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May 13, 2013

Vectura, Chinese Partners Form $65M Respiratory JV

  • U.K.-owned Vectura Group said today it formed a RMB 400 million ($65 million) joint venture with two Chinese partners aimed at commercializing new respiratory products in China and the rest of Asia.

    Vectura Group has established Tianjin Kinnovata Pharmaceutical with Tianjin KingYork Group, a Chinese pharmaceutical company that specializes in manufacturing corticosteroid based products, and Zendex Bio Strategy, a private equity investor based in Hong Kong.

    Kinnovata will initially use Vectura’s Clickhaler® and Duohaler® dry powder inhaler (DPI) technology platforms to commercialize products intended to address unmet respiratory medical needs in Asia’s asthma and chronic obstructive pulmonary disease (COPD) markets. Vectura has worked on developing the product pipeline with KingYork and Zendex since late 2011. 

    “There is a clear, large, and growing need in China and other Asian markets for more affordable, locally produced asthma and COPD products and, for some time, we have been looking for the best means of entry,” Vectrura CEO Chris Blackwell said in a statement“Combining Vectura’s established technology with KingYork’s local regulatory expertise and experience in corticosteroid products, Kinnovata has an opportunity to capture a significant market share of the growing Asian respiratory market.”

    Vectura said it is also providing training and other expertise to Kinnovata as it prepares to undertake its first Clickhaler clinical studies in Chinese patients.  An application for the import of Asmasal® Clickhaler (salbutamol) has been filed with the Chinese State Food and Drug Administration.

    In addition, a separate R&D cooperation agreement has been established between Kinnovata and the Shanghai Institute of Pharmaceutical Industry to undertake the development of several DPI products on behalf of Kinnovata. Long-term, Kinnovata said it will develop, manufacture, and commercialize respiratory products for Asia’s regional markets.

    KingYork is expected to hold a 50% equity share, with Vectura holding 35% and Zendex and partners, the remaining 15%. Vectura said its equity stake is expected to be valued at RMB 140 million ($22.8 million) upon closing of the joint venture deal, with the company also receiving royalties through 2030 on certain products sold by Kinnovata.

    Vectura said it based the value of its equity stake and potential future royalty streams equal the value attributed to intangible and tangible assets relating to the Clickhaler and Duohaler devices. Assets include manufacturing equipment, formulation know-how, and the regulatory dossiers for European approved products delivered in Clickhaler, including salbutamol and budesonide.

    Based on the value of Vectura’s equity stake, KingYork’s share would be about RMB 200 million ($32.5 million), and Zendex’, approximately RMB 60 million ($9.8 million). The combined stake of KingYork and Zendex includes cash of £19.8 million ($30.4 million), technology assets, intellectual property, and land at KingYork’s pharmaceutical business park in Tianjin, where Kinnovata will establish its manufacturing facility.

    Chris Chan has been appointed CEO of Kinnovata. He previously served as an advisor to Zendex.


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