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
Arts and Entertainment
musicOfficial chart could be moved to accommodate Friday international release day
Sport
Wes Brown is sent-off
football
News
i100
Sport
Italy celebrate scoring their second try
six nations
Sport
Glenn Murray celebrates scoring against West Ham
footballWest Ham 1 Crystal Palace 3
Arts and Entertainment
Drake continues to tease ahead of the release of his new album
music
ebooks
ebooksA special investigation by Andy McSmith
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: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower