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VRP Verona Pharma Plc

55.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Verona Pharma plc Verona Pharma Plc:operational Update And Financial Results For The Three Months Ended March31, 2020

30/04/2020 7:00am

UK Regulatory


 
TIDMVRP 
 
 
   Reported positive Phase 2b results in symptomatic patients with moderate 
to severe COPD with nebulized ensifentrine 
 
   Reported positive efficacy and safety with single dose pMDI ensifentrine 
 
   U.S. FDA response to End-of-Phase 2 package expected in the second 
quarter 
 
   Conference Call Today at 9:00 am EDT / 2:00 pm BST 
 
   LONDON, April 30, 2020 (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 financial 
results for the three months ended March 31, 2020, and provides a 
corporate update. 
 
   OUTLOOK AND STRATEGY 
 
   Verona Pharma aims to improve health and quality of life for the 
millions of people affected by chronic respiratory diseases. The 
Company's first-in-class development candidate, ensifentrine, has the 
potential to provide relief for patients suffering from respiratory 
conditions such as chronic obstructive pulmonary disease ("COPD"), 
cystic fibrosis ("CF") and asthma. 
 
   Ensifentrine is a novel, investigational inhaled therapy that has been 
shown to act as both a bronchodilator and an anti-inflammatory agent in 
one compound. Initially, the Company is advancing the development of 
nebulized ensifentrine for the maintenance treatment of COPD in moderate 
to severe patients. 
 
   The Company's key objectives include: 
 
 
   -- Completing an End-of-Phase 2 meeting with the U.S. Food and Drug 
      Administration ("FDA") in the second quarter of 2020 to receive guidance 
      on the design of the Phase 3 program with nebulized ensifentrine; 
 
   -- Securing sufficient capital to fund the Phase 3 program for nebulized 
      ensifentrine; and 
 
   -- Initiating the Phase 3 program with nebulized ensifentrine in moderate to 
      severe COPD patients. 
 
 
   RECENT CORPORATE DEVELOPMENTS 
 
   Clinical 
 
 
   -- In January 2020, the Company reported positive top-line data from a Phase 
      2b clinical study with nebulized ensifentrine added on to tiotropium 
      (Spiriva(R)), a long acting anti-muscarinic ("LAMA") bronchodilator in 
      symptomatic patients with moderate to severe COPD. The study met the 
      primary endpoint at all doses and also met clinically relevant secondary 
      endpoints. The Company believes these data support dose selection for 
      Phase 3 clinical trials. The study was accepted as a late-breaking 
      abstract at the 2020 American Thoracic Society International Conference. 
 
   -- In March 2020, the Company reported positive efficacy and safety data 
      with a single dose of the pressurized metered-dose inhaler ("pMDI") 
      formulation of ensifentrine in a Phase 2 clinical trial in patients with 
      moderate to severe COPD. With these results and those observed in 
      previous Phase 2 clinical trials, ensifentrine has demonstrated 
      statistically significant and clinically meaningful improvements in lung 
      function in COPD patients when delivered via any of the three widely used 
      inhaled modes: nebulizer, DPI and pMDI. 
 
   -- Results from the single dose part of the study (Part A) demonstrated a 
      statistically significant and clinically meaningful increase in lung 
      function as measured by ("FEV1")1 compared to placebo. 
 
   -- Positive data support initiation of the second, multiple dose, part of 
      the study (Part B), which will evaluate the pMDI formulation in this 
      patient population over 7 days of twice-daily treatment. Verona Pharma 
      has postponed the initiation of Part B due to concerns regarding the 
      safety of trial subjects, caregivers and medical staff during the novel 
      coronavirus (COVID-19) pandemic. As a result the Company does not expect 
      to announce results from Part B of this trial in 2020. The Company will 
      continue to monitor this evolving situation and will provide an updated 
      timeline for the initiation of Part B at a later date. 
 
   -- Also during the first quarter of 2020, the Company requested an 
      End-of-Phase 2 meeting with the FDA. As a result of the COVID-19 pandemic, 
      the FDA has advised that it will provide a written response to the 
      Company on its End-of-Phase 2 package, rather than holding a meeting. The 
      Company is expecting to receive this response during the second quarter 
      of 2020. 
 
   -- Based on the positive Phase 2 data and subject to receiving the FDA's 
      response to the End-of-Phase 2 package, the Company plans to seek the 
      necessary funding and initiate the Phase 3 clinical program. 
 
   -- Additionally, in February 2020, the Company published its Phase 2b 
      clinical results with nebulized ensifentrine as a monotherapy for 
      maintenance treatment of COPD in the peer reviewed journal, Respiratory 
      Research. The 403-patient trial, which was reported in March 2018, met 
      its primary endpoint demonstrating that ensifentrine produced clinically 
      and statistically significant improvements in lung function at all doses. 
      In addition, clinically relevant secondary endpoints were met including 
      significant progressive improvements in COPD symptoms. 
 
 
   Management 
 
 
   -- In February 2020, the Company appointed Dr. David Zaccardelli as 
      President and Chief Executive Officer and as an executive director. Mark 
      Hahn, was appointed as Chief Financial Officer in March. 
 
 
   FINANCIAL HIGHLIGHTS 
 
 
   -- Net cash, cash equivalents and short-term investments at March 31, 2020 
      amounted to GBP20.8 million (December 31, 2019: GBP30.8 million). In 
      April 2020 the Company received a fiscal 2019 tax credit of GBP7.3 
      million in cash. 
 
   -- For the three months ended March 31, 2020, the Company reported operating 
      loss of GBP11.2 million (three months ended March 31, 2019: GBP7.8 
      million) and reported loss after tax of GBP9.6 million (three months 
      ended March 31, 2019: GBP5.4 million). 
 
   -- The increase in operating costs was predominantly due to increased 
      general and administrative expenses, which were driven primarily by costs 
      relating to executive changes and costs associated with the closure of 
      our New York office and relocation of our US base of operations to North 
      Carolina. Included in net profit and partly offsetting the rise in 
      operating loss is a fall in the net amount of finance income and expense 
      of GBP0.7 million. 
 
   -- Reported loss per share was 9.1 pence for the three months ended March 
      31, 2020 (three months ended March 31, 2019: 5.1 pence). 
 
   -- Net cash used in operating activities for the three months ended March 
      31, 2020 was GBP10.1 million (three months ended March 31, 2019: GBP9.9 
      million). 
 
