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June 10 (Bloomberg) -- Achillion Pharmaceuticals Inc. gained the most ever in a single day of trading after U.S. regulators let it restart trials of a top experimental drug for hepatitis C and analysts speculated the company may be a takeover target.

The Food and Drug Administration stopped study of sovaprevir last year over concerns that the drug damages the liver. The treatment is in the second of three stages of testing usually required before approval.

The news on Achillion’s experimental drugs could make it a takeover target, said Brian Abrahams, an analyst with Wells Fargo. Merck & Co. yesterday agreed to buy Idenix Pharmaceuticals Inc. for $3.85 billion to gain its top hepatitis C experimental medicines. Achillion also said today it has begun trials of another hepatitis C drug, ACH-3422, that blocks the liver virus’s ability to replicate. That compound belongs to a class of drugs called “nucs,” or nucleotide polymerase inhibitors.

Yesterday’s Merck deal “illustrates the appetite for, and scarcity value of, early stage nucs, and that a strategic premium is willing to be paid for them,” Abrahams, based in New York, said in a note to clients. “We still await proof-of-concept from Achillion and reiterate nucs development carries significant risk.”

Two-Day Rally

Achillion, based in New Haven, Connecticut, rose 83 percent to $7.79 at the close in New York, the biggest single-day increase since shares were offered to the public in October 2006. Yesterday it gained 48 percent to $4.25 after Merck’s Idenix deal.

“We believe Achillion is uniquely positioned with clinical candidates,” Milind Deshpande, the company’s chief executive officer, said today in a statement.

Idenix’s leading candidate is in the same family of medicines as ACH-3422 and, after its deal with Merck is completed, will be added to Merck’s cocktail of hepatitis C pills in an effort to create combination therapies with faster cures and fewer side effects.

Companies have held off from buying hepatitis C-focused biotechnology companies since Bristol-Myers Squibb Co. bought Inhibitex Inc. in 2012 to boost development of drugs for the liver disease. Inhibitex’s drugs, which were still in experimental testing, were abandoned in trials after some patients were hospitalized and one died.

Liver Concerns

The FDA halted Achillion’s study of in September after tests showed abnormal liver results in patients taking sovaprevir. High levels of liver enzymes were observed in healthy patients when the drug was combined with two medicines used to treat HIV infections.

AbbVie Inc. and Johnson & Johnson are among the other drugmakers competing in a market estimated at $20 billion to provide more effective, convenient treatments for a disease that affects an estimated 170 million people worldwide. The virus attacks the liver and may lead to cancer, organ failure and, eventually, the need for an organ transplant.

“The risk is definitely to consider,” said Asthika Goonewardene, an analyst with Bloomberg Industries, in a telephone interview from London. “Nucs have a history of bad safety.”

To contact the reporter on this story: Sonali Basak in New York at

To contact the editors responsible for this story: Reg Gale at Drew Armstrong, Andrew Pollack

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