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
Voices
Ed Miliband and David Cameron are neck and neck in the polls
election 2015Armando Iannucci: on how British politics is broken
News
i100
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
ebooks
ebooksA celebration of British elections
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
A voter placing a ballot paper in the box at a polling station
i100
News
people
Arts and Entertainment
The Queen (Kristin Scott Thomas) in The Audience
theatreReview: Stephen Daldry's direction is crisp in perfectly-timed revival
Sport
football
  • Get to the point
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

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power