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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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Post-period end, reported positive top-line Phase 2b results with
nebulized ensifentrine and senior management changes
Conference Call Today at 9:00 am EST / 2:00 pm GMT
LONDON, Feb. 27, 2020 (GLOBE NEWSWIRE) -- Verona Pharma plc (AIM:VRP)
(Nasdaq:VRNA) (Verona Pharma), a clinical-stage biopharmaceutical
company focused on developing and commercializing innovative therapies
for respiratory diseases, announces its unaudited results for the full
year ended December 31, 2019, and provides a corporate update.
"We believe that 2020 will be a transformative year for Verona Pharma.
Both Mark Hahn and I are very pleased to have joined Verona, where we
can leverage our experience in leading pharmaceutical companies through
late-stage clinical trials and into commercialization of innovative
therapeutics like ensifentrine," said David Zaccardelli, Pharm. D.,
President and Chief Executive Officer. "We are looking forward to our
planned End-of-Phase 2 meeting with the U.S. FDA in the second quarter
and initiating our Phase 3 program for ensifentrine in the treatment of
COPD later this year."
"We believe that ensifentrine, with its novel mechanism of action
possessing both bronchodilation and anti-inflammatory activity in a
single agent, has the potential to significantly benefit COPD patients.
In the US alone, over 1.2 million COPD patients remain symptomatic
despite treatment with current maximal therapy. We believe ensifentrine
will be an important therapy for these patients. Beyond the first
indication for nebulized ensifentrine, we continue progressing both dry
powder inhaler ("DPI") and pressurized metered dose inhaler ("pMDI")
formulations for COPD patients and ultimately advancing into asthma and
cystic fibrosis indications."
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
Clinical development progress with ensifentrine demonstrating efficacy
and tolerability in COPD patients.
Nebulizer formulation:
In January 2020, the Company reported positive top-line data from a
Phase 2b clinical study in symptomatic patients with moderate to severe
COPD. The study met the primary endpoint at all doses, as well as
meeting clinically relevant secondary endpoints:
-- The 4 week, 416 patient, Phase 2b dose-ranging study evaluated nebulized
ensifentrine (0.375 mg, 0.75 mg, 1.5 mg and 3.0 mg) or placebo as an
add-on treatment to tiotropium (Spiriva(R) Respimat(R)), a long acting
anti-muscarinic antagonist ("LAMA").
-- The primary endpoint of improved lung function as measured by increase in
morning peak forced expiratory volume in one second (FEV1)1 at week 4
was met at all doses. Statistically significant and clinically meaningful
improvements ranged from 78 mL for the 0.375 mg dose (p=0.0368) to 124 mL
for the 3.0 mg dose (p=0.0008). Effects were maintained over 4 weeks.
-- Dose-dependent improvements in lung function were observed on both
FEV1 and FEV1 AUC(0-12hr)2.
-- Statistically significant improvement in average FEV1 AUC(0-12hr) of 87
mL for the 3.0 mg dose (p=0.0111) is supportive of twice daily dosing.
-- Clinically meaningful improvements in health-related quality of life
(mean SGRQ-C3) were observed when added to tiotropium treatment with the
two highest doses also achieving statistical significance.
-- Ensifentrine was well tolerated at all doses with an adverse event
profile similar to placebo.
-- These data provide support for dose selection in Phase 3 trials.
In January 2019, the Company reported top-line data from an exploratory
Phase 2a clinical trial in patients with moderate to severe COPD. While
the study did not meet the primary endpoint of an increase in morning
peak FEV(1) , ensifentrine did produce additional bronchodilation when
added to an inhaled long acting anti-muscarinic antagonist/long acting
beta2 agonist ("LAMA/LABA") therapy.
-- The three-day, 79 patient, Phase 2a trial, evaluated nebulized
ensifentrine (1.5 mg or 6.0 mg) or placebo as an add-on treatment to
tiotropium/olodaterol (Spiriva(R) Respimat(R)), a LAMA/LABA therapy.
-- The primary endpoint of statistically significant improvement in peak
FEV1 (over 4 hours) on day 3 of treatment was not met, although the
morning dose of ensifentrine 1.5 mg improved peak FEV1 by 46 mL, compared
to placebo.
-- In a post hoc analysis, greater lung function improvements were observed
in patients less responsive to existing dual bronchodilator therapy. More
than 40% of patients observed improved morning peak FEV1 by >100 mL.
-- Statistically significant improvements in evening peak FEV1 after the
evening dose of ensifentrine were observed with both the 1.5 mg and 6 mg
dose groups, with ensifentrine 1.5 mg showing a 130 mL improvement
(p<0.001) and ensifentrine 6.0 mg showing an 81 mL improvement (p=0.002),
compared to placebo.
Inhaler formulations:
In August 2019, positive Phase 2 clinical data with a DPI formulation
for the maintenance treatment of COPD met all primary and secondary lung
function endpoints.
-- The two-part, 35 patient, Phase 2 trial evaluated DPI ensifentrine
compared to placebo. In Part A, patients received a single dose of
ensifentrine (150 ug4, 500 ug, 1500 ug, 3000 ug, or 6000 ug) or placebo.
In Part B, patients were randomized to receive one of four dose levels
(150 ug, 500 ug, 1500 ug, or 3000 ug) of ensifentrine or placebo,
administered twice daily over one week.
-- The primary endpoint of improvement in peak bronchodilator effect of
repeat doses of ensifentrine, as measured by FEV1, was met. Peak FEV1
corrected for placebo demonstrated 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 the 3000 ug dose, (p<0.0001 for all doses), all
highly statistically significant.
-- Statistically significant improvements in average FEV1 over 12 hours
(average FEV1 AUC(0-12hr)) corrected for placebo were observed over 7
days with all doses: 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 clinical studies with
nebulized ensifentrine.
We have initiated a Phase 2 clinical trial with a pMDI formulation of
ensifentrine. Single dose data are expected early in the second quarter
of 2020, and multiple dose data are expected in the second half of 2020.
ORGANIZATION
Major organization changes:
David Zaccardelli, Pharm. D., appointed President and Chief Executive
Officer, and Mark W. Hahn appointed Chief Financial Officer, following
the end of the period.
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 Operations and Global Project
Management. Expanded the clinical team through the addition of senior
experts with many years of experience in late-stage clinical development
of COPD therapies.
(1) FEV(1) : Forced Expiratory Volume in one second,
a standard measure of lung function
(2) FEV(1) AUC(0-12hr) : Area Under the Curve 0-12
hours calculated using the trapezoidal rule, divided
by the observation time (12 hours) to report in mL,
a measure of the aggregate effect over 12 hours
(3) SGRQ-C: St. George's Respiratory Questionnaire
is a validated instrument that measures impact on
overall health, daily life, and perceived well-being
in patients with COPD (i.e. change in frequency and
severity of COPD symptoms, and impact on activities,
social functioning and psychological disturbances
related to airways disease).
(4) ug: microgram, or mcg
-----------------------------------------------------
FINANCIAL HIGHLIGHTS
-- Cash, cash equivalents and short-term investments at December 31, 2019
amounted to GBP30.8 million (December 31, 2018: GBP64.7 million);
-- For the year ended December 31, 2019, reported operating loss of GBP41.1
million (full year 2018: GBP25.6 million) and reported loss after tax of
GBP31.9 million (full year 2018: loss after tax of GBP19.9 million),
reflecting the preparation and initiation of clinical trials and
pre-clinical activities;
-- Reported loss per share of 30.3 pence for the year ended December 31,
2019 (full year 2018: loss per share 18.9 pence);
-- Net cash used in operating activities for the year ended December 31,
2019 of GBP33.8 million (full year 2018: GBP18.1 million).
The company today published its audited accounts for the year ended
December 31, 2019.
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
------------------------------------------------------- -------------------------
info@veronapharma.com
------------------------------------------------------- -------------------------
David Moskowitz, VP Capital Markets Strategy & Investor
Relations (Investor Enquiries)
Victoria Stewart, Director of Communications (Media
Enquiries)
------------------------------------------------------- -------------------------
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
------------------------------------------------------- -------------------------
An electronic copy of the annual report and accounts will be made
available today on the Company's website (http://www.veronapharma.com).
Also, a copy of the Form 20-F will be filed with the SEC today. This
press release does not constitute an offer to sell or the solicitation
of an offer to buy 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.
About Verona Pharma
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
https://www.globenewswire.com/Tracker?data=ocvLOlYr2W1qjVmgw3vszBTucF1WEJdt5bBqtoTSbfIDAS7mFcO34ozhtltFXiw6eyVlis1xAuA7UgXXLhemwfQf65LZ_vtap9qZV-I6Pek=
www.veronapharma.com.
Forward-Looking Statements
This press release contains forward-looking statements. All statements
contained in this press release that do not relate to matters of
historical fact should be considered forward-looking statements,
including, but not limited to, 2020 being a transformative year for
Verona Pharma, the Company's incoming CEO and CFO leveraging their
experience in leading pharmaceutical companies through late-stage
clinical trials and into commercialization of innovative therapeutics
like ensifentrine, the development of different formulations of
ensifentrine, the progress and timing of clinical trials and data, Phase
3 readiness of nebulized ensifentrine, the potential for ensifentrine to
be the first therapy for the treatment of respiratory diseases to
combine bronchodilator and anti-inflammatory activities in one compound,
the potential for ensifentrine to significantly benefit COPD patients,
and potential applications and advancing the development of ensifentrine
into cystic fibrosis, asthma and other respiratory diseases.
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 and
the completion of our clinical trials; 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; our future growth and ability to compete depends on retaining
our key personnel and recruiting additional qualified 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. Any such
forward-looking statements represent management's estimates as of the
date of this press release. 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.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S JOINT STATEMENT
OVERVIEW
Verona Pharma is a clinical-stage biopharmaceutical company developing
life enhancing treatments for respiratory diseases with significant
unmet medical needs. We are focused on the development of our
first-in-class inhaled candidate, ensifentrine, for the treatment of
chronic obstructive pulmonary disease (COPD). Ensifentrine has a unique
dual mode of action. It acts as a bronchodilator and an
anti-inflammatory in the same molecule. We are in Phase 2 development
with three formulations of ensifentrine for COPD: nebulized, dry powder
inhaler (DPI) and pressurized metered-dose inhaler (MDI).
During the year and post year-end, we made significant clinical progress,
reporting positive Phase 2 clinical data from trials with nebulized and
DPI formulations. In addition, we expanded our understanding of the
market opportunities, retaining our focus on the US as the initial
market for nebulized ensifentrine.
OUTLOOK AND STRATEGY
We intend to become a leading biopharmaceutical company focused on the
treatment of respiratory diseases with significant unmet medical needs.
Our key 2020 goals are:
-- Rapidly advance the development of nebulized ensifentrine for the
maintenance treatment of COPD in moderate and severe patients
-- Raise funding to advance the development of ensifentrine and supporting
business activities
-- Agree an End of Phase 2 meeting with the FDA to provide guidance on the
design of the Phase 3 program with nebulized ensifentrine
-- Start our Phase 3 program with nebulized ensifentrine in moderate to
severe COPD patients
-- Report results from a Phase 2 trial with a pressured metered dose inhaler
(MDI) formulation of ensifentrine for the treatment of COPD
-- Longer term we aim to develop ensifentrine for acute exacerbations of
COPD as well as additional respiratory indications such as CF and severe
asthma, and to seek strategic collaborations with market leading
biopharmaceutical companies
We would like to thank the staff and Board members for all their
contributions and shareholders for their continued support during a
successful year.
Significant progress in development and identification of compelling
market opportunities
We are initially developing ensifentrine as a nebulized formulation for
the maintenance treatment of uncontrolled, symptomatic, moderate to
severe COPD patients. Our market research shows that nebulized delivery
is the preferred route of administration for more severe COPD patients,
especially in the US. The regulatory pathway for the development of
nebulized drug products is well-established.
COPD is a progressive respiratory disease with no cure. Our market
research demonstrates that, in the US alone, approximately two million
patients remain uncontrolled and symptomatic despite taking currently
available medications. Few therapeutic alternatives are available for
these patients.
Ensifentrine is potentially a treatment alternative for these
symptomatic COPD patients. The past year has seen significant clinical
progress with the successful completion in January 2020 of our second
four-week Phase 2b clinical trial with nebulized ensifentrine in over
400 patients with COPD. In this trial ensifentrine demonstrated
statistically and clinically meaningful improvements in lung function
when dosed on top of tiotropium, a LAMA which is a mainstay of current COPD chronic maintenance therapy. Ensifentrine produced both a clinically meaningful bronchodilator effect and a progressive improvement in symptoms, suggesting an anti-inflammatory effect in these COPD patients. A further exploratory Phase 2 study that reported in January 2019 demonstrated that ensifentrine provides additional bronchodilation when added on top of what was formerly presumed to be maximum bronchodilator treatment with dual or triple COPD standard-of-care treatment. In our clinical program, which has enrolled over 1,300 human subjects, we have demonstrated that ensifentrine is an effective bronchodilator in COPD patients with or without concurrent bronchodilator therapy. In addition, many Key Opinion Leaders in the field of COPD support our view that the progressive improvement in COPD symptoms observed over a four-week treatment period with ensifentrine is due to an anti-inflammatory effect, attesting to its dual activity. We believe that nebulized ensifentrine could potentially be used to treat symptomatic COPD patients who already take either a single bronchodilator or dual or triple therapy. This is an attractive market opportunity estimated to be about 3 million patients in the US alone. The successful development of DPI and MDI formulations of ensifentrine and the completion last year of the DPI Phase 2 clinical trial in COPD patients are further important development milestones. In August 2019, we announced positive results from our Phase 2 clinical trial evaluating a DPI formulation of ensifentrine for the maintenance treatment of patients with COPD. The magnitude of improvement in lung function, as measured by FEV1, was highly statistically significant and we believe this supports twice daily dosing of ensifentrine for COPD treatment. In June 2019, we announced the initiation of a Phase 2 trial to evaluate a pressurized MDI formulation of ensifentrine in patients with moderate-to-severe COPD. We anticipate reporting data from the single-dose portion of this trial (Part A) early in the second quarter of 2020, and reporting results from the second portion of the trial (Part B), which evaluates multiple doses of the MDI formulation of ensifentrine, in the second half of 2020. In the US, our market research shows that about 5.5 million moderate to severe COPD patients currently use these types of devices. We expect that developing DPI and MDI formulations would open up another attractive market opportunity. We anticipate that we would partner the DPI/MDI formulations later in development in order to realize the potential of this multi-billion dollar opportunity. In addition to COPD, we believe ensifentrine could become an attractive development candidate in cystic fibrosis and severe asthma. Senior executive changes bring substantial leadership, operational and