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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Verona Pharma Plc | LSE:VRP | London | Ordinary Share | GB00BYW2KH80 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 55.00 | 45.00 | 65.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMVRP
Initiated a Phase 2 trial of RPL554 as add-on to dual bronchodilator
therapy for COPD maintenance treatment; enrolled last patient and dosing
underway
Progressed DPI and pMDI programs; formulations for clinical development
now selected
LONDON, Nov. 06, 2018 (GLOBE NEWSWIRE) -- Verona Pharma plc (AIM: VRP)
(Nasdaq: VRNA) ("Verona Pharma" or the "Company"), a clinical-stage
biopharmaceutical company focused on developing and commercializing
innovative therapies for respiratory diseases, announces today an
operational update and financial results for the three months and nine
months ended September 30, 2018.
The Company's product candidate, RPL554, is a first-in-class, inhaled,
dual inhibitor of the enzymes phosphodiesterase 3 and 4 ("PDE3 and
PDE4"), that acts as both a bronchodilator and an anti-inflammatory
agent in a single compound. Verona Pharma is developing RPL554 for the
treatment of chronic obstructive pulmonary disease ("COPD"), cystic
fibrosis ("CF"), and potentially asthma.
OPERATIONAL HIGHLIGHTS
During the three months ended September 30, 2018, the Company:
-- Initiated a Phase 2 clinical trial evaluating RPL554 as an add-on to dual
bronchodilator therapy for COPD maintenance treatment:
-- Randomized, double-blind three-way cross-over study at sites in
the US and the UK;
-- Add-on to an inhaled LAMA/LABA, tiotropium/olodaterol (Stiolto(R)
Respimat(R));
-- Expected that some patients will continue a stable dose of inhaled
corticosteroids ("ICS") throughout the study, providing a "triple
therapy" background;
-- Top-line data from 79 enrolled patients now expected in January
2019, ahead of schedule.
-- Published full results from two RPL554 Phase 2 clinical studies in COPD
in the high-impact, peer reviewed European Respiratory Journal.
-- Results highlighted the drug's clinically meaningful add-on effect
to single bronchodilators, potential to reduce lung hyperinflation,
a cause of breathlessness in COPD patients, and its relative speed
of onset of action. Results from these studies were previously
reported by Verona Pharma on May 10, 2016 and September 7, 2017.
-- Presented an expanded dataset from its Phase 2b study evaluating RPL554
as a maintenance treatment for COPD in an oral presentation at
the European Respiratory Society International Congress:
-- Dr Singh, M.D., Professor of Clinical Pharmacology and Respiratory
Medicine, Medicines Evaluation Unit, University of Manchester,
presented data expanding on top-line results announced by the
Company on March 26, 2018;
-- Dr Singh provided further context around the clinical significance
of the strong and maintained bronchodilator response over the 4
week period, the progressive improvement in symptoms, while being
well tolerated by the patients, and the potential for RPL554
therapy as both a stand-alone and as an add-on treatment to
"standard of care" for COPD patients with this progressive and
debilitating disease, where there remains a high unmet medical
need.
-- Selected dry powder inhaler ("DPI") and pressured metered dose inhaler
("pMDI") formulations of RPL554:
-- First DPI clinical trial in COPD patients expected to begin in
December 2018;
-- First pMDI clinical trial in COPD patients expected to begin in
the first half of 2019.
Post-period end, the Company:
-- Completed patient enrollment in its Phase 2 clinical trial evaluating
RPL554 as an add-on to dual bronchodilator therapy for COPD maintenance
treatment. The Company confirmed that it expects top-line data in January
2019.
-- Ongoing review of our RPL554 development strategy in the context of all
data generated, including from current and completed clinical trials,
regulatory interactions and market research, indicates that the Company
will conduct a further clinical study to generate additional data to
facilitate and further de-risk dose selection for the Phase 3 program and
the commercial positioning. We continue to expect to complete our Phase 2
program in the second half of 2019, before progressing into pivotal Phase
3 trials.
-- Hosted an "Investor and Analyst R&D Forum" on October 12, 2018, in New
York City, providing insights into the unmet medical need and the
challenges of treating COPD, as well as an update of the most recent
clinical data on RPL554. The forum featured a panel of Key Opinion
Leaders in the field of COPD who provided the clinicians' perspective, as
well as representatives from the COPD Foundation and the COPD patient
community who provided the patients' perspective. (Review the full
presentation from the R&D Forum at
https://investors.veronapharma.com/events/event-details/investor-analyst-rd-forum.)
-- Presented data from pre-clinical studies and a Phase 2a clinical trial
evaluating RPL554 as a potential treatment for CF at the 2018 North
American Cystic Fibrosis Conference in Denver. The pre-clinical and
clinical data showed that RPL554 stimulates rare Class III and Class IV
CF transmembrane conductance regulator ("CFTR") mutants and that RPL554
has a favorable pharmacokinetic ("PK") profile and increased forced
expiratory volume in one second ("FEV1") among patients with CF,
respectively. Top-line data from this Phase 2a trial were previously
reported by Verona Pharma on March 2, 2018.
FINANCIAL HIGHLIGHTS
-- Net cash, cash equivalents and short term investments at September 30,
2018, amounted to GBP68.9 million (December 31, 2017: GBP80.3 million).
-- For the nine months ended September 30, 2018, operating loss was GBP18.3
million (nine months ended September 30, 2017: GBP19.1 million) and loss
after tax was GBP17.0 million (nine months ended September 30, 2017:
GBP14.2 million). The decrease in operating loss was due to GBP0.4
million reductions in each of research and development costs, and general
and administrative costs. The increase in loss after tax reflects the
GBP3.4 million finance expense relating to the increase in the fair value
of the warrants liability, a non-cash item. This compares to a GBP3.9
million credit to finance income in the nine months ended September 30,
2017, as the fair value of the warrants liability reduced in the
corresponding prior year period.
-- Reported loss per share was 16.1 pence for the nine months ended
September 30, 2018 (nine months ended September 30, 2017: 17.4 pence).
-- Net cash used in operating activities for the nine months ended September
30, 2018, was GBP13.1 million (nine months ended September 30, 2017:
GBP15.8 million). The decrease in cash used was due to lower expenditure
on clinical trial activity in the 2018 period compared to the
corresponding period of 2017, and an increase in cash inflow from
taxation of GBP3.8 million (representing research and development tax
credits).
"We continue to advance the clinical development of nebulized RPL554 for
COPD as exemplified by the initiation of, and recent completion of
patient enrollment in, our Phase 2 trial evaluating RPL554 as an add-on
to dual bronchodilator (LAMA/LABA) therapy for COPD maintenance
treatment. We expect to report top-line data from this trial, which is
being conducted in the US and UK, in January 2019. Many COPD patients
continue to experience breathing difficulties and daily symptoms, such
as breathlessness, that impair their quality of life despite treatment
with dual and triple therapy. We believe the novel bronchodilator and
anti-inflammatory properties of RPL554 will be particularly useful in
this large group of patients with a high unmet medical need, and very
limited treatment options. This Phase 2 trial is intended to further
define the late stage program leading to Phase 3 pivotal trials and
refine the commercial positioning. As we have already observed
beneficial effects of adding RPL554 to single bronchodilators, we
believe a positive effect in this study could significantly expand the
COPD patient population treatable with RPL554," commented Jan-Anders
Karlsson, PhD, CEO of Verona Pharma. "We are also encouraged by the very
positive response that RPL554 received at the recent European
Respiratory Conference in September, and at our 'Investor and Analyst
R&D Forum' in October."
