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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 Phase 2b study with nebulized ensifentrine as add-on to
long-acting bronchodilator
Initiated first Phase 2 study with metered-dose inhaler formulation
Post-period end reported positive Phase 2 data with dry powder inhaler
formulation
Appointed senior clinical team in preparation for Phase 3 nebulized
ensifentrine program
LONDON, Aug. 06, 2019 (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 an operational
update and financial results for the three months and six months ended
June 30, 2019.
The Company's first-in-class development candidate, ensifentrine, is an
inhaled, dual inhibitor of the enzymes phosphodiesterase 3 and 4 that
acts both as a bronchodilator and an anti-inflammatory agent in a single
compound. Ensifentrine is currently in Phase 2b clinical development for
the maintenance treatment of chronic obstructive pulmonary disease
("COPD") and is planned to enter Phase 3 trials for this indication in
2020. Verona Pharma may also develop ensifentrine for the treatment of
cystic fibrosis and asthma.
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS FOR THE THREE AND SIX MONTH
PERIODSED JUNE 30, 2019
Three months ended June 30, 2019
-- Initiated a four-week Phase 2b (400 patient) dose-ranging study in May
2019 evaluating nebulized ensifentrine as an add-on to treatment with a
long acting bronchodilator in patients with moderate-to-severe COPD. The
Company anticipates reporting data from this study around the end of
2019.
-- Initiated a Phase 2 dose-ranging study in June 2019 to evaluate the
pharmacokinetic ("PK") profile, efficacy and safety of a pressurized
metered-dose inhaler ("MDI") formulation of ensifentrine in patients with
moderate-to-severe COPD. The Company anticipates reporting data from the
first part of the trial in the second half of 2019, with final data
expected in the first quarter of 2020.
-- Commenced the second part of the Phase 2 study to evaluate the PK
profile, efficacy and safety of a dry powder inhaler ("DPI") formulation
of ensifentrine in patients with moderate-to-severe COPD, consisting of
one week of twice-daily treatment, supported by the positive interim
findings from the single dose part one of this two-part study.
-- Presented expanded post hoc analysis of nebulized ensifentrine clinical
data in COPD maintenance treatment at the American Thoracic Society (ATS)
2019 International Conference, providing further evidence from our prior
Phase 2b clinical trial of the dual bronchodilator and anti-inflammatory
effects of ensifentrine, including symptom improvement.
-- Deepened the expertise available to the Company through a number of
senior appointments.
-- Appointed Dr Martin Edwards to the Board of Directors in April
2019 as an independent Non-Executive Director.
-- Appointed Nina Church as Executive Director of Global Clinical
Development and Nancy Herje as Senior Director of Clinical
Operations in June 2019; Nina and Nancy have more than 55 years'
combined experience in clinical development, including late stage
development of inhaled respiratory products.
-- The Company was granted a key European patent that provides intellectual
property protection throughout Europe out to 2035 for a suspension
formulation of ensifentrine suitable for nebulized administration. A
corresponding patent has already been granted in the US.
-- Hosted an "Investor and Analyst R&D Forum" on May 8, 2019, in London, to
provide insights into the unmet medical need and challenges of treating
COPD, as well as an update of the most recent clinical data on
ensifentrine. The forum featured a panel of Key Opinion Leaders in the
field of COPD to provide the clinicians' perspective, as well as a COPD
patient to provide a patient's perspective.
Three months ended March 31, 2019
-- Reported top-line data from three-day Phase 2 trial which enrolled 79
patients to investigate the efficacy and safety of two different doses
(1.5 mg and 6.0 mg, twice daily) of nebulized ensifentrine on top of an
inhaled LAMA/LABA therapy, tiotropium/olodaterol (Stiolto(R) Respimat(R))
for COPD maintenance treatment.
-- Ensifentrine demonstrated additional bronchodilation in patients
already receiving maximum standard-of-care dual bronchodilation
therapy with an inhaled LAMA/LABA therapy.
-- Although the primary endpoint of statistically significant
improvement in peak FEV1 vs placebo following the morning dose on
day 3 was not met, a number of positive results were obtained:
-- the peak FEV1 improvement after the evening dose on day 3
was both statistically significant and clinically
meaningful (1.5 mg (P<0.001) and 6 mg (P=0.002));
-- the improvement in FEV1 with the 1.5 mg (P<0.05) dose was
maintained throughout the 24-hour period as measured on day
3;
-- the average FEV1 of 50 mL during the first 4 hours of
dosing with 1.5 mg was statistically significant (p=0.039);
and
-- statistically significant reductions in residual lung
volume ('trapped air') were observed after the evening dose
of ensifentrine with both the 1.5 mg (P<0.001) and 6 mg
(P=0.002) dose groups, compared to placebo.
-- Ensifentrine was observed to be well tolerated in this study.
-- Reported positive interim bronchodilation and safety data from part one
of a two-part Phase 2 clinical trial of a DPI formulation of ensifentrine
in 37 patients with moderate-to-severe COPD that received a single dose
of one (out of five) dosage strengths of ensifentrine (150 ug, 500 ug,
1500 ug, 3000 ug, or 6000 ug) or placebo.
-- Interim data showed a statistically significant and clinically
meaningful increase in lung function as measured by FEV1, compared
to placebo; peak FEV1 increased from baseline in a dose-dependent
manner (ranging from 68 mL to 333 mL, p<0.05 for doses 1500 ug and
above).
-- Average FEV1 0-12 hours also showed a dose response and
demonstrated durability of effect over the dosing interval
(average FEV1 _0-12h: ranging from 54 mL to 254 mL, p<0.05 for
doses 1500 ug and above) supporting twice-daily dosing.
Ensifentrine DPI formulation was observed to be well tolerated at
each dose with an adverse event profile similar to placebo.
-- The data supported initiation of the second part of the Phase 2
trial to evaluate the ensifentrine DPI formulation in patients
with moderate-to-severe COPD over one week of twice-daily
treatment.
-- Strengthened the management team through the additions of Kathleen
Rickard, MD, as Chief Medical Officer, and Tara Rheault, PhD, MPH, as
Vice President of Research and Development and Global Project Management.
Post-period end, the Company:
-- Reported positive results from the second part of the Phase 2 study of
the DPI formulation of ensifentrine in COPD. The trial, which consisted
of one week of twice-daily treatment, met all its primary and secondary
lung function endpoints with ensifentrine delivered in a DPI format. The
magnitude of improvement in lung function and duration of action were
highly statistically significant and support twice daily dosing of
ensifentrine for the treatment of COPD.
-- Primary endpoint met: peak FEV1 corrected for placebo showed
improvements over baseline of 102 mL for the 150 ug2 dose, 175 mL
for the 500 ug dose, 180 mL for the 1500 ug dose and 260 mL for
the 3000 ug dose, (p<0.0001 for all doses), all highly
statistically significant.