 
   "We continue to execute on the clinical development plan for 
ensifentrine in COPD for both nebulizer and handheld inhaler 
formulations. We recently reported significant improvements in lung 
function and a continued favorable safety profile demonstrated by the 
single dose Phase 2 results with the pMDI formulation of ensifentrine," 
said David Zaccardelli, Pharm. D., President and Chief Executive 
Officer. "With these results and those observed in previous Phase 2 
clinical trials, ensifentrine has demonstrated statistically significant 
and clinically meaningful improvements in lung function in COPD patients 
when delivered via any of the three widely used inhaled modes: nebulizer, 
DPI and pMDI. In addition to positive effects of ensifentrine on lung 
function, we are very encouraged by the promising data on COPD symptoms 
and quality of life seen in Phase 2 studies." 
 
   "We look forward to the FDA's response to our End-of-Phase 2 package, 
which is expected in the second quarter of 2020. Currently, the 
initiation of a Phase 3 program for ensifentrine for the treatment of 
COPD is anticipated later this year, subject to securing additional 
funding. We continue to monitor the situation caused by the COVID-19 
pandemic and its potential impact on our operational and financing goals 
and will provide an update as and when further information becomes 
available." 
 
   COVID-19 IMPACT AND BUSINESS CONTINUITY 
 
   To help protect the health and safety of the patients, caregivers and 
healthcare professionals involved in its ongoing clinical trials of 
ensifentrine, as well as its employees and independent contractors, in 
response to the COVID-19 pandemic, Verona Pharma has implemented a 
number of precautionary clinical and operational measures to ensure 
consistent and appropriate clinical trial conduct. The Company continues 
to review the effect of the COVID-19 pandemic on its operations, ongoing 
and planned clinical trials and the potential disruption to financial 
markets. 
 
   Ongoing and Planned Clinical Trials of Ensifentrine and Interactions 
with Regulators 
 
   Verona Pharma's ongoing clinical trial evaluating the pMDI formulation 
of ensifentrine in patients with moderate to severe COPD has met 
previously disclosed timelines for reporting data from the single-dose 
portion (Part A), and the Company previously reported that it 
anticipated reporting results from the multiple-dose portion (Part B) in 
the second half of 2020. In March 2020, the Company announced it has 
postponed the initiation of Part B due to concerns regarding the safety 
of trial subjects, caregivers and medical staff during the COVID-19 
pandemic. As a result the Company does not expect to announce results 
from Part B of this trial in 2020. The Company will continue to monitor 
this evolving situation and will provide an updated timeline for the 
start of Part B at a later date. 
 
   Verona Pharma is expecting to receive in the second quarter of 2020 a 
response from the FDA to its End-of-Phase 2 package. The Company 
anticipates that this response will inform the design of the planned 
Phase 3 program with nebulized ensifentrine. 
 
   Verona Pharma has previously reported that it anticipates initiating the 
Phase 3 program in the third quarter of 2020. The Company is continuing 
its preparations to initiate the Phase 3 program as soon as possible 
following a response from the FDA to its End-of-Phase 2 package, which 
supports proceeding with Phase 3 and subject to securing sufficient 
capital to fund the program and the status of the COVID-19 pandemic at 
that time. The Company is investigating the potential impact of the 
COVID-19 pandemic on the program, including the planned design, cost and 
timelines and is evaluating potential mitigations including 
pre-enrollment COVID-19 screening among others. The Company plans to 
provide an update on these details as and when further information is 
available. 
 
   Verona Pharma is investigating whether the COVID-19 pandemic may cause 
disruption of clinical supply of ensifentrine for the ongoing trial of 
the pMDI formulation or planned Phase 3 clinical trials of the nebulized 
formulation. The Company's contract manufacturers have indicated that 
they have appropriate plans and procedures in place to ensure 
uninterrupted future supply of clinical ensifentrine, subject to 
potential limitations on their operations and on the supply chain due to 
the COVID-19 pandemic. The Company is continuing to monitor this 
situation and will provide an update if it becomes aware of any 
disruption caused by the pandemic to the clinical supply of ensifentrine 
for ongoing and planned clinical trials. 
 
   Corporate Operations and Financial Impact 
 
   Verona Pharma has also implemented measures to help keep the Company's 
employees, families, and local communities healthy and safe. All 
employees are working remotely and all business travel has been 
restricted. 
 
   The COVID-19 pandemic has caused significant disruption to the financial 
markets. Verona Pharma has previously indicated that a key 2020 goal is 
to raise significant additional funding to initiate and complete the 
Phase 3 program. The Company is continuing to evaluate available sources 
of capital, however, the cost and other terms of such capital have 
become more onerous as a result of the impacts of the COVID-19 pandemic 
on the financial markets. There is no guarantee that the Company will be 
successful in securing additional financing on acceptable terms or 
within its planned timeframe, or at all, and should it be unable to 
raise sufficient additional funds it will be required to defer the 
initiation of Phase 3 clinical trials and other development activities, 
until such funding can be obtained. 
 
   COVID-19 risk factor 
 
   Verona Pharma has assessed the potential impact on its business of the 
COVID-19 pandemic and will be updating its risk factor disclosures on a 
Report on Form 6-K to be filed with the SEC on or about April 30, 2020. 
The Company is continuing to review the effect of the COVID-19 pandemic 
on its operations, ongoing and planned clinical trials and the potential 
disruption to financial markets. 
 
   (1) FEV(1) Forced Expiratory Volume in one second, a standard measure of 
lung function 
 
   Conference Call and Webcast Information 
 
   Verona Pharma will host an investment community conference call at 9:00 
a.m. EDT / 2:00 p.m. BST on Thursday, April 30, 2020 to discuss the Q1 
2020 financial results and the corporate update. 
 
   Analysts and investors may participate by dialing one of the following 
numbers and reference conference ID: 2667888: 
 
 
   -- 866-940-4574 for callers in the United States 
 
   -- 0800 028 8438 for callers in the United Kingdom 
 
   -- 0800 181 5287 for callers in Germany 
 
 
   A live webcast will be available on the Events and Presentations link on 
the Investors page of the Company's website, www.veronapharma.com, and 
an audio replay will be available there for 30 days. An electronic copy 
of the Q1 2020 results release will also be made available today on the 
Company's website. 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 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. If 
successfully developed and approved, Verona Pharma's product candidate, 
ensifentrine, has the potential to be the first therapy for the 
treatment of respiratory diseases that combines bronchodilator and 
anti-inflammatory activities in one compound. Verona Pharma is currently 
in Phase 2 development with three formulations of ensifentrine for the 
treatment of COPD: nebulized, dry powder inhaler and pressurized 
metered-dose inhaler. Ensifentrine also has potential applications in 
cystic fibrosis, asthma and other respiratory diseases. For more 
information, please visit www.veronapharma.com. 
 
   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 development and potential of ensifentrine, the initiation, 
progress and timing of clinical trials, our expectations surrounding 
clinical trial results and responses from the FDA, the market 
opportunity for various formulations of ensifentrine, including 
estimates of the market size for COPD, the impact of the novel 
coronavirus COVID-19 pandemic on our business and operations and the 
Company's future financial results, the sufficiency of our cash and cash 
equivalents, and our expectations surrounding additional funding. 
 