Conference Call and Webcast Information
Verona Pharma will host an investment community conference call at 8:00
a.m. Eastern Standard Time (1:00 pm Greenwich Mean Time) on Tuesday,
November 6, 2018. Analysts and investors may participate in the
conference call by utilizing the conference ID: 8100157 and dialing the
following numbers:
-- 800-289-0571 or 929-477-0324 for callers in the United States
-- 0800 358 6377 or 44 (0)330 336 9126 for callers in the United Kingdom
-- 0800 589 4609 or 49 (0)69 2222 25577 for calls in Germany
Those interested in listening to the conference call live via the
internet may do so by visiting the "Investors" page of Verona Pharma's
website at www.veronapharma.com and clicking on the webcast link. A
webcast replay of the conference call [audio] will be available for 30
days by visiting the "Investors" page of Verona Pharma's website at
www.veronapharma.com and clicking on the "Events and presentations"
link.
An electronic copy of the interim results will be made available today
on the Company's website (www.veronapharma.com). This press release does
not constitute an offer to sell or the solicitation of an offer to buy
any of the Company's securities, and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of that jurisdiction.
This press release contains inside information for the purposes of
Article 7 Regulation (EU) No. 596/2014.
About COPD
Chronic obstructive pulmonary disease ("COPD") is a progressive and
life-threatening respiratory disease for which there is no cure(1) .
Although COPD is thought to be underdiagnosed, globally, around 384
million people suffer from the disease(2) . This number, according to
the World Health Organization ("WHO"), is likely to increase in coming
years, with estimates that COPD will become the third leading cause of
death worldwide by 2030(1,3) . The condition damages the airways and the
lungs, leading to persistent symptoms of breathlessness, impacting a
person's daily life and their ability to perform simple activities such
as walking a short flight of stairs or carrying a suitcase(1) . Many
experience acute periods of worsening symptoms called 'exacerbations',
often leading to emergency department visits or hospital admissions and
are also associated with high mortality(4) . In the United States alone,
the 2010 total annual medical costs related to COPD were estimated to be
$32 billion and are projected to rise to $49 billion in 2020(5) . About
30-40% of moderate to severe COPD patients on triple inhaled therapy
(ICS/LAMA/LABA) remain uncontrolled and continue to experience airway
obstruction (breathing difficulties), COPD symptoms and
exacerbations(6,7) . There is an urgent need for drugs with novel
mechanisms of action that can be used by these patients in addition to
current therapies.
About Verona Pharma plc
Verona Pharma is a clinical-stage biopharmaceutical company focused on
developing and commercializing innovative therapies for the treatment of
respiratory diseases with significant unmet medical needs. Verona
Pharma's product candidate, RPL554, is a first-in-class, inhaled, dual
inhibitor of the enzymes phosphodiesterase 3 and 4 that acts as both a
bronchodilator and an anti-inflammatory agent in a single compound. In
clinical trials, treatment with RPL554 has been observed to result in
statistically significant improvements in lung function and clinical
symptoms as compared to placebo, and has shown clinically meaningful and
statistically significant improvements in lung function when
administered in addition to frequently used short- and long-acting
bronchodilators as compared to such bronchodilators administered as a
single agent. Verona Pharma is developing RPL554 for the treatment of
chronic obstructive pulmonary disease (COPD), cystic fibrosis (CF), and
potentially asthma.
Forward Looking Statements
This press release, operational review, outlook and financial review
contain forward-looking statements. All statements contained in this
press release, operational review, outlook and financial review that do
not relate to matters of historical fact should be considered
forward-looking statements, including, but not limited to, statements
regarding the Phase 2 clinical trial of RPL554 as an add-on to dual
bronchodilator therapy for COPD maintenance treatment, including
expected enrollment, patients continuing on a stable doses of ICS
throughout the trial, the timing of top-line data from the trial, the
utility of the data from the trial to inform the design of pivotal Phase
3 trials, to better understand the strategic commercial potential of
nebulized RPL554 and to provide an impetus to progress RPL554 in COPD,
and positive effects from the trial expanding the treatable COPD patient
population in a meaningful way, the treatment potential of RPL554 and
its usefulness for COPD patients, the potential for RPL554 to be the
first novel class of bronchodilator in over 40 years and first therapy
that acts as a bronchodilator and anti-inflammatory agent, the
percentage and number of COPD patients with uncontrolled COPD, RPL554 as
an attractive additional treatment for COPD patients, the requirement
for novel anti-inflammatory therapies in treating COPD, the potential of
RPL554 as a safe and effective add-on therapy for the treatment of COPD,
RPL554's anti-inflammatory effect potentially causing progressive
symptom improvement in the Phase 2b clincial trial with nebulized
RPL554, planned future clinical development of RPL554 and the value of
completed and ongoing clinical trials in development planning, residual
volume being directly related to breathlessness, the percentage and
number of COPD patients who use inhalers for maintenance therapy, the
potential for a DPI or pMDI inhaler formulation of RPL554 to expand the
addressable market for RPL554 and the potential size and significance of
the market for such formulations, the timing of clinical trials for DPI
and pMDI formulations, out-licensing these formulations, developing a
DPI or pMDI formulation for the treatment of asthma or other respiratory
diseases, becoming a leading biopharmaceutical company, using our
financial and other resources on developing RPL554 for the maintenance
treatment of COPD and the impact on timing of trials for other
indications, assessments of the commercial position of RPL554 and the
Company's Phase 3 development strategy, plans to seek strategic
collaborations and the funding and benefits from such collaborations,
and plans to in-license or acquire additional clinical stage product
candidates.
These forward-looking statements are based on management's current
expectations. These statements are neither promises nor guarantees, but
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or achievements
to be materially different from our expectations expressed or implied by
the forward-looking statements, including, but not limited to, the
following: our limited operating history; our need for additional
funding to complete development and commercialization of RPL554, which
may not be available and which may force us to delay, reduce or
eliminate our development or commercialization efforts; the reliance of
our business on the success of RPL554, our only product candidate under
development; economic, political, regulatory and other risks involved
with international operations; the lengthy and expensive process of
clinical drug development, which has an uncertain outcome; serious
adverse, undesirable or unacceptable side effects associated with
RPL554, which could adversely affect our ability to develop or
commercialize RPL554; potential delays in enrolling patients, which
could adversely affect our research and development efforts; we may not
be successful in developing RPL554 for multiple indications; our ability
to obtain approval for and commercialize RPL554 in multiple major
pharmaceutical markets; misconduct or other improper activities by our
employees, consultants, principal investigators, and third-party service
providers; the loss of any key personnel and our ability to recruit
replacement personnel, material differences between our "top-line" data
and final data; our reliance on third parties, including clinical
investigators, manufacturers and suppliers, and the risks related to
these parties' ability to successfully develop and commercialize RPL554;
and lawsuits related to patents covering RPL554 and the potential for
our patents to be found invalid or unenforceable.
These and other important factors under the caption "Risk Factors" in
our Annual Report on Form 20-F filed with the Securities and Exchange
Commission ("SEC") on February 27, 2018, and our other reports filed
with the SEC, could cause actual results to differ materially from those
indicated by the forward-looking statements made in this press release,
operational review, outlook and financial review. Any such
forward-looking statements represent management's estimates as of the
date of this press release and operational and financial review. While
we may elect to update such forward-looking statements at some point in
the future, we disclaim any obligation to do so, even if subsequent
events cause our views to change. These forward-looking statements
should not be relied upon as representing our views as of any date
subsequent to the date of this press release, operational review,
outlook and financial review.
