Actelion has dismissed criticism from dissident shareholder Elliott Advisors over its handling of a legal battle with Japan’s Asahi Kasei Pharma Corp which could cost the Swiss biotech some $547 million.
At the end of last week, a court in California awarded Asahi up to $547 million, plus potential punitive awards, concerning an investigational heart disease treatment, fasudil. In January 2007, Actelion acquired the US firm CoTherix which in turn told Asahi Kasei that it would not continue development of the drug and returned the rights. The Tokyo-headquartered group disputed the basis for terminating the deal and initiated arbitration proceedings and filed a lawsuit.
At the end of 2009, a jury decided that CoTherix should pay Asahi Kasei some $91 million, plus interest, while the lawsuit remains ongoing. This latest verdict comes at a bad time for Actelion’s management, days before an annual general meeting which will see Elliott push for a change of management.
‘Inept management’, Elliott claims
Elliott said it views the verdict “as further evidence of an inept management and a board of directors that has either failed to recognise or been kept out of the loop on serious, strategic legal matters”. The hedge fund, which holds a more-than-6% stake in the Swiss firm, added that “by any measurement, in pursing the acquisition of CoTherix, Actelion’s management has destroyed shareholder value on a massive scale”. The company paid 539 million Swiss francs for CoTherix in 2007 “in return for only a moderate contribution in revenues and profits over the years”.
Elliott concluded by saying that “we believe that shareholders have not been adequately warned about the legal risks involved in the CoTherix/Asahi case, and it is time for a new board to change the governance policies and open the door to better shareholder communications”.
Actelion responded by noting that it is “disappointed, but respectful of the jury`s verdict in this ongoing litigation”. Once the latter has concluded its deliberations, the company “will decide on potential further steps, including (but not limited to) an appeal”.
The Allschwil-based firm added that it has taken note of Elliott’s letter but “respectfully, the company believes that these criticisms have no factual basis”.
