Why Achillion Pharmaceuticals, Inc. Stock Spiked Today

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What happened

Shares of clinical-stage biotech Achillion Pharmaceuticals (NASDAQ: ACHN) gained a healthy 15.4% today on around three times the average daily volume. What's going on?

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The company reported before the opening bell that the European Medicines Agency Committee for Orphan Medicinal Products issued a positive opinion on ACH-4471 for orphan status as a potential treatment for the rare kidney disorder known as C3 glomerulopathy, (C3G).

ACH-4471 is the company's lead product candidate. The drug is currently being assessed as a potential disease-modifying therapy in C3G, paroxysmal nocturnal hemoglobinuria, and immune complex-mediated membranoroliferative glomerulonephritis.

So what

The big-ticket item is that orphan-drug designation in the EU comes with a whopping 10-year period of marketing exclusivity after approval. So, if approved, Achillion's shares would probably garner a noteworthy premium because of the drug's rather lengthy period of exclusivity in key markets abroad.

Now what

One of the most interesting aspects about Achillion is that it's exceptionally well capitalized for a company of its size and developmental state, thanks to its former hep C collaboration with Johnson & Johnson. Specifically, the biotech reported having a noteworthy $330 million in cash and cash equivalents earlier this month. That's a big deal, because it should translate into minimal dilution for shareholders as Achillion's early- to mid-stage pipeline for rare kidney ailments matures.

Is Achillion worth buying right now? While some analysts have pegged ACH-4471 as a potential blockbuster if it can strike gold in multiple indications, this company is still a long way from filing a regulatory application. As such, Achillion is arguably a worthwhile watchlist candidate at this juncture, but not quite a screaming buy.

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George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Johnson & Johnson. The Motley Fool has a disclosure policy.