Pre-close trading update confirms 2020 trading ahead of expectations
Chippenham, UK - 12 January 2021: Vectura Group plc (LSE: VEC) ("Vectura" or "the Group"), an industry-leading specialist inhalation CDMO, today announces an unaudited 2020 pre-close trading update. The Group expects revenue and Adjusted EBITDA for 2020 to be ahead of Board expectations, following Q4 2020 approval of VR315 (US), generic Advair®, partnered with Hikma.
Will Downie Chief Executive Officer of Vectura, commented:
"I am pleased to report that the business has performed well during 2020, trading ahead of Board expectations following FDA approval in December 2020 of our generic Advair® programme, partnered with Hikma. The business has also proven resilient in the face of wider challenges posed by the Coronavirus outbreak.
"We have continued to execute on our inhalation CDMO strategy, signing 18 deals during 2020, with revenue from this new business being recognised in the second half of the year.
"This is an exciting time for the Group and we look forward to continued positive momentum in 2021."
2020 Highlights
· Strong operational performance, underpinned by a resilient base business
o Revenue and adjusted EBITDA ahead of Board expectations, following Q4 2020 approval of VR315 (US), generic Advair®1, partnered with Hikma.
o Closing cash and cash equivalents of approximately £79m; following capital returns of approximately £16.4m made in 2020
o No disruption to product supply chain, despite COVID-19 pandemic
· Executing on strategy to become the industry-leading inhalation CDMO
o New Business Development team now established with presence in East and West Coast US, Europe and UK
o 18 new CDMO deals signed, delivering against a diverse range of client needs across a wide range of indications; approximately £3m revenue recognised in H2 2020
· Progress across co-development pipeline
o Approval of VR315 (US), generic Advair® programme partnered with Hikma, in December 2020 triggered milestones of $11m
o Approval of Enerzair® Breezhaler® in Japan and Europe triggered milestones of $6.25m
· Operational transformation continues despite COVID-19 pandemic, including strategic review of the Group's operating footprint
· Appeal upheld damages and on-going royalties awarded to Vectura amounting to an estimated $200m, following US Jury verdict in patent litigation against GSK in the US
2021 Outlook
· Building on the positive momentum seen in 2020, Vectura expects to see continued progression against its strategy with CDMO revenues in 2021 expected to more than triple versus 2020
· flutiform® product supply revenues benefited from partner stock builds in both 2019 and 2020, driven by moves towards more conservative stock holding policies given supply chain uncertainties, including Brexit, and in the case of Japan a move from air to sea freight
o These stock builds are not expected to recur in 2021, with partner demand forecasts indicating Vectura product supply revenue in the range of £75m - £80m
o From 2022 onwards, Vectura product supply volumes are expected to align more closely with underlying forecast growth in-market sales
· Following a strategic review of the Group's operating footprint, a phased reduction of activities at the Muttenz site in Switzerland will begin in 2021
o This initiative is expected to deliver a modest benefit to the operational cost base in 2021, with a £5-7m reduction in annual operating cost expected by the end of 2022
o Activities previously performed in Switzerland will be transitioned to the UK, with new CDMO contracts being delivered from the UK
· Reflecting the Group's transition towards a development services model and restructuring of the Group's operational footprint, the Group expects to incur low-single digit £'millions of exceptional cash costs in 2021
GSK litigation
As announced on 19th November 2020, the United States Court of Appeals for the Federal Circuit denied GlaxoSmithKline's (GSK) motions for judgment as a matter of law, a new trial on infringement and for a new trial on damages in litigation concerning Vectura's US patent 8303991.
GSK did not subsequently petition the US Court of Appeals for a re-hearing and GSK has since notified Vectura of its intention to pay approximately $164m to Vectura by the end of January 2021. This amount reflects damages, interest and royalties accrued up to the period ending Q3 2020.
Additional royalties due for Q4 2020 and 2021 will be received in the quarter following reported sales, bringing total amounts receivable to approximately $200m. Amounts received will be subject to taxation in the UK. Vectura expects to pay tax at rate of approximately 10% on these proceeds.
GSK may petition the US Supreme Court to review the decision. Such a petition would not impact the timing of GSK making payments on the award.
Attendance at 39th Annual J.P. Morgan Healthcare Conference
Vectura is attending the 39th Annual J.P. Morgan Healthcare Conference, 11-14 January 2021. Will Downie, CEO, will give a presentation at 8.20 am ET on Thursday 14th January. The live presentation will be webcast and may be accessed through the Investor section of the Group's website, www.vectura.com.
- Ends-
For more information, please contact:
Vectura Group plc
Elizabeth Knowles - VP Investor Relations +44 (0)7767 160 565
David Ginivan - VP Corporate Communications +44 (0)7471 352 720
Consilium Strategic Communications +44 (0)20 3709 5700
Mary-Jane Elliott / Sue Stuart / David Daley
About Vectura
Vectura is a provider of innovative inhaled drug delivery solutions that enable partners to bring their medicines to patients. With differentiated proprietary technology and pharmaceutical development expertise, Vectura is one of the few companies globally with the device, formulation and development capabilities to deliver a broad range of complex inhaled therapies.
Vectura has thirteen key inhaled and eleven non-inhaled products marketed by partners with global royalty streams, and a diverse partnered portfolio of drugs in clinical development. Our partners include Hikma, Novartis, Sandoz (a division of Novartis AG), Mundipharma, Kyorin, GSK, Bayer, Chiesi, Almirall, and Tianjin KingYork.
For further information, please visit Vectura's website at www.vectura.com
Forward-looking statements
This press release contains forward-looking statements, including statements about the commercialisation of products and the successful execution of the Group's strategy to win new customer contracts for development services. Various risks may cause Vectura's actual results to differ materially from those expressed or implied by the forward looking statements, including: failure to successfully win new customer contracts for development services; commercial limitations imposed by patents owned or controlled by third parties; dependence upon strategic alliance partners to develop and commercialise products and services; difficulties or delays in obtaining regulatory approvals to market products and services resulting from development efforts; the requirement for substantial funding to conduct research and development and to expand commercialisation activities; and product initiatives by competitors. As a result of these factors, prospective investors are cautioned not to rely on any forward-looking statements. We disclaim any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
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