Investors are spooked by pharmaceutical firm Circassia Pharmaceuticals’ (CIR) warning that it may need third party funding to acquire the full US commercial rights to flagship drug Tudorza.
Sales are also expected to fall to a range of £48m to £52m, lower than previous consensus expectations of £54.9m for the year to 31 December 2018, contributing to a 10.4% share price slump to 49.2p.
Delays in recognising sales in China via a new local subsidiary and a higher level of Tudorza rebates via Medicare/Medicaid in the US (which effectively mean lower prices for drug manufacturers) in the second half of 2018 have been blamed for the setback.
Circassia is unsure how much it get from commercial partner AstraZeneca (AZN) until the end of its financial year as this will be affected by rebate levels in the US.
The company is in the process of buying full commercial rights to Tudorza and the in development Duaklir treatment from AstraZeneca, which has a 19.9% stake in Circassia.
A $20m deferred option payment for chronic obstructive pulmonary disease (COPD) drug Tudorza is due on approval of Duaklir. This fellow COPD treatment is pencilled in for a launch this year if approved.
On top of the $20m, the company also needs to pay up an additional $100m consideration under the deal, although AstraZeneca could offer help with a loan facility.
For Circassia, $120m is a significant sum to stump up. For context, the market cap is currently around £179m. On the flipside, the company is confident Tudorza has potential for strong sales growth.
Circassia is continuing its transformation into a respiratory-focused pharmaceutical business by rolling out an expanded sales force in China in 2019. The change in strategy emerged in 2017 after two major trial failures.
