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Biotech Stocks I'm Watching: ACHN

|Includes: Achillion Pharmaceuticals, Inc. (ACHN)

Here's the first in a series of write-ups for several biotech companies I'm actively monitoring, and which have great upside potential in the near-term (6-8 weeks):

Achillion Pharmaceuticals (NASDAQ:ACHN)

ACHN missed its chance to present updated ACH-1625 data at last week's EASL conference, however we should expect data from the next two dosing cohorts shortly. 

ACH-1625, an HCV NS3 protease inhibitor, has shown remarkable log10 reduction. In December 2009, ACHN reported a 3.94 log10 mean reduction in HCV RNA titers after 5-day monotherapy with its 600 mg bid dose cohort (n=6) compared to a 0.22 log10 reduction in the placebo group (n=3). Titers remained down after seven (7) days from the last dose and demonstrated a mean reduction of 2.0 log 10 through day 12.

In January 2010, ACHN reported titer data from the second dose cohort of 500 mg bid.  After five (5) days of monotherapy, patients on treatment (n=6) demonstrated a mean 4.25 log10 reduction in viral titers compared to a mean reduction of 0.29 log10 in the placebo group (n=3).

When data from the first dose cohort was announced in December 2009, ACHN stock's price jumped almost 50% from $2.15 to $3.19. Further data in January 2010 did not move the stock up and the stock of course decreased further when the company raised $21 million in January. 

The stock price saw a nice rise ahead of the EASL conference, most likely in anticipation of expected new -1625 data (which didn't come).  The stock has seen a recent sell-off which makes for a perfect buying opportunity.  I bought ACHN back in early March and sold some last week ahead of EASL.  Now that the stock price is back down and non-volatile at $2.70 and change, I'm buying more ahead of upcoming catalysts and because of the long-term value.

At the recent Canaccord Adams Hepatitis C Conference, ACHN mentioned that enrollment was nearly complete in the next two dose cohorts (lower dose and a once-daily) with data "around the corner" or "shortly after EASL."  ACHN is also completing its manufacturing as it prepares for a September 2010 phase 2 study initiation. Partnering discussions are also fairly advanced, although I would not get my hopes up on this aspect due to the recent financing and also because management mentioned it expects a term sheet "soon" (which can always fall apart or take weeks to months to execute a license).

There's also a pending 3-month tox study, which adds some degree of cautionary measure.

Nonetheless, I like ACHN because:

1. Very strong efficacy and safety data, although early, in an increasingly crowded HCV market
2. Well financed heading into the next few catalysts
3. Trading at a discount (the stock price seems to have found a floor)
4. Strong management
5. Highly watched by traders and investors as evidenced by the uptrend the few weeks ahead of EASL
6. Low debt (about $3 million)
7. Consistently low quarterly burn rate of about $6 million
8. Stronger partnering position due to new/forthcoming data and recent financing
9. Little to no downside in the near-term (unless an unexpected safety signal arises)

For more information on ACHN or to learn more about other biotech companies and catalysts, please visit, our database covering over 280 publicly-traded biotechnology and pharmaceutical companies, more than 1000 profiles of approved and development-stage drugs, devices and diagnostics, and 17 different catalyst types.

Disclosure: Long ACHN