Interim Results for six months ended 30 September 2006
17 Nov 2006
Vectura Group plc - Interim Results for six months ended 30 September 2006
Chippenham, UK – 28 September 2006: Vectura Group plc (LSE: VEC) today announces its results for the six months ended 30 September 2006.
ANNOUNCED TODAY
- Acquisition of Innovata plc for £131m, creating the UK leader in pulmonary drug development (see separate press release)
PERIOD HIGHLIGHTS
- Worldwide collaboration, development and licence agreement, signed in April 2006 with Boehringer Ingelheim to develop a new inhaler
- Successful outcome of Phase IIb trial of NVA237 for Chronic Obstructive Pulmonary Disease (COPD)
- Successful outcome of Phase IIb clinical study of VR004 for erectile dysfunction (ED)
- VR040 demonstrates safety and efficacy in Phase IIa study for treatment of "off" periods in patients with Parkinson's disease (PD)
- Revenues increased by 71% to £6.1m
- Net cash inflow from operations £1.5m (HI 05/06 cash inflow of £4.3m)
- Placing completed in July 2006, raising £42.9m (post expenses)
- Strong financial position with closing cash of £68.6m
Commenting on the results, Dr. Chris Blackwell, Chief Executive of Vectura, said:
"This has been another extremely successful six months in which we have demonstrated our ability to take the key products in our pipeline to the next stages of development, established a third major licensing deal and successfully executed a secondary fundraising. We look forward to building on the achievements of the first six months reporting on further clinical trials and progressing our US licensing discussions for VR315, as well as integrating the acquisition of Innovata plc that has been announced today."
There will be a meeting and conference call for analysts today at 9.30am GMT at the offices of Financial Dynamics. Please contact Claire Rowell at Financial Dynamics on 020 7269 7285 for details.
Enquiries
Vectura Group plc Chris Blackwell, Chief Executive On 17/11/06 +44 (0) 207 831 3113
Anne Hyland, Chief Financial Officer Thereafter +44 (0) 1249 667 700
Financial Dynamics +44 (0) 207 831 3113
David Yates / Anna Keeble
Notes for Editors
Vectura's principal focus is the development of a range of inhaled drugs for the treatment both of lung diseases and other conditions where optimised delivery via the lungs can provide significant benefits, such as a rapid onset of action, improved efficacy and improved tolerability compared with current therapies.
Vectura's products combine its proprietary, innovative, pulmonary formulation and device technologies (Aspirair® GyroHaler® and PowderHale®) with existing, off-patent drugs either for use in new indications or to provide inhalation as an improved route of administration. Using drugs that have already been approved in some form in at least one major pharmaceutical market lowers the risk of product development failure compared to new chemical entities, Vectura is able to secure patent protection for its portfolio by identifying new indications for off-patent compounds and applying the Company's proprietary delivery technologies to create new methods of administration. The Company has development collaborations with a number of companies, including Boehringer Ingelheim, Novartis, GSK and Chiesi and an un-named leading international pharmaceutical company. For further information, please visit Vectura's website at www.vectura.com.
This press release contains "forward-looking statements," including statements about the discovery, development and commercialisation of products. Various risks may cause Vectura's actual results to differ materially from those expressed or implied by the forward-looking statements, including adverse results in clinical development programs; failure to obtain patent protection for discoveries; commercial limitations imposed by patents owned or controlled by third parties; dependence upon strategic alliance partners to develop and commercialise products and services; difficulties or delays in obtaining regulatory approvals to market products and services resulting from development efforts; the requirement for substantial funding to conduct research and development and to expand commercialisation activities; and product initiatives by competitors. As a result of these factors, prospective investors are cautioned not to rely on any forward-looking statement. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW
OVERVIEW
We are pleased to report that we have continued to see positive progress on all fronts with solid advances in our product pipeline, progress on technology out-licensing, and a 71% increase in revenues to £6.1 million. The period started with our global licensing agreement with Boehringer Ingelheim, which was signed on 13 April 2006, providing further validation for our innovative inhalation technologies (in this case our multi-dose dry powder inhalers). Importantly, we also demonstrated the strength of our product pipeline during 2006 by the successful outcome of three important studies. NVA237, for the treatment of chronic obstructive pulmonary disease (COPD) and VR004, for the treatment of erectile dysfunction (ED), both completed Phase IIb clinical trials. VR040 for Parkinson's disease (PD) completed its proof-of-concept study. We also demonstrated the strong investment support for Vectura, which enabled us to conclude a very wellsupported fundraising in July. Consequently our balance sheet has been significantly strengthened and we closed the period with £68.6m of cash reserves.
