Achillion sinks on Hep C trial halt

Achillion Pharmaceuticals Inc. shares lost more than half their value Friday, after the company and its partner Gilead Sciences Inc. decided to abandon their hepatitis C drug.

Gilead and Achillion said Thursday preliminary trial results of the drug had shown an increase in the level of serum creatinine, which indicates abnormal kidney function.

Shares of New Haven, Conn.-based Achillion closed down $9.12, or 51 percent, at $8.87 on the Nasdaq Stock Market. The shares traded as low as $8.56, below the previous 52-week low of $11.57 hit Oct. 27. Shares were trading at a year high of $20 on Feb. 1.

Shares of Foster City, Calif.-based Gilead closed down $1, or 1.4 percent, at $71.16 on Nasdaq.

The companies said they are continuing their partnership and will be back underway in the first half of 2008 in testing with other similar compounds.

Needham & Co. analyst George Fulop said Gilead and Achillion are now "a couple of years behind."

Adam Cutler, an analyst with JMP Securities, said there's "a silver lining as the drug has a totally novel mechanism," and called the share movement an "overreaction."

However, analysts say moving toward a new combination treatment, or a "cocktail," as is used against HIV, is showing the greatest potential to treat the hepatitis virus, and is the most likely outcome. The hepatitis C virus mutates and can easily become resistant to drugs.

Hepatitis C, an infection passed through the blood, often by sharing needles or through blood transfusions is the main reason for liver transplants in the U.S. About 170 million people worldwide and more than 3 million Americans are infected.

Wall Street has been betting on a drug from Vertex Pharmaceuticals Inc., which has shown promising results with little side effects so far. Analysts are waiting for results from three large studies in the U.S. and Europe in the first half of 2007, which together involve 1,000 patients. The company has said it expects to file an application for approval of the drug in the United States in the second half of 2008.

Vertex shares closed Friday at $32.36, down 67 cents, or 2 percent, on the Nasdaq.
ACHN is trading at $8.89 today.

The halted experimental drug was an anti-HCV mechanism that involved inhibition of a viral protein called NS4A, which binds to a portion of HCV protease.
A common feature of positive-strand animal RNA viruses involves the synthesis of polyproteins which are co- and post-
translationally cleaved to produce essential viral components of the RNA replication machinery and structural proteins for
virion assembly. Such cleavages are usually catalyzed by one or more viral proteinases and, in some cases, host enzymes. This strategy is shared by the hepatitis C viruses (HCV), a group of enveloped, positive-strand RNA viruses. NS4A is a cleavage product of the virus.