Latest news13 Sep 2014 22:34
http://seekingalpha.com/article/2490465-vectura-group-following-a-familiar-path?
Vectura Group Following A Familiar Path
Investors who like Nektar Therapeutics (NASDAQ:NKTR) or Alkermes (NASDAQ:ALKS) may want to take a look at Britain's Vectura Group plc (OTC:VEGPF) (VEC.L). Although not a household name, Vectura has established itself as a technology leader in the formulation and manufacture of inhaled drugs and devices to administer these drugs. Vectura boasts a key partnership with Novartis (NYSE:NVS) for potential blockbuster Ultibro as well as Seebri, as well as a diverse pipeline of generic and branded respiratory drugs.
Vectura Group has multiple avenues to growth. The company can continue its policy of being a partner of choice for companies that wish to enter the large (and still under-served) market for therapies for respiratory ailments like COPD and asthma, or the company can choose to start developing and commercializing drugs on its own - transitioning from earning mid-single digit to mid-teens royalties to being a more fully fledged specialty pharmaceutical company. While there are risks associated with the performance of its licensing partners, clinical development risks, and potential risks from a long-term change in strategy, I believe Vectura could be almost 50% undervalued today.
Readers considering these shares should note that the U.S. ADRs are of the "F-type" and not very liquid. The London-listed shares (VEC.L) are considering more liquid and most major brokerages will allow clients to trade on major foreign exchanges like the LSE.
A Respiratory Specialist
Both Nektar and Alkermes got their start by applying their specialized knowledge and technologies to drug development partnerships with major pharmaceutical and biotech companies - accepting small royalties (as a percentage of sales) but taking on little-to-no R&D expense or clinical risk in the process.
Vectura has followed a similar path with its specialty in inhaled products. Vectura has the second-most patents for dry powder inhaler (or DPI) formulations and devices, behind Boehringer Ingelgeim, and is in the top overall for inhaler patents over the last 15 years. Vectura is no only able to transform drugs into dry powder formulations, the company offers devices like the Clickhaler, OmniHaler, Duohaler, and GyroHaler (the latter being similar to the Diskus inhaler used to administer Advair).
This dual drug and device focus is important, particularly when it comes to developing generic equivalents of respiratory drugs. It has been more challenging for companies like Teva (NYSE:TEVA) to copy bestselling drugs like Advair because it is not enough to prove that the underlying drug is the same, there must also be a delivery device that functions similarly to the original approved device. Device development is beyond the scope of what most generics can do, elevating Vectura as a partner of choice in developing generic respiratory drugs
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