Vectura - An emerging Pharmaceutical Co.

Just a reminder why this is as buy.. news from 21st Dec
Vectura signs US development deal for asthma therapy UPDATE


(Adds further broker comment, share price)
LONDON (AFX) - Vectura Group PLC has struck a US collaboration and
development deal with a "leading international pharmaceutical company" for its
generic combination asthma therapy, VR315.
In a statement, the British drug developer said it will share the profits
from any eventual sales of the product, and could receive up to 63 mln usd in
milestone payments.
The therapy is thought to be a copycat version of GlaxoSmithKline PLC's
top-selling asthma drug Advair, which generated sales of 3 bln stg last year and
will lose patent protection in around 2010.
The small-cap British company struck a similar deal in Europe last April,
with another unnamed partner. At the time analysts speculated the partner was
Novartis AG's generic drugs arm Sandoz, raising the prospect that today's deal
could be with the same company.
Vectura allocated a large portion of the 43 mln stg it raised through a
share sale in June to the remaining development programme for VR315. By offering
to co-fund the research, the company could negotiate with partners for a larger
slice of eventual profits.
"The fact that they've managed to sign this deal nine months after the
European one is a good indication that the development of VR315 is progressing
nicely," analyst Lucinda Seagrove from Jeffries Securities said.
"This is a good piece of news, and what we were hoping to hear."
Jeffries has a 'buy' recommendation and a 150 pence price target on the
stock.
Evolution Securities, meanwhile, reiterated its 'buy' recommendation and
said the news will likely lead to an upgrade in forecasts.
The company remains on track to have a product on the market when Advair
comes off patent, the broker believes.
"The cost and profit share arrangement...should allow Vectura to retain
significant upside from eventual US sales of its generic asthma combination
product," it noted.
If it is Sandoz and Vectura collaborating in Europe and the US, they are
likely to be eyeing the large and growing market for combination respiratory
drugs, currently dominated by Advair and AstraZeneca PLC's Symbicort, which
generate more than 8 bln usd in sales a year.
The therapies -- a steroid plus a long-acting beta agonist -- are widely
prescribed for asthma and, increasingly, chronic obstructive pulmonary disease,
a condition caused mostly by smoking.
Combined products are the fastest growing sector in the respiratory market,
Vectura claimed today.
VR315 is being developed to be used with its GyroHaler dry powder inhaler.
Under the terms of the US deal, Vectura will oversee the therapy's development
for the US market and set up commercial manufacture and supply of the GyroHaler
device.
The partner, meanwhile, will be responsible for the clinical development,
manufacture and marketing.
At 9.50 am shares in the company were trading 3.25 pence, or 3.7 pct, higher
at 91.5, valuing the company at 150 mln stg. The group is set to double in size
next month, when a deal to buy UK peer Innovata PLC completes.

amy.brown@afxnews.com
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