J&J gives nod to Actelion rumors
- Following industry rumors, Johnson & Johnson and Actelion Pharmaceuticals have both confirmed that J&J has started preliminary talks with the Swiss biotech in hopes of taking over the company.
- The deal would give J&J access to a portfolio of seven marketed products and a pipeline of clinical assets, mostly for pulmonary arterial hypertension (PAH).
- Actelion shares jumped by almost 20% on the news to push the stock above $192 per share. The biotech now has a market cap of over $20 billion.
Actelion Pharmaceuticals has been the target for the takeover rumor mill for some time, and last Friday it seemed that the rumors are finally true. Johnson & Johnson has confirmed that discussions are taking place, though the company has said that there will be no "additional comments regarding these discussions unless and until it is appropriate to do so, or a formal agreement has been reached."
In a brief statement, Actelion also said "that it has been approached by Johnson & Johnson about a possible transaction. There can be no certainty that a transaction will result." Actelion CEO Jean-Paul Clozel has been outspoken about keeping Europe's largest biotech independent and has fended off M&A advancements in the past.
Its PAH franchise has five oral, intravenous and inhaled drugs for all stages of disease, including the endothelin antagonist Tracleer (bosentan), which lost patent protection last year. While Tracleer may face generic competition in 2017, its follow-on drugs Opsumit (macitentan) and Uptravi (selexipag), may exceed $1 billion in 2017 and 2019 respectively.
The Swiss biotech's focus is on drugs for rare diseases, allowing it to demand high price tags even as others in the industry face scrutiny. Actelion Pharmaceuticals also has two specialty drugs approved to treat type 1 Gaucher disease, Niemann-Pick type C disease, mycosis fungoides type cutaneous T-cell lymphoma and digital ulcers in systemic sclerosis. Overall, Actelion's product sales in the first nine months of 2016 were CHF1.8 billion ($1.8 billion), and these marketed drugs may fill gaps created by biosimilar competition for existing drugs, as well as boosting the company's existing cardiovascular disease franchise.
Its R&D pipeline crosses cardiovascular and immunological disease, CNS disorders and infectious disease, with a novel antibiotic, cadazolid, and a multiple sclerosis drug, ponesimod, in late stage development.
Analysts at Jefferies forecast "a compelling growth profile" for the PAH franchise, stating that a "highly profitable and long lifecycle PAH franchise is likely attractive."
The analysts see Actelion as an attractive target, particularly once the company has read-outs from key trials: cadazolid's Phase 3 trial in Clostridium difficile (first quarter 2017); ACT-132577 for resistant hypertension (first quarter 2017); and ponesimod's Phase 3 OPTIMUM study for multiple sclerosis (second half 2018), along with more information on plans for clazosentan for subarachnoid hemorrhage during 2017.
Because of these catalysts and its rare disease model, Actelion could have the potential to drive up the price of a takeout. Some analysts speculate that a deal price could be as high as 250 Swiss francs ($247) per share, valuing Actelion at around $26 billion.
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