Actelion Sees Slower Growth Than Analysts From 2013 to 2015

Actelion Ltd. said earnings will remain stable in 2013 before rising in 2014 and accelerating to “double-digit” growth in 2015 as a new blood-pressure drug spurs sales.

Actelion plans to deepen cost cuts, including lower and “more targeted” spending on research and development, the Allschwil, Switzerland-based company said in a statement today. Its estimates are for “core” earnings, defined as sales minus cash operating expenses, excluding currency swings. The shares fell as analysts said the forecasts were below their own.

Trial results announced last week of an experimental drug called macitentan suggest Actelion has succeeded in developing a successor for Tracleer, the blood-pressure drug that accounts for 87 percent of sales and will face competition from cheaper copycat pills in 2015. Olav Zilian, an analyst at Helvea SA in Geneva, said he may have overestimated how quickly sales of macitentan would increase or how fast research spending would decrease.

“This guidance is definitely more cautious than we are currently forecasting,” Zilian wrote in a note today.

Analysts had been predicting earnings growth next year and an increase of as much as 12 percent from 2014, Andrew Weiss, an analyst at Bank Vontobel in Zurich, wrote in a note today.

Actelion fell 3.8 percent to 38.47 Swiss francs in Zurich, giving the company a market value of 5 billion francs ($5.4 billion). The stock has declined 14 percent in the past year, including reinvested dividends, compared with a 13 percent return in the Bloomberg Europe Pharmaceutical Index.

Elizabeth Taylor’s Husband

Investors aren’t putting any value on the company’s drug pipeline and the stock “deserves a re-rating,” said Jean-Pierre Garnier, Actelion’s chairman.

“We’re going to tell you that the stock is undervalued,” Garnier said at the start of today’s analyst briefing in London. “You’ve heard that many times, you’ve been to many company presentations, you’re a sophisticated audience. So it makes me feel like Elizabeth Taylor’s fifth husband on the eve of their wedding night: I know what needs to be done, but I’m not sure I can make it exciting.”

The company has said it expects core earnings to be unchanged this year from 2011, and for sales to decline by a low-single-digit percentage.

Increased Competition

Sales of Tracleer have been falling as the drug faces increased competition from Gilead Sciences Inc.’s Letairis. Actelion reported a net loss last year because of provisions for a lawsuit it lost to Asahi Kasei Corp. and for bad debts from health-care providers in southern Europe.

Actelion said April 30 that a late-stage trial of macitentan showed that patients who took it were 45 percent less likely to experience worsening of their disease than those who got a placebo. The drug showed a trend toward prolonging patients’ lives, though the result wasn’t statistically significant. The company plans to present more data at a conference in October, it said.

Tracleer and macitentan are designed to treat pulmonary arterial hypertension, a disease in which the arteries that move blood from the heart to the lungs narrow, making the heart work harder and causing elevated blood pressure. About 40 percent of patients die within five years of diagnosis, and a lung transplant is the only cure, according to Actelion.

Chief Executive Officer Jean-Paul Clozel is also looking to antibiotics and immune-system treatments to lessen the company’s reliance on one disease. Actelion wants to sell the rights to drugs for “general practice” diseases such as asthma, insomnia and cardiovascular disorders to focus on treatments prescribed by specialists, he said at the analyst briefing.

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