Elliott turns up heat on Actelion with board move

ZURICH Thu Mar 17, 2011 8:23am EDT

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ZURICH (Reuters) - Activist hedge fund Elliott Advisors is tapping six pharma executives and M&A experts to stand for election to the Actelion board, stepping up pressure for major changes at Europe's biggest biotech firm.

The New York-based fund, Actelion's largest shareholder, has urged the Swiss group to consider putting itself up for sale after a spate of product setbacks last year.

Elliott wants former Novartis veteran James Shannon to take over from Robert Cawthorn as Actelion chairman at the Swiss biotech group's annual general meeting (AGM) on May 5, it said on Thursday.

Shannon told Reuters a sale of the company was not the only option, but Actelion needed to move away from its current high-risk strategy in order to secure value for shareholders.

The hedge fund is also calling for Actelion founder and former Roche scientist Jean-Paul Clozel to step down from the board but remain as chief executive.

In addition to Shannon, it has proposed Peter Allen, Anders Haerfstrand, Robert Hock, Elmar Schnee and Hans-Christian Semmler -- all figures with drug industry or investment banking experience -- as candidates to the board.

Actelion shares slipped 1 percent following the news. Investors had been waiting to hear the names of Elliott's board candidates after the hedge fund hired a search firm.

Actelion was not immediately available to comment.

PRESSURE BUILDING

Pressure from Elliott, which owns nearly 6 percent of the $7 billion company, has been mounting ahead of Actelion's AGM -- but the company recently won support from another significant shareholder, Rudolf Maag, who holds 4.2 percent.

Actelion is determined to stay independent, though some analysts say it could be the next pharma takeover target after Sanofi-Aventis's $20 billion-plus acquisition of Genzyme.

Elliott said it was requesting a special investigation to clarify whether the board has received any approaches for the company since January 1, 2010 and how the company dealt with them.

"We have been clear from the beginning that we have deep concerns about the company's current 'wait and see' strategy," Elliott said in a statement.

Clozel has built Actelion into a major force on the back of Tracleer, a $1.8 billion-a-year drug for a rare but deadly lung disorder.

Some investors are worried Actelion has not done enough to secure future revenue drivers, given the failure of other experimental medicines.

Actelion's next big hope is Macitentan, which could reach the market in 2013 and may be a $1 billion-plus product.

Shannon said it would be wrong to exclude any options for the company.

"I do not believe a sale is the only option for the company," Shannon said, adding its strong cash position could allow it to go for an acquisition itself, while it could also buy in products or merge with another company.

(Reporting by Katie Reid; Editing by Ben Hirschler and Alexander Smith)

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