Actelion vows to stay independent

By Silke Koltrowitz and Katie Reid

ZURICH (BestGrowthStock) – Actelion announced an 800 million Swiss franc ($829 million) share buyback on Thursday and reiterated it wants to stay independent, knocking hopes the Swiss biotech group could be sold and sending its shares lower.

The buyback comes after increased shareholder pressure for the company to deliver value in the wake of a number of setbacks that triggered talk Actelion could be bought.

Analysts welcomed the announcement, but Actelion’s shares tumbled as much as 8.1 percent in early trade. At 0937 GMT shares were trading 2.8 percent lower at 50.55 francs as investors also worried about the impact of pricing pressure on the group’s top line.

“Nevertheless, the share buyback is definitely a right move and although it will not be enough to offset weakness today, we believe it will provide major support for the share price in the mid term,” Kepler Capital Markets analyst Tero Weckroth said, adding he believed Actelion could still be bought.

Actelion has been touted as the next takeover target in the pharmaceutical industry after Sanofi-Aventis launched a $18.5 billion bid for U.S. biotech group Genzyme.

The Swiss biotech, which is worth around $7 billion, has been battered by a number of disappointments in its product development this year, eroding investor confidence.

Last week its largest shareholder, BB Biotech, urged Actelion to examine its strategy..

The failure of experimental brain hemorrhage drug clazosentan in a late-stage trial dealt a blow to its bid to expand its pipeline.. Actelion said it had now decided not to proceed with the development of clazosentan.

Actelion shares rallied some 30 percent earlier this month as speculation swirled it could be bought, helping to reverse the stock’s losses this year, but its shares lost ground ahead of the results and are now down nearly 10 percent since January.

Chief Executive Jean-Paul Clozel declined to comment on the takeover speculation but told Reuters remaining independent was the best way for the company to create value for shareholders.

The share buyback lets Actelion purchase common stock over the next three years and represents nearly 12 percent of its issued share capital at Wednesday’s closing price.

PRICE PRESSURES

Actelion confirmed its full-year outlook but said it expected the pace of sales growth to slow in 2011 as price pressures weigh.

“We expect the pricing environment of pharmaceuticals to remain challenging,” Chief Financial Officer Andrew Oakley told Reuters.

The drugs industry is grappling with tougher pricing for medicines as Europe’s cash-strapped governments fight to get record budget deficits under control and as a result of U.S. healthcare reforms.

Third-quarter net profit slipped to 105.3 million Swiss francs after a weaker-than-expected 12 percent rise in sales of key heart and lung disorder drug Tracleer to 400 million francs.

“Actelion missed expectations and said nothing on the speculation that pushed its share price higher. That is disappointing,” a Zurich-based trader said, noting that after the failure of clazosentan only Tracleer remained.

Non-GAAP earnings before interest and taxes (EBIT) are expected to be below 2010 levels as milestone revenues seen during 2010 would not be repeated, the group said.

STILL A TARGET

Investors have said a wide-range of pharma companies, including Novartis, BristolMyersSquibb, Amgen and Biogen Idec, could be interested in Actelion thanks to its presence in the multi-billion dollar pulmonary arterial hypertension (PAH) market.

“We continue to believe there are few large/mid pharma companies that would consider acquiring Actelion, but see 65 francs per share as a minimum starting bid,” analysts at Jefferies said.

Analysts still see some upside potential for Actelion despite the recent setbacks thanks to expected Tracleer successor macitentan and PAH treatment selexipag.

(Editing by Michael Shields, Mike Nesbit)

($1=.9649 Swiss Franc)

Actelion vows to stay independent