LONDON Britain's Circassia Pharmaceuticals is throwing in the towel on allergy investment after a second high-profile clinical trial flop, focusing instead on building a broader respiratory business.
The failure of the company's immunotherapy to perform better than placebo in fighting dust mite allergy in a Phase IIb test follows similar negative results in a Phase III trial against cat allergy last year.
The company's stock lost two-third's of its value in a single session on the June 2016 cat results, which many investors feared undermined the allergy thesis, and the reaction on Tuesday was more muted, with shares losing around 3 percent.
In both cases, the company said, the immunotherapy failed because of a marked placebo effect among patients not on therapy.
The top shareholders in Circassia, which listed on the London stock market in March 2014 in Britain's largest biotech flotation for decades, are Invesco and Neil Woodford's investment management company, both big backers of UK science.
Woodford suffered another setback earlier this month when Allied Minds, which commercializes ideas from universities, announced a large writedown.
Circassia Chief Executive Steve Harris said he was "naturally disappointed" by the dust mite study failure.
"We remain convinced that the technology has biologic activity, but we also believe the difficulty in overcoming the placebo effect using the field study designs required by regulators represents a significant hurdle, and consequently we will make no further investment in our allergy portfolio," he said.
Instead, Circassia will concentrate on its wider respiratory business, in particular a new U.S. commercial collaboration with AstraZeneca. Circassia last month secured U.S. rights from AstraZeneca for two drugs to treat chronic obstructive pulmonary disease for up to $230 million.
(Reporting by Ben Hirschler; Editing by Mark Potter)