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Can spinoff Idorsia approach Actelion’s success?

July 28, 2017
Delayed Swiss Exchange – 07/28 15:22:29
P/E ratio 2017
Founded in 1997 at Allschwil, a suburb of Basal, Switzerland, Actelion has become in just 11 years the largest European biotech firm.  With earnings in each fiscal year, the firm posted more than €2 billion in revenue in 2016.

The firm’s unique approach to research distinguishes it from its rivals, where traditionally strategic marketing drives scientific research. At Actelion, the approach is flipped around – allowing the Swiss company to develop a promising pipeline of molecules over the years.

As an example, the first commercialized treatment (which no one believed in, including Roche, the former employer of Clozel) confounding all prognostics and generated more than $15 billion in sales.

Actelion has never been interested in external growth, and has instead concentrated on internal research. Led by its excellent financial director André Muller, profitability (margin of 15-20%) has never been missing — a characteristic which distinguished the company again from the rest of the industry.

Starting with almost nothing, Actelion was recently acquired by Johnson & Johnson for $30 billion. Jean-Paul Clozel had always vehemently depended the company’s independence, but under the pressure of powerful shareholders finally conceded to accept the offer (several times increased) of the American multinational.

With one condition, however: that he can keep control of the very promising pipeline of molecules in development. Out of Actelion was created a new company :  Idorsia, listed on the Swiss exchange since June 16.

The pipeline is made up of four molecules in phase 2 (hypertension, sleep disorders and two rare illnesses) and five molecules in phase 1 (anxiety problems, epilepsy asthma, cardiovascular and pulmonary problems).

It is nearly impossible for the lay observer to evaluate the quality of this pipeline at its fair market value. One thing however is certain : no one knows better than Jean-Paul Clozel. On this point, he certainly had good reason to keep control of the pipeline to oversee its development.

Well capitalized (one billion francs in the firm treasury), supported by an experienced team with unmatched research installations in Europe, Clozel intends with Idorsia to repeat the performance achieved at Actelion.

The first objective of the company is to rapidly achieve profitability in bringing three products to the market in order to self-finance future research so as to not dilute shares with new capital raises.

The second objective is developing the pipeline towards potential sales of 5 billion francs (a level, if attained, would multiply the value of the company by at least 20 times).


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