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Vectura investors breathe sigh of relief as inhaler sales pick up in first half

Vectura's adjusted underlying earnings (EBITDA) rose more than 50% to £24.6mln on higher revenue of £79.9mln

woman with inhaler
Vectura's flutiform inhaler comfortably outperformed the market in the first half

Vectura Group PLC (LON:VEC) shares nudged higher on Tuesday after the inhaler maker posted a solid set of interim results and reiterated its full-year guidance.

Sales of its flutiform asthma inhaler fell off towards the end of 2017 as a result of de-stocking, but they picked up again in the opening six months of 2018, despite the market itself actually declining.

READ: Vectura expects revenue rise despite Advair blow

That was reflective of the group’s inhaled portfolio as a whole, with revenue in the division climbing 7.1%, more than offsetting a 17.4% slide in revenues from its smaller non-inhaled business.

In total, revenue for the six months through to the end of June rose 1.4% to £79.9mln (H1 17: £78.8mln).

Adjusted underlying earnings (EBITDA) rose more than 50% to £24.6mln (H1 17: £16.2mln) as Vectura benefitted from better procurement and stronger operating margins.

The interim operating loss narrowed substantially to £30.2mln (H1 17: £41.3mln) driven by lower amortisation and R&D costs.

Momentum is back

“Vectura is regaining momentum after a challenging 2017,” said chief executive James Ward-Lilley.

“Inhaled in-market growth is continuing with flutiform stock levels normalising resulting in total inhaled Vectura revenues increasing 7.1% vs H1 2017.

“Our refocussed pipeline is making progress with Phase II VR647 results a key highlight in H1 2018. We have identified and are progressing a series of new pipeline projects, and we look forward to the read-out of the VR475 Phase III adult asthma study later this year.”

Ward-Lilley maintained the firm’s full-year guidance, with analysts forecasting 2018 sales of around £159mln and EBITDA of £31.6mln.

79% of EBITDA secured already

“Vectura’s £24.6mln H1 EBITDA represents 79% of the consensus £31mln FY2018 forecast,” read a Peel Hunt note to clients.

“Positive momentum has returned to the inhaled portfolio, which should be taken positively. However, Vectura has maintained its FY2018 outlook, and revenue and R&D expense phasing likely limits the scope for material forecast upgrades.

“Nevertheless, with the stock down c37% year-to-date, we believe these optically solid interim results are likely to provide a fillip to the shares today.”

Shares rose 1.5% on Tuesday to 75.1p.

Quick facts: Vectura Group PLC

Price: 97.7 GBX

AIM:VEC
Market: AIM
Market Cap: £588.37 m
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