-- Secondary endpoints met:
-- Statistically significant improvements in average FEV1 over
12 hours were observed over 7 days with all doses (average
FEV1 AUC(0-12hr) corrected for placebo: 36 mL for the 150
ug dose, 90 mL for the 500 ug dose, 80 mL for the 1500 ug
dose and 147 mL for the 3000 ug dose; p<0.05 for all
doses).
-- Ensifentrine in a handheld dry powder format was well
tolerated at all doses with an adverse event profile
similar to placebo. The safety profile was comparable to
that observed in prior studies with nebulized ensifentrine.
FINANCIAL HIGHLIGHTS
-- Net cash, cash equivalents and short term investments at June 30, 2019,
amounted to GBP46.5 million (December 31, 2018: GBP64.7 million).
-- For the six months ended June 30, 2019, reported operating loss of
GBP19.8 million (six months ended June 30, 2018: GBP11.5 million) and
reported loss after tax of GBP14.4 million (six months ended June 30,
2018: GBP14.6 million). Operating expenses increased from GBP11.5 million
to GBP19.8 million due primarily to development activities with
ensifentrine.
-- Reported loss per share of 13.7 pence for the six months ended June 30,
2019 (six months ended June 30, 2018: 13.9 pence).
-- Net cash used in operating activities for the six months ended June 30,
2019 was GBP18.1 million (six months ended June 30, 2018: GBP12.3
million). The increase in cash used was due to pre-clinical and clinical
studies with ensifentrine and other working capital movements.
"Our Phase 2b dose-ranging clinical trial with nebulized ensifentrine
for COPD is progressing as planned and we anticipate completing this
study around the end of 2019. Informed by this and prior studies in over
800 patients, we then plan to advance into our Phase 3 clinical trial
program, which we expect to commence in 2020 following an End of Phase 2
meeting with the FDA," commented Jan-Anders Karlsson, PhD, CEO of Verona
Pharma. "We are very excited by the positive DPI formulation results
reported yesterday. These very promising results support our view that
ensifentrine is an effective bronchodilator in COPD patients, whether
administered as a dry powder via a handheld inhaler or as a suspension
via a nebulizer. We plan to complete further development and
commercialization of the DPI formulation with a partner and believe
these clinical data strongly support this opportunity."
"We believe ensifentrine, with its novel dual mode of action, has the
potential to be an important additional treatment option for the many
COPD patients that remain symptomatic and have a deteriorating lung
function despite using currently available therapies."
GENERAL INFORMATION
Conference Call and Webcast Information
Verona Pharma will host an investment community conference call at 8:00
a.m. Eastern Daylight Time (1:00 pm British Summer Time) on Tuesday,
August 6, 2019. Analysts and investors may participate in the conference
call by utilizing the conference ID: 7433729 and dialing the following
numbers:
-- 866-940-4574 or 409-216-0615 for callers in the United States
-- 0800 028 8438 for callers in the United Kingdom
-- 0800 181 5287 for callers 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
COPD is a progressive and life-threatening respiratory disease without a
cure. The World Health Organization estimates that it will become the
third leading cause of death worldwide by 2030. The condition damages
the airways and the lungs, leading to debilitating breathlessness that
has a devastating impact on performing basic daily activities such as
getting out of bed, showering, eating and walking. 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. About 800,000 US COPD patients on dual/triple inhaled therapy
(LAMA/LABA +/- ICS) remain uncontrolled, experiencing symptoms that
impair quality of life. These patients urgently need better treatments.
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, ensifentrine, is a first-in-class, inhaled,
dual inhibitor of the enzymes phosphodiesterase 3 and 4 that has been
shown to act as both a bronchodilator and an anti-inflammatory agent in
a single compound. Three formulations of ensifentrine are under
development for the treatment of COPD: nebulized ensifentrine is
currently in Phase 2b clinical development for the maintenance treatment
of COPD and is planned to enter Phase 3 trials for this indication in
2020; a dry powder inhaler (DPI) formulation reported positive Phase 2
data in August 2019; a pressurized metered-dose inhaler (pMDI)
formulation expects to report Phase 2 single dose data in the second
half of 2019, with final data expected in the first quarter of 2020.
Verona Pharma may also develop ensifentrine for the treatment of cystic
fibrosis and 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 ensifentrine as a first-in-class product candidate, the timing
of clinical trials of ensifentrine and trial results, the Company's
"Investor and Analyst R&D Forum", ensifentrine as the first novel class
of bronchodilator in over 40 years and the first therapy for the
treatment of respiratory diseases that combines bronchodilator and
anti-inflammatory activities in one compound, the treatment potential of
ensifentrine, improvements in air trapping on top of dual bronchodilator
treatment translating into further symptom improvement in patients
already on maximum standard-of-care therapy, the market potential for
ensifentrine in a handheld inhaler formulation, the value of
ensifentrine for COPD patients who remain symptomatic and uncontrolled
despite treatment with currently available medicine, the number of COPD
patients who use inhalers for maintenance therapy, the expansion of the
market for ensifentrine in a DPI or pMDI formulation and the size of
such market, partnering late-stage development and commercialization of
a DPI or pMDI formulation, our goal to become a leading
biopharmaceutical company, our review of, and the data from, our next
dose-ranging Phase 2b study to facilitating and de-risking dose
selection for our Phase 3 program and further enhancing ensifentrine's
commercial positioning, the treatment potential for ensifentrine in
other respiratory disease, strategic collaborations and their value, and
in-licensing additional 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 ensifentrine,
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 ensifentrine, 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 ensifentrine, which could adversely affect our ability to develop
or commercialize ensifentrine; potential delays in enrolling patients,
which could adversely affect our research and development efforts; we
may not be successful in developing ensifentrine for multiple
indications; our ability to obtain approval for and commercialize
ensifentrine 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 ensifentrine; and lawsuits
related to patents covering ensifentrine 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 March 19, 2019, 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 Executive Officer info@veronapharma.com
Victoria Stewart, Director of Communications
N+1 Singer Tel: +44 (0)20 3283 4200
(Nominated Adviser and UK Broker)
Aubrey Powell / Jen Boorer / Iqra Amin (Corporate
Finance)
Mia Gardner (Corporate Broking)
Optimum Strategic Communications Tel: +44 (0)20 3950 9144
(European Media and Investor Enquiries) verona@optimumcomms.com
Mary Clark / Anne Marieke Ezendam / Hollie Vile
Westwicke, an ICR Company
(US Investor enquiries)
Stephanie Carrington Tel: +1 646 277 1282
Stephanie.Carrington@icrinc
.com
OPERATIONAL REVIEW
Overview
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, ensifentrine, 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 combines
bronchodilator and anti-inflammatory activities in one compound.
