Actelion CEO seeks to diffuse takeover talk

ZURICH Tue Jul 22, 2014 5:33am EDT

ZURICH (Reuters) - Actelion Chief Executive Jean-Paul Clozel said he was determined to keep the Swiss biotech company independent, batting away speculation it could become the next takeover target for U.S. firms seeking lower taxes by relocating abroad.

Europe's biggest biotech company has been rumored as a potential tax inversion target and its strong pipeline of drugs to treat pulmonary arterial hypertension (PAH) could also attract bidders.

Dublin-based Shire Plc last week became the latest drugmaker to be snapped up as part of this trend in a $55 billion deal with U.S. rival AbbVie Inc.

But Clozel, who co-founded Actelion in 1997, said Actelion would be better off as an independent concern, a view he said investors shared.

"Actelion - having a reasonable size, a culture of innovation and science - has the best chance to grow in a healthy way as an independent company and this benefits the shareholders," Clozel said in an interview.

"Our shareholders are really supporting us in the present situation."

Helvea analyst Olav Zilian said expectations of a tax-driven takeover were already priced into Actelion's shares, which have shot up 45 percent so far this year making it the best performer on the Swiss blue-chip index.

"If there's no bid, there will be pressure on the share price," said Zilian, who has a 'hold' rating on the company.

The shares were up 2.4 percent at 0921 GMT, giving the firm a market capitalization of around 13.5 billion Swiss francs ($15.02 billion). The European healthcare sector was up 0.4 percent.

Zilian said Actelion's size could restrict the number of potential U.S. suitors since the value of the target company post-deal must be between 20 and 40 percent of the combined business to benefit from lower taxes.

He said U.S. biotechs Amgen and Gilead would be too large, while Celgene and Biogen Idec were very different businesses to Actelion and would be a poor fit.

Under pressure from the European Union, Switzerland is also reforming its corporate tax laws, which could act as a further deterrent to any potential bidders.

HEALTHY PIPELINE

While a tax inversion deal with a U.S. firm may be tricky to execute, traders said Actelion could be attractive to other European drugmakers looking to replenish their pipelines and pick up specialist expertise.

"Actelion is the answer to AstraZeneca's chronic pipeline shortage, GlaxoSmithKline's need for expansion and would be an easy morsel for Roche or Novartis to digest," Hobart Capital Markets trader Justin Haque said.

The Swiss biotech's prospects have brightened over the past year after it won approval in the United States and Europe for Opsumit, a treatment for PAH which is a follow-on to its current flagship product, Tracleer.

A strong launch of Opsumit, which beat expectations with sales of 38 million francs in the second quarter, has reassured investors that the company's sales and growth prospects are intact, despite the loss of exclusivity on Tracleer from 2015."We are really very confident that Opsumit is not only going to be replacing but also topping Tracleer, but we must not be too impatient, it will take time," Clozel said.

Buoyed by Opsumit's launch, Actelion raised its full-year outlook and now expects core earnings growth in at least a mid-teens percentage range in 2014. In February, it expected low single-digit percentage growth.

Core earnings rose to 233 million Swiss francs in the second quarter, lifted by strong product sales and rebate reversals and well ahead of the 171 million average forecast in a Reuters poll.

Strong data from another PAH drug called Selexipag in June have also boosted optimism about further earnings. Clozel said Actelion hoped to file the drug for approval with regulators at the end of this year or the start of next.

(Additional reporting by Francesco Canepa in London.; Editing by Erica Billingham)