BBAGF BB Biotech AG (PK)

Swiss biotech Actelion Ltd.'s (ATLN.VX) shares slide Monday on news it will shelve development of its key drug Tracleer to treat a deadly lung disease, disappointing investors who had high hopes the drug could eventually double the company's sales with the new treatment area. Actelion, based in Allschwil, Switzerland, said Tracleer, generically known as bosentan, didn't show a relevant improvement for patients with idiopathic pulmonary fibrosis, or IPF. However, the company said it has other assets in the pipeline with which it can still tackle the market believed worth several billions in sales.

Still, investors sold the company's shares and at 1000 GMT, the stock was down 8.30 Swiss francs ($7.73), or 15%, at CHF46.45 in a higher Swiss market.

Data from the trial, dubbed BUILD-3, which involved more than 600 patients, suggests that one of Actelion's other drugs, macitentan, might have better chances in IPF, the company said. Macitentan is currently in mid-stage trials and will deliver first data in the second half of 2011.

"We'll then decide if we'll start late-stage trials with macitentan in idiopathic pulmonary fibrosis," company spokesman Roland Haefeli said.

Biotech analyst Carri Duncan at Sal. Oppenheim said while Actelion now stresses that it still has a drug under development that it is exploring in the area of idiopathic pulmonary fibrosis, "this is a very difficult indication and it's hard to say if any of their other assets will be successfully." She rates the stock at neutral.

"The news is another big blow for Actelion because the sales potential of bosentan in IPF would have been high, and last December, results from another trial with the experimental sleeping pill almorexant also had a negative read-out, rasing safety concerns," said Sibylle Bischofberger of Zuercher Kantonalbank.

Analysts and investors will now turn to the second half of 2010, awaiting information on another late-stage drug, clazosentan, which seeks to prevent blood vessel spasms that can occur after brain bleeding, as well as the information on macitentan in IPF, expected in the second half of 2011.

Company spokesman Haefeli said that Monday's news doesn't change the company's financial targets for 2010 to grow sales by more than 10% and cash earnings before interest and taxes by almost 20%.

Actelion, Europe's largest biotech company by sales, generates the bulk of its sales with Tracleer. The drug has become the standard treatment for patients who suffer from hypertension in the lungs, but sales momentum has been slowing in recent quarters.

In 2009, Actelion generated sales of CHF1.77 billion, around CHF1.51 billion of which came from Tracleer.

The possible failure to expand the use of Tracleer is increasing the risk of Actelion becoming a takeover target, some analysts say.

Companies previously mentioned as possible bidders include Swiss drug maker Novartis AG (NVS), Chicago-based Abbot Laboratories (ABT) and GlaxoSmithKline PLC (GSK), Actelion's development partner for the experimental sleeping pill almorexant.

Among Actelion's larger shareholders with stakes of more than 5% are fund managers such as Fidelity Management & Research or BB Biotech, as well as the company itself while Blackrock Inc. and Mellon Bank hold between 3% and 5%.

Company Web Site: http://www.actelion.com

-By Julia Mengewein, Dow Jones Newswires; +41 43 443 80 45; julia.mengewein@dowjones.com

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