We are initially developing ensifentrine as a nebulized formulation for
the maintenance treatment of symptomatic COPD patients. Our market
research shows that nebulized delivery is the preferred route of
administration for more severe COPD patients, especially in the US,
where approximately two million patients remain uncontrolled despite
taking currently available medicines.
COPD is a progressive respiratory disease with no cure. Few therapeutic
alternatives are available for these patients. The bronchodilator and
anti-inflammatory properties of ensifentrine may be particularly helpful
for these symptomatic patients (e.g. chronic cough, sputum and
breathlessness) with a very high unmet medical need.
In the United States it is estimated that there are 24 million people
with COPD; of those diagnosed with COPD more than 2 million suffer from
severe or very severe forms of the disease. China is estimated to have
at least 70 million COPD patients with many still undiagnosed.
Importantly, over 90% of medications are prescribed in hospitals (in
contrast to the US) and at least a third of patients use nebulized
drugs. We believe the Chinese COPD (respiratory market) could represent
a particularly attractive opportunity for ensifentrine.
Verona Pharma is developing ensifentrine for the treatment of COPD,
cystic fibrosis (CF), and asthma and potentially other respiratory
diseases. Ensifentrine has been observed to be well tolerated in
clinical studies to date, having been studied in more than 800 subjects
in 14 completed clinical trials.
Clinical update
Lead product - nebulized ensifentrine
We are developing nebulized ensifentrine for the maintenance treatment
of COPD. In our clinical trials we have observed that ensifentrine
improves lung function in COPD patients when used either as a
stand-alone treatment or as an add-on to treatment with single and dual
bronchodilators. We believe that the addition of nebulized ensifentrine
to symptomatic COPD patients already treated with standard-of-care
medicines represents a very significant market opportunity.
In May 2019 we initiated a Phase 2b dose-ranging study evaluating
nebulized ensifentrine as an add-on to treatment with a long acting
bronchodilator in patients with moderate-to-severe COPD. The four-week,
randomized, double-blind, placebo-controlled dose-ranging trial is
designed to evaluate the safety and efficacy of nebulized ensifentrine
as an add-on to inhaled tiotropium, a LAMA commonly used to treat COPD,
and to establish the dosing regimen for a potential Phase 3 program in
COPD. The Phase 2b study will enroll approximately 400 patients with
COPD at approximately 50 sites in the US.
The primary endpoint of this study is improvement in lung function with
ensifentrine, as measured by peak forced expiratory volume in one second
("FEV(1) ") from 0 to 3 hours, a standard measure of exhaled breath
volume. Key additional endpoints include measurements of respiratory
symptoms and quality of life via different patient reported outcome
tools.
We continue to expect to complete patient dosing in our four-week Phase
2b study around the end of 2019 and to progress into pivotal Phase 3
trials in 2020, following the expected end of Phase 2 meeting with the
U.S. Food and Drug Administration ("FDA").
The post-hoc analysis of data from the 4-week Phase 2b (2018) study of
ensifentrine as a maintenance treatment for COPD published in May 2019
at the ATS 2019 International Conference showed a significant
improvement in symptom scores, measured using the E-RS scale, among
patients who did not respond well to the two existing classes of
bronchodilators (non-reversible patients). Given that the majority of
COPD patients are classified as non-reversible, we believe ensifentrine
may offer a significant benefit to most COPD patients; we also believe
that the progressive improvement in symptoms over the four-week period
observed in the post-hoc analysis suggest an anti-inflammatory benefit
that would be additional to that of standard treatment with LAMA or LABA
bronchodilator therapy.
In January 2019, we reported top-line data from a 3-day Phase 2
cross-over trial that enrolled 79 patients to investigate the efficacy
and safety of two different doses (1.5 mg and 6.0 mg, twice daily) of
nebulized ensifentrine on top of an inhaled LAMA/LABA therapy,
tiotropium/olodaterol (Stiolto(R) Respimat(R)), for COPD maintenance
treatment. Each patient received both doses and placebo during the three
treatment periods and about 30% of patients also used stable inhaled
corticosteroid (ICS) therapy throughout the study.
The average improvement in peak FEV(1) on the morning of day 3 with the
1.5 mg dose was observed to be 46 mL which was not statistically
significant so the primary endpoint of the study was not met. However,
the average improvement in FEV(1) over the first 4 hours was 50mL and
statistically significant (p<0.05). Also, the average improvement in
FEV(1) over 24 hours (with two doses of ensifentrine) was statistically
significant (p<0.05)). Analysis showed that more than 40% of patients
reported an improvement in FEV(1) of more than 100 mL, which we believe
suggests that a significant number of COPD patients on dual or triple
therapy could derive a substantial benefit from adding ensifentrine to
their therapy. Importantly, in this and several other clinical trials
ensifentrine produced clinically relevant and statistically significant
improvements in air trapping (residual volume), both on its own as well
as when administered on top of single or dual bronchodilator treatment.
We believe this may translate into further symptom improvement in these
patients already on maximum standard-of-care therapy.
The learnings from our trials to date, including patient numbers,
treatment regimes as well as endpoints are being taken into account in
the design of the Phase 3 trials.
Verona Pharma is also developing formulations of ensifentrine in both
dry powder inhaler ("DPI") and pressurized metered-dose inhaler ("pMDI")
formats, for the treatment of COPD patients who prefer administration
using a handheld inhaler device.
Dry powder inhaler ("DPI") formulation
In March 2019, we announced positive interim data from our two-part
Phase 2 clinical trial of a dry powder inhaler ("DPI") formulation of
ensifentrine in 37 patients with moderate-to-severe COPD who received a
single dose of one (out of five) dosage strengths of ensifentrine (150
ug, 500 ug, 1500 ug, 3000 ug, or 6000 ug) or placebo. Interim data
showed statistically significant and clinically meaningful increase in
lung function as measured by FEV(1) , compared to placebo; peak FEV(1)
increased from baseline in a dose-dependent manner with the observed
increases ranging from 68 mL to 333 mL (p<0.05 for doses 1500 ug and
above).
Average FEV(1) 0-12 hours also showed a dose response and demonstrated
durability of effect over the dosing interval (average FEV(1) 0-12h:
ranging from 54 mL to 254 mL, p<0.05 for doses 1500 ug and above)
supporting twice-daily dosing. Ensifentrine DPI formulation was observed
to be well tolerated at every dose with an adverse event profile similar
to placebo.
The data supported initiation of the second part of the Phase 2 trial in
March 2019 to evaluate the ensifentrine DPI formulation in patients with
moderate-to-severe COPD over one week of twice-daily treatment. Top-line
data from this study was reported in August 2019 and the trial met all
its primary and secondary lung function endpoints with ensifentrine
delivered in a DPI format. The magnitude of improvement in lung function
and duration of action were highly statistically significant and support
twice daily dosing of ensifentrine for the treatment of COPD.
