Vectura Share Discussion Threads

[dp1umb] 05/8/2019 17:47

Unfortunately it’s my fault I topped up at 82p(on the way back down)
Obviously Trump isn’t helping!

[diesel] 05/8/2019 12:08

Yup the chart is looking dodgy, today could be key, will we hold at 80ish or is this heading for 70?

[justiceforthemany] 05/8/2019 10:08

Major support broken - now 77p

[pooroldboy55] 03/8/2019 08:49

Also who would want the MD job if a few months later they are out on their ear no one that's already in a good job.

[alexchry] 01/8/2019 16:46

polaris-early 2019 was what Hikma said early last year. I have no argument with your estimates but clearly the trials have taken longer than Hikma expected.

[polaris] 01/8/2019 14:52

VR315 trial end and resubmission will be H2 2019. The issue is getting the trial enrolled fully. It then takes 6-9 months of treatment to complete the necessary stats per enrolled patient. I'd expect something from Hikma in their H1 results on the 9th August and an update in the trading update in November (7th). You cannot expect any launch of a resubmitted product before mid-2020.

[alexchry] 01/8/2019 14:13

Now well into the second half of the year and no news regarding advair generic. When the FDA requested a new trial Hikma said they hoped to submit trial findings early in 2019.

[polaris] 31/7/2019 13:50

First guesses for VEC FY2019 H1 now calculated.

I expect revenues to come in the range £80-85M and costs around £60M. This split into £30M in royalties and the rest from contract development and manufacturing revenues.

There is some degree of leeway based on unknowns such as recognition of partner costs for R&D, which would increase the profit before write-downs. I have not included anything for the milestones for product submissions (e.g. Novartis QVM149). Further writedowns will clearly still lead to a large headline loss but, as i keep droning on about, these are balance sheet movement items and do not affect the on-going business.

Costs for the on-going litigation are also not included and i have recognised nothing from the legal award to VEC of $89.7M.

Cash will come in around the £115-120M mark, again depending on how certain partner product development contributions are recognised.

Effective EPS to be above 3p for H1 from on-going operations, maybe above 4p (revenue recognition timing...yuk!).

A final award in the litigation in the US would really throw the cat amongst the pigeons. VEC may see an effective direct back-dated revenue increase/restatement of up to $150M with the possibility of substantial extra royalty revenues from the US patent until expiry in late 2021. At current sales rates in the US, that equates to around £30M p.a. from the ellipta products covered by the IP. That would be a 17-20% increase in revenues and a 2-3p increase in EPS for the HY, as all the payments would be 100% margin as royalties. That is too way out there for me to speculate on until there is a final ruling in the case, allowing the possibility for appeal.

[srpactive] 31/7/2019 13:28

F

Sorry article from 8 May, I do not know why that came up when I googled
citywire latest Wednesday papers.

Apologises.

[polaris] 31/7/2019 13:09

fhmktg - yes, i was editing the previous post and, depending on exchange rates, it should be over £100M for VEC FY2019, cf. around £75M in last FY (taking EUR:GBP exchange rate as 1.15:1).

[fhmktg] 31/7/2019 13:01

That's £105 million sales target for next year from Kyorin, if my conversion is ok.

[polaris] 31/7/2019 12:55

Kyorin results for Q1 of FY ending March 2020 released this morning. Flutiform sales of 3.5Bn Yen cf. 3.0Bn Yen for comparable Q in last FY. Application for pediatric use submitted. FY target is for 14Bn Yen sales cf. 13.1Bn for FY ending March 2019. Q1 actual sales suggest possible upside of as much as 1Bn Yen on forecast figures. VEC take a royalty and manufacturing revenue slice from these sales.

edit
The weakening GBP to JPY means that the net sales worth is going to be something between £100-115M based on VEC FY of Jan-Dec 2019 for this market. VEC reported €87M in sales for japan region for CY2018. With exchange rates that becomes something above €100M for CY2019. Margin is 35-36% on supply revenue. All flutiform royalty revenue in results come from Japanese region. this was £5.4M in VEC FY 2018, suggesting a royalty rate around 7%. Similar in VEC FY 2019, based on the numbers above, would yield revenue increase for manufacturing of up to 30% on FY 2018 and royalty payments in the £7M region. That is some revenue driver, with the possibility/probability of the pediatric revenues to come from early 2020.

For CY2018 the revenue generated from japan region to FY results was £29.2M from manufatcuring and £5.4M in royalties, with cost of sales around £18.7M, generating total revenues of £34.6M and profit of £15.9M.

Using the numbers above and the weakening GBP then it could be more like £38M in manufacturing revenues and £7M in royalties for CY2019 with cost of sales around £24M, generating total revenues of £45M and profit of £21M.

