Why Achillion Pharmaceuticals Shares Collapsed by 25% Today

What's happening?

Shares of Achillion Pharmaceuticals (NASDAQ: ACHN  ) are crashing 25% today after the company reported mixed early stage drug trial results yesterday and following Express Scripts' decision to remove Gilead Sciences' Harvoni from its preferred drug formulary, a decision that may suggest future a future price war among hepatitis C drug developers.

Why it's happening
Achillion reported that its promising hepatitis C drug, ACH-3102, cured 100% of patients when dosed alongside Sovaldi for six weeks in a phase 2 trial, but that its Sovaldi alternative, ACH-3422, posted a lower log reduction in viral clearance during phase 1 studies than some had hoped.

The company is developing ACH-3102 as an alternative to Gilead Sciences' ledipasvir, which is paired up with Sovaldi in Gilead Sciences latest generation hepatitis C drug, Harvoni. In November, Achillion reported that 100% of patients taking ACH-3102 with Sovaldi for eight weeks were free of the virus 12 weeks later, which is known as a functional cure. The recent release demonstrating similar cure rates four weeks after receiving the two drugs over a six week period may suggest that ACH-3102 plus Sovaldi works as well as Harvoni with the advantage of fewer weeks of treatment.

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