PRODUCT PIPELINE
NVA237 completes Phase IIb
The NVA237 Phase IIb dose range study that we announced in June 2006 further validates the clinical profile of NVA237 and supports the potential of the product to provide an important addition to the available therapeutic options to treat COPD, a common and costly disease with high unmet patient need.
NVA237, which uses our PowderHaleÒ technology, is being developed and commercialised by Novartis both as a monotherapy and in combination with Novartis' once-daily bronchodilator indacaterol, under the terms of a global licence agreement signed in April 2005.
The trial randomised 335 subjects in 35 European sites into a multi-centre double-blind, parallel group, placebo-controlled study, including an additional open label tiotropium group, to assess the efficacy, safety and tolerability of four doses of NVA237 inhaled once-daily for 28 days in subjects with COPD.
NVA237 demonstrated bronchodilatory efficacy, as determined by a range of pulmonary function measures. NVA237 achieved statistical significance over placebo in terms of the primary efficacy variable, trough Forced Expiratory Volume in one second - FEV1 and was comparable to tiotropium. These data support the use of NVA237 as a once-daily bronchodilator.
VR315 for asthma preparing for Phase III
We signed a European collaboration, development and licence agreement with a leading international pharmaceutical company for VR315, our combination asthma therapy, in March 2006. VR315 will be developed as a generic combination product using our GyroHaler® dry powder inhaler. Combination therapy for asthma is the biggest and fastest growing sector of the asthma market with annual sales currently exceeding $6 billion and European annual sales estimated at approximately $1.5 billion. With the validation of the European deal we believe VR315 will be a very attractive product for a US generics company and discussions are continuing with several potential partners.
VR040 for Parkinson's disease (PD) completes Phase II proof of concept study
In August, we reported on our Phase II "proof-of concept" clinical study for VR040 for the treatment of induced "off" periods in patients with PD. The study demonstrated that VR040 was safe, well tolerated and successfully recovered patients from an induced "off" episode with a rapid onset of action. The randomised, double-blind, placebo-controlled, four parallel group, ascending dose study was designed to assess the safety and tolerability profile of VR040. Preliminary pharmacokinetic (PK) analysis and an assessment of efficacy were also undertaken. The study evaluated six fine particle doses (200μg, 300μg, 500μg, 750μg, 800μg and 1,200μg) and placebo in 24 idiopathic PD patients who experience "off" episodes. Each patient received one or two doses.
The study demonstrated that VR040 can provide rapid relief from "off" episodes for patients with PD, within minutes of inhalation. This study also showed that high plasma levels can be achieved very quickly with VR040, which translate into the very quick onset of benefit for patients with PD who have motor fluctuations in the more advanced stages of their condition. This bodes well for future clinical development, which will now focus on determining optimal titrated doses of VR040. Our increased funds now provide us with the opportunity to generate significant value from VR040 as we proceed through later stages of development.
VR004 for erectile dysfunction (ED) completes first Phase IIb study
In June, we reported on the first of two Phase IIb studies designed to demonstrate that VR004 improves erectile performance with a rapid onset of action that is both durable and well tolerated. The results of the study validate our belief that VR004 has potential as a rapidly-acting, safe and effective treatment.
The combination of these attributes meets our target profile and the unmet need for a spontaneous product, providing activity on demand for patients with ED.
VR004 is our proprietary formulation of apomorphine, delivered by oral inhalation to the lungs using our Aspirair dry powder inhaler (DPI). Our second dose-defining Phase IIb study is underway and is due to report in 2007.
