The verdict is in for healthcare company BTG (BTG) on a litigation battle and the result is not positive.
The company is making a £53.5m provision to cover damages for breaching a distribution deal with Wellstat Therapeutics concerning the commercialisation of Vistogard.
Vistogard is a treatment that helps patients deal with a toxic reaction from chemotherapy. Shares in BTG are down 5.4% to 737p.
The Court of Chancery of Delaware has confirmed its ruling in favour of Wellstat. As a result the distribution agreement is being terminated and BTG is returning all rights to Vistogard to Wellstat as soon as practicable.
According to the court, Wellstat is entitled to damages of $55.8m plus interest and costs, although BTG is considering appeal options.
DAMAGES HIGHER THAN EXPECTED
Panmure Gordon analyst Dr Julie Simmonds says Vistogard generated sales of approximately £3m in 2017 so the loss of the product would not have a significant impact on her estimates.
Unfortunately, the damages are ‘significant’ and slightly higher than initial forecasts.
Investec’s Andrew Whitney argues that BTG’s returning of rights of Vistogard could mean low single digit pressure on his earnings per share estimates of 22.7p when related sales are removed.
In a better bit of news, BTG has finalised reimbursement codes in the US for its Varithena treatment from 1 January, allowing doctors to be more easily paid through electronic claims.
Simmonds says progress with Varithena has a significant impact on sentiment and more certainty on coding is expected to reduce debate on uptake, but it will take a year until the full impact is realised.
