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Vectura Group Plc LSE:VEC London Ordinary Share GB00BKM2MW97 ORD 0.0271P
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Pharmaceuticals & Biotechnology 160.50 -104.80 -13.20 563
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Vectura Daily Update: Vectura Group Plc is listed in the Pharmaceuticals & Biotechnology sector of the London Stock Exchange with ticker VEC. The last closing price for Vectura was 91.10p.
Vectura Group Plc has a 4 week average price of 82.40p and a 12 week average price of 59.10p.
The 1 year high share price is 101.80p while the 1 year low share price is currently 59.10p.
There are currently 618,315,653 shares in issue and the average daily traded volume is 1,330,782 shares. The market capitalisation of Vectura Group Plc is £563,285,559.88.
polaris: VEC had been profitable for the last 2 years, last 4 years if GSK hadn't reneged on their patent agreement in the the operational level. The write-downs are down to the fact that SKP and VEC were both similar market caps in the mid £100's M and now the combined entity is around £500 M. That is a lot of accounting to go through the books. Most of that is down to the failure of the pre-merger VEC products to make it to market. There's been a whole raft of them and quite a few of the early stage ones disappeared over last 18 months. Without the SKP assets, VEC would have been unviable. Best case scenario is that GSK lose and the appeal is seen as frivolous, to increase the damages. I'd doubt that extreme so just an uphold of original decision and so the maximum return is around $200 M by mid 2021. Patent runs out in mid 2021 and it may be that the litigation is only resolved around the same time. That's around £150 M. VEC have around £75 M in cash on the books and the PCRX milestone cash is worth £24 M at same exchange rate for GSK damages. Then add in the operations cash-flow. VEC price is well underpinned by cash. Flutiform continues to grow revenues and the manufacturing revenue is key to base value of VEC. The royalties from the Japan sales isn't to be sniffed at either. Once you add in the royalties from the the main ex-VEC products: Ultibro/Utibron/Seebri then anything on top is clear profit for VEC, with its streamlined R&D strategy. There are quite a few marketed products that add to possible profits: Forspiro Airbufo, Forspiro Airflusal, Breelib FOX nebuliser, Rayos and some legacy products. Hopefully to be added this year: QVM149 (triple with Novartis) and VR315 (generic Advair). Longer term: VR2081 (US generic Symbicort), VR354 (US generic Breo Ellipta), generic Trelegy and probably a third from the series depending on sales. VR730 (the generic pMDI inhaler). Nebulised therapy work (need an update here on the progress). Other depending on the CDMO progress. I am particularly interested to see how VEC now develop the Lyon manufacturing site towards contracted work. But note how many of the original VEC developments have hit the buffers: VR475, VR647, VR506, VR465 and no doubt others I cant remember off the top of my head. It's not all positive...
best1467: It’s remarkable what’s happened in this share price in the last 10 days and I really feel for Polaris but am allso slightly surprised with is in-depth knowledge that he would sell at that crazy level. But as they say hindsight is a wonderful thing and it could have Got even cheaper and who knows it may still do.
qnq: that would be some weird hedge fund. first shorting b4 weekend then, paying spread 4 pence to short. besides, lse don't have uptick rule. still interesting to know the source. maybe some pharma thinking to make a bo, before vectura's share price and the pound recover.
cockneytrader: I am not optimistic how the COVID will play out. Although Vectura seems a safe haven, I am not certain about supply chains going forward. Results in March will be good with a healthy cash surplus. The share price is unlikely to go up, and in my view should be supported during 2020 with another £10 or £20 million share buy back.
bioking: DNL about to explode , Institutional investor added 1 million shares this week . LOTS of BIG NEWS around the corner =10+ BAGGER GEM RALLLYYYYYYYYYYYY Diurnal (DNL) Market Cap £27 M Price: 31p Upcoming Catalysts: MAA-Acceptance for Chronocort in February/March 2020 Alkindi approval in Israel expected in 2Q 2020 Alkindi approval in Australien expected in 2Q 2020 US-Partnership for Alkindi & Chronocort expected in 1H 2020 Alkindi & Chronocort Partnership for Asia für Japan und China US-Approval for Alkindi expected in 4Q 2020 EU Approval for Chronocort expected in 4Q/1Q 2020/21 Investment summary:Alkindi, a cortisol replacement therapy designed for children under 18 years of age, is DNL’s first product on the market. It is expected to be followed by Chronocort for adults – a larger market – which now has a clear pathway for regulatory approval in both Europe and the US. Despite this, the share price is still languishing well below valuations determined by peer group and DCF (202p) analyses
popper joe: If you are trying to compare that pre-merger peak SKP price with the current VEC price, you need to consider that SKP holders received 2.79 VEC shares for each SKP share. So current equivalent price would be £2.65. Still a big fall from £4.85
polaris: HBM have been constantly selling since Q2 2018 and have sold around 45M since then (not taking into account the effect of the consolidation): hTTps:// This holding announcement was, i think, the last increase in holding statement to yield 61,061,686 shares, around 9.2%. The last announcement, post consolidation: hTTps:// This shows 16,228,860 at the end of October 2019 - to less than 3% holding. Pretty sure HBM are still selling, looking at the spiky volume stats, and this type of volume will impact a SP, whatever you may believe, on that timescale. I continue to wonder why some people hold here if they see no prospects going forward. But what do i know? regards, Paul
justiceforthemany: $100M is absolute peanuts for GSK. Just pay up and move on Emma. Or better submit an offer for VEC. The Telegraph's 175p rumour from 2018 a good starting point. JAN 2018 The City rumour mill moved back into full swing today following the Christmas lull, speculating that asthma inhaler maker Vectura could be in the crosshairs of pharma giant GlaxoSmithKline, looking to capitalise on its recent share price slump. City chatter mooted that GSK is preparing to deliver a knockout bid in excess of 175p per share, which would value the company at close to £1.2bn. Vectura has become vulnerable to a swoop after its share price tumbled 14pc last year and traders have speculated that GSK could be the first to launch an opportunistic bid.
