Shares of Achillion Pharmaceuticals ( ACHN) were sinking nearly 8% during Thursday morning trading following a downgrade of the biopharmaceutical firm's stock at Baird to "Neutral" from "Outperform" with a $5 price target.

Thursday's downgrade is in part predicated on a lack of confidence in Achillion's CH-4471 treatment to compete with Alexion Pharmaceuticals' ( ALXN) Soliris treatment.

CH-447 is Achillion's treatment for patients with untreated paroxysmal nocturnal hemoglobinuria (PNH), which recently completed a Phase 2 study. But, Baird analyst Brian Skorney remains unconvinced it can compete with Soliris, which also treats PNH.

He adds that while PNH data is interesting, he is not "banking on it."

Skorney also believes the potential milestone payments from Johnson & Johnson ( JNJ)  for Hepatitis C treatments justify much of its current valuation. In May, the two companies entered into a collaboration arrangement in which Johnson & Johnson would develop and commercialize one or more of Achillion's lead hepatitis C virus (HCV) assets.

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