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Vectura's profitable pipeline

RESULTS: Vectura's successful collaboration with Novartis has borne more fruit as milestone payments begin to stack up

Vectura (VEC) is one of a small group of mid-sized drug companies that's free of cash worries after having banked a further $12.5m (£7.7m) in milestone payments from Novartis (NOVN) during the half. That was triggered by the European and Japanese launch of Vectura's QVA149 combination product for treating chronic obstructive pulmonary disorder. Product development is also progressing with a new deal agreed with Belgian pharmaceutical company UCB (UCB) to develop VR942 for inflammatory respiratory disease.

IC TIP: Hold at 106p

Financial details for the UCB deal aren't yet available, but it represents Vectura's first move into the lucrative biological medicines market - the collaboration will bring VR942 to the proof of concept stage. That aside, the next big pipeline advance for Vectura will come when its co-development partner, Novartis, gains eventual approval for asthma drug NVA237 - known as Seebri Breezhaler in the US. The drug is currently in phase III trials after successful launches in the European Union and Japan, and Novartis is expected to file the product with US regulators in the first half of 2014, while QVA149 will be filed by the year-end.

Broker Peel Hunt expects a £3.6m full-year pre-tax loss, giving a loss per share of 0.5p (from a loss of £4.1m and EPS of 0.1p in 2013), but anticipates a pre-tax profit of £10.3m for 2015, with EPS of 3.3p.

VECTURA (VEC)

ORD PRICE:106pMARKET VALUE:£360m
TOUCH:105-106p12-MONTH HIGH:120pLOW: 76p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:41p*NET CASH:£65.5m

Half-yearto 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201217.0-1.100.30nil
201317.0-1.20-0.10nil
% change----

Ex-div:-

Payment:-

*Includes intangible assets of £63.5m, or 19p a share