Peak FEV(1) , corrected for placebo, showed improvements over baseline
of 102 mL for the 150 ug dose, 175 mL for the 500 ug dose, 180 mL for
the 1500 ug dose and 260 mL for 3000 ug dose, (p<0.0001 for all doses),
all highly statistically significant.
Average FEV(1) 0-12h, corrected for placebo, improved by 36 mL for the
150 ug dose, 90 mL for the 500 ug dose, 80 mL for the 1500 ug dose and
147 mL for the 3000 ug dose; p<0.05 for all doses).
Ensifentrine was well tolerated at all doses with an adverse event
profile similar to placebo. The safety profile was comparable to that
observed in prior studies with nebulized ensifentrine.
Metered-dose inhaler ("pMDI") formulation
In June 2019, we commenced a Phase 2 dose-ranging trial to evaluate the
pharmacokinetic ("PK") profile, efficacy and safety of ensifentrine
delivered by pMDI in patients with moderate-to-severe COPD. The trial
has a randomized, double-blind, placebo-controlled, two-part design. We
anticipate reporting data from the first part of the trial in the second half of 2019 and final data in the first quarter of 2020. We believe the availability of ensifentrine in handheld inhaler formats will greatly expand the market potential for ensifentrine to the millions of COPD patients who prefer to use handheld devices. In the US, DPI and pMDI handheld inhalers are more commonly used than nebulizers for medication in COPD, where an estimated 5.5 million people in the US use inhalers for COPD maintenance therapy. This market was valued at approximately $6 billion in 2017. Opportunities also exist to explore the development of ensifentrine for the treatment of asthma and other respiratory diseases. Enhancements to the senior team Verona Pharma deepened the expertise available to the Company through a number of senior appointments. In April, Dr Martin Edwards was appointed to the Board as a Non-Executive Director. In June, we announced the appointments of Nina Church as Executive Director of Global Clinical Development and Nancy Herje as Senior Director of Clinical Operations in June. Nina and Nancy have more than 55 years' combined experience in clinical development, including late stage development of inhaled respiratory products and will lead the ensifentrine Phase 3 program. They will support the work of Kathleen Rickard, MD and Tara Rheault, PhD, MPH, who joined Verona earlier this year as Chief Medical Officer and as Vice President of Research and Development Operations and Global Project Management respectively. OUTLOOK We intend to become a leading fully integrated biopharmaceutical company, focused on the treatment of respiratory diseases with significant unmet medical needs. Our initial focus, the nebulized formulation of ensifentrine addresses a clear unmet medical need in symptomatic COPD patients. This is a very large market opportunity in the US and also in China. We believe this market can be addressed with a modest investment in a commercial organization in the US and through a partnership in China. Following completion of the Phase 2b dose-ranging study evaluating nebulized ensifentrine as an add-on to treatment with a long acting bronchodilator in patients with moderate-to-severe COPD, the Company expects to proceed to an End of Phase 2 meeting with the FDA in the first half of 2020. The Company expects to commence its Phase 3 clinical program with nebulized ensifentrine for the maintenance treatment of COPD in 2020, subject to the FDA's authorization to proceed. Verona Pharma is also developing ensifentrine for other respiratory diseases including CF and asthma. After the successful development of DPI and pMDI formulations of ensifentrine last year, and the positive data from the phase 2 DPI trial reported yesterday, we believe these formulations could open up a much larger patient population to ensifentrine treatment. In the US, our market research suggests that about 5.5 million moderate to severe COPD patients currently use either DPI or pMDI devices for administering their COPD therapies. We may seek strategic collaborations with market leading biopharmaceutical companies to develop and commercialize the DPI and pMDI formulations of ensifentrine. We believe that any such collaborations (the signing and terms of which remain uncertain) could provide significant funding to advance the development of ensifentrine, while allowing us to benefit from the development or commercialization expertise of our collaborators. Ensifentrine is protected by a broad patent umbrella. We believe that future medicinal products containing ensifentrine are protected by our IP beyond 2035. We have retained the worldwide commercialization rights for ensifentrine. We have strengthened and expanded our management team and board of directors during the year, adding further expertise. We now have extensive experience particularly in respiratory product development, from drug discovery through commercialization, including the development and/or marketing of launched medicinal products including Symbicort, Daliresp/Daxas, Flutiform, Advair, Breo Ellipta and Anoro Ellipta. FINANCIAL REVIEW Financial review of the six and three month period ended June 30, 2019 Six months ended June 30, 2019 Research and Development Costs Research and development costs were GBP15.8 million for the six months ended June 30, 2019, compared to GBP8.3 million for the six months ended June 30, 2018, an increase of GBP7.5 million. The increase was predominantly attributable to a GBP6.9 million increase in clinical trial expenses relating to four clinical trials (ongoing or in preparation) of ensifentrine in the six months ended June 30, 2019 compared to two trials in the six months ended June 20, 2018. Salary costs increased by GBP0.5 million reflecting the expansion of the clinical team. General and Administrative Costs General and administrative costs were GBP4.0 million for the six months ended June 30, 2019, compared to GBP3.2 million for the six months ended June 30, 2018, an increase of GBP0.8 million. The increase was primarily attributable to a GBP0.4 million increase in professional and market research fees and a GBP0.2 million increase in other overhead expenses. Finance Income and Expense Finance income was GBP2.2 million for the six months ended June 30, 2019, and GBP1.1 million for the six months ended June 30, 2018. The increase in finance income was primarily due to a decrease in the fair value of the warrant liability of GBP1.7 million compared to an increase in the liability in the six month period ended June 30, 2018, (which is recorded as a finance expense). In the prior period, there was a foreign exchange gain on cash and short term investments of GBP0.7 million, compared to a loss for the six months ended June 30, 2019, recorded in finance expense. Finance expense was GBP0.2 million for the six months ended June 30, 2019, compared to GBP6.0 million for the six months ended June 30, 2018. The decrease was due to a decrease in the fair value of the warrant liability, recorded in finance income, compared to an increase of GBP6.0 million in the value of the liability in the prior period. Foreign exchange losses on cash and short term investments during the six months ended June 30, 2019 resulted in a loss of GBP0.1 million. Taxation Taxation for the six months ended June 30, 2019, amounted to a credit of GBP3.4 million compared to a credit of GBP1.8 million for the six months ended June 30, 2018, an increase of GBP1.6 million. The credits are obtained at a rate of 14.5% of 230% of our qualifying research and development expenditure. The increase in the credit amount was attributable to our increased expenditure on research and development, compared to the prior period, and a change in the mix of recoverable spend. Cash Flows Net cash used in operating activities increased to GBP18.1 million for the six months ended June 30, 2019, from GBP12.3 million for the six months ended June 30, 2018. This was due to an increase in operating costs driven by higher research and development costs, as well as differences in the timing of supplier payments. Net cash generated from investing activities predominantly reflects the net movement of cash being placed on deposit for more than three months and such deposits maturing. Deposits of more than three months are disclosed as short term investments, separately from cash. The increase in net cash generated in investing activities to GBP20.9 million for the six months ended June 30, 2019, from GBP17.2 million for the six months ended June 30, 2018 was due to the net movement of funds from short term investments to cash being greater during the six months ended June 30, 2019. Cash, cash equivalents and short-term investments Net cash, cash equivalents and short-term investments at June 30, 2019, decreased to GBP46.5 million from GBP64.7 million at December 31, 2018 due to the utilization of cash in ordinary operating activities. Net assets Net assets decreased to GBP49.8 million at June 30, 2019, from GBP62.9 million at December 31, 2018. This was primarily due to losses generated by the operating activities of the Company. Post-period end The Company received GBP4.4 million in respect of its 2018 tax credit on qualifying research and development expenditure. Three months ended June 30, 2019 The operating loss for the three months ended June 30, 2019, was GBP12.0 million (June 30, 2018: GBP5.7 million) and the loss after tax for the three months ended June 30, 2019, was GBP9.0 million (June 30, 2018: profit of GBP0.6 million). Research and Development Costs Research and development costs were GBP9.9 million for the three months ended June 30, 2019, compared to GBP3.9 million for the three months ended June 30, 2018, an increase of GBP6.0 million. The increase was predominantly attributable to a GBP5.6 million increase in clinical trial expenses relating to three clinical trials (ongoing or in preparation) of ensifentrine in the three months ended June 30, 2019 compared to two trials in the three months ended June 30, 2018. Salary costs increased by GBP0.2 million reflecting the expansion of the clinical team. General and Administrative Costs General and administrative costs were GBP2.1 million for the three months ended June 30, 2019, as compared to GBP1.8 million for the three months ended June 30, 2018, an increase of GBP0.3 million. The increase was primarily attributable to a GBP0.2 million increase in other overhead costs. Finance Income and Expense Finance income was GBP1.0 million for the three months ended June 30, 2019, and GBP5.3 million for the three months ended June 30, 2018. Finance income in the three months ended June 30, 2019 comprised GBP0.3
million in relation to the decrease in the fair value of the warrant
liability, compared to a GBP3.2 million decrease in the prior period,
together with a GBP0.7 million foreign exchange gain on cash and short
term investments in the three months ended June 30, 2019 compared to a
GBP2.1 million gain in the prior period.
Finance expense was GBP36 thousand for the three months ended June 30,
2019, as compared to GBP35 thousand for the three months ended June 30,
2018.
Taxation
Taxation for the three months ended June 30, 2019, amounted to a credit
of GBP2.1 million compared to a credit of GBP1.0 million for the three
months ended June 30, 2018.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
AS OF JUNE 30, 2019, AND DECEMBER 31, 2018
As of As of
Notes June 30, 2019 December 31, 2018
-------------- --------------------
GBP'000s GBP'000s
ASSETS
Non-current assets:
Goodwill 441 441
Intangible assets 2,174 2,134
Property, plant and
equipment 211 21
Total non-current assets 2,826 2,596
------------- ----------------
Current assets:
Prepayments and other
receivables 3,427 2,463
Current tax receivable 7,912 4,499
Short term investments 10 24,091 44,919
Cash and cash equivalents 22,434 19,784
----------------
Total current assets 57,864 71,665
------------- ----------------
Total assets 60,690 74,261
============= ================
EQUITY AND LIABILITIES
Capital and reserves
attributable to equity
holders:
Share capital 5,266 5,266
Share premium 118,862 118,862
Share-based payment
reserve 9,209 7,923
Accumulated loss (83,514) (69,117)
------------- ----------------
Total equity 49,823 62,934
------------- ----------------
Current liabilities:
Derivative financial
instrument 11 769 2,492
Lease liabilities 163 --
Trade and other payables 8,796 7,733
Total current liabilities 9,728 10,225
------------- ----------------
Non-current liabilities:
Assumed contingent
obligation 12 1,056 996
Deferred income 83 106
Total non-current
liabilities 1,139 1,102
------------- ----------------
Total equity and
liabilities 60,690 74,261
============= ================
The accompanying notes form an integral part of these condensed
consolidated financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHSED JUNE 30, 2019, AND JUNE 30, 2018
(UNAUDITED)
Three Months Three Months Six Months Six Months
Ended June Ended June Ended June Ended June
Notes 30, 2019 30, 2018 30, 2019 30, 2018
------------- ------------ ------------ ------------
GBP'000s GBP'000s GBP'000s GBP'000s
Research and development costs (9,916) (3,882) (15,844) (8,303)
General and administrative costs (2,130) (1,772) (3,961) (3,230)
------- --- ------ --- ------- -------
Operating loss (12,046) (5,654) (19,805) (11,533)
Finance income 7 1,011 5,273 2,202 1,101
Finance expense 7 (36) (35) (187) (6,027)
------- --- ------ --- ------- -------
Loss before taxation (11,071) (416) (17,790) (16,459)
Taxation -- credit 8 2,099 1,027 3,412 1,847
------- ---- ------ ---- ------- --- ------- ---
(Loss) / profit for the period (8,972) 611 (14,378) (14,612)
Other comprehensive income:
Items that might be subsequently reclassified to profit
or loss
Exchange differences on translating foreign operations 14 42 1 15
------- ---- ------ ---- ------- --- ------- ---
Total comprehensive (loss) / income attributable to
owners of the Company (8,958) 653 (14,377) (14,597)
======= === ====== ==== ======= =======
Basic (loss) / earnings per ordinary share -- (pence) 9 (8.52) 0.58 (13.65) (13.91)
Diluted (loss) / earnings per ordinary share --(pence) 9 (8.52) 0.58 (13.65) (13.91)
The accompanying notes form an integral part of these condensed
consolidated financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHSED JUNE 30, 2019, AND JUNE 30, 2018 (UNAUDITED)
Total
Share Share Share-based Accumulated Total
Note Capital Premium Expenses Losses Equity
-------- -------- ----------- -------------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Balance at
January 1,
2018 5,251 118,862 5,022 (49,254) 79,881
-------- -------- ----------- --------- -------
Loss for the
period -- -- -- (14,612) (14,612)
Other
comprehensive
income for the
year:
Exchange
differences
on
translating
foreign
operations -- -- -- 15 15
-------- -------- ----------- --------- --- -------
Total
comprehensive
loss for the
period -- -- -- (14,597) (14,597)
Share-based
payments -- -- 1,527 -- 1,527
-------- -------- ----------- --------- --- -------
Balance at
June 30,
2018 5,251 118,862 6,549 (63,851) 66,811
======== ======== =========== ========= =======
Balance at
January 1,
2019 as
previously
reported 5,266 118,862 7,923 (69,117) 62,934
Impact of
change in
accounting
policy 3 -- -- -- (20) (20)
-------- -------- ----------- ---------
Adjusted
balance at
January 1,
2019 5,266 118,862 7,923 (69,137) 62,914
-------- -------- ----------- --------- -------
Loss for the
period -- -- -- (14,378) (14,378)
Other
comprehensive
income for the
year:
Exchange
differences
on
translating
foreign
operations -- -- -- 1 1
-------- -------- ----------- --------- --- -------
Total
comprehensive
loss for the
period -- -- -- (14,377) (14,377)
Share-based
payments -- -- 1,286 -- 1,286
-------- -------- ----------- --------- --- -------
Balance at
June 30,
2019 5,266 118,862 9,209 (83,514) 49,823
======== ======== =========== ========= =======
The accompanying notes form an integral part of these condensed
consolidated financial statements.
The currency translation reserve for June 30, 2019, and June 30, 2018,
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
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHSED JUNE 30, 2019, AND JUNE 30, 2018 (UNAUDITED)
Six Months Six Months
Ended June Ended June
30, 2019 30, 2018
------------ ------------
GBP'000s GBP'000s
Cash used in operating activities:
Loss before taxation (17,790) (16,459)
Finance income (2,202) (1,101)
Finance expense 187 6,027
Share-based payment charge 1,286 1,527
Decrease / (increase) in prepayments and other
receivables 65 (424)
Increase / (decrease) in trade and other payables 163 (1,647)
Depreciation of property, plant and equipment 157 4
Unrealized foreign exchange gains 3 --
Amortization of intangible assets 50 43
------- --- ------- ---
Cash used in operating activities (18,081) (12,030)
Cash outflow from taxation -- (315)
------- --- -------
Net cash used in operating activities (18,081) (12,345)
------- -------
Cash flow from investing activities:
Interest received 296 380
Purchase of plant and equipment (21) (1)
Payment for patents and computer software (90) (174)
Transfer to short term investments -- (14,923)
Maturity of short term investments 20,686 31,948
------- --- ------- ---
Net cash generated in investing activities 20,871 17,230
------- --- ------- ---
Cash flow from financing activities:
Repayment of lease liabilities (168) --
------- ------- ---
Net cash used in financing activities (168) --
------- ------- ---
Net increase in cash and cash equivalents 2,622 4,885
Cash and cash equivalents at the beginning of the
period 19,784 31,443
Effect of exchange rates on cash and cash
equivalents 28 246
------- --- ------- ---
Cash and cash equivalents at the end of the period 22,434 36,574
======= === ======= ===
VERONA PHARMA PLC
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHSED JUNE 30, 2019
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 dual listed, with its
ordinary shares listed on the AIM market operated by the London Stock
Exchange and its American Depositary Shares 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 and its subsidiaries, Verona Pharma, Inc., and
Rhinopharma Limited (together the "Group"), for the six months ended
June 30, 2019, 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, 2018.
The 2018 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
August 6, 2019. There have been no changes, other than the adoption of
IFRS 16, to the accounting policies as contained in the annual
consolidated financial statements as of and for the year ended December
31, 2018, 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 June 30, 2019, believes the Group has sufficient funds to continue
as a going concern for at least 12 months from the date this report is
issued. Beyond this point the Group is dependent on its ability to raise
additional capital to finance its future operations and research and
development activities. The Group might seek funding through public or
private financing, license agreements, debt finance, collaboration
agreements or other arrangements. Should the Group not be successful in
arranging finance in a timely manner then management has the ability to
delay or curtail planned research and development, including the
initiation of Phase 3 trials, to preserve funds for a short period after
this date. The Group's activities and results are not exposed to
seasonality. The Group operates as a single operating and reportable
segment.
Dividend
The Directors do not recommend the payment of a dividend for the six
months ended June 30, 2019, (six months ended June 30, 2018: GBPnil and
the year ended December 31, 2018: GBPnil).
3. Change in accounting policy: adoption of IFRS 16
IFRS 16 'Leases' is effective for accounting periods beginning on or
after January 1, 2019, and replaces IAS 17 'Leases'. It eliminates the
classification of leases as either operating leases or finance leases
and, instead, introduces a single lessee accounting model. The adoption
of IFRS 16 resulted in the Group recognizing lease liabilities within
current liabilities, and corresponding 'right-of-use' assets for the
arrangements within property plant and equipment that were previously
classified as operating leases.
The Group's principal lease arrangements are for office buildings. The
Group has adopted IFRS 16 retrospectively with the cumulative effect of
initially applying the standard as an adjustment to the opening balance
of retained earnings at January 1, 2019. The standard permits a choice
on initial adoption, on a lease-by-lease basis, to measure the
right-of-use asset at either its carrying amount as if IFRS 16 had been
applied since the commencement of the lease, or an amount equal to the
lease liability, adjusted for any accrued or prepaid lease payments. The
Group has elected to measure the right-of-use asset at its carrying
value as if IFRS 16 had been applied since the commencement of the lease,
with the result of a GBP20 thousand reduction in opening total
accumulated losses.
Initial adoption has resulted in the recognition of right-of-use assets
of GBP325 thousand and lease liabilities of GBP316 thousand and the
reclassification of prepaid lease rentals of GBP29 thousand.
As of
January 1, 2019
------------------
GBP'000s
Operating lease commitments (including prepayments)
disclosed as at December 31, 2018 600
Less: adjustments relating to prepaid lease payments (29)
-------------
Operating lease commitments as at December 31, 2018 571
------------- ---
Discounted using the group's incremental borrowing
rate 526
Less: short-term leases recognized on a straight-line
basis as expense (210)
Lease liability recognized as at January 1, 2019 316
============= ===
In applying IFRS 16 for the first time, the group has used the following
practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases with
reasonably similar characteristics;
-- accounting for operating leases with a remaining lease term of less than
12 months as at January 1, 2019, as short-term leases;
-- the use of hindsight in determining the lease term where the contract
contains options to extend or terminate the lease; and
-- excluding initial direct costs from the initial measurement of the
right-of-use asset.
The Group is applying IFRS 16's low-value and short-term exemptions. The
adoption of IFRS 16 has had no impact on the Group's net cash flows,
although a presentation change has been reflected in 2019 whereby cash
outflows of GBP168 thousand are now presented as financing, instead of
operating. There is a decrease of GBP18 thousand in general and
administrative costs as depreciation of the right of use asset is less
than the lease costs and a GBP15 thousand increase in finance expense
from the presentation of a portion of lease costs as interest costs.
There is no significant impact on overall loss before tax and loss per
share.
4. 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.
5. 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,
2018.
6. 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, 2018. In addition the company carried out a
value in use impairment review.
