21 March 2017

Vectura Group plc: Preliminary Results


Strong business performance in a transformational year with positive outlook for 2017

Chippenham, UK – 21 March 2017:Vectura Group plc (LSE: VEC) (“Vectura”, “the Group”, “the Company”), an industry-leading device and formulation business for inhaled airways products, today announces its preliminary results for the nine-month period ended 31 December 2016.

Financial Highlights

Strong financial results from a broadened portfolio of on-market products. Excluding milestones and other non-recurring sources of revenue, nine-month proforma[4] revenue growth of 26.2% and proforma[4] EBITDA[2] growth of 57.4% highlights the robust underlying performance of the business.

  Reported Proforma[4] based on recurring revenue[1]
  9 months ended 31 December 2016* 12 months ended 31 March 2016 Change 9 months ended 31 December 2016 9 months ended 31 December  2015 Change
Income statement            
Revenue £126.5m £72.0m   £115.6m £91.6m  
Recurring revenue%[1]     +20.5 ppts      
EBITDA[2] £34.1m £23.2m   £17.0m £10.8m  
(Loss)/Profit before tax (£40.1m) (£1.9m) (2011.0%)      
Basic EPS (5.3p)   (541.6%)      
Basic EBITDA per share[2]     (1.8%)      
* Includes results of Skyepharma from 10 June 2016
  • Revenue up 76.0% to £126.5m (2015/16: £72.0m)
    • Continued momentum from seven recently launched inhaled products with in-market net sales for the year to 31 December 2016 growing 81% to over $2.0bn1
    • Reported performance also benefits from the addition of Skyepharma following the merger on 10 June 2016
  • EBITDA growth of 47.0% to £34.1m reflecting robust underlying performance
  • Revenue from recurring[1] sources now accounts for 80.1% of total revenue (2015/16: 59.6%)
  • Loss before taxation of £40.1m compared to £1.9m in the prior period due to a higher amortisation charge of £64.0m (2015/16: £18.8m) and exceptional items of £9.4m (2015/16: £5.6m) driven by the merger
  • Year-end cash of £92.5m with strong operating inflows of £28.2m offset by merger related outflows

Operational highlights

Significant growth across marketed products

  • Strong flutiform® demand and product supply volumes in calendar year 2016 at record levels with good progress on capacity expansion initiatives
  • Net sales of Ultibro® Breezhaler® grew 37% over the period, benefiting from FLAME data

Developments across our novel partnered pipeline

  • Validation of FOX®smart nebuliser device
    • First EU regulatory progress enabling commercialisation(VR876, partnered with Bayer)
      • Ablynx exercised option for continued development of their RSV programme ALX-0171 (VR465) in hospitalised infants triggering a milestone for the Group of €1.5m. Phase IIb study initiated with results expected in H2 2018
    • Phase I completed for the inhaled biologic in co-development with UCB (VR942) with a Phase II trial to start in H2 2017

Significant progress across our generics partnered pipeline

  • ANDA filing by Hikma for a generic Advair Diskus®2 (VR315 US) accepted by the FDA triggering a $10m milestone for Vectura. GDUFA action date of 10 May 2017 confirmed
  • Pipeline review completed with development initiating on 3-5 additional generics programmes

Continued development of our wholly-owned pipeline

  • Phase III study for VR475 EU (treatment of severe asthma in adults) progressing well with results expected mid-2018
  • IND filing accepted by FDA for VR647 US (nebulised budesonide for paediatric asthma)
    • Phase I study in adults to initiate in H1 2017
    • Phase II study in children planned for H2 2017

Business development leveraging existing partnerships and growing pipeline

  • Third US licensing agreement signed with Hikma for VR730 (DPI generic salmeterol)
  • Second licensing agreement signed with Mundipharma for VR2076 (pMDI triple combination)
  • US commercial rights for Seebri™ Neohaler®and Utibron™ Neohaler® licensed by Novartis to Sunovion and launch expected in 2017

Merger integration and synergy realisation making excellent progress

  • Pipeline review completed
  • New organisational structure in place
  • Annual synergy savings of at least £10 million by 2018

