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FOCUS-After split from Actelion, Idorsia CEO plans to raise more cash in 2019

* Idorsia spun off from Swiss biotech firm Actelion in 2017

* J&J invested $1 bln as part of deal

* Late-stage trials on four drugs getting under way - CEO Clozel

* Clozel pledges no 'crazy price' for key insomnia drug

By John Miller

ALLSCHWIL, Switzerland, June 18 (Reuters) - Swiss biotech Idorsia, spun off from Actelion last June with a $1 billion investment from buyer Johnson & Johnson, will seek fresh funding in 2019 to support late-stage trials of drugs getting underway, its CEO told Reuters.

French founders Jean-Paul Clozel and his wife, Martine Clozel, sold Actelion for $30 billion last year, but only after extracting rights to 11 prized drugs in development, including an insomnia medicine nicknamed DORA.

With 650 employees, Jean-Paul Clozel expects to burn through Idorsia's cash in about two years, before his drug hopefuls generate revenue - typical of the biotech industry where the risk of pipeline failures is ever-present but the rewards of striking paydirt, as was the case with Actelion, can be vast.

Waiting until cash runs low before hitting up capital markets or new partners is not his style, he said.

"I prefer to negotiate when we have a big enough cash than when you have $200 million. This is why we need to start very soon," Jean-Paul said.

"If you are at the end of the road in terms of money, people can hold you hostage," he said in his office in Basel's Allschwil suburb, where he can look across to his old Actelion headquarters next door.

Jean-Paul, a cardiologist, and Martine, a pediatrician whose physicist mother studied under Nobel Prize winner Marie Curie, own 28 percent of Idorsia.

J&J has 9 percent and Swiss billionaire Rudolf Maag a 6.5 percent stake. The firm's shares have nearly tripled since their June 2017 listing, boosting its valuation to 3.1 billion Swiss francs ($3.16 billion).

The Clozels founded Actelion in 1997, calling it a stroke of luck that Swiss drugmaker Roche, their previous employer, discontinued its cardiovascular program. They took Martine Clozel's prized molecule, what became billion-dollar-seller Tracleer, with them to their new company.

The aim now, Martine said, is to duplicate that success.

"We want to grow a second Actelion -- a better Actelion," she said this week at a business conference in Zurich.

Investors are pinning their hopes on compounds in late-stage clinical trials, including DORA, which started phase III trials last week and which the Clozels hope wins approval in the United States and Europe around 2021.

While acknowledging securing financing remains a top Idorsia risk, Deutsche Bank analyst Tim Race estimates annual revenue from DORA, along with hypertension treatment Aprocitentan, stroke drug Clazosentan, and Lucerastat, for rare Fabry disease, could exceed 4 billion Swiss francs ($4.06 billion).

"We believe investors have been too quick to dismiss this potential," said Race, who rates Idorsia a "buy".

"Lightning can strike twice."

DORA's prospects in Europe are uncertain, however, given the availability of generic sleep drugs and European doctors who often favour cognitive therapy over pills, said Bank Vontobel analyst Stefan Schneider.

Schneider, who recently cut his rating to "hold" from "buy", sees peak sales for Idorsia's four top drugs of up to 2.6 billion francs, but rates chances of hitting that below 50 percent.


Merck has a head start in insomnia with Belsomra, which works like DORA by inhibiting a neuropeptide that wakes people up. Belsomra has not met analysts' expectations, with first-quarter sales falling 10 percent from the fourth, to $54 million.

Jean-Paul said DORA's daily cost may be roughly equivalent to a $5 cup of Starbucks coffee in New York City.

"We're not going to ask a crazy price," he said.

"It's normal to have a high price when you work on a rare disease. It's not normal to put a rare disease price for a disease that is not rare," he said, giving as an example the high pricetag of some hepatitis C medicines, a chronic disease that affects more than 70 million people worldwide.

Not every Clozel venture has succeeded.

This year, J&J abandoned an antibiotic it acquired in the Actelion deal after it failed a late-stage study.

In 2004, Actelion shares plunged by a third when a heart failure drug flopped, a crisis Jean-Paul said prompted some board members to urge him to unload the company.

He's had his share of victories, too, as in 2011 when U.S. hedge fund Elliott sought to topple him from Actelion's leadership, arguing he'd spurned approaches from deep-pocketed suitors that would have boosted shareholder value.

Jean-Paul fought and won, something he said he and Martine would do again for Idorsia.

"I hate the word 'Serial entrepreneur' because for me, a serial entrepreneur is a serial killer," he said. "What I want to do is create something that lasts forever." (Additional reporting by Paul Arnold and Elyse Tanouye Editing by Sonya Hepinstall)