Vectura enters new development and licence agreement for a US inhaled generic

Agreement concerns an existing inhaled combination therapy for asthma and COPD delivered using a pMDI.

Under the terms of this agreement, Vectura is responsible for the development of the formulation and manufacture of clinical batches for use in pilot clinical studies whereas Sandoz is responsible for the clinical development, manufacture and commercialisation of VR2081.

Vectura will receive an initial payment of $5 million from Sandoz and is eligible to receive up to a further $5 million upon achievement of pre-determined development milestones. The Group is also eligible to receive a double digit percentage royalty on net sales in line with our other generic development programmes. The total R&D cost borne by Vectura is expected to be below $20 million up to regulatory filing and subsequent launch, which is anticipated in the early to mid-2020's. It is expected that the $5 million initial milestone will be recognised in revenues across 2017 and 2018 but will be offset by a modest increase in R&D spend in those years. The overall R&D guidance range of £65 million - £75 million for each of 2017 and 2018 remains unchanged.

The global respiratory market, worth over $40 billion in 2015, is expected to continue to grow, with current estimates predicting low single digit percentage growth annually up to 2025. Within this, the dynamics of the classes of products are forecast to change significantly with further generic penetration of core classes such as ICS/LABA and LAMA expected to gain momentum. The generics market is growing and accounts for over 80% of all US prescriptions and in 2015 was estimated to be worth c. $80 billion.

James Ward-Lilley, CEO, commented: "This agreement, extending our existing strong relationship with Sandoz, further reinforces Vectura's compelling position as a leader in the development of inhaled novel and generic products leveraging our suite of formulation and device platforms and proven development capabilities. Following the merger of Vectura and Skyepharma last summer we announced that we were prioritising three to five generic projects utilising the Group's newly combined pMDI and DPI device platforms. This programme represents the first partnered collaboration of this series of projects and offers substantial potential for future value creation."