"These results reflect the strong organic performance for Vectura in 2016 both before and after the June 2016 merger with Skyepharma which has transformed the outlook for the business. “As well as strong financial performance, we have made excellent progress on both partnered and wholly owned pipeline projects. In addition, we have executeda number of valuable business development agreements. The merger integration is well advanced and we remain confident of delivering the committed synergy targets as a minimum. The new organisational structure is in place, the portfolio review completed and promising new pipeline projects commenced. “With its proven formulation, device and development capabilities Vectura is well-positioned to accelerate shareholder value creation,capitalising on changes in the market dynamics of the inhaled respiratory market. The Group has a strong outlook both as a partner for generic and novel development programmes and the opportunity to capture an increasing share of investment value through the future commercialisation of its wholly-owned specialist targeted assets. “We look forward to 2017 with confidence given the strength of our capabilities and established in-market performance with further newsflow on our generic and novel programmes alongside further additional business development partnering.”

James Ward-Lilley

Chief Executive Officer of Vectura

Analyst briefing

James Ward-Lilley, Chief Executive Officer, and Andrew Derodra, Chief Financial Officer, will present the Preliminary Results and provide an update on the Group’s performance for the nine-month period ended 31 December 2016 at a briefing for analystsat 9.30am to 10.30am GMT on 21 March 2017. The presentation will be held in the Guildhall Room, 85 Gresham Street, London, EC2R 7HE. There will be a simultaneous live conference call. Dial-in details are:

Participant local dial-in: +44(0)20 3364 5729
Participant free phone dial-in: 0800 279 4835
Participant code: 6937967

A live webcast of the meeting, with the presentation slides including pro-forma financial information, will be available on Vectura’s website: http://www.vectura.com/investors/presentations-webcasts/

Enquiries

Vectura Group plc
Andrew Derodra – Chief Financial Officer
Fleur Wood –  Director Communications
Elizabeth Knowles – Director Investor Relations and Analysis
+44 (0)1249 667700

Consilium Strategic Communications
Mary-Jane Elliott / Sue Stuart / Jessica Hodgson
+44 (0)20 3709 5700
vectura@consilium-comms.com

About Vectura

Vectura, a FTSE250 company listed on the London Stock Exchange (LSE: VEC), is an industry-leading device and formulation business for inhaled airways products. With our extensive range of technologies, integrated capabilities and collaborations, we are a leader in the development of inhalation products, increasing our ability to help patients suffering from respiratory diseases. In June 2016 Vectura completed a merger with Skyepharma PLC.

Vectura has seven inhaled, four non-inhaled and ten oral products marketed by partners with growing global royalty streams, and a portfolio of drugs in clinical development, a number of which have licence agreements with several global pharmaceutical and biotechnology companies including Hikma, Novartis, Sandoz, Mundipharma, Kyorin, Baxter, GSK, UCB, Ablynx, Grifols, Bayer, Chiesi, Almirall, Janssen, and Tianjin KingYork.

For further information, please visit Vectura's website at www.vectura.com.

Forward-looking statements

This press release contains forward-looking statements, including statements about the discovery, development and commercialisation of products. Various risks may cause Vectura's actual results to differ materially from those expressed or implied by the forward-looking statements, including: adverse results in clinical development programmes; failure to obtain patent protection for inventions; commercial limitations imposed by patents owned or controlled by third parties; dependence upon strategic alliance partners to develop and commercialise products and services; difficulties or delays in obtaining regulatory approvals to market products and services resulting from development efforts; the requirement for substantial funding to conduct research and development and to expand commercialisation activities; and product initiatives by competitors. As a result of these factors, prospective investors are cautioned not to rely on any forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

[1]Revenue from royalties, share of sales, product supply and device sales
[2]Operating profit/(loss) before net financing income, tax, depreciation, amortisation, share-based compensation, share of result of associates and exceptional items. Refer to Note 6 of the financial statements
[3]Calculated using EBITDA and weighted average number of shares in issue during the period
[4] Supplementary unaudited proforma revenue and EBITDA, which exclude acquisition accounting adjustments, are presented as though the merger with Skyepharma was implemented on 1 April 2015. This information is provided in order to indicate underlying comparative performance. Refer to the Financial Review. 
1 - Based upon royalty reports received from partners
2 - Advair Diskus® is a trademark of GSK

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