Circassia, a major biopharmaceutical company, lost nearly half its value in the stock market after an official announcement on June 20, 2016, regarding its key cat allergy therapy failure. The drug in question was in phase 3 trials. The UK-based drug company had made the experimental cat allergy trial central to its investment strategy which came crashing down when the results of the trials were first made public today.

Previously, in March 2014, the company’s announcement of a promising new cat related allergy treatment led to a 200 million pound collection at the London Stock Exchange. The event is thought to be the London’s biggest stock market float in decades. Circassia Biotech floated at 310p per share, valuing it to near £581 million.

Initially, the company gave rough estimates of its timeline for the product and hoped to launch it by late 2017 once the trials finished. Circassia was working on several next generation immunotherapies for treatment of cat, ragweed, dust mite and grass allergies. The immunotherapy known as Synthetic Peptide Immuno-Regulatory Epitopes (Spires) was the main focus of their efforts and was originally developed by researchers at Imperial College London.

The failed clinical trials can result in even more decline in the stock prices of the company down the line and send a shock wave amongst the investors. According to Reuters, medical and pharmaceutical stock market expert Nicholas Keher, shared that the company fell from 62 percent to 100p in early trading. He called the news “very disappointing”.

Analysts at Numis agree with Nicholas Keher and termed the results as “surprising and disappointing”. They have also allocated a target price and recommendation on the stock under review, according to The Telegraph.

Study proceedings have come to a halt after the results of the trials were deemed unfavorable. The aim of the study was to develop a product that would potentially change the patient’s underlying allergy causes by making the immune system of recipients tolerant to cat allergens.

The double blind, multi-centre, field trial compared the administration effects of Fel d 1 allergen peptides (4 dose course) with two sequential courses (8 dose) and a placebo. The study conducted in hundred centers in North America, Europe, and Russia was investigating differences in the effects of therapy and the placebo as its end point outcome.

Improvement in all groups was seen when compared to initial baselines. However, no difference in the effects of placebo and therapy could be seen and no efficacy for the medicine was thus established.

The company has announced that the results of the trial will be fully reviewed to understand them and assess that whether some confounding or hidden factors affected the results. Evaluation of implications on its allergy portfolio will also be conducted.

Steve Harris, the company’s CEO, made a statement in the press release and said that the company was surprised and disappointed by these results and that such dramatic placebo effect was not observed during the initial stages of the trial.

He added that their product trial failed to identify a treatment effect despite huge and dramatic improvements seen in recipient’s allergy symptoms and medication use.

Harris explained that the company will focus on its wider allergy products range and provide updates for future developmental plans. “We will continue to focus resolutely on our wider portfolio, rapidly growing the sales of our market-leading NIOX® asthma management products and advancing our pipeline of respiratory products”, said Harris.

Circassia will stop working on the newly initiated study on grass allergy treatment and ragweed allergy therapy.

Two other projects that have shown progress and have progressed will into the development process; phase 2b study of Circassia’s house dust mite allergy product and a birch allergy product. The latter will continue for now while the house dust mite allergy product would be assessed and a decision about its future will be made further down the line.

The company revealed that its respiratory products range and franchise was unaffected by this development and that the cash balance of the company remains over £139 million ($202.5 million).

The Humane Society of the United States (HSUS) stated that nearly 15 % of the US population is allergic to cats or dogs. Nearly one third of Americans (a total of 2 million) allergic to cats live with at least one cat in their house anyway.

Cat allergy in humans is due to a result of an immunological reaction to one or more allergens produced by a cat. Characteristic symptoms of the reaction often involve chest tightening, nasal congestion, watering of the eyes, sneezing, rash development, wheezing and coughing.

Allergies can be treated with help of medications like antihistamines and decongestants. Allergy shots or allergen immunotherapy, a periodic injection therapy, can help enhance body’s natural immune response to the cat allergens. However, long-term protection cannot be achieved by any of these methods.