Vectura Share Discussion Threads

[soundbuy] 25/4/2017 10:44

Well, this was from the 10th April

Hikma Pharmaceuticals got a boost on Monday as Numis upgraded the stock to 'buy' from 'add'.
It said that following Mylan’s Complete Response Letter, the market is now overly discounting Hikma’s prospects for gaining approval of its generic version of GlaxoSmithKline's bestselling asthma drug Advair this year.
In addition, the share price is now also heavily discounting the core business, Numis said.
"If Hikma gains FDA approval this year, most likely with minor deficiencies in a complete response letter, we see potential for a slight upgrade to our low-end FY17 forecasts, and a material upgrade to our low-end FY18 forecasts (potentially more than 10%), and envisage a higher multiple being warranted post upgrades (14x FY18 EV/EBITDA well underpinned versus peers)."
Numis reckons Hikma has a stronger chance of approval than Mylan because it included 12-18 year olds in its study and has benefited from the expertise of Vectura, a business that, unlike Mylan, has a generic version of Advair Diskus approved in Europe in partnership with Sandoz.
"In our opinion the current share price is well underpinned by the core business (more than 25% upside), with a free option on generic Advair. This is an asymmetric risk worth taking, with the catalyst now a month away and potential for more than 50% returns if Hikma's generic Advair is approved first time, or with minor deficiencies."
In its final results on 15 March, Hikma said it expected revenue for the Generics business to be around $800m this year, with an improvement in the mix of sales and new product launches more than offsetting the impact of increased competition on the marketed portfolio and a reduction in contract manufacturing revenue.
The group said certain new launches were expected to contribute around 15% of Generics revenue in 2017, primarily generic Advair, which was assumed to be launched in the second half of the year.
Numis has a 2,350p price target on Hikma.

[popper joe] 25/4/2017 10:43

Aceuk, I take your point about size and political weight being important in pharmaland, particularly with regard to approval of new drugs etc. But surely that is why a company like Vectura partners up with a larger company like Hikma? My earlier post was to try to understand why the potential rejection of vr315 might have such a detrimental effect on the share price. Maybe it will now stabilise at around £1.40 and it would then be fair to assume that the £1.55 to £1.60 level had an approval priced in?

[soundbuy] 25/4/2017 10:40

Ah....knives are out then

[stopaloss] 25/4/2017 10:35

Today's drop no doubt due to RBC downgrade to underperform. share price coming back up now though.

[soundbuy] 25/4/2017 10:35

This news appeared days after the Mylan rejection, gotta make you wonder if it had any bearing ....

[aceuk] 25/4/2017 10:25

It's a minnow problem - Vectura are now in no better place than Vectura and Skyepharma were pre-takeover. Pharma is about 1) size & money and 2) political weight - Vectura is STRONG in neither department.

[popper joe] 25/4/2017 10:02

Looking at the presentation from the last results, Vectura were quoting analyst estimates of peak sales for generic advair VR315 of between $300m to $500m gross. Royalties would be mid-teens on net sales. I have no idea what net figure $300m of gross sales would produce, but assume $150m to get the debate going. Someone more knowledgeable can put the meat on the bones! So that would give Vectura additional revenue of around $22m or £17m. Last year they reported total revenue of £142m and rising. So my schoolboy estimate is that approval of generic advair should be worth about 10% or 15p on the share price. I have probably got this wrong, but put it out there as a straw man to be corrected.

[cumnor] 25/4/2017 09:25

Soundboy-expected 150-55 if no approval-170-80 if gets it but this will be taken out within a couple of years at much much higher sp, given the dearth of new products big pharma is able to push through the regulatory process (MMyylan) and rapidly expanding upper respiratory market, esp in Asia thanks to pollution and smoking boom. Singer and the likes are well aware of this and thus want cheap shares. I'll be adding at different target levels for meduium long term-only way to make anything on pharma. imo

[alexchry] 25/4/2017 08:25

Soundbuy-yes, I'd been expecting a fall to these levels if May 10th had brought bad news. In the couple of months from end of Jan the share price had risen steadily from 130 to over 160. In the month since the Mylan announcement it has lost most of those gains. I never realised how much the share price depended upon generic Advair approval. The Singer report is a complete about-face as they seem to be negative even if VEC get Advair approval. I'd like to see updates from some of the other broker/analysts.

[soundbuy] 25/4/2017 08:11

This is where I expected the share to be if approval not given.....grrrrrrr

[soundbuy] 25/4/2017 08:07

Note and associated commentary doing the damage.......

[richtea1701] 25/4/2017 07:50

Couldn't have said it better myself Cumnor - smoke and mirrors designed to screw the minnows

[diesel] 24/4/2017 23:27

Cumnor, don't normally go for the conspiracy theory, but this is fishy. Let's see if any other brokers spot the obvious demise in the prospects here.

[popper joe] 24/4/2017 22:17

How much is Hikma's approval actually worth to Vectura? The FT is reporting that Singer are suggesting a Vectura share price of £1.55 upon approval or £1.07 for an absolute rejection. Does anyone know what the actual affect on the company's bottom line is projected to be? Surely it can't be worth 30% of the company?

[carpadium] 24/4/2017 20:36

Still remain reasonably confident that Hikma will get the thumbs up on May 10th.
Trump's on record when it comes to support for less expensive generic counterparts and a pound to a penny that Hikma have covered all angles prior to submission.
Still reckon Mylan's failure part political.

[jopper74] 24/4/2017 17:12

This is a Snakes and ladders share........very hard climb BUT very easy slide back down! Considering selling as I feel I have missed many others whilst waiting for VEC to break the 200 mark...

[dontay] 24/4/2017 14:51

Annual report:http://www.vectura.com/files/7314/9277/1782/Vectura_Group_plc_Report_and_Accounts_for_the_nine-month_period_ended_31_December_2016.pdf

[gswredland] 24/4/2017 13:39

Exactly ace

[aceuk] 24/4/2017 12:51

A one third target price reduction looks a bit ridiculous on the likelihood of something getting marketing approval!

[alexchry] 24/4/2017 12:38

Unless some information has leaked out regarding Mylan's rejection or Hikma's application then Singer or any other broker/analyst is just guessing. What I can't understand is why Singer didn't issue this note soon after the Mylan decision was known.

[carpadium] 24/4/2017 12:08

All eyes on whether or not other broker forecasts change for the worse. If they don't then it would appear N+1 Singer being singularly ultra-cautious.

Fully agree with diesel's 5544.

[diesel] 24/4/2017 11:33

This all looks rather odd, brokers do not normally do such a dramatic turnabout unless something truly disastrous has happened.