VR776 for premature ejaculation (PE) commenced Phase II
Recruitment started in May for a Phase II study of VR776 in patients with PE and will report in 2007. We believe the delivery of VR776 via the lungs will provide rapid delivery of the active component and therefore a rapid onset of action, offering significant clinical benefit. Currently, no product is licensed in the US or EU specifically for the treatment of PE. PE is estimated to affect between 27 and 34 percent of men across all age ranges, and thus may represent a bigger market opportunity than ED. VR776 is formulated with our dry powder technology, PowderHale®, and delivered with our Aspirair® inhaler
GENERATING VALUE FROM OUR ENABLING TECHNOLOGIES DEMONSTRATED BY DEAL WITH BOEHRINGER INGELHEIM
Vectura's three dry powder inhaler ("DPI") technologies, Gyrohaler®, PowderHale® and Aspirair®, are based on our in-depth knowledge of device engineering and particle science, which enable Vectura to re-formulate and patent a broad range of drugs for pulmonary delivery.
Vectura's strategy is to license rights to these technologies to other pharmaceutical companies where the resulting licence will complement the Group's overall business strategy and commercial returns.
There is a growing demand for dry powder inhalers, particularly those that can deliver high performance and consistent doses. We believe that our device and formulation technologies are well placed to capture a significant market share, as they can provide critical benefits which are needed by both patients and regulatory authorities.
In April 2006, we agreed a worldwide collaboration, development and licence agreement with Boehringer Ingelheim to develop a dry powder inhaler (DPI) as a tailored Boehringer Ingelheim device. It will deliver a range of their proprietary respiratory products, mainly for treating asthma and COPD.
Under the non-exclusive agreement, we will work with Boehringer Ingelheim on the continued development of the inhaler until the end of 2007, after which Boehringer Ingelheim will be responsible for any further development, manufacturing, clinical trial use with their proprietary compounds, and for the commercialisation of those products.
Most treatments for asthma and COPD are delivered by inhalation. Global markets for those treatments are valued in excess of $17 billion today and are forecast to grow to over $28 billion by 2010. Dry powder inhalers are increasingly the first choice for patients with these diseases and it is expected that DPIs will be used to deliver the majority of the drugs sold in these markets by 2010.
FINANCIAL REVIEW
In the 6 months to 30 September 2006, revenues were £6.1m, an increase over 2005/06 of 71%. Product licensing revenues of £2.3m were 28% higher than in the comparative period (2005/06: H1 £1.8m; H2 £2.0m) and relate to our licensing agreement with Novartis for NVA237 and with our European partner for VR315. We received £7.9m from Novartis in April 2005 and this revenue is being recognised over a 24-month period.
Pharmaceutical Development Services revenues of £2.9m represented an 81% increase on the prior period (2005/06: H1 £1.6m; H2 £2.8m). These revenues include £1.9m in relation to our continuing work on VR315.
Technology licensing revenues of £0.8m were realised during the period. The majority of the income was generated from our licensing agreement with Boehringer Ingelheim. The gross profit in the period to 30 September 2006 was £4.5m, a £1.8m improvement over the previous period (2005/06: H1 £2.7m; H2 £3.7m). This was driven by the increase in milestone licensing revenues.
Total investment in research and development was £6.7m, a 51% increase on the prior year (2005/06: H1 £4.4m; H2 £8.0m). Expenditure was incurred primarily on the Phase IIb VR004 trials and the VR040 Phase II trial. The work on our new dry powder inhaler, VR040 Phase II trials and our VR315 US programme will result in an increase in our investment in research and development in the second half of the year, which will be almost double that incurred in the first half of the year.
Administrative expenses, excluding share-based compensation, are £0.2m higher at £1.2m (2005/06: H1 £0.9m; H2 £0.9m).
R&D tax credits of £0.8m have been recorded in the period (2005/06: H1 £0.9m; H2 £0.1m).
Net cash inflow from operating activities in the six months to 30 September 2006 was £1.5m compared to the £4.3m cash inflow in the prior period (2005/06: H2 £5.9m outflow). As at 30 September 2006, we had cash and short-term deposits totalling £68.6m.
The net loss per share in the six months to 30 September 2006 was 1.5p, a 7% increase on the prior year (2005/06: H1 1.4p; H2 4.6p).
Headcount at 30 September 2006 was 146 (31 March 2006: 126).
OUTLOOK
As Vectura implements its strategy for growth, the key drivers for the remainder of the period are the results from our development work on VR315 and the partnering of the product for the US, together with results from VR004 Phase IIb and VR776 Phase IIa trials. We will continue to advance the products in our pipeline and pursue appropriate licensing opportunities for both our products and our technologies to generate value for our shareholders.
Download PDF version of this press release which includes financial data
