Actelion Plunges After Forecasting Declining Sales in 2012

Actelion Ltd. fell the most in more than 19 months in Zurich trading after saying revenue will decline in 2012 as the Swiss drugmaker faces price cuts and the loss of market share to Gilead Sciences Inc.

Actelion plunged 9.7 percent to close at 30.70 Swiss francs, the biggest drop since March 1, 2010. The stock has slumped 40 percent this year. Product sales next year may fall by a low- to mid-single-digit range in local currencies, the Allschwil, Switzerland-based company said today in a statement.

Sales of the lung drug Tracleer, which accounted for 83 percent of revenue in the first nine months of this year, are losing ground to Foster City, California-based Gilead’s Letairis, which is gaining after a reference to the risk of liver damage was removed from the drug’s label.

“This U.S. label change for Letairis is clearly having a greater impact on Tracleer than we had assumed,” Adrian Howd, an analyst at Berenberg Bank in London, wrote in a report today. “This is a decaying asset that is decaying faster” than predicted.

The company is also experiencing pricing pressure globally, which it expects to continue in 2012, Chief Executive Officer Jean-Paul Clozel said on a conference call with analysts today.

Results from a late-stage trial of macitentan, Actelion’s successor to Tracleer, are expected in the first half of next year and may provide more long-term value in the stock, Berenberg’s Howd said. He’s among 12 analysts who recommend buying the stock, compared with 11 who suggest investors hold it and one who rates it a “sell.”

Missed Estimates

Third-quarter revenue fell to 401.8 million francs ($444 million) from 445.7 million francs a year earlier, Actelion said today, as the strength of the local currency eroded the value of sales outside Switzerland. Sales missed the average analyst forecast of 415.8 million francs, based on 12 estimates compiled by Bloomberg.

Analysts predicted before today’s announcement that Actelion’s sales in 2012 would be unchanged from an estimated 1.83 billion francs for this year, according to Bloomberg data. The company today maintained its 2011 forecast for percentage sales growth in the mid-single digits in local currencies.

Third-quarter earnings rose 37 percent to 137.5 million francs as reduced operating expenditure helped the company beat the average analyst forecast of 122.5 million francs.

Franc Effect

The appreciation of the franc during the quarter wiped 135 million francs from sales, Chief Financial Officer Andrew Oakley said on a conference call with analysts today. The company also incurred a loss on a wrong-way bet on the currency near the end of the quarter, after the Swiss central bank said it would cap the value of the franc, sending it down 8.7 percent between Sept. 5, when it made the announcement, and the end of the quarter.

Actelion had a further loss on Greek government bonds it received as payment for drugs supplied to public hospitals, Oakley said. The company declined to quantify either loss, though the currency hedging loss was “the dominant part,” Roland Haefeli, a spokesman, said in an e-mail.

“We are evaluating all possible options to mitigate the effect of currency on our reported results,” Oakley said in today’s statement. “Over the next 12 months we will also make appropriate capital allocation decisions based on operating performance as well as the outcome of upcoming clinical studies.”


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