Weston Medical...
By Ben Hirschler, European Pharmaceuticals Correspondent
LONDON, Sept 3 (Reuters) - Weston Medical Group Plc shares lost 90 percent of their value on Tuesday as the British needle-free injection specialist delayed the launch of a key product and said it would need additional funding.
The flagship Intraject device will not now be launched until at least mid-2005 while the firm makes design modifications, after tests showed some products were not working properly.
"It's a bombshell. There was no warning of this and it's very late in the day to start saying there are problems," said Robin Campbell, industry analyst at WestLB Panmure.
Shares in the group, which floated in May 2000 and peaked at 275 pence in January 2001, traded down to as little as four pence after closing on Monday at 50. They were quoted off 87 percent at 6-1/2 by 1040 GMT.
Weston Medical has trumpeted its Intraject device as a less painful and more effective way of delivering drugs into the body, winning backing from major drug firms including Roche Holding AG (ROCZg.VX), GlaxoSmithKline Plc (London:GSK.L - News) and Abbott Laboratories Inc (NYSE:ABT - News).
Investors had expected some of these licensee partners to start filling the device with their medicines in 2003. That will not now happen, leaving the firm with a yawning funding gap.
Chief Executive Christopher Samler said it was not possible yet to say how much new cash was needed.
"It all depends on the extent of the delay and we haven't fully bottomed that out," he told Reuters.
All options for fund-raising were being considered, he added. "There are all sorts of ways of cutting this, from a rights issue, to a restructuring of our agreements (with pharmaceutical companies), through to potential M&A considerations."
Weston Medical had cash reserves of 21 million pounds ($32.60 million) at the end of March and has been burning its way through just under one million pounds a month, excluding capital expenditure.
The group discovered that some of its devices were not working properly after conducting new in-house tests about a month ago.
"The results surprised us hugely. Some of the devices weren't performing as expected, they weren't as consistent as expected," Samler said.
The company is now examining three components for possible modification -- the capsule and size of opening, the shock absorber and the gas pressures used.
Weston Medical shares had already fallen heavily last week.
That fall was attributed, at the time, to concerns that a lawsuit over a new hepatitis treatment made by Roche might adversely affect Weston's agreement with the Swiss group.
Tuesday's revelation prompted market speculation that some investors may have got early warning of the Intraject problems. Company spokesman Nikul Odedra denied this.
"We don't believe that there was a leak from the organisation with respect to the announcement that we put out today... We believe the drop in the price was most likely to do with the Ribapharm lawsuit," he said.
U.S. biotech Ribapharm Inc filed a suit last week to try and prevent Roche from selling its Pegasys drug -- which will be delivered via Intraject -- with another medicine called ribavirin. |