For further information please contact:
Verona Pharma plc Tel: +44 (0)20 3283
4200
Jan-Anders Karlsson, Chief info@veronapharma.com
Executive Officer
Stifel Nicolaus Europe Limited Tel: +44 (0)20 7710
(Nominated Adviser and UK 7600
Broker)
Stewart Wallace / Jonathan
Senior / Ben Maddison
ICR, Inc. (US Media and Investor
Enquiries)
James Heins Tel: +1 203 682 8251
James.Heins@icrinc.com
Stephanie Carrington Tel: +1 646 277 1282
Stephanie.Carrington@icrinc.com
FTI Consulting (UK Media and Tel: +44 (0)20 3727
Investor Enquiries) 1000
Simon Conway / Natalie Garland-Collins veronapharma@fticonsulting.com
__________________
(1) World Health Organization. Chronic Obstructive Pulmonary Disease.
http://www.who.int/mediacentre/factsheets/fs315/en/. Accessed September
2017.
(2) Adeloye D, Chua S, et al. Global and regional estimates of COPD
prevalence: Systematic review and meta-analysis. J Glob Health 2015;
5(2): 020415.
(3) World Health Organization. Burden of COPD.
http://www.who.int/respiratory/copd/burden/en/. Accessed September 2017.
(4) COPD Foundations. Characteristics of COPD Patients Using United
States Emergency Care or Hospitalization.
https://journal.copdfoundation.org/jcopdf/id/1103/Characteristics-of-COPD-Patients-Using-United-States-Emergency-Care-or-Hospitalization.
Accessed September 2017.
(5) Centers for Disease Control. Increase Expected in Medical Costs for
COPD. https://www.cdc.gov/features/ds-copd-costs/. Accessed September
2017.
(6) Mullerova H., et al., Characterization of COPD Patients Treated With
Inhaled Triple Therapy Containing Inhaled Corticosteroid [ICS],
Long-Acting Beta2-Agonists [LABA], and Long-Acting Muscarinic
Antagonists [LAMA] in the UK, American Journal of Respiratory and
Critical Care Medicine 2017;195:A4986
(7) Vestbo J, et al., Single inhaler extrafine triple therapy versus
long-acting muscarinic antagonist therapy for chronic obstructive
pulmonary disease (TRINTY); a double-blind, parallel group, randomised
controlled trial, The Lancet, Vol 389, p. 1919-1929; May 13, 2017.
OPERATIONAL REVIEW
Company overview
We are a clinical-stage biopharmaceutical company focused on developing
and commercializing innovative therapies for the treatment of
respiratory diseases with significant unmet medical needs. Our product
candidate, RPL554, is a first-in-class, inhaled, dual inhibitor of the
enzymes PDE3 and PDE4 that acts as both a bronchodilator and an
anti-inflammatory agent in a single compound. We believe RPL554 has the
potential to be the first novel class of bronchodilator in over 40 years,
and the first therapy for the treatment of respiratory diseases that
acts as both a bronchodilator and anti-inflammatory agent in a single
compound.
We have completed 12 Phase 1 and Phase 2 clinical trials with RPL554 and,
including our ongoing clinical trial, these have now enrolled over 800
subjects. In our clinical trials, treatment with RPL554 has consistently
been observed to result in statistically significant improvements in
lung function as compared to placebo. Statistically significant means
that there is a low statistical probability, typically less than 5 per
cent, that the observed results occurred by chance alone. Our most
recent Phase 2b clinical trial in patients with moderate-to-severe COPD
has also shown clinically meaningful and statistically significant
improvements in daily reported COPD symptom scores. When RPL554 is added
to commonly used short- and long-acting bronchodilators as compared to
such bronchodilators administered as a single agent, it has also shown
clinically meaningful and statistically significant improvements in lung
function. In particular, following such combined treatment, COPD
patients experienced a marked reduction in residual lung volume, which
is believed to be related to one of the most debilitating symptoms,
breathlessness. The very rapid onset of action observed when adding
RPL554 on top of tiotropium, was also notable, and may be particularly
helpful to those patients suffering from morning breathlessness.
We believe that RPL554 has shown anti-inflammatory effects, has been
well tolerated in our clinical trials to date and has not been observed
to result in the gastrointestinal or other side effects commonly
associated with roflumilast (Daxas(R) /Daliresp(R) ), the only PDE4
inhibitor currently on the market for the treatment of COPD. We are
developing RPL554 for the treatment of patients with COPD and for the
treatment of patients with CF.
Despite treatment with currently approved therapies, many patients with
COPD experience daily symptoms impairing their quality of life. Airway
obstruction and air trapping due to narrow air passages are major causes
of debilitating breathlessness (dyspnoea) reducing physical ability and
causing anxiety and depression. Of the patients treated with dual
bronchodilator (LAMA/LABA) and triple therapy (LAMA/LABA/ICS), research
suggests that up to 40% (approximately 800,000 patients in the US alone)
are uncontrolled, remaining symptomatic and at an increased risk of
exacerbations.
We believe RPL554, having shown improvement in FEV(1) and symptoms
(which commonly are a precursor to exacerbations) in clinical trials,
may be an attractive additional treatment for COPD patients. Furthermore,
we believe that novel anti-inflammatory therapies are required, as many
current treatments such as ICS and PDE4 inhibitors are either effective
only in specific subsets of exacerbating COPD patients or are associated
with distressing side effects which can reduce treatment compliance. In
the US, approximately 3 million COPD patients are treated with single
bronchodilator (either LAMA or LABA) therapy. In our clinical trials, we
have already shown that RPL554 is a very effective addition to single
bronchodilators, and we believe it is well placed to potentially meet
the need for a safe and effective dual bronchodilator/anti-inflammatory
treatment regimen as an add-on to, for example, a LAMA.
Operational performance in the nine months ended September 30, 2018
The 4 week Phase 2b clinical trial with nebulized RPL554 in 403 patients,
completed in the first quarter of 2018, showed a rapid onset and
sustained bronchodilator effect from the first to the last dose, that
was both clinically and statistically meaningful. In addition, the study
showed a marked and significant improvement in daily reported COPD
symptoms using The Evaluating Respiratory Symptoms (E-RS)(TM) measure
and in each of its three sub-scores. The improvement in symptoms was
already statistically significant after the first week but continued to
progress and further improve during the 4 week treatment period. Similar
effects were seen with other symptom scores used, for example the SGRQ.
We believe that these observations support the view that the progressive
symptom improvement cannot be explained only by the increased
bronchodilator response, but that an anti-inflammatory effect also may
have contributed to this improvement. All RPL554 doses tested produced
comparable improvements in lung function and symptoms, and RPL554 was
well tolerated at all doses with an adverse event profile similar to
placebo. We presented data from our RPL554 clinical development program
at the American Thoracic Society's International Conference (San Diego,
May 2018) ("ATS Conference"). The posters disclosed further analysis of
the benefit of adding RPL554 to tiotropium therapy. Of particular
relevance was the marked reduction in residual volume by the combined
treatment in these patients, as this is a cardinal feature of COPD and
believed to be directly related to one of the most debilitating symptoms,
breathlessness. The very rapid onset of action observed when adding
RPL554 on top of tiotropium, was also notable. A separate poster,
presenting data supporting the suitability of RPL554 for inhaled
delivery, was also presented at the ATS Conference.
During the three months ended September 30, 2018 we achieved an
important publication in the high-impact, peer reviewed European
Respiratory Journal, entitled "The short term bronchodilator effects of
the dual PDE3 and PDE4 inhibitor RPL554 in COPD" that provides full
results from two Phase 2 clinical studies with RPL554. Results from
these studies were previously reported by us on May 10, 2016 and
September 7, 2017.
