(Bloomberg) -- Circassia Pharmaceuticals Plc, the drug company backed by British investor Neil Woodford, likened to Warren Buffett for his value investing strategy, jumped as much as 30 percent in London Friday.
The move came after the Oxford U.K.-based drugmaker announced a lung disease collaboration with AstraZeneca Plc, including sales rights for drugs Tudorza and Duaklir in the U.S. market, signaling a future strategy of late-stage development and commercialization.
“We are rebuilding the business,” Chief Executive and Co-Founder Steven Harris said in a phone interview. “This deal is transformational for us, an important announcement that accelerates our strategy,” he added.
Investors will hope the deal on medicines for lung conditions is a step in the company's recovery process, after shares fell 67 percent when its cat allergy drug failed clinical trials in June.
Circassia sees the transaction as broadly cash neutral for three years, then cash generative. It will also issue shares to AstraZeneca upon completion of the deal, the company added in the statement.
Harris says the company is awaiting further data on its allergy program, and if it is compelling, will accelerate investment. If not, spending will be stopped.
“Circassia will be an important strategic partner for AstraZeneca in the U.S. and we look forward to working closely together,” AstraZeneca Vice President Mark Mallon commented in the statement.
Woodford, founder of the investment firm that bears his name, holds a 20 percent stake, according to data compiled by Bloomberg. He invested in Circassia while working at his previous employer, Invesco Ltd. The stock has fallen almost 70 percent since its initial public offering in March 2014.
Circassia shares closed up 5.4 percent at 92 pence a share in London.
--With assistance from Naomi Kresge
To contact the reporter on this story: Tiago Ramos Alfaro in London at talfaro1@bloomberg.net.
To contact the editors responsible for this story: Adveith Nair at anair29@bloomberg.net, Joe Easton, Niveditha Ravi
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