a1ord53: Edited Transcript of VEC.L earnings conference call or presentation 26-Mar-19 9:30am GMT Full Year 2018 Vectura Group PLC Earnings Call Wiltshire Mar 26, 2019 (Thomson StreetEvents) -- Edited Transcript of Vectura Group PLC earnings conference call or presentation Tuesday, March 26, 2019 at 9:30:00am GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * James Ward-Lilley Vectura Group plc - CEO & Executive Director * Paul Fry Vectura Group plc - CFO & Executive Director ================================================================================ Conference Call Participants ================================================================================ * Amy Lucinda Walker Peel Hunt LLP, Research Division - Analyst * James Daniel Gordon JP Morgan Chase & Co, Research Division - Senior Analyst * Max Stephen Herrmann Stifel, Nicolaus & Company, Incorporated, Research Division - Head of European Healthcare Equity Research & MD * Nick Peter Russell Nieland Citigroup Inc, Research Division - VP and Analyst * Samir Devani Rx Securities Limited, Research Division - Research Analyst * Stefan John Hamill Numis Securities Limited, Research Division - Director of Equity Research ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen, and welcome to the Vectura's preliminary results for the 12 months ended 31st of December 2018 webcast and conference call. Your speakers for today are James Ward-Lilley, CEO; and Paul Fry, CFO. (Operator Instructions) We will only be taking questions from the phone lines today and any questions submitted to the webcast will be answered after the call. As a reminder, today's a conference call is being recorded. (Operator Instructions) -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [2] -------------------------------------------------------------------------------- Great. Good morning, and welcome, everybody, here to Numis' offices. I'm delighted to welcome you, ladies and gentlemen, right here in the room and on the line, welcome you to the presentation of Vectura's preliminary results for 2018. My name is James Ward-Lilley, Vectura's CEO, and I'm delighted to welcome today for the presentation and Q&A our CFO, Paul Fry. I'll start the session today running through the headlines of our 28 (sic) [2018], performance, then hand over to Paul to cover the 2018 financial results in more detail and provide guidance for 2019. I'll then come back and describe how we're continuing to execute our strategy, key opportunities and the upcoming news flow for 2019. Vectura's story for 2018 is really quite simple and it's all about delivery, performance and focus; regaining momentum on the top line; and executing against our revised investment plans. Following a challenging 2017, we saw the delay of our VR315 U.S. ADVAIR generic program and partner supply chain destocking. I'm delighted to report a much improved picture for 2018 across the whole business, and as a result, be able to present what I believe is a very strong set of results today. So let's start with our headline financial results. Revenues of GBP 160 million were up 8%, driven, in particular, by product supply revenues of almost GBP 86 million, up 15%, and very strong development services and milestones revenue growth with revenues of GBP 16.5 million, up 72%. Flutiform remains a key growth driver for the business with revenues of almost GBP 80 million in 2018, up 14%. Our refocused R&D investment strategy and transformation activities have enabled us to bring in total R&D spend of GBP 55 million, down GBP 5 million on 2017. When we combine good revenue growth, operational excellence initiatives and lower R&D, we've been able to deliver EBITDA of GBP 39 million, ahead of expectations, and growing at 51%. Operating cash flows were also considerably improved at GBP 35 million, up 30%, with the business closing the end of the year with a cash balance of GBP 108 million. Beyond our financials, we've also demonstrated strong execution, delivering against our business priorities. The most notable partnering and business alliance progress was the signing of the global agreement with Hikma for the development of the generic versions of the Ellipta portfolio. Alongside this, we also made valuable progress with a number of further effective alliance management activities with existing partners, which have contributed both revenues and EBITDA in the year. With our revised investment focus, which we announced in January last year, we've also made good progress with the pipeline. On the inhaled generics front, the required repeat clinical bioequivalence program for VR315 remains on track with Hikma for resubmission later this year. Our partnership with Hikma was materially extended with the new Ellipta deal, which includes the addition of up to 5 new development programs for the group. And with our other major inhaled generics partner, Sandoz, we've seen the European approval of VR632; a new SYMBICORT generic DPI program; and we continue to make good progress with the formulation and device development of VR2081, including a milestone receipt as the program moves into clinical development. On the nebulized side, we've also made good progress. We were, of course, disappointed, as we've expressed before, with the outcome of the Phase III study for VR475 against what was certainly a very challenging exacerbations endpoint. But when taken together, the secondary data from VR475 Phase III program, the VR647 Phase II results and the positive Phase II data generated using the FOX device in the neonatal setting in the Ablynx Phase II program, this all combines together to provide very strong further revenues as a differentiation underpinning our nebulized device platform and give further confidence in the opportunity, both for 647 and for the 3 new non-budesonide programs we started during the year. And finally, when it comes to delivering against our priorities, I'm also very pleased with the operational excellence initiatives seen during the year. The R&D transformation project has allowed us to focus our investments, reduce our total R&D spend while essentially generating additional financial and clean capacity for additional programs. In Lyon where we have our oral non-inhaled manufacturing operations, we see strong manufacturing KPI performance and we're also seeing leverage of both plant capacity and recently invested CapEx as the team signs up new deals. Finally, our operational excellence focus is also reflected in our team's supply chain performance, including key supply contracts and with steps we're taking now to rationalize our off-site footprint. Now a fundamental part, of course, of our performance and capability remains the quality and performance of the teams working within the group. I'd simply, this morning, like publicly to take the opportunity here today to thank them for their support and their commitment through 2018. Across the group, in all our sites, our team has continued to embrace change and refocus their efforts on new projects and new ways of working. This has been the basis of our strong performance in 2018 and will continue to put us in great stead for 2019 and beyond. So with that, in terms of financial headlines and operational headlines, I'd like now to turn to Paul to cover the financial details of '18 and guidance for '19. Paul? -------------------------------------------------------------------------------- Paul Fry, Vectura Group plc - CFO & Executive Director [3] -------------------------------------------------------------------------------- Thank you, James, and good morning. First off, I'm delighted to be presenting here to you today as CFO of Vectura. As you know, I joined the company towards the end of last year, and since joining, I do feel that what I saw from the outside has been confirmed from looking at the company from the inside: that is a great business, a great team, strong fundamentals, differentiated and some good opportunities for growth. This is my first set of annual results for Vectura and it makes, today, a little easier for me as, of course, that I'm able to present a strong set of financial results. As James said, 2018 was a very strong financial delivery year for Vectura, I think the product of both good execution on a clear set of priorities as well as some hard work to secure some important one-off gains. And what I hope to do today is to pick out some of the highlights of that performance as well as perhaps share a little bit about how I'm thinking about the business. Starting with a quick view of the income statement. I think the highlights here, as James has pointed out, on the top line, good revenue growth, up 8% to -- compared to what was a decline in 2017 on a pro forma basis. And with improved margin leverage, that's resulted in adjusted EBITDA growth of over 50%. And this, overall, generates GBP 35 million in cash from operations, up 30%. Before walking through the key drivers of this performance, I think it's important to understand the margin structure of the business, or in short, how we make money. This slide, which is the most detailed slide I'm going to show today, attempts to lay this out. And before talking about revenues, which were in the box to the left there, I'd like to start on the right of this chart and talk about R&D. We make investments in proprietary programs, in platforms and intellectual property in order to create opportunities for new partnering in the future. And this is really the beginning of the revenue cycle for us. Our investments in 647 and our nebulizer platform are good examples of this. And in 2018, we spent around 60% of our overall R&D funds on this pre-partnering, pre-revenue phase. Once we partner these programs or intellectual property, we start to generate revenues -- development revenues, usually in the form of upfront milestones or fees during the development phase and I think the generic Ellipta deal, which we did with Hikma last year, is a great example of that. I think what's important to note is that whilst still in this development phase, we continue to incur costs, which are classified as R&D, and around 40% of our R&D spend in 2018 was on partnered programs. And this is because R&D investment generates revenues. And because this R&D investment generates revenues, you can almost consider that as a kind of cost of sales with margin structures varying from deal to deal during that phase. Once these products have reached the market, the margin structure changes significantly with products either adding royalties at more or less 100% margin, or else, we earn a manufacturing margin by supplying these products to distribution partners. And here, we earn in aggregate on product supply around a 25% gross margin. In a few cases, we earn both manufacturing margin and royalties and flutiform is an example of this. That's flutiform, as a whole, represents about half the sales of the company. But as this is largely manufacturing margin, it earns around 1/3 of the gross profit of the company. And what I'm going to do now is to a step through each of these elements and talk through the 2018 performance under each. So starting with product supply revenues, these were up 15% last year with the largest component being flutiform, which is up 17%. And this growth was driven by good underlying demand growth with supply growth boosted in the second half in comparison to a low second half of 2017, which, as you know, was impacted by destocking in Europe. And we're now seeing stock levels at a more normalized level both in Japan and in Europe. Moving to flutiform margin. I think it's important to talk about this for a moment. It was up -- the flutiform gross profit margin was up 4 percentage points in the year versus the prior year to 39%. And this increase is really accounted for by 2 specific gains in 2018: the first is some cash compensation following a transfer of manufacturing from Sanofi to Recipharm and the second is a provision release related to API sourcing. But even if we exclude those items, the gross margin declined less than 1% in the year. And on the headwind side, there were some Japan price decreases and input cost increases, but these were partially offset on the positive side by mix and overall supply chain performance. And just looking forward into 2019, I think we expect the gross margin on product supply for flutiform to normalize around 35%. Moving on to royalties. Overall, this revenue stream declined 8% versus 2017 with very much a split between the inhaled and non-inhaled performance. On the inhaled side, again, it's important to talk about flutiform just for a moment. Under our agreement with Mundipharma, our overall margin on flutiform is capped and we're now awarded virtually exclusively through the product supply margin. This means, in 2018, we received virtually no royalties for Mundipharma, which has caused a decline, you can see, on the slide. Therefore, what you see here on the flutiform royalties for 2018 are Japan royalties only and these grew at 10% versus the previous year. If you just exclude flutiform royalty then from the picture for a moment, overall, the inhaled royalties grow at about 2%, which is driven by good performances from both Ultibro and AirFluSal. Also important to highlight the Breelib benefited from a launch last time in 2017 of GBP 4.3 million. And on the non-inhaled side, we saw expected declines in this portfolio as it continues to age. It's important to highlight here the loss of EXPAREL revenues in the third quarter, which we expected and previously guided. And also worth emphasizing, I think, a strong performance in RAYOS, which was up 15%, thanks to strong growth in-market. And then moving to the last of the revenue categories, development revenues. As James said, this grew over 70% in 2018. And clearly, a key driver of this growth was the generic Ellipta deal signed with Hikma in November. This is the largest deal Vectura has ever signed and clearly aligned with the group's focus on generics. Of the GBP 11.4 million we received upfront, we recognized GBP 6.6 million of that as revenue in 2018, GBP 4.2 million related to the license and the rest for development services. There are a number of other important contributors for growth, including 2081 and the accelerated recognition of revenues from 2076 following the termination agreement with Mundipharma. I think it's also worth highlighting the work the Lyon site had done to generate new development revenues in 2018, which was up 25% versus last year. And then turning to R&D. I think this is another area where the company has been clearly focused on its priorities. R&D expenditure was down versus -- 8% versus the prior year and at the lower end of our guidance range at GBP 55 million. Partnered R&D, which I described -- as I described earlier, is R&D that in a way has been presold and is generating revenues, was 37% of total R&D with the majority focused on our generics programs. The remaining pre-partnered R&D was broadly flat on 2017 despite 2018 being a much heavier year for clinical spend on 647 and 475 and the funding of 3 new nebulized programs, all of which was achieved within the same overall pre-partnered R&D funding envelope. This slide then summarizes the impacts on adjusted EBITDA, showing you the positive movements in product supply and development revenues partially offset by a net decline in royalties. And combined with the reduction in R&D, this drove an adjusted EBITDA up 51% versus the prior year. At constant exchange rate, this would have been 55% growth versus the prior year. Of this, 90% drops into cash generated from operations, which grew 30%. And then just to complete the cash story, after accounting for tax payments and CapEx, this cash generation enabled us to build cash reserves up to GBP 122 million, of which we distributed GBP 13.8 million to shareholders in 2018 by way of share buyback. As a result, we closed the year with a strong balance sheet -- strong cash balance of GBP 108 million. And clearly, this exceeds our operational requirements, no doubt, but as a board, we continue to look very carefully at how we might allocate this capital, which includes considering material returns to shareholders as well as potential M&A. And then just to complete. I'd like to finally signpost a few moving pieces for 2019. Despite 2018 benefiting from a number of gains specific to last year, overall, we see a sustained performance in 2018 with continued revenue growth offset by a number of margin impacts, including the flutiform gross margin normalization I talked about earlier and the loss of EXPAREL revenues. I'm not going to go through the full list here, but perhaps to highlight on the royalties that we do expect to see the GBP 9 million royalty from GSK, the Ellipta patent booked in the first half. And the development revenues, I'd like to highlight we see potential new partnering revenues for 647 in the second half. And there's also potential for a milestone payment from Novartis with QVM149, which we filed at the end of this year as we've previously guided. And finally, we've reiterated our guidance for 2019 on R&D spend of between GBP 45 million and GBP 55 million. I now hand over to James who will take you through our plans for executing on our strategy in 2019. Thank you. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [4] -------------------------------------------------------------------------------- Thanks very much, Paul. And before we are -- before I go into how we're continuing to execute our strategy, I think, for me, to just remind ourselves briefly of the opportunity we have at Vectura, operating in this arena of inhaled medicines delivery, primarily focused in respiratory diseases to transform patients' lives and continue to generate additional shareholder value. The respiratory market continues to be highly valuable, growing with 2027 sales projected at over $62 billion with the bigger segments coming from the well-known areas such as COPD and asthma, which make up around $42 billion of the sales projected in 2027. Despite many existing treatments being available, we continue to see high levels of unmet medical needs in these areas with over 480 million patients per year affected globally by COPD and asthma and with continued growth in this area being driven by new classes of drugs such as dual bronchodilator LAMA/LABAs; triple therapies for both COPD and asthma; new biologic treatments; volume growth from new generic treatments, including substitutable generics in the U.S.; and continued increases in diagnosis and treatment, particularly in emerging markets. Beyond COPD and asthma, we can also see very significant growth in niche specialist disease areas, which were worth around $10 billion in 2018 and are projected to double over the next 10 years. Beyond the existing market size and class evolution dynamics, the respiratory segment also continues to be one where there are high levels of innovation and of research activity. Based on publicly available data, there are currently over 220 inhaled development projects, excluding emerging market activities and many of these projects have potential for formulation, product device combination and development partnering with companies such as Vectura with around 80% of these projects originating from small to midcap companies, which typically do not have the end-to-end capabilities to formulate, develop product device combinations on a standalone basis. It's also revealing to note that these numbers exclude any additional opportunities linked to the reformulation and repurposing of existing molecules, which, along with partnered complex inhaled generics, is the primary focus of Vectura's unpartnered development activities today. On the generic front, we continue to see high technical, regulatory and financial barriers for the successful development of complex inhaled generics, particularly substitutable products for the U.S. market. This is a core demonstrated competence of Vectura in Europe and one where we have a unique opportunity to be one of the very few winners in this segment in the U.S. with our VR315, VR2081 and now extended Ellipta portfolio. Now as I've outlined before and has been very nicely explained by Paul, our business model is well proven and simple. Our differentiated inhalation capabilities allow us to be well placed to maximize value, translating our scientific capabilities in partnerships to initially generate development revenues, and thereafter, see these mature into product supply revenue and royalties. Our refocused investment priorities are reflected in our pipeline. Our successful record of converting R&D investment in inhalation space to revenues is reflected in the strong cash flows generated from our existing 10 (inaudible) inhaled in-market assets. Our focus and priority given to the new generics opportunity is reflected in our unique and now expanded inhaled generics portfolio and the further strengthening of evidence in the differentiated nebulized platform is reflected in our 4 priority projects with VR647, our nebulized budesonide treatments for patient -- for pediatric asthma in the U.S. leading the way, along with the 3 new purposed and reformulated existing therapies added to the portfolio in 2018. And last, but certainly not least, I come back to this QVM149, which is an important upcoming additional revenue driver for Vectura. Now turning to our inhaled in-market assets, I'll start with flutiform first. And flutiform, as I said earlier, continues to perform well and we've seen strong growth, particularly ex-EU. In Europe, we've continued to see growth in 2018. Mundipharma have grown in-market revenues for flutiform by 2%. And this was in an ICS/LABA market, which was actually declining by 3.3%, and as a result, this has led to flutiform increasing its value share to 3.8% last year. In Japan, we continued to see a very strong performance of flutiform with Kyorin driving reported in-market growth in terms of value of 12.8% despite the price reduction in April of 5.6%. Flutiform volume share has grown to 15.4% in Japan, clearly demonstrating Kyorin's very strong performance in the less saturated Japanese ICS/LABA market. Given the importance of product supply for Vectura revenues, as Paul has highlighted, it's particularly important to note the reported volume market growth for flutiform, which, in 2018, was up 12.2% in total, up almost 3% in Europe and up over 17% in volume in Japan. Looking forward, we can see no reason for dramatic change in market performance for flutiform. In Europe, with the k-haler launch as a breath-activated device and the pediatric labeling helping Mundi's promotional messaging, we expect flutiform to hold its position in a mature, highly competitive and commoditized market. Outside the EU, we continue to expect to see strong growth in Japan and Rest of World markets. Vectura revenue, as Paul has highlighted, from Mundipharma, will be driven by product supply where we've seen steady growth in Europe and strong growth ex-EU. In Japan, where we see a receiver combination of royalty and product supply revenue from Kyorin, outside currency effects, we expect to continue to see good growth in both volume and in value. Ultibro also continues to be an important driver of revenue, as Paul has shown earlier, with Vectura royalties of GBP 13.7 million in 2018, which are up 11% on a constant-currency basis. Global combined in-market revenues for Ultibro and Seebri have now reached GBP 680 million and grew almost 6% in 2018. Ultibro continues its ex-U. S. LAMA/LABA class leadership with the rate of EU share erosion resulting from the earlier market entrants stabilizing as expected and as reflected on the right-hand side of this table. Looking forward, given Ultibro's class-leading exacerbations reduction data and the strong promotional efforts of Novartis in Europe, we expect to continue to see Ultibro maintaining its ex-U. S. class leadership with continued stabilization of its LAMA/LABA class share and revenues growing along with the increased overall LAMA/LABA class growth. As mentioned before, I'd like to now turn to QVM149, which is the third of the assets in our partnered Novartis portfolio, and has now reached an important stage of development. This product has the opportunity to be one of the first triple therapies for the treatment of asthma in Europe and where there is a clear and logical need for a new combined therapy option. As we know, we know there is a need for the use in inhaled corticosteroids to treat the underlying inflammation of asthma. So the idea of using Ultibro where we have a powerful dual bronchodilator opening up the airways effectively and, as demonstrated in the efficacy we've seen in COPD, and adding to it with a well-known, well-characterized inhaled corticosteroid, Novartis is providing a very logical and easy-to-use combination approach for the treatment of asthma, offering a physician the power of the additional LAMA/LABA bronchodilation effect, and to that, which is beyond that of the ICS/LABA, and a treatment for the less well-controlled moderate-to-severe asthma patients. We expect to see the Phase III data for QVM149 in the second half of this year with Novartis committed to submitting the file before the end of '19. This is a significant opportunity with no triple therapies established in the EU asthma setting today. The individual EU ICS/LABA and LAMA markets combined were worth almost GBP 5 billion in 2018. Consensus revenues do not today fully capture the value potential for the product with projected values of GBP 240 