UCB Not for Sale as Billionaire Shareholder Awaits Reward

UCB SA’s biggest shareholder says the Belgian drugmaker isn’t for sale, even as analysts say medicines for rheumatoid arthritis and epilepsy make the company an attractive takeover target.

The Janssen family, which owns 36 percent of Brussels-based UCB through holding company Financiere de Tubize SA, has no plans to sell the stake, said Marc Van Steenvoort, a Tubize spokesman. UCB’s market value of 9.1 billion euros ($12.3 billion) makes Tubize’s stake worth about 3.3 billion euros.

“From the perspective of the family the position is very clear: they’re there for the long term,” he said by phone.

The family’s stance may damp recurring speculation that UCB will be a target. The company says Cimzia for rheumatoid arthritis and the epilepsy treatment Vimpat will boost sales, which stalled the past five years as UCB’s previous best-sellers lost patent protection. The new products, along with treatments for osteoporosis and lupus that are in the final stage of studies, are poised to reward investors’ patience, said Chief Executive Officer Roch Doliveux.

“We’ve gone through difficult times and transforming times,” Doliveux said in an interview in his office. “We’re in a phase of enjoying the growth and maximizing that growth. That has been possible because right in the middle, where we had significant issues with our patent expiries in 2008, 2009, we kept on investing in R&D. Without a reference shareholder that would have been tougher.”

‘Most Attractive’

Cimzia will reach $1 billion in sales next year, according to the average of four analyst estimates compiled by Bloomberg, while Vimpat will achieve the same milestone by 2016. Those products, together with the company’s drugs in development, would “on paper” draw the interest of larger pharmaceutical companies seeking to solve their own patent woes, said Richard Parkes, an analyst at Deutsche Bank AG in London.

“Of all the European companies it’s one of the ones that would look most attractive,” Parkes said by phone. Sales of Cimzia, Vimpat and the Parkinson’s disease drug Neupro, which UCB calls its core medicines, rose 27 percent to 847 million euros in the first nine months of the year.

UCB’s assets could make it a target for AstraZeneca Plc, which is facing declining sales of four of its five biggest-selling drugs, Andrew Baum, an analyst with Citigroup Inc. in London, wrote in a report last week.

UCB rose 0.4 percent to close at 49.70 euros in Brussels. The stock, which peaked in 2006 at 54.85 euros, has returned 18 percent this year, including reinvested dividends, compared with a 27 percent return for the Bloomberg Europe Pharmaceuticals Index. Among 24 analysts tracked by Bloomberg, nine recommend buying the shares, 10 have a hold rating, and five suggest investors sell.

Pfizer Competition

Investors have fretted over slower-than-expected Cimzia revenue after third-quarter sales of the drug missed analysts’ estimates, said Fabian Wenner, an analyst with Kepler Cheuvreux in Zurich who has a reduce rating on the stock. The injection is also facing competition from new oral therapies such as Pfizer Inc.’s Xeljanz.

Cimzia belongs to a class of drugs called TNF-alpha inhibitors that also includes AbbVie Inc.’s Humira, with sales of $9.3 billion last year, and Enbrel, sold by Pfizer and Amgen Inc., who shared sales of $7.9 billion last year. UCB’s share of the anti-TNF market has been stuck at about 5 percent for the past two years, according to data compiled by Bloomberg Industries.

Mature Products

At the same time, sales of the company’s older products are declining. UCB’s so-called mature products dropped 17 percent in the first half of the year to 929 million euros.

Still, expanded regulatory approvals of Cimzia as a treatment for the inflammatory illnesses ankylosing spondylitis and psoriatic arthritis, will help the company achieve its goal of peak sales for the drug of “at least” 1.5 billion euros by the second half of the decade, according to Doliveux.

“There should really be no concern,” Doliveux said. “I’m very confident about Cimzia. The momentum is there, it’s very strong in the U.S. and in Europe. Soon it will be a question of what does the ‘at least’ mean.”

Emmanuel Janssen founded the company, a maker of industrial chemicals then known as Union Chimique Belge, in 1928. Four family representatives -- Charles-Antoine Janssen, Evelyn du Monceau, Arnoud de Pret and Bridget van Rijckevorsel -- hold seats on the 12-member board.

UCB is collaborating with Amgen on the development of romosozumab for the treatment of post-menopausal osteoporosis, a disease that afflicts 65 million people in the U.S., Japan and Europe, with a market estimated by UCB at $6.6 billion annually. The two companies expect data by the end of 2015 from the final stage of trials usually needed for regulatory approval.

Lupus Drug

The drug could be “transforming” for UCB because of the potential market size, Doliveux said.

UCB also expects results in early 2015 from a late-stage trial of epratuzumab, a treatment for lupus that UCB licensed from Immunomedics Inc. in 2006. That drug is high risk because the outcomes of the trial aren’t easily measured, he said.

Doliveux, a veterinarian by training, joined UCB as head of its pharmaceutical business in 2003 and became CEO in 2005. He oversaw the company’s transition into a specialty-drug company after the 1.5 billion-pound ($2.4 billion) purchase of Celltech Group Plc in 2004 and the 4.4 billion-euro acquisition of Schwarz Pharma AG in 2006.

While Doliveux says the company always looks for new deals, the pace of dealmaking has slowed since then.

“The hurdle is very high because of the growth rates that are ahead of us, and because of the shareholder value creation that is ahead of us,” Doliveux said. “It’s very difficult to beat that. Goal No. 1 in medicine is do no harm. I guess Goal No. 1 in M&A is do no harm.”

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