Why Shares of Achillion Pharmaceuticals, Inc. Soared

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Shares of the clinical-stage biopharma Achillion Pharmaceuticals rose by nearly 20% this morning, on unusually high volume, after the company released an encouraging interim data analysis for its hep C drug ACH-3102 currently in a small mid-stage trial. Per the report, the drug achieved 100% functional cure rates (sustained viral responses after 12-weeks) after a mere six weeks of treatment, when used in combination with Gilead Sciences' Sovaldi (sofosbuvir).

So what: The shortest approved hep C treatment duration at the current time is Gilead's once-daily combo pill Harvoni, which can be taken for 8-weeks by a select group of patients (not all), as opposed to the standard 12-week regimen. Moreover, we haven't seen other major hep C players -- most notablyMerck-- have much success yet when it comes to shortening treatment times.

Achillion thus appears to have the first drug that shows real promise on this front, meaning that it may peak the interest of big pharmas via a buyout scenario.

Now what: This trial was admittedly small (only 12 active patients received the six week treatment regimen), but it is nonetheless unprecedented. The company is thus planning on moving forward with another clinical trial to assess the combo's ability to reduce viral loads after only four weeks of treatment.

Despite these impressive results, investors may want to remain cautious with this speculative biopharma for a couple of reasons. First off, Achillion's drug composed only 11% of the combo therapy, with Gilead's Sovaldi making up the bulk of the treatment, which is a fact that needs to be considered when weighing Achillion's value proposition going forward.

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Next up, there are several companies pursuing similar lines of research, suggesting that Achillion won't have the edge for long.

Time will tell how this plays out. But it's important to remember that the hep C market is already awfully crowded, and multiple companies are likely to roll out their own shorter duration combo therapies in the near future.

If they fail in this pursuit, though, that's when all eyes could really turn on Achillion.

The article Why Shares of Achillion Pharmaceuticals, Inc. Soared originally appeared on Fool.com.

George Budwell owns shares of Gilead Sciences. The Motley Fool recommends Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.