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Actelion Acquires Ceptaris

Zacks Equity Research

Actelion Ltd. (ALIOF) completed the acquisition of privately-held Ceptaris Therapeutics. The acquisition closed on the heels of Ceptaris’ drug Valchlor gaining U.S. Food and Drug Administration (:FDA) approval.

We note that in Jul 2013, Actelion had entered into an agreement with Ceptaris to acquire the latter, contingent upon the FDA’s approval of Valchlor and some additional closing conditions.

Valchlor gained approval for the topical treatment of early-stage (stage IA and IB) mycosis fungoides-type cutaneous T-cell lymphoma. It can be used in patients who have previously undergone skin-directed treatment. It is currently the only FDA-approved topical formulation of mechlorethamine. Launch is expected in the last quarter of 2013. Valchlor will be distributed by Accredo Speciality Pharmacy. Patients will be provided with support and assistance programs.

Actelion had paid $25 million to Ceptaris upon signing the agreement. An additional $225 million was also paid on the completion of the acquisition. Moreover, Ceptaris' shareholders are entitled to payments based on Valchlor sales and achievement of some commercial milestones.

We believe this acquisition will provide Actelion an opportunity to build a portfolio beyond its pulmonary arterial hypertension (:PAH) franchise. The diversification should bode well for Actelion, in our view. This acquisition is also a step forward in Actelion’s three pronged strategy of building a specialty franchise along with growing the PAH franchise and optimization of profitability. 

Actelion currently carries a Zacks Rank #1 (Strong Buy). Other stocks that look attractive include Biogen Idec Inc. (BIIB), Gilead Sciences Inc. (GILD) and Affymetrix Inc. (AFFX). All three carry a Zacks Rank #1.

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