(Reuters) - Achillion Pharmaceuticals Inc said the U.S. Food and Drug Administration allowed it to resume the development of one of its hepatitis C drugs, lifting a clinical hold that was imposed nearly a year ago.
The company’s shares soared as much as 56 percent to $6.65 on the Nasdaq on Tuesday.
Merck & Co’s planned acquisition of Idenix Pharmaceuticals, announced on Monday, leaves Achillion as the only unencumbered company developing drugs that block a protein required by the hepatitis C virus to replicate.
“With several potential acquirers in the wings, including Bristol-Myers Squibb, AbbVie Inc and Johnson & Johnson, we foresee forthcoming data as a potential catalyst for a transaction,” JMP Securities analysts wrote in a note.
The analysts said Achillion could attract a potential bid of $13 per share. This could value the company at $1.26 billion, based on 96.8 million shares outstanding as of May 1, according to Thomson Reuters data.
The U.S. health regulator placed a hold on the development of Achillion’s drug, sovaprevir, in July last year after data from an early-stage study showed elevated liver enzymes - a sign of liver damage - in some patients who received the drug.
Achillion submitted additional data on the drug in September, but the FDA maintained the hold.
The company is developing therapies that do not contain interferon, a conventional constituent in hepatitis C drugs that causes flu-like symptoms.
Achillion said on Tuesday that the FDA had allowed it to test the drug in a maximum daily dose of 200 mg for hepatitis C patients and in single dose trials for healthy volunteers.
The regulator, however, maintained a hold on multiple dose studies on healthy volunteers.
Achillion’s shares were up about 55 percent at $6.59 in early trading. The stock closed nearly 48 percent higher on Monday after Merck said it would buy Idenix.
Reporting by Natalie Grover in Bangalore; Editing by Kirti Pandey