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Actelion spin Idorsia debuts in strong IPO

June 16, 2017

Idorsia, a pharmaceuticals research company, has been spun out from Actelion, the Swiss pharmaceuticals company acquired for $30bn in cash in January by Johnson & Johnson.

Shares in the bio-tech group opened at SFr10 on Friday and ended at SFr13.65 in Europe, valuing Idorsia at about SFr1.5bn — which was at the high end of analyst forecasts.

Idorsia, which is headed by Jean-Paul Clozel, who founded Actelion in 1997, is not expected to generate significant revenues for three years. Under the terms of the deal agreed with J&J, Actelion shareholders received $280 in cash, plus a share in Idorsia for each of their shares.

Mr Clozel, a French cardiologist, repeatedly resisted takeover approaches for Actelion, and consented to the group’s sale to J&J only after it was agreed he could keep control of its research laboratories and early-stage experimental medicines.

Idorsia was launched with SFr1bn in cash, but running costs are likely to be about SFr80m-SFr90m per quarter and its pipeline of drugs under development may not generate sustainable revenues until 2020, analysts reckoned.

Idorsia has royalty and collaboration agreements with J&J. Mr Clozel’s ambition is to continue his work developing treatments for unmet medical needs.

“It is not so different from buying into a biotech start-up — the upside is you get an established team with record, the downside is the cost base,” said Peter Welford, pharmaceuticals analyst at Jefferies.

“You’re buying an established company with more than 600 employees who have worked together over many years, almost all in Switzerland, hoping that they will be able to repeat the [Actelion] story and develop new drugs that create value.”

Mr Clozel, who will own about 4 per cent of Idorsia’s shares, said its research experience, facilities and initial cash position created an “ideal constellation” for developing successful medicines.

Idorsia’s “pipeline” of drugs in development includes possible treatments for central nervous system, cardiovascular and immunological disorders, as well as for rare medical conditions such as Fabry disease, a genetic disorder.

Idorsia’s listing prospectus described the company’s vision “to become one of Europe’s most innovative biopharmaceuticals companies”. But among the risk factors in the prospectus, investors were warned that the company “may never be able to generate revenues from the sale of any commercial pharmaceutical product or any further revenues from the licensing of its pipeline products or attain profitability”.

http://on.ft.com/2skjeUM

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