clinical expertise With effect from February 1, 2020, Verona Pharma appointed Dr. David Zaccardelli as President and Chief Executive Officer (CEO) and executive director. He succeeded Dr. Jan-Anders Karlsson following his retirement after 8 years of dedicated service to the Company. Dr. Zaccardelli brings substantial specialty pharmaceutical leadership and operational expertise, including most notably, serving as President and CEO of Dova Pharmaceuticals, Inc. until its acquisition by Swedish Orphan Biovitrum AB (Sobi) in November 2019. Previously, Dr. Zaccardelli held several senior management roles including Chief Operating Officer at United Therapeutics Corporation. We have also appointed Mark Hahn, a seasoned pharmaceutical finance executive, as Chief Financial Officer (CFO), with effect from March 1, 2020. Mr. Hahn previously served as the CFO of Dova Pharmaceuticals, Inc. and Cempra, Inc. and raised over $600 million to support product development and commercialization activities of those companies. Mr. Piers Morgan will continue to serve as CFO of Verona Pharma through February 28, 2020 to ensure a smooth transition and continue support on financial reporting, before leaving to pursue other interests. We are grateful to Dr. Karlsson and Mr. Morgan for their contributions to the Company. To support the later stage development of ensifentrine, in early 2019, we strengthened our team with the appointment of Kathleen Rickard, MD, as Chief Medical Officer (CMO,) and Tara Rheault, PhD, MPH, as VP Research and Development Operations and Global Project Management. Together they have extensive expertise in respiratory drug development, regulatory affairs and commercialization. We also expanded our team hiring experts with significant experience of late-stage clinical trials in COPD. Ensifentrine - first-in-class bronchodilator and anti-inflammatory agent We are a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapeutics for the treatment of respiratory diseases with significant unmet medical need. Our product candidate, ensifentrine (RPL554) is an investigational, potential first-in-class, inhaled, dual inhibitor of the enzymes phosphodiesterase 3 and 4, or PDE3 and PDE4, that is designed to act as both a bronchodilator and an anti-inflammatory agent. We are not aware of any other single compound in clinical development or approved by the U.S. Food and Drug Administration, or FDA, nor the European Medicines Agency, or EMA, for the treatment of respiratory diseases that acts as both a bronchodilator and anti-inflammatory agent. We believe ensifentrine has the potential to be the first novel class of bronchodilator in over 40 years. A nebulized formulation of ensifentrine has currently completed Phase 2 clinical development for the treatment of chronic obstructive pulmonary disease, or COPD, and we are preparing to meet with the FDA to discuss plans for Phase 3 clinical trials, which we expect to commence in the third quarter of 2020, subject to FDA feedback and to funding. Successful Phase 1 and 2 studies have been completed with nebulized ensifentrine in healthy volunteers and in patients with cystic fibrosis, or (CF), chronic asthma and allergic rhinitis, in addition to COPD. A Phase 2 study in COPD with ensifentrine formulated in a dry powder inhaler, or DPI, has been completed, with positive clinical results reported in August 2019. A Phase 2 study in COPD with ensifentrine formulated in a pressurized metered dose inhaler, or MDI, is ongoing with clinical results expected in the second half of 2020. We intend to develop ensifentrine as a nebulized therapy for the treatment of COPD. For the past 40 years, the treatment of COPD has been dominated by three classes of inhaled therapies approved for use by the FDA or EMA: antimuscarinic agents and beta2-agonists, both available as either short-acting or long-acting bronchodilators, and inhaled corticosteroids, or ICS, known for their anti-inflammatory effects. However, despite existing treatment with one or multiple combinations of these therapies, and owing to the progressive and incurable nature of COPD, many COPD patients on maximum inhaled therapy still experience significant lung function impairment and symptoms for which limited further approved treatment options are available. One such treatment is an oral formulation of a PDE4 inhibitor (roflumilast) with anti-inflammatory properties, although frequency of adverse events has limited its use in COPD patients. Clinicians have expressed desire to use this oral PDE4 inhibitor in more patients were it not for the adverse events. We believe this suggests that ensifentrine has potential to become an important treatment for COPD and other respiratory diseases if our late-stage clinical program demonstrates favorable efficacy, safety and tolerability results for the compound. In our clinical trials, treatment with ensifentrine has been repeatedly observed to result in statistically significant improvements in lung function as compared to placebo, whether dosed alone or in combination with commonly used short- and long-acting classes of bronchodilators, with or without ICS. Statistically significant means that there is a low statistical probability, typically less than 5%, that the observed results in a study or a trial occurred by chance alone. In two Phase 2b clinical trials of nebulized ensifentrine as a maintenance treatment for COPD, patients with moderate-to-severe COPD treated with ensifentrine showed clinically meaningful and statistically significant improvements in reported COPD symptom scores. In addition, our clinical trials have also shown clinically meaningful and statistically significant improvements in certain measures of lung function following combined treatment with ensifentrine as add-on to other approved bronchodilators; COPD patients experienced a marked reduction in residual lung volume, which is believed to be related to one of the most debilitating symptoms, breathlessness. The rapid onset of action observed when adding ensifentrine on top of tiotropium, a commonly used LAMA, was also notable, and may be particularly helpful to those patients suffering from morning breathlessness. We believe that the clinical effects observed with ensifentrine are driven by its bronchodilator, anti-inflammatory and mucociliary clearance mechanisms. High unmet medical need in symptomatic COPD patients despite treatment with current standard-of-care We believe there is an urgent and unmet medical need for new and more effective treatments for COPD to reduce the number and burden of symptoms, acute periods of worsening symptoms, or exacerbations, and establish a consistent and durable response to treatment. According to the World Health Organization (WHO), over one billion people suffer from chronic respiratory diseases. Among the most common of these afflictions is COPD, which is a progressive respiratory disease
for which there is no cure. COPD damages the airways and the lungs and
leads to shortness of breath, impacting a person's ability to perform
daily activities. Chronic inflammation plays a central role in the
pathology of the disease and is particularly prominent in the airways of
COPD patients. COPD includes chronic bronchitis, which refers to the
inflammation of the lung and airways that results in coughing and sputum
production, and emphysema, which refers to a destruction of distal lung
tissue, or air sacs.
In some cases, patients with COPD experience exacerbations, which are
estimated to cause approximately 1.5 million emergency department visits,
687,000 hospitalizations and 129,000 deaths per year in the United
States alone. According to the WHO, COPD is expected to become the third
leading cause of death globally by 2030, with 384 million people
worldwide suffering from the disease. It is estimated that there are 24
million people with COPD in the United States, only half of whom have
been diagnosed. Of those diagnosed with COPD in the United States, more
than 2 million suffer from severe or very severe forms of the disease.
Total annual medical costs relating to COPD in the United States are
projected to rise to $49 billion in 2020. Whereas the number of patients
diagnosed with COPD in the United States continues to increase annually,
the growth in numbers in more developing countries, like China, is
significantly higher. The prevalence of COPD in China is expected to be
about 8% of patients over 40 years of age and is expected to increase in
coming years. Global sales of drugs used for chronic maintenance therapy
of COPD were $13.6 billion in 2019, of which $9.6 billion were in the
US.
Cystic fibrosis and severe asthma
In CF, a fatal inherited disease, we believe the bronchodilatory and
anti-inflammatory effects of ensifentrine may be beneficial and, if
approved, has the potential to become an additional important and novel
treatment for patients. Furthermore, we aim to explore, alone or with a
collaborator, the development of ensifentrine to treat severe asthma and
other respiratory diseases.
