3. Circassia and Neil Woodford

Neil Woodford-backed Circassia posted a major phase 3 flop in the summer of 2016 for its key investigational cat allergy immunotherapy.

For a long while, if you thought of British biotech, you thought of Circassia, a company whose IPO raised a staggering and record-breaking $332 million a few years back. Circassia was the jewel in the U.K. life sciences crown.

In 2016, that jewel lost its shine. Last summer, the company posted a major phase 3 flop for its key investigational cat allergy immunotherapy when the med failed to beat out placebo, missing its primary endpoint.

This was a big hit for a drug designed not only to alleviate symptoms but also treat the heart of the condition by helping patients’ immune systems tolerate the allergens. Circassia blamed a “marked placebo effect,” something it hadn’t seen in phase 2, which had better results.

The trial data hit the same week that the U.K. voted to leave the European Union, but Circassia’s failure was seen as a larger blow to British biotech. The company's shares took a battering, falling around 65% the day of the announcement, and they now trade at less than half their prefailure price.

No one knows these stats better than Neil Woodford, the star U.K. investor. Back in 2015, Woodford had pulled out of Sanofi and doubled down on Circassia, snapping up a 13.5% stake in the biotech, a 150% increase on his original ownership.

Then, last year, Woodford quietly bought up another big chunk of Circassia shares, moving his stake in the company past the 20% mark. The very next business day, Circassia posted the phase 3 trial data that caused its stock price to crash.

At the time, the company said it would stop its studies of treatments for grass and ragweed allergies, and review the data from the cat-allergy study for factors that could have affected the outcome. Studies of dust-mite and birch allergy products are still set to continue, but the company faces tough questions about its entire R&D future.  

Financially, the Circassia failure certainly didn’t ruin Woodford, but the company is now seen as an outlier rather than a pioneer in the allergy field, and in life sciences in general. Both Woodford and Circassia saw their reputations take a serious pummelling, with bruises showing up across the U.K. biotech industry.

And this wasn’t the end of the misery for Woodford, but more on that with another rotten tomato winner in the form of Northwest Bio.

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3. Circassia and Neil Woodford