Let’s kick things off with Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN). This one is a bit of an unusual situation. The company announced on Monday that it would be terminating the worldwide license and collaboration agreement that it has in place with Janssen Pharmaceuticals, and that revolves around hepatitis C. Specifically, and predating the Achillion news, Janssen announced that it was set to discontinue the development of JNJ-4178, a combination of AL-335, odalasvir and simeprevir.
This discontinuation sort of pulls the rug out from underneath the collaboration that the two companies are in place, so it would have been tough for the agreement to continue in its existing form.
So why has Janssen discontinued its efforts in hepatitis C?
Well, this is a pretty saturated space right now. There are numerous treatments available on the market that can effectively cure hepatitis C (or at least, counteract the virus to a level at which it is no longer of any concern) and the simple fact is that there is just not that much in terms of revenues on offer for a company that brings a new asset to market. Sure, a fresh alternative might have a small competitive advantage but the chances of it being able to unseat the range of already well-established drugs, and do so to a degree that capital that Janssen or Achillion, or both, would have to outlay in order to achieve said unseating, are slim.
Markets are responding negatively to the news, at least from an Achillion perspective, and the company closed out the session on Monday at a 22% discount the price at which it opened.
Where things go from here remain unclear. The 22% selloff seems like a bit of an oversell, so we will probably see some degree of recovery as we move into the middle of the week and beyond. Don’t expect the stock to recover fully, quickly, however, as this program was representative of a large portion of its forward valuation.
Moving on, let’s look at Aldeyra Therapeutics, Inc. (NASDAQ:ALDX).
This one is a brief announcement but one that says the company up for what could be a considerable move near term. On Monday, Aldeyra announced that it will be holding a webcast and conference call on Tuesday, September 12, 2017 at 8:00 a.m. EDT (so, just before markets open today). The focus of the call will be data from a phase 2 a clinical trial that the company is conducting (and just completed) in an attempt to demonstrate that its lead development asset can be effective in a dry eye disease indication.
The drug in question is called ADX-102.
As far as what markets are looking for from this data, it’s really just about safety. That is, it’s a dose ranging trial designed to inform a maximum tolerable dose (and, in turn, one with the highest chance of success in a larger scale trial) for a phase 2 trial that is about to kickoff. The primary objective of the trial is rooted in identifying said dose, so what we want to see from the numbers is some sort of indication that the drug has a clinical benefit in these patients (and ideally, a dose-dependent benefit) and, of course, that it can be safe in the doses being trialed. Again, an ideal outcome would be no safety concerns at the highest dose tested, but it’s tough to speculate as to whether this will be the case ahead of the numbers being released.
Whatever the data shows, the bottom line is that if Aldeyra management is able to say on the conference call that the company believes numbers warrant advance into the above-mentioned face to be, then the trial will have been a success and the company should pick up a bit of a boost in and around conference call time.
Markets didn’t really respond to the announcing of the upcoming conference call, but there is a good chance that operators are pointing to pull the trigger on a buy or a sell based on the outcome of the event. As such, we are expecting a pretty volatile start to the Tuesday session for Aldeyra, with the direction of the volatility rooted in the implications of the news.