Dr. Martine Clozel was leading a team of scientists at Swiss drugmaker Roche in 1990 when she discovered a potential new drug for pulmonary arterial hypertension (PAH), a life-threatening condition that limits the heart's ability to pump blood into the lungs. The French doctor knew she had hit on something big, but she had no idea how much it would ultimately change her life and thousands of others.
That's because her discovery formed the basis for Actelion Ltd., one of Europe's most successful biotechs. Clozel and her husband, Jean-Paul, also a doctor, have shepherded their drug to market in near-record time. Launched in the U.S. at the end of 2001 under the name Tracleer, the drug will be available in the European Union by midyear.
In 2002, sales of Tracleer are expected to drive Actelion's revenues up 74%, to $66 million. While the four-year-old company is expected to post a $25 million loss this year, analysts say it has raised the bar for the entire industry. "Actelion is one of the few European biotech companies with the realistic potential to turn profitable within the next five years," says Sam Williams, a health-care analyst at Robertson Stephens in London. That's no mean feat, especially in Europe, where biotech is less mature than in the U.S. The stock has doubled since July, to a recent $44 per share.
If it weren't for the determination of this French couple, a breakthrough drug might still be languishing in Roche's lab. PAH afflicts an estimated 110,000 people worldwide, a market too small to interest a large pharmaceutical company like Roche. So in early 1997, Jean-Paul Clozel, then a vice-president in Roche's cardiovascular department, approached Chairman and CEO Franz B. Humer about spinning off the research project into a separate company. Humer gave his blessing but made it clear that Roche would not put a penny into the startup.
Undeterred, the Clozels rounded up two Roche colleagues and in December, 1997, founded Actelion. Initially the company survived on $34 million in venture capital raised by London's Atlas Venture. Then, in April, 2000, Actelion went public on Switzerland's version of the Nasdaq, netting $148 million. "Four years ago, we were four people with no money," recalls Jean-Paul, 47, the company's CEO and director. "Today, we have more than 400 employees, operations in several countries, and a drug approved in the U.S."
Mind you, Tracleer will never be a billion-dollar blockbuster. PAH is a relatively rare disease characterized by an overproduction of the hormones that are secreted by the endothelium, the layer of cells that lines the interior of blood vessels. Tracleer works to counter the negative effects of the hormones. By 2006, sales of the drug are expected to peak--at between $300 million and $600 million a year. But those figures are just a fraction of what Actelion could rake in if the company succeeds in getting Tracleer approved for treatment of a broader range of diseases involving the endothelium, including cancer and fibrosis.
In the meantime, Tracleer is already accumulating market share. The drug boasts a number of advantages over its nearest rival, GlaxoSmithKline PLC's (GSK) Flolan. Tracleer is the first PAH drug to be taken orally, while Flolan must be administered through a catheter. And while a year's supply of Flolan carries a hefty $100,000 price tag, Tracleer costs only $28,000. "Tracleer will be able to quickly replace Flolan as the treatment of choice," predicts Ivo Staijen, an analyst at Bank Sarasin in Zurich. That's good news for Roche, too, which is entitled to a nearly 10% cut of sales.
Now, Actelion will have to prove it's not just a one-hit wonder. "With a reasonable cash pile [$91 million at the end of last year] and revenues coming in from Tracleer, the question now is what next," says Ravi Mehrotra, director of biotech research at SG Cowen Securities Corp. in London. Another treatment for acute heart failure is in late-stage trials. And scientists are testing seven other new compounds against diseases such as Alzheimer's and obesity. One more big hit, and the Clozels will never have to scramble for funding again. By Kerry Capell in London