Interim Management Statement

Interim Management Statement

Chippenham, UK - 3 August 2010: Vectura Group plc (LSE: VEC) ("Vectura") today publishes an Interim Management Statement for the period from 1 April 2010 to 2 August 2010, and announces a restructuring of its Research and Development ("R&D") activities aimed at achieving a reduction in costs of approximately £6m per annum from the next financial year.

Review of strategy and R&D restructuring proposals

Vectura aims to accelerate the timelines to achieving profitability and sustainable cash generation by refocusing and restructuring its R&D operations. This means reducing the cost base and focusing on the nearer-term projects. Specifically, Vectura proposes:

·; To focus on partnered programmes and branded generic opportunities, which remain key value drivers

·; To seek licensing partners for existing specialty products with a strategy of not progressing these products beyond Phase II proof of concept

·; To exploit the value of Vectura's technologies, technical expertise and development capabilities

·; To continue to explore new partnerships focussed on respiratory medicines

·; Proposed closure of its Nottingham facility and consolidation of its formulation development activities at its Chippenham facility

Pipeline update

·; NVA237 (COPD) - Phase III clinical studies on-going and Novartis expect to file in 2011

·; QVA149 (COPD) - Phase III clinical studies started in April 2010, triggering a $7.5m (£5.1m) milestone payment to Vectura; Novartis expect to file this product in 2012

·; VR315 EU and VR632 EU (asthma/COPD products, partnered with Sandoz) - Good progress continues on development for the European markets

·; VR315 US (asthma/COPD) - Development continues whilst Vectura further assesses FDA requirements and partnership opportunities; $9.5m (£6.2m) payment from Sandoz US received in May 2010

·; VR040 (Parkinson's disease) - Phase II "at home" study clinical phase complete; results expected in 2010. Vectura is seeking a licensing partner

·; VR496 (cystic fibrosis) - Phase II proof-of-concept results expected in early 2011. Vectura is seeking a licensing partner

·; VR506 (generic inhaled corticosteroid for asthma) - Good progress continues on preparations for clinical development

Financial update

On 7 June 2010, Vectura reported its full year results for the year ended 31 March 2010:

·; Loss after taxation was £10.2m (FY 2008/09 loss of £16.7m)

·; Cash and cash equivalents decreased by £9.9m to £64.1m

Vectura's performance from 1 April 2010 to date has been in line with the Board's expectations. A one-off restructuring charge of up to £3m is expected in the current financial year. Following the proposed restructuring, Vectura's current forecast of research and development expenditure will be reduced by approximately £6m per annum with effect from 1 April 2011.

Outlook

Vectura looks forward to late-stage progress on partnered programmes, continued progress with VR315 US and clinical trial results for both VR496 and VR040. Licensing activities continue in all areas; products, technologies and intellectual property from which we expect to provide additional positive news. The Board believes that Vectura has the financial resources, the product portfolio, and the technological know-how to deliver major value to its shareholders.

Dr Chris Blackwell, Chief Executive of Vectura, commented:

"In a more cautious environment both in the sector and the economy, we believe it prudent to reduce the risk profile of Vectura whilst preserving the upside. We are accelerating our timelines to profitability and sustainable cash generation by refocusing and restructuring our R&D operations. This means reducing our cost base and focusing on nearer-term projects. Vectura continues to enjoy excellent technological knowhow, a robust pipeline and strong partners supported by a healthy cash position. The steps taken today will help secure the best long-term future for Vectura."

Enquiries

Notes for editors

About Vectura

Vectura Group plc is a company that develops inhaled therapies principally for the treatment of respiratory diseases. Vectura's main products target diseases such as asthma and chronic obstructive pulmonary disease (COPD), a growing market that is currently estimated to be worth in excess of $25 billion. Vectura also develops products for other lung pathologies and non-respiratory diseases.

Vectura has eight products marketed by its partners and a portfolio of drugs in clinical and pre-clinical development, some of which have been licensed to major pharmaceutical companies. Vectura seeks to develop certain programmes itself where this will optimise value. Vectura's formulation and inhalation technologies are available to other pharmaceutical companies on an out-licensing basis where this complements Vectura's business strategy.

Vectura has development collaborations with several pharmaceutical companies, including Novartis, Sandoz (the generics arm of Novartis), Baxter, GlaxoSmithKline (GSK) and Otsuka. For further information, please visit Vectura's website at www.vectura.com

Forward-looking Statements

This press release contains forward-looking statements, including statements about the discovery, development and commercialisation of products. Various risks may cause Vectura's actual results to differ materially from those expressed or implied by the forward-looking statements, including adverse results in clinical development programmes; failure to obtain patent protection for inventions; commercial limitations imposed by patents owned or controlled by third parties; dependence upon strategic alliance partners to develop and commercialise products and services; difficulties or delays in obtaining regulatory approvals to market products and services resulting from development efforts; the requirement for substantial funding to conduct research and development and to expand commercialisation activities; and product initiatives by competitors. As a result of these factors, prospective investors are cautioned not to rely on any forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.