Staff Writer

Shares in Vectura Group plc fell more than 24 percent Thursday in London trading on news that the company's partner, Novartis AG's Sandoz unit, gave back U.S. control of Vectura's asthma drug candidate, VR315.

In the European portion of the original deal there was no change to the agreement signed in April 2006, and Sandoz will continue to be fully responsible for the development, manufacture and commercialization of the product, according to Vectura.

Regaining full control of the product in the U.S. is part of Vectura's strategy to become a cash-generative specialty pharmaceutical company, the Chippenham, UK-based company said. "VR315 will form the cornerstone of Vectura's nascent US operations," the company said in a statement.

Vectura will receive an additional payment of $9.5 million from Sandoz in the second quarter of 2010, following a $6 million milestone received last year and $2 million received in 2006. Further potential payments to Vectura may be generated under the revised agreement.

Under the revised agreement, Vectura regains full rights and responsibilities for the development and commercialization of VR315 in the U.S. and is released from its profit share obligations.

Sandoz will provide a loan facility of up to $25 million to help Vectura's development and commercialization of VR315 in the U.S.

Branded combination dry powder inhaler (DPI) therapy is the biggest sector of the respiratory market, with annual sales in excess of $10 billion, according to Vectura. "Such products have the potential to provide a large value opportunity as generics or branded generics," the company said.

Piper Jaffray analyst Sam Fazeli stated in a research note, "We continue to believe that the most likely route forward for VR315 is a branded generic [505b2 submission] route, which will require clinical trials."

Shares in London-based GlaxoSmithKline plc, maker of Advair for asthma and chronic obstructive pulmonary disease, were up $1.42 or 3.76 percent, closing at $39.22 on the New York Stock Exchange.

Shares in Vectura (LSE:VEC) were down £15.25 closing at £48.25 (US$73.54).