December 8, 2009 / 7:08 AM / 10 years ago

UPDATE 2-Actelion latest casualty as Roche trims portfolio

* Roche drops Actelion study in favour of own drug

* Move follows similar decision on Genmab drug

* Actelion to recognise $88.7 mln deferred revs in 6 months

* Actelion shares fall 1.3 percent

(Adds details on deal, shares and Roche strategy)

By Martin de Sa’Pinto

ZURICH, Dec 8 (Reuters) - Swiss drugmaker Roche Holding ROG.VX is ending a deal with biotech Actelion ATLN.VX to develop a drug to treat autoimmune diseases, continuing a portfolio overhaul that began after its Genentech buy.

Roche’s drug review has already hit Danish biotech company Genmab GEN.CO, which said on Friday the Swiss group would discontinue development of an experimental cancer drug, and could affect others as well, according to industry analysts. [ID:nBNG417827]

“With the Genentech buy they are going through a big portfolio review. They seem to be doing it progressively, so these probably won’t be the only programmes that are cut,” Nomura Code analyst Samir Devani said. Roche completed its $46.8 billion buyout of Genentech in March.

Actelion said on Tuesday it would continue developing ACT-128800 and would book $88.7 million in deferred revenue from the initial deal — which included an upfront payment from Roche of $105 million — over the next six months.

The biotech firm is currently conducting mid-stage clinical trials of ACT-128800 in multiple sclerosis and psoriasis.

Actelion now has 100 percent of the rights to the drug rather than having to share them with Roche but will miss out on potential milestone payments of between $350 million and $400 million, and will bear the full cost of development.

“From a valuation point of view, it should not make a great difference over the long term,” said Weiss.

“There will be no additional payments but we have peak sales estimated at $1.5 billion, so when you sum it all up, later stage operational cash flows may increase but near term cash flows will decrease.”

Shares in Actelion had slipped 1.3 percent to 59.35 Swiss francs by 0912 GMT, underperforming a 0.3 percent rise in the DJ Stoxx Healthcare index .SXDP, while Roche was almost flat at 168.90 francs.

Weiss said he would decrease earnings per share estimates for Actelion by around 5 percent for 2012 to 2013, but would raise estimates further out.

Some analysts say Actelion is overly dependent on its billion-dollar-a-year heart and lung drug Tracleer and needs to establish its use for other diseases while bringing through more new products, such as almorexant, to diversify its revenue base. (Additional reporting by Ben Hirschler in London; writing by Sam Cage; editing by Karen Foster)

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