   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, as well as 
the impact of our management team transition; 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; lawsuits related to patents covering 
ensifentrine and the potential for our patents to be found invalid or 
unenforceable; the impact of the novel coronavirus COVID-19 pandemic on 
our operations, the continuity of our business and general economic 
conditions; and our vulnerability to natural disasters, global economic 
factors and other unexpected events, including health epidemics or 
pandemics like COVID-19. 
 
   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, 2020, under the caption "Supplemental 
Risk Factor Disclosures" in our Report on Form 6-K to be filed with the 
SEC on or about April 30, 2020, 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. 
 
   THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF 
ARTICLE 7 OF REGULATION (EU) NO 596/2014 
 
   For further information please contact: 
 
 
 
 
Verona Pharma plc                                     Tel: +44 (0)20 3283 4200 
Victoria Stewart, Director of Communications          info@veronapharma.com 
 
N+1 Singer                                            Tel: +44 (0)20 3283 4200 
(Nominated Adviser and UK Broker) 
Aubrey Powell / George Tzimas / Iqra Amin (Corporate 
 Finance) 
Tom Salvesen (Corporate Broking) 
 
Optimum Strategic Communications                      Tel: +44 (0)20 950 9144 
(European Media and Investor Enquiries)               verona@optimumcomms.com 
Mary Clark / Eva Haas / Hollie Vile 
 
Argot Partners                                        Tel: +1 212-600-1902 
(US Investor Enquiries)                               verona@argotpartners.com 
Stephanie Marks / Kimberly Minarovich / Michael 
Barron 
 
 
   OPERATIONAL REVIEW 
 
   Company overview 
 
   Verona Pharma is focused on the development of our novel, late-stage 
candidate, ensifentrine, for the treatment of unmet respiratory needs. 
This inhaled inhibitor of the enzymes phosphodiesterase 3 and 4 ("PDE3" 
and "PDE4") is in Phase 2 clinical development with three formulations 
of ensifentrine for the treatment of chronic obstructive pulmonary 
disease ("COPD"): nebulized, dry powder inhaler ("DPI") and pressurized 
metered-dose inhaler ("pMDI"). Ensifentrine has demonstrated significant 
and clinically meaningful improvements in lung function in COPD patients 
when delivered via any of these formulations. Ensifentrine also has 
potential applications in cystic fibrosis, asthma and other respiratory 
diseases. 
 
   Ensifentrine highlights: 
 
 
   -- First-in-class dual bronchodilator and anti-inflammatory agent in a 
      single molecule 
 
   -- Potentially the first novel class of bronchodilator in COPD in over 40 
      years 
 
   -- Potentially the only bronchodilator option as an add-on to existing dual 
      / triple therapy 
 
 
   COPD is a progressive respiratory disease without a cure. It damages the 
airways and lungs, leading to debilitating breathlessness, 
hospitalizations and death. COPD has a major impact on everyday life. 
Patients struggle with basic activities such as getting out of bed, 
showering and walking. COPD affects approximately 384 million people 
worldwide. It is projected to be the third leading cause of death 
globally by 2030, according to the World Health Organization. 
 
   COPD patients are frequently treated with bronchodilators, to relieve 
airway constriction and make it easier to breathe, and with 
corticosteroids, to reduce lung inflammation. Despite receiving maximum 
therapy, many patients, more than 1.2 million in the US alone, remain 
symptomatic and urgently need additional treatment. We believe that 
ensifentrine can provide significant benefits for these patients. 
 
   Initially, we are developing nebulized ensifentrine for the maintenance 
treatment of moderate to severe COPD patients. During the first quarter 
we made significant clinical progress, reporting positive data from our 
second four-week Phase 2b clinical trial with nebulized ensifentrine in 
over 400 symptomatic COPD patients. In this trial, ensifentrine 
demonstrated that it provides additional bronchodilation when given in 
addition to tiotropium (Spiriva(R) ), a long acting anti-muscarinic 
antagonist ("LAMA") widely used for the treatment of COPD. Our first 
4-week Phase 2b clinical trial in over 400 COPD patients, which was 
reported in March 2018, also demonstrated improvements in 
bronchodilation and COPD symptoms with nebulized ensifentrine as 
monotherapy. 
 
   Summary of Phase 2b clinical results in moderate to severe COPD 
patients: 
 
 
   -- Statistically significant and clinically meaningful improvements in lung 
      function 
 
   -- Statistically significant improvements in symptoms and Quality of Life 
      measures 
 
   -- Improvements as monotherapy or as an addition to background therapy 
 
   -- Well-tolerated in 15 clinical trials in over 1300 subjects 
 
 
   Also during the first quarter of 2020, we requested an End-of-Phase 2 
meeting with the FDA. The FDA has advised that it will provide a written 
response to the Company about its End-of Phase 2 package, rather than 
holding a meeting. We expect to receive this response during the second 
quarter of 2020. The U.S. regulatory pathway for the development of 
nebulized treatments for COPD is well-established and nebulized 
therapies currently attract a premium price in this substantial market. 
 
   Our DPI and pMDI formulations of ensifentrine have also demonstrated 
positive efficacy and safety data in Phase 2 clinical trials in moderate 
to severe COPD. An estimated 5.5 million people in the US use inhaled 
delivery, or DPI formulations delivered via handheld inhalers, for COPD 
maintenance treatment. The availability of these formulations of 
ensifentrine, if successfully developed and approved, creates new 
opportunities for using ensifentrine with existing inhaled medications. 
US sales of inhaled COPD maintenance medication were approximately $9 
billion in 2019. 
 
   Management update 
 
   Senior executive changes bring substantial leadership, operational and 
clinical expertise. 
 
   In February 2020, Verona Pharma appointed Dr. David Zaccardelli as 
President and Chief Executive Officer and executive director. 
 
   In March 2020, Verona Pharma appointed Mark Hahn as Chief Financial 
Officer. 
 
   FINANCIAL REVIEW 
 
   Financial review of the three month period ended March 31, 2020 
 
   The operating loss for the three months ended March 31, 2020, was 
GBP11.2 million (March 31, 2019: GBP7.8 million) and the loss after tax 
for the three months ended March 31, 2020, was GBP9.6 million (March 31, 
2019: GBP5.4 million). 
 
   Research and development costs 
 
   Research and development costs were GBP5.9 million for the three months 
ended March 31, 2020, compared to GBP5.9 million for the three months 
ended March 31, 2019. In the three months ended March 31, 2020, these 
costs included preparatory costs for our planned Phase 3 program, the 
close down costs for the Phase 2b study for nebulized ensifentrine added 
on to tiotropium and related drug product manufacturing costs. 
 
