UPDATE 3-Actelion, GSK drop sleep drug hopeful

Fri Jan 28, 2011 5:38am EST

Related Topics

* Actelion, GSK no longer developing almorexant

* Say will continue to work together

* Could make Actelion more appealing to bidders -analyst

* Actelion shares rise 1.8 percent, outperform sector

(Adds analyst comment, updates shares)

By Katie Reid

ZURICH, Jan 28 (Reuters) - Actelion Ltd (ATLN.VX) and British partner GlaxoSmithKline Plc (GSK.L) have stopped development of insomnia drug almorexant, potentially making the Swiss biotech group a more attractive takeover target.

Safety problems over almorexant had already cast uncertainty over the drug's development and Actelion, long seen as a takeover target, said last year it was a risky project.

Helvea analyst Olav Zilian said the news, which comes after a spate of setbacks last year, could make Actelion more appealing to potential bidders as the group no longer has to spend money on a project that had relatively low prospects of success.

"A binding commitment to a new cost driver has been eliminated," Zilian said, adding some industry experts had had doubts about how commercially attractive a new sleeping pill would have been.

"Although the clinical proof (of) a novel mode of action with superior safety and tolerance would have disproven these concerns," he said.

At 1010 GMT, Actelion shares were trading 1.8 percent higher, outperforming a 0.8 percent lower European healthcare index .SXDP. GSK shares were down 2.3 percent in a weak London market.

Most analysts had already removed almorexant from their valuation of the company after safety concerns emerged at the end of 2009. The average peak sales forecast from analysts for the treatment was between 500 million francs ($528.7 million) and 800 million.

"The key driver for Actelion share price is the takeover possibility, not clinical data on drugs like almorexant," Kepler Capital Markets analyst Tero Weckroth said. "But the news puts further pressure on the management to deliver." [ID:nLDE69D23W]

BROADENING PIPELINE

Actelion has built up a leading position in the multi-billion dollar pulmonary arterial hypertension (PAH) market and is seeking to cut its dependence on Tracleer, which treats a rare heart and lung disorder and rakes in more than $1 billion a year.

But the $7 billion company's efforts have so far been thwarted by a number of setbacks, including the late-stage failure of experimental brain haemorrhage drug clazosentan as well as the failure of Tracleer to cut mortality rates in patients suffering from fatal lung disease idiopathic pulmonary fibrosis (IPF).[ID:nLDE68Q02W]

"Actelion will continue to focus on its PAH franchise with macitentan and selexipag, as well as on research and development programmes outside this franchise, such as the multiple sclerosis drug S1P1," Roland Haefeli, a spokesman for Actelion, said.

"We will also have four Phase II studies reading out from now until the third quarter," he said.

Actelion is due to announce the results of a late-stage trial of macitentan, seen as a successor to Tracleer in PAH at the end of the year or early 2012.

It is also aiming to have a fully-enrolled late-stage study for selexipag in this setting by the end of 2011, Haefeli said.

"We believe both macitentan and selexipag have an above-average likelihood of success in Phase III, with results due 4Q11-2H12, at least 2-3 years before Tracleer goes generic," analysts at Jefferies said in a note.

"We conservatively forecast a $1.4 billion future PAH franchise, below the 2012 $1.9 billion peak but still sufficient to sustain ongoing R&D investment without significant sales & marketing cuts," the analysts said.

Actelion and GSK remain committed to conducting further research to better understand the potential of orexin receptor antagonism in sleep disorders and other indications, Actelion said.

"This decision follows a review of data from additional clinical studies, which were conducted to further establish the clinical profile of almorexant, including the tolerability profile," Actelion said on Friday. (Editing by Hans Peters and David Holmes) ($1 = 0.9458 Swiss franc)

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