Drug pioneer dives 66pc as cat allergy remedy fails
BIOTECH Circassia Pharmaceuticals took a walloping after its experimental drug trial for people with cat allergies collapsed.
Oxford-based Circassia – in which superstar fund manager Neil Woodford holds a large stake – said final stage trials from an up-until-now promising allergy drug reported that 60pc of the drugs response had demonstrated a ‘powerful placebo response’.
Meaning, it seemed to be having an effect, when actually it did not.
‘We are surprised and disappointed by these results. Such a dramatic placebo effect was not a feature of our earlier phase II studies,’ said Steve Harris, chief executive of Circassia.
Meanwhile, Neil Woodford wrote: ‘This is undoubtedly a disappointing development. We had high hopes for this trial and are surprised at its failure, particularly when you consider some of the positive aspects of the trial data.’
News of the collapse of Circassia’s cat allergy trial has had a knock on effect on some of the other drugs the business is trying to develop. In its press release, Circassia said it will stop a study of its grass allergy treatment and also halt preparatory work for a study of its ragweed allergy therapy.
Circassia floated two years ago at 310p a share, raising £200m, with aspirations to become ‘the next Shire’. The company also carried out a fundraising for acquisitions last year, raising £275m at 288p a share via a placing and open offer. Yesterday, however, Circassia’s shares plunged 66pc, or 179.3p to 91p.
Woodford, though, attempted to reassure investors in Circassia. He said: ‘It is the nature of the stock market to over-react to negative news, with the immediate reaction typically much greater than longterm fundamentals would justify. That is almost certainly the case here. We remain supportive shareholders.’
Overall, the FTSE 100 leapt 3pc or 182.91 points to 6204 while the
FTSE 250 soared by 3.3pc or 537.07 points to 16,959.11 amid hopes Britain will this week vote to remain in the European Union.
Mislav Matejka, an analyst at JP Morgan, said: ‘If the UK votes to remain in the European Union there will clearly be a short-term market rebound, especially given the weakness seen over the past two weeks. This would potentially take the market back to the levels from the beginning of June.’
Once again, banks and housebuilders peppered the leaderboard as dealers looked to pick up shares in companies that had declined on fears Britain would leave the European Union. Lloyds Banking Group perked up 7.6pc, or 4.95p to 70p while Taylor
Wimpey gained 6.8pc, or 12p to 188p. Online stockbroker and wealth manager Hargreaves Lansdown topped the FTSE 100 leaderboard, surging 7.8pc, or 96p to 1325p. Elsewhere in the sector, Aberdeen Asset Management moved 6.3pc, or 16.7p higher to 283.7p as broker Numis revived takeover speculation with a note arguing any acquirer would have to pay 380p a share, or £5bn, for the business.
In the oil sector, HSBC gave BP
another push, pointing out the oil major is this week set to host an investor visit to its operations in Azerbaijan. BP, which HSBC rates as a ‘buy’, edged up 1.55pc, or 5.8p to 379.95p.
Satellite operator Inmarsat, which has seen its shares plunge 34pc over the last six months, improved 2.6pc, or 18p to 727p thanks to a Citigroup upgrade to ‘buy’. The broker also increased its price target to 900p from 880p.
Rolls-Royce put on 3pc, or 19p to 634p even though JPMorgan argued the engineering giant, which has told its employees it would prefer Britain to remain in the European Union, could be a strong beneficiary of a weaker pound if there is a Brexit.
‘It is very possible that a sharp depreciation in sterling (in a Brexit scenario) could have an immediate positive impact on Rolls-Royce’s shares,’ said David H Perry, an analyst at JP Morgan. Among the smaller companies,
Asos fizzed 5.8pc, or 202p higher to 3662p as Exane BNP Paribas published a lengthy and bullish note on the online retailer.
The French broker slapped an ‘outperform’ rating on the company with a £52 price target.