Actelion Ltd.

Gewerbestrasse 16
Allschwil,
Switzerland
Telephone: ( + 41 061) 565 65 65
Fax: ( + 41 061) 565 65 00
Web site: http://www.actelion.com

Public Company
Incorporated: 1997
Employees: 1,028
Sales: CHF 663.6 million ($548 million) (2005)
Stock Exchanges: Swiss
Ticker Symbol: ATLN
NAIC: 325412 Pharmaceutical Preparation Manufacturing; 541710 Research and Development in the Physical Sciences and Engineering Sciences; 551112 Offices of Other Holding Companies

Switzerland's Actelion Ltd. is one of that country's leading biotech-based pharmaceuticals companies. The Allschwil-based company specializes in the development of compounds and treatments for diseases related to the endothelium, the cell layer lining of blood vessels. Actelion's flagship product is Tracleer, the commercial name for bosentan, the first successful oral treatment for pulmonary-arterial hypertension (PAH), a disease in which the overproduction of endothelin by the endothelium inhibits the flow of blood from the heart to the lungs. Because of the rare incidence of PAH, which affects only approximately 100,000 people throughout the world, Actelion has been working to identify other areas of effectiveness for bosentan, and is involved in a number of late-stage clinical trials. In 2005, for example, the company completed studies indicating the substance's effectiveness in treating Eisenmenger's syndrome and ulcers related to systemic sclerosis. The company is also developing a number of other substances, such as a urotensin II receptor antagonist, for use with endothelium-related diseases. Actelion's other major product is Zavesca, based on the active ingredient miglustat, which is an oral treatment for the genetic lipid storage disorder Gaucher disease. Founded in 1997 by a team of former La Roche scientists, Actelion has been listed on the Swiss stock exchange since 2000. The company is led by CEO Jean-Paul Clozel. In 2005, Actelion posted sales of CHF 664 million ($548 million).

SWISS BIOTECH STARTUP IN
1997

Actelion was created in 1997 as a spinoff of Swiss pharmaceutical giant F. Hoffmann-La Roche. Yet the company's roots reached back to the mid-1980s, when a team of Roche scientists, led by Martine Clozel, and Walter Fischli, and including Clozel's husband Jean-Paul Clozel, and others, began investigating a newly discovered substance secreted by the endothelium, the inner lining of blood vessels consisting of a single layer of cells. Until then, the endothelium was considered to play a passive role in blood flow. The discovery of the substance, and especially the recognition of the substance's role in the flow of blood through the vessel, presented an important opportunity to develop treatments for a number of diseases and heart conditions. These included pulmonary arterial hypertension (PAH), a condition that restricted the flow of blood from the heart to the lungs.

Martine Clozel had been alerted to the substance's existence while reviewing a study of porcine cells. As Clozel herself related in the Actelion pamphlet Drug Hunters: "The data suggested this was the most potent vasoconstrictor known to science. I absolutely wanted to find out more about this substance and see if it was the missing link in heart failure, pulmonary arterial hypertension and a number of other diseases." By 1987, the Roche team had begun working to isolate the substance, a peptide, from human endothelium cells. The team was not alone, however, and in 1988, a group of Japanese researchers published their own paper, labeling the new peptide as endothelin.

Nonetheless, the advanced state of the Roche team's own research enabled Martine Clozel and Walter Fischli to become the first to identify the peptide in human cells, as well as its receptors, and also to confirm endothelin's action as a powerful vasoconstrictor and therefore its role behind certain diseases, including pulmonary arterial hypertension. Their research also led them to begin developing antagonists to block the effects of endothelin.

By 1990, the team had succeeded in developing two endothelin receptor antagonists (ERAs). With these, the group began developing its first clinical compounds. The first of these was called bosentan (later marketed under the brand name Tracleer); synthesized toward the end of 1991, it offered the potential of being developed in capsule form. The second, tezosentan, was more suited for intravenous applications. That compound was given the commercial name of Veletri.

