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Actelion Looks Within as Competition Lifts Drug Prices

February 17, 2013

Actelion Bets on Do-It-Yourself as Competition Lifts Drug Prices

Actelion Ltd.'s lung medicine Tracleer is seen in this undated handout photograph. Diversifying is important because Tracleer, a drug for pulmonary arterial hypertension, accounts for 87 percent of Actelion’s sales and starts to lose patent protection in 2016. Source: Actelion Pharmaceuticals Ltd/copyright 2011 via Bloomberg

Actelion Ltd. is depending on in- house research to invent new medicines because the company can’t compete with bigger rivals to buy products in development elsewhere, Chief Executive Officer Jean-Paul Clozel said.

Actelion is looking “all the time” to acquire or license the rights to experimental drugs to lessen its reliance on treatments for pulmonary arterial hypertension, Clozel, 57, said in a Feb. 14 interview in his office in Allschwil, Switzerland. The company gets 95 percent of sales from medicines for the disease, in which arteries that move blood from the heart to the lungs narrow, causing high blood pressure.

While the company wants to build a second business selling so-called orphan drugs for rare diseases that are prescribed by specialists, that’s a strategy also being pursued by Sanofi, Shire Plc, GlaxoSmithKline Plc and Pfizer Inc. (PFE:US) The competition means higher prices.

“The chances that we can get very obvious, nice assets is rather low,” Clozel said. “Specialized orphan drugs is what people look for, it’s hot. Shire wants it, Sanofi wants it, Glaxo, Pfizer. They have much bigger pockets.”

Actelion has spent at least 650 million Swiss francs ($704 million) on five deals since going public in 2000. Two gave the company drugs that flopped in trials, and another resulted in a lawsuit the company is still fighting. Actelion terminated its latest deal, an option to buy Trophos SA, in 2011 after that company’s drug failed in a study.

Tracleer Sales

Diversifying is important because Tracleer, a drug for pulmonary arterial hypertension, accounts for 87 percent of Actelion’s sales and starts to lose patent protection in 2016.

Clozel co-founded Actelion to develop Tracleer after his previous employer, Roche Holding AG, decided it didn’t want the product. Tracleer has garnered 13.8 billion Swiss francs in sales since being approved in 2001.

Actelion has applied for regulatory approval of a successor product, Opsumit, in the European Union and the U.S., and expects a decision this year. The company is working on other home-grown treatments for psoriasis and diarrhea.

“If you want to have good drugs, discover them yourself,” Clozel said. “I don’t like to depend on other people.”

Actelion said Feb. 14 it plans to increase its dividend by 25 percent to 1 Swiss franc, and repeated a commitment to completing an 800 million-franc share buyback by the end of this year.

“If we believed we could use this money to buy an asset so easily, we would keep it,” Clozel said. “But frankly we have to be realistic. It’s not so easy to compete.”

Selexipag Trials

Actelion rose 2.8 percent Feb. 15 to close at 47.72 francs, giving the company a market value of 6 billion francs.

Opsumit’s peak sales may surpass Tracleer’s, Clozel said. Actelion is testing another drug for PAH, selexipag, in the third and final stage of trials usually needed for regulatory approval. The company gained marketing rights to the treatment outside Japan in a 2008 deal with Kyoto-based Nippon Shinyaku Co.

Actelion will start advanced trials this year of two drugs from its own laboratories: ponesimod for psoriasis and an antibiotic called cadazolid for clostridium difficile, a diarrhea-causing infection acquired commonly in hospitals.

Still, neither of those will be big enough on their own and the company will need to look outside for more products, said Fabian Wenner, an analyst at Kepler Capital Markets in Zurich.

Partnership Talks

“Those ones will not change the course of things,” Wenner said in a telephone interview. “They really need the next big asset.”

Actelion is in talks with potential partners to help pay for trials of ponesimod as a treatment for multiple sclerosis, Clozel said, declining to comment on how advanced the talks are or whether he expects a deal this year. Partners are waiting to see whether Biogen Idec Inc.’s MS pill Tecfidera is approved and what prescribing conditions the U.S. Food and Drug Administration puts on it, Clozel said.

“There are a lot of moving parts, which make the life of partnering not so easy,” he said, adding if the company doesn’t find a partner, it won’t develop the drug for MS. “We want to keep some value in the product. I am not ready to accept any price.”

Clozel, who founded Actelion with his wife Martine Clozel in 1997, cited the company’s in-house development as a reason for remaining independent when Amgen Inc. considered making a takeover offer in 2010. He reiterated that position in 2011 in fighting off a hedge fund that sought seats on the board and wanted Actelion to consider selling itself.

“We have a real company based on research and innovation,” Clozel said. “That’s unique. When we had activists, they didn’t see that. Our shareholders have given their confidence to us. I really want to show them they were right.”

To contact the reporter on this story: Simeon Bennett in Geneva at sbennett9@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net


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