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Vectura Group Plc: Interim Management Statement 3 Months Ended 31 December 2007

Chippenham, UK – January 17 2008: Vectura Group plc (LSE: VEC) (“Vectura”), the pulmonary product development company focused on lung and neurological diseases, is today issuing its Interim Management Statement (“IMS”). This IMS relates to the three month period from 1 October 2007 to 31 December 2007 and contains information up to the publication of this IMS (“the period”).

Highlights:
• Milestone from collaboration with Boehringer Ingelheim (€10 million cash payment and a €5 million equity investment received in December 2007).
• Milestone (€3 million received in October 2007) on VR315 (Vectura’s generic combination product in development for asthma and COPD with an undisclosed partner).
• Progress on development of NVA237 and QVA149 for COPD (licensed to Novartis), with initiation of two QVA149 Phase II clinical studies.   Novartis announced today that they expect to file NDA   submissions for both NVA237 and QVA149 in 2011.
• Announced in December 2007 an agreement to develop VR632, a second combination product for asthma, with our European collaboration partner for VR315.
• Announced successful outcome of Phase II clinical study on VR040 for Parkinson’s disease in October 2007.

Financial outlook:
• Cash generative in the third quarter with cash balances at 31 March 2008 expected to be in excess of £75 million.
• Revenues for third quarter in line with expectations with full year revenues expected to be at least 70% ahead of previous year’s total of £14 million.

Dr Chris Blackwell, Chief Executive of Vectura, commented:

“Vectura continues to build its position in the rapidly growing respiratory market. Two significant milestones have been received during the past quarter and we have added an important new late-stage product to the pipeline with the introduction of our new, partnered combination asthma therapy, VR632. Our business focus is to generate sustainable cash flow and this is reflected in the prioritisation and focus of our resources to deliver the progress we have seen in our pipeline.”

Enquiries:

Notes for Editors:

About Vectura
Vectura Group plc is a pulmonary product development company focused principally on the development of a range of inhaled therapies for the treatment of respiratory and neurological diseases. Vectura develops products to treat respiratory diseases such asthma, chronic obstructive pulmonary disease (COPD) and cystic fibrosis, the market for which is forecast to achieve sales of $32 billion by 2011. Vectura also develops products for non-respiratory diseases where optimised delivery via the lungs into the blood stream can provide significant benefits, such as a rapid onset of action, improved efficacy and improved tolerability compared with current therapies.Vectura has eight marketed products and a portfolio of drugs in clinical and pre-clinical development, some of which have been licensed to major pharmaceutical companies. The Company seeks to develop certain programmes further through development to optimise value at a later licensing stage. Vectura also offers its formulation and inhalation technologies to other pharmaceutical companies on a licensing basis where this complements Vectura’s business strategy.Vectura has development collaborations with several pharmaceutical companies including Boehringer Ingelheim, Novartis and Chiesi. The acquisition of Innovata in January 2007 brought established alliances with a number of additional companies, such as Baxter, GlaxoSmithKline (GSK), Merck Generics (part of Mylan Inc), UCB and Otsuka, as well as providing revenue streams, complementary products and critical mass.

For further information, please visit Vectura’s website at www.vectura.com

Forward-Looking Statements
This press release contains “forward-looking statement”, 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 statement. 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.

Interim Management Statement

Pipeline Update

Boehringer Ingelheim collaboration
We announced on 26 November 2007 that we had achieved a pre-agreed milestone under our collaboration with Boehringer Ingelheim to develop a new dry powder inhaler (DPI). Vectura received a cash payment of €10 million and a €5 million equity investment.

In April 2006, Vectura entered a worldwide collaboration, development and licence agreement with Boehringer Ingelheim to develop a DPI as a tailored Boehringer Ingelheim device to deliver a range of their proprietary respiratory products, primarily for treating asthma and COPD. Boehringer Ingelheim ultimately will be responsible for further development, manufacturing and clinical trial use of the DPI with their proprietary compounds, and the commercialisation of these products. Vectura will receive development milestones and royalties on sales of each product that uses the device. The non-exclusive nature of the agreement with Boehringer Ingelheim provides Vectura with an excellent opportunity to deliver further value from our inhaled therapy technologies.

NVA237 and QVA149 for COPD
NVA237 is a once-daily, rapid onset, long-acting muscarinic antagonist (LAMA), which Novartis intends to launch as a as a once-daily treatment for COPD. QVA149 comprises the combination of NVA237 with Novartis’s once-daily, long-acting beta agonist (LABA), indacaterol (or QAB149), which is currently in Phase III development.

VR315 for asthma
VR315 is an inhaled combination therapy for asthma that is being developed as a generic product using Vectura’s GyroHaler® as the delivery device. Vectura licensed the European rights for VR315 to an undisclosed leading international pharmaceutical company in March 2006. The US rights were licensed to an undisclosed leading international pharmaceutical company in December 2006.

Vectura will receive up to €15.5 million in milestones and development funding prior to launch of VR632, and will earn royalties on all product sales, as well a margin on the commercial manufacture and supply of GyroHaler®

VR632 for asthma
On 18 December 2007, Vectura announced that its undisclosed European collaboration partner for VR315 had exercised an option to license VR632, a second combination asthma therapy. VR632 will be developed as a generic combination product using GyroHaler®. This agreement follows the March 2006 agreement with the same European partner for VR315.

Vectura will receive up to €15.5 million in milestones and development funding prior to launch of VR632, and will earn royalties on all product sales, as well a margin on the commercial manufacture and supply of GyroHaler®.

VR040 treatment for Parkinson’s disease (PD)
VR040 is an inhaled, systemically acting product for treating “off” episodes associated with advanced PD that do not respond to oral treatment.

In October 2007 Vectura announced successful completion of a second Phase II clinical study for VR040 in patients with PD. The study demonstrated that VR040 was safe, well tolerated, and successfully recovered patients from an induced “off” episode with a rapid onset of action that was also durable. Importantly, the novel delivery via inhalation could offer patients an improved alternative to the currently available formulations of apomorphine.

Guidance And Outlook
Following the receipt of the milestones payments from Boehringer Ingelheim and our VR315 partner, Vectura was cash generative in the third quarter of 2007 and we expect cash balances at 31 March 2008 to be in excess of £75 million.

We expect our revenues for our year to March 2008, which will include elements of the above milestones, to be around 70% higher than the £14 million reported in the previous year, with the majority of this increase resulting from the full year revenue contribution from the acquired Innovata business.