Vectura : initiates legal proceedings against GSK

Vectura Group plc

Vectura initiates legal proceedings against GSK relating to option-to-licence patent agreement and confirms 2016 revenue guidance

This announcement includes inside information

Chippenham, UK - 27 July 2016:Vectura Group plc (LSE: VEC) ('Vectura', 'the Group'), an industry-leading inhaled airways disease focused business, announces that it has received formal notification from GlaxoSmithKline ('GSK') that GSK does not wish to exercise the option to take a license to any additional patents under the patent licence and option agreement with Vectura dated 5 August 2010 for GSK's Breo Ellipta/Relvar Ellipta, Anoro Ellipta and Incruse Ellipta products (the 'Ellipta products').

In response to this, Vectura has filed a patent infringement lawsuit against GSK claiming infringement of Vectura's U.S. Patent No. 8,303,991 in the United States District Court for the District of Delaware. Whilst the lawsuit has been filed, Vectura continues to remain open to finding a mutually acceptable solution in order to avoid costs and potential uncertainty over royalties that have, up to now, been subject to a cap of £13 million per calendar year.

The separate licence agreement with GSK relating to the legacy Skyepharma dry powder formulation technology used in the Ellipta products is unaffected with the potential for royalty income of up to £9 million per annum.

Patent licence and option-to-licence agreement

In August 2010, GSK and Vectura entered a license and option-to-licence agreement encompassing a number of Vectura patent families relating to various formulation technologies relevant to GSK's Ellipta products. A number of these patents expire in 2016. GSK had the option to extend the term of the agreement by licensing additional patent families on or before 31 July 2016, but has formally notified Vectura that it does not wish to do so.

Despite the notification from GSK, the Directors believe that revenues for the current financial year ending December 2016 remain in line with current expectations.

James Ward-Lilley, Vectura's CEO commented:

'As a UK-based R&D collaborator and formulation specialist, the Group undertakes to build strong collaborative partnerships respecting important and valued IP and know how. Vectura has now issued proceedings in the US to enforce its patents relating to these products. Vectura has a robust, diversified business with a series of growing revenue streams from products at relatively early stages of their respective sales trajectories. The focus of the organisation is the progression of the portfolio and leveraging the benefits of the recent merger with Skyepharma including the additional revenues of new product opportunities and delivery of committed cost synergies.'

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About Vectura

Vectura, a FTSE 250 company listed on the London Stock Exchange (LSE: VEC), is an industry-leading inhaled airways disease focused business with proprietary formulation and devices across DPI, pMDI and smart nebulisation platforms. With our extensive range of technologies, capabilities and collaborations, we believe we can become a leader in the development of inhalation products, increasing our ability to help patients suffering from respiratory diseases. In June 2016 Vectura completed a merger with Skyepharma PLC.

Vectura has seven inhaled, four non-inhaled and ten oral products marketed by partners with growing global royalty streams, and a portfolio of drugs in clinical development, a number of which havelicence agreements with several global pharmaceutical and biotechnology companies including Hikma, Novartis, Sandoz, Mundipharma, Kyorin, Baxter, GSK, UCB, Ablynx, Grifols, Chiesi, Almirall, Janssen, and Tianjin KingYork.

For further information, please visit Vectura's website atwww.vectura.com.

Forward-looking statements

This press release contains forward-looking statements, including statements about the discovery, development and commercialisation of products. Various risks may cause Vectura's actual results to differ materially from those expressed or implied by the forward-looking statements, including: adverse results in clinical development programmes; failure to obtain patent protection for inventions; commercial limitations imposed by patents owned or controlled by third parties; dependence upon strategic alliance partners to develop and commercialise products and services; difficulties or delays in obtaining regulatory approvals to market products and services resulting from development efforts; the requirement for substantial funding to conduct research and development and to expand commercialisation activities; and product initiatives by competitors. As a result of these factors, prospective investors are cautioned not to rely on any forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.