UPDATE 1-FDA places clinical hold on Achillion's hep C drug, shares plunge

Mon Jul 1, 2013 6:27pm EDT

* Co says liver enzymes elevated in drug interaction with HIV drug

* Co says hold does not affect mid-stage study

* Co could potentially lose access to market for HIV patients - analysts

* Shares fall 22 percent in extended trading

By Vrinda Manocha

July 1 (Reuters) - Achillion Pharmaceuticals Inc said the U.S. Food and Drug Administration had placed a clinical hold on its hepatitis C drug sovaprevir after elevations in liver enzymes were noted in an early-stage study of the drug's interaction with an HIV drug.

Shares of the company fell 22 percent in extended trading.

The company said the FDA had asked for study reports from two drug-drug interaction studies involving the drug and a safety analysis of ongoing trials.

Achillion was testing sovaprevir's interaction with an antiretroviral drug atazanavir, which was boosted by another drug called ritonavir.

The company said it had detected elevations in liver enzymes, an indication of liver damage, in multiple subjects, but none of the elevations met the criteria of a serious adverse event.

"We don't know what's going on. What we know is that when Achillion's drug is evaluated with a pretty typical HIV drug, we get a toxic combination," Maxim Group analyst Jason Kolbert told Reuters.

"Clearly now the profile of this drug is not perfect at a time when the market wants to see drugs with a very clean profile."

William Blair analyst Katherine Xu said if the drug-drug interaction was real, then the company may not be able to target patients taking atazanavir.

"I think about 20 percent of hepatitis C patients are infected with HIV, and then within these HIV patients, probably 10 percent are taking atazanavir. It's not that much, it's more a perception. It might be a nuisance for doctors to prescribe", she said.

Maxim's Kolbert also said that some people had thought that Achillion was positioning itself to be sold, and the news would hurt their chances that a buyer would want to acquire the entire company.

The company said none of its other drug-drug interaction studies had showed such elevations in liver enzymes.

The FDA issues clinical holds to delay the clinical investigation of a drug, or to suspend an ongoing investigation. Companies may not recruit new subjects when an ongoing study is placed on a clinical hold.

The clinical hold does not affect the company's mid-stage trial testing sovepravir in combination with another of its hepatitis C drugs and a standard therapy ribavirin.

The company said it expected to provide the information to the FDA within about six weeks.

Shares of the company, which were halted prior to the news, closed at $8.36 on Monday on the Nasdaq.

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