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Achillion Rises as Hepatitis Drug Field Winnows

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Idenix shares drop as Wall Street shifts focus to rival hepatitis C drug developer.

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MINYANVILLE ORIGINAL Shares of hepatitis C drug developer Achillion Pharmaceuticals (ACHN) are rising after at least two Wall Street analysts recommended buying the stock.

Rival Idenix Pharmaceuticals (IDIX), on the other hand, is dropping after seeing its buy recommendation lowered to a hold at Bank of America-Merrill Lynch. BofA and Deutsche Bank both recommended buying Achillion.

Achillion's stock rose 16% to $9.40 in morning trading Wednesday. The stock jumped more than 50% in the past month. Idenix shares fell more than 11% to $5 in morning trading. The stock has lost more than half its value since the end of July.

The ratings and stock movements are the latest sentiment shift among the field of drug developers racing to bring the next-generation of hepatitis C treatments to market. Bristol-Myers Squibb (BMY) recently dropped out of the race because of safety concerns around its drug. Idenix has two drugs that are being scrutinized by US officials because of concerns that they may pose similar threats. It should be noted that no such safety issue has actually materialized among the Indenix drugs. (See Idenix Drops After FDA Puts Hold on Another Hepatitis Drug.)

Many investors are betting that Gilead Sciences (GILD), long known for its HIV drugs, is in the best position to win approval for a better treatment following its $11 billion takeover of Pharmasset earlier this year. (See Gilead Sciences Makes Headlines With HIV Prevention Pill, Looks to Hepatitis Drugs for Future.)

Gilead, Vertex Pharmaceuticals (VRTX), and Idenix are all testing drugs known as nucleotide polymerase inhibitors. Bristol-Myers was testing a hepatitis drug in the same class. The drugs target an enzyme needed for the hepatitis C virus to replicate.

Achillion's lead drug isn't in this same class and neither is an experimental treatment being tested by Abbott Laboratories (ABT). There's no indication so far that the entire class of "nucs" being developed by Gilead, Vertex, and Idenix have safety issues. In fact, Gilead execs point to the large pool of patients that have already been tested with the company's lead drug to show that the treatment doesn't appear to have toxicity problems. Still, Achillion and Abbott offer alternative approaches to those other companies' drugs.

For each one of these companies, the goal is to create an all-oral regimen for hepatitis C patients that eliminates the need for interferon, an injected therapy that causes flu-like symptoms.

Millions of Americans are believed to be chronically infected with the liver-destroying virus and many of them were exposed decades ago. As many as 170 million people worldwide are estimated to have chronic infections.

Twitter: @brettchase

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No positions in stocks mentioned.
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