Actelion has defended its management and strategy in the face of renewed criticism from a shareholder who wants the firm to explore a possible sale.
Last week, the Swiss biotech received a letter from Elliott Advisors, a hedge fund which has a stake of around 6% in Actelion. It called for the resignations of chief executive Jean-Paul Clozel and chairman Robert Cawthorn and claimed that the board had made "little apparent progress" in addressing concerns of some shareholders about its "strategic direction and corporate governance."
Elliott Advisors said that "in light of the many rumoured approaches by motivated enquirers," Actelion should form a strategic committee to explore options, including a sale. Now the latter's vice chairman Joe Scodari (pictured) has responded with a letter of his own.
In it, he mentions a meeting on January 25, where Elliott Advisors provided "useful background regarding your recent decision to start investing in our company in October 2010 (after the rumours regarding an offer for the company) and you set out your concerns and suggestions". He added that "we are, of course, surprised and disappointed that...you have now chosen to make your letter public as opposed to engaging in a constructive direct dialogue".
Mr Scodari went on to say that "your proposed measures and actions risk destabilising the company", and stressed the board's unanimous support for Dr Clozel, whose "scientific knowledge and insight are essential in order to set the most value creating strategic direction for the company", and for Mr Cawthorn. He added that "we believe your proposal equates to asking the company to put itself up for sale".
This is not a line Actelion wishes to pursue, it appears. Mr Scodari said the firm has more than 10 compounds in the clinic, three of which are in Phase III (including macitentan, "which has significant revenue potential"), and several projects in pre-clinical development, "forming one of the richest pipelines of compounds in the industry". As such, the board "remains fully supportive of the company's strategy of focusing on bringing these valuable assets to fruition, building on our global reach and capabilities as well as using selected partnerships where suited".
He concluded by saying "we believe this will deliver superior shareholder value compared to other strategic options, such as a sale of the company, where shareholders would forego the significant upside inherent in the company's pipeline".
Actelion is regularly mentioned as a possible takeover target (Amgen and GlaxoSmithKline have been cited more than most as potential suitors) as some analysts fear it will struggle to reduce its reliance on the pulmonary arterial hypertension blockbuster Tracleer (bosentan). The drug accounts for the vast majority of its revenues but will start losing patent protection in 2015. Also, last week, Actelion and GSK discontinued development of their late-stage insomnia drug almorexant due to tolerance concerns.
Elliott Advisors has now responded to Mr Scodari's missive and has asked Actelion to reveal whether it has actually had any approaches in the last 12 months. It goes on to ask: "If so, what process did the board adopt to consider these approaches"and "how did you subsequently respond".
The shareholder's letter goes on to claim that Actelion's board is "notacting in the best interest of shareholders" and renews the call for the chairman and CEO to step down. Elliott Advisors argued that the company's "high-risk strategy of investing heavily in new andunproven compounds, despite its poor track record at delivering newproducts to market in the last four years, deserves to be open to properscrutiny".