Vectura confirms R&D investment priorities, announces a proposed £50 million capital return and a pre-close trading update
Chippenham, UK – 17 July 2019: Vectura Group plc (LSE: VEC) ("Vectura" or "the Group") today confirms its R&D investment priorities, announces a proposed £50 million capital return and provides an unaudited pre-close trading update.
Paul Fry, Interim Chief Executive Officer of Vectura, commented:
“Vectura has a rich heritage in developing innovative inhaled drug delivery solutions and we believe we provide a differentiated offering to partners. We see an attractive, growing market opportunity for these services, and this is where our focus is set for the future. Today we are confirming that our R&D investment priorities will be clearly aligned to this partnering focus.
“Given the Group’s focus is now primarily on organic growth, with lower risk R&D spend supported by partners, it is our intention to return £50 million to shareholders this year, with the Board continuing to review our capital allocation strategy on a regular basis.
“Vectura made a positive start to trading during H1 2019, with flutiform® product supply revenues making an important contribution to growth. We are pleased to be able to re-confirm our financial guidance and outlook expectations for 2019.”
R&D investment priorities
Vectura is a provider of innovative inhaled drug delivery solutions that enable partners to bring their medicines to patients. With differentiated proprietary technology and pharmaceutical development expertise, Vectura is one of the few companies globally with the device, formulation and development capabilities to deliver a broad range of complex inhaled therapies.
Following the successful build out of its generics portfolio, Vectura will continue to focus on securing new partner contracts for the development of inhaled therapies, including novel molecules. For these contracts the Group will move towards offering development services where a smaller proportion of the overall contract value is delivered through contingent milestones.
The Group will continue to invest in new proprietary platform technologies, creating intellectual property to drive future licensing and royalty income. In 2018, the Group invested approximately 55% (c. £30 million) of its total R&D spend in platform technologies and existing partnered programmes.
The R&D investment that has historically been focused outside these priorities will be progressively re-deployed towards new partner contracts.
Return of capital
In light of the Group’s reducing R&D risk profile, future cash generation expectations and strong cash balance, the Board has approved, in principle, a capital return of approximately £50 million, commencing in 2019. The proposed return of capital is currently expected to be structured as a tender offer, although the Board continues to review other options. Further details regarding the specific mechanism for, and the timing of, the return of capital will be provided at the time of the Group’s interim results in September.
The Board recognises that considerable financial upsides remain in the outlook for the Group, and, in the absence of future inorganic growth opportunities, it intends to make additional future ‘special’ returns of excess capital arising from operations or from material one-off events, by the most appropriate mechanism.
Current trading and outlook
Vectura made a positive start to trading in 2019, with flutiform® in-market demand and partner supply chain management resulting in product supply revenues being ahead of the Board’s expectations for H1 2019. Given the Group’s visibility of flutiform® product supply volumes for the rest of 2019, the Group expects this strong performance to continue into the second half of the year.
Following a constructive end of Phase II meeting with the FDA in May, Vectura continues to seek a partner for VR647 Phase III development and commercialisation. Irrespective of the outcome of these discussions the Group maintains its financial guidance and outlook expectations for 2019.
Vectura will report its interim results for the six-months ended 30 June 2019 on Tuesday 10 September 2019.