Mike Havrilla on GILD - Gilead Sciences Inc

Achillion Pharma (ACHN) is a promising micro-cap biotech, specializing in the development of new treatments for infectious diseases, such as the multi-billion dollar market for the chronic treatment of hepatitis C. As I recently wrote , several companies in this space have been bought out at huge premiums over the past year – including an astounding premium of over 400% for a $57M buyout by GlaxoSmithKline (GSK) of hepatitis C virus [HCV] developer Genelabs (GNLB).

Since completing a $41.5M private placement in mid-August (of which $31.1M was already received), Achillion has sufficient liquidity through most of 2010 and is focused on the development of its two pre-clinical HCV compounds, ACH-1095 and ACH-1625. ACH-1095 is part of a 2004 research collaboration with Gilead Sciences (GILD) for which Achillion received $10M upfront and may receive an additional $157M in potential milestone payments from the time of an IND filing to begin clinical studies through commercialization.

Achillion expects to file INDs with the FDA to begin clinical studies for ACH-1095 before year-end and ACH-1625 during 1Q09, starting with Phase 1 pharmacokinetic [PK] + safety studies during 1H09 and progressing to Phase 1b proof-of-concept studies during 2H09. The Company also has an antibiotic drug candidate (ACH-702) which is expected to commence clinical studies in the near-term and it possesses a novel mechanism of action that may be useful against resistant pathogens such as MRSA.

Achillion has a total of 26.4M shares outstanding with a low float of just 12.2M shares and a negligible short interest of less than 0.2M shares. The market cap stands at $26.4M at the close today with $44.3M in cash, $7.7M in debt, and an enterprise value of negative $10.2M.

Thanks to net proceeds of nearly $30M from the private placement in mid-August, Achillion has no concerns over trying to raise cash during the difficult market conditions and can focus on moving its two lead HCV product candidates into the clinic by early next year – with promising results so far for fully-owned ACH-1625 with high potency (for lower dosage requirements), potential once-daily dosing, and possible synergistic effects with other HCV medications.

Below are some recent articles on other companies included in the ETF Innovators [ETFI] Emerging Bio-Pharma Index and smaller companies in the micro-cap range:

Emerging Biotech & Pharma Index: 36 More Cos.

A New Index of Emerging Biotech & Pharma Companies

Navigating the Minefield of Micro-Cap Biotechs