Why Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) Is A Good Buy For Johnson & Johnson (NYSE:JNJ)?

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Healthcare organization Johnson & Johnson (NYSE:JNJ) is looking at strategic acquisitions lately. One possible candidate is Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN).

Johnson & Johnson has been faring pretty well this year. The company’s diversified, recession-proof business model, innovation in pharmaceuticals and ample cash flow are all causes why it did well in an otherwise poor market. It is able to ride over harsh times because of its excellent balance sheet, along with cash amounting to as much as $38.5 billion. As per Alex Gorsky, J&J CEO the company isn’t going to acquire just any company. Its actual target is small as well as medium-sized drug developers that could increase its product portfolio or work well along with existing therapies in areas J&J is working on. It is not known at present specifically which organizations J&J plans to acquire.

Achillion is currently developing a clinical-stage hepatitis C drug. Interestingly J&J has an existing worldwide collaboration with Achillion. Hepatitis C is a bit of a failure for Johnson & Johnson as it’s at one point novel tablet Olysio met with wide acceptance and then disappeared in hardly any time at all. In 2014, Olysio had $2.3 billion in global sales. The major drawback was that the drug had to be consumed along with ribavirin as well as interferon that were known to have a number of undesirable side effects such as rash, anemia and symptoms similar to flu. Olysio was almost obsolete in 2015 because of the arrival of ribavirin and interferon-free Hepatitis C drugs developed by Gilead Sciences, Inc. (NASDAQ:GILD). Acquiring Achillion provides J&J a path to able to have state-of-the-art Hepatitis C virus drugs development infrastructure. Also, Achillion is financially doing well. Hence the strong case for J&J acquiring Achillion.

On February 11, Achillion declared the start of a phase 1 investigation with ACH-4471. The latter is the organization’s initial oral, very potent tiny molecule which has been proved to suppress complement factor D. The phase 1 investigation is being carried out in healthy individuals. The objective is testing single increasing doses of ACH-4471 to evaluate safety, endurability, pharmacodynamics (PD) as well as pharmacokinetics (PK).

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