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Shares in Circassia Pharmaceuticals briefly dropped as much as 7.8 per cent on Tuesday morning and continued to trade choppily, after the British biotech group said it would end new investment in its anti-allergy treatments after a series of disappointing drug trials.

The abandonment of Circassia’s allergy programme marks a disappointing reversal of fortunes for the Neil Woodford-backed company, which floated in 2014 with hopes of becoming “the next Shire” in London’s biggest life-science IPO for decades.

On Tuesday the company said that trials of a new treatment for a dust mite allergy did not show a significant effect compared with a placebo.

The trial’s failure followed similar issues with a new cat allergy treatment last year, which caused shares in the group to shed more than two thirds of their value.

Steve Harris, Circassia chief executive, said he believes both treatments were effective, and questioned the regulatory requirements that led to the disappointing results.

He said:

It is concerning that in two well-designed field trials, a robust placebo response has confounded our ability to demonstrate a significant treatment effect, despite positive results in earlier chamber studies. We remain convinced that the technology has biologic activity, but we also believe the difficulty in overcoming the placebo effect using the field study designs required by regulators represents a significant hurdle.

Mr Harris said Circassia will make no further investment in its allergy programmes, and will instead focus on its wider respiratory business, particularly a collaboration with FTSE 100 group AstraZeneca agreed last month.

Shares in Circassia were down 0.5 per cent at publication time, to 103p.

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