Hartford Business Journal

12 Hartford Business Journal • August 15, 2016 www.HartfordBusiness.com By Gregory Seay gseay@HartfordBusiness.com T wo path-altering scenarios emerged in the spring of 2015 from New Hav- en-based Achillion Pharmaceuticals' licensing of its Hepatitis C treatments to medical-products behemoth Johnson & Johnson Co.'s Janssen Pharmaceuti- cals division. First, says Connecticut bioscience entre- preneur David I. Scheer, Achillion's chair- man and co-founder, Achillion garnered an upfront $225 million investment — one that could grow close to $1 billion with additional "milestone'' payments — from the maker of Band-Aids, baby powder and life-saving drugs for a variety of ailments, including its own cocktail of Hep C-fighting compounds. Rather than emulate its highly successful cross-street neighbor, Alexion Pharmaceuti- cals, which has reaped billions in sales and a lofty stock price since U.S. approval of its Soliris drug a decade ago, Achillion chose to license its Hep C intellectual property to a larger partner with deep pockets to commer- cialize its antiviral portfolio. An estimated 170 million people worldwide have Hepatitis C, which can cause liver failure. "We had a drug candidate that could work really well in [a Hepatitis C virus] portfolio, and it filled a gap they had in their treatment portfolio,'' said Achillion CEO Milind Desh- pande. "It was a great validation of all the innovation we put into our program.'' Wall Street, too, likes what it sees in pub- licly traded Achillion. With its stock price trending upward lately, since the May 2015 announcement of its Janssen Hep-C part- nership, Achillion's market capitalization is cresting above $1.2 billion. More importantly, Achillion is using its $426.5 million cash horde as of June 30 to self-fund its latest pivot into research and development, and perhaps eventual com- mercialization, of a class of treatments aimed at enhancing the effectiveness of the human body's disease-fighting apparatus. It will be the first clear test of a Con- necticut bioscience company's ability to refocus its drug-development model and tal- ent toward development of an entirely new class of treatments that leverage the body's ability to battle certain ailments like a life- threatening blood disease and another that causes blindness. Such research pivots are common among drug developers, but Achillion appears to be the first growing Connecticut biopharma to undertake such a risky move, observers say. The second scenario that emerged, and most important to the future of Connecti- cut's evolving bioscience cluster, Scheer says, is that the Achillion-Janssen deal generated the kind of buzz in the U.S. and global bioscience research and investor communities usually reserved for Boston's Cambridge-Route 128; California's San Diego and Silicon Valley; Austin, Texas; and North Carolina's "Research Triangle.'' "Achillion is a case study,'' said Scheer, a bioscientist who has staked four other biosci- ence ventures in and outside Connecticut the past 35 years, "because it embodies key ele- ments of what ultimately can prove to make Connecticut a vibrant bioscience cluster.'' Stock analyst Brian Skorney, of Robert W. Baird Co. in New York, has tracked Achillion for a decade. Skorney said Achillion's 16-year arc reflects many of the ups and downs of drug development. The company invested millions and thousands of hours of research and clini- cal trials, yet ultimately was unable to com- mercialize its intellectual property on its own. But in the process, the proprietary knowl- edge and patents it amassed, along with Wall Street's confidence so far in Achillion's ability to stake high ground in complement-associ- ated treatments, is what has kept its stock at around $9 a share, said Skorney, who currently rates its shares a "buy.'' Still, he says he has a "wait-and-see'' pos- ture toward Achillion going forward, pri- marily because even the biggest biopharmas with the world's best researchers fail more often than not in their quest to develop safe, effective drugs. "Drug development is a very serendipi- tous effort, and the propensity for failure is very high,'' Skorney said. 'Achilles heel' As Achillion, Alexion, Arvida LLC, Achillion pivots toward new treatments from page 1 Building Bioscience A N H B J S E R I E S O N C T ' S B I O S C I E N C E S E C T O R Achillion Pharmaceuticals researcher Jennifer Chu. Achillion Pharmaceuticals' Chief Financial Officer Mary Kay Fenton and Chief Executive Officer Milind Deshpande are among long-time hands who have guided the 16-year-old company through development of a portfolio of anti- disease treatments. Achillion is now focused on complement immune system treatments. H B J P H O T O | G R E G O R Y S E A Y P H O T O | C O N T R I B U T E D

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