Stockwatch: My enemy's drug failure is not my drug's success
This article was originally published in Scrip
In life sciences, big share price movements occur in response to merger and acquisition (M&A) activity, clinical trial results and regulatory events. Actual, rather than rumoured M&A is the panacea for many investors but some companies have played up to this by appearing to spend more effort stoking rumours of their impending acquisition than developing their drugs. Such is the case with Achillion Pharmaceuticals, whose cry of acquisition wolf after each of its hepatitis C virus (HCV) antiviral competitors is acquired has been accompanied by a share price rise and an inevitable fundraising by the company. It is illogical for investors to believe that any and all companies developing HCV antivirals will be acquired. Those that have been repeatedly passed over as competitors with better and more advanced products are snapped up seem to be unlikely M&A candidates, but when they shout loud enough, investors behave as if this is a maximum sum game.