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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue