Vectura Share Discussion Threads

[aceuk] 23/3/2018 15:18

I've known polaris as a poster for some years, probably over a decade - I think he is very knowledgeable regards pharma (think that's your job Paul?) and always attentive to detail. That said polaris got to the Ellipta point pretty quickly so once the lunatics had done the usual bath water antics the calmer heads at the back of the room got there as well.

My observations of GSK over the years lead me to believe they will not bid, indeed as far as I have seen their usual tactic is destruction (SkyePharma and others). Maybe on this occasion there'll be somebody (Hikma or Mylan again?) with deep enough pockets to back Vectura?

[cityfarmer] 23/3/2018 15:09

If Polaris and I are correct regarding generic Ellipta range (and increasingly think we are) and a newspaper or broker publish a similar view then we will quickly leave £1 behind! As also covered on this board there has been shenanigans going on behind the scenes for months manipulating the price (on quite a massive scale) and could all be about to unfold.. I have been in SKP for more years than I care to remember and been adding over the last couple of weeks (including Wed this week) and feel we are in for a very interesting few months….. Good luck all fellow VECers

[alexchry] 23/3/2018 15:08

Polaris, thanks for that explanation, it may have been a fairly minor alteration in holdings as they were only .03% over 5%.

[boadicea] 23/3/2018 15:03

Swimming well against the tide so far today.

Polaris's arguments and theories make good sense to me.

If the idea gets around that this has been manipulated for the benefit of a potential predator and is therefore a screaming one way bet, it could become quite expensive for shorters to hold the fort. For this reason I would expect any bid from GSK to be not too long delayed, apart from any consideration that they might be gazumped. They need to hold it down to give a generous look to a measly offer but for how long could they keep it down and/or not attract competition?
On that basis I am happy to now have this as my largest market position.

Also, since shorters are not stupid, will they have built balancing positions in some way or are they being obliquely underwritten?

[brucie5] 23/3/2018 14:56

So true, Richtea. On the markets, the greatest disasters are mainly preceded by too much success. Paul Scott lost everything, including his house after 2009, having made a fortune. He's all the better for it, as an investor, but a painful lesson. Great to see this back at the level I last bought in, shortly before the results. I haven't sold a single share, though I have a target in mind, which now looks much more likely to happen.

[richtea2517] 23/3/2018 13:50

There is only one way to learn in trading - and that is through pain. Nothing else will re-educate.

[polaris] 23/3/2018 13:48

Alexchry - L&G are fund holders and nominee account guardians. If the underlying accounts buy and sell shares then this can also affect L&Gs need to make notifications to the LSE. It is all about the direct and indirect holdings that they have. Further, if L&G are acting as an intermediary between two parties then their shareholding can chop and change on a regular basis and these changes can be very large.

s1zematters - i also ended up tripling up yesterday and added further this morning. When something is a conviction buy then it is a conviction buy.

I just wish that i had more available funds that i was willing to commit. As i am looking to buy a house at some point this year then i need most of my liquid funds to be freely available. Hence i'm only margin trading and don't like to be too close to balance available to receive margin calls. I have been on the receiving end of those in the past and they are not nice. The worst, the day of the tsunami in Japan in 2011. I was holding well over 1m GBP of stocks at that point in time and lost a six figure sum in 48 hours. That was 40% of my then trading pot, in 48 hours!!

[dp1umb] 23/3/2018 13:42

Deals behind the scenes we will never get to know! But I think things will unfold in next couple of weeks.

[alexchry] 23/3/2018 13:32

What concerns me is that L&G are now sellers, can't understand what's going on.

[s1zematters] 23/3/2018 13:31

Well, Rictee I bought more on results day as it was falling, that said only now does that seem in retrospect a good idea after seeing it drop 10p in hours from my top up price.
like I said automated Quant trading programs picked up on the fall and exacerbated it throughout the day.

Backbone and self-belief or deep pockets required these days in the markets. I bought yesterday at 71p also.

My target remains 100p

---------------------
s1zematters - 21 Mar 2018 - 08:08:24 - 6862 of 6979 Vectura - An emerging Pharmaceutical Co. - VEC
i am adding at this level,

[polaris] 23/3/2018 13:26

jonnycash1 - got to agree with you here. If you put in the hours to understand what you are getting into then there is no reason to exit unless the foundations on which you built the position are no longer valid. Re-evaluation is necessary on a regular basis such that you can alter stops and limits (if that is your thing) or set nominal levels at which you will buy and sell. Any other approach is just gambling or coin flipping.

@all - When i like something i do tend to post a lot. This is so that i can receive feedback from others to poke holes in my theories. This is the basis of hypothesis and experimental testing, something dear to my heart.

My posts are not going to move the price and if they encourage others to buy then on their heads be it. I am one voice in a world of billions.

[richtea2517] 23/3/2018 12:55

Market entirely rigged to screw you and I. Wonder how many genuine holders bottled on results day and panic sold.

[cityfarmer] 23/3/2018 12:52

As highlighted earlier this week feel the Ellipta news really is a game changer for VEC and the reaction to the news on Wednesday was crazy ie we should have been up a similar %. Will be very interesting to see how this plays out over the coming weeks/months. VEC have already been in discussions with Partners for generic Ellipta range and after Wed the cat is very much out of the bag and may lead to someone forcing GSK hand by making a play for VEC … Game on!

