When Circassia Pharmaceuticals went public on the London Stock Exchange two years ago, raising a whopping $300 million, the British biotech community brimmed with enthusiasm over the prospect of revived investor interest in the sector.
Today, the biotech’s stock price (LSE: $CIR), and the flagging investor interest that remained in a chilly market, were dealt body blows by Circassia’s announcement that its cat allergy program had gone down to defeat in a Phase III study.
Circassia CEO Steve Harris said that the allergy medicine, intended to allow allergic cat lovers to live with their pets in domestic harmony, was done in by a high placebo effect. And the company immediately slammed the brakes on a registration study for a grass allergy drug trial while putting a ragweed study on ice. A pair of mid-stage studies that are well under way will proceed, but with greatly reduced odds for success in the wake of the Phase III setback.
Circassia’s stock plunged 64% on the news, creating a raw reminder of the string of biotech failures that plagued the UK industry for years.
Biotech IPOs had already gone by the some months ago, a reflection of the savage downturn in drug developers’ shares on Nasdaq over the last 6 months. The absence of IPOs for the near term in London will likely turn the most hopeful prospects to Nasdaq, where new offerings still come up regularly even though enthusiasm has been damped down.
Even though the IPO scene has turned bleak for the British, the sector has still attracted a growing amount of venture capital, which will help sustain its startups until the window opens again.
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