Achillion, J&J To Initiate Phase IIb Study On HCV Combo

Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) announced the initiation of patient dosing in a global phase IIb study by its partner Janssen, a company of Johnson & Johnson (NYSE:JNJ) , on JNJ-4178 – a triple combination of AL-335, odalasvir (also known as ACH-3102) and J&J’s Olysio (simeprevir). The all-oral combination regimen is being developed for the treatment of genotype 1 chronic hepatitis C virus (HCV) infection.

However, shares of Achillion lost 31.5% in the past one month compared to a 9.6% increase in the Zacks classified Biomed/Genetics industry.

In Jun 2015, Achillion out-licensed its HCV portfolio to J&J. Under the agreement, J&J has the global rights to develop and commercialize one or more of Achillion's lead HCV candidates, including ACH-3102, ACH-3422 and sovaprevir.

The phase IIb, open-label, multi-center OMEGA-1 study is expected to enroll approximately 300 treatment-naive and treatment-experienced patients with chronic HCV without cirrhosis. The study aims to investigate the efficacy, safety and pharmacokinetics of JNJ-4178. Patients in the study will receive the triple combination once daily for either 6 or 8 weeks. The primary efficacy endpoint is the percentage of patients with a sustained virological response 12 weeks after the end of treatment (SVR12).

Presently, JNJ-4178 is being evaluated in a phase IIa study in HCV patients with or without compensated cirrhosis. Interim results from the phase IIa study, presented in Sep 2016, showed that all the patients in cohort 1 remained HCV RNA-undetectable at 24 weeks after completing therapy. The phase IIa study also confirmed the required dose for each component as well as the treatment duration.

Per the company’s press release, more than 150 million people are infected with HCV worldwide including approximately 3 million people in the U.S. Therefore, successful development of the combination drug will allow the company to tap huge unmet patient needs in the U.S.

The collaboration with J&J could see Achillion receiving up to $1.1 billion in the form of development, regulatory and sales milestone payments, apart from a separate equity investment. Achillion is also entitled to receive tiered royalties in the mid teens to low twenties on future worldwide sales. All development and commercialization costs will be borne by J&J.

Zacks Rank & Key Picks

Achillion currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Heska Corporation (NASDAQ:HSKA) and Cambrex Corporation (NYSE:CBM) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heska’s earnings estimates have increased from $1.13 to $1.35 for 2016 and from $1.38 to $1.53 for 2017 over the last 60 days. The company has posted a positive earnings surprise in all of the four trailing quarters with an average beat of 301.64%. Its share price has increased 70.9% year to date.

Cambrex’s earnings estimates increased from $2.46 to $2.55 for 2016 and from $2.91 to $3.06 for 2017 over the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 19.78%. Its share price has increased 6.4% year to date.

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