[polaris] 23/3/2018 12:07

The thing is that GSK do not have cash burning a hole in their pocket, that is why they have withdrawn from the bidding for the consumer healthcare side of the Pfizer business. The share price has been depressed by the news as any acquisition of that size was goung to require new paper, possibly a rights issue and the likely cutting of the dividend. This was all viewed as bad by major shareholders. Now it is out of the way then GSK can focus on their strategy of firming up the pharma business as the highest priority. The two major thrusts there are the respiratory products (Nucala, Ellipta) and the HIV (Juluca, Triumeq, Tivicay).

The interest for VEC is in the former and i am sure it will be a few weeks before we have any clue how GSK might act. The litigation between GSK and VEC means that both sides have all the info on the IP for the delivery device. If GSK feel that VEC might have the IP protection to get an AB-rated substitutable device on the market then i am sure they will act to remove the threat. GSK will be willing to pay more than a competitor as any US pricing will be heavily impacted by a generic entrant, as the market size and margin decrease if that happens. If GSK take out any potential competition then that threat goes away.

The 2017 US sales of the Ellipta series were 1Bn GBP, with the 5th product (Trelegy) only just launched. The Growth rate is in the >50% region across the series. Global sales were 1.6Bn GBP. Projecting forward to 2020 then i expect the US market to be worth close to 2bn GBP for the series of products. Global sales to be about the same as current ratio so add 60%, or 3.2Bn GBP.

My guestimate is that a generic entrant into the US Ellipta market in 2020 would half the market size due to pricing pressure, so reduce US market to about 1Bn GBP. A generic entrant can expect 25% of total sales, maybe more. An agreement with a tier I pharma or generics company will probably bring in high teens %age for VEC in royalties and manufacturing revenue. If it is a combination of around 4% IP royalty (100% margin) and 12% on manufacturing (50% margin) then VEC are looking at revenues of 10M+30M=40M GBP p.a. and a bottom line increase of 10M+15M=25M GBP. If the device was approved worldwide then i am sure you can work out the new numbers.

What would this be worth to a competitior to GSK? Probably more importantly, what would this be worth to GSK to protect the market for 5+ years?

To my mind, the threat, if deemed high probability, has the potential to reduce the respiratory division sales at GSK by over 1Bn GBP p.a. from 2020 (just on the US market!). Therefore, they would be willing to pay above the odds due to the higher material impact on their figures from a generic entrant.

Now i am no expert with DCF or other valuation models, but it doesn't take a lot of imagination to realise that GSK buying VEC to get the IP protection, new device technology and to sell off the parts that they have no overall interest in does now make sense. Generic Advair reasoning for a takeover is a false flag IMO. The numbers do not make sense. For me, they do now.

It all now lies with the patent lawyers and the interpretation of the GSK/VEC IP as to exactly how much this might be worth to a predator. The EU hearing is expected in 2018 and the US case is now delayed to Q2 2019.

If there is any reasonable probability of GSK losing market incumbent status for Ellipta then they will move, IMO. The value of the IP might also drive others into the fray or to preempt any GSK move.

The underlying business here is sound and so it puts a bottom in the price. I believe that is above where we are now but short term trading may still show that to be the 69-70p region. The downside from here appears limited, the upside is tbd! ;-)

regards,

Paul

[dp1umb] 23/3/2018 10:37

Glaxo have got cash burning a hole in there pocket after this mornings news???

[diesel] 23/3/2018 10:03

Jim, not so far, this time, but 6 months ago they bought about 80000 each, then the share price was in the 90's.

[cumnor] 23/3/2018 09:59

II buying and director buys enough for me-not bothered about gyrations over next few weeks. Loaded up around here. Also JPM statement was, for JPM, uncharacteristically positive. Sell and try to buy bak later, if you are keen on VEC's prospects mid term, risky imo.

[polaris] 23/3/2018 09:51

Different interpretation of blue diesel. You meant blue as in a positve change is SP, pob meant blue as in sad because the price will fall. It is a matter of outlook. ;-)

[jimboyce] 23/3/2018 09:49

Interesting to note that finance director and CEO haven't bought any shares following the results?

[pooroldboy55] 23/3/2018 08:46

I agree diesel could be back 60s buy end of day no real support.

[diesel] 23/3/2018 08:11

Despite directors and inst's buying and broker forcasts that have target prices of about double, yesterday's rise was very much under pressure, be interesting to see who wins out today. The Dow won't help market sentimentbut, but I added more yesterday and am confident we'll end up blue..

[jonnycash1] 22/3/2018 20:43

JPMorgan keeps “overweight221; advice and 140p target on Vectura following 2017 Wednesday’s results from the inhaler developer, which sent the stock sinking 15 per cent after management appeared to damp optimism around a late-stage trial of its VR475 experimental treatment for severe asthma.

“We see yesterday’s move as excessive, removing the entire value of a programme that was already known to carry some risk. We were also surprised to see such a move with shares already trading below the base business valuation of 109p."

Only 11p out on their base case valuation look. Not a bad effort for JPM.