At the European Respiratory Society International Congress in Paris in
September 2018, Dr. Singh, M.D., Professor of Clinical Pharmacology and
Respiratory Medicine, Medicines Evaluation Unit, University of
Manchester, presented an expanded dataset from our 4 week Phase 2b study,
expanding on top-line results announced by us on March 26, 2018. Dr.
Singh also provided further context around the clinical significance of
these results and potential for RPL554 therapy in both the stand-alone
and add-on to standard of care settings for patients with this
progressive and debilitating disease, where there remains a high unmet
medical need.
We announced on October 31, 2018 that we have now completed patient
enrollment in our Phase 2 trial evaluating nebulized RPL554 as an add-on
to dual bronchodilator therapy for COPD maintenance treatment. Following
completion of dosing and data analysis, top line data is expected to be
available in January 2019. The randomized, double-blind, three-way
crossover trial has enrolled 79 patients with COPD to investigate the
efficacy and safety of nebulized RPL554 as an add-on to an inhaled
LAMA/LABA, tiotropium/olodaterol (Stiolto(R) Respimat(R)), compared to
placebo. We expect that those patients already receiving ICS
anti-inflammatory therapy will continue a stable dose of ICS throughout
the study, thus providing a "triple therapy" background. Following a 7-
to 14-day washout period in advance of dosing and between study arms,
patients will receive three days of treatment with each of two dose
strengths (1.5 mg or 6.0 mg) of nebulized RPL554 or placebo twice daily.
The primary endpoint of this trial is improvement in lung function with
RPL554 vs placebo (as add-on to tiotropium/olodaterol), as measured by
FEV(1) .
This Phase 2 trial will also provide important data to better understand
the strategic commercial potential of nebulized RPL554 used in COPD
patients with airway obstruction and COPD symptoms already using
standard-of-care bronchodilator treatments. We have already observed in
our clinical trials the beneficial effects of adding RPL554 to single
bronchodilators; amongst patients treated with a single bronchodilator
(either a LAMA or a LABA, with or without ICS) research suggests that up
to 40% (approximately 1.2 million patients in the US alone) have reduced
lung function and remain symptomatic. We believe that a positive effect
in this "add-on to dual bronchodilators" study could significantly
expand the COPD patient population treatable with RPL554; research
suggests that, again, up to 40% (or approximately 800,000 additional
patients in the US alone) are likewise remaining uncontrolled,
symptomatic and at an increased risk of exacerbations even when treated
with dual bronchodilator therapy(1) .
In addition to our nebulized formulation of RPL554, we are also
developing RPL554 in both DPI and pMDI formulations for the maintenance
treatment of COPD patients who prefer to use a handheld inhaler device.
We estimate that, in the US, approximately 90% of the 3.7 million
mild/moderate COPD patients and 80% of the 2.7 million severe/very
severe COPD patients use inhalers for maintenance therapy(1) . We
believe that the successful development of a DPI or pMDI formulation of
RPL554 for moderate disease would greatly expand the addressable market
for the drug and represents a multi-billion dollar potential
opportunity. Formulations have been selected for both DPI and pMDI, and
we expect to commence a clinical trial with the DPI formulation in
December 2018, and a clinical trial with the pMDI formulation to follow
in the first half of 2019. We anticipate making these inhalation
formulations available for out-licensing once we establish their
clinical profile.
At the 2018 North American Cystic Fibrosis Conference in Denver, CO in
October 2018, data presented from pre-clinical studies and a Phase 2a
clinical trial evaluating RPL554 as a potential treatment for CF showed
that RPL554 stimulates rare Class III and Class IV CFTR mutants and that
RPL554 has a favorable PK profile and increased FEV(1) among patients
with CF, respectively. Top-line data from this Phase 2a trial were
previously reported by us on March 2, 2018.
We may also explore the development of RPL554 in DPI and/or pMDI
formulations for the treatment of asthma and other respiratory diseases.
OUTLOOK
We intend to become a leading biopharmaceutical company focused on the
treatment of respiratory diseases with significant unmet medical needs.
We recognize that our proposed strategy for achieving this goal depends
on the totality of the data from all clinical trials conducted with
RPL554, future interactions with regulatory authorities and our
commercial assessment of different development options for RPL554. Key
elements of this strategy include:
-- A strong focus on bringing nebulized RPL554 into Phase 3 clinical trials
for the maintenance treatment of COPD, which requires us to deploy our
financial and other resources on maintenance treatment of COPD with
nebulized and inhaled formulations of RPL554 in the short term, which may
alter our timing to commence further trials using RPL554 in other
indications.
-- Identifying compelling market opportunities such as patients with COPD
that continue to experience daily symptoms impairing their quality of
life, despite treatment with currently available medicines. In our
clinical trials, we have shown RPL554 to be an effective add-on to
treatment with single bronchodilators, and we are now examining RPL554 as
an add-on also to patients treated with dual bronchodilators. We believe
that add-on to first-line and second-line treatments both represent very
significant market opportunities.
-- Our ongoing Phase 2 clinical trial to evaluate nebulized RPL554 for the
maintenance treatment of severe COPD patients when dosed in addition to
LAMA/LABA or triple (LABA/LAMA/ICS) therapy, compared to placebo. We
expect to announce top-line data in January 2019.
-- Ongoing review of our RPL554 development strategy in the context of
additional data generated, including from clinical trials, regulatory
interactions and market research, to identify opportunities to enhance
and de-risk our late-stage development and commercialization of RPL554.
Based on this review and data from the on-going Phase 2 the Company will
conduct a further clinical study to generate additional data to
facilitate and further de-risk dose selection for the Phase 3 program and
the commercial positioning. We continue to expect to complete our Phase 2
program in the second half of 2019, before progressing into pivotal Phase
3 trials.
-- Development of RPL554 in inhaler formulations for the treatment of COPD
patients who may prefer administration using an inhaler device. We expect
a clinical trial with the DPI formulation to commence in December 2018,
and a clinical trial with the pMDI formulation to follow in the first
half of 2019.
-- Development of RPL554 for the treatment of CF. The timing for future
studies in this indication is dependent on our decision to move more
rapidly towards Phase 3 clinical trials with nebulized RPL554 for the
maintenance treatment of COPD.
-- Developing RPL554 as a therapy to treat other forms of respiratory
disease. We believe that RPL554's properties as an inhaled, dual
inhibitor of PDE3 and PDE4 give it broad potential applicability, and,
following development of RPL554 for the treatment of COPD and CF, we may
explore its development to treat other respiratory diseases.
-- We may seek strategic collaborations with market leading
biopharmaceutical companies to develop and commercialize RPL554. We
believe these collaborations could provide significant funding to advance
the development of RPL554 while allowing us to benefit from the
development and commercialization expertise of our collaborators.
-- We may acquire or in-license product candidates for the treatment of
respiratory diseases. We plan to leverage our respiratory disease
expertise to identify and in-license or acquire additional clinical stage
product candidates that we believe have the potential to become novel
treatments for respiratory diseases with significant unmet medical needs.
________
(1) Q2 2017 US COPD patient database & physician survey research, IQVIA
MIDAS Sales; Mullerova H et al. American Journal of Respiratory and
Critical Care Medicine 2017; Vestbo J, et al. Lancet 2017; Bateman et
al. Eur Respir J 2013; Vogelmeier et al. Lancet Respir Med. 2013; Mahler
et al. Eur Respir J 2013
FINANCIAL REVIEW
Financial review of the nine and three month period ended September 30,
2018
Nine months ended September 30, 2018
Research and Development Costs
Research and development costs were GBP13.6 million for the nine months
ended September 30, 2018, compared to GBP14.0 million for the nine
months ended September 30, 2017, a decrease of GBP0.4 million. The cost
of clinical trials reduced by GBP1.7 million as there were four active
trials in the nine months ended September 30, 2017, including a four
week Phase 2b trial for COPD maintenance treatment, compared to two
clinical trials in the nine months ended September 30, 2018.
