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This is Why Actelion (ALIOF.PK) Canceled Its Appearance at the J.P. Morgan Conference Next Week

1/6/2017 5:53:43 AM

This is Why Actelion Canceled Its Appearance at the JP Morgan Conference Next Week January 6, 2017
By Mark Terry, Breaking News Staff

The saga of Swiss-based Actelion Pharmaceuticals (ALIOF.PK) takes another turn, although it’s hard to know exactly what it means. With the JP Morgan Healthcare Conference being held in San Francisco next week, all eyes are on biopharma companies, hoping for a peak at industry trends for 2017. Except Actelion canceled its scheduled appearance.

Around the end of November, U.S.-based Johnson & Johnson (JNJ) was reportedly in talks to acquire Actelion. Then it was reported that the company walked away from the deal, supposedly over price.

Then it was reported that Paris-based Sanofi (SNY) was in talks to acquire the company.

On December 22, 2016, Actelion and J&J officially announced that they were in talks about a possible “strategic transaction.” It’s not clear if Sanofi is any longer in the picture.

Actelion focuses on rare drugs. It recently brought two new drugs on the market, both of which have the potential to become blockbusters over the next two or three years. About 50 percent of its revenue derives from sales of Tracleer, used to treat a form of high blood pressure that affects arteries in the lungs, pulmonary arterial hypertension (PAH). Tracleer is facing generic competition this year.

The two new drugs are Opsumit and Uptravi. Opsumit is used to treat PAH, and is likely to replace Tracleer. Uptravi is also used to treat PAH.
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It was reported originally that J&J balked at Actelion’s asking price. J&J reportedly offered $260 per share, or more than $28 billion. However, Actelion was asking for as much as $285 per share. The original deal was also believed to have a complicated structure, with J&J creating a biotech company that tied Actelion to relevant parts of its own pharmaceutical business. Because it would have required J&J to give up control of some of its assets, many analysts were skeptical about the likelihood of the deal.

When Sanofi threw its hat in the ring, inside sources said the deal might involve a contingent value right, or CVR. A CVR allows a buyer to agree to a base price with an additional amount tacked on only if specific pipeline drugs meet various milestones. Sources indicated there was a discussion of a CVR of about $20 as part of the $275 per share price being negotiated.

Now sources, in response to news that Actelion wasn’t appearing at the JP Morgan conference, are indicating that the deal with J&J would separate Actelion’s commercialized portfolio from its pipeline assets. If there’s news at all, it’s expected later this month. Reuters also writes, “The deal structure would allow J&J to acquire Actelion with a cash offer in the region of $260 per share. It would also let Actelion shareholders benefit financially from Actelion’s R&D pipeline, the people said.”

It was also reported today that J&J and Actelion have started discussions with Switzerland’s takeover board about the viability of the deal. The panel’s preliminary review is ongoing. The Swiss takeover board evaluates and determines whether deals meet legal requirements. Reuters does indicate that J&J would invest $1 to $2 billion over several years into Actelion’s R&D efforts in return for a minority stake in the rest of the business.

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