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Vectura Group: Getting A Second Wind

By Edison Stock MarketsMar 31, 2014 06:56AM ET
Vectura Group: Getting A Second Wind
By Edison   |  Mar 31, 2014 06:56AM ET
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Getting a second wind

Vectura Group's (VEC.LSE) €130m acquisition of private German smart nebuliser technology company Activaero has addressed its pipeline gap in a single deal, adding seven clinical programmes based on the FAVORITE inhalation platform. These should effect a second wave of regulatory filings for branded respiratory products from 2017 onwards. As outlined at its recent investor day, Vectura now has a broader and more balanced pipeline, underpinned by formulation and device technologies, with which to build a sustainable business focused on treating airways diseases. Upcoming catalysts for H114 remain US filings of NVA237 and QVA149, and top-line VR506 data.

Activaero: Smart nebuliser technology, smart deal

Activaero was acquired for €95m upfront (€45m in cash and €50m in shares) plus a €35m deferred consideration (due August 2015). Its FAVORITE technology improves inhalation efficacy by managing airflow (rate and volume) to optimise and target deposition of therapeutics in the lung. FAVORITE has been applied to smart nebulisers and the FOX handheld liquid inhaler, and is the basis of the clinical severe asthma programmes FAVOLIR (adult) and SCIPE (paediatric), and five other partnered development assets. FAVOLIR could be filed in Europe in 2017.

Technology update: Pow(d)erful platforms

Vectura’s technologies may give rise to additional development and/or partnering opportunities. New formulation technologies include PowderMax (applicable for small molecules and drug combinations) and ParticleMax (biologics). The Gyrohaler platform has expanded into next-generation dry powder inhalers (DPI).

Pipeline update: Expanding respiratory focus

Activaero programmes represent a second wave of potential branded products behind Seebri and Ultibro, and the recent US development milestone for VR315 suggests progress in the generic portfolio. However, there is also a wider focus on novel applications of inhaled drug delivery to reduce side-effects/systemic exposure. Disclosure of two preclinical drugs, small molecule JAK inhibitor VR588 and TRPV1 modulator VR611, support this, along with the ongoing development of VR942, a biologic partnered with UCB for severe respiratory disease.

Valuation: EV c £580m

The current EV is supported by three marketed products, over 10 clinical programmes and a comprehensive suite of delivery technologies. Near-term catalysts should unlock further potential upside. FY14 results report on 21 May.

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Vectura Group: Getting A Second Wind

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Vectura Group: Getting A Second Wind

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