Verona Pharma Share Discussion Threads

[timbo003] 08/5/2018 21:40

This year’s Verona Pharma AGM was held at 9.00 a.m. on Wednesday 2nd May 2018 at
The London offices of NASDAQ, Woolgate Exchange, 25 Basinghall Street, London EC2V 5HA

For investors who are unfamiliar with the company, Verona is a clinical stage Pharmaceutical company currently focused on developing just one asset, RPL554, which has a unique mechanism of action (PDE3/PDE4 inhibition). RPL554 is currently being developed for the treatment of COPD and Cystic Fibrosis.

The company listed on Aim in 2006 through a reverse takeover of Isis Resources, raising around £2m at 4p/share, which valued the company at just under £6m.

There have been numerous equity based fund raisings since 2006, including an IPO on Nasdaq (raising £70m) which took place just after a one for fifty share consolidation. The shares are currently priced at around 160p/share valuing the company at about £165m with cash on the balance sheet of around £80m (Dec 31st, 2017). The company broker (N+1 Singer) has a short term target price of 348p/share (last updated March 2018) and estimate cash burn of £35m during the next two years and £75m over 3 years.

Links to the Company web site and other useful information are shown below:

Verona Web site:
Annual Report (year ending Dec 2017):
Aim Admission document:

There were just three ordinary shareholders present at the meeting, this prompted me to remind the Chairman, David Ebsworth (DE), that 9 am starts were generally unpopular with retail investors, who often have large distances to travel and the rail fares at that time of day were relatively expensive. He seemed slightly surprised, but said that they would take these comments into consideration when organizing the next AGM. In addition to the three shareholders there was the full Board of Directors and around eight of the usual AGM functionaries.

After welcoming shareholders, DE kicked off the formal meeting with the resolutions and voting. There were no questions on the resolutions, most of which were passed with majorities in excess of 99.9%. For resolutions 2, 3 and 4 (the remuneration policy, remuneration report and re-election of the Chairman), between 5% and 6% of the votes cast were against the resolutions. The total votes cast in each case represented around 75% of the shares in issue.

The CEO, Jan-Anders Karlsson (JAK) then gave an update on recent developments, using a slightly modified version of the slide set used for the recent H.C. Wainwright Global Life Sciences Conference (April 2018)


The important points made by JAK, which were not covered directly by the slides were as follows:

* RPL554 should be suitable for all CF patients, unlike the Vertex blockbuster, Kalydeco [Ivacaftor] which is only indicated for CF sufferers with the G551D gene mutation.
* The full data from the COPD phase IIB study will be presented at the ERS in September.
* The clinical data obtained thus far now supports the use of RPL554 in both rescue and maintenance in COPD patients already taking other commonly used COPD drugs alone, or in combination.
* Verona’s Q1 update will be released on Tuesday May 8th.

After the presentation we had a Q&A session lasting for around 20 – 30 minutes which I have summarized at the bottom of this report (note: it is a summary, not a verbatim account).

When shareholders had exhausted all their questions, DE closed the meeting and I took the opportunity to have a brief chat with DE and JAK to raise a couple of additional topics that I hoped would get better responses than if I had asked in a formal setting.
I began by asking whether they were closely following the current situation at Vernalis, where the company has just closed it US operations (at a huge loss) and effectively put itself up for sale (no doubt at the behest of Woodford and Invesco who between them hold >65% of the shares).


I then suggested that if during the sale process Vernalis were to be split up into component parts, the Vernalis royalty rights for RPL554 may be up for sale at a fire sale price (note: Vernalis are entitled to a £5m milestone payment following first registration and 3% royalties on the first 10 years of sales for all products containing RPL554). DE and JAK acknowledged that they were following the Vernalis situation closely.

I mentioned that Verona’s royalty arrangement with Vernalis also had a clause whereby Verona may have to pay the previous Verona Chairman (Clive Page) royalties on behalf of Vernalis. I opined that surely someone must have been seen a big conflict of interest during Clive’s tenure on the Board and that I was surprised that the situation was ever allowed to arise in the first place. DE and JAK did not agree or disagree with me, but their body language suggested to me that they shared my views.

