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Vectura expects its full-year underlying earnings to be materially above current market forecasts

Last updated: 21:25 03 Jan 2019 AEDT, First published: 20:24 03 Jan 2019 AEDT

Inhaler use
James Ward-Lilley, the group’s chief executive officer commented: "Vectura has made good progress in the year with positive top-line performance"

Vectura Group PLC (LON:VEC) saw its shares rise on Wednesday after the inhaled drugs specialist said it expects its full-year underlying earnings (EBITDA) to be materially above current market consensus expectations.

In an unaudited 2018 pre-close trading update, the FTSE SmallCap said its revenues continue to grow in line with expectations, underpinned by positive in-market sales performance of its flutiform and Ultibro products.

READ: Vectura to take £40mln hit as severe asthma treatment fails in late-stage study

The group noted that flutiform total in-market sales were up 8.6% year-on-year for the 12 month period to September 2018 at constant exchange rates, with Europe +3.7%, Japan +13.9% and rest of world (ROW) +19.7%.

It added that Ultibro total in-market sales were up 12.2% for the same period, with Europe +9.7%, Japan -0.8% and ROW +27.3%.

Vectura also highlighted significant progress on its nebulised portfolio, despite disappointing VR475 results, including positive VR647 Phase II data and the development of three new Vectura enhanced therapies, targeting niche or orphan disease segments.

R&D transformation

The group said its R&D transformation is successfully creating a capacity to support new programmes as well as cost efficiencies

The firm added that it expects its R&D investment the full year 2018 to be at, or around, the bottom of the £55mln to £65mln guidance range, with its 2019 guidance for R&D expenditure unchanged at £45mln to £55mln.

It said adjusted EBITDA is expected to be materially ahead of market consensus due to overall revenue mix, productivity initiatives and margin improvements.

The group added that its closing cash and cash equivalents were approximately £108mln at the year-end.

Strong operational execution

James Ward-Lilley, the group’s chief executive officer commented: "Vectura has made good progress in the year with positive top-line performance, pipeline evolution aligned with our refocused investment strategy, and strong operational execution.”

He added: “We look forward to 2019 with key news flow on VR315, partnering of VR647, further disclosure and momentum on our new Vectura Enhanced Nebulised assets as well as Phase III results from QVM149, our inhaled triple combination therapy for asthma, partnered with Novartis."

Vectura said it will report its preliminary results for the year ended 31 December 2018 on Tuesday 26 March 2019.

In mid-morning trading, Vectura shares were 12.6% higher at 79.70p.

“Sometimes it’s not a case of doing bigger business but of doing better business. While 2018 revenue guidance was left unchanged in an update from pharmaceutical firm Vectura, earnings were flagged to be ‘materially ahead’ of expectations.

“Improved margin performance, a larger contribution from higher return parts of the group and productivity improvements have all helped to enhance earnings, reflecting well on management.

“It has not all been plain sailing for the inhaler specialist. November’s failure in a late-stage study for a key asthma treatment was a recent setback, albeit one which is an occupational hazard in the pharma sector, and performance has been patchy for some time.

“Today’s news could suggest that the company’s strategy of moving its focus from higher risk early stage product development to partnerships with major companies and sales from licensed products is bearing fruit, a year after it was first announced.”

 -- Adds analyst comment, updates share price --

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