UPDATE: Biotech Actelion Gets Lift On Takeover, Shakeup Hopes

Switzerland's Actelion Ltd (ATLN.VX) drew investor attention Friday amid hopes that a shakeup of the company's top brass could pave the way for a takeover of Europe's largest biotech company.

Shares in the group surged more than 4% after investment firm Elliott Advisors Ltd. sent a letter Actelion's board, asking for chairman Robert Cawthorn and chief executive Jean-Paul Clozel to resign.

The fund, a unit of U.S. hedge fund Elliott Management, also pushed for the election of an independent chairman, who should consider the sale of the firm to unlock shareholder value.

"Pressure is building up on Actelion and CEO Clozel to do something," said Beat Stuber of Zurich-based asset manager Johnson & Stuber. "A takeover is possible. Maybe it's only a question about the price." Johnson & Stuber, which manages asset of around 600 million Swiss francs, holds Actelion shares.

Actelion has been considered a takeover candidate since last October after several drug development setbacks raised concerns about the Swiss company's ability to remain an independent firm.

Criticism of CEO Clozel has also risen during that time. According to shareholders, who declined to be named, Clozel's failed attempt to push for the development of novel drugs has irked investors.

Actelion's hopes to bring sleeping pill Almorexant to market were dashed in January on safety concerns. Its experimental drug clazosentan also failed to meet study goals. Some analysts had expected the drugs to eventually become blockbusters with more than $1 billion in sales.

Large shareholders like Fidelity Management and BB Biotech (BION.EB) have reacted by reducing their holdings in Actelion. The companies either declined or couldn't be reached for comment.

Meanwhile, investors such as Bermuda-based Orbis Investment Ltd and Elliott Advisors have raised their stakes amid speculation Actelion is ripe for a takeover.

Orbis declined to comment.

Elliott Advisors has been an active follower of Actelion and last December reached out to Actelion in private to discuss the firm's future. After repeated failed attempts to get in contact with the firm, it made its concerns public.

Actelion Friday said confirmed receipt of the letter from Elliott Advisors and said its board was discussing its contents. "We will inform the market in due time," said spokesman Thomas Haefeli. He declined to make Clozel and Cawthorn available for a comment, saying the letter was addressed to the entire board.

Potential bidders for Actelion include U.K.-based GlaxoSmithKline Plc (GSK), which has a drug research partnership with Actelion, U.S.-based Amgen Inc (AMGN), Eli Lilly & Co (LLY) and Bristol-Myers Squibb Co (BMY).

No official offer has been made and the companies have repeatedly declined to comment on such market speculation.

Actelion said in November that it is in regular dialogue with industry participants, but CEO Clozel repeatedly said the company wants to stay independent.

Despite the criticism of Clozel, the French executive is considered one of Switzerland's most successful managers. The trained cardiologist helped found the company in 1997 out of a spin-off from Roche Holding AG (ROG.VX) and succeeded in bringing blockbuster Tracleer to market.

That success made Actelion one of the rare Swiss biotech company's to perform well on the country's stock exchange. Although sometimes considered as a European biotech hub due to the vicinity to industry giants such as Roche and Novartis AG (NVS), many Swiss biotechs have gone out of business after trial failures.

According to analyst estimates, a potential bidder may pay up to 70 francs per Actelion share, valuing the biotech at about 9 billion Swiss francs. An acquirer could thus access the biotech firm's solid cash flow, which stems from its blockbuster hypertension drug Tracleer.

But Bank Sarasin said a bid for Actelion was unlikely, despite hedge fund pressure, as the patent expiry of the company's blockbuster drug Tracleer in 2015 could hold off potential acquirers.

Shares of Actelion were 4.2% higher at 54.7 francs in midday trade.

Company website: http://www.actelion.com

-By Goran Mijuk , Dow Jones Newswires; +41 43 443 8047; goran.mijuk@dowjones.com

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