Vectura revenue takes hit as firm focuses on R&D

The FTSE 250 company said that was lower than 2016 full-year pro forma revenue of £183.6m, . with the drop put down to reduced revenues from non-recurring sources of £16.6m in 2017 compared to £57.3m in the 2016 proforma.

It said 2017 underlying revenue was £131.4m, which was 4.0% higher and driven by the group's key-inhaled products, with underlying revenue from flutiform, Ultibro and Seebri Breezhaler rising 5.4% to £85.8m.

Vectura said it saw “strong” annual in-market net sales growth from its key products too, with flutiform up 11.8% and Ultibro Breezhaler rising 20.6% at constant exchange rates.

Group reported revenue growth was moderated compared to in-market sales growth by previously-reported destocking in the flutiform and Ultibro Breezhaler supply chains, which had no impact on in-market sales momentum, the board explained.

The company made an IFRS-reported operating loss of £96.2m, which it said was due to the impact of a full year, non-cash charge for amortisation and impairment of intangible assets of £109.7m, arising from its prior acquisitions/

Adjusted EBITDA was ahead of expectations at £25.8m, which was reportedly driven by in-line revenue performance, the delivery of merger synergy savings and tight research and development cost management.

R&D costs of £60.3m were said to be at the lower end of the guidance range.

The company had reported adjusted EBITDA for the nine month reporting period in 2016 od £34.1m.

Vectura said the reduction in adjusted EBITDA compared to the reported nine-month figure for 2016 reflected a full year of R&D costs in 2017.

The board also said that ongoing disciplined capital allocation and working capital management delivered “strong” operating cash inflows, and the group ended the year with a closing cash balance of £103.7m - up from £92.5m a year earlier.

“It has been an important year of progress for Vectura,” said chief executive James Ward-Lilley.

“We have delivered a good set of financial results, in line with market expectations, and our key partnered inhaled products, flutiform and Ultibro Breezhaler, have continued to show strong in-market growth.

“Notwithstanding the disappointing delays we have seen for our VR315 (US) generic Advair programme, we continue to see substantial value in the development of complex inhaled generics.”

In light of that, Ward-Lilley said the company had extended its valuable inhaled generics portfolio, and in addition, it also progressed its enhanced therapy pipeline and fully delivered its merger integration plans.

“Our refocused investment strategy, announced in January 2018, is underpinned by a strong core business, tight financial discipline and a skilled workforce.

“We are committed to fully leveraging the capabilities and technologies that differentiate us to maximise the value of our pipeline at a substantially lower cost and relative risk.

“We have clearly defined priorities and we look forward to a series of significant news flow catalysts during 2018.”