Why Achillion Pharmaceuticals Inc. Shares Jumped

Before you go, we thought you'd like these...
Before you go close icon

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.

What: Shares of Achillion Pharmaceuticals , a clinical-stage developer of therapies to treat infectious diseases, advanced as much as 10% after announcing a poster presentation for preclinical drug ACH-3422 over the weekend and following a large insider purchase within the company.

So what: According to Achillion's press release from Saturday, ACH-3422 -- an NS5B polymerase inhibitor that could be a potential treatment for hepatitis C -- showed impressive preclinical activity with in vitro human cells and in a two-week animal toxicity study. The plan is for Achillion to advance ACH-3422 to proof-of-concept human trials by no later than mid-2014 and use it in combination with other direct-acting antiviral agents.

Also stirring the pot was an SEC filing that RA Capital Management, an owner of roughly 10% of Achillion's outstanding shares, purchased an additional 1.186 million shares at a price of $2.45. Insider buys can be an important tool for shareholders to keep their eyes on as insiders have a keen understanding of the company they're investing in. If they're bullish, it could mean good news is on the long-term horizon.

Now what: Whereas I see why investors are excited today, this is really much ado about nothing in my book. Achillion's preclinical portfolio has never been much of an issue; it's the fact that its lead drug is on hold by the Food and Drug Administration and that two new oral hepatitis-C medications from competitors are likely to be approved by the FDA within the next year. That's the real concern! I'm worried that Achillion has fallen so far behind in the hep-C race that even if it does manage to get one of its product candidate in front of the FDA that it may not matter. I would suggest tempering your optimism after some extremely early stage results on ACH-3422 and an insider buy from RA Capital.

Two game-changing biotechs you should be following instead
The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In The Motley Fool's brand-new FREE report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

The article Why Achillion Pharmaceuticals Inc. Shares Jumped originally appeared on Fool.com.

Fool contributor  Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle  @TMFUltraLong . Try any of our Foolish newsletter services free for 30 days . We Fools don't 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 .

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading