Vectura Share Discussion Threads

[polaris] 20/11/2020 13:40

That's an interesting judgment (US lawyer talk - i hate dropping the e...) statement! There were points where VEC pushed the acceptable envelope but, on the main points, GSK have been summarily rejected. Everything from GSK is thrown out...again!

After reading the report, i now have all the information required to give a numbers update.

The three main products covered by the agreement are the US sales of Relvar/Breo, Anoro and Incruse in the Ellipta range. Shame it doesn't include Trelegy...

H1 2019 sales were:
Breo/Relvar £171 M, Anoro £139 M and Incruse £75 M = £385 M and £11.55 M to VEC
This is around $15 M for H1 2019 and tallies well with the additional $10.6 M awarded in the appeal for royalties covering 1st Jan 2019 - 16th May 2019. That leads me to believe the following calculations have a good basis.

Q2 2019
Post judgment part is around £3.35 M in unpaid royalties to VEC

Q3 2019
Breo/Relvar £103 M, Anoro £94 M and Incruse £34 M = £231 M and £6.93 M to VEC

Q4 2019
Breo/Relvar £107 M, Anoro £91 M and Incruse £52 M = £250 M and £7.50 M to VEC

YTD 2020 (3 Qs)
Breo/Relvar £367 M, Anoro £237 M and Incruse £96 M = £700 M and £21.00 M to VEC

With the judgment we are owed £38.78 M in royalties before any interest.

There are another 3Qs of royalties to come, with Breo/Relvar up 34 % YoY, Anoro about flat and Incruse down 12 % so far in 2020. Best guess is another £750 M in attributable sales before IP lapses - another £22.5 M to VEC

Sub-Totals
VEC expected royalties pre IP lapse, but post previous judgment, of £61.28 M
Previous value of award $106.9 M

That's about $190 M before any accrued interest. It's been 18 months since the period covered by the previous judgment and so i'd guess that another $10 M in accrued interest isn't unreasonable assuming GSK stump it up before YE 2020.

Total expected payment to VEC from GSK by mid-2021?
Yes, it's around $200 M pre-tax...nice!

ps. This is a much better estimate than my original post, as it is based on actual US sales of products included in the 991 patent.

edit
That's about 22.5 p per share on full payment post tax...

[alexchry] 20/11/2020 13:25

I wish you well, I had the prostate variety 15 years ago, about the length of time I've been waiting for SKP, then VEC, to make me rich.

[alexchry] 20/11/2020 13:20

The GSK money is very welcome and clearly adds to the current value of the company but doesn't do a lot for future prospects which depend mainly upon the tie up with Hikma regarding Ellipta and CDMO contracts and there are no changes there. In the shorter term there is the Advair generic which has been delayed by a couple of years but, as Polaris has identified, there are still plenty to go for there. VEC have had spare cash before and twice they have opted for a share buyback presumably because they couldn't find a profitable use for the cash. They will now have an even bigger pile of cash but, based on past experience, I'm not sure they'll be able to do much with it other than returning it to shareholders in some form.

[mr dexy] 20/11/2020 12:54

Very humbling posts from POB & Polaris...

... I doff my cap to you both.

Regards to all.


Mr D

[popper joe] 20/11/2020 12:46

Popper Joe 3 May '19 - 22:21 - 8362 of 10522 Edit

Oh the irony if GSK do effectively end up paying for Vectura to develop the generic versions of the very same products that were the subject of the patent dispute!

------------------------------------------

This now looking quite possible!

[a1ord53] 20/11/2020 12:39

PB 55 fast recovery to you !


PS Any idea why analysts are so quite ? Where are Numis,Peel hunt ......???

[base7] 20/11/2020 12:38

Lets hope GSK ( along with Trump) concede & allow both parties to move on , even though we will be competing with then fiercely on the generic front with HIK!
with a substantial bank balance , which would be the ency of many much larger companies, I am sure there will be a buy back of some sort together with the possibility of the announcement of regular dividends but I also hope that we look to make either bolt on acquisitions or seek a larger acquisition ( once our share price has re rated, assuming it will at some point ) which will change our perspective in the eyes of investors to being a well funded growth stock.
Disappointed with todays share price but as I have ben hee ( SKP) for many years I am prepared to wait a while longer.I am sure would all be glad for 200p but for we lifers we need more like 300p to feel we have had a reasonable ( allbeit not stellar ) return from Vec.

[polaris] 20/11/2020 12:29

Yes, you nailed it after my musings in post 9633, Popper Joe.

I have a read now - best fudgel to have for a Friday afternoon IMO.

[popper joe] 20/11/2020 12:22

The final judgment can be found here:



Open the PDF file under "Report" .

Quite heavy going, or you could just read my post 9641, which said the same thing 6 months ago, but in fewer words ;-)

[pooroldboy55] 20/11/2020 11:53

Thanks allAs some of you know the Manor Hospital is the old Oxford United Manor Ground many happy memories for me and to this day still a season ticket holder with the same people I stood with back in the sixties time flies make the most of it .Andrew ( POB)Ps Me an optimist never realist yes.

