Drug flop sees GlaxoSmithKline shares fall

Shares in GlaxoSmithKline fell nearly 2%, or 22p, to 1151p today, after Britain's biggest drugmaker called off late-stage development on insomnia drug Almorexant.

Glaxo bought the rights to the drug from Switzerland's Actelion, Europe's biggest biotech company, for as much as Swfr 565 million (£376 million) in 2008.

It paid Actelion an initial Swfr 150 million SwFr in July 2008, plus set out milestone payments worth up to Swfr 3.2 billion (£2.1 billion).

At the time, GSK said the drug had "tremendous potential".

However, the two drugmakers today dumped Almorexant over safety concerns.

GlaxoSmithKline said: "This decision follows a review of data from additional clinical studies, which were conducted to further establish the clinical profile of almorexant, including the tolerability profile."

The pharma giant added that it will continue working with Actelion to develop other insomnia treatments.