Into the mid-1990s, the research team continued their drug development work, and by 1996 had readied both compounds for clinical trials. However the team ran up against a roadblock when Roche proved unwilling to back trials for a drug with limited commercial value. Despite their revolutionary nature, the drugs, which focused specifically on treating PAH, were targeted at a relatively minor population. With just over 100,000 PAH patients in the world, neither bosentan nor tezosentan offered the potential blockbuster status required to spark the pharmaceutical giant's interest in clinical trials.

Nonetheless, the Clozels, both of whom were also practicing cardiologists, Fischli, and others at Roche were convinced of the need to continue the development of both drugs. They approached Roche with the idea of licensing the compounds and forming their own company. Roche agreed, although refused to provide any backing capital and also asked for 10 percent of any resulting sales.

The Roche team, which included Thomas Widmann, head of clinical development in Roche's cardiovascular department, and also part of the startup team at Hesperion, a clinical research company, decided to establish Actelion, funded at first by their own savings. The group quickly brought in a fifth member, André Mueller, who had worked at Sandoz, before serving as CFO at biotech startup Biogen. Mueller had also been one of the founders of Switzerland's first venture capital fund, an experience which proved vital to the launch of Actelion. Although originally signed on as a consultant, Mueller soon became the company's CFO.

By the beginning of 1998, Actelion had arranged its first financing package, worth some CHF 18 million. By the end of that year, the company had succeeded in winning backing from Basler Kantonalbank, which provided the financing that enabled the company to set up its own laboratory in Allschwil. The company also managed to attract additional financing from a number of leading European venture capital groups.

CLINICAL TO COMMERCIAL IN
2001

The company quickly launched its first clinical trials of Tracleer/bosentan, testing its effectiveness on patients afflicted with PAH. The treatment rapidly revealed its promise, all the more so because the tablet-based formulation was capable of replacing the more burdensome catheter-based treatment delivery system then available, while reducing the cost of treatment by some 75 percent.

COMPANY PERSPECTIVES

Actelion's core values supporting growth: Innovation, Open Communication, Trust & Teamwork, Results Driven, Positive Work Environment.

Buoyed by the results of its clinical trials, Actelion filed a New Drug Application for the use of Tracleer in treating PAH with the U.S. Food and Drug Administration in 2000. The company, which was determined not only to develop its own drugs, but to control their marketing and distribution as well, then launched an initial public offering, listing its shares on the Swiss New Market Stock Exchange, the Swiss equivalent of the NASDAQ. That listing, which immediately raised nearly $150 million for the company, valued Actelion at CHF 1.2 billion ($900 million).

In preparation for the commercial release of Tracleer, Actelion began developing a subsidiary network, establishing clinical and research facilities in the United States as well as elsewhere in Europe. The company also established a licensing agreement for its tezosentan/Veletri compound with Genentech in 2000.

In 2001, Actelion joined the global pharmaceutical market, winning approval from the FDA to release Tracleer as the world's first ERA. The tablet-based treatment rapidly won over doctors and PAH sufferers, and by the mid-2000s, had replaced the catheter-based rival as the market leader. Aiding this growth was the company's reception of approval to launch Tracleer on the European market in 2002. By 2003, the company had filed a New Drug Application for the Japanese market as well. Approval for the launch of Tracleer in the Japanese market came in 2005. By then, Tracleer had been approved for launch in Australia, Brazil, and Hong Kong as well. The success of Tracleer enabled the company to post its first large-scale sales by 2002, and to become profitable by 2004.

At the same time, Actelion began conducting a series of clinical trials to determine the effectiveness of bosentan for other conditions, including for digital ulcers and pulmonary fibrosis, related to scleroderma, as well as for the treatment of metastatic melanoma.

Actelion also sought to expand its medicine chest beyond its only commercialized drug. This effort became all the more important after the company was forced to abandon its clinical study testing Veletri as a treatment for acute heart failure when the tezosentan compound failed to live up to its promise. Similarly, the company's hopes for another compound, palosuran, were met with clinical failure in 2005.

