Vectura trading in line, mulling capital returns

Vectura confirmed on Wednesday that its outlook remains in line with guidance for the full year as it said it was considering returning some capital to shareholders.

In an update ahead of its annual meeting, the company said it was "very pleased" to have won its recent US litigation with GlaxoSmithKline, after a court ruled earlier this month that its Ellipta inhalers had infringed on Vectura’s patents.

The company also said it was pleased to have received a $2.5m milestone payment related to the EU filing of closed-triple asthma candidate QVM149, which is being developed by Novartis.

"We continue to focus on executing our strategy and build on the strong operational performance we reported in our 2018 preliminary results," it said.

"Given our strong balance sheet and ongoing cash generation we continue to review our capital allocation policy, including consideration of material shareholder returns, and will provide further updates in due course."

Shore Capital noted that consensus for FY2019 is flat year-on-year adjusted earnings before interest, tax, depreciation and amortisation of around £39m. The broker also said the $2.5m milestone payment "added to an already healthy cash balance".

"We continue to have caution around the overall strategy and note the limited visibility on the timing of possible capital allocation updates, M&A and/or licensing deals. However, we do note the potential for upside from possible share buybacks (with management previously noting that Vectura’s cash balance exceeds operational requirements) and the recent success in litigation versus GSK, which could lead to a further cash payment if the parties settle outside of court or in the event that GSK opts to appeal and is ultimately unsuccessful."