Circassia Pharmaceuticals PLC (CIR): Another Failed Trial Puts An End To Anti-Allergy Treatment Efforts

After another field trial failure of its anti-allergy treatment, Circassia Pharmaceuticals PLC (LON:CIR), an Oxford-headquartered specialty biopharmaceutical company, appears to be falling way short of the big promises that were made during its blockbuster IPO back in 2014. This time, it’s the company’s treatment for house dust mite allergy that has failed in proving its efficacy against the placebo test.

CIR faced a major setback when its much-hyped anti-allergy treatment for cats failed in the final stages of the study last June — the news sent CIR shares nosediving more than 60% in a day. That drop accounts for almost all the lost value in the stock since. Although Circassia has now decided to give up on the anti-allergy investment, once expected to be the next big thing in the biopharmaceutical space, shares didn’t register any considerable drop, indicating that investors seem to have already priced-in the worst case scenario.

AstraZeneca (LSE:AZN) to the rescue

A major factor that helped avoid another sell-off after this setback was CIR’s recent deal with big-pharma AstraZeneca, which sold two of its respiratory drugs—Tudorza and Duaklir—in a deal that could amount to £230 million, including AZN getting a 14% stake (worth US$50 million at the time of transaction) in the company.

These payments would include conditions such as CIR using its option to “secure the remaining commercial rights” of Tudorza, a contribution to AZN’s R&D efforts and payment if Duaklir gains an approval from the US FDA. Both drugs treat chronic pulmonary obstructive disease and while Tudorza generated US$80 million in sales last year, Duaklir is still in the final stages of development.

LSE:CIR Circassia Pharmaceuticals Future Revenue and Net Income by Simply Wall St
LSE:CIR Circassia Pharmaceuticals Future Revenue and Net Income by Simply Wall St

“We plan to double our U.S. sales force to promote Tudorza® as our priority, as well as our existing NIOX® products transforming Circassia into a worldclass respiratory business positioned for future in-licensing and M&A”, said co-founder and CEO Steve Harris in a statement issued following the deal signed with AZN.

The transaction with AZN is expected to reflect in CIR’s profits in a year; however, it expects to generate positive cash in no less than three years. Analysts covering the company expect it to turn profitable not before 2020. The fortunes of the company now depend on its respiratory drug pipeline and performance of two drugs acquired from AZN in a competitive US market. Investors would look for solid results now before jumping in, considering the company’s recent track record.