[polaris] 31/7/2019 11:11

More BS trading patterns today. The UT went through at 78.05 with apparent bid-offer spread of 81.65-82.5 for ...32 shares! Only 4 other ATs below 80 for 1, 502, 502 (coincidence?) and 2000 shares. Yet the daily candle will show the range as 78 to whatever the daily high ends up being. Volume weighted price is above 80p. Honestly, it is like watching the price action for a company valued in the few millions of pounds rather than a £500M+ company.

I haven't seen any new news regarding the GSK litigation in the US. Cases resolved yesterday are now on the justia website, so it may just be a rediscovery of the old information.

edit
Same at midday with a random 6 UT trade significantly below the bid-offer at 79.3, before trades resume above 80...

[rogerrail] 31/7/2019 09:38

Neither can I, probably a reference to the original announcement and award few months ago.

[insideryou] 31/7/2019 09:37

With all this good news, it still remains stuck. Very odd and fishy

[fhmktg] 31/7/2019 08:08

I can't find anything on Citywire today, please copy the link

[fhmktg] 31/7/2019 07:53

No RNS, so hold fire!

[srpactive] 31/7/2019 07:39

Morning

On citywire this morning it states Vectura has won a legal battle with Glaxo surprisingly. Obviously if true.

Does anyone know anything?

dyor

active

[frazboy] 30/7/2019 21:23

Thanks for that bodecia, I was assuming that we would be paying a 20% (maximum) tariff on the export of the finished goods - apparently not, VEC should be a hedge against a weak pound... Here's hoping!

[best1467] 30/7/2019 16:48

Nice finish to the day for a change

[boadicea] 30/7/2019 16:38

frazboy - The official advice relating to pharmaceuticals contains (inter alia) the following information.

" In the absence of a new agreement on trade, this would mean a reversion to World Trade Organisation (WTO) tariffs. The WTO’s Pharmaceutical Tariff Elimination Agreement means that for signatory states, such as Japan, the United States, Canada, Australia and member states of EU, finished pharmaceutical products and certain components are subject to zero per cent tariffs; however, for other states such as Brazil, China and Russia there are tariffs of between one and fifteen per cent.
Whether or not the UK becomes a signatory to the Pharmaceutical Tariff Elimination Agreement after it leaves the EU, it will still be able to trade with the EU on the basis of a zero tariff for pharmaceutical products. In written evidence to the House of Lords EU External Affairs Subcommittee in February 2017, the Government confirmed that -
"The Pharmaceutical Agreement is extended on a Most-Favoured Nation (MFN) basis. This means that signatories extend the tariff eliminations to all WTO members. So, all WTO members enjoy the benefits of tariff free trade to signatory countries irrespective of whether or not they themselves are members. The UK will therefore continue to benefit from the tariff eliminations of negotiating parties and in line with our technical rectification approach, the UK will continue to place zero tariffs on pharmaceutical goods covered by the Agreement."

As always, the matter has some complications which are further examined in the article which, if anyone wishes to read it, can be found at -



Generally speaking it sounds significantly less scary than Bremainers would have us believe but not always quite as straightforward as Brexiteers would claim, especially if a concerted effort is made to inflate marginal molehills into mountains!

[frazboy] 30/7/2019 12:43

Boadecia - about 50% of VEC revenue is flutiform. From reading the risk register in the AR my understanding is that there may be import duties on the raw materials imported into the UK from the EU (post Brexit) - the manufacturing facility is in the UK - and export duties on the finished products . I'm not particularly concerned about the former but the latter will presumably cut Flutiform margins...? Furthermore I was wondering to what extent the increase in sales of Flutiform (reported recently) to suppliers is stock building prior to Brexit (again, the risk register highlights this point - they don't want to run out of stock as users may, permanently, switch product.So, I'm assuming that Brexit, is on balance, negative to VEC. Could be completely wrong tho!

[polaris] 30/7/2019 11:39

VEC will receive the full $9M for the SKP legacy IP in ellipta during H1 2019, as sales of series reached over £1Bn. The IP expires in late 2019, but as it is capped at $9M p.a., then this will be the last recognised payment.

As for the VEC IP legacy...that is still in the courts. If it comes through for VEC, then US sales of relevant IP containing products is around £500M for H1 2019. The aim would be a 3% royalty based payment on sales until expiry of the patent in mid to late 2021. That's all up in the air and timescale is unknown for resolution.

On the ellipta generic front, total sales for 5 products was a little over £1Bn, down about 10% for the main dual product, Breo. GSK attribute this to pricing pressures from the entry of generics to the market-place (generic Advair included here as well as an authorised generic Ventolin. Can't beleive that one is still going and growing sales!!!). On the flip side, Trelegy is growing strongly and could become the top selling product by early 2020. That means a FY target in excess of £2Bn, £1Bn in the US. Therefore, the development of generics of the main three products - Trelegy, Breo and Anoro - will more than likely go ahead. I think they will can the Arnuity development. Incruse...jury is still out on that one.

regards,

Paul

[a1ord53] 30/7/2019 11:19

Polaris, did you look into GSK results ?
Any good numbers for VEC ?
Thanks in advance for your opinion.