Pre-clinical costs also reduced by GBP0.8 million. These reductions were
offset by a GBP1.6 million increase in contract manufacturing and
formulation development costs. Personnel related costs increased by
GBP0.5 million in the nine months ended September 30, 2018, compared to
the prior period, as the research and development team was expanded.
General and Administrative Costs
General and administrative costs were GBP4.6 million for the nine months
ended September 30, 2018, compared to GBP5.0 million for the nine months
ended September 30, 2017, a decrease of GBP0.4 million. The decrease was
primarily attributable to a GBP0.8 million decrease in commercial
research costs and professional fees relating to our global offering of
American Depositary Shares and ordinary shares in 2017 (the "Global
Offering"), offset by a GBP0.3 million increase in the non-cash
share-based payment charge.
Finance Income and Expense
Finance income was GBP1.8 million for the nine months ended September
30, 2018, and GBP4.1 million for the nine months ended September 30,
2017. The decrease was primarily due to an increase in the fair value of
the warrant liability during the first nine months of 2018 (which is a
non-cash item, recorded as a finance expense) compared to a decrease in
the liability in the nine month period ended September 30, 2017, which
resulted in a non-cash gain (recorded as finance income) of GBP3.9
million in the comparative period. There was a foreign exchange gain on
cash and short term investments of GBP1.2 million in the nine months
ended September 30, 2018, and a loss in the comparative period (recorded
in finance expense). Furthermore, GBP0.6 million of interest was
received in the nine months ended September 30, 2018 (nine months ended
September 30, 2017: GBP0.2 million).
Finance expense was GBP3.5 million for the nine months ended September
30, 2018, compared to GBP2.2 million for the nine months ended September
30, 2017. The movement was due to an increase in the fair value of the
warrant liability of GBP3.4 million, recorded in finance expense,
compared to reduction in the value of the liability in the comparable
2017 period (recorded in finance income), both non-cash items. In
addition, there was a foreign exchange loss on cash and short term
investments in the prior period of GBP2.1 million. In the nine months
ended September 30, 2018, there was a foreign exchange gain (recorded in
finance income).
Taxation
Taxation for the nine months ended September 30, 2018, amounted to a
credit of GBP3.0 million compared to a credit of GBP2.9 million for the
nine months ended September 30, 2017, an increase of GBP0.1 million. It
predominantly relates to research and development tax credits which are
obtained at a rate of 14.5% of 230% of our qualifying expenditure.
Cash Flows
Net cash used in operating activities (after receipt of R&D tax credits)
decreased to GBP13.1 million for the nine months ended September 30,
2018, from GBP15.8 million for the nine months ended September 30, 2017.
Cash used in operating activities (before receipt of R&D tax credits)
increased, reflecting differences in the timing of supplier payments
made in the nine months ended September 30, 2018, compared to the 2017
period. Offsetting this was a GBP4.6 million net cash inflow from
taxation received in the nine months ended September 30, 2018, compared
to GBP0.8 million in the prior period. The cash inflow from taxation in
both periods related principally to cash received from UK research and
development tax credits.
Net cash generated from / (used in) investing activities predominantly
reflects the net movement of cash being placed on deposit for more than
three months and such deposits maturing, because deposits of more than
three months are disclosed as short term investments, separately from
cash. In the nine months ended September 30, 2018 the Company had cash
generated from investing activities amounting to GBP8.6 million; the net
cash used in the nine months ended September 30, 2017 of GBP54.8 million
reflects that the Company placed a significant proportion of the
proceeds from the Global Offering on deposit as short term investments
in that period. The Company balances the objective for higher interest
income from longer term deposits with short term liquidity requirements.
There was no cash received or paid from financing activities for the
nine months ended September 30, 2018. The GBP63.2 million received for
the nine months ended September 30, 2017, represented the cash raised in
the Global Offering.
Cash, cash equivalents and short-term investments
Net cash, cash equivalents and short-term investments at September 30,
2018, decreased to GBP68.9 million from GBP80.3 million at December 31,
2017 due to the utilization of cash in ordinary operating activities.
Net assets
Net assets decreased to GBP65.2 million at September 30, 2018, from
GBP79.9 million at December 31, 2017. This decrease was primarily due to
the operating activities of the Company and the fair value remeasurement
of the warrant liability.
Three months ended September 30, 2018
The operating loss for the three months ended September 30, 2018, was
GBP6.8 million (September 30, 2017: GBP8.1 million) and the loss after
tax for the three months ended September 30, 2018, was GBP2.3 million
(September 30, 2017: GBP9.1 million).
Research and Development Costs
Research and development costs were GBP5.3 million for the three months
ended September 30, 2018, compared to GBP6.1 million for the three
months ended September 30, 2017, a decrease of GBP0.8 million. The
movement was predominantly attributable to a GBP0.8 million decrease in
clinical trial expenses. During the three months ended September 30,
2017, the Company incurred clinical trial costs in respect of its Phase
2b trial for COPD maintenance treatment; during the three months ended
September 30, 2018, there were costs in respect of a trial evaluating
RPL554 as an add on to LAMA/LABA maintenance treatment.
General and Administrative Costs
General and administrative costs were GBP1.4 million for the three
months ended September 30, 2018, compared to GBP2.0 million for the
three months ended September 30, 2017, a decrease of GBP0.6 million. The
decrease was primarily attributable to a GBP0.5 million decrease in
professional fees in the three months ended September 30, 2018, compared
to the same period in 2017.
Finance Income and Expense
Finance income was GBP3.3 million for the three months ended September
30, 2018, and GBP0.1 million for the three months ended September 30,
2017. The increase in finance income was primarily due to a decrease in
the fair value of the warrant liability during the third quarter of 2018
of GBP2.6 million compared to an increase in the liability in the third
quarter ended September 30, 2017 (recorded as a finance expense) both
non-cash items. There was a foreign exchange gain of GBP0.5 million on
cash and short term investments in the 2018 period, and a foreign
exchange loss in the 2017 period (recorded in finance expense).
Finance expense was GBP27 thousand for the three months ended September
30, 2018, compared to GBP2.4 million for the three months ended
September 30, 2017. The decrease in finance expense was primarily due to
a decrease in the fair value of the warrant liability during the third
quarter of 2018 (recorded as a finance income) compared to an increase
in the liability in the third quarter ended September 30, 2017, of
GBP1.2 million both non-cash items. In addition, there was a foreign
exchange loss on cash and short term investments in the three months
ended September 30, 2017 of GBP1.2 million. In the three months ended
September 30, 2018, a foreign exchange gain was recorded in finance
income.