My final point to make before we all left was that there was little awareness of Verona among retail investors (giving all the usual reasons why it was desirable to increase retail investor awareness) and I went on to suggest the usual remedies, for example: more active PR, recorded interviews, paid for research notes and presentations to retail investors (mentioning that the ShareSoc Growth Company Seminars offered particularly good value). DE and JAK both seemed reasonably receptive to these suggestions, so I am in the process of following up on this.


Q&As

Q: Investors were surprised to hear about the unexpected departure of the Chief Medical Officer, Kenneth Newman, last month. You were silent about the reasons for the departure, was it due to a disagreement on strategy?
A: Definitely not, Ken departed on good terms; maybe he has reached that time in life when you just want to take it easy.

Q: Do you know what he is doing now?
A: He is probably spending a lot more time fishing.

Q: Until fairly recently you seemed to be undecided whether to progress CF or COPD as the priority indication, you now seem to have decided upon COPD, despite the possible advantages of progressing CF as the priority, are you sure this is the right decision?
A: We will now progress COPD as a priority, the deciding factors were that we have dosed many more patients (circa 400) and COPD is a much bigger addressable market now we have established that it has an additive effect on existing COPD treatments. There is also the issue of finding sufficient patients who would qualify for large Phase III CF studies (many patients are already trialing other treatments from competing companies such as Vertex and Galapogos).

Q: Your original positioning for nebulized RPL554 was to prioritize development for Emergency Room (ER) use following exacerbations and to use readmission rate following discharge as one of the end points (inspired by MediciNova’s discussion with FDA on a possible development pathway for their fast acting intra venous bronchodilator MN-221). You seem to have deprioritized ER use and prioritized maintenance therapy. Can you explain why?
A: When we looked at it in detail, running a trial based on ER readmission rates would be too costly and complicated, the maintenance market is much larger and the clinical program would be much easier to implement.

Q: Have you got enough cash to finish all the trials, or will you need more?
A: we should have enough cash to complete the Phase II program and get half way through a phase III program

Q: How much cash have you raised throughout the life of the company and how does this compare with the current market capitalization?
A: Verona has raised around $170m and our current market cap is around $200m.

Q: Is it really worth spending valuable resource in developing a dry powder inhalation (DPI) formulation, as you will most probably end up out-licensing the drug for DPI formats and a big pharma partner will almost certainly want RPL554 in their own proprietary device in combination with their own actives?
A: We have not set out to develop a DPI formula for marketing; instead we are conducting a study with a simple single active powder formulation, in a capsule, using an old generic device. It is a proof of concept study, so it should not require very much resource. However, it should answer some of the questions that a large pharma partner would be asking during negotiations. The same goes for the aerosol formulation work.

Q: In the last phase IIB study you failed to show a minimum effective dose and any sort of dose response for the primary outcome (peak FEV1). That may be OK for Europe, but FDA will probably require an additional phase II. Can you comment?
A: Even though there was no dose response for FEV1, KOLs are increasingly advocating the use of other more clinically meaningful parameters as end points, for example, overall daily symptom score, which in the last study did show a highly significant dose response. The FDA have been known shift from entrenched positions in the past, furthermore there have been several important staff changes recently. We are due to have discussions with FDA before finalizing plans for Phase III.

Q: With the benefit of hindsight (and a time machine), would you have included a lower dose in the Phase IIB study?
A: It would have been good to have shown a dose response for FEV1 in the last study, but in addition to the reasons already given (see above), we have previously used a lower dose (0.4mg) in another study where we did demonstrate a significant dose response for FEV1.

Q: You showed a significant difference in peak FEV1 for RPL554 vs controls in the last study, which is excellent. However, you could not show a significant difference in trough FEV1. Is this a problem and does this suggest that the therapeutic half-life is insufficient to match the twice daily dosing of the most popular COPD treatments such as Advair?
A: See answer to question on dose response, i.e. symptom scores is more clinically relevant than FEV1.

Q: Have you looked at licensing the product out to China? The Chinese COPD market is huge (100m patients) and there may be opportunities to use Chinese data to support or augment US and European regulatory filings.
A: Jan-Anders has a trip to China already planned; he is due to leave in the next few days.

[timbo003] 08/5/2018 18:54

I will finish off the AGM notes later this evening, meanwhile it is well worth listening to the analyst Q&As in today's webcast, some of the questions are very similar to the ones asked at the AGM:

[timbo003] 08/5/2018 09:40

Shakin'

Yes I was there along with just two other regular shareholders.

