ZURICH Actelion's drive to broaden its use of key drug Tracleer hit a severe setback after it failed to cut mortality rates in patients suffering from a fatal lung disease, pushing the group's shares sharply lower.
Actelion, Europe's biggest biotech company, had expected approval of Tracleer to treat idiopathic pulmonary fibrosis (IPF) to double sales of the drug, which brought in 1.5 billion Swiss francs ($1.39 billion) last year.
At 1120 GMT, shares in the group were down 16 percent at 46.00 Swiss francs, making it by far the largest loser in the Dow Jones European Healthcare Index, as investors also worried about the future of Actelion beyond Tracleer's patent expiry in 2015.
"The failure which has been announced today is a major setback to our investment case as the reported trend is so weak that we do not believe that doctors will consider using the drug off-label in these severely sick patients," Helvea analyst Olav Zilian said in a note.
The group is trying to bring through more products and find more uses for Tracleer, which accounts for around 85 percent of sales and is currently used to treat pulmonary arterial hypertension (PAH), a chronic, life-threatening disorder affecting around 100,000 people in the United States and Europe.
Actelion has staved off competition in PAH from Gilead Sciences' Letairis and Pfizer's Thelin and success in the IPF trial would have brought it closer to bringing out the first treatment for the disease.
The group, which has traded at a premium to Novartis and Roche, said it was sticking to its 2010 targets despite the failed study.
It expects net sales to grow 10 percent in local currencies, while cash earnings before interest and tax are seen rising nearly 20 percent in local currencies.
DIVERSIFYING ITS PORTFOLIO
Some analysts said the rest of Actelion's pipeline was not appreciated by the market and the share weakness offered a good opportunity to enter the stock.
"Despite today's disappointment, with five other drugs in or about to enter pivotal trials, we remain optimistic that Actelion has other opportunities to diversify away from its dependence on Tracleer," PiperJaffray analysts said in a note.
Actelion is still hopeful its sleep medicine almorexant, which is partnered with GlaxoSmithKline, will get approved despite a safety problem observed in a late-stage trial late last year.
Analysts are also awaiting the results of a late-stage trial of clazonsentan in subarachnoid hemorrhage in the second half of this year.
The group started a Phase III trial of expected Tracleer successor, macitentan, in PAH, one year ahead of schedule, at the end of 2009.
"We continue to expect data during 2012. Once-a-day dosing and improved safety could offer advantages over current gold standard Tracleer," analysts at Jefferies said.
Actelion also said it would start a study with macitentan in IPF later this year and would report data in the second half of next year.
(Editing by Rupert Winchester and Sharon Lindores)
($1=1.077 Swiss Franc)