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BTG (LON:BGC) report:Further agreement with Nycomed US Inc

Contributed by Daniel Stewart & Company

By Daniel Stewart & Co

- BTG announced that it signed an agreement with Nycomed US Inc. concerning the accelerated transition to BTG on 1 October 2010 of marketing rights to CroFab and DigiFab.

- Under the terms of the new agreement, the companies will cooperate to ensure an orderly transition of the sales, marketing, promotion and distribution functions to BTG and to ensure continued orderly product supply to end users.

- BTG will gain access to Nycomed's market data, customers and sales force, and from 1 October 2010 BTG will have exclusive rights to market and sell the products.

- In return, BTG will pay Nycomed up to ?10.3m, the precise amount depending on the amount of product delivered to and sold by Nycomed before 30 September 2010. We estimate the final amount to be ?9m.

- As a result of this agreement, we now anticipate that product revenues for the current financial year will be ?9m higher than previously forecast (?97m vs. ?88m previously).

- The increase in revenue is expected to flow directly into gross profit, as full manufacturing costs have already been included in BTG's expectations.

- The payments to be made under this agreement are estimated to result in a one time operating expense of ?9m in the current year's financial results, and we estimate that the net impact will be earnings neutral in FY2011.