Vectura sinks to four-year low as generic Advair pushed back

Vectura and Hikma Pharmaceuticals hope a dispute resolution process with US drug regulators will their enable their generic version of GlaxoSmithKline’s Advair asthma treatment to overcome an outstanding hurdle.

Hikma on Thursday gave an update on its generic version of Advair, for which Vectura has formulated the drug and provided the puffer device for the generic drug. In May the US Food and Drug Administration sent a 'complete response letter' that raised certain issue over the drug than needed to be resolved before it could be approved.

Since then, drugmaker Hikma has had “constructive discussions” with the FDA and has been able to clarify and address the majority of the questions raised.

However, it said on Thursday that there remains an "outstanding issue" regarding its clinical endpoint study.

“We firmly disagree with the FDA's position and we are progressing with a dispute resolution process. We now expect this process to be completed in the first quarter of 2018, at which point we will update the market and provide further details on timelines.”

Vectura said it and Hikma, which previously had been eyeing a potential launch in 2018, "remain confident in the approvability of our product" and are committed to bringing the drug to the market "as quickly as possible".

Shares in Vectura were down almost 8% to 89.05p by 0940 GMT on Thursday, while Hikma's were more than 5% lower at 983.5p but GSK's up more than 1% to 1,360.89p.

Analysts at RBC Capital Markets said this was negative as, "at best", the timeline has been pushed back to the first quarter of next year before any submission is likely, not to mention a 10-month review period.

"More likely, we think further delays are possible given the complexity of the issues raised suggesting a meaningful delay," analysts said, eyeing a launch timeline of late-2020/21 or perhaps being cancelled altogether if the study is to be repeated and rival generics make it to market, including Mylan and Sandoz.

"We would also question the value of the market by the time Vectura/Hikma reach it with GSK actively switching patients. This is a clear negative for Vectura and, whilst the product is now only a small proportion of our SoTP valuation, we see meaningful cuts to consensus as likely at a time of high R&D expenditure."