Achillion (NASDAQ: ACHN ) investors are probably shaking their heads wondering what’s wrong with their company following Johnson & Johnson‘s (NYSE: JNJ ) acquisition of the privately held Alios for $1.7 billion this week.
On the surface, J&J’s willingness to fork over so much money for
the unproven nucleotides percolating in Alios’ pipeline would seem to
support a higher valuation for Achillion, which has two hepatitis C
drugs in phase 2 trials and boasts a market cap of just $1.1 billion.
But instead of climbing, Achillion shares retreated following the
announcement, so let’s take a closer look.