Circassia Shares Plunge After Trial of Experimental Cat Allergy Drug Fails!

UNITED KINGDOM – Circassia Pharmaceuticals PLC shares crashed more than 60% Monday after the company said its experimental cat allergy treatment failed to show any advantage at all over a placebo in a large clinical trial.

The Oxford, England-based company said the treatment, called Cat-SPIRE, would reduce allergy symptoms by around 60% in a trial which involved 1,245 subjects across Europe, Russia, and North America. The problem: so too did the placebo. Both the drug and placebo also greatly reduced how much patients need to rely on “rescue medication” such as anti-inflammatory drugs.

The failure is likely to raise many questions about Circassia’s pipeline of allergy treatments, which are currently based on the same technology as Cat-SPIRE. It is also targeting allergies to grass, ragweed, house dust mite and birch. Its cat allergy treatment was the most advanced.

Circassia will immediately halt a recently-initiated late stage trial of its grass allergy treatment and shelve plans to carry out an early stage trial on its ragweed therapy, according to a company statement. It will then press on with trials for its birch allergy treatment as this is close to completion, and will assess whether to continue with a “well-advanced” trial on its house dust mite therapy, it said.

“Who could predict that a placebo could have such a massive effect?” stated Chief Executive Steve Harris. “In some ways, it’d be easier to take if the drug had not shown such a strong effect.”

He explained the company would now dig into the data to try to figure out whether the placebo effect was stronger in certain regions, or among certain types of patients. But he also cautioned that he didn’t want to “hold out a high degree of promise or hope that we will find something.”

Paul Cuddon, who is an analyst at Numis, said the huge placebo effect suggested that participants may have exaggerated the severity of their allergic reaction to cats at the outset of the trial.

The failure could also dent the confidence among U.K. biotech investors: Circassia has been held up as an emblem of the sector since it raised £200 million ($287 million) in its stock market float in back in early 2014. It was a prominent example of how U.K. science–the technology was first developed by scientists at Imperial College London–may form the basis of a successful company.

Just last year, Circassia diversified the business away from the allergy core by acquiring two respiratory-focussed biotechnology companies. Mr. Harris stated these two businesses meant Circassia had a “Plan B.”