Impairment of intangible assets, goodwill and non-financial assets
The Company notes that after the reduction in its share price since
December 31, 2018, at various points in the three months to 31 March,
2019, the market value of the Company was less than its net book value.
The Company therefore carried out an impairment review as at March 31,
2019. From market research management assessed, among other inputs,
potential patient numbers from likely physician prescribing patterns,
price points, the time from possible launch to peak sales, script
rejection, attrition rates and probability of success. Management also
carried out a sensitivity analysis on key assumptions and assessed that
a reasonable change in these assumptions would not lead to the value in
use falling below net book value. Consequently, management determined
that the Company's value in use exceeded the carrying value of the
Company's assets and that no impairment was required.
Similarly, at various points in the three months to June 30, 2019, the
market value of the Company was less than its net book value. Management
reassessed the impairment review and identified no changes to market
conditions, the competitive landscape, market research insights or other
factors that would change its conclusions. Consequently, management
determined that the Company's value in use exceeded the carrying value
of the Company's assets and that no impairment was required.
7. Finance income and expense
Three Three Six
Months Months Months
Ended Ended Ended Six Months
June 30, June 30, June 30, Ended June
2019 2018 2019 30, 2018
-------- -------- -------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s
Finance income:
Interest received on cash balances 229 213 479 373
Foreign exchange gain on translating foreign currency
denominated bank balances 669 2,060 -- 728
Fair value adjustment on derivative financial instruments
(note 11) 113 3,000 1,723 --
-------- --------
Total finance income 1,011 5,273 2,202 1,101
======== ======== ======== ========
Three Three Six
Months Months Months
Ended Ended Ended Six Months
June 30, June 30, June 30, Ended June
2019 2018 2019 30, 2018
-------- -------- -------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s
Finance expense:
Fair value adjustment on derivative financial instruments
(note 11) -- -- -- 5,976
Interest on discounted lease liability 6 -- 15 --
Foreign exchange loss on translating foreign currency
denominated balances -- -- 114 --
Impact of changes in foreign exchange rates on the
contingent arrangement -- 8 -- --
Unwinding of discount factor movements related to
the assumed contingent arrangement (note 12) 30 27 58 51
-------- -------- -------- --------
Total finance expense 36 35 187 6,027
======== ======== ======== ========
8. Taxation
The tax credit for the six month period ended June 30, 2019, amounts to
GBP3.4 million and consists of the estimated research and development
tax credit receivable on qualifying expenditure incurred during the six
month period ended June 30, 2019 for an amount of GBP3.4 million less a
tax expense of GBP19 thousand related to the US operations (six month
period ended June 30, 2018: GBP1.8 million tax credit, comprising GBP1.9
million for research and development tax credit, less GBP7 thousand
expense for tax on US operations).
The tax credit for the three month period ended June 30, 2019, amounts
to GBP2.1 million, and consists of the estimated research and
development tax credit receivable on qualifying expenditure incurred
during the three month period ended June 30, 2019 for an amount of
GBP2.1 million less a tax expense of GBP0.02 million related to the US
operations (three month period ended June 30, 2018: GBP1.0 million tax
credit, comprising GBP0.9 million for research and development tax
credit, plus tax credit GBP0.1 million expense for tax on US
operations).
9. (Loss) / earnings per share calculation
For the six months ended June 30, 2019, the basic loss per share of
13.65p (June 30, 2018: loss of 13.91p) is calculated by dividing the
loss for the six months ended June 30, 2019 by the weighted average
number of ordinary shares in issue of 105,326,638 during the six months
ended June 30, 2019 (June 30, 2018: 105,017,401). Since the Group has
reported a net loss, diluted loss per ordinary share is equal to basic
loss per ordinary share.
For the three months ended June 30, 2019, the basic loss per share of
8.52p (June 30, 2018: earnings of 0.58p) is calculated by dividing the
loss for the three months ended June 30, 2019 (profit for June 30, 2018)
by the weighted average number of ordinary shares in issue of
105,326,638 during the three months ended June 30, 2019 (June 30, 2018:
105,017,401).
The diluted earnings per share of 0.58p for the three months ended June
30, 2018 is calculated by dividing the profit for the three months ended
June 30, 2018 by the weighted average number of ordinary shares in issue
of 105,017,401 plus the dilution of share options and awards of 813,046.
Where the Group has reported a net profit, diluted earnings per share
has been calculated after adjusting the weighted average number of
shares used in the basic calculation to assume the conversion of all
potentially dilutive shares. A potentially dilutive share arises from
employee share schemes where the exercise price is below the average
market price of the Company's shares during the period.
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.
10. Short term investments
Short term investments as at June 30, 2019 amounted to a total of
GBP24.1 million (December 31, 2018: GBP44.9 million) and consisted of
fixed term deposits in both US Dollars and UK Pounds.
11. Derivative financial instrument
Pursuant to the July 2016 placement 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 considering 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 June 30, 2019, and December 31, 2018, warrants over 12,401,262 shares
were in effect.
As of June 30, 2019 As of December 31, 2018
----------------------- ---------------------------
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 0.61% 0.76%
Remaining term to
exercise 2.84 years 3.34 years
Annualized volatility 59.19% 60.72%
Dividend rate 0.00% 0.00%
Dilution discount 7.76% 5.66%
As at June 30, 2019, the Group updated the underlying assumptions and
calculated a fair value of these warrants, using the Black-Scholes
pricing model (including level 3 assumptions), amounting to GBP0.8
million.
The variance for the six month period ending June 30, 2019, was GBP1.7
million (six month period ending June 30, 2018: GBP6.0 million) and is
recorded as finance income (June 30, 2018, recorded in finance expense)
in the Consolidated Statement of Comprehensive Income.
Derivative Derivative
financial financial
instrument instrument
----------- -------------
2019 2018
----------- -------------
GBP'000s GBP'000s
As of January, 1 2,492 1,273
Fair value adjustments recognized in profit or
loss (1,723) 5,976
---------- -----------
As of June, 30 769 7,249
========== ===========
For the amount recognized as at June 30, 2019, 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 1,187
Base case, reported fair value 769
Variable down 416
12. Assumed contingent obligation related to the business combination
The value of the assumed contingent obligation as of June 30, 2019,
amounted to GBP1,056 thousand (December 31, 2018: GBP996 thousand). The
increase in value of the assumed contingent obligation during the six
months ended June 30, 2019, amounted to GBP60 thousand (six months ended
June 30, 2018: GBP57 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 2018 and the six months ended June 30,
2019, there were no events that triggered remeasurement.
2019 2018
-------- --------
GBP'000s GBP'000s
January 1 996 875
Impact of changes in foreign exchange rates 2 6
Unwinding of discount factor 58 51
-------- --------
June 30 1,056 932
======== ========
There is no material difference between the fair value and carrying
value of the financial liability.
