Shares in pharmaceutical business Vectura (VEC) fell sharply after its severe asthma treatment failed to prove effective versus placebo in Phase III trials.
Vectura has been working on the VR475 treatment for several years, having taken ownership of the technology as part of its 2014 acquisition of Activaero.
It was hoped that VR475 could provide help for people suffering from the most severe forms of asthma.
While Panmure Gordon analyst Julie Simmonds argues that VR475 is not a ‘major contributor’ of value to Vectura, investors may disagree given the implied estimated £40m hit to pre-tax profit this year.
A BIG BLOW FOR INVESTORS
Shares in Ventura have slumped more than 13% to 67.35p in morning trade on Monday, valuing the business at approximately £450m.
In Simmonds' view, Vectura's value is more closing intertwined with its Flutiform and Ultibro, less severe asthma and pulmonary treatments, and other respiratory generic programmes.
Vectura has ditched the development and partnership of VR475, which uses a nebulisation device and budesonide to help treat adult and adolescent sufferers of severe asthma.
Approximately 250,000 adults and children in the UK have severe asthma problems, according to Asthma UK.
DAMAGE TO PROFIT LIMITED TO 2018?
Looking ahead to the 2019 financial year, the company says the impact to earnings before interest, tax, depreciation and amortisation, as well as R&D cost changes, are expected to be ‘broadly neutral’.
An update on research and development guidance for 2019 has been pencilled in for early next year.
Shore Capital analyst Adam Barker says ‘significant differences’ in secondary endpoints between VR475 and placebo could bode better news for the ongoing VR647, a similar treatment specifically for children suffering from asthma.
