BTG takes a hit after Astra halts CytoFab development

Specialist healthcare group BTG revealed on Tuesday that it will take a one-off charge after disappointing results from its 'CytoFab' study meant that further development of the drug has been halted.

The group has received top-line data from an AstraZeneca study comparing the efficacy and safety of AZD9773 with a placebo. AZD9773, or CytoFab, is a developing treatment for severe sepsis and/or septic shock.

It showed that CytoFab "did not show any significant improvements versus placebo in respect of the primary endpoint, ventilator-free days, or secondary endpoints including mortality."

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As such, AstraZeneca decided to halt any further development of CytoFab and will hand the asset back to BTG. However, BTG said that it doesn't expect to conduct any further development itself, meaning that it will take a charge of £28m in the current financial year, of which £25m relates to a non-cash impairment of intangible and tangible fixed assets.

"These results are obviously disappointing, as the treatment of severe sepsis remains a major unmet need. Our core business and trading continue on track, as described in our recent interim management statement," said BTG's Chief Executive Officer Louise Makin.

Nevertheless, analysts at Jefferies said that the Cyto failure is "unfortunately not surprising but largely priced-in".

"We highlighted this as an upcoming high-risk binary event in our July 11th downgrade to 'hold', as sepsis is a very challenging indication. Given the stock's 15-20% recent sell-off, we see minimal downside from current levels on today's setback."

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