million in 2024. That's only a few years after the launch, and we'd expect pedia sales to be some time after this as is the norm for these types of products. Novartis, themselves, have indicated they believe in the blockbuster peak potential revenues of greater than GBP 1 billion for their QVM triple program. I'd now like to talk about the positive progress and expansion of the inhaled generics pipeline. I'll focus first on VR315. Vectura, with our partner, Hikma, remain confident in the commercial value and volume potential for VR315. Here, there is no doubt the value of the net reported sales, as you can see on the top chart here, in the U.S. ICS/LABA market has reduced significantly over the last 5 years, as reflected in the reported numbers from GSK and AZ for both ADVAIR and SYMBICORT. Nevertheless, despite these price reductions, the value of this market in net reported sales were still worth almost $3.5 billion in 2018, of which GSK sales of ADVAIR and BREO/RELVAR were over $2.3 billion. What is also striking, as seen on the second chart below, is the volume opportunity and the ICS/LABA market, which continues to increase, as you can see, up to almost 37 million devices in 2018, up from 34 million devices in 2015 with, again, ADVAIR alone generating in the weeks prior to the entry of the generic product, 150,000 device prescriptions per week. Now the opportunity for Vectura and our partner, Hikma, remains significant and the barriers remain high for future new entrants. There remain only 3 companies who submitted files for approval. And now, with Mylan having approval and launching, we have proof that it is possible for sponsors to get substitutable generics over the line to commercial revenue generation. Mylan's initial pricing is within our expected range, and as we've mentioned before and as we often see with generic entrants, we'd expect to see prescriptions initially coming from -- primarily from the substitution of ADVAIR devices. But inevitably, over time, we can also expect to see switches away from other patented ICS/LABA treatments as new entrants reach the market with additional supply capacity and provide payers, physicians and patients with further affordable, high-quality, substitutable options with devices, which closely match the original GSK product. Based on the recruitment for the repeat clinical study and the productive interactions we've had on the other noncritical path queries outside the clinical program, Vectura and Hikma continue to prepare for resubmission of the -- a resubmission to the complete response letter in 2019, enabling a launch sometime during 2020. Now beyond VR315, I'd like to say a few words on the Ellipta deal we signed with Hikma in November. Now I fully understand and accept the full value of this deal remains some way out, but it would be remiss of me today not to take a moment to underline how important, I believe, getting this deal done has been to Vectura, and the huge value it represents both today and in many years to come. This program and this agreement was the single largest product portfolio deal the group has done to date. The agreement provides development revenues in the short and medium term and gives us access to the largest single next-wave inhaled generics portfolio in the market for the next 10 to 15 years. Vectura is in the lead with our partner Hikma in developing this suite of assets, and given our VR315 learnings, is set to be one of the very few players with the skills, capacity and experience to access this potential. Let me just take a moment to spell out the opportunity we see. The development portfolio includes GSK's fast-growing, once-daily ICS/LABA therapy, BREO/RELVAR; its LAMA/LABA treatment, Anoro; and its recently launched COPD triple therapy, Trelegy. These 3 projects are main drivers of value of this program. And to put this opportunity into context, the triple therapy and LAMA/LABA market alone currently are worth around GBP 1.5 billion -- GBP 1.8 billion and this is forecast to be worth around GBP 5.5 billion by 2024. And when we look at GSK's portfolio for these assets, they generated GBP 2.6 billion of revenue from -- in 2018, again, which is set to almost double by 2024 and this remains several years ahead of peak sales and generic entry. Turning now to our nebulized portfolio. As I noted earlier, we've seen growing clinical evidence, which supports both the continued progression of our VR647 program and the expansion of our nebulized portfolio, which we announced -- as we announced in January '18, we're looking to reformulate and repurpose existing molecules with a lower overall risk, for example, to early-stage new molecule development at Vectura's cost, such as VR588 and also the 942 activities. The Phase III results of VR475 were certainly a disappointment, but not a total surprise given the challenging exacerbation endpoint -- primary endpoint. Nevertheless, the lung function and symptoms data that we've seen in the Phase III data have further reinforced our confidence and belief in the VR647 program, which is quite different, as is highlighted on this slide, from the primary symptoms endpoint in the pediatric asthmatic segment. With this precedented efficacy endpoints and a very well-established large U.S. nebulized market and the strength of the supporting data, we now have for VR647 Phase I and Phase II readouts, the additional 475 second year data, we are now progressing preparations for our scheduled Phase II -- end of Phase II FDA meeting for 647 and are focusing, in parallel, on the enabling activities both for the initialization of the Phase III development and also partnering potential -- potential partnering discussions for the Phase III program. But we'd expect any partner agreement to happen in the second half of the year once the end of Phase II meeting with the FDA is completed. As I mentioned in September, with the revised investment portfolio and the R&D transformation, not only have we reduced our total R&D spend, we've also created the headroom financially and in terms of device development and formulation capacity to initiate 3 new programs, which leverage our differentiated nebulization technology and which focus on reformulation and repurposing of existing molecules. These assets include targets in cardiopulmonary vascular disease, in cystic fibrosis and in management of infections in post-transplant immunocompromised patients. And all of these assets have potential sales of well over $250 million. This year, we're targeting at least 1 orphan drug designation with this portfolio by the end of the year. And if all goes well, all 3 assets have the potential for partnering with proof-of-concept data within a 3- to 5-year period. I'd like to summarize now and focus on '18, but also switch my attention to '19. We've clearly demonstrated strong delivery against our priorities in '18 and these remain unchanged for 2019. We will continue to grow revenues and sustain an overall strong financial performance following an outstanding EBITDA performance in 2018. We will maximize our partnering efforts focused on VR647. And our pipeline progression continues with VR315 with Hikma at the top of our list. Our operational excellence activities will ensure we continue to underpin our financial performance with high -- a high-quality operating environment. And we'll continue to focus on creating a great place to work, attracting, retaining and developing the very best talent, operating in a performance-based and value-driven culture and ensuring we have an efficient and effective working environment for all of our staff designed for the needs of our business going forward. And in terms of news flow, our focus is on 4 main catalysts. Firstly, the 315 program, looking forward to the repeat clinical study readout followed by resubmission in the second half of the year. Secondly, VR647, following the end of the Phase II meeting, we expect to progress partnering agreement for the Phase III developments in the U.S. Thirdly, we plan to provide additional details of the 3 new nebulized assets, including hopefully target orphan drug disease designation again in the second half. And fourthly, as indicated earlier, QVM149, Novartis' triple therapy, we look forward to the Phase III study readout and subsequent submission before the end of '19. Following a strong performance in 2018 where we stabilized the business and regained momentum, I believe the investment case for the Vectura Group is stronger than ever with more demonstrable evidence across all dimensions than ever before. We have a compelling differentiation -- differentiated inhalation development capability. We've delivered and continued to see revenue growth driven by our inhaled in-market assets, driving cash flow generation. We have a focused R&D strategy with clear pipeline progression, which have the prospects of material near-term readouts as well as significant further partnering potential. And we've continued to develop and deliver on our operational excellence agenda, which is contributing to our sustained 2019 financial guidance. And the combination of all these activities, provide a compelling outlook with significant room for revenue growth leverage with enhanced cash flows, further contributing to our robust balance sheet alongside what I think we've demonstrated as a continued strong capital allocation discipline. With these final remarks, I'd like to wrap up. Thank you all for your attention, and open the floor for your questions. And we'll start with questions in the room. If you can stick your hand up and name your home base, that would be great. We'll take questions in the room and then we'll come back to calls on the line and then the online questions. So first is from, I think, James Gordon, I think, from JPMorgan. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- James Daniel Gordon, JP Morgan Chase & Co, Research Division - Senior Analyst [1] -------------------------------------------------------------------------------- That's right. James Gordon from JPMorgan. Two questions, although, of course, a couple of subparts. One question, just on capital -- yes, probably. Capital allocation or cash returns, so you're saying that you're considering what to do with all the cash you've got, but under what time lines might we find out what still needs to happen for a decision to be made about doing something like a buyback? And in terms of M&A, are you then considering M&A that's on such a scale that you wouldn't also be able to do some buyback, and so thoughts around M&A targets. So that was one question. And the other one, which is on QVM, 2 questions on that. One would be in terms of how big it could be in Europe is an issue if you don't have like a lead-in product as in an asthma patient might take a LABA/ICS first, they might take ADVAIR or BREO. And if they did, then they might then go on to Trelegy from GSK because BREO and Trelegy are in the same device whereas Novartis don't have if it's like a feeder product. So does that impact the European potential? And for Japan, I think the product's going to be launched in Japan, but you noted that Ultibro wasn't growing that quickly in Japan, hasn't become that big in Japan. Other reasons where the triple could be bigger in Japan where Ultibro hasn't been that big? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [2] -------------------------------------------------------------------------------- Yes. Perfect. Okay. So Paul, do you want to touch on capital allocation and I can come back on the M&A side? -------------------------------------------------------------------------------- Paul Fry, Vectura Group plc - CFO & Executive Director [3] -------------------------------------------------------------------------------- So on capital allocation, I'm not going to give you a time line today on that. All I can say is, as I said earlier, that we, as a management team, as a board, think very carefully about that and continuing to think very carefully about that. M&A is one possible use of that cash, returns to shareholders would be another. And whether they can be combined in some way, possibly. But that's all to be determined. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [4] -------------------------------------------------------------------------------- Yes. I think our position on M&A, James, hasn't changed. I think we've continued to say we are business where we invest in growth. That investment in growth primarily goes initially in our own pre-partnered R&D activities. As Paul has highlighted, a lot of our R&D is actually partnered and we should think about that in some ways as a cost of sales and cost of goods in a way. That's our primary focus for reinvestment. And we continue to look for M&A opportunities. As we said, few and far between. We're extremely disciplined in terms of the financial criteria and strategic criteria that we might want to look at. And in the absence of M&A, we're aware that GBP 108 million at the end of last year is a lot of money and is more than necessary with operational requirements. Therefore, we will -- we are considering and we'll continue to consider material returns to shareholders when we believe the -- this current share price is below our inherent value, if that makes sense, but we're not going to commit to a time line right now. So I think those are the first two questions. On QVM149, I think GSK's logical arguments would be the one you've given. It's nice to have a lead-in product. I'd say Novartis have a pretty strong lead-in product with Ultibro. The positioning and class leadership and brand awareness of Ultibro in the COPD segment, I think, gives Novartis a really great position to be able to talk to physicians about the power and efficacy of Ultibro, which they're extremely familiar with. It is the class leader and you can see that position sort of strengthening and holding for many years to come. And be able to then talk about adding an inhaled corticosteroid is a very simple way of positioning a product. So I'm sure there are different ways to think about that positioning, but I'm very positive about the potential we've got and should be one of the first three coming into the market. Japan, Ultibro, yes, I think we're -- it would be nice to see stronger growth coming from Japan. You can see the effectiveness of a well-established respiratory player like Kyorin who are well known in the segment. We know Novartis has spent a lot of time with their partner, Meiji, doing additional work. I hope we can see that performance pick up for Ultibro and then that being reflected in additional performance for the rest of their portfolio. Thank you. Max and then Amy. -------------------------------------------------------------------------------- Max Stephen Herrmann, Stifel, Nicolaus & Company, Incorporated, Research Division - Head of European Healthcare Equity Research & MD [5] -------------------------------------------------------------------------------- It's Max Herrmann from Stifel. Three questions. Firstly, just on QVM again, just wondered what the milestone was on potential European approval? Then secondly, just on the R&D guide for 2019. Obviously, you've nicely split out what sort of internal R&D and what's R&D for third-parties. I wanted to try and understand, within that GBP 45 million to GBP 55 million, what was internal and then just to get an idea what the major investments are internally within that? And then on VR647, what is the cost of the Phase III? What are the dynamics that a partner needs to think about before -- it's not just clearly a deal transaction ties with you, but also the investment behind the program. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [6] -------------------------------------------------------------------------------- So Paul, do you want to touch on QVM and the R&D guidance? -------------------------------------------------------------------------------- Paul Fry, Vectura Group plc - CFO & Executive Director [7] -------------------------------------------------------------------------------- The QVM149, I suppose I can't go into the detail of that, but probably think Seebri as a sort of maybe an analog for potential launch (inaudible), which would come in 2020. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [8] -------------------------------------------------------------------------------- We are on submission this year. -------------------------------------------------------------------------------- Paul Fry, Vectura Group plc - CFO & Executive Director [9] -------------------------------------------------------------------------------- Yes, sorry. I guided on the slide $2.5 million this year for submission. I thought you meant for launch. Yes, approvals, so I think Seebri possibly is analog for that. R&D, the split for 2019 I'd say is broadly the similar proportions to 2018. The main focus for our own proprietary piece, the [nominable] pre-partnered, if you like, R&D, there's still a little bit of work on 647 as we bring that up ready for handover to a partner. Obviously, the nebulization, 3 new net programs we talked about earlier continuing to mature and will continue to the demand investment. But overall, just in terms of our own platform technology, so bringing the nebulizer platform up, FOX generation, too, this kind of investments will also be in that [part]. