BB Biotech, a Swiss investment fund, said on Monday that it would stand behind the management of Actelion, Europe’s largest biotechnology company, in its months-long struggle against the activist hedge fund Elliott Advisors.
“We have never doubted the competence of Actelion’s scientists, the commitment of their management or the veracity of their board,” BB Biotech said in a statement. “We intend to support the proposals made by Actelion in their 2011 proxy, including the board nominations.”
With its statement, BB Biotech has become the second major Actelion shareholder to back the board in the run-up to its shareholder meeting on May 5. Last month, Rudolf Maag, who holds more than 4 percent of the company, said he would support management as well. The fund held 3.8 percent of Actelion at the end of last year.
Actelion, which has a market capitalization of about 6 billion Swiss francs ($6.7 billion), has been waging a running battle with Elliott over which of two competing slates of candidates will be seated on its board, as part of a wider disagreement about the company’s strategy.
Elliott argues that Actelion has spent too much on unsuccessful drug trials, and is pushing the company to disclose whether it has been approached by potential buyers.
The hedge fund bought into Actelion last year, and is now its largest shareholder with about 5 percent of the company. Its campaign has made headlines and been the preoccupation of Actelion’s leadership ever since, with a flurry of statements coming from both sides.
This month, Actelion nominated the former chief executive of GlaxoSmithKline, Jean-Pierre Garnier, to join its board as vice chairman next month, and succeed its chairman, Robert Cawthorn, when he steps down next year.
Elliott sees several weakness at Actelion, one being its revenue dependence on Tracleer, a highly successful hypertension drug set to lose its patent protection in 2015.
“Actelion has no near-term alternative to preserve even some of the Tracleer sales post patent expiry,” a slate of independent board candidates supported by Elliott said in a recent statement.
Actelion’s latest disappointment was the anti-insomnia drug almorexant, for which it terminated phase III trials in January of this year.
“Not everything Actelion has done in R.&D. has paid off,” BB Biotech acknowledged on Monday. “On occasion, Actelion has taken significant risk without successful payoff.”
The fund said it would act “as a critical shareholder demanding good corporate stewardship, but it shall also continue to maintain a constructive relationship with the management and the board of directors.”
BB Biotech, based in Schaffhausen, Switzerland, is a major investor in biotechnology, with 1.2 billion Swiss francs under management.