Consort Medical splutters as BAT stubs out Voke programme

British American Tobacco has terminated an agreement with Consort Medical over the manufacture of nicotine inhalers for its Voke development programme.

Consort, which said it was in "constructive dialogue" with BAT's Nicovations arm and product developer Kind Consumer over the future of the Voke programme, reassured investors that it did not believe the shelving of the deal would "materially impact" its expectations for underlying trading performance in 2017.

Consort pointed out that the programme to build, manufacture and supply Voke inhalers and parts was only one of 16 programmes in its subsidiary Bespak's development pipeline.

Pointing to recent half-year results that showed a period of solid growth, chief executive Jonathan Glenn singled out the underlying strength in Bespak and pharmaceutical ingredient arm Aesica and the "momentum emanating from the growing and diverse pipeline portfolio of significant development programmes" and said the company remained "highly confident in the robustness of the remainder of our business and our prospects for the future".

Broker Shore Capital said that at current share price levels there seemed to be little incorporated in the company's valuation for the Voke programme.

ShoreCap's forecasts assumed peak sales of £15m for Voke, with launch in 2017, so removing Voke completely reduces its valuation to 1,050p from 1,090p - which only includes revenue contribution from one of Bespak’s remaining development pipeline.