Pre-close trading update confirms 2019 trading in-line with expectations
Chippenham, UK – 13 January 2020: Vectura Group plc (LSE: VEC) ("Vectura" or "the Group") today announces an unaudited 2019 pre-close trading update. The Group expects revenue and Adjusted EBITDA to be at least in line with Board expectations. Vectura will report its preliminary results for the year ended 31 December 2019 on Tuesday 17th March 2020.
Will Downie, Chief Executive Officer of Vectura, commented:
"The base business continued to perform well, trading in-line with expectations for 2019. Both the recent re-filing of generic Advair and the US Jury verdict in our favour in May 2019, in the GSK litigation, offer the potential for significant value. As Vectura transitions in 2020 to a more services focused model, related new business deals will begin to bring the future shape of the company into focus. This is an exciting time for the Group.”
- Operational performance delivering revenue and Adjusted EBITDA at least in line with Board expectations, with closing cash and cash equivalents of approximately £74m
- Progression of partnered development programmes, including submission of FDA response by Hikma in respect of generic Advair® (VR315 US) following completion of Clinical Endpoint study
- Given the Group’s strong cash position in 2019, and a strategic shift to a more services based, lower risk business model, the Group announced plans to return £60m in cash to shareholders
- An approximately £40m special dividend paid in October 2019
- A £20m share buyback programme currently underway, with c.£3.5m completed in 2019. The balance will be completed in 2020
- Vectura was awarded damages and on-going royalties amounting to an estimated $200m, following US Jury verdict in patent litigation against GSK in the US, subject to appeal
2020 Financial guidance
- The Group expects to see approval of VR315 (US) and QVM149 by its partners in H2 2020:
- Vectura would earn milestones of $11m upon approval of VR315 (US) and would earn a mid-teen royalty on net sales of the product
- Vectura would earn $5m upon approval of QVM149 in Europe and would earn a low-single digit royalty on net sales of the product
- As previously guided, the annual GSK royalty (£9m in 2019) is not expected to recur in 2020
- Continued growth of flutiform® partner in-market sales is expected in 2020, with Vectura product supply revenues expected to be at a similar level to 2019
- Revenues from development services are expected to build momentum as the Group moves towards a development services model, and overall R&D is expected to progressively reduce as capacity is released from its proprietary pipeline. The Group expects R&D investment for 2020 to be within the range of £40m to £45m
- Reflecting the Group’s transition towards a development services model, the Group expects to incur mid-single digit £’millions of exceptional cash costs in 2020
Following a US Jury trial in May 2019 Vectura was awarded damages and estimated ongoing royalties amounting to approximately $200m, based upon the application of a 3% royalty rate to US sales of GSK infringing products for the period August 2016 to the expiration of Vectura’s patent in mid-2021. Interest will also accrue on damages at the Treasury bill rate, compounded annually.
GSK has initiated an appeal in the US and, based on the present appeal briefing schedule, a decision is likely to be received before the end of Q1 2021.
In order to concentrate on the US litigation, Vectura has taken the decision not to pursue its appeal of the decision of the UK High Court in the proceedings initiated by GSK relating to the Ellipta® products. The US action involves different patent claims to those in the UK and interprets the patents under US law.
Attendance at 38th Annual J.P. Morgan Healthcare Conference
Vectura is attending the 38th Annual J.P. Morgan Healthcare Conference, 13-16 January 2020 in San Francisco, California. Will Downie, CEO, will give a presentation at 10.00 am PT on Thursday 16th January. The live presentation will be webcast and may be accessed through the Investor section of the Group’s website, www.vectura.com.
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.
Vectura has ten key inhaled and eleven non-inhaled products marketed by partners with global royalty streams, and a diverse partnered portfolio of drugs in clinical development. Our partners include Hikma, Novartis, Sandoz (a division of Novartis AG), Mundipharma, Kyorin, GSK, Bayer, Chiesi, Almirall, and Tianjin KingYork.
For further information, please visit Vectura's website at www.vectura.com