J&J approaches $20B-valued Actelion about takeover deal

Johnson & Johnson
J&J has joined the long list of drugmakers to be linked to Actelion

Actelion has confirmed Johnson & Johnson approached it about a possible acquisition. The news sent Actelion’s market cap up toward $20 billion as expectations that the perennial takeover target could finally accept a buyout bid rose.

Buying Actelion would give J&J two drugs that are expected to start racking up blockbuster sales in the coming years. The products, pulmonary arterial hypertension drugs Opsumit and Uptravi, have both made solid starts to commercial life, cementing expectations that their annual sales will top out at approximately $2 billion. That would give J&J a ready-made source of revenues at a time when it is looking to M&A to offset the forecast effect of biosimilars on its blockbuster Remicade.

Actelion also has a clutch of late-phase pipeline prospects. A phase 3 trial of the antibiotic cadazolid in patients with Clostridium difficile-associated diarrhea is due to report data early next year. The Swiss drugmaker is also closing in on data from further trials of Opsumit. More distant data drops include a readout from a Phase III relapsing multiple sclerosis trial of sphingosine-1-phosphate 1 receptor agonist ponesimod.

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These late-phase prospects could be attractive to buyers, although a clearer picture of their value will only emerge with the phase 3 readouts.

The current situation is particularly muddy for ponesimod, which will need to deliver impressive data if it is to claim market share in a niche where multiple drugmakers are gunning for Novartis’ incumbent Gilenya. The uncertainties created by the upcoming readouts led Jefferies Analyst Peter Welford to pencil in late 2017 or 2018 as a more likely time for a takeover. By then, the effect of generic competition on Tracleer, another of Actelion’s products, should be clearer, too.

J&J has nonetheless added its name to the list of drugmakers to approach Actelion. Reports have linked the Swiss company to a laundry list of major biopharma companies over the past six years. A takeover by Shire was reportedly on the cards last year, but Actelion CEO Jean-Paul Clozel, who fought off an activist investor in 2011, has consistently talked up the merits of staying independent.

Clozel and CSO Martine Clozel own approximately 5% of Actelion and have a track record of getting investors on their side. If J&J or another company is to finally succeed in acquiring Actelion, it will likely need to pay a hefty sum as compared to the Swiss drugmaker’s forecast sales and persuade Clozel of the operational value of the deal.

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