LONDON – Vectura plc is to acquire the privately owned German respiratory diseases specialist Activaero GmbH for £108 million (US$180.3 million), expanding the development pipeline by seven products and gaining access to new drug delivery technologies.

The acquisition will be funded through cash and shares, with Vectura paying £79 million at completion in the form of £38 million cash and £42 million in shares, followed by a deferred payment of £29 million due on Aug. 1, 2015. In addition to the transaction price, Activaero investors are eligible for up to £5 million in relation to future transactions involving the company’s technology.

Chris Blackwell, CEO of Vectura, said the acquisition fulfils a number of strategic objectives in a single move, significantly expanding the pipeline and broadening the therapeutic focus, while providing the opportunity to deliver a wider range of compounds, from small molecules to biologics.

“It is a big deal, that transforms the company and brings in a lot of good things to move us forward,” Blackwell told BioWorld Today. “We’ve been waiting for quite a while to do something like this.”

Activaero and Vectura got to know each other last summer, when there were discussions about a potential license of Activaero’s lead product Favolir. “We soon realized this was something serious, that fits very well and that [Activaero] ticked the boxes really well in terms of our other priorities,” Blackwell said.

Both the initial and deferred cash payments will be made from existing resources. However, at the same time, Chippenham, UK-based Vectura has raised £52 million in a placing of 33.6 million new shares. The majority of the proceeds will be devoted to progressing Favolir, which now becomes the most advanced program in Vectura’s portfolio. Vectura’s development portfolio consists of six products, three of which are partnered.

“The placing has gone down really well, as we knew it would when talking to investors,” Blackwell said. “Favolir is going to be our lead product, so we wanted to make sure its funding needs are met.” While the uplift in the market helped the placing to an extent, the main attraction was a health care investment opportunity offering good returns and a growth profile, and one that is not high risk. “The share price has held up very well today,” Blackwell observed.

Shares in Vectura (LSE:VEC) closed at £1.58 on Thursday.

Activaero’s two lead programs, Favolir for treating severe asthma in adults and children, and Scipe for mild and moderate asthma in children, open up the possibility of establishing specialist sales forces in the U.S. and Europe, allowing Vectura to retain greater value.

Gemunden, Germany-based Activaero was founded in 1999 and has 50 employees across two sites. In 2013, it had sales of €10.2 million (US$14.4 million) from licensing fees, milestones, services and sales of its smart nebulizer technology. Blackwell said it is “culturally very important” that the company is fully integrated into Vectura. There will be a review of the business and the portfolio once the acquisition is completed; however, savings of €1.5 million already have been identified.

The Activaero nebulizer technology gives fine control over how much drug gets into the central and peripheral parts of the lung, and can be tuned to the requirements of individual patients. That is important for anti-inflammatory drugs that need to reach the small airways to provide optimal benefits.

Activaero has data to show it can optimize nebulization to give more efficient delivery of a range of drugs, with the increase in efficiency allowing dosing to be reduced. That is a significant addition to Vectura’s dry powder drug delivery technology. “It provides the opportunity to re-invent products with enhanced benefits and to look at delivering novel drugs,” Blackwell said.

Favolir has completed a phase IIb study in the treatment of severe adult asthma, with the data possibly providing the basis of a marketing application in Germany in the second half of 2014. Vectura is planning to start a phase III European trial later in the year and will look at how to accelerate the U.S. development timeline, following completion of the acquisition.

Activaero also has a pulmonary hypertension product in phase III development, which is partnered by an unnamed big pharma company. Blackwell said the program is being run and funded by the partner. “The transaction brings in a number of partners, none of which are existing partners of Vectura.”