There's a new chief at the helm of drug development group Vectura (VEC), but these half-year results reflect much of the work done by his predecessor. Vectura finished the period to 30 September - at which point James Ward-Lilley replaced Chris Blackwell in the top job - with sales up 35 per cent and cash profit 57 per cent higher at £4.7m. The top-line growth reflected a 67 per cent surge in royalty revenue combined with a quarter increase in device sales.
Royalty revenue should ramp up further in the second half, but profit may suffer from an increase in research and development (R&D) costs. Vectura spent £17.8m in the period under review on developing future products, including £1.6m on clinical trials for VR475 (Favolir), a new aerosol product for asthma sufferers, and a further £1.6m on a new hand-held, battery-powered inhaler called FOX.
After the period-end Swiss group Novartis (CH:NOVN) received approval from US regulators for two new respiratory products - the Utibron Neohaler and Seebri Neohaler. The launch of these products in the US at the start of 2016 will create another royalty stream for Vectura.
Analysts at N+1 Singer expect adjusted pre-tax losses of £2.3m for the year ending March 2016, but EPS of 1.7p as a result of R&D tax credits (FY2015: pre-tax losses of £6.2m and EPS of 0.9p).
| VECTURA (VEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 171p | MARKET VALUE: | £700m | |
| TOUCH: | 170.9-171p | 12-MONTH HIGH: | 188p | LOW: 119p |
| DIVIDEND YIELD: | nil | PE RATIO: | 107 | |
| NET ASSET VALUE: | 54p* | NET CASH: | £78.5m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 19.4 | -8.7 | -1.4 | nil |
| 2015 | 26.1 | -5.0 | -0.7 | nil |
| % change | +35 | - | - | - |
*Includes intangible assets of £153m, or 37p a share | ||||