CF is the most common fatal inherited disease in the United States and
Europe. CF causes impaired lung function and is commonly associated with
repeat and persistent lung infections often resulting in frequent
exacerbations and hospitalizations. There is no cure for CF and although
current therapies are leading to longer lifespans the median age of
death for CF patients is still only around 40 years.
CF is considered a rare, or orphan, disease by both the FDA and the EMA.
According to the Cystic Fibrosis Foundation, more than 30,000 people in
the United States and more than 70,000 people worldwide are living with
CF and approximately 1,000 new cases of CF are diagnosed each year. The
FDA and the EMA provide incentives for sponsors to develop products for
orphan diseases, and we may seek orphan drug designation for
ensifentrine from both regulators in treating CF. CF patients take an
average of seven medications daily. Global sales of drugs used for the
treatment of CF were $3.5 billion in 2019, of which $2.0 billion were in
the US.
Asthma is widely seen as a result of chronic inflammation in the lungs.
Worldwide 300 million people suffer from asthma with about 25 million
diagnosed in the US alone. Global sales of drugs used for the treatment
of asthma were $16.5 billion in 2019, with $9.7 billion in the US alone.
Established treatments include those adopted from the treatment of COPD
(for example, bronchodilators and ICS), anti-IgE agents and leukotriene
inhibitors. Approximately 1 million patients in the United States are
refractory asthmatic patients who remain uncontrolled on established
therapies. These patients are the target for injectable biologic
anti-IL-5 agents. Annual sales of biologics in the United States for the
treatment of asthma exceed $1.0 billion. We see potential for
ensifentrine as an inhaled product for such patients.
We may also explore the development of ensifentrine in MDI and/or DPI
formulations for the treatment of asthma and other respiratory diseases.
DEVELOPMENT OF ENSIFENTRINE
Clinical development of ensifentrine in COPD
In January 2020, we reported top-line results from our 4 week
416-patient Phase 2b dose-ranging clinical trial. This trial evaluated
four doses of nebulized ensifentrine (0.375 mg, 0.75 mg, 1.5 mg and 3.0
mg) or placebo as an add-on treatment to tiotropium (Spiriva(R)
Respimat(R)), a commonly used LAMA bronchodilator, in symptomatic
patients with moderate-to-severe COPD who required additional treatment.
The trial met its primary endpoint of improved lung function, with
ensifentrine plus tiotropium producing a clinically and statistically
significant dose-dependent improvement in FEV(1) at week 4, compared to
placebo plus tiotropium. Additionally, clinically meaningful
improvements in health-related quality of life (mean SGRQ-C) were
observed on top of tiotropium. Ensifentrine was well tolerated at all
doses with an adverse event profile similar to placebo. We believe that
these data support dose selection for our planned Phase 3 program, which
we anticipate initiating in the third quarter of 2020, subject to FDA
feedback and funding.
In January 2019, we announced results from our exploratory
pharmacological Phase 2 clinical trial evaluating nebulized ensifentrine
administered twice daily on top of treatment with tiotropium and
olodaterol. Although we did not meet the primary endpoint, treatment
with ensifentrine showed statistically significant improvements in
FEV(1) , including when measured over 24 hours, and after the second
dose in the evening. We believe this suggests that ensifentrine could be
an effective addition to dual bronchodilator therapy, in particular
during the second half of the day following treatment, when patients may
derive less benefit from their LAMA/LABA dual bronchodilator therapy.
COPD -- successful development of DPI and pMDI formulations
In addition to our nebulized formulation of ensifentrine, we have
developed both MDI and DPI formulations of ensifentrine for the
maintenance treatment of COPD.
Delivery of orally inhaled drugs by pMDI or DPI is a mainstay of
maintenance treatment for patients with moderate to severe COPD. We
believe that over 90% of patients with diagnosed COPD use inhalers, such
as a pMDI or DPI, rather than a nebulizer.It is estimated that, in the
United States, approximately 5.5 million patients with moderate to
severe COPD use inhalers for maintenance therapy. Successful development
of a pMDI or DPI formulation of ensifentrine for moderate disease would
greatly expand the addressable market for the drug and represents a
multi-billion dollar potential opportunity.
In August 2019, we announced results from our Phase 2 clinical trial
evaluating a DPI formulation of ensifentrine for the maintenance
treatment of patients with COPD. The magnitude of improvement in lung
function, as measured by FEV(1) was highly statistically significant and
we believe this supports twice daily dosing of ensifentrine for COPD
treatment. Secondary lung function endpoints were also met, and
ensifentrine was well tolerated at all dose levels. We believe that
delivery of ensifentrine with a hand-held inhalation device, such as the
DPI format, could substantially expand the clinical utility and
commercial opportunity in COPD treatment.
In June 2019, we announced the initiation of a Phase 2 dose-ranging
trial to evaluate the pharmacokinetic, or PK profile, efficacy, and
safety of a pressurized MDI formulation of ensifentrine in patients with
moderate-to-severe COPD. We anticipate reporting data from the
single-dose portion of this trial (Part A) early in the second quarter
of 2020, and reporting results from the second portion of the trial
(Part B), which evaluates multiple doses of the MDI formulation of
ensifentrine, in the second half of 2020.
We may also explore the development of ensifentrine in pMDI and/or DPI
formulations for the treatment of asthma and other respiratory diseases.
CORPORATE
Ensifentrine is protected by granted and pending patents. We believe
that medicinal products containing ensifentrine are protected by our IP
beyond 2035. We have worldwide commercialization rights for
ensifentrine. We raised $90 million in gross proceeds from investors
from our April 2017 global offering comprising an initial public
offering ("IPO") on the Nasdaq Global Market ("Nasdaq"), and a
concurrent European private placement, together with a shareholder
private placement. Members of our management team, which we have
strengthened and expanded during the year, and our board of directors
have extensive experience in large pharmaceutical and biotechnology
companies, particularly in respiratory product development from drug
discovery through commercialization and have played important roles in
the development and commercialization of several approved respiratory
treatments, including Symbicort, Daliresp/Daxas, Flutiform, Advair, Breo
Ellipta and Anoro Ellipta.
FINANCIALS
The operating loss for the year ended December 31, 2019 was GBP41.1
million (2018: GBP25.6 million) and the loss after tax for the year
ended December 31, 2019 was GBP31.9 million (2018: GBP19.9 million).
Research and Development Costs
Research and development costs were GBP33.5 million for the year ended
December 31, 2019 as compared to GBP19.3 million for the year ended
December 31, 2018, an increase of GBP14.2 million. The cost of clinical
trials increased by GBP12.7 million as there were two active trials in
the year ended December 31, 2018, compared to four clinical trials in
the year ended December 31, 2019. Pre-clinical costs increased by GBP0.3
million which was offset by a reduction in Chemistry, Manufacturing, and
Controls of GBP0.4 million. Personnel related costs increased by GBP1.3
million in the year ended December 31, 2019, compared to the prior year.
General and Administrative Costs
General and administrative costs were GBP7.6 million for the year ended
December 31, 2019 as compared to GBP6.3 million for the year ended
December 31, 2018, an increase of GBP1.3 million. The increase was
primarily attributable to a GBP0.9 million increase in costs relating to
commercial market research, a GBP0.3 million increase in personnel
related costs and a GBP0.6 million increase in other overhead costs.
This was offset by a GBP0.5 million decrease in share based payments.
Finance Income and Expense
Finance income was GBP2.4 million for the year ended December 31, 2019
and GBP2.8 million for the year ended December 31, 2018. The decrease
was due to a loss in foreign exchange on cash and short term investments
(recorded as a finance expense) compared to GBP1.9 million gain in the
prior year. This was offset by a GBP1.6 million decrease in the fair
value of the warrant liability in the year ended December 31, 2019
compared to an increase in the liability in the year ended December 31,
2018 (which is a non-cash item, recorded as a finance expense).
Finance expense was GBP0.5 million for the year ended December 31, 2019,
as compared to GBP1.3 million for the year ended December 31, 2018. The
movement was due to a decrease in the fair value of the warrant
liability (recorded in finance income), compared to an increase of
GBP1.2 million December 31, 2018, both non-cash items. In addition,
there was a foreign exchange loss on cash and short-term investments in
December 31, 2019 of GBP0.3 million. In the year ended December 31,
2018, there was a foreign exchange gain (recorded in finance income).
As at December 31, 2019, there was approximately GBP22.9 million in cash
and cash equivalents (2018: GBP19.8 million) and GBP7.8 million in
short-term investments (2018: GBP44.9 million).
Taxation
Taxation for the year ended December 31, 2019 amounted to a credit of
GBP7.3 million as compared to a credit of GBP4.2 million for the year
ended December 31, 2018, an increase in the credit amount of GBP3.1
million. The credits are obtained at a rate of 14.5% of 230% of our
qualifying research and development expenditure, and the increase in the
credit amount was primarily attributable to our increased expenditure on
research and development.
We would like to thank the staff and Board members for all their
contributions and shareholders for their continued support during a
successful year.
Dr. David Ebsworth Dr. David Zaccardelli
Chairman Chief Executive Officer
February 27, 2020 February 27, 2020
VERONA PHARMA PLC
CONSOLIDATED STATEMENT OF COMPREHESIVE INCOME
FOR THE YEARED DECEMBER 31, 2019
Year ended Year ended
Notes December 31, 2019 December 31, 2018
----- -------------------- --------------------
GBP'000s GBP'000s
Research and development costs (33,476) (19,294)
General and administrative costs (7,607) (6,297)
----------- ------ ----------- ------
Operating loss 7 (41,083) (25,591)
Finance income 9 2,351 2,783
Finance expense 9 (474) (1,325)
----------- ------ ----------- ------
Loss before taxation (39,206) (24,133)
Taxation -- credit 10 7,265 4,232
----------- ------- ----------- -------
Loss for the year (31,941) (19,901)
Other comprehensive income / (loss):
Items that might be subsequently reclassified to profit
or loss
-------------------- --------------------
Exchange differences on translating foreign operations (33) 38
----------- ------ ----------- -------
Total comprehensive loss attributable to owners of
the Company (31,974) (19,863)
=========== ====== =========== ======
Loss per ordinary share -- basic and diluted (pence) 5 (30.3) (18.9)
The accompanying notes form an integral part of these consolidated
financial statements.
VERONA PHARMA PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2019
As of Restated As of
Notes December 31, 2019 December 31, 2018
----- --------------------
GBP'000s GBP'000s
ASSETS
Non-current assets:
Goodwill 11 441 441
Intangible assets 12 2,757 2,618
Property, plant and
equipment 13 43 21
Right-of-use assets 14 971 --
-------------- ---- --------------- ---
Total non-current assets 4,212 3,080
-------------- ---- --------------- ---
Current assets:
Prepayments and other
receivables 15 2,770 2,463
Current tax receivable 7,396 4,499
Short term investments 7,823 44,919
Cash and cash equivalents 22,934 19,784
Total current assets 40,923 71,665
-------------- ---- --------------- ---
Total assets 45,135 74,745
============== ==== =============== ===
EQUITY AND LIABILITIES
Capital and reserves
attributable to equity
holders:
Share capital 17 5,266 5,266
Share premium 118,862 118,862
Share-based payment reserve 10,364 7,923
Accumulated loss (100,627) (68,633)
Total equity 33,865 63,418
-------------- ---- --------------- ---
Current liabilities:
Derivative financial
instrument 19 895 2,492
Lease liability 14 460 --
Trade and other payables 20 8,261 7,733
-------------- ---- --------------- ---
Total current liabilities 9,616 10,225
-------------- ---- --------------- ---
Non-current liabilities:
Assumed contingent
obligation 21 1,103 996
Non-current lease liability 14 491 --
Deferred income 60 106
Total non-current
liabilities 1,654 1,102
-------------- ---- --------------- ---
Total equity and liabilities 45,135 74,745
============== ==== =============== ===
The accompanying notes form an integral part of these consolidated
financial statements.
VERONA PHARMA PLC
COMPANY ONLY STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2019
As of Restated As of
Notes December 31, 2019 December 31, 2018
----- -------------------- --------------------
GBP'000s GBP'000s
ASSETS
Non-current assets:
Goodwill 11 441 441
Intangible assets 12 2,757 2,618
Property, plant and
equipment 13 43 21
Right-of-use asset 14 731 --
Investments 16 1,342 913
Total non-current assets 5,314 3,993
-------------- ---- -------------- ----
Current assets:
Prepayments and other
receivables 15 3,093 2,602
Current tax receivable 7,249 4,290
Short term investments 7,823 44,919
Cash and cash equivalents 22,823 19,596
Total current assets 40,988 71,407
-------------- ---- -------------- ----
Total assets 46,302 75,400
============== ==== ============== ====
EQUITY AND LIABILITIES
Capital and reserves
attributable to equity
holders:
Share capital 17 5,266 5,266
Share premium 118,862 118,862
Share-based payment reserve 10,364 7,923
Accumulated loss (100,259) (68,514)
Total equity 34,233 63,537
-------------- ---- -------------- ----
Current liabilities:
Derivative financial
instrument 19 895 2,492
Lease Liability 14 335 --
Trade and other payables 20 9,256 8,269
-------------- ---- -------------- ----
Total current liabilities 10,486 10,761
-------------- ---- -------------- ----
Non-current liabilities:
Assumed contingent liability 21 1,103 996
Non-current lease liability 14 419 --
Deferred income 61 106
Total non-current
liabilities 1,583 1,102
-------------- ---- -------------- ----
Total equity and liabilities 46,302 75,400
============== ==== ============== ====
The accompanying notes form an integral part of these consolidated
financial statements.
The Parent has taken advantage of the exemption permitted by Section 408
of the Companies Act 2006 not to present an income statement for the
year. The Parent Company's loss for the year was GBP31.7 million (2018:
loss of GBP19.9 million), which has been included in the Company's
income statement.
The financial statements were approved by the Company's board of
directors on February 27, 2020 and signed on its behalf by Dr. David
Zaccardelli, Chief Executive Officer of the Company.
Dr. David Zaccardelli
Chief Executive Officer of the Company.
Company number: 05375156
VERONA PHARMA PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED DECEMBER 31, 2019
Total
Share Share Share-based Payment Accumulated Total
Capital Premium Reserve Losses Equity
-------- -------- ------------------- -------------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------- -------- ------------------- -------------- ----------
Balance at
January 1,
2018, as
previously
reported 5,251 118,862 5,022 (49,254) 79,881
Impact of
change in
accounting
policy -- -- -- 484 484
-------- -------- ------------------- --------- --- -------
Balance at
January 1,
2018
(Restated) 5,251 118,862 5,022 (48,770) 80,365
-------- -------- ------------------- --------- -------
Loss for the
year -- -- -- (19,901) (19,901)
Other
comprehensive
income for the
year:
Exchange
differences
on
translating
foreign
operations -- -- -- 38 38
-------- -------- ------------------- --------- --- -------
Total
comprehensive
loss for the
year -- -- -- (19,863) (19,863)
New share
capital
issued 15 -- -- -- 15
Share-based
payments -- -- 2,901 -- 2,901
-------- -------- ------------------- --------- --- -------
Balance at
December 31,
2018
(Restated) 5,266 118,862 7,923 (68,633) 63,418
======== ======== =================== ========= =======
Balance at
January 1,
2019 5,266 118,862 7,923 (68,633) 63,418
-------- -------- ------------------- --------- -------
Impact of
change in
accounting
policy -- -- -- (20) (20)
-------- -------- ------------------- --------- -------
Adjusted
Balance at
January 1,
2019 5,266 118,862 7,923 (68,653) 63,398
-------- -------- ------------------- --------- -------
Loss for the
year -- -- -- (31,941) (31,941)
Other
comprehensive
loss for the
year:
Exchange
differences
on
translating
foreign
operations -- -- -- (33) (33)
-------- -------- ------------------- --------- -------
Total
comprehensive
loss for the
year -- -- -- (31,974) (31,974)
Share-based
payments -- -- 2,441 -- 2,441
-------- -------- ------------------- --------- --- -------
Balance at
December 31,
2019 5,266 118,862 10,364 (100,627) 33,865
======== ======== =================== ========= =======
The currency translation reserve for 2018 and 2019 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
COMPANY ONLY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED DECEMBER 31, 2019
Total
Share Share Share-based Payment Accumulated Total
Capital Premium Reserve Losses Equity
-------- -------- ------------------- -------------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------- -------- ------------------- -------------- ----------
Balance at
January 1,
2018, as
previously
reported 5,251 118,862 5,022 (49,084) 80,051
Impact of
change in
accounting
policy -- -- -- 484 484
-------- -------- ------------------- --------- --- -------
Balance at
January 1,
2018
(Restated) 5,251 118,862 5,022 (48,600) 80,535
-------- -------- ------------------- --------- -------
Loss for the
year -- -- -- (19,914) (19,914)
Other
comprehensive
income for the
year:
-------- -------- ------------------- -------------- ----------
Total
comprehensive
loss for the
year -- -- -- (19,914) (19,914)
New share
capital
issued 15 -- -- -- 15
Share-based
payments
recognized as
an expense -- -- 2,865 -- 2,865
Share-based
payments
recognized as
an
investment -- -- 36 -- 36
-------- -------- ------------------- --------- --- -------
Balance at
December 31,
2018
(Restated) 5,266 118,862 7,923 (68,514) 63,537
======== ======== =================== ========= =======
Balance at
January 1,
2019 5,266 118,862 7,923 (68,514) 63,537
-------- -------- ------------------- --------- -------
Impact of
change in
accounting
policy -- -- -- (20) (20)
Adjusted
Balance at
January 1,
2019 5,266 118,862 7,923 (68,534) 63,517
-------- -------- ------------------- --------- -------
Loss for the
year -- -- -- (31,725) (31,725)
Other
comprehensive
income for the
year:
-------- -------- ------------------- -------------- ----------
Total
comprehensive
loss for the
year -- -- -- (31,725) (31,725)
Share-based
payments
recognized as
an expense -- -- 2,012 -- 2,012
Share-based
payments
recognized as
an
investment -- -- 429 -- 429
-------- -------- ------------------- --------- --- -------
Balance at
December 31,
2019 5,266 118,862 10,364 (100,259) 34,233
======== ======== =================== ========= =======
VERONA PHARMA PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED DECEMBER 31, 2019
Year ended Year ended
December 31, 2019 December 31, 2018
-------------------- --------------------
GBP'000s GBP'000s
Cash used in operating activities:
Loss before taxation (39,206) (24,133)
Finance income (2,351) (2,783)
Finance expense 474 1,325
Share-based payment charge 2,441 2,901
Increase in prepayments and other receivables (484) (640)
Increase in trade and other payables 449 531
Depreciation of property, plant, equipment and right
of use asset 398 8
Unrealised FX gains / losses (8) --
Amortization of intangible assets 106 90
----------- ------- ----------- -------
Cash used in operating activities (38,181) (22,701)
Cash inflow from taxation 4,361 4,590
----------- ------- ----------- -------
Net cash used in operating activities (33,820) (18,111)
----------- ------ ----------- ------
Cash flow from investing activities:
Interest received 887 883
Purchase of plant and equipment (38) (13)
Payment for patents and computer software (244) (255)
Purchase of short term investments (7,940) (59,700)
Maturity of short term investments 45,134 64,366
----------- ------- ----------- -------
Net cash generated from investing activities 37,799 5,281
----------- ------- ----------- -------
Cash flow used in financing activities:
Repayment of finance lease liabilities (426) --
Net cash used in financing activities (426) --
----------- ------ ----------- -------
Net increase / (decrease) in cash and cash
equivalents 3,553 (12,830)
Cash and cash equivalents at the beginning of the
year 19,784 31,443
Effect of exchange rates on cash and cash equivalents (403) 1,171
----------- ------ ----------- -------
Cash and cash equivalents at the end of the year 22,934 19,784
=========== ======= =========== =======
VERONA PHARMA PLC
COMPANY ONLY STATEMENT OF CASH FLOWS
FOR THE YEARED DECEMBER 31, 2019
Year ended Year ended
December 31, 2019 December 31, 2018
-------------------- --------------------
GBP'000s GBP'000s
Cash used in operating activities:
Loss before taxation (39,046) (24,191)
Finance income (2,351) (2,783)
Finance expense 463 1,325
Share-based payment charge 2,012 2,865
Increase in prepayments and other receivables (624) (654)
Increase in trade and other payables 935 164
Depreciation of property, plant, equipment and right
of use asset 329 8
Unrealised FX gains/ losses (5) --
Amortization of intangible assets 105 90
----------- ------- ----------- -------
Cash used in operating activities (38,182) (23,176)
Cash inflow from taxation 4,361 4,992
----------- ------- ----------- -------
Net cash used in operating activities (33,821) (18,184)
----------- ------ ----------- ------
Cash flow from investing activities:
Interest received 887 883
Purchase of plant and equipment (38) (13)
Payment for patents and computer software (244) (255)
Purchase of short term investments (7,940) (59,700)
Maturity of short term investments 45,134 64,366
----------- ------- ----------- -------
Net cash generated from investing activities 37,799 5,281
----------- ------- ----------- -------
Cash flow used in financing activities:
Gross proceeds from issue of shares and warrants -- 15
Repayment of finance lease liabilities (348) --
----------- ------ ----------- -------
Net cash (used in) / generated from financing
activities (348) 15
----------- ------ ----------- -------
Net increase / (decrease) in cash and cash
equivalents 3,630 (12,888)
Cash and cash equivalents at the beginning of the
year 19,596 31,313
Effect of exchange rates on cash and cash equivalents (403) 1,171
----------- ------ ----------- -------
Cash and cash equivalents at the end of the year 22,823 19,596
=========== ======= =========== =======
VERONA PHARMA PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED DECEMBER 31, 2019
1. General information
Verona Pharma plc (the Company") and its subsidiaries (together the
"Group") are a clinical-stage biopharmaceutical group 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 on the AIM,
a market of the London Stock Exchange, and The Nasdaq Global Market
("Nasdaq"). 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.
The Company listed its American Depositary Shares ("ADS") on Nasdaq in
April 2017 ("the 2017 Global Offering").
