LONDON, Oct 9 (Reuters) - Shares in Britain's leading biotechnology company, Celltech Group Plc (LSE: CCH.L - news) , fell more than five percent on Monday after one of its drugs failed in clinical trials.
Relaxin, a medicine for treating the rare skin disease scleroderma, was acquired by Celltech when it bought Medeva last year and was being developed with U.S. firm Connetics Corp .
Connetics has now dropped plans to seek approval of Relaxin after a Phase II/III study failed to meet its primary goals. Celltech said it would consider whether to fund development of the product for other diseases after studying the trial data.
Analysts said Relaxin's failure was a setback but was not as serious as if one of the core Celltech products had failed. Peak sales for the drug had been forecast at up to 120 million pounds ($173.8 million) of which Celltech would have received around half.
"It's a knock but it's not the worst failure they could have had," said Sam Williams, biotechnology analyst at Robertson Stephens, who retains his "buy" recommendation on the stock.
"It was worth about 10 percent of our revenues in 2005 and takes a little over 10 percent out of earnings per share."
Celltech Finance Director Peter Allen played down the significance of the failure in what he said was always a high-risk project.
"When we acquired Medeva this clinical trial was ongoing and we had to fund it whether we terminated it or not, so we decided we might as well see what happened," he told Reuters.
Celltech shares were off 76 pence or 5.6 percent at 12.80 pounds by 0900 GMT. The stock peaked at 19.35 pounds at the height of the biotech boom last March after ending 1999 at 531p.
Sally Bennett of Charterhouse Securities was also sanguine about the fallout of Relaxin's problems.
"It was a mid-term project that looked interesting but it's not a core Celltech technology," she said, reiterating her "add" stance on the shares.
Celltech has another eight products in clinical trials, with most investor attention focused CDP 870, an anti-TNF antibody product currently in Phase II trials for rheumatoid arthritis.
The company is a leading developer of antibody drugs and has developed a method to produce large quantities of the cloned proteins in bacterial rather than mammalian cells, potentially cutting costs appreciably. |
