VEC.L Regulatory News (VEC)

Vectura Group announces global agreement with Hikma to develop generic versions of GSK's Ellipta® portfolio

- Upfront payment of US$15m

- Up to US$80m of development milestone payments

- Mid teen percentage profit share arrangement for each portfolio product

Chippenham, UK - 08 November 2018: Vectura Group plc (LSE: VEC) ("Vectura", "the Group"), today announces signing an agreement with Hikma Pharmaceuticals PLC ("Hikma") for the global development and commercialisation of generic versions of GSK's Ellipta® portfolio, utilising Vectura's proprietary Open-Inhale-Close dry powder inhaler device.

Following interactions with US FDA, the Open-Inhale-Close dry powder inhaler device has the potential to be developed as an AB-rated substitutable drug-device combination for generic versions of the GSK Ellipta® portfolio. This presents a significant opportunity, with net sales for Ellipta® products in the US projected to be $4bn by 2024 and over $5.5bn globally[1].

James Ward-Lilley, Chief Executive Officer of Vectura, said: "This is a highly significant and valuable agreement for Vectura, reflecting our increased focus in our complex inhaled generic portfolio. The agreement validates Vectura's rare, industry-leading development capabilities. It also reflects the strong existing relationship we have with Hikma and their confidence in the future of the substitutable inhaled generic segment including VR315 our joint Advair® generic programme."

The Open-Inhale-Close dry powder inhaler programme includes the development of AB-rated substitutable generics of up to five GSK respiratory medicines. Vectura and Hikma have agreed to develop and commercialise at least three of the portfolio products. A substitutable generic version of Breo® Ellipta® (fluticasone furoate and vilanterol trifenatate) will be prioritised for the first wave of development. Pharmaceutical and device development work has progressed in parallel with partnering discussions. The new device is an evolution of Vectura's lever-operated multi-dose [LOMI] device and builds on Vectura and Hikma's shared experience with the VR315[US] programme, enabling accelerated development under this new agreement. Details of product specific launch timings will be provided as development progresses.

Financial Considerations

Upon signing Vectura will receive an upfront payment of US$15m and estimate £5m [US$6.5m] of this revenue to be recognised in 2018. Vectura will be responsible for, and fund, initial device and formulation development. Hikma will be responsible for clinical development, regulatory submission and commercialisation activities. Transfer of the first product to Hikma's manufacturing facility to enable clinical manufacturing, will trigger a $5m milestone payment. Thereafter Vectura will receive milestone payments of up to $75m upon achieving key development milestones, including the delivery of pharmacokinetic clinical trials, pivotal clinical trials, ANDA submissions and FDA approvals.

On approval Vectura will receive a share of distributable net profit up to a mid teen percentage for each portfolio product.

In the event cumulative net global sales of the combined products reaching $1bn, $3bn and $5bn Vectura is also eligible to receive milestone payments of $25m, $35m and $40m respectively. Vectura will contribute up to US$70m towards Hikma's development activities for the portfolio. Vectura's contribution to the development costs will be deferred and made through a reduced profit share mechanism following commercial launch of the first product. Vectura's investment in the programmes does not alter the company's R&D guidance for 2018 and 2019.

Ends

Conference Call

James Ward-Lilley, Chief Executive Officer, will be joined by Roger Heerman, Executive Vice President Business Development and Martin Oliver, Senior Vice President Generic Programmes for a live conference call today at 09.30 GMT to discuss the agreement. A copy of the presentation will be available on Vectura's website 30 minutes before the call. Link: http://www.vectura.com/investors/presentations-webcasts/

Dial-in details:

Participant local dial-in: 0844 571 8892 (UK)

Participant free phone dial-in: 0800 376 7922 (UK)

Conference ID: 5084804

For more information, please contact:

About Vectura

Vectura is an industry-leading inhaled product formulation, device design and development business offering a uniquely integrated inhaled drug delivery platform. We develop inhalation products to help patients suffering from airways diseases.

Vectura has eight key inhaled, two non-inhaled and ten oral products marketed by partners with growing global royalty streams, and a diverse partnered portfolio of drugs in clinical development. Our partners include Hikma, Novartis, Sandoz, Mundipharma, Kyorin, Baxter, GSK, UCB, Ablynx, Bayer, Chiesi, Almirall, Janssen, Dynavax and Tianjin KingYork.

Vectura's strategy is to fully leverage its differentiated technology and skills, maximising value by enhancing the delivery and performance of inhaled products and through the development of high-quality generic alternatives to branded therapies.

For further information, please visit Vectura's website at www.vectura.com.

About Hikma

Hikma helps put better health within reach every day for millions of people in more than 50 countries around the world. For 40 years, we've been creating high-quality medicines and making them accessible to the people who need them. We're a global company with a local presence across the United States (US), the Middle East and North Africa (MENA) and Europe, and we use our unique insight and expertise to transform cutting-edge science into innovative solutions that transform people's lives. We're committed to our customers, and the people they care for, and by thinking creatively and acting practically, we provide them with a broad range of branded and non-branded generic medicines. Together, our 8,500 colleagues are helping to shape a healthier world that enriches all our communities. We are a leading licensing partner in the MENA region, and through our venture capital arm, are helping bring innovative health technologies to people around the world. For more information, please visit www.hikma.com.