Inhaled medicines specialist Vectura spent last year watching its development partner Novartis amassing the Phase III data needed to win regulatory approval for its two lead chronic obstructive pulmonary disorder (smoker's cough) products NVA237 and QVA149. That process is well advanced and Novartis has enough data to get the products in front of regulators within the next couple of years to provide the shares with some much needed momentum.
The first of these decisions will be in Europe later this year for NVA237. If, as expected, the product is approved for prescription in the EU, this will trigger a further $10m (£6.25m) milestone payment for Vectura. Management reckons that so far NVA237 has returned four times the company's initial investment in milestone payments alone.
The testing programme for US regulatory approval is taking longer because of extra data requested by the FDA, consequently product filings aren't expected before 2014. However, the company did earn $2m from a new collaboration on VR315, the supposed generic version of GlaxoSmithKline's blockbuster drug Advair, from a mystery big pharma partner with a US subsidiary. In the meantime, costs are under control and research and development costs fell 13 per cent to £32.8m for the year.
Cannacord Genuity expects the current year loss per share will be cut from 4.4p to 2.6p and has a sum-of-the-parts valuation of 114p.
VECTURA (VEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 66p | MARKET VALUE: | £219m | |
| TOUCH: | 65-66p | 12-MONTH HIGH: | 107p | LOW: 50p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 42p* | NET CASH: | £75.5m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 25.2 | -21.4 | -6.1 | nil |
| 2009 | 31.2 | -19.6 | -5.2 | nil |
| 2010 | 40.1 | -13.8 | -3.2 | nil |
| 2011 | 42.9 | -13.3 | -2.7 | nil |
| 2012 | 33.0 | -13.2 | -1.3 | nil |
| % change | -23 | - | - | - |
*Includes intangible assets of £73m, or 22p a share | ||||
