UPDATE 2-Vectura revenue up, key drugs to start Phase III
* Year revenue up 24 pct, beating forecasts
* After-tax loss reduced by 13 pct
* $15 mln due as NVA237 and QVA149 set to enter Phase III
* CEO says Novartis/Schering news positive for Vectura
* Shares up 1.5 pct
(Adds CEO interview, analyst comment, shares)
LONDON, May 19 (Reuters) - British inhaled drug specialist Vectura (VEC.L) reported a bigger-than-expected rise in full-year revenue and a smaller loss, and said on Tuesday two key new drugs were set to enter final-stage clinical tests.
The group welcomed news that its partner Novartis (NOVN.VX) was buying up rights to a combination lung drug being developed with Schering-Plough Corp SGP.N as evidence of Novartis's strong commitment to respiratory medicine.
Revenue in the year ended March rose 24 percent to 31.2 million pounds ($48 million), ahead of Reuters Estimates consensus forecasts of 26 million, while the loss after tax fell 13 percent to 16.7 million, equivalent to 5.2 pence per share.
Year-end cash was 74 million pounds.
Piper Jaffray analyst Sam Fazeli said the good results were driven by incremental increases on all product and revenue lines, as well as weaker sterling. The shares rose 1.5 percent.
Vectura said its NVA237 experimental drug for "smoker's lung", or COPD, would start pivotal Phase III trials by June, while QVA149 -- which combines NVA237 with Novartis's QAB149 -- was expected to enter Phase III in the fourth quarter.
Both drugs are being partnered with the Swiss group and the start of the late-stage tests will trigger two payments of $7.5 million each to Vectura.
Novartis is looking at various options for using QAB149 in combination with other drugs and has also just taken over worldwide rights to an experimental combination therapy including Schering-Plough's mometasone steroid treatment. [ID:nLJ137868]
Vectura Chief Executive Chris Blackwell said this was positive for his company, since it strengthened Novartis's position and could potentially lead to additional use of NVA237 in combination with a steroid.
"If they do that, either as a double combination product or even a triple combination product, then clearly we could earn more revenues from that," he told Reuters.
"We've had no indication from Novartis that that is their intention but I think this announcement today is a good sign for us in that they are strengthening their hold on the third element that will be required."
Vectura is also working with Sandoz, the generics arm of Novartis, on two other lung drugs widely believed by analysts to be generic versions of GlaxoSmithKline's (GSK.L) Advair and AstraZeneca's (AZN.L) Symbicort.
Vectura said "good progress" was being made with both the generics -- VR315 and VR632 -- which are being developed for asthma and chronic obstructive pulmonary disease (COPD), but it did not give further detail.
Analysts view them as potential $1 billion-plus products, since Advair sold 4.1 billion pounds worldwide last year and Symbicort $2.0 billion.
"They are very significant products and we think they will be major value plays in the whole respiratory market," Blackwell said. ($1 = 0.6516 pound) (Reporting by Ben Hirschler; Editing by Dan Lalor and Simon Jessop)