SEEKING A MULTI-DRUG PROFILE
FOR THE NEW CENTURY

By then, however, the company had made its first acquisition, of fellow Swiss researcher Axovan Ltd., which had discovered and developed its own class of compounds, including clazosentan, another ERA that targeted G-protein-coupled receptors thought to be involved in certain types of strokes and cerebral diseases. The company also acquired the license for Zavesca, an oral treatment developed by Oxford GlycoSciences for a rare metabolic disorder, type 1 Gaucher disease. The company began marketing Zavesca in Europe in 2003, and in the United States in 2004.

Alliances formed part of Actelion's strategy for expanding its range of products beyond its reliance on Tracleer. In 2003, the company joined with Merck to create a partnership in order to develop a Renin inhibitor. As part of that alliance, Actelion transferred its technology to Merck in early 2004, in exchange for a milestone payment of $15 million. The agreement called for Merck to pay Actelion as much as $262 million upon the successful commercialization of the partnership-developed Renin inhibitor. The partnership passed its second milestone in 2005, with the decision to bring its first compound into the preclinical development phase. By 2005, the partnership passed its third milestone, with the completion of the first human trials.

Into 2006, Actelion had successfully claimed the lead in the market of PAH treatments, enabling the company to build its revenues to nearly CHF 664 million. The company was by then considered one of Switzerland's top two biotech companies (behind Serono).

KEY DATES

1987:: Martine Clozel begins investigating newly discovered substance secreted by endothelium (named endothelin in 1988) as part of Roche research team.
1991:: Clozel's team, including Walter Fischli, and Jean-Paul Clozel, succeeds in synthesizing first ERAs (endothelin receptor antagonist), called bosentan and tezosentan.
1997:: The Clozel group, joined by Thomas Widmann and André Mueller, acquire licenses to bosentan and tezosentan and start up new company, Actelion.
1999:: Clinical trials of bosentan begin.
2000:: Actelion goes public with listing on Swiss New Market Stock Exchange.
2001:: FDA approves bosentan (marketed as Tracleer) in U.S. market.
2002:: Tracleer is approved in Europe; Actelion acquires license for Zavesca from Oxford Glyco.
2003:: Zavesca is approved in Europe; company forms Renin inhibitor partnership with Merck.
2004:: Tracleer is approved in Australia; Actelion posts first profits, acquires Actovan.
2005:: Tracleer is approved in Japan.
2006:: Company forms autoimmune disorder partnership with Roche.

Actelion continued seeking its next big drug. By 2006, the company had reached the clinical trial phase for five compounds, with a pipeline of 12 more drug discovery projects investigating in such areas as immunology, infectious disease and metabolic and nervous system disorders, as well as its original focus on cardiovascular and cardiopulmonary conditions. The company also sought out new partnerships, such as a collaborative effort launched with Roche in 2006 in order to develop treatments for autoimmune disorders. In this way, the company hoped to reach its target of becoming a CHF 1 billion company by the end of the 2000s.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Actelion Clinical Operations, Inc. (U.S.A.); Actelion Finance SCA (Luxembourg); Actelion Ltd.; Actelion Luxembourg SARL; Actelion Paris Organisation SAS (France); Actelion Participation; Actelion Partners SNC (Luxembourg); Actelion Percurex AG; Actelion Pharmaceuticals Israel Ltd.; Actelion Pharmaceuticals Ltd.; Actelion Registration Ltd. (U.K.).

PRINCIPAL COMPETITORS

Pfizer Inc.; Johnson and Johnson; E. Merck; Astrazeneca S.A.; GlaxoSmithKline; Sanofi-Aventis; Bayer AG; Novartis International AG; Celesio AG; Roche Holding AG; AstraZeneca PLC; Bayer Healthcare L.L.C.

Actelion Ltd

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