Taxation
Taxation for the three months ended September 30, 2018 amounted to a
credit of GBP1.1 million compared to a credit of GBP1.3 million for the
three months ended September 30, 2017. It predominantly relates to
research and development tax credits which are obtained at a rate of
14.5% of 230% of our qualifying expenditure.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENT
OF FINANCIAL POSITION (UNAUDITED)
AS OF SEPTEMBER 30, 2018, AND DECEMBER
31, 2017
As of As of
September December
30, 31,
Notes 2018 2017
GBP'000s GBP'000s
ASSETS
Non-current assets:
Goodwill 441 441
Intangible assets 2,138 1,969
Property, plant and equipment 11 16
Total non-current assets 2,590 2,426
--------- --------
Current assets:
Prepayments and other receivables 1,963 1,810
Current tax receivable 3,226 5,006
Short term investments 9 41,329 48,819
Cash and cash equivalents 27,561 31,443
Total current assets 74,079 87,078
--------- --------
Total assets 76,669 89,504
EQUITY AND LIABILITIES
Capital and reserves attributable
to equity holders:
Share capital 5,266 5,251
Share premium 118,862 118,862
Share-based payment reserve 7,253 5,022
Accumulated loss (66,182) (49,254)
Total equity 65,199 79,881
Current liabilities:
Derivative financial instrument 10 4,658 1,273
Trade and other payables 5,732 7,154
Tax payable -- U.S. Operations -- 169
Total current liabilities 10,390 8,596
Non-current liabilities:
Assumed contingent obligation 11 962 875
Deferred income 118 152
Total non-current liabilities 1,080 1,027
--------- --------
Total equity and liabilities 76,669 89,504
The accompanying notes form an integral part of these consolidated
financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED
INTERIM STATEMENT OF COMPREHENSIVE
INCOME
FOR THE THREE AND NINE
MONTHSED SEPTEMBER
30, 2018, AND SEPTEMBER
30, 2017
(UNAUDITED)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
Notes 2018 2017 2018 2017
GBP'000s GBP'000s GBP'000s GBP'000s
Research and development
costs (5,346) (6,085) (13,649) (14,028)
General and administrative
costs (1,417) (2,040) (4,647) (5,041)
Operating loss (6,763) (8,125) (18,296) (19,069)
Finance income 7 3,331 114 1,841 4,131
Finance expense 7 (27) (2,361) (3,463) (2,151)
Loss before taxation (3,459) (10,372) (19,918) (17,089)
Taxation -- credit 8 1,119 1,258 2,966 2,861
Loss for the period (2,340) (9,114) (16,952) (14,228)
Other comprehensive income
/ (loss):
Items that might be subsequently
reclassified to profit
or loss
Exchange differences on
translating foreign operations 9 (14) 24 (28)
Total comprehensive loss
attributable to owners
of the Company (2,331) (9,128) (16,928) (14,256)
Loss per ordinary share
-- (pence) 6 (2.22) (8.70) (16.14) (17.40)
The accompanying notes form an integral part of these consolidated
financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENT
OF CASH FLOWS FOR
THE NINE MONTHSED SEPTEMBER 30, 2018,
AND SEPTEMBER 30, 2017 (UNAUDITED)
Nine Nine
Months Months
Ended Ended
September September
30, 30,
2018 2017
GBP'000s GBP'000s
Cash used in operating activities:
Loss before taxation (19,918) (17,089)
Finance income (1,841) (4,131)
Finance expense 3,463 2,151
Share-based payment charge 2,231 1,991
Increase in prepayments and other receivables (223) (2,377)
(Decrease) / increase in trade and other
payables (1,434) 2,798
Depreciation of property, plant and equipment 6 5
Amortization of intangible assets 66 50
Cash used in operating activities (17,650) (16,602)
Cash inflow from taxation 4,594 816
Net cash used in operating activities (13,056) (15,786)
Cash flow from investing activities:
Interest received 681 87
Purchase of plant and equipment (1) (3)
Payment for patents and computer software (235) (177)
Transfer to short term investments (44,716) (54,689)
Maturity of short term investments 52,854 --
Net cash generated from / (used in) in
investing activities 8,583 (54,782)
Cash flow from financing activities:
Gross proceeds from the April 2017 Global
Offering -- 70,032
Transaction costs on April 2017 Global
Offering -- (6,786)
Net cash generated in financing activities -- 63,246
Net decrease in cash and cash equivalents (4,473) (7,322)
Cash and cash equivalents at the beginning
of the period 31,443 39,785
Effect of exchange rates on cash and
cash equivalents 591 (1,069)
Cash and cash equivalents at the end
of the period 27,561 31,394
VERONA PHARMA PLC
CONDENSED CONSOLIDATED
INTERIM STATEMENT OF
CHANGES IN EQUITY
FOR THE NINE MONTHSED SEPTEMBER 30,
2018, AND SEPTEMBER
30, 2017 (UNAUDITED)
Total
Share Share Share-based Accumulated Total
Capital Premium Expenses Losses Equity
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Balance at January
1, 2017 2,568 58,527 2,102 (28,728) 34,469
Loss for the period -- -- -- (14,228) (14,228)
Other comprehensive
loss for the year:
Exchange differences
on translating foreign
operations -- -- -- (28) (28)
Total comprehensive
loss for the period -- -- -- (14,256) (14,256)
New share capital issued 2,676 67,648 -- -- 70,324
Transaction costs on
share capital issued -- (7,453) -- -- (7,453)
Share options exercised
during the period 7 140 -- -- -- -- 147
Share-based payments -- -- 1,991 -- 1,991
Balance at September
30, 2017 5,251 118,862 4,093 (42,984) 85,222
Balance at January
1, 2018 5,251 118,862 5,022 (49,254) 79,881
Loss for the period -- -- -- (16,952) (16,952)
Other comprehensive
income for the year:
Exchange differences
on translating foreign
operations -- -- -- 24 24
Total comprehensive
loss for the period -- -- -- (16,928) (16,928)
New share capital issued 15 -- -- -- 15
Share-based payments -- -- 2,231 -- 2,231
Balance at September
30, 2018 5,266 118,862 7,253 (66,182) 65,199
The currency translation reserve for September 30, 2018, and September
30, 2017, is not considered material and as such is not presented in a
separate reserve but is included in the total accumulated losses
reserve.
VERONA PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHSED SEPTEMBER 30, 2018
1. General information
Verona Pharma plc (the "Company") and its subsidiaries are a
clinical-stage biopharmaceutical company focused on developing and
commercializing innovative therapeutics for the treatment of respiratory
diseases with significant unmet medical needs.
The Company is a public limited company which is listed on the
Alternative Investment Market of the London Stock Exchange and on April
27, 2017, the Company's American Depositary Shares began trading on the
Nasdaq Global Market. The Company is incorporated and domiciled in the
United Kingdom. The address of the registered office is 1 Central Square,
Cardiff, CF10 1FS, United Kingdom.
The Company has two subsidiaries, Verona Pharma Inc. and Rhinopharma
Limited ("Rhinopharma"), both of which are wholly owned.
2. Basis of accounting
The unaudited condensed consolidated interim financial statements of
Verona Pharma plc (the "Company") and its subsidiaries, Verona Pharma,
Inc., and Rhinopharma Limited (together the "Group"), for the nine
months ended September 30, 2018, do not include all the statements
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group as
of December 31, 2017.
The 2017 Accounts, on which the Company's auditors delivered an
unqualified audit report, have been delivered to the Registrar of
Companies.
These unaudited condensed interim financial statements were authorized
for issue by the Company's board of directors (the "Directors") on
November 6, 2018. There have been no changes, except as otherwise stated,
to the accounting policies contained in the annual consolidated
financial statements as of and for the year ended December 31, 2017,
which have been prepared in accordance with international financial
reporting standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB").
The interim condensed consolidated financial statements have been
prepared on a going-concern basis. Management, having reviewed the
future operating costs of the business in conjunction with the cash held
as of September 30, 2018, believes the Group has sufficient funds to
continue as a going concern for at least twelve months from November 6,
2018.
The Group's activities and results are not exposed to seasonality. The
Group operates as a single operating and reportable segment.
During the period the Group adopted IFRS 9. This has not had a material
impact on the accounting for financial instruments held by the Group,
including the assumed contingent obligation, the derivative financial
instrument or short term deposits. There has been no change in the
classification and measurement of these financial instruments.