For the amount recognized as at June 30, 2019, of GBP1,056 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 rate Revenue
(up / down (up / down
1 % pt) 10 % pts)
------------- -----------
GBP'000s GBP'000s
Variable up 1,016 1,088
Base case, reported fair value 1,056 1,056
Variable down 1,098 1,024
13. Share option scheme
During the six months ended June 30, 2019 the Company granted a total of
4,249,050 share options and 740,496 Restricted Stock Units ("RSUs") (six
months ended June 30, 2018, the Company granted 2,090,847 share options,
and 273,390 RSUs).
The movement in the number of the Company's share options is set out
below:
Weighted Weighted
average average
exercise exercise
price 2019 price 2018
--------- ----------- --------- ------------
GBP GBP
Outstanding at
January 1 1.53 8,752,114 1.53 7,527,457
Granted during
the period 0.57 4,249,050 1.46 2,090,847
Expired during
the period 2.00 (19,998) -- --
Forfeited during
the period -- -- 1.43 (799,524)
---------
Outstanding
options at June
30 1.22 12,981,166 1.53 8,818,780
========== =========
The movement in the number of the Company's RSUs is set out below:
2019 2018
--------- ------------
Outstanding at January 1 862,473 1,052,236
Granted during the period 740,496 273,390
Forfeited during the period -- (153,916)
Outstanding RSUs at June 30 1,602,969 1,171,710
========= =========
The share--based payment expense for the six months ended June 30, 2019,
was GBP1,286 thousand (six months ended June 30, 2018: GBP1,527
thousand). In the six months ended June 30, 2018, 153,916 unvested
options and RSUs were forfeited. Previously GBP370 thousand had been
recognized in the statement of comprehensive income relating to their
fair value; in the six months ended June 30, 2018, this charge was
reversed.
The options and RSUs granted during the six months ended June 30, 2019,
were awarded under the Company's 2017 Incentive Plan with total fair
values estimated using the Black Scholes option pricing model of GBP1.9
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 six months ended June 30, 2019.
Share options RSUs
----------------------- ------------------------
Issued in the six
months ended June 30, Issued in the six months
2019 ended June 30, 2019
----------------------- ------------------------
Options / RSUs granted 4,249,050 740,496
Risk--free interest rate 0.67% - 0.82% 0.76% - 0.82%
Expected life of options
/ RSUs 5.5 - 7 years 5.5 - 7 years
Annualized volatility 65.63% - 69.71% 67.98% - 69.71%
Dividend rate 0.00% 0.00%
Vesting period 1 to 4 years 1 to 4 years
14. Related party transactions
Dr David Ebsworth, Chairman of the Company, purchased 87,600 ordinary
shares for GBP50 thousand from the market in the period.
Piers Morgan, Chief Financial Officer of the Company, and his spouse
purchased 88,415 ordinary shares in total for GBP53 thousand from the
market in the period.
At December 31, 2018, there was a receivable of GBP126 thousand (2017:
nil) due from one director and two key management personnel relating to
tax due on RSUs that vested in the year ended December 31, 2018. Of this,
GBP93 thousand was repaid with interest in the quarter and GBP33
thousand relating to the Company's National Insurance obligation was
settled by the Company.
In the period a director provided consultancy services for GBP15
thousand.
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 June
30, 2019, and for the three and six month periods ended June 30, 2019
into US dollars at the noon buying rate of the Federal Reserve Bank of
New York on June 28, 2019, which was GBP1.00 to $1.2704. 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 STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE
AND SIX MONTHS ENDED JUNE 30, 2019 (UNAUDITED)
Six Months Six Months
Three Months Ended Three Months Ended Ended June Ended June
June 30, 2019 June 30, 2019 30, 2019 30, 2019
-------------------- -------------------- ------------ ------------
GBP'000s $'000s GBP'000s $'000s
Research and development costs (9,916) (12,597) (15,844) (20,128)
General and administrative costs (2,130) (2,706) (3,961) (5,032)
----------- ------ ----------- ------ ------- -------
Operating loss (12,046) (15,303) (19,805) (25,160)
Finance income 1,011 1,284 2,202 2,797
Finance expense (36) (46) (187) (238)
----------- ------ ----------- ------ ------- -------
Loss before taxation (11,071) (14,065) (17,790) (22,601)
Taxation -- credit 2,099 2,667 3,412 4,335
----------- ------- ----------- ------- ------- --- ------- ---
Loss for the period (8,972) (11,398) (14,378) (18,266)
Other comprehensive income:
Items that might be subsequently reclassified to profit
or loss
Exchange differences on translating foreign operations 14 18 1 1
----------- ------- ----------- ------- ------- --- ------- ---
Total comprehensive loss attributable to owners of
the Company (8,958) (11,380) (14,377) (18,265)
=========== ====== =========== ====== ======= =======
Loss per ordinary share -- basic (pence / cents) (8.52) (10.82) (13.65) (17.34)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT JUNE 30,
2019, AND DECEMBER 31, 2018 (UNAUDITED)
As of As of As of
June 30, 2019 June 30, 2019 December 31, 2018
-------------- -------------- --------------------
GBP'000s $'000s GBP'000s
ASSETS
Non-current
assets:
Goodwill 441 561 441
Intangible
assets 2,174 2,762 2,134
Property, plant
and equipment 211 268 21
Total
non-current
assets 2,826 3,591 2,596
------------- ------------- ----------------
Current assets:
Prepayments and
other
receivables 3,427 4,354 2,463
Current tax
receivable 7,912 10,051 4,499
Short term
investments 24,091 30,605 44,919
Cash and cash
equivalents 22,434 28,500 19,784
Total current
assets 57,864 73,510 71,665
------------- ------------- ----------------
Total assets 60,690 77,101 74,261
============= ============= ================
EQUITY AND
LIABILITIES
Capital and
reserves
attributable to
equity holders:
Share capital 5,266 6,690 5,266
Share premium 118,862 151,002 118,862
Share-based
payment
reserve 9,209 11,699 7,923
Accumulated loss (83,514) (106,096) (69,117)
------------- ------------- ----------------
Total equity 49,823 63,295 62,934
------------- ------------- ----------------
Current
liabilities:
Derivative
financial
instrument 769 977 2,492
Finance lease
liabilities 163 207 --
Trade and other
payables 8,796 11,175 7,733
Total current
liabilities 9,728 12,359 10,225
------------- ------------- ----------------
Non-current
liabilities:
Assumed
contingent
obligation 1,056 1,342 996
Deferred income 83 105 106
Total
non-current
liabilities 1,139 1,447 1,102
------------- ------------- ----------------
Total equity and
liabilities 60,690 77,101 74,261
============= ============= ================
(END) Dow Jones Newswires
August 06, 2019 02:00 ET (06:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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