   In the same period in 2019 this included the cost for the Phase 2 trial 
using the dry powder inhaler formulation, costs for the Phase 2b study 
for nebulized ensifentrine added on to tiotropium and related drug 
product manufacturing costs. In addition there were preparatory costs 
for the dose-ranging Phase 2b study for ensifentrine added on to 
tiotropium. 
 
   General and administrative costs 
 
   General and administrative costs were GBP5.3 million for the three 
months ended March 31, 2020, compared to GBP1.8 million for the three 
months ended March 31, 2019, an increase of GBP3.5 million. The increase 
was primarily attributable to a GBP2.7 million increase in costs 
relating to executive changes and costs associated with the closure of 
our New York office and relocation of our US base of operations to North 
Carolina. We booked costs of GBP1.7 million relating to payments with 
respect to contractual notice periods and other severance costs. There 
was a GBP0.2 million impairment relating to the closure of the New York 
office and an increase in the share based payment charge of GBP0.8 
million for Restricted Stock Units issued to new executive officers and 
accelerated charges relating to severance agreements. In addition there 
was a GBP0.3 million increase in foreign exchange charges relating to 
movements in the GBP/USD exchange rate. Finally, recruitment costs, 
Directors and Officers liability insurance and various other costs 
increased by an aggregate of GBP0.5m. 
 
   Finance income and expense 
 
   Finance income was GBP0.4 million for the three months ended March 31, 
2020, and GBP1.9 million for the three months ended March 31, 2019. The 
decrease in finance income was primarily due to a smaller decrease in 
the fair value of the warrant liability of GBP0.1 million during the 
three months ended March 31, 2020 compared to a decrease of GBP1.6 
million in the warrant liability during the three months ended March 31, 
2019. 
 
   Finance expense was GBP0.1 million for the three months ended March 31, 
2020, compared to GBP0.8 million for the three months ended March 31, 
2019. The decrease was due to no foreign exchange loss on cash and short 
term investments for the 2020 period compared to a GBP0.8 million loss 
for the three months ended March 31, 2019. 
 
   Taxation 
 
   Taxation for the three months ended March 31, 2020, amounted to a credit 
of GBP1.3 million compared to a credit of GBP1.3 million for the three 
months ended March 31, 2019. The credits are obtained at a rate of 14.5% 
of 230% of our qualifying research and development expenditure. Similar 
expenditure on research and development has resulted in approximately 
the same tax credit year on year. 
 
   Cash flows 
 
   Net cash used in operating activities increased to GBP10.1 million for 
the three months ended March 31, 2020, from GBP9.9 million for the three 
months ended March 31, 2019. Operating costs in the three months ended 
March 31, 2020, were higher than in the prior period but there was a 
similar cash outflow due to the timing of supplier payments and a number 
of accrued and non-cash severance costs in 2020. 
 
   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, because deposits of more than three months 
are disclosed as short term investments, separately from cash. The 
decrease in net cash generated in investing activities to GBP7.2 million 
for the three months ended March 31, 2020, from GBP9.0 million for the 
three months ended March 31, 2019, was due to the net movement of funds 
from short term investments to cash being less during the three months 
ended March 31, 2020. 
 
   Cash, cash equivalents and short-term investments 
 
   Cash, cash equivalents and short-term investments at March 31, 2020 
decreased to GBP20.8 million from GBP30.8 million at December 31, 2019 
due to the utilization of cash in the Company's ordinary operating 
activities. 
 
   The Group intends to initiate its Phase 3 program for the maintenance 
treatment of COPD once it believes it has alignment with the U.S. Food 
and Drug Administration ("FDA") on its planned design for the Phase 3 
clinical program. The Group will require significant additional funding 
to initiate and complete this Phase 3 program and will need to secure 
the required capital to fund the program. The Group intends to seek 
additional funding through public or private financings, debt financing, 
collaboration or licensing agreements and other arrangements. However, 
there is no guarantee that the Group will be successful in securing 
additional finance on acceptable terms, or at all, and should the Group 
be unable to raise sufficient additional funds it will be required to 
defer the initiation of Phase 3 clinical trials and other development 
activities, until such funding can be obtained. This could also force 
the Group to delay, reduce or eliminate some or all of its research and 
development programs, product portfolio expansion or commercialization 
efforts, or pursue alternative development strategies that differ 
significantly from its current strategy, which could have a material 
adverse effect on the Group's business, results of operations and 
financial condition. 
 
   Additionally the ongoing COVID-19 pandemic could impact the Group's 
ability to initiate its planned Phase 3 development program and could 
cause further disruption to capital markets, either of which could 
adversely affect Group's ability to raise the necessary capital. 
 
   Net assets 
 
   Net assets decreased to GBP25.8 million in the three month period ended 
March 31, 2020, from GBP33.9 million at December 31, 2019. This decrease 
was primarily due to the operating activities of the Company. 
 
   VERONA PHARMA PLC 
 
   CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION 
 
   AS OF MARCH 31, 2020 AND DECEMBER 31, 2019 (UNAUDITED) 
 
 
 
 
                                      As of              As of 
                          Notes   March 31, 2020    December 31, 2019 
                                 ---------------  -------------------- 
                                    GBP'000s            GBP'000s 
ASSETS 
Non-current assets: 
Goodwill                                    441                441 
Intangible assets                         2,772              2,757 
Property, plant and 
 equipment                                   42                 43 
Right-of-use assets           9           1,210                971 
Total non-current assets                  4,465              4,212 
                                 --------------   ---------------- 
 
Current assets: 
Prepayments and other 
 receivables                              1,972              2,770 
Current tax receivable                    8,667              7,396 
Short term investments       10             700              7,823 
Cash and cash 
 equivalents                             20,059             22,934 
Total current assets                     31,398             40,923 
                                 --------------   ---------------- 
Total assets                             35,863             45,135 
                                 ==============   ================ 
 
EQUITY AND LIABILITIES 
Capital and reserves 
attributable to equity 
holders: 
Share capital                             5,311              5,266 
Share premium                           118,862            118,862 
Share-based payment 
 reserve                                 11,811             10,364 
Accumulated loss                       (110,160)          (100,627) 
                                 --------------   ---------------- 
Total equity                             25,824             33,865 
                                 --------------   ---------------- 
 
Current liabilities: 
Derivative financial 
 instrument                  11             783                895 
Lease liabilities                           623                460 
Trade and other payables                  6,619              8,261 
Total current 
 liabilities                              8,025              9,616 
                                 --------------   ---------------- 
 
Non-current liabilities: 
Assumed contingent 
 obligation                  12           1,156              1,103 
Non-current Lease 
 Liability                                  809                491 
Deferred income                              49                 60 
                                                  ---------------- 
Total non-current 
 liabilities                              2,014              1,654 
                                 --------------   ---------------- 
Total equity and 
 liabilities                             35,863             45,135 
                                 ==============   ================ 
 
 
   The accompanying notes form an integral part of these consolidated 
financial statements. 
 
   VERONA PHARMA PLC 
 
   CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME 
 
   FOR THE THREE MONTHSED MARCH 31, 2020 AND MARCH 31, 2019 (UNAUDITED) 
 
 
 
 
                                                                   Three Months       Three Months 
                                                                       Ended              Ended 
                                                          Notes    March 31, 2020     March 31, 2019 
                                                                 -----------------  ----------------- 
                                                                     GBP'000s           GBP'000s 
Research and development costs                                       (5,872)           (5,928) 
General and administrative costs                                     (5,301)           (1,831) 
                                                                 ----------   ----  --------- ----- 
Operating loss                                                      (11,173)           (7,759) 
Finance income                                                6         391             1,860 
Finance expense                                               6         (52)             (820) 
                                                                 ----------   ----  --------- ----- 
Loss before taxation                                                (10,834)           (6,719) 
Taxation -- credit                                            7       1,261             1,313 
                                                                 ----------  -----  ---------  ------ 
Loss for the period                                                  (9,573)           (5,406) 
Other comprehensive loss: 
Items that might be subsequently reclassified to profit 
 or loss 
                                                                 -----------------  ----------------- 
Exchange differences on translating foreign operations                   40               (13) 
                                                                 ----------  -----  --------- ----- 
Total comprehensive loss attributable to owners of 
 the Company                                                         (9,533)           (5,419) 
                                                                 ==========   ====  ========= ===== 
Loss per ordinary share -- basic and diluted (pence)          8        (9.1)             (5.1) 
 
 
   The accompanying notes form an integral part of these consolidated 
financial statements. 
 
   VERONA PHARMA PLC 
 
   CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY 
 
   FOR THE THREE MONTHSED MARCH 31, 2019, AND MARCH 31, 2020 
(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, 
 2019              5,266   118,862        7,923    (68,633)       63,418 
Impact of 
 change in 
 accounting 
 policy (1)           --        --           --        (20)          (20) 
Adjusted 
 Balance at 
 January 1, 
 2019              5,266   118,862        7,923    (68,653)       63,398 
                --------  --------  -----------  ---------       ------- 
Loss for the 
 period               --        --           --     (5,406)       (5,406) 
Other 
comprehensive 
loss for the 
period: 
Exchange 
 differences 
 on 
 translating 
 foreign 
 operations           --        --           --        (13)          (13) 
                --------  --------  -----------  ---------       ------- 
Total 
 comprehensive 
 loss for the 
 period               --        --           --     (5,419)       (5,419) 
Share-based 
 payments             --        --          620         --           620 
                --------  --------  -----------  ---------  ---  ------- 
Balance at 
 March 31, 
 2019              5,266   118,862        8,543    (74,072)       58,599 
                ========  ========  ===========  =========       ======= 
 
Balance at 
 January 1, 
 2020              5,266   118,862       10,364   (100,627)       33,865 
                --------  --------  -----------  ---------       ------- 
Loss for the 
 period               --        --           --     (9,573)       (9,573) 
Other 
comprehensive 
loss for the 
period: 
Exchange 
 differences 
 on 
 translating 
 foreign 
 operations           --        --           --         40            40 
                --------  --------  -----------  ---------  ---  ------- 
Total 
 comprehensive 
 loss for the 
 period               --        --           --     (9,533)       (9,533) 
New share 
 capital 
 issued               45        --           --         --            45 
Share-based 
 payments             --        --        1,447         --         1,447 
                --------  --------  -----------  ---------  ---  ------- 
Balance at 
 March 31, 
 2020              5,311   118,862       11,811   (110,160)       25,824 
                ========  ========  ===========  =========       ======= 
 
 
   The currency translation reserve for March 31, 2019, and March 31, 2020, 
is not considered material and as such is not presented in a separate 
reserve but is included in the total accumulated losses reserve. 
 
   (1) This relates to the adoption of IFRS 16. See note 2.17 of the 20-F 
2019. 
 
   VERONA PHARMA PLC 
 
   CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS 
 
   FOR THE THREE MONTHSED MARCH 31, 2020 AND MARCH 31, 2019 (UNAUDITED) 
 
 
 
 
                                                      Three Months       Three Months 
                                                          Ended              Ended 
                                                      March 31, 2020     March 31, 2019 
                                                    -----------------  ----------------- 
                                                        GBP'000s           GBP'000s 
Cash used in operating activities: 
Loss before taxation                                   (10,834)            (6,719) 
Finance income                                            (391)            (1,860) 
Finance expense                                             52                820 
Share-based payment charge                               1,447                620 
Decrease in prepayments and other receivables              753                 84 
Decrease in trade and other payables                    (1,553)            (2,899) 
Depreciation of property, plant and equipment and 
 right of use assets                                       122                 78 
Impairment of right of use asset                           232                 -- 
Unrealized foreign exchange losses / (gains)                 1                (11) 
Amortization of intangible assets                           30                 24 
                                                    ----------  -----  ----------  ----- 
Net cash used in operating activities                  (10,141)            (9,863) 
                                                    ----------   ----  ---------- ---- 
Cash flow from investing activities: 
Interest received                                           98                125 
Purchase of plant and equipment                             (4)                (2) 
Payment for patents and computer software                  (45)               (61) 
Maturity of short term investments                       7,148              8,972 
                                                    ----------  -----  ----------  ----- 
Net cash generated in investing activities               7,197              9,034 
                                                    ----------  -----  ----------  ----- 
Cash flow from financing activities: 
Repayment of finance lease liabilities                    (132)               (84) 
                                                    ----------   ----  ---------- ---- 
Net cash used in financing activities                     (132)               (84) 
                                                    ----------   ----  ---------- ---- 
Net decrease in cash and cash equivalents               (3,076)              (913) 
Cash and cash equivalents at the beginning of the 
 period                                                 22,934             19,784 
Effect of exchange rates on cash and cash 
 equivalents                                               201               (145) 
                                                    ----------  -----  ---------- ---- 
Cash and cash equivalents at the end of the period      20,059             18,726 
                                                    ==========  =====  ==========  ===== 
 
 
 
 
   VERONA PHARMA PLC 
 
   NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 
 
   FOR THE THREE MONTHSED MARCH 31, 2020 
 
   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 ("ADSs") 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, 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 ("Rhinopharma") (together "the Group"), for the 
three months ended March 31, 2020, 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, 2019. 
 
   The 2019 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 April 
30, 2020. There have been no changes to the accounting policies as 
contained in the annual consolidated financial statements as of and for 
the year ended December 31, 2019, which have been prepared in accordance 
with international financial reporting standards ("IFRS") as issued by 
the International Accounting Standards Board ("IASB"). 
 
   The Group's activities and results are not exposed to any seasonality. 
The Group operates as a single operating and reportable segment. 
 
   Going concern 
 
   The Group has incurred recurring losses since inception, including net 
losses of GBP31.9 million, GBP19.9 million and GBP20.5 million for the 
years ended December 31, 2019, 2018 and 2017, respectively. In addition, 
as of March 31, 2020, the Group had an accumulated loss of GBP110.2 
million. The Group expects to continue to generate operating losses for 
the foreseeable future. As of the issuance date of these condensed 
consolidated interim financial statements, the Group expects that its 
cash and cash equivalents, would be sufficient to fund its operating 
expenses and capital expenditure requirements for at least 12 months 
from the issuance date of these condensed consolidated interim financial 
statements. Accordingly, the consolidated financial statements have been 
prepared on a basis that assumes the Group will continue as a going 
concern and which contemplates the realization of assets and 
satisfaction of liabilities and commitments in the ordinary course of 
business. 
 
   The Group intends to initiate its Phase 3 program for the maintenance 
treatment of COPD once it believes it has alignment with the U.S. Food 
and Drug Administration ("FDA") on its planned design for the Phase 3 
clinical program. The Group will require significant additional funding 
to initiate and complete this Phase 3 program and will need to secure 
the required capital to fund the program. The Group intends to seek 
additional funding through public or private financings, debt financing, 
collaboration or licensing agreements and other arrangements. However, 
there is no guarantee that the Group will be successful in securing 
additional finance on acceptable terms, or at all, and should the Group 
be unable to raise sufficient additional funds it will be required to 
defer the initiation of Phase 3 clinical trials and other development 
activities, until such funding can be obtained. This could also force 
the Group to delay, reduce or eliminate some or all of its research and 
development programs, product portfolio expansion or commercialization 
efforts, or pursue alternative development strategies that differ 
significantly from its current strategy, which could have a material 
adverse effect on the Group's business, results of operations and 
financial condition. 
 
   Additionally the ongoing COVID-19 pandemic could impact the Group's 
ability to initiate its planned Phase 3 development program and could 
cause further disruption to capital markets, either of which could 
adversely affect the Group's ability to raise the necessary capital. 
 
   The Group is monitoring the effect of the COVID-19 pandemic and 
reviewing the possible impact on its operations, planned clinical trials 
and the potential disruption to financial markets in the near and the 
long term. Management has determined that this currently does not affect 
the going concern assumption under which the condensed consolidated 
interim financial statements are prepared. 
 
   Impairment of intangible assets, goodwill and non-financial assets 
 
   The Group is constantly reviewing the effect of the COVID-19 pandemic on 
its operations, ongoing and planned clinical trials and the potential 
disruption to financial markets. Management has determined that the 
current effect on the Group does not require an impairment of intangible 
assets or goodwill as the Company's market value still supports the 
value of the assets. However, management will continue to monitor the 
situation. 
 
   Dividend 
 
   The Directors do not recommend the payment of a dividend for the three 
months ended March 31, 2020, (three months ended March 31, 2019: GBPnil 
and the year ended December 31, 2019: 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 apart from a 
right-of-use asset relating to property a lease in the United States. 
 
   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; and 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, 
2019. 
 
   5. Critical estimates and judgments 
 
   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, 2019, with the exception of development of 
the COVID-19 pandemic. 
 
   We have assessed whether the COVID-19 pandemic has any impact on the key 
estimates and judgments previously reported in respect of the derivative 
financial instruments and the assumed contingent obligation and 
concluded that there is no impact. 
 
   6. Finance income and expense 
 
 
 
 
                                                             Three months      Three months 
                                                                 ended             ended 
                                                             March 31, 2020    March 31, 2019 
                                                            ---------------  ----------------- 
Finance income:                                                GBP'000s          GBP'000s 
Interest received on cash balances                                       53              250 
Foreign exchange gain on translating foreign currency 
 denominated bank balances                                              226               -- 
Fair value adjustment on derivative financial instruments 
 (note 11)                                                              112            1,610 
Total finance income                                                    391            1,860 
                                                            ===============  =============== 
 
 
 
 
 
 
                                                         Three months      Three months 
                                                             ended             ended 
                                                         March 31, 2020    March 31, 2019 
                                                        ---------------  ----------------- 
Finance expense:                                           GBP'000s          GBP'000s 
Interest on discounted lease liability                               20                9 
Foreign exchange loss on translating foreign currency 
 denominated balances                                                --              783 
Unwinding of discount factor related to the assumed 
 contingent arrangement (note 12)                                    32               28 
                                                        ---------------  --------------- 
Total finance expense                                                52              820 
                                                        ===============  =============== 
 
   7. Taxation 
 
   The tax credit for the three months ended March 31, 2020, amounts to 
GBP1.3 million, and consists of the estimated research and development 
tax credit receivable on qualifying expenditure incurred during the 
three months ended March 31, 2020 for an amount of GBP1.3 million less a 
tax expense of GBP40 thousand related to the US operations (three months 
ended March 31, 2019: GBP1.3 million tax credit, comprising GBP1.3 
million for research and development tax credit, less GBP3 thousand 
expense for tax on US operations). 
 
   8. Loss per share calculation 
 
   The basic loss per share of 9.1p (March 31, 2019: 5.1p) for the three 
months ended March 31, 2020 is calculated by dividing the loss for the 
three months ended March 31, 2020, by the weighted average number of 
ordinary shares in issue of 105,453,364 during the three months ended 
March 31, 2020 (March 31, 2019: 105,326,637). 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 shares of the Company, so the loss per ADS is any 
period is equal to 8 times the loss per share. 
 
   9. Right-of-use assets 
 
   ln the three months to March 31, 2020, a new lease was signed in North 
Carolina and a liability and corresponding right-of-use ("ROU") asset of 
GBP575 thousand was recognized. The lease terminates on April 30, 2024. 
 
   As at December 31, 2019, the Group had a ROU asset relating to office 
space in New York. In the three months to March 31, 2020, the New York 
office was closed and the ROU asset was subject to an impairment review 
and its net book value of GBP232 thousand was subsequently expensed to 
the income statement. The Group retains a liability of GBP224 thousand 
relating to this asset. 
 
   10. Short term investments 
 
   Short term investments as at March 31, 2020, amounted to a total of 
GBP0.7 million (December 31, 2019: GBP7.8 million) and consisted of 
fixed term deposits. 
 
   11. Derivative financial instrument 
 
   On July 29, 2016, the Company issued 31,115,926 units to new and 
existing investors at the placing price of GBP1.4365 per unit. Each unit 
comprises one ordinary share and one warrant. 
 
   The warrant holders can opt for a cashless exercise of their warrants, 
whereby they can choose 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 warrants. The warrants are therefore 
classified as a derivative financial liability, since their exercise 
could result in a variable number of shares to be issued. 
 
   The warrants entitled the investors to subscribe for, in aggregate, a 
maximum of 12,401,262 shares. The warrants can be exercised until May 2, 
2022. 
 
   At December 31, 2019, and March 31, 2020, warrants over 12,401,262 
shares were in effect. 
 
 
 
 
                               At March 31, 2020      At December 31, 2019 
                             ---------------------  ------------------------ 
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                   0.10%                    0.54% 
Time to expiry                      2.09 years               2.34 years 
Annualized volatility                    76.32%                   65.56% 
Dividend rate                             0.00%                    0.00% 
 
 
   As at March 31, 2020, the Group updated the underlying assumptions and 
calculated a fair value of these warrants of GBP0.8 million. 
 
   The variance for the three months ended March 31, 2020, was GBP0.1 
million (three months ended March 31, 2019: GBP1.6 million) and is 
recorded as finance income in the Consolidated Statement of 
Comprehensive Income. 
 
 
 
 
                                                 Derivative     Derivative 
                                                  financial      financial 
                                                  instrument     instrument 
                                                -------------  ------------- 
                                                    2020           2019 
                                                -------------  ------------- 
                                                  GBP'000s       GBP'000s 
At January 1,                                         895           2,492 
Fair value adjustments recognized in profit or 
 loss                                                (112)         (1,610) 
                                                ---------      ---------- 
At March 31,                                          783             882 
                                                =========      ========== 
 
 
   For the amount recognized as at March 31, 2020, 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                            1,100 
Base case, reported fair value           783 
Variable down                            500 
 
   12. Assumed contingent obligation related to the business combination 
 
   The value of the assumed contingent obligation as of March 31, 2020, 
amounted to GBP1,156 thousand (December 31, 2019: GBP1,103 thousand). 
The increase in value of the assumed contingent obligation during the 
three months ended March 31, 2020, amounted to GBP53 thousand (three 
months ended March 31, 2019: GBP22 thousand). 
 
   The assumed contingent liability is measured at the expected value of 
the milestone payment and royalty payments. This expected value is based 
on estimated future royalties payable, derived from sales forecasts, and 
an assessment of the probability of success using standard market 
probabilities for respiratory drug development. The risk-weighted value 
of the assumed contingent arrangement is discounted back to its net 
present value applying an effective interest rate of 12%. 
 
   The assumed contingent liability is accounted for as a liability and its 
value is measured at amortized cost using the effective interest rate 
method, and is re-measured for changes in estimated cash flows or when 
the probability of success changes. Re-measurements relating to changes 
in estimated cash flows and probabilities of success are recognized in 
the IP R&D asset it relates to. The unwind of the discount is recognized 
in finance expense. In 2019 and the three months ended March 31, 2020, 
there were no events that triggered remeasurement. Should the Group 
determine that it has moved from its Phase 2 to Phase 3 stage of 
development then the value of the liability could increase by between 
GBP15 million and GBP30 million; the increase in the value of the 
liability will give rise to an approximately equivalent increase in the 
value of the IP R&D asset it relates to. 
 
 
 
 
                                                2020       2019 
                                              --------  ---------- 
                                              GBP'000s   GBP'000s 
At January 1,                                    1,103      996 
Impact of changes in foreign exchange rates         21       (6) 
Unwinding of discount factor                        32       28 
                                              --------  ------- 
At March 31,                                     1,156    1,018 
                                              ========  ======= 
 
 
   There is no material difference between the fair value and carrying 
value of the financial liability. 
 
   For the amount recognized as at March 31, 2020, of GBP1,156 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): 
 
 
 
 
                                                Foreign 
                                   Revenue      Exchange 
                                  (up / down   (up / down 
                                  10 % pts)      1% pt) 
                                  GBP'000s     GBP'000s 
Variable up                            1,191        1,152 
Base case, reported fair value         1,156        1,156 
Variable down                          1,121        1,159 
 
   13. Share option scheme 
 
   During the three months ended March 31, 2020 the Company granted 
1,605,000 share options and forfeited 1,628,799 share options (in the 
three months ended March 31, 2019, the Company granted no share options 
nor forfeited any share options). The forfeitures were part of the 
severance agreements relating to executive changes. 
 
   During the three months ended March 31, 2020 the Company granted 
8,442,049 Restricted Stock Units ("RSUs") (three months ended March 31, 
2019, the Company granted no RSUs). 
 
   The movement in the number of the Company's share options is set out 
below: 
 
 
 
 
                    Weighted                Weighted 
                     average                 average 
                     exercise                exercise 
                      price       2020        price       2019 
                    ---------  -----------  ---------  ----------- 
                       GBP                     GBP 
Outstanding at 
 January 1               1.15  14,179,196        1.53  8,752,114 
Granted during the 
 period                  0.55   1,605,000          --         -- 
Forfeited during 
 the period              1.02  (1,628,799)         --         -- 
                                                       --------- 
Outstanding 
 options at March 
 31                      1.10  14,155,397        1.53  8,752,114 
                               ==========              ========= 
 
 
   The movement in the number of the Company's RSUs is set out below: 
 
 
 
 
                                  2020       2019 
                               ----------  --------- 
 
Outstanding at January 1       1,602,969   862,473 
Granted during the period      8,442,049        -- 
Expired during the period        (44,846)       -- 
Exercised during the period     (887,080)       -- 
                               --------- 
Outstanding RSUs at March 31   9,113,092   862,473 
                               =========   ======= 
 
 
   1,069,184 of the RSUs issued related to an element of annual base salary 
and 7,372,865 related to additional equity grants for Dr. Zaccardelli 
and Mr. Hahn (see note 14). Using the Black-Scholes valuation model the 
fair value of each RSUs relating to annual base salary was GBP0.55 and 
the fair value of each RSU relating to the additional grants was 
estimated at GBP0.525 as at 31 March, 2020. 
 
   The share--based payment expense for the three months ended March 31, 
2020, was GBP1,447 thousand (three months ended March 31, 2019: GBP620 
thousand). 
 
   14. Related party transactions 
 
   The Directors and Officers have authority and responsibility for 
planning, directing and controlling the activities of the Company and 
they therefore comprise key management personnel as defined by IAS 24 
("Related Party Disclosures"). 
 
   During the three months ended March 31, 2020, Dr. Jan-Anders Karlsson, 
the Company's former CEO, and Piers Morgan, the Company's former CFO, 
resigned and were replaced by Dr. David Zaccardelli as CEO and President, 
and Mark Hahn as CFO. 
 
