January 3, 2019 / 2:57 PM / 5 months ago

UPDATE 3-Vectura hopes new respiratory device will breathe life into business

* Forecasts 2018 adjusted core earnings above market forecasts

* Looking for partner for pediatric asthma product

* Margins helped by Japan, rest of world sales (Adds 2017 earnings numbers and context, updates shares)

By Noor Zainab Hussain and Karina Dsouza

Jan 3 (Reuters) - Vectura Group is pinning its future on a relatively new respiratory device aimed at treating several ailments beyond asthma, as the British drugmaker looks to revive its business after the costly acquisition of rival SkyePharma in 2016.

Vectura, which has partnerships with Bayer, Novartis and GSK, said on Thursday its 2018 adjusted core earnings would exceed analysts' forecasts, citing rising sales of inhalers and improved margins.

Vectura's shares, which fell more than 40 percent in 2018, closed 13 percent higher at 80 pence, giving the company a valuation of around 532 million pounds ($672 million).

The company also said research and development expenses for 2019 would remain unchanged from its forecast of 45-55 million pounds, with 2018 investments at, or around, the bottom of the 55 million to 65 million pounds range.

Most of that cash is being spent on its "nebulised platform", which is expected to treat common respiratory diseases such as asthma as well as other ailments, Chief Financial Officer Paul Fry told Reuters on Thursday.

Fry said the company's new nebulised devices, which convert liquid medicine into mist that is inhaled by patients, would also focus on pediatric asthma, cardio pulmonary vascular disease and cystic fibrosis.

"We are looking to explore that platform in a number of different therapy areas like cystic fibrosis ... we believe there is an important market opportunity and something that perhaps not many people are exploiting."

Fry said Vectura was seeking a partner for its pediatric asthma treatment, but did not give details on any potential deal.

Vectura stopped developing a treatment for severe uncontrolled asthma in November after trials showed it failed to have a significant impact on the condition.

The company said then it would take an impairment charge related to the failure that would hit its 2018 pretax results by 40 million pounds.

While the company posted a 96.2 million pounds operating loss in 2017, due to an impairment charge related to previous acquisitions, it reported adjusted core earnings of 25.8 million pounds.

Fry said 2018 margins benefited as a larger proportion of sales of its biggest product Flutiform came from Japan and other high-margin regions.

Margins were also helped by fewer batches of products being written down and lower production costs due to changes in suppliers.

Fry added that Vectura's deal with Hikma Pharmaceuticals for generic versions of GSK's Ellipta portfolio also boosted revenue in 2018.

$1 = 0.7943 pounds Reporting by Karina Dsouza in Bengaluru, Additional reporting by Arathy Nair and Sangameswaran S; Editing by Saumyadeb Chakrabarty, Keith Weir and Mark Potter

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