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Vectura to merge with SkyePharma in £441m deal

Will form a “one-stop shop” for specialist respiratory medicine development
SkyePharma Flutiform inhaler

UK-listed Vectura and SkyePharma have agreed to merge their operations into a single specialist respiratory medicine company.

The deal will see Vectura buy SkyePharma for £441m ($621m), with the latter's shareholders owning around 37-42% of the combined company - depending on whether they elect to take part of the offer in cash.

The merger will create 'an industry-leading airways-related specialty business', according to the merger prospectus. The combined group will have a market value of more than £1bn and will have a broader technological capability, with Vectura's expertise in dry powder inhalers (DPIs) and smart nebulisers complementing SkyePharma's strength in pressurised metered dose inhalers (pMDIs).

Joining forces will give the combined company the critical mass to develop new respiratory devices and products more quickly, as well as providing significant cost-saving opportunities, said the two firms, which already receive royalties on the sale of a several marketed products.

James Ward-Lilley, currently Vectura's chief executive, will be the CEO of the enlarged group, with SkyePharma's Andrew Derodra serving as chief financial officer and Vectura's Trevor Phillips taking the role of chief operating officer.

Vectura's chairman Bruno Angelici will hold the same position at the combined company, while SkyePharma's CEO Peter Granta and Andrew Oakley, Vectura's finance director, will leave.

Angelici said that after the merger goes through, "enhanced cash flow will better position [the company] to consider attractive strategic opportunities which may emerge in the future".

SkyePharma has just reported record revenues for 2015 of £95m, up 30% with the help of rising royalties and product supply fees for asthma therapy Flutiform (fluticasone/formoterol) and GlaxoSmithKline's respiratory drugs based on the Ellipta device.

Vectura recorded revenues of £26m in the six-month period ended September 2015 - up 35% - as royalties increased on products such as Novartis' Ultibro Breezhaler (indacaterol/glycopyrronium bromide).

There are high hopes for strong sales of Vectura's VR315, a generic version of GSK's big-selling asthma and chronic obstructive pulmonary disease (COPD) drug Seretide/Advair (salmeterol/fluticasone propionate), which is on course for approval next year.

Analyst Samir Devani of Rx Securities said the merger offered a "strong rationale, with complimentary respiratory technologies [providing] a true one-stop shop for respiratory development, a strong combined pipeline, a more diversified revenue composition and stronger balance sheet."

Article by
Phil Taylor

17th March 2016

From: Sales



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