C virus (HCV) and other therapeutic areas. The company is collaborating with Janssen Pharmaceuticals (J&J) to develop and commercialise its Hep-C franchise including NS5A inhibitor ACH-3422, a novel nucleotide NS5B polymerase inhibitor, ACH-3102, and NS3/4A protease inhibitor, sovaprevir.

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