Vectura Group gains from Skyepharma merger as it raises expectations

The company raised revenue expectations for the nine month period ended 31 December, due to strong growth from its partnered marketed respiratory products.

The FTSE 250-listed company said the executive team for the company after the merger has been chosen with representation from both Vectura and Skyepharma. A new organisation structure for the enlarged company has also been chosen with a formal staff consultation process is underway.

The majority of the new organisation is expected to be implemented in the next few months and delivery of the £2m of annual non-headcount cost synergies, which would result in £10m of cost savings per year from 2018.

Combined recurring royalty and revenues from marketed inhaled products including Flutiform, Breezhaler, Ultibro, and Ellipta are ahead of previous expectations for 2016.

In July, the company’s Novartis AG business reported total net sales for Ultibro and Breezhaler of $100m in the second quarter, a 52% rise compared to the same period in 2015.

GlaxoSmithKline (GSK) reported in July second quarter sales of the Ellipta products of £220m, up from £68m in 2015, but decided not to extend the term of its licence agreement beyond 31 July.

The company said the decision by GSK would not materially affect its revenue for the period to 31 December, but it could be affected by up to £13m per year from 2017 and it has initiated legal proceedings in the US against GSK.

Total revenues from oral and non-inhaled products are ahead of previous expectations with Solaraze in the US benefiting from temporary exceptional market factors.

Following the completion of the merger, a review of the combined development pipeline as well as an assessment of an initial wave of new programme opportunities has been completed.

The company plans to stop spending on the SKP-2075 after the completion of the formal consultation process which is underway due to the merger. The funds that would have been spent on this development would provide funding for other programmes with research and development investment expected to remain unchanged for 2016 and 2017.

Chief executive James Ward-Lilley, said: "The new Vectura is in a strong position to create significant sustained shareholder value following the completion of the merger with Skyepharma in June.

“We continue to see strong growth from our partnered marketed respiratory products and the outlook for 2016 revenue is ahead of previous expectations. At the same time, integration of the two businesses is progressing well and the completion of the review of the existing development pipeline and assessment of new programme opportunities positions us to accelerate our strategy execution.”