Achillion’s collaborative deal with Janssen Pharmaceuticals (Johnson and Johnson), announced 19 May, repositions Achillion as a viable, independent concern with a high-potential Hep-C franchise, a small molecule programme targeting the complementary Factor D pathway and noteworthy research platform. The agreement lays to rest any speculation as to an outright company takeover. The deal, entailing up to $900m in milestones and a $225m equity investment, is value enhancing on our analysis, moving our valuation to $2.3bn from $1.9bn as Janssen takes on all R&D costs, paying royalties on sales from mid-teens to low twenties.
Janssen has acquired the rights to develop and commercialise ACH-3102 (NS5A inhibitor), ACH-3422 (nuc) and sovaprevir (protease inhibitor) with the intention of developing a short-duration, highly effective, pan-genotypic Hep-C treatment that would potentially be best-in-class. Achillion’s agreement with Janssen brings an experienced and skilled development and commercialisation partner, while freeing up valuable financial resources to support its budding earlier-stage research programme. Additionally, Janssen brings its own portfolio of potential Hep-C candidates to the deal, mitigating risk of clinical failure and providing the potential for acceleration of the development timeline. We await next news in the coming months on the structure and timeline of the new development programme.
Achillion confirms that its discovery programme for novel oral small molecule inhibitors of complement factor D (fD) is on track and that an IND for a lead compound will be submitted by year end. Focus thus far has been on paroxysmal nocturnal hemoglobinuria (PNH), a rare, life-threatening blood disorder. However, potential in indications with considerably larger patient populations, including dry age-related macular degeneration (AMD), myasthenia gravis and atypical haemolytic uremic syndrome (aHUS) are also being explored.
Our valuation of $2.3bn ($16.7 per share or $16.1 per diluted share) moves up from $1.85bn ($15.8 per share or $15.1 per diluted share) primarily on value enhancements connected to the collaboration with Janssen, which includes $1.1bn in new equity and potential milestones. We estimate current total cash at ~460m (including the equity investment), which should be sufficient to take Achillion through to profitability on the planned launch of its Hep-C combination regimen in 2018.