   Dr. Jan-Anders Karlsson's severance agreement included severance pay 
equal to GBP479,160, a cash bonus of GBP40,000, a payment as 
compensation of termination of employment of GBP100,000 and base salary 
in lieu of notice of GBP363,000. Other benefits included continued 
medical and life insurance and continued pension contributions. 
 
   Piers Morgan's severance agreement included severance pay equal to 
GBP123,930 as payment in lieu of notice, a cash bonus of GBP82,620, ex 
gratia compensation of GBP30,000 and GBP40,000 additional compensation 
for termination of employment. 
 
   Pursuant to the terms of his employment agreement Dr. Zaccardelli is 
entitled to receive an annual base salary of $750,000, payable $250,000 
in cash and $500,000 in restricted stock units, and a target annual 
bonus opportunity of 50% of his annual base salary. Dr. Zaccardelli is 
also entitled to receive an award of restricted stock units, equal to 4% 
of the Company's outstanding ordinary shares, and an additional award of 
restricted stock units if the Company raises additional equity capital 
during fiscal year 2020, which is intended to result in Dr. 
Zaccardelli's equity awards (other than the portion of his base salary 
payable in restricted stock units) being equal to 4% of the Company's 
outstanding ordinary shares on the applicable date of issuance. 
 
   Pursuant to the terms of his employment agreement Mr. Hahn is entitled 
to receive an annual base salary of $500,000, payable $250,000 in cash 
and $250,000 in restricted stock units, and a target annual bonus 
opportunity of 50% of his annual base salary. Mr. Hahn is also entitled 
to receive an initial award of restricted stock units, equal to 3% of 
the Company's outstanding ordinary shares and an award of restricted 
stock units equal to 1% of the Company's outstanding ordinary share 
after six months of employment. He will also be entitled to an 
additional award of restricted stock units if the Company raises 
additional equity capital during fiscal year 2020, which is intended to 
result in Mr. Hahn's equity awards (other than the portion of his base 
salary payable in restricted stock units) being equal to 4% of the 
Company's outstanding ordinary shares on the applicable date of 
issuance. 
 
   Convenience translation 
 
   The Company maintains its books and records in pounds sterling and 
prepares its financial statements in accordance with IFRS, as issued by 
the IASB. It reports its results in pounds sterling. For the convenience 
of the reader the Company has translated pound sterling amounts in the 
tables below as of March 31, 2020, and for the three months ended March 
31, 2020, into US dollars at the noon buying rate of the Federal Reserve 
Bank of New York on March 31, 2020, which was GBP1.00 to $1.2454. 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 INTERIM STATEMENTS OF FINANCIAL POSITION AS AT 
MARCH 31, 2020 AND DECEMBER 31, 2019 (UNAUDITED) 
 
 
 
 
                      As of            As of              As of 
                  March 31, 2020   March 31, 2020    December 31, 2019 
                 ---------------  ---------------  -------------------- 
                    GBP'000s          $'000s             GBP'000s 
ASSETS 
Non-current 
assets: 
Goodwill                    441              550                441 
Intangible 
 assets                   2,772            3,452              2,757 
Property, plant 
 and equipment               42               52                 43 
Right-of-use 
 assets                   1,210            1,507                971 
Total 
 non-current 
 assets                   4,465            5,561              4,212 
                 --------------   --------------   ---------------- 
 
Current assets: 
Prepayments and 
 other 
 receivables              1,972            2,456              2,770 
Current tax 
 receivable               8,667           10,794              7,396 
Short term 
 investments                700              872              7,823 
Cash and cash 
 equivalents             20,059           24,981             22,934 
Total current 
 assets                  31,398           39,103             40,923 
                 --------------   --------------   ---------------- 
Total assets             35,863           44,664             45,135 
                 ==============   ==============   ================ 
 
EQUITY AND 
LIABILITIES 
Capital and 
reserves 
attributable to 
equity 
holders: 
Share capital             5,311            6,614              5,266 
Share premium           118,862          148,031            118,862 
Share-based 
 payment 
 reserve                 11,811           14,709             10,364 
Accumulated 
 loss                  (110,160)        (137,193)          (100,627) 
                 --------------   --------------   ---------------- 
Total equity             25,824           32,161             33,865 
                 --------------   --------------   ---------------- 
 
Current 
liabilities: 
Derivative 
 financial 
 instrument                 783              975                895 
Lease 
 liabilities                623              776                460 
Trade and other 
 payables                 6,619            8,243              8,261 
Total current 
 liabilities              8,025            9,994              9,616 
                 --------------   --------------   ---------------- 
 
Non-current 
liabilities: 
Assumed 
 contingent 
 obligation               1,156            1,440              1,103 
Non-current 
 Lease 
 Liability                  809            1,008                491 
Deferred income              49               61                 60 
                                                   ---------------- 
Total 
 non-current 
 liabilities              2,014            2,509              1,654 
                 --------------   --------------   ---------------- 
Total equity 
 and 
 liabilities             35,863           44,664             45,135 
                 ==============   ==============   ================ 
 
 
 
   CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME FOR 
THE THREE MONTHS ENDED MARCH 31, 2020 AND MARCH 31, 2019 (UNAUDITED) 
 
 
 
 
                                                           Three months ended    Three months ended    Three months ended 
                                                             March 31, 2020        March 31, 2020        March 31, 2019 
                                                          --------------------  --------------------  -------------------- 
                                                                GBP'000s               $'000s               GBP'000s 
Research and development costs                                 (5,872)               (7,313)               (5,928) 
General and administrative costs                               (5,301)               (6,602)               (1,831) 
                                                          -----------   ------  -----------   ------  ----------- ------ 
Operating loss                                                (11,173)              (13,915)               (7,759) 
Finance income                                                    391                   487                 1,860 
Finance expense                                                   (52)                  (65)                 (820) 
                                                          -----------   ------  -----------   ------  ----------- ------ 
Loss before taxation                                          (10,834)              (13,493)               (6,719) 
Taxation -- credit                                              1,261                 1,570                 1,313 
                                                          -----------  -------  -----------  -------  -----------  ------- 
Loss for the period                                            (9,573)              (11,923)               (5,406) 
Other comprehensive loss: 
Items that might be subsequently reclassified to profit 
 or loss 
                                                          --------------------                        -------------------- 
Exchange differences on translating foreign operations             40                    50                   (13) 
                                                          -----------  -------  -----------  -------  ----------- ------ 
Total comprehensive loss attributable to owners of 
 the Company                                                   (9,533)              (11,873)               (5,419) 
                                                          ===========   ======  ===========   ======  =========== ====== 
Loss per ordinary share -- basic and diluted (pence 
 / cents)                                                        (9.1)                (11.3)                 (5.1) 
 
 
 
 
 
 

(END) Dow Jones Newswires

April 30, 2020 02:00 ET (06:00 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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