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Actelion/Axovan: Acquisition Through Earnout

 
• By Hazel Dawson

Acquiring compatriot Axovan was Actelion's only option to access Phase II endothelin receptor antagonist (ERA) clazosentan; a licensing deal would have left Axovan with too little to remain a standalone company. But the CHF 252 million ($191 million) deal still makes sense for Actelion: the company's initial financial exposure is just CHF 40 million, with most of the remaining deal value linked to milestones. Actelion gains access to a late-stage compound it knows well, that fits perfectly within its own ERA-focused portfolio. Furthermore, it beefs up its R&D and bolsters its preclinical pipeline, all for little more than it would have had to pay for clazosentan alone. Axovan puts its lead compound in the hands of a partner with a proven track record in ERA development and commercialization.

Swiss biotech company Actelion Pharmaceuticals Ltd.'s acquisition in October 2003 of compatriot Axovan AG for a potential CHF 252 million ($191 million) including earn-outs didn't come as a surprise [See Deal]. Besides sharing a common ancestry—both companies were founded by former Roche employees—Actelion and Axovan have stayed close since Axovan was founded in 2000, when Actelion's seed funding gave it a 20% stake in the private biotech. Actelion's ownership has since been diluted to 9%, yet the companies' ties have remained intact: they are located in the same building, share board members, have a common medicinal chemistry approach to drug discovery and collaborate since June 2003 in GPCR receptor targeted drug discovery [See Deal]. What's more, both companies also licensed their lead endothelin receptor antagonist (ERA) drugs from Roche.

Axovan's ERA clazosentan was the motivating factor behind the deal. Actelion's founders had discovered the molecule—an injectable endothelin A receptor antagonist optimized for treating cerebral diseases—in the early 90s while...

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