Specialist pharmaceuticals group Vectura Group (LON:VEC) saw its shares rocket by more than 20% to 58.25p this morning in news that Glaxosmithkline (LON:GSK) had 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 £20m in up-front and milestone payments. An initial up-front payment of £10m will be received in September 2010 with the remaining £10m 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 £13m.

The majority of treatments for asthma and COPD (chronic obstructive pulmonary disease) are delivered by inhalation. Global markets for these treatments are valued in excess of $25bn today and are expected to grow by 30% over the next 10 years. Vectura remains focused on the respiratory market. It said today's deal with GSK, one of the world's leading companies developing therapies for the treatment of asthma and COPD, was an example of how its range of technologies, including both inhalation devices and formulation technologies, could capture value from this large market.

Dr Chris Blackwell, the chief executive of Vectura, said: "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.”

In March, shares in Vectura plummeted on news that Sandoz was handing back the US development and commercialisation rights for VR315, its combination product for asthma/COPD. However, there was better news in May when the company confirmed that it was set to land a $7.5m milestone payment from drugs giant Novartis. That was triggered by confirmation that Phase III clinical trials were set to get underway on Vectura's flagship candidate QVA149 for the treatment of COPD.

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