IPO year: 2014
Raised: £200 million ($332 million in 2014 dollars)
Share price: 310 pence or £3.10 ($3.79)
Valuation: £581 million ($968 million)
Close Aug. 30, 2019: 18.7 pence or £0.19 ($0.23)
Change: Down 93%
When it went public in 2014, Circassia was to be the herald of a renaissance for U.K. biotech IPOs. Instead, its pipeline of allergy treatments failed one by one, leading the Oxford-based company to ax all of them and eventually delist from the London Stock Exchange, nearly five years after pulling off its £200 million mega-IPO.
Though £200 million ($323 million in 2014 dollars) might sound unremarkable in the context of Moderna’s $604 million behemoth IPO last year, it represented a new hope for a country that had not seen a biotech IPO in nearly a decade. At the time, the last company to list in London was antiscarring company Renovo, which raised £57.5 million in 2006, and before that, Ark Therapeutics, which bagged £55 million in 2004. Both companies subsequently went belly up, scaring off investors and tarnishing their perspectives of the biotech sector.
In 2014, Circassia had a cat allergy treatment in phase 3, with midstage programs for grass, ragweed and dust mite allergies following behind. Its immunotherapies were designed not just to relieve symptoms but also treat their underlying cause by helping patients’ immune systems tolerate the allergens.
"Circassia's IPO was a key test for the U.K. market and the fact that it got away successfully shows increased receptivity for the life sciences sector," Lala Gregorek, then an analyst at Edison Investment Research, told FierceBiotech at the time. "Circassia is a great example of science developed in the U.K., and the considerable investor interest in it is encouraging."
By Bloomberg’s count, it was the biggest British biotech IPO in a generation. But a success IPO is no guarantee of future success. In 2016, it all came crashing down.
Circassia’s key cat allergy program failed to beat placebo in phase 3, thanks to a “marked placebo effect” that Circassia had not seen in phase 2. To add insult to injury, the company also said it would halt work on its grass and ragweed allergy programs and that it would “assess the implications associated with” continuing a phase 2b trial for its house dust mite allergy program. Its stock nosedived 64% by lunchtime.
Circassia abandoned the rest of its allergy programs in March 2017 after its dust mite candidate flopped in a phase 2b trial. As with the previous setbacks to its ragweed and cat allergy trials, Circassia pointed to a pronounced placebo effect to explain the failure of the dust mite study.
“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,” Circassia CEO Steve Harris said in a statement at the time. “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, and consequently we will make no further investment in our allergy portfolio.”
The company continued selling Niox, its asthma management device, and inked a deal with AstraZeneca in 2017 to develop and market Tudorza and Duaklir, two of the latter’s chronic obstructive pulmonary disease drugs, in the U.S.
Last December, Circassia finally limped away from the London Stock Exchange to trade on its AIM submarket. The company had slipped below the minimum free float—the number of shares available to the public—when it teamed up with AstraZeneca, but it gained an exemption that bought it time to address the problem.
Circassia failed to boost its free float from 11% to the required 25%, and so management asked investors to vote in favor of a plan to delist from London’s main exchange. Had they voted it down, Circassia reckoned the U.K. financial regulator could have yanked its listing, leaving the company without an exchange on which its shares could be bought and sold.
On Feb. 4, Circassia announced it had been admitted to the AIM submarket, trading at 0.08 pence a share—a fraction of the 310 pence price at which it had debuted on the main stock exchange five years earlier. Its stock has since increased to 18.7 pence, but we'll go ahead and call this one a loser.