Circassia share price flies on news of Astrazeneca partnership
Shares in Neil Woodford-backed pharmaceuticals firm Circassia rocketed over 30 per cent this morning after the firm announced a $50m (£40.4m) investment from Astrazeneca.
Circassia will buy the rights to two of Astrazeneca's pulmonary disease drugs in a deal that values the products at as much as $230m.
The FTSE 100 giant will receive $50m of shares in its fellow London-listed minnow, with Circassia handing over $100m in cash to Astrazeneca over the next few years and further royalty payments to follow.
Read more: Circassia share price tanks by 65 per cent as allergy treament fails trial
Circassia chief executive Steve Harris called the deal "a transformational opportunity for the company" and one that will double the number of its marketed products in the first instance.
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The firm hopes it will triple the number of marketable products in the next two years. He added:
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.
The two drugs in question are Tudorza and Duaklir. Tudorza has already been signed off for use in the US and 60 other countries and generated sales of $170m in 2016.
The share price move will come as a boost to shareholders – such as Neil Woodford, who owns 21 per cent, and Invesco, which owns 35 per cent – after it more than halved following the failure of its experimental cat allergy treatment in a late-stage trial last June.
Read more: Circassia optimistic following strong sales growth
Duaklir's development is still in its infancy in the US but was initially approved by the EU in 2014. The $100m cash consideration will handed over by Circassia to Astrazeneca once Duaklir has been approved by US authorities or June 2019, whichever comes earlier.
Astrazeneca executive vice president, global product and portfolio strategy Mark Mallon said: "Circassia will be an important strategic partner for AstraZeneca in the US and we look forward to working closely together."