Celltech trial failure sends shares plummeting

The risks of gambling on biotechnology stocks were starkly illustrated yesterday after the share price of Celltech, the UK's second biggest company in the sector, crashed by almost half. The company's shares fell 289p to 341p as the group said its leading product, a drug for septic shock, had failed final stage clinical trials.

Celltech said the drug BAYX 1351, licensed from Germany's Bayer, "has not been shown to be effective in reducing mortality in septic shock". The news rocked the biotechnology sector with shares in Scotia, PPL Therapeutics, Cortecs and Cantab falling heavily.

Peter Allen, Celltech's finance director, said the news was a severe disappointment. David Bloxham, chief operating officer, said ruefully: "When we got a phone call from Bayer yesterday morning and realised the news was not good we considered jumping off somewhere high."

However, Peter Fellner, chief executive, said that there were no financial implications for Celltech as Bayer had fully funded the drug's pounds 100m development costs. "We remain financially strong", he said.

Dr Bloxham said he thought the outcome was more devastating for Bayer, which had publicly heralded the drug as its main product launch in 1998 and had already built a factory to manufacture it. "I understand there will be redundancies at Bayer," he said.

Dr Bloxham said Celltech would abandon the sepsis work, but would continue developing the same drug for the bowel condition Crohn's disease and would continue its leukaemia and arthritis programmes: "We still have other legs to stand on," he said.

Analysts said that though no one had been successful in developing a septic shock drug, the news was a blow for Celltech, particularly as the group was forced to abandon a drug for asthma less than two years ago. Ian Smith, an analyst with Lehman Brothers, said: "Celltech needs some new and exciting news to get its share price going again."

Mark Brewer, an analyst with Hoare Govett, pointed out that the septic shock market was notoriously difficult. "Every single biotechnology company who has got involved in septic shock has failed," he said.

He thought Celltech's remaining drug programme looked weak: "We are positive about their leukaemia drug, but we think there will be a lot of competition in the Crohn's market and there are better products being developed for arthritis by companies like Glaxo."

Analysts said the impact of Celltech's announcement on other biotechnology stocks highlighted the risks involved in the sector. Mr Smith at Lehmans said the market would now question how easy it was to predict whether a drug would make it to market: "This will make the City less inclined to assume success," he said.

Mr Brewer at Hoare Govett thought it would have implications for the queue of biotechs hoping to list in the UK. "Float prices may have to be scaled back," he said.

However, several prominent names in the industry argued that the sector as a whole would not be held back. John Padfield chief executive at Chiroscience, said the market was increasingly able to discriminate between high and low-risk biotech stocks.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent