Vectura Group plc Confirms Sandoz Pharma A.G. as Partner on VR315 and VR632

Chippenham, UK – September 9 2008: Vectura Group plc (LSE: VEC) (“Vectura”), the inhalation product development company, announces that Sandoz, the generics division of Novartis, is the exclusive licensee in certain territories for Vectura’s combination asthma/COPD products, VR315 and VR632. Combination therapy for asthma and COPD is the biggest and fastest growing sector of the respiratory market, with annual sales currently exceeding US$9 billion.

VR315 is being jointly developed as a generic product delivered with Vectura’s GyroHaler® dry powder inhaler (DPI) delivery device. Vectura licensed the European rights for VR315 to Sandoz in March 2006 and the US rights were licensed to them in December 2006. In December 2007, Sandoz exercised an option to license VR632 in Europe. VR632 is also being developed as a generic combination product using the GyroHaler® DPI.

Vectura is due to receive up to €38 million in milestones and development funding prior to the launch of VR315 and VR632 in Europe, and will earn royalties on all product sales as well as a margin on the commercial manufacture and supply of GyroHaler®. Vectura is also due to receive a share of profits from all Sandoz VR315 US sales, as well as up to $63 million upon achievement of pre-determined development and commercial milestones. Costs for the US development of VR315 are being shared between Vectura and Sandoz on a defined basis.

At a Sandoz investor day on 3 September, a video of the manufacturing facilities for these products, which are now operational, was shown and can be found as part of the web cast of the event at Sandoz has invested over $50 million in these manufacturing facilities.

Dr Chris Blackwell, Chief Executive of Vectura, commented: “These respiratory products are major opportunities for both Sandoz and Vectura. The investments made by both companies are now visible, as is the potential to derive significant value from them.”

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