Circassia Falls Most Ever as Cat-Allergy Drug Fails in Trial

  • Shares down as much as 67 percent, most since 2014 IPO
  • Company halts work on grass, ragweed allergy therapies

Circassia Pharmaceuticals Plc, a U.K. drugmaker backed by investor Neil Woodford, plunged by a record 67 percent in London trading after the company’s drug to prevent cat allergies failed to work better than a placebo in a clinical trial.

The drug greatly reduced allergy symptoms in the late-stage study, but a placebo had the same effect, the Oxford, England-based company said in a statement Monday.

“We are surprised and disappointed by these results,” said Circassia Chief Executive Officer Steve Harris. “Such a dramatic placebo effect was not a feature of our earlier phase II studies. However, in this large-scale trial it eliminated the ability to identify a treatment effect despite dramatic improvements in subjects’ allergy symptoms and rescue medication use.”

Circassia plunged 64 percent to 97.60 pence at 1:04 p.m. in London, cutting the company’s market value to 275.8 million pounds ($404 million). Shares of Imperial Innovations Group Plc, which owns 9.3 percent, fell 3.9 percent.

“Investors will be concerned that this negates the value of the rest of the allergy platform,” wrote Peel Hunt LLP analyst Amy Walker in a note to clients. The company said it will stop its studies of treatments for grass and ragweed allergies, and is reviewing the data from the cat-allergy study for factors that could have affected the outcome. Studies of dust-mite and birch allergy products will continue.

Woodford, who founded Woodford Investment Management LLP in 2014, holds a 19 percent stake in Circassia, according to data compiled by Bloomberg. He invested in Circassia while working at his previous employer, Invesco Ltd. Invesco is the biggest shareholder at about 35 percent, according to the data.

Both Invesco and Woodford also own stakes in Imperial Innovations, with Invesco controlling about 39 percent, according data compiled by Bloomberg.

(An earlier version of this story was corrected to show Invesco’s stakes in Circassia and Imperial Innovations.)

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