Achillion Surges As FDA Releases Hepatitis C Clinical Hold On Sovaprevir

Shares of Achillion Pharmaceuticals (ACHN) have increased more than 52% in 24 hours based on the news that the FDA has released a clinical hold on Sovaprevir. Back in September of 2013, Achillion was ordered to halt clinical trials for Sovaprevir because of tests that showed patients' elevated enzyme levels in the liver, which is very toxic for patients taking the drug compound. The FDA did not want to take chances after the administration had to stop the Bristol-Myers Squibb (BMY) Hep C trial after 9 patients were hospitalized and one patient died.

Admittedly, it was smart for management to release this news one day after Merck (MRK) had agreed to purchase Idenix Pharmaceuticals, another Hepatitis C drug maker, for $3.8 billion dollars. Now, the company has gained momentum from investors who are looking for the next best Hepatitis C drug maker that could possibly be acquired by another big pharmaceutical company like Pfizer (PFE) or Glaxosmithkline (GSK). 

The Hepatitis C market is huge and could eventually reach up to $20 billion dollars or more. Therefore, many big pharmaceutical companies and other small cap biotech stocks are starting to develop research in this area. The problem, though, is that this is becoming a crowded space, so the dependent factor is the quality of treatment for patients. Not only must the treatment be safer than the others but it must also produce a substantially higher level of efficacy.

In the case of Hepatitis C, an effective and timely treatment would last under 2 months. The other day, Merck's acquisition occurred because the company stated that it could achieve a treatment that could help cure Hepatitis C patients in one month or less. This would lower the price of the treatment and make it more affordable for patients, which would be a huge breakthrough in the Hepatitis C space. Investors should keep an eye on Achillion Pharmaceuticals over the next few months because it could be the next acquisition target for a big pharmaceutical company.