* Shareholders vote down Elliott board candidates
* Also against probe of whether Actelion got bid offers
* Actelion nominees Garnier and Bertolini voted onto board
* Shares down nearly 7 percent, earlier hit seven-month low
(Adds comment from CEO, chairman, Elliott)
By Katie Reid and Paul Arnold
BASEL, May 5 (Reuters) - Actelion shareholders threw their weight behind the management of Europe's largest biotech company, rejecting a bid for control by activist investor Elliott Advisors and making a sale less likely.
Actelion shares, which have been supported by speculation the company might be the next takeover target in the healthcare industry after Sanofi-Aventis's bid for Genzyme, fell as hopes of a quick sale of Actelion faded after its annual shareholders' meeting on Thursday.
New York-based hedge fund Elliott had urged the Swiss biotech group to consider seeking a buyer after a string of product setbacks and accused Actelion of pursuing a high-risk strategy that has eroded shareholder value.
But Actelion shareholders rejected Elliot's proposal to remove current board members, including chairman Robert Cawthorn, and also voted against its proposal to initiate an investigation into whether Actelion has received any takeover offers, something it has always denied.
"(It) seems that Elliott doesn't have support and maybe some might speculate that Elliot could or even must sell positions in Actelion," said one Zurich-based trader.
Shareholders also backed the reelection to the board of founder and Chief Executive Jean-Paul Clozel. They had earlier booed when Elliott's Dominik Dolenec called on Clozel to step down from the board with immediate effect.
"Let us make sure we do not destroy our efforts and achievements by letting a minority shareholder with no clear strategy and understanding of Actelion take control of your company," Clozel told the packed meeting before the vote.
Actelion shares were down 6.9 percent at 44.55 francs by 1329 GMT, having touched a seven-month low of 43.69.
RADICAL CHANGE
Elliott, which has a track record of activism and pushing for radical change at a range of companies, had proposed a slate of six drug industry and M&A experts for the board, including former Novartis AG executive James Shannon, whom it had wanted to chair Actelion instead of incumbent Cawthorn.
But none of the candidates were elected.
Cawthorn told shareholders Actelion was open to mergers and acquisitions but warned that putting itself up for sale now would deprive shareholders of value.
The mood in Basel seemed to be more in favour of Actelion from the start of the meeting and the room erupted into applause when the mayor of Allschwil, where Actelion is based, told shareholders they should "never change a winning team".
Actelion's two nominees -- Jean-Pierre Garnier, a former GlaxoSmithKline Plc chief who is now chairman designate, and Robert Bertolini, ex finance chief of Schering-Plough -- were voted on to the board with large majorities.
"We are very pleased at the strong expression of support from our shareholders," Cawthorn said after the AGM. "Now it's back to work."
Actelion, founded by former Roche scientists Clozel and his wife Martine in 1997, had already won the public backing of large shareholders Rudolf Maag and biotech investment fund BB Biotech, as well as Swiss investor group Ethos, Germany-based independent proxy voting service IVOX and proxy firm Glass Lewis ahead of the AGM.
"My goal is to develop drugs, it's not to remain independent," Clozel told reporters.
The outcome of the meeting had been difficult to predict after Elliott secured backing from U.S.-based shareholder advisory group ISS, which advised investors to vote for the removal of Cawthorn from the board and to back three of Elliott's boardroom nominees.
Actelion was a bright light in the European biotech industry thanks to its success with Tracleer, a drug to treat a rare heart and lung disease. Lately however investors had been unsettled by its subsequent failure to broaden its pipeline.
Elliott's Dolenec said he was pleased by the impact their public debate had made, noting Actelion had already started to make changes. He welcomed the election of Garnier and Bertolini to the Actelion board. (Editing by Sophie Walker and David Holmes)