Biotech Values

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Actelion Almorexant Meets Target; Flags Safety Woes

http://online.wsj.com/article/BT-CO-20091221-701075.html

By Julia Mengewein

ZURICH (Dow Jones)--Swiss biotech company Actelion Ltd. (ATLN.VX) said Monday its experimental sleeping pill almorexant met its main target in a two week late-stage trial, but noted that certain "safety observations" were made that need to be analyzed further, raising concerns over the drug's long-term potential.

Actelion, based in Allschwil, near Basel, said almorexant helped insomniacs to fall and stay asleep in a non-sedative fashion.

"The troubling part of the press release is the statement that certain safety observations were made," said Carri Duncan of Sal. Oppenheim.

"This potential safety issue underscores our caution on this risky program. To already see safety issues in the two-week study doesn't bode well for the profile of almorexant," said Duncan, who rates Actelion at neutral with a fair value of 63 Swiss francs ($60.57). She attributes a 35% success rate to Actelion's most promising drug under development.

At 0720 GMT, Actelion shares were indicated CHF0.85 lower, or 1.5%, at CHF57.50, after closing at CHF58.35 Friday.

A spokesman for Actelion said that he cannot provide further information on the safety observations at this point.

"Additional studies are being planned to further establish the clinical profile of almorexant. We will explore aspects of sleep quality, absence of addiction and improved next-day performance. Chronic use studies in both adults and elderly will further evaluate the safety profile of this innovative agent," Chief Executive Jean-Paul Clozel said in a statement.

Actelion said it's currently preparing further late-stage trials in adults and elderly patients that will evaluate the long-term efficacy and safety of the drug.

The trial arm looking at current insomnia gold standard treatment zolpidem, of which Sanofi Aventis S.A. (SAN.FR) sells a branded version as Ambien, showed evidence "for a differentiation" from zolpidem.

The trial included around 700 patients and is part of Actelion's RESTORA program that will explore also the long-term use of almorexant in later trials.

Actelion is in a global partnering deal--excluding Japan--with U.K.-based drug maker GlaxoSmithKline PLC (GSK) to jointly develop and commercialize the drug.

While analysts see potential of up to $1.7 billion in annual sales should the drug reach the market, Monday's news once again highlighted that it will take more studies than RESTORA 1 to unlock the full potential, especially when it comes to using the drug long-term.

The drug could be especially compelling as patients don't experience a "hangover" effect the next day, which is common with many sleep aids already on the market.

Right now, U.S.-based drug maker Merck & Co. Inc (MRK) is the only other company known to work on a sleeping pill that works with the same mechanism. Merck's sleeping pill is in late mid-stage trials.

The market for sleeping pills has big potential, because only a fraction of people suffering from insomnia seek treatment. Many prescription drugs on the market are related to anesthesia drugs and have unwanted side effects, while drugs that can be bought without a prescription aren't generally very effective.