Neil Woodford has reiterated his support for Circassia Pharmaceuticals, a stock he holds in his Patient Capital trust, after it dropped 66% on failed drug trials.
The company, which is part of the FTSE 250 index, saw its stock plummet by two thirds to trade at 91p, after the failure of its high-profile phase III study into its cat allergy vaccine.
Woodford's £748m trust saw a 0.6% decline in its share price following the news, but rebounded later in the day.
The vehicle remains 21.6% down over the year to 20 June, with its NAV 10% lower, versus the AIC UK All Companies sector average fall of 6.3%, and is trading on a slight discount of 0.08%, according to FE.
Commenting on the dramatic falls in the share price of the pharmaceutical stock, Woodford (pictured) pointed out there is "much more" to the company than its allergy platform.
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"As a result of acquisitions made last year, it has become a more diverse business with some very attractive respiratory products both in the market and under development," Woodford said.
"The company remains very well-financed, with net cash of almost £140m on its balance sheet."
These factors must be borne in mind when considering the reaction of the stockmarket to the news which has seen the firm's share price drop by 66%, he added.
Woodford said: "We would expect an announcement like this to be greeted by a share price decline but it is the nature of the stockmarket to over-react to negative news, with the immediate reaction typically much greater than long-term fundamentals would justify.
"That is almost certainly the case here - this is a significant disappointment for Circassia but we remain supportive shareholders and from here, we continue to see long-term value in the shares."
