UK respiratory technology companies Vectura and SkyePharma have completed a merger to form the Vectura Group.
Implications | An all-shares merger of the United Kingdom (UK) biotech companies Vectura and SkyePharma was completed on 10 June 2016, with Vectura buying SkyePharma in a GBP441 million (USD629 million) deal to form the Vectura Group. |
Outlook | The merged company is expected to become an industry-leading specialist in inhalation devices for patients with respiratory conditions, including asthma, with an estimated worth of GBP1 billion. |
Both component companies of the newly formed Vectura Group have strong portfolios in the respiratory drug sector and in proprietary inhaler technologies, including dry powder inhalers, pressurised metered-dose inhalers, and nebulisers, for the treatment of asthma, chronic obstructive pulmonary disease (COPD), emphysema, chronic bronchitis, and other respiratory conditions.
The companies have stated that the merger is expected to lead to cost savings, along with pooling of resources and expertise, and should provide a major player in the inhalation device sector, with broad access to the global inhaled respiratory market, worth GBP35 billion (USD50 billion) in 2015. The two pipelines are complementary and integration is expected to create a company with an estimated worth of GBP1 billion, generating more than GBP150 million per year.
SkyePharma shareholders will receive 2.79 Vectura shares for each share they own and may take 15% in cash.
The combined Vectura Group will have a balanced product portfolio and an evolving pipeline, with 21 launched products – of which nine are inhalation-based – and more than 20 products and technologies in the development pipeline. The new Vectura Group's nine marketed inhalation products are:
• flutiform ICS-LABA – a fixed-dose combination of fluticasone propionate and formoterol fumarate dehydrate for asthma in patients aged 12 years and over, delivered via SkyePharma's flutiform metered-dose inhaler – marketed in the European Union (EU) by Mundipharma (UK) and in Japan by Kyorin;
• Ultibro Breezhaler LABA-LAMA – a once-daily inhaled fixed-dose combination of indacaterol and glycopyrronium bromide, approved in the EU as a maintenance bronchodilator for adult COPD – co-developed by Sosei (Japan) and licensed to Novartis (Switzerland);
• Seebri Breezhaler LAMA – inhaled glycopyrronium bromide as a maintenance bronchodilateor for adult COPD – co-developed by Sosei and licensed to Novartis;
• AirFluSal Forspiro ICS-LABA – an innovative Vectura inhaler with an inhaled combination of fluticasone propionate and salmeterol, for asthma and/or COPD – licensed to Sandoz (Germany; a subsidiary of Novartis);
• Advate (antihaemophilic factor (recombinant)) – a serum-free Factor VIII product for the treatment of haemophilia A – marketed worldwide by Baxter;
• Adept (icodextrin) – a 4% icodextrin solution used in surgery to protect against post-surgical adhesions – licensed to Baxter;
• Anoro Ellipta LAMA-LABA – a multi-dose dry powder inhaler delivering umeclidinium and vilanterol, formulated by GlaxoSmithKline (GSK) using proprietary Vectura technology, for COPD;
• Relvar Ellipta/Breo Ellipta ICS-LABA – a multi-dose dry powder inhaler delivering fluticasone furoate and vilanterol, formulated by GSK using Vectura's proprietary technology; and
• Incruse Ellipta LAMA – a multidose dry powder inhaler delivering umeclidinium, formulated by GSK using Vectura's proprietary technology.
In the company's merged development pipeline, drug formulations will be developed using the proprietary dry powder inhalers PowderHale, PowderMax, and Skyeprotect for small molecules, ParticleMax for inhaled biologicals, and the SkyePharma-originated metered-dose inhalers SkyeDry, SkyeStabe, SkyeFine, and IDD-P. In addition, Vectura expects to maximise the potential of its FAVORITE (flow and volume-regulated inhalation technology) platform in conjunction with SkyePharma formulation expertise.
Outlook and implications
In 2015, SkyePharma reported revenue of GBP95.9 million, with operating profits of GBP31.5, including first royalty payments from the Flutiform asthma inhaler. Vectura pre-merger had revenues of GBP72.0 million in the 12-month period ending 31 March 2016, a 24% year-on-year (y/y) increase, and royalty revenues of GBP39.2 million (up 56% y/y).
Vectura's sales were impacted by the January 2016 expiry of the patent for its haemophilia A Factor VIII therapeutic Advate, developed in collaboration with Baxter (United States). However, Vectura currently anticipates late-2016 product launches for its Utibron Neohaler LABA/LAMA (indacaterol and glycopyrronium bromide) and Seebri Neohaler LAMA (glycopyrronium bromide), both for COPD and partnered with Novartis.
This is the latest of many mergers between mid-size biotech companies aimed at pooling resources and at minimising duplication of roles and offsetting depleting income from off-patent drugs (see United States – Ireland: 1 June 2016: Ireland-based Jazz Pharmaceuticals announces USD1.5-bil. acquisition of Celator and United Kingdom: 31 May 2016: Shire comes closer to dominating rare diseases market as shareholders approve Baxalta merger). Vectura estimates this merger will save GBP10 million per year by 2018 while uniting complementary development portfolios with little overlap. The agreement will create a major worldwide player in respiratory technology.