Consort Medical Says BAT Unit Ends Voke Inhaler Supply Deals -- Update

(Adds broker comment, share price)

By Philip Waller

LONDON--Shares in Consort Medical PLC (CSRT.LN) fell Tuesday after the drug-delivery-device maker said a unit of British American Tobacco PLC (BTI) is terminating supply deals for the Voke nicotine inhaler as the product failed to commercially launch in 2016.

Consort said Nicovations Ltd. had served termination notices for all supply agreements with Bespak Europe Ltd., a Consort Medical unit, for Voke, effective immediately.

The companies, however, remain in talks about the future of the Voke program, Consort said.

At 1035 GMT, shares in Consort were down 54 pence, or 5.1%, at 1006 pence.

Brokerage Panmure Gordon, which is maintaining its buy recommendation on Consort, described the news as disappointing, but said it isn't changing its financial estimates for the company as the product had previously been removed from forecasts.

It said Consort would launch a number of products in the next 12 months that could boost the company's growth above Panmure's expectations.

"We don't expect the company to lose financially from the termination of the contract," Panmure analyst Julie Simmonds said. "We expect the shares to be weak on today's news, however, we would see this as a buying opportunity as the underlying business remains strong."

Voke designer Kind Consumer licensed distribution rights to the product to Nicovations, which in 2011 entered into separate supply agreements with Bespak under which the latter would make and supply filled Voke devices and associated valves.

Voke is one of 16 programs being pursued by Bespak, and Consort Medical said it doesn't believe the termination materially affects its expectations for underlying trading this financial year ending April 30.

"While we are naturally disappointed in the loss of the supply agreements for Voke to Nicovations, we continue our dialogue with Kind Consumer and with Nicovations on the future of the program and we remain highly confident in the robustness of the remainder of our business and our prospects," Consort Chief Executive Jonathan Glenn said.

Write to Philip Waller at [e-mail]

(END) Dow Jones Newswires

January 03, 2017 06:14 ET (11:14 GMT)

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