Vectura recurring revenues rise following inhaler launches

Vectura, a maker of inhaled airways products, reported that revenue grew last year on the back of recently launched products, but its loss before tax widened due to one-off charges from its merger with Skyepharma.

For the nine-month 'year' ended 31 December, revenue increased 76% to £126.5m, compared to the same period the previous year, following the momentum of seven recently launched inhale products with in-market net sales rising 81% to $2bn.

The FTSE 250 company said it also benefitted from the £441m merger last March with the integration of Skyepharma "well advanced" and management confident of delivering synergy targets as a minimum.

However, the merger led to loss before taxation widening to £40.1m from £1.9m due to a higher amortisation charge of £64m and exceptional items of £9.4m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) surged 47% to £34.1m, beating some analyst forecasts.

Revenue from recurring sources now accounts for 80.1% of total revenue, up significantly from 59.6% in 2015.

The company ended 2016 with £92.5m in cash with operating inflows of £28.2m offset by merger related outflows.

Chief executive James Ward-Lilley said that Vectura is well-positioned to accelerate shareholder value creation with its formulation, device and development capabilities, as well as 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," he said.

Broker N+1 Singer said that Vectura's EBITDA was ahead of its £24.7m forecast and it anticipated continued strong top line growth driven by upcoming US launches of chronic obstructive pulmonary disease drugs Seebri and Utibron by Novartis’ partner Sunovion and VR315 generic Advair by Hikma, which is subject to approval by the US Food and Drug Admisntartion by its 10 May generic drug user fee amendments date.

This was echoed by Nicholas Hyett, equity analyst at Hargreaves Lansdown, who said that as "with so many players in the pharmaceutical industry, a lot hangs on when the US drugs regulators approve the first generic versions of former GSK blockbuster Advair".

Shares in Vectura were up 2.48% to 161.30p at 1340 GMT.