Experimental feature

Listen to this article

00:00
00:00
Experimental feature
or

Shares in Circassia Pharmaceuticals, the Neil Woodford-backed biotech group, jumped almost a third on Friday morning after it announced that AstraZeneca will take a $50m stake in the company as part of a “transformative” new collaboration.

Circassia will pay up to $230m over a number of years plus royalties for certain US commercial rights for Tudorza and Duaklir, two treatments for chronic obstructive pulmonary disease.

The payment will include new shares in Circassia worth $50m, which will be issued when the deal is completed.

Analysts at Cantor Fitzgerald described the announcement as a “bold strategic move” for Circassia, and a “positive step” after trials for its flagship immunotherapy programme hit a wall last year.

Shares in the company tumbled by more than two thirds last June after it halted the trials, which were for an experimental cat allergy treatment.

However, they rose 30 per cent on Friday morning, to 111p. That is its biggest one-day rise ever, but still leaves them down 59 per cent over the last twelve months.

Steve Harris, Circassia chief executive, said:

This proposed transaction is an ideal fit with Circassia’s strategy and respiratory focus. It represents a transformational opportunity for the company, doubling the number of marketed products in our portfolio, with the potential to triple the current number within two years.

Through an initial commercial collaboration with AstraZeneca, we plan to double our US sales force to promote Tudorza as our priority, as well as our existing NIOX products, transforming Circassia into a world-class respiratory business positioned for future in-licensing and M&A. In addition, the transaction structure is highly attractive, allowing us to fund the consideration without further investment anticipated from shareholders, while at the same time welcoming AstraZeneca to our share register.

Mark Mallon, AstraZeneca executive vice president for global product and portfolio strategy, said:

Tudorza and Duaklir are important components of AstraZeneca’s respiratory franchise globally and this collaboration will support their commercialisation in the US for the benefit of the millions of COPD patients.

Circassia will be an important strategic partner for AstraZeneca in the US and we look forward to working closely together.

Copyright The Financial Times Limited 2017. All rights reserved.
myFT

Follow the topics mentioned in this article

Follow the authors of this article

Comments have not been enabled for this article.