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Vectura Group plc January 2017
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Disclaimer
This presentation has been organised by Vectura Group plc (the Company) in order to provide general information on the Company. This material has been prepared solely by the Company and is (i) for your private information, and the Company is not soliciting any action based upon it (ii) not to be construed as an offer to sell or issue or a solicitation of an offer to buy or subscribe for any security and (iii) based upon information that the Company considers reliable. The Company does not represent that the information contained in this material is accurate or complete, and it should not be relied upon as such. No representation, warranty or undertaking, express or implied, is or will be made with respect to the fairness, accuracy or completeness of any of the information or statement of opinion or expectation contained herein or stated in the presentation or any other such information nor shall you be entitled to rely upon it. In furnishing you with this information no obligation is undertaken to provide you with any further information, to update this information nor any other information nor to correct any information contained herein or any omission therefrom.
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Our vision and strategy
4
Progressive specialist capability build linked to portfolio evolution
Drive operational efficiency and effectiveness including merger benefits
Selective M&A focused in specialist segment
OPERATIONAL LEVERAGE ACCELERATION INNOVATION
Investment in novel and formulation device technology
Continue to maximise partnerships with generics/ analogues & novel therapies
SUSTAINED ORGANIC GROWTH
To be the leading airways disease formulation and device development experts reflected in strong novel and generic partnerships and own specialist commercialisation in niche diseases
DELIVERING OUR VISION
”
”
OUR VISION
5
A sustained focus on our core capabilities and a balanced approach to building wholly-owned specialist capability
WHOLLY-OWNED SPECIALIST ASSETS
GENERIC / ANALOGUE MOLECULE & DEVICE PARTNERING
NOVEL PATENTED MOLECULE & DEVICE PARTNERING
Industry-leading formulation and device development partnering
£
Current sustainable cash flows Additional future opportunity
Milestones & low-single digit royalties
High-value opportunities
Higher molecule and lower financial risk
Limited management control
Milestones & mid-teen royalties
High-volume opportunities
Lower molecule and financial risk
Limited management control
Direct sales revenues
High-value specialist market
Focus on known molecules to manage risk exposure
High management control
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Positioned to continue to deliver sustainable growth with risk balanced investment
Long track record of effective partnering combined with proprietary device & formulation platforms and clear plans for new added value opportunities
driving revenue, EBITDA and cash-flow growth ESTABLISHED IN-MARKET PORTFOLIO
STRONG POTENTIAL FOR ADDITIONAL PARTNER DEVELOPMENT PROGRAMMES
Unique exposure to fast growing novel and generic segments
with operational leverage and focused investment priorities
BROAD LATE-STAGE PIPELINE & EARLY INNOVATIVE PORTFOLIO
STRONG FINANCIAL DISCIPLINE
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Established in-market portfolio driving revenue, EBITDA and cash-flow growth
Sustained strong underlying business performance demonstrated in proforma1 financial highlights – HY16
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driven by recently launched products 31% +
STRONG REVENUE1 GROWTH
from further operational leverage 63% +
EBITDA1,2 PROGRESSION
robust cash generation with clear priorities for capital allocation
92m £ BALANCE SHEET STRENGTH
£99.8m £92m
At 31 March 2016 Operating activities Merger relatedoutflows
Other (net) At 30 September2016
£36.5m
£58.0m £72.0m £73.9m
FY 13/14 FY 14/15 FY 15/16 HY 16
£5.2m £16.2m £16.2m
£23.2m
FY 13/14 FY 14/15 FY 15/16 HY 16
Reported3 revenues
Reported3 EBITDA2
£4.2m (£36.9m) £24.9m
76% of reported3 revenues from recurring sources 1. Supplementary unaudited proforma financial information is presented as though the merger with Skyepharma was implemented on 1 April 2015 and excludes
acquisition accounting adjustments. This information is included in order to indicate underlying comparative performance. 2. Earnings before net financing income, tax, depreciation, amortisation, share-based compensation, share of results of associates and exceptional items. 3. As reported in Vectura’s interim results for the period ended 30 September 2016, announced 23 November 2016.
1 1 1
Strong base of recurring revenues from seven recently launched in-market inhaled assets
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Generic / analogue molecule & device partnering Novel patented molecule & device partnering
flutiform® Ultibro® Breezhaler®
Seebri® Breezhaler®
Anoro® Ellipta®
Relvar® Ellipta®/ Breo® Ellipta®
Incruse® Ellipta®
Wholly-owned specialist assets
AirFluSal® Forspiro®
Photos of Seebri® Breezhaler® and Ultibro® Breezhaler® courtesy of Novartis AG. Ultibro®, Seebri® Breezhaler®, AirFluSal® and Forspiro® are registered trade marks of Novartis AG. Anoro® Ellipta®, Relvar®/Breo® Ellipta® and Incruse ® Ellipta ® are registered trade marks of GSK, photos courtesy of GSK.
1. Formulation technology licence, product not developed by Vectura. 2. Supplementary unaudited proforma financial information is presented as though the merger with Skyepharma was implemented on 1 April 2015 and excludes acquisition accounting adjustments. This
information is presented to indicate underlying comparative performance.
3. Internal calculations based on IMS Health Data Q3 2016. € to $ exchange rate of 1.2276 based on average FX rates over the period from 1-Jan-13 to 30-Sept-16 (FactSet). 4. Calculation based upon results reported in Vectura’s interim results on 23 November 2016 for HY16.
HY 14/15 HY 16
flutiform® AirFluSal® Seebri® and Ultibro® Ellipta® products
Reported recurring inhaled revenue4
£12.8m
£41.3m
$1.6bn > TOTAL MAT IN-MARKET SALES3
23% PROFORMA2 GROWTH
Other
Ultibro® and flutiform® performing strongly with positive growth trajectory
10
$m
Ultibro®1
0
50
100
150
200
250
300
350
400$m
FY13 FY15 FY14 Last 12 months
flutiform®2
0
50
100
150
200
250
FY13 FY15 FY14 Last 12 months
$m
Further positive FLAME data presented at ERS 2016 US commercialisation rights licensed to Sunovion - a strong respiratory business with an existing COPD portfolio Expect positive impact of recent GOLD guideline changes US launch expected 2017
Continues to benefit from growing demand in EU and Japan Breath activated programme under regulatory review China COPD programme due to read-out in H1 2017 and asthma studies being initiated3
Last twelve months net sales of Seebri® and Ultibro® sales of $497m1
1. Based upon Company reported information - 12 mths ended 30 Sept 2016. 2. Internal calculations based on IMS Health Data Q3 2016. € to $ exchange rate of 1.2276 based on average FX rates over the period from 1-Jan-13 to 30-Sept-16
(FactSet) - 12 mths ended 30 Sept 2016. 3. Vectura management view.
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Unique exposure to fast growing novel and generic segments
Broad late-stage pipeline and early innovative portfolio
Broad pipeline includes seven late-stage assets and three flagship early-stage innovative assets
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7 inhaled Phase III or pre-launch programmes
PIPELINE HIGHLIGHTS AT A GLANCE 1 7
Generic / analogue molecule & device partnering Novel patented molecule & device partnering Wholly-owned specialist assets
5 2 3 4 7 6
3 1 3 2
3 flagship innovative early-stage assets
1. Ablynx programme ALX-0171.
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Vectura well positioned in key respiratory growth classes
0
2
4
6
8
10
12
14
2015 2024LAMA/LABA Generic ICS/LABA ICS/LABA/LAMA Biologics
$2bn
$10-15bn
$3-5bn
$2-5bn
$3bn
$bn
$2bn
1 Forecast estimates from Decision resources Pharmacor Asthma (2016) COPD (2015) and select analyst reports Stifel Sept 2016, Leerink May 2016, JP Morgan March 2016, Citibank June 2016, N+1 Singer June 2016, Societe Generale Sep 2016 ; G7 Biologics – Asthma only, ICS/LABA/LAMA Asthma & COPD
2 Ablynx programme ALX-0171.
KEY GROWTH CLASSES IN ASTHMA AND COPD MAINTENANCE MARKET1
VECTURA PORTFOLIO AND PIPELINE ASSETS
Product Vectura formulation
Vectura device
Partner
VR942 (Global)
Ultibro®(EU & ROW) UtibronTM (US)
Partner device (DPI)
VR315 (US)
VR632 (EU)
AirFluSal® (EU & ROW)
VR2076 (Global)
QVM149 (EU & ROW)
Partner device (pMDI)
Partner device (DPI)
VR4652 (Global)
Generic / analogue molecule & device partnering Novel patented molecule & device partnering Wholly-owned specialist assets
x
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Long track record of effective partnering combined with proprietary device and formulation platforms and clear plans for new added value opportunities
Strong potential for additional partner development programmes
VR942 Phase I study completed
Proven ability with strong partnerships and IP portfolio underpin business evolution
flutiform® launched in EU
REVENUE PROGRESSION AND RECURRING REVENUES1
£30.5m £36.5m £58.0m
£72.0m £73.9m
FY 12/13 FY 13/14 FY 14/15 FY 15/16 HY 16
60% 76%
STRONG IP PORTFOLIO
KEY EVENTS2
Seebri® launched in Europe and Japan
BREO® ELLIPTA® launched in US3
AirFluSal® Forspiro® launched in Europe
Ultibro® launched in Europe and Japan
UCB co-development deal
flutiform® launched in Japan
Acquisition of Activaero
Collaboration with Janssen Biotech Inc.
Licensed rights to VR506 (US)
FDA approval of Seebri TM & UtibronTM
Neohaler®
VR475 (EU) Phase III study begins
Merger with Skyepharma
QVM149 Phase III study begins
VR315 (US) ANDA accepted for file
Ablynx option over smart nebuliser
VR730 deal signed with Hikma
1. Merger with Skyepharma PLC completed on 10 June 2016. Revenues shown are reported revenues and therefore only include Skyepharma revenues in HY16 for the period post merger completion (10 June 2016) 2. Key events include Skyepharma events which occurred pre-merger completion (10 June 2016). 3. Anoro® Ellipta®, Relvar®/Breo® Ellipta® and Incruse ® Ellipta ® are registered trade marks of GSK, photos courtesy of GSK. Formulation technology licence, product not developed by Vectura.
48% 47% 44%
ANORO and INCRUSE® ELLIPTA® launched in US3
• 151 live patent families with over 20 licensees • >460 granted national patents in 2014-2015 and over 45 priority applications made since 2011
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Vectura capabilities well matched with further business development opportunity in dynamic global respiratory market currently valued at $40bn1
Generic / analogue molecule & device partnering Novel patented molecule & device partnering Wholly-owned specialist assets
Significant growth potential of specialist diseases with high unmet need5
Market share of generics expected to grow from 7% to 20% of value by 20203
Large, attractive and dynamic market with over 700 assets in development and over 200 in clinical phases2
Growth in new classes are offsetting value decline from generics4
MARKET DYNAMICS OUR DIVERSE PORTFOLIO & TECHNOLOGIES
In-market and pipeline generic/analogue assets with high value potential • AirFluSal® Forspiro® (EU & RoW) (Sandoz) • Generic Advair® – VR315 (US) (Hikma) • 3-5 new generic pipeline opportunities initiating In-market and pipeline asset opportunities • LAMA and LAMA/LABA: Seebri® and Ultibro® (EU & ROW)
(Novartis) – US launch expected 2017
• ICS/LABA/LAMA (Asthma): QVM149 (EU & ROW) (Novartis) and VR2076 (Global) (Mundipharma)
• Inhaled Biologics: VR942 (Global) (UCB)
Breadth of device platforms and formulation expertise, with proven track record of novel and generic partnering
• Respiratory Syncytial Virus: VR465 (Global) (Ablynx ALX-0171) • Pulmonary Arterial Hypertension: VR876 (EU & ROW) (Bayer) • Multiple potential applications for technology and formulation
expertise
1. Global Data Reports, 2016. 2. Global Data Analytics. www.globaldata.com Accessed October 2016. 3. Inhaled respiratory classes. Asthma & COPD Reports, Decision Resources, 2015/2016. 4. Asthma & COPD Reports, Decision Resources, 2015/2016. 5. Global Data Analytics. www.globaldata.com Accessed October 2016. Specialist diseases (IPF, CF, ARDS, RSV) expected to grow from $3bn to >$11bn by 2024.
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Industry-leading proprietary platforms provide access to $40bn1 global respiratory market
VECTURA PLATFORMS % OF MARKET2 PATIENT SUITABILITY
GyroHaler® Lever-operated Open-inhale -close
Multi dose Unit dose
47% Breath activated (no propellant) therefore no coordination needed to activate Typically requires some dexterity
Dose-indicating MDI actuator
38% Patients with low respiratory flow rates e.g. elderly and young
• Can be used with spacer devices frequently used for children
Familiar with other pMDI devices e.g. SABA inhalers
Dry Powder Inhalers (DPIs)
Pressurised Meter Dose Inhalers (pMDI)
Smart nebuliser technology
15%
Rapid delivery of high doses of treatments often bronchodilators (EU) and steroids (US/China) Delivery in cases where patient education is not feasible e.g. hospital or paediatric Patients unable to adopt or use other inhalers AKITA® JET
Desktop solution
FOX®
Handheld solution
1. Global Data reports 2016, Decision Resources Pharmacore 2015/16. Market defined as Asthma, COPD, Allergic Rhinitis, RSV, IPF, CF, ARDS, RSV. 2. IMS MIDAS 4Q15 Sales Data – all inhaled respiratory market revenues.
Unique FAVORITE™ technology used in smart nebuliser devices (Flow And VOlume Regulated Inhalation TEchnology)
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Tidal breathing1
(typical short and abrupt inhalation pattern)
FAVORITE ™ inhalation (slow and deep inhalation)
AKITA® JET
FOX®
High degree of control and adjustability of formulation and compounds Includes intelligent connected programming technology
Additional generic molecules re-formulated to be nebulised in AKITA® JET Platform e.g. Cystic Fibrosis treatments, antibiotics, combinations Additional partnered large molecule assets nebulised using FOX ® e.g. peptides, biologics Option for low cost handheld FOX® device to be base platform for multiple novel / generic assets
KEY FEATURES & BENEFITS VECTURA DEVICES FUTURE OPPORTUNITIES
Flow Rate & Volume Regulation allowing faster delivery, improved lung deposition, less drug required, potential to enhance efficacy, enhanced drug distribution with potential to target central and or deep lung-small airways
1. Meyer et al. 2001; Deposition von therapeutischen Aerosolen in der Lungenperipherie. Aerosole in der inhalationstherapie, ed. G. Scheuch. Vol. 5. 2001, Dustri-Verlag Dr Karl Feistle: München. 93-100.
Desktop solution
Handheld solution
Industry-leading innovative formulation and device application to inhaled biologics
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Unit dose DPI Industry-leading inhaled biologics collaboration with UCB Utilises Vectura’s proprietary high performance and reusable unit-dose dry-powder inhaler − Capable of delivering high doses of drug with high lung
delivery efficiency
And Vectura’s ParticleMaxTM formulation technology − Spray drying to produce uniform mixtures of drugs and
excipients − Particularly applicable to biologics
Multiple potential options for further partnering as inhaled biologic formulation platform
KEY FEATURES & BENEFITS VECTURA DEVICE FUTURE OPPORTUNITIES
“Leveraging proprietary ParticleMaxTM formulation
technology and our proprietary unit dose dry
powder device”
OFFERS: good blister emptying and high emitted dose; high fine particle fraction delivery; and, low flow-rate dependency.
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Appr
oved
Utibron™ Neohaler® & Seebri™ Neohaler® (US) - LABA/LAMA and LAMA: COPD
DPI
Programme/Product Partner Event
Novartis Novartis announced US commercialisation deal with Sunovion - a strong respiratory COPD partner - US launch expected 2017
VR876 (EU & ROW) - Pulmonary Arterial Hypertension
NEB Bayer First FOX® smart nebuliser approval as part of a referenced labelled product for launch in EU for delivery of iloprost (product, Ventavis®) with device trademark Breelib®
Phas
e I
VR2076 (Global) - ICS/LABA/LAMA: Asthma
pMDI Mundipharma Announced agreement to progress development of pMDI triple combination in Asthma & COPD, initially Asthma • Further potential milestone payments of
€46.5m linked to development, regulatory and launch progress of the programme
• Royalties receivable upon successful launch • Mid-single digit royalty with
potential to increase dependent upon sales
• First regulatory filings planned in the EU for late 2022/early 2023
Gui
danc
e
Continued strong business development progress post interim results announced in November 2016
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Strong financial discipline with operational leverage and focused investment priorities
Our capital allocation priorities
Investing for growth and maintaining
capacity to accelerate development
”
”
Continued investment in net R&D
Capital expenditure to support growth
Initiatives to expand manufacturing capacity and establish a second line to meet growing demand for flutiform®
Within £15m-£20m range for FY2017
Maintaining balance sheet capacity
Modest operational cash balances
Accelerating growth potential through selective M&A
Target returns on investment > cost of capital Strict financial discipline
22
Within £65m-£75m range for FY2017
Strategic approach to R&D investment
23
GENERIC / ANALOGUE MOLECULE & DEVICE PARTNERING
NOVEL PATENTED MOLECULE PARTNERING
Typical % of R&D Typical economics & risk Pipeline asset
examples Strategic evolution
WHOLLY-OWNED SPECIALIST NOVEL ASSETS
35% - 40%
VR942 (UCB) VR465 (Ablynx)1
Continue with strategic
partnerships
Sales and development milestones
Low single-digit royalties on high value opportunities
Lower financial risk, higher molecule risk
10% - 20%
VR315 (Hikma) VR730 (Hikma) VR506 (Hikma) VR632 (Sandoz)
45% - 50%
VR475 VR647
Sales and development milestones
Mid-teen royalties on high volume opportunities
Lower financial and molecule risk
Higher margin value capture
Under management control
Focus on known molecules to manage risk exposure
Continue own development at current resourcing levels
and evaluate options for value capture
£
£
£
£
£ WHOLLY-OWNED SPECIALIST ASSETS
GENERIC / ANALOGUE MOLECULE & DEVICE PARTNERING
NOVEL PATENTED MOLECULE & DEVICE PARTNERING
1. Ablynx ALX-0171.
Good progress with merger integration and synergy delivery
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LYON SYNERGY DELIVERY ON TRACK
PIPELINE REVIEW COMPLETE
Commenced development of VR588, an innovative inhaled pan-JAK therapy
Commenced initial development of 3 to 5 generic inhaled development opportunities
As previously announced, ceased development of pre-clinical SKP-2075
New organisation structure being implemented
On track to deliver at least £10 million synergies per annum from 2018
On-going potential business development opportunities have increased since the merger and there are a number of meaningful prospects under discussion
A number of operational and business development initiatives are underway to maximise the value of Vectura’s high-quality manufacturing facility in Lyon - Two new deals signed in Q4 2016
Self-commercialisation focus on niche assets with option to unlock further potential through selective M&A
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Specialist focus
High level of unmet medical need
M&A acceleration rationale
Limited size of specialist clinical trials
Limited number of active competitors with commercial capability
Limited commercialisation investment c. 75-100 FTEs in US
Higher value margin capture
High number of novel formulation options using Vectura proprietary technology and device platforms in specialist setting
US a priority
Focus on accessing or acquiring existing specialty care capability
Provides platform for wholly-owned assets
Avoids opportunity cost of establishing own platform
Provides leverage for series of future wholly-owned assets and in-licensing
26
Anticipated news flow 2017 Ap
prov
ed
Utibron™ Neohaler® (US) - LABA/LAMA: COPD
DPI
Programme/Product Partner Event
Seebri™ Neohaler® (US) - LAMA: COPD
DPI
Novartis
Novartis
US launch expected 2017
US launch expected 2017
VR876 (EU & ROW) - Pulmonary Arterial Hypertension
NEB Bayer Launch expected H1 20171
Phas
e I
VR647 (US) - ICS: Severe paediatric asthma NEB
VR2076 (Global) - ICS/LABA/LAMA: Asthma pMDI
Wholly-owned
Mundipharma
Phase 1 study to start H1 enabling P2 start in H2 2017
Phase I update
Pre-
clin
ical
VR315 (US) - Generic Advair® DPI
VR942 (Global) - Inhaled biologic: uncontrolled asthma
DPI
Hikma
UCB
GDUFA goal date 10 May
Initiation of Phase II trial 2017
flutiform® - ICS/LABA: Asthma pMDI Mundipharma – Patient enrolment into asthma study in China – Regulatory progress with breath-actuated version – Commercialisation in Latin America
1. Vectura Management view.
27
Positioned to continue to deliver sustainable growth with risk balanced investment
Long track record of effective partnering combined with proprietary device & formulation platforms and clear plans for new added value opportunities
driving revenue, EBITDA and cash-flow growth ESTABLISHED IN-MARKET PORTFOLIO
STRONG POTENTIAL FOR ADDITIONAL PARTNER DEVELOPMENT PROGRAMMES
Uniquely portfolio exposure to fast growing novel and generic segments
with operational leverage and focused investment priorities
BROAD LATE-STAGE PIPELINE & EARLY INNOVATIVE OPPORTUNITIES
STRONG FINANCIAL DISCIPLINE