The ADSs trade on The Nasdaq the symbol "VRNA" and Verona Pharma's
ordinary shares trade on AIM under the symbol "VRP".
2. Accounting policies
A summary of the principal accounting policies, all of which have been
applied consistently throughout the year, is set out below.
2.1 Basis of preparation
The consolidated financial statements of the Group and the financial
statements of the Company have been prepared in accordance with
International Financial Reporting Standards ("IFRSs") as issued by the
International Accounting Standards Board and IFRS Interpretations
Committee applicable to companies reporting under IFRS.
The consolidated financial statements of the Group and the financial
statements of the Company have been prepared under the historical cost
convention, with the exception of derivative financial instruments which
have been measured at fair value.
The preparation of financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires
management to exercise its judgment in the process of applying the
Group's and Company's accounting policies. The areas involving a higher
degree of judgment or complexity, or areas where assumptions and
estimates are significant to the consolidated financial statements are
disclosed in note 4.
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 December 31, 2019, the Group had an accumulated loss of GBP100.6
million. The Group expects to continue to generate operating losses for
the foreseeable future. As of the issuance date of the annual
consolidated 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 annual consolidated 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 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 will 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, 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.
Business combination
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a
subsidiary is the fair value of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent
consideration arrangement. The excess of the cost of acquisition over
the fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill. Goodwill arising on acquisitions is
capitalized and is subject to an impairment review, both annually and
when there are indications that the carrying value may not be
recoverable.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair
values at the acquisition date. Acquisition-related costs are expensed
as incurred and included in administrative expenses.
Basis of consolidation
These consolidated financial statements include the financial statements
of Verona Pharma plc and its wholly owned subsidiaries Verona Pharma,
Inc. and Rhinopharma. The acquisition method of accounting was used to
account for the acquisition of Rhinopharma.
Inter-company transactions, balances and unrealized gains on
transactions between group companies are eliminated.
Verona Pharma Inc. and Rhinopharma adopt the same accounting policies as
the Group.
2.2 Foreign currency translation
Items included in the Group's consolidated financial statements are
measured using the currency of the primary economic environment in which
the entity operates ("the functional currency"). The consolidated
financial statements are presented in pounds sterling ("GBP"), which is
the functional and presentational currency of the Group.
Transactions in foreign currencies are recorded using the rate of
exchange ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated using the
rate of exchange ruling at the balance sheet date and the gains or
losses on translation are included in the Consolidated Statement of
Comprehensive Income. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange
rates at the dates of the original transactions. Non-monetary items
measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined.
The assets and liabilities of foreign operations are translated into
pounds sterling at the rate of exchange ruling at the balance sheet
date. Income and expenses are translated at weighted average exchange
rates for the period. The exchange differences arising on translation
for consolidation are recognized in Other Comprehensive Income.
2.3 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call
with banks and other short-term highly liquid investments with original
maturities of three months or less.
2.4 Deferred taxation
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. Deferred tax is determined using tax rates and laws that
have been enacted or substantially enacted by the balance sheet date and
expected to apply when the related deferred tax is realized or the
deferred liability is settled.
Deferred tax assets are recognized to the extent that it is probable
that the future taxable profit will be available against which the
temporary differences can be utilized.
2.5 Research and development costs
Capitalization of expenditure on product development commences from the
point at which technical feasibility and commercial viability of the
product can be demonstrated and the Group is satisfied that it is
probable that future economic benefits will result from the product once
completed. No such costs have been capitalized to date.
Expenditure on research and development activities that do not meet the
above criteria is charged to the Consolidated Statement of Comprehensive
Income as incurred.
2.6 Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation
and any provision for impairment. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset to
its working condition for its intended use. Depreciation is calculated
to write off the cost less their estimated residual values, on a
straight-line basis over the expected useful economic lives of the
assets concerned. The principal annual periods used for this purpose
are:
Computer hardware 3 years
2.7 Intangible assets and goodwill
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the
excess of the consideration transferred over the fair value of the
identifiable net assets acquired.
(b) Patents
Patent costs associated with the preparation, filing, and obtaining of
patents are capitalized and amortized on a straight-line basis over the
estimated useful lives of ten years.
(c) Computer software
Amortization is calculated so as to write off the cost less estimated
residual values, on a straight-line basis over the expected useful
economic life of two years.
(d) In-process research & development ("IP R&D")
The IP R&D asset acquired through a business combination, that had not
reached technical feasibility, was initially recognized at fair value.
Subsequent movements in the assumed contingent liability (see 2.12) that
relate to changes in estimated cashflows or probabilities of success are
recognized as additions to the IP R&D asset that it relates to. There
were no changes in estimated cashflows or probabilities of success in
the years ended 31 December, 2019, or 2018.
This is a change in accounting policy as prior to January 1, 2019
movements in the assumed contingent liability were taken to the
Statement of Comprehensive Income (see note 2.18). As a result of the
change in accounting policy GBP484 thousand was restated from
Accumulated Loss to the IP R&D asset.
The asset is subject to impairment testing until completion, abandonment
of the project or when the research findings are commercialized through
a revenue generating project. The Group determines whether intangible
assets are impaired on an annual basis or when there is an indication of
impairment.
2.8 Impairment of intangible assets, goodwill and non-financial assets
The Group holds intangible assets relating to acquired IP R&D, patent
costs and goodwill. Goodwill and intangible assets are tested annually
for impairment or if there is an indication of impairment. The Group is
a single cash generating unit ("CGU") so all intangibles are allocated
to the Group as one CGU.
As at 31 December, 2019, and 2018 the Group carried out impairment
reviews with reference to its market capitalization. At points during
the year ended 31 December 2019, the Group's market capitalization was
less than its net assets. As a result, the Group carried out an
impairment review by forecasting expected sales of ensifentrine,
delivered by nebulizer for the maintenance treatment of chronic COPD,
and associated costs. This cashflow forecast was then discounted to its
net present value to demonstrate that the value in use of the
ensifentrine was greater than the Group's net assets. The Group was
required to make various estimates and assumptions as inputs for this
model including, but not limited to:
-- market size and product acceptance by clinicians, patients and
reimbursement bodies;
-- gross and net selling price;
-- costs of manufacturing, product distribution and marketing support;
-- costs of the Group's overhead;
-- size and make up of a sales force;
-- probabilities of success; and
-- discount rate.
2.9 Employee Benefits
(a) Pension
The Group operates defined contribution pension schemes for its
employees. Contributions payable for the year are charged to the
Consolidated Statement of Comprehensive Income. The Group has no further
liability once the contributions have been paid.
(b) Bonus plans
The Group recognizes a liability and an expense for bonus plans if
contractually obligated or if there is a past practice that has created
a constructive liability.
2.10 Share-based payments
The Group operates a number of equity-settled, share-based compensation
schemes. The fair value of share based payments is determined using the
Black-Scholes model and requires several assumptions and estimates as
disclosed in note 18.
The fair value of share-based payments under these schemes is expensed
on a straight-line basis over the share based payments' vesting periods,
based on the Group's estimate of shares that will eventually vest.
2.11 Provisions
Provisions are recognized when the Group has a present legal or
constructive liability as a result of past events, it is probable that
an outflow of resources will be required to settle the liability, and
the amount can be reliably estimated. Provisions are measured at the
present value of the expenditures expected to be required to settle the
liability using a pre-tax rate that reflects current market assessments
of the time value of money and the risks specific to the liability.