Retail shareholders do not like 9 o'clock starts!

I have written something up and posted on the Sharesoc AGM forum and I will look to find the time later today to do a few necessary edits, reformat then post here.

[pejaten] 08/5/2018 07:25

What do you mean current poor performance? As always with bio tech all depends on whether drug will work and potential market

[shakin not stirred] 07/5/2018 15:13

Did anyone attend and if so would appreciate your thoughts on current poor performance and if any info that would suggest an upturn. Timbo did you attend and value any views

[bewise2] 03/5/2018 10:23

Anybody attend the AGM?

[bewise2] 30/4/2018 19:17

AGM on Wed!

[volsung] 25/4/2018 08:47

Rise you brute!

[shakin not stirred] 12/4/2018 21:02

127 tolmers. Seems that your view is shared on lse board and agree.Share price would seem to indicate city agree as well. One step forward and two steps back.

[127tolmers] 11/4/2018 08:29

Not a good sign when the CMO departs leaving his options behind and in the middle of a trials program.

[bewise2] 03/4/2018 16:21

Holding well on nasdaq....

[beanol] 26/3/2018 19:41

Thanks Timbo. Feels to be in very promising situation. A person who provides services to the company told me recently that COPD looked to be their short term main focus going forward.

[timbo003] 26/3/2018 17:39

The slide set and audio from today's web cast are here:

Slide set:


Audio (fast forward for the first 5 minutes):



The Q&As are illuminating:

It seems that they are currently thinking COPD (not CF) as the main focus in the short term.

Also some of the beneficial effects seemed to continue to increase as the trial progressed, suggesting that there may be further improvements beyond 4 weeks. This presumably bodes well for the Phase III pivotals, which for maintenance therapy would run over longer periods

[aishah] 26/3/2018 16:09

up 48% on Nasdaq (@16:09 BST) - $23.88.

[volsung] 26/3/2018 15:56

Thar she blows!! I cannae stop her Cap'n!

[timbo003] 26/3/2018 11:20

I wonder what bearing this result with have on the decision whether to progress COPD or CF as a clinical development priority, I suspect it will steer them towards CF, based on the thought that it will have either orphan or fast track status (or both) and therefore FDA will be less picky about the dose selected for further clinical development.

[volsung] 26/3/2018 08:45

Hopefully over £4 after conference call

[waterloo01] 26/3/2018 08:44

timbo, thanks for the insight. I added some this AM.

[timbo003] 26/3/2018 07:42

Results out from the COPD phase 2b study a bit sooner than expected.

Statistically and clinically meaningful outcomes on the primary and secondaries, the only slight fly in the ointment is that they haven't been able to establish a minimum effective dose, i.e. all doses tested (0.75 mg, 1.5 mg, 3.0 mg and 6.0 mg) were effective. This is not a problem for Europe, but the US may want more data. We will have to see what they have to say on the conference call later today (13:00) for which shareholders can dial in, or listen via web cast (see below)


Conference Call
Verona Pharma will host an investment community conference call today at 8:00 a.m. Eastern Daylight Time (1:00 p.m. British Summer Time) to discuss the positive top-line data from the Phase 2b clinical trial in COPD disclosed in this press release.

Analysts and investors may participate in the conference call by utilizing the conference ID: 13677941 and dialing the following numbers:

1-877-423-9813 or + 1-201-689-8573 for callers in the United States
0 800 756 3429 for callers in the United Kingdom
0 800 182 0040 for callers in Germany

Those interested in listening to the conference call live via the internet may do so by visiting the "Events and Presentations" page on the "Investors" section of Verona Pharma's website at and clicking on the webcast link. Slides highlighting the top-line data will also be posted to the "Events and Presentations" page.

[aishah] 21/3/2018 18:42

N+1 STRONG BUY,tp 348p

[timbo003] 21/3/2018 13:54

Singer raised their 12 month target this morning from 327p to 348p which probably accounts for the mark up today.

[timbo003] 15/3/2018 13:11

I've just received the annual report and accounts.

The AGM is on Wednesday 2nd May starting at 9:00.

They clearly don't want too many shareholders attending then!

[haroldthegreat] 15/3/2018 12:58

Price is rising nicely