[polaris] 20/11/2020 11:37

I'll admit to opening a few positions in the last half hour or so...DMA necessary and several are only partial fills as a result. The laughably smallest was only 300. It's quite hard to buy in volume without paying a premium. ;-)

[cumnor] 20/11/2020 11:31

Thanks Polaris, hope you get the opportunity to get in again (even at a lower price). If and when the money comes lets hope VEC mgmt are a bit more insightful as to how to proceed. Given what they have to play with (flutiform and a huge cash pile and serious IP and tech) the share price performance has been a disgrace and CEO after CEO seems to lack imagination. Were this a Nasdaq stock but the share price and mgmt would be very different.
POB, hope you recover well from this. I do always enjoy your input over the years on different threads..

[polaris] 20/11/2020 11:22

from:



13th September 2019
The US$89.7m jury award to Vectura was based on a 3% royalty rate applied to US sales of GSK's infringing products from August 1, 2016 to December 31, 2018. Judge Andrews granted Vectura's motion for supplemental damages based on GSK's infringing sales from January 1, 2019 to May 16, 2019 at a 3% royalty rate, which results in approximately US$10.5m in additional damages payable to Vectura.

Judge Andrews granted Vectura's motion for an ongoing royalty rate of 3% on U.S. sales of GSK's infringing products from May 17, 2019 to expiration of Vectura's patent in mid-2021.

Judge Andrews granted Vectura's motion for pre-judgment interest at the prime rate, compounded quarterly, which results in approximately US$6.7m due to Vectura.


So the $10.5 M was to cover royalties due in 2019, up to mid May. With sales growth post this date, royalties due for whole 2019 come in around £25 M, so £17 M more to come. 2020 is on track for £40 M. All of royalties due in rest of 2019 and 2020 are subject to interest at T-bill rate, compounded Qly, until VEC receive them. I'd expect the final judgment to be recorded soon enough on:



That'll be one interesting read...

[letsmakesome] 20/11/2020 11:17

Hope you get well soon!

[boadicea] 20/11/2020 11:14

May I add my good wishes to pob55. I am acquainted with The Manor Hospital but not, fortunately, as an in-patient. I'm sure your dry sense of humour and affable nature and optimistic outlook will help pull you through.

Also commiserations to polaris - you deserved better after all the valuable help you have and continue to give in this thread. Thanks to you this is actually my largest holding so I cracked open a bottle for a small celebration last night.

I still have a small fear GSK will refuse to stay down but I suppose that will give us a fair chance of a final knockout after more delay. Is that the cause of an apparent reluctance of the market to recognise full value of the win this morning?

[peddlers] 20/11/2020 11:03

Pooroldboy - I hope you have a speedy recovery.

[letsmakesome] 20/11/2020 11:02

Thanks! A bit too late - should have been a bit patient. Got in at 119. Have to sit right now :|

[peddlers] 20/11/2020 11:01

Letsmakesome- you should watch what happens over the next few days.
I'm contemplating adding another buy order around 112 as we may get a dip before heading forward.
I was lucky on Tuesday to have an order of an additional 3000 share fill at 1.02

[polaris] 20/11/2020 10:44

Now to some numbers... :-D

Assuming GSK do finally cave in this time then the full value of the IP is down to the 3 % royalty on US sales up to the end of the agreement. US total Ellipta sales up to Q3 in 2020 are £1.126 Bn. Not all the products contain VEC IP but pretty sure around £1 Bn of that does. FY 2020 sales will come in around £1.35 Bn and a 3 % royalty is around £40 M. The IP agreement runs out sometime next year, so expect another £20 M in 2021. 2018 and 2019 will come in around £25 M and £30 M respectively, although most of the 2018 royalties are included in the original settlement and supplemental damages.

Existing award and damages is $106.9 M. There will be more interest on that at T-bill rate up to the point of release. On the numbers above, i project up to another £90 M in royalty based payments to the end of the IP cover, mid 2021. That makes the bulk of $220 M (might be more - depends on interest payments and actual US sales), which will then be taxed at around 10 % in the UK.

On top of that, Pacira are likely to hit the $500 M annualised sales figure in mid 2021, especially if/when EU approval arrives (expected very soon after positive opinion). That's another $32 M.

VR315 will bring in a decent royalty too on approval, plus the mid teens royalties based on sales. QVM149 will launch and also provide another royalty based on 3 % of net sales.

VEC had a little over £74 M in cash at end Q2 and there were a few post balance sheet events that add to that.

So, by end 2021, i would expect VEC cash pile to be approaching £300 M, maybe more depending on FCF from on-going operations.

At today's price of around 120 p, VEC has a market cap around £720 M, implying a forward enterprise value of £420 M. That's pretty low given the opportunities.

However, this all still depends on GSK finally giving up the ghost. If they don't then the share price will take a hit in the short term, probably back to the rising trendline.

ps. That bloody trendline - my orders a few weeks back were not filled as i wanted a touch. It got within 1 p... typical ;-)

[gbcol] 20/11/2020 10:23

Best wishes POB. Making money is great but it’s nothing without our health.

[base7] 20/11/2020 10:08

100% correct & I wish you every success with your recovery!

[base7] 20/11/2020 10:08

100% correct & I wish you every success with your recovery!

[pooroldboy55] 20/11/2020 09:43

Yes Paul life we all get it wrong sometimes,what's important in life I'm at the moment in the Manor hospital in Oxford after having a and cancer removed from my bladder puts life into perspective A

[letsmakesome] 20/11/2020 09:38

Do you forsee significant upside from current levels within the next 6 months?I am contemplating buying some more to average down and hopefully recoup some of my losses on this having bought a few years ago at c170