Gross profit for the six months to September was up by 86% to £21.2m from £11.4m due to a rise in product licensing milestones as a proportion of total revenue.

R&D expenditure rose by 15% to £18.5m from £16.1m. Vectura said it expected investment to continue to increase as key products moved to late-stage development.

Royalty income increased by 15% to £6.8m, with ADVATE contributing 72% of the total at £4.9m, up from £3.9m.

Product licensing revenues were £7.1m, previously £0.5m. These included £5.8m of milestones received from Sandoz for VR315, which were recognised in full during the period.

Technology licensing revenues rose to £5.1m from £2.7m. Pharmaceutical Development Services revenues exceeded expectations at £3.6m, up from £3.1m.

The group had a net cash inflow of £2.3m, compared with a £5.0m outflow a year ago.

Cash and equivalents at 30 September were £76.3m, up from £74.0m at 31.

Chief executive Chris Blackwell said Vectura had made considerable financial and operational progress since the beginning of the financial year.

The start of the Phase III NVA237 trial and impressive data on improvement in lung function shown with QVA149 had increased confidence in the market potential of both products for the treatment of patients with chronic obstructive pulmonary disease.

'Building on this performance, our key objectives in 2010 are the initiation of the QVA149 Phase III studies, ongoing progress on VR315, and presentation of clinical data on VR040 and VR496.'

Vectura said it was focused on becoming a sustainably cash-generative business following receipt of substantial milestone and royalty revenues from its partnered late-stage respiratory programmes.

'In the short-term we will continue to manage cash carefully and fund increased investment in our own proprietary development activities from both current revenue streams and cash resources.'

The group planned to establish an infrastructure in the US market, ultimately aimed at exploiting the commercial value of its products.

Story provided by Business Financial Newswire