2.12 Assumed contingent liability related to the business combination
In 2006 the Group acquired Rhinopharma and assumed contingent
liabilities owed to Vernalis Pharmaceuticals Limited which was
subsequently acquired by Ligand Pharmaceuticals, Inc. ("Ligand"). The
Group refers to the assignment and license agreement as the Ligand
Agreement.
Ligand assigned to the Group all of its rights to certain patents and
patent applications relating to ensifentrine and related compounds (the
"Ligand Patents") and an exclusive, worldwide, royalty-bearing license
under certain Ligand know-how to develop, manufacture and commercialize
products (the "Licensed Products") developed using Ligand Patents,
Ligand know-how and the physical stock of certain compounds.
The assumed contingent liability comprises a milestone payment on
obtaining the first approval of any regulatory authority for the
commercialization of a Licensed Product, low to mid-single digit
royalties based on the future sales performance of all Licensed Products
and a portion equal to a mid-twenty percent of any consideration
received from any sub-licensees for the Ligand Patents and for Ligand
know-how.
The liability was initially recognized at fair value and subsequently
measured at amortized cost. The assumed contingent liability is
estimated as 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%.
Royalties payable are based on the future sales performance so the
amount payable is unlimited. Sales that may be achieved are difficult to
predict and subject to estimate, which is inherently uncertain.
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.
Remeasurements relating to changes in estimated cash flows and
probabilities of success are recognized in the IP R&D asset it relates
to ("see 2.7"). This is a change in accounting policy for the year ended
December 1, 2019 (see 2.18). The unwind of the discount is recognized in
finance expense.
2.13 Financial instruments -- initial recognition and subsequent
measurement
The Group classifies a financial instrument, or its component parts, as
a financial liability, a financial asset or an equity instrument in
accordance with the substance of the contractual arrangement and the
definitions of a financial liability, a financial asset and an equity
instrument.
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity.
(a) Financial assets, initial recognition and measurement and
subsequent measurement
The Group has no financial assets recorded at fair value through profit
or loss ("FVPTL"). All assets are initially recognized initially at fair
value plus transaction costs and subsequently measured at amortized cost
using the effective interest method.
(b) Financial liabilities, initial recognition and measurement and
subsequent measurement
Financial liabilities are classified as measured at amortized cost or
FVTPL.
The Group's warrants are classified as FVTPL and fair value gains and
losses are recognized in profit or loss.
Other financial liabilities are initially recognized at fair value and
subsequently measured at amortized cost using the effective interest
method. Interest expense and foreign exchange gains and losses are
recognized in profit or loss. Any gain or loss on derecognition is also
recognized in profit or loss.
The Group's financial liabilities include trade and other payables, the
Group's warrants and the assumed contingent liability.
(c) Derivative financial instruments
Derivatives are initially recognized at fair value on the date a
derivative contract is entered into and are subsequently re-measured at
fair value at the end of each reporting date. The Group holds one type
of derivative financial instrument, the warrants, as explained in Note
2.14.
The full fair value of the derivative is classified as a non-current
liability when the warrants are exercisable in more than 12 months and
as a current liability when the warrants are exercisable in less than 12
months.
Changes in fair value of a derivative financial liability when related
to a financing arrangement are recognized in the Consolidated Statement
of Comprehensive Income within Finance Income or Finance Expense.
2.14 Derivative financial instrument - warrants
Warrants issued by the Group to investors as part of a share
subscription are compound financial instruments where the warrant meets
the definition of a financial liability.
The financial liability component is initially measured at fair value in
the Consolidated Statement of Financial Position. Equity is measured at
the residual between the subscription price for the entire instrument
and the liability component. The financial liability component is
remeasured. Equity is not remeasured.
2.15 Short Term Investments
Short term investments include fixed term deposits held at banks with
original maturities between three months and a year. They are classified
as loans and receivables and are measured at amortized cost using the
effective interest method.
2.16 Transaction costs
Qualifying transaction costs might be incurred in anticipation of an
issuance of equity instruments and may cross reporting periods. The
entity defers these costs on the balance sheet until the equity
instrument is recognized. Deferred costs are subsequently reclassified
as a deduction from equity when the equity instruments are recognized,
as the costs are directly attributable to the equity transaction. If the
equity instruments are not subsequently issued, the transaction costs
are expensed. Any costs not directly attributable to the equity
transaction are expensed.
Transaction costs that relate to the issue of a compound financial
instrument are allocated to the liability and equity components of the
instrument in proportion to the allocation of proceeds. Where the
liability component is held at fair value through profit or loss, the
transaction costs are expensed to the Consolidated Statement of
Comprehensive Income. For liabilities held at amortized cost,
transaction costs are deducted from the liability and subsequently
amortized. The amount of transaction costs accounted for as a deduction
from equity in the period is disclosed separately in accordance with
International Accounting Standard ("IAS 1").
2.17 Investments in subsidiaries
Investments in subsidiaries are shown at cost less any provision for
impairment.
2.18 Changes in accounting policy
Accounting for the assumed contingent liability
As discussed in note 2.12, in 2006 the Group acquired Rhinopharma and
assumed contingent liabilities owed to Vernalis Pharmaceuticals Limited
which was subsequently acquired by Ligand Pharmaceuticals, Inc.
("Ligand").
Ligand assigned to the Group all of its rights to certain patents and
patent applications relating to ensifentrine and related compounds and
an exclusive, worldwide, royalty-bearing license to develop, manufacture
and commercialize products. The assumed contingent liability comprises a
milestone payment on obtaining the first approval of any regulatory
authority and royalties based on the future sales of ensifentrine.
The initial fair value of the assumed contingent liability was estimated
as the expected value of the milestone payment and royalty payments.
This expected value is based on estimated future royalties payable,
derived from sales forecasts, an assessment of the probability of
success using standard market probabilities for respiratory drug
development discounted to 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.
Up to the year ended December 31, 2018, movements in the liability
relating to re-measurements of cash flows or changes in the
probabilities of success were taken to the Consolidated Statement of
Comprehensive Income. During the year ended December 31, 2019, the
Company reviewed the accounting for this item and has determined that
these movements in the liability will now be recognized in the cost of
the corresponding asset. The corresponding asset is the intangible IP
R&D asset.
The Group believes that this change in accounting policy results in the
Consolidated Financial Statements providing a more relevant and reliable
view of its financial position and performance because without an
adjustment to the IP R&D asset on the re-measurement of the liability,
the cost of the asset would not be fairly reflected on the Consolidated
Statement of Financial Position. The Consolidated Statement of Financial
Position more faithfully represents the financial position of the Group
if the intangible asset is adjusted by any re-measurement of the
liability for changes in estimated cash flows, to give a fairer
reflection of the cost of the intangible asset.
The Group has reviewed the International Financial Reporting
Interpretations Committee ("IFRIC") discussion of accounting for
variable payments made for the purchase of an intangible asset that is
not part of a business combination that concluded that it was too broad
for it to address within the confines of existing IFRS standards. As a
result, practice in this area is mixed and many pharmaceutical companies
follow a cost accumulation model. The Group also noted that adjusting
the cost of the asset when a liability is remeasured for changes in
estimated cash flows is consistent with the guidance in IFRIC 1 for
decommissioning liabilities and IFRS 16 for lease liabilities.
There were no such re-measurements of the liability in the years ended
December 31, 2019, 2018 and 2017. Movements in the liability in these
periods related to the unwinding of the discount and movements in
exchange rates.
IAS 8 requires the opening balance of each affected component of equity
to be adjusted for the earliest prior period presented and the other
comparative amounts disclosed for each prior period presented as if the
new accounting policy had