IFRS 15 has also been adopted by the Group; this has had no impact as
the Group is not revenue generating.
Dividend
The Directors do not recommend the payment of a dividend for the nine
months ended September 30, 2018, (nine months ended September 30, 2017:
GBPnil and the year ended December 31, 2017: GBPnil).
3. Segmental reporting
The Group's activities are covered by one operating and reporting
segment: Drug Development. There have been no changes to management's
assessment of the operating and reporting segment of the Group during
the period.
All non-current assets are based in the United Kingdom.
4. Financial instruments
The Group's activities expose it to a variety of financial risks: market
risk (including foreign currency risk), cash flow and fair value
interest rate risk, credit risk and liquidity risk. The condensed
consolidated interim financial statements do not include all financial
risk management information and disclosures required in the annual
financial statements, and they should be read in conjunction with the
Group's annual financial statements for the year ended December 31,
2017.
5. Estimates
The preparation of condensed consolidated interim financial statements
require management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts
of assets and liabilities, income and expenses. Actual results may
differ from those estimates.
In preparing these condensed consolidated interim financial statements,
the significant judgments made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were
the same as those applied to the consolidated financial statements for
the year ended December 31, 2017.
6. Loss per share calculation
For the nine months ended September 30, 2018, the loss per share of
16.14p (September 30, 2017: 17.40p) is calculated by dividing the loss
for the nine months ended September 30, 2018 by the weighted average
number of ordinary shares in issue of 105,038,800 during this period
(September 30, 2017: 81,923,920).
For the three months ended September 30, 2018, the loss per share of
2.22p (September 30, 2017: 8.70p) is calculated by dividing the loss for
the three months ended September 30, 2018 by the weighted average number
of ordinary shares in issue of 105,080,903 during this period (September
30, 2017: 104,896,971). Since the Group has reported a net loss, diluted
loss per ordinary share is equal to basic loss per ordinary share.
Each ADS represents 8 ordinary shares of the Company, so the profit or
loss per ADS in any period is equal to 8 times the profit or loss per
share.
7. Finance income and expense
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
2018 2017 2018 2017
GBP'000s GBP'000s GBP'000s GBP'000s
Finance income:
Interest received on cash
balances 238 103 611 195
Foreign exchange gain on
translating foreign currency
denominated balances 502 -- 1,230 --
Fair value adjustment on
derivative financial instruments
(note 10) 2,591 -- -- 3,925
Other income -- 11 -- 11
Total finance income 3,331 114 1,841 4,131
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2018 30, 2017 30, 2018 30, 2017
GBP'000s GBP'000s GBP'000s GBP'000s
Finance expense:
Fair value adjustment on
derivative financial instruments
(note 10) -- 1,188 3,385 --
Foreign exchange loss on
translating foreign currency
denominated balances -- 1,156 -- 1,693
Foreign exchange loss on
receivables relating to
financing activities -- -- -- 408
Impact of changes in foreign
exchange rates on the contingent
arrangement -- (7) -- (20)
Unwinding of discount factor
movements related to the
assumed contingent arrangement
(note 11) 27 24 78 70
Total finance expense 27 2,361 3,463 2,151
8. Taxation
The tax credit for the nine month period ended September 30, 2018,
amounts to GBP3.0 million and consists of the estimated research and
development tax credit receivable on qualifying expenditure incurred
during the nine month period ended September 30, 2018 for an amount of
GBP3.0 million less a tax expense of GBP35 thousand related to the US
operations (nine month period ended September 30, 2017: GBP2.9 million
tax credit, comprising GBP3.1 million for research and development tax
credit, less GBP0.2 million expense for tax on US operations).
The tax credit for the three month period ended September 30, 2018,
amounts to GBP1.1 million, and consists of the estimated research and
development tax credit receivable on qualifying expenditure incurred
during the three month period ended September 30, 2018, for an amount of
GBP1.1 million less a tax expense of GBP28 thousand related to the US
operations (three month period ended September 30, 2017: GBP1.3 million
tax credit, comprising GBP1.4 million for research and development tax
credit, less GBP0.1 million expense for tax on US operations).
9. Short term investments
Short term investments as at September 30, 2018 amounted to a total of
GBP41.3 million (December 31, 2017: GBP48.8 million) and consisted of
fixed term deposits in US Dollars and UK Pounds.
10. Derivative financial instrument
In July 2016, the Company issued 31,115,926 units to new and existing
investors at the placing price of GBP1.4365 per unit, each of which was
comprised of one ordinary share and one warrant. The warrant holders can
subscribe for 0.4 of an ordinary share at a per share exercise price of
120% of the placing price (GBP1.7238). The warrant holders can opt for a
cashless exercise of their warrants by choosing to exchange the warrants
held for a reduced number of warrants exercisable at nil consideration.
The reduced number of warrants is calculated based on a formula using
the share price and the exercise price of the shares. The warrants were
therefore classified as a derivative financial liability, since their
exercise might result in a variable number of shares to be issued. The
warrants expire on May 2, 2022.
At September 30, 2018, and December 31, 2017, warrants over 12,401,262
shares were in effect.
As of September 30, As of December 31,
2018 2017
Shares available to be issued
under warrants 12,401,262 12,401,262
Exercise price GBP 1.7238 GBP 1.7238
Risk-free interest rate 0.95% 0.42%
Expected term to exercise 3.59 years 1.79 years
Annualized volatility 62.01% 47.35%
Dividend rate 0.00% 0.00%
Dilution discount 4.37% 0.00%
As at September 30, 2018, the Group updated the underlying assumptions
and calculated a fair value of these warrants, using the Black-Scholes
pricing model (including level 3 assumptions), of GBP4.7 million.
The variance for the nine month period ending September 30, 2018, was
GBP3.4 million (nine month period ending September 30, 2017: GBP3.9
million) and is recorded as finance expense (September 30, 2017,
recorded in finance income) in the Consolidated Statement of
Comprehensive Income.
Derivative Derivative
financial financial
instrument instrument
2018 2017
GBP'000s GBP'000s
As of January 1, 1,273 7,923
Fair value adjustments recognized in
profit or loss 3,385 (3,925)
As of September 30, 4,658 3,998
For the amount recognized as at September 30, 2018, the effect if
volatility were to deviate up or down is presented in the following
table.
Volatility
(up / down
10 % pts)
GBP'000s
Variable up 5,663
Base case, reported fair value 4,658
Variable down 3,626
11. Assumed contingent obligation related to the business combination
The value of the assumed contingent obligation as of September 30, 2018,
amounted to GBP962 thousand (December 31, 2017: GBP875 thousand). The
increase in value of the assumed contingent obligation during the nine
months ended September 30, 2018, amounted to GBP87 thousand (nine months
ended September 30, 2017: GBP50 thousand) and the unwinding of the
discount on the liability was recorded in finance expense. Periodic
re-measurement is triggered by changes in the probability of success.
The discount percentage applied is 12%. In 2017 and the nine months
ended September 30, 2018, there were no events that triggered
remeasurement.
2018 2017
GBP'000s GBP'000s
As of January 1, 875 803
Impact of changes in foreign exchange
rates 9 (20)
Unwinding of discount factor 78 70
As of September 30, 962 853
There is no material difference between the fair value and carrying
value of the financial liability.
For the amount recognized as at September 30, 2018, of GBP962 thousand,
the effect if underlying assumptions were to deviate up or down is
presented in the following table (assuming the probability of success
does not change):
Discount Revenue
rate (up /
(up / down
down 10 %
1 % pt) pts)
GBP'000s GBP'000s
Variable up 920 991
Base case, reported fair value 962 962
Variable down 1,007 934
12. Share option scheme
During the nine months ended September 30, 2018 the Company granted a
total of 2,090,847 share options and 273,390 Restricted Share Units
("RSUs") (nine months ended September 30, 2017, the Company granted
4,656,828 share options, and 1,052,236 RSUs).
The movement in the number of the Company's share options is set out
below:
Weighted Weighted
average average
exercise exercise
price 2018 price 2017
GBP GBP
Outstanding at January 1 1.53 7,527,457 1.87 3,037,333
Granted during the period 1.46 2,090,847 1.32 4,656,828
Exercised during the period -- -- 1.10 (133,333)
Expired during the period -- -- 1.90 (33,333)
Forfeited during the period 1.43 (799,524) -- --
Outstanding options at September
30 1.53 8,818,780 1.53 7,527,495
The movement in the number of the Company's RSUs is set out below:
2018 2017
Outstanding at January 1 1,052,236 --
Granted during the period 273,390 1,052,236
Exercised during the period (309,237) --
Forfeited during the period (153,916) --
Outstanding RSUs at September 30 862,473 1,052,236
========= =========
The share--based payment expense for the nine months ended September 30,
2018, was GBP2.2 million (nine months ended September 30, 2017: GBP2.0
million). In the nine months ended September 30, 2018, 799,524 unvested
options and 153,916 RSUs were forfeited. Previously GBP370 thousand had
been recognized in the statement of comprehensive income relating to
their fair value; in the nine months ended September 30, 2018, this
charge was reversed. There is no exercise price for the RSUs.
The options and RSUs granted during the nine months ended September 30,
2018, were awarded under the Company's 2017 Incentive Plan with total
fair values estimated using the Black Scholes option pricing model of
GBP2.3 million. The cost is amortized over the vesting period of the
options and the RSUs on a straight-line basis. The following assumptions
were used for the Black--Scholes valuation of share options and RSUs
granted in the nine months ended September 30, 2018.
Share options RSUs
Issued in the nine Issued in the nine
months ended months ended
September 30, 2018 September 30, 2018
Options / RSUs granted 2,090,847 273,390
Risk--free interest
rate 1.08% - 1.22% 1.08% - 1.22%
Expected life of
options / RSUs 5.5 - 7 years 5.5 - 7 years
Annualized volatility 69.88% -71.35% 69.88% -71.35%
Dividend rate 0.00% 0.00%
Vesting period 1 to 4 years 1 to 4 years
13. Related party transactions
In the nine months ended September 30, 2018, and 2017, the executive
director received regular salary, post-employment benefits and
share-based payments. Additionally, non-executive directors received
compensation for their services in the form of cash compensation and
equity grants. The compensation costs for the directors and senior staff
for the three and nine months ended September 30, 2018, and 2017 were as
follows:
Short
term Post
employee Share-based employment
benefits payments benefits Total
GBP'000s GBP'000s GBP'000s GBP'000s
Three months
ended
September
30, 2018 Directors 221 304 2 527
Other key management
personnel 324 332 7 663
545 636 9 1,190
========= ========
Three months
ended
September
30, 2017 Directors 244 355 5 604
Other key management
personnel 428 628 7 1,063
672 983 12 1,667
Short
term Post
employee Share-based employment
benefits payments benefits Total
GBP'000s GBP'000s GBP'000s GBP'000s
Nine months
ended
September
30, 2018 Directors 666 1,045 9 1,720
Other key management
personnel 1,245 993 21 2,259
1,911 2,038 30 3,979
=========
Nine months
ended
September
30, 2017 Directors 738 697 13 1,448
Other key management
personnel 1,159 1,203 18 2,380
1,897 1,900 31 3,828
Dr. Jan-Anders Karlsson, Chief Executive Officer of the Company,
purchased 3,250 ordinary shares for GBP5 thousand from the market in the
period.
Dr. David Ebsworth, Chairman of the Company, purchased 12,000 ordinary
shares for GBP14 thousand from the market in the period.
At September 30, 2018, there was a receivable of GBP167 thousand (2017:
nil) due from one director and four key management personnel relating to
tax due on RSUs that vested in the period.
In the period a director provided consultancy services for GBP22
thousand.
14. Convenience translation
We maintain our books and records in pounds sterling and we prepare our
financial statements in accordance with IFRS, as issued by the IASB. We
report our results in pounds sterling. For the convenience of the reader
we have translated pound sterling amounts in the tables below as of
September 30, 2018, and for the three and nine month periods ended
September 30, 2018 into US dollars at the noon buying rate of the
Federal Reserve Bank of New York on September 28, 2018, which was
GBP1.00 to $1.3053. These translations should not be considered
representations that any such amounts have been, could have been or
could be converted into US dollars at that or any other exchange rate as
of that or any other date.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE THREE AND NINE MONTHSED SEPTEMBER
30, 2018 (UNAUDITED)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2018 30, 2018 30, 2018 30, 2018
GBP'000s $'000s GBP'000s $'000s
Research and development costs (5,346) (6,978) (13,649) (17,816)
General and administrative costs (1,417) (1,850) (4,647) (6,066)
Operating loss (6,763) (8,828) (18,296) (23,882)
Finance income 3,331 4,348 1,841 2,403
Finance expense (27) (35) (3,463) (4,520)
Loss before taxation (3,459) (4,515) (19,918) (25,999)
Taxation -- credit 1,119 1,461 2,966 3,872
Loss for the year (2,340) (3,054) (16,952) (22,127)
Other comprehensive income:
Items that might be subsequently reclassified to profit
or loss
Exchange differences on translating foreign operations 9 12 24 31
Total comprehensive loss attributable to owners of
the Company (2,331) (3,042) (16,928) (22,096)
Loss per ordinary share -- (pence / cents) (2.22) (2.90) (16.14) (21.07)
CONDENSED CONSOLIDATED STATEMENT
OF FINANCIAL POSITION AS AT SEPTEMBER
30, 2018, AND DECEMBER 31, 2017
(UNAUDITED)
As of As of As of
September September December
30, 2018 30, 2018 31, 2017
GBP'000s $'000s GBP'000s
ASSETS
Non-current assets:
Goodwill 441 577 441
Intangible assets 2,138 2,791 1,969
Property, plant and equipment 11 14 16
Total non-current assets 2,590 3,382 2,426
--------- --------- --------
Current assets:
Prepayments and other receivables 1,963 2,562 1,810
Current tax receivable 3,226 4,211 5,006
Short term investments 41,329 53,947 48,819
Cash and cash equivalents 27,561 35,975 31,443
Total current assets 74,079 96,695 87,078
--------- --------- --------
Total assets 76,669 100,077 89,504
EQUITY AND LIABILITIES
Capital and reserves attributable
to equity holders:
Share capital 5,266 6,874 5,251
Share premium 118,862 155,151 118,862
Share-based payment reserve 7,253 9,467 5,022
Accumulated loss (66,182) (86,387) (49,254)
Total equity 65,199 85,105 79,881
Current liabilities:
Derivative financial instrument 4,658 6,080 1,273
Trade and other payables 5,732 7,482 7,154
Tax payable -- U.S. Operations -- -- 169
Total current liabilities 10,390 13,562 8,596
Non-current liabilities:
Assumed contingent obligation 962 1,256 875
Deferred income 118 154 152
Total non-current liabilities 1,080 1,410 1,027
--------- --------- --------
Total equity and liabilities 76,669 100,077 89,504
(END) Dow Jones Newswires
November 06, 2018 02:00 ET (07:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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