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [10] -------------------------------------------------------------------------------- So on 647, obviously, the size and time line and specifics of the Phase III program are somewhat contingent on -- or actually contingent on the FDA meeting, Max. So have a clear view on what that program should be, but obviously, we need to have that discussion with the FDA to finalize that design and that's really the sort of chicken and egg in terms of having those final discussions with partners. We're looking ideally for a partner who's got presence in the pediatric nebulization segment who's got the clinical development wherewithal and skills to develop the Phase III program and the financial capability to support the program and see it through. We haven't disclosed the financial value, but typically we're talking less than GBP 100 million, north of GBP 50 million and you can guess the number in between. But the actual number, specifically, we're not disclosing because it depends on the FDA guidance. Amy? -------------------------------------------------------------------------------- Amy Lucinda Walker, Peel Hunt LLP, Research Division - Analyst [11] -------------------------------------------------------------------------------- It's Amy Walker from Peel Hunt. Just on the flutiform, is the margin that you make on flutiform product supply affected by the geographic mix of your sales? And if so, does the margin to Vectura on the Rest of World sales, how does that compare to Europe and Japan given that the growth rate and share appreciation seems to be greatest in Rest of World? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [12] -------------------------------------------------------------------------------- Yes. Paul, do you want to take that? -------------------------------------------------------------------------------- Paul Fry, Vectura Group plc - CFO & Executive Director [13] -------------------------------------------------------------------------------- So -- I mean, broadly, broadly, directionally, Japan is a more profitable business for us than Europe in terms of gross margin. Rest of World are probably a little less, and it just really depends on the contract. A lot of that work is tender work and we may work with our partner specifically on tender prices where those certainly will be a little bit lower in Rest of World. But I say Japan will be more profitable broadly than the others. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [14] -------------------------------------------------------------------------------- And Japan is, as you know, a mix of royalty and product supply whereas the Mundipharma revenues are entirely on the product supply side. -------------------------------------------------------------------------------- Amy Lucinda Walker, Peel Hunt LLP, Research Division - Analyst [15] -------------------------------------------------------------------------------- The next thing was just can you talk a little bit about the shape of the Ellipta patient expiry impact that you're seeing coming into the royalties? Do you use all of it in one go? I think you referenced November 2019 is the earliest date. And can you remind us what the earliest date of expiry on the Novartis product is, please? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [16] -------------------------------------------------------------------------------- Yes. So it's mid- to late 2020s on the Novartis Ultibro, Seebri portfolio in Europe and it's late and beyond that into the early -- late 2020s and early '30s for the U.S. For Ellipta, I think the RED BOOK guidance is '26 or '27. I think the first BREO patents will get exposed in 2025 and so we would expect potentially some patent challenges in that period. BREO is the main focus and we'd be the first one to be looking for development and then commercialization followed by, obviously, in order, Anoro and then Trelegy. -------------------------------------------------------------------------------- Amy Lucinda Walker, Peel Hunt LLP, Research Division - Analyst [17] -------------------------------------------------------------------------------- And last one, just to follow up on James' questions. I understand you don't want to comment specifically on what you're doing with M&A, but can you, at least, say whether you're in active due diligence on anything? And also, would you tend to have a preference if you were going to buy something for something that's on market and profit generating, a kind of revenue stream like a flutiform? Or is it more technologies that you want to add to support some sort of idea of what your preference and your interest is. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [18] -------------------------------------------------------------------------------- I think, we've been very clear and our view hasn't changed. So ideally, we'd like to find and that's why we talk about tendency, you'd find an unattractive asset, appropriately priced, which had on-market assets which were growing where you could acquire it with accretion within a very short period of time. We're a growing business and it's nice to add to the bottom line. Likewise, we've got capital strength and if there were some opportunity for tuck-in technology-type capabilities, we would consider that. But I think with our nebulized platform overall and with our technologies, we're quite well set there. There could be one or two things we could think about that will be on a much smaller scale typically. And I won't comment if we're in active discussions or not, that would be inappropriate. But I'd simply say, these opportunities are few and far between. -------------------------------------------------------------------------------- Samir Devani, Rx Securities Limited, Research Division - Research Analyst [19] -------------------------------------------------------------------------------- Samir Devani, Rx Securities. I've got a couple of questions. Just on flutiform in Europe, you've obviously highlighted it was quite a challenging market. But is it possible that we might see a sales decline in Europe this year? So that's the first question. And then second, just on 647, would you commit to kicking off the Phase III program ahead of partnering? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [20] -------------------------------------------------------------------------------- Yes, so good question, Samir. Everything is possible. Flutiform's been pretty stable, as I showed on the slide, for the last few years. In spite of the market being commoditized, you've got hundreds now of nonsubstitutable branded or nonbranded alternative analogs to both SYMBICORT and to Seretide in Europe. And Mundipharma have managed to continue to drive both value and volume growth and obviously there's continued pricing pressure. I think the introduction of the k-haler and also the pediatric labeling helped, but we've continued not to forecast strong growth in Europe. We've got 2% -- slightly more than 2% in terms of volumes and I think it's why our focus on volume, for us, we're slightly protected from a pricing perspective and due to the nature of the contract. So even if we did see a value decline, I'd expect to continue to see for Vectura very limited impact. We do expect to see volume growth on a continued basis. Low, but positive. On 647, I think we've been very clear: we're doing all the preparatory work for Phrase III. But our view is we need to find a strong partner both for the clinical development experience and the financial wherewithal to invest in that Phase III program. We've got a host of additional opportunities we want to pursue and, for example, the 3 next-wave assets when we have other opportunities behind that, which we think we want to develop and it would be wrong of us to just be focusing on 647 alone. So we're not planning to move it into Phase III development at this stage without a partner. Nick and then Stefan. -------------------------------------------------------------------------------- Nick Peter Russell Nieland, Citigroup Inc, Research Division - VP and Analyst [21] -------------------------------------------------------------------------------- All right. So Nick Nieland at Citi. Just 2 questions. Is -- have you got an update on the situation with flutiform in China, please? And the other question was can you say anything about milestones -- further milestones to come from Seebri and Ultibro, commercial milestones? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [22] -------------------------------------------------------------------------------- Yes. Paul, do you want to take that? -------------------------------------------------------------------------------- Paul Fry, Vectura Group plc - CFO & Executive Director [23] -------------------------------------------------------------------------------- Yes. I mean, just as a planning assumption, I wouldn't assume any milestones on Seebri and Ultibro to be royalty income. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [24] -------------------------------------------------------------------------------- Yes. In China, we're waiting for the asthma submission we're expecting next year. And with approval of that and an RDL lifting, I mean I think China is a potential nice additional upside. The ICS/LABA market is relatively immature. It's growing quite fast now. Obviously, SYMBICORT and ADVAIR being on that market for almost 15 years now so it is a developing market. Although it's still largely an acute market, there is a maintenance market growing. You could imagine flutiform coming on to the market in the next 3 to 4 years. Mundipharma actually have a couple of thousand people in China, so they've got a well-established team in China, and obviously, that will be a nice additional boost to the Rest of World growth. Stefan? -------------------------------------------------------------------------------- Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [25] -------------------------------------------------------------------------------- Stefan Hamill from Numis. Also on flutiform, so is there any way to quantify the impact of the k-haler in the pediatric extensions? Have those impacted in 2018? Or is it more likely to see a 2019 impact there? And could it actually accelerate as a result of these improvements? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [26] -------------------------------------------------------------------------------- Yes, I've always been cautious about that, Stefan, in saying that we've never said hockey stick or acceleration. I think in a commoditized European market where there's a lot of pricing pressure and there's lots of alternatives, I think it's helpful to have a differentiated device, which we already have, but to further help with that breath activation for the patients, for example, elderly patients have trouble with coordination and so on, it's a really nice device and we can expect to see that progressively gain share in '19. No real impact in '18. Pediatric labeling was not significant in '18, but I think now will be helpful. I said I don't expect it to see an acceleration, but to help stabilize the negative pressures, it's useful. -------------------------------------------------------------------------------- Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [27] -------------------------------------------------------------------------------- Okay, that's clear. And Lyon facilities, it looks like you made very good momentum on sort of filling that with new programs. I just wondered when those might actually impact the top line for that part of the business? And whether you're in -- within sight of breakeven in that part of the business yet? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [28] -------------------------------------------------------------------------------- The Lyon site, as we know, is not core as part of the overall group strategy. It is profitable. Obviously, you've got royalties coming in from that group, both from products historically like Solaraze and EXPAREL, which are non-oral, but also on the oral revenues and the generated product supply, which come from Lyon. Manufacturing revenues, as we know, is slightly unprofitable, but you have seen, for example, a sign of those new development deals we've seen in the development revenues, significant improvement and increase in those development revenues and we're looking for profitability in the near term in Lyon. And that will give us options. We've always said in 2016 when we acquired -- merged with Sky, we would continue to look at options there for Lyon and turning it into a profitable manufacturing business, building capacity, leveraging the CapEx is what we've been doing and the team are doing good job to continue that. And as we see that move forward clearly, that value of that asset both to us and potentially to other third-parties becomes more significant. -------------------------------------------------------------------------------- Stefan John Hamill, Numis Securities Limited, Research Division - Director of Equity Research [29] -------------------------------------------------------------------------------- And last question, just you talked about extensive activities in the respiratory pipeline globally. Is it still your intention to partner beyond the nebulized and generic assets? And is it still your focus to focus on already approved agents? Or would you do innovative agents? -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [30] -------------------------------------------------------------------------------- Yes. I think we're very clear and it's useful to reiterate this, which is, in January 2018, we said we'd have a revised reinvestment focus, right, and our focus is essentially on partnering of assets initially on the inhaled generics. And we've expanded that portfolio, in particular, with the Ellipta portfolio, building on our 2017 announcement of the 2081 deal, which was great and focus on the new reformulated nebulized assets. But the move was away from Vectura alone -- stand- early molecular work. And we're not an exploratory wet lab, and I don't think we're the right people to do new molecular -- risky molecular early-stage, mid-strage or late-stage development on our own dollar. We are and we have capacity and we're increasing our capacity, thanks to the industrialization of our nebulizers, and are open for business for new molecule formulation and device business with selected partners who have to pay us the right upfront and the right development services fee, essentially on a fee-for-service basis, to make sure we're covering this cost. Gone are the days where Vectura will subsidize with other small midcap biotech companies their early-stage development. That is not an effective business model for us, looking for bio dollars in the next 15 or 20 years. We need to be rewarded. We've got rare assets and it's a competitive space. To get those assets, we need to be appropriately rewarded on the day we sign the deal and throughout that development activity. That's the switch and focus, which we started last year by stopping doing those things and making sure we've got the capacity to execute our new 3 nebulized assets. With those now in process, we've got a bit more capacity to look for more value-added and immediately accretive deals. Any more questions in the room? If not, we can check with the operator. Have we got any questions on the line? -------------------------------------------------------------------------------- Operator [31] -------------------------------------------------------------------------------- There are no questions on the phone, sir. -------------------------------------------------------------------------------- James Ward-Lilley, Vectura Group plc - CEO & Executive Director [32] -------------------------------------------------------------------------------- Very good. Any questions in the room? If not, I'd like to thank you all for listening. Thanks for your attention, and wish you a good day. Thank you very much.
verger: I'm confused! VEC have valued SKP as worth £x, and as it is a merger they have equated £x as a share swap ie 2.7977 VEC shares for every SKP share based on the VEC closing share price on 15/3/16 of 146.60p. If people think that SKP is worth more then the VEC share price needs to go up to reflect this. But what if people like the deal (as I do), buy into VEC pushing the share price up and making the deal more expensive for VEC? What is the timetable for this deal? Should they not suspend the shares? Or have I missed something? Advice please!
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