Some colour on the story
LONDON (Dow Jones)--Celltech Group PLC (NYSE:CLL - News) , one of the few profitable biotechnology companies in Europe, Thursday said it will take up to a year longer than expected for one of its key drugs to reach the market, prompting its shares to plunge over 30%.
In a major setback for Chief Executive Goran Ando, recently arrived from Pharmacia Corp. (PHA), Celltech said it would delay final clinical trials of rheumatoid arthritis drug CDP 870 until it had examined interim studies.
More crucially for the company's financial outlook, it said its partner, U.S. pharmaceutical giant Pfizer Inc. (NYSE:PFE - News) , had asked to renegotiate the terms of the deal between the two, and may hand the drug back to Celltech.
Celltech shares fell sharply on the news, although they started to claw back some losses within an hour. At 1407 GMT, they were down 19% at 386.5 pence.
Analysts said the news of the delay and the possible renegotiation of terms was exacerbated by Celltech's failure to fully explain why the trial was delayed. Safety was unlikely to be the problem, they said.
"Goran Ando didn't come to Celltech to push a drug that doesn't work," said Navid Malik, analyst at Williams de Broe. "I don't think it's the drug that's the problem, it's something about the way it's being used."
As Celltech plans to continue trialing the drug for rheumatoid arthritis, and has no plans to stop ongoing trials for the drug for use in treating Crohn's disease, safety can't be the reason for the delay, he said.
Celltech's Ando said that, with or without Pfizer, "we firmly believe that CDP 870 has considerable potential in RA and intend to maximise this value."
He also said the commercial potential of the drug as a Crohn's treatment was much bigger than originally envisaged. A Phase III Crohn's trial is due to get underway in the next two weeks. Drugs are usually submitted to regulators after Phase III.
Around 60% of profits from the drug is likely to come from its use in treating Crohn's disease, with the remainder from its use in RA, said an analyst who declined to be named. This is no doubt why Pfizer is keen to renegotiate, he said.
"Note that trials are still ongoing. This is important because it shows there are no major safety issues for the product, otherwise it would be unethical to continue," he said. "This doesn't mean that CDP 870 is dead."
Others weren't so upbeat, however.
"Very bad news...we wonder what Pfizer knows," said a trader who declined to be named, predicting further share price falls in the next few days. "Everyone's banging the bear drum."
Company Web site: celltechgroup.com
-By Susannah Rodgers, of Dow Jones Newswires; 44 20 7842 9269; susannah.rodgers®dowjones.com
(Sarah Thompston contributed to this story.) |
