Vectura Group plc announced that Glaxo Group Limited and GlaxoSmithKline Research & Development Limited have signed a worldwide non-exclusive agreement to license some of Vectura’s dry powder drug formulation patents in relation to two late stage development compounds in GSK’s respiratory product pipeline.

Under the terms of the agreement, Vectura will receive up to £20 million in up-front and milestone payments. An initial up-front payment of £10 million will be received in September 2010 with the remaining £10 million expected to be received by the time both compounds are launched. In addition, Vectura will earn royalties capped at certain levels of sales of these products. The maximum annual royalties payable to Vectura under this license agreement will be £13 million.

The majority of treatments for asthma and COPD are delivered by inhalation. Global markets for these treatments are valued in excess of $25 billion today and are expected to grow by 30% over the next 10 years. Vectura remains focused on the respiratory market. With the benefit of Vectura’s range of enabling technologies, including both inhalation devices and formulation technologies, the Company is well placed to capture value from this large market in a number of ways. Today’s deal with GSK, one of the world’s leading companies developing therapies for the treatment of asthma and COPD, is one such example.

Dr Chris Blackwell, Chief Executive of Vectura, commented: “GSK is one of the world’s leading developers of innovative respiratory medicines and I believe this deal reflects the importance of Vectura’s respiratory technology IP. The non-exclusive nature of this agreement also allows us to continue our efforts to deliver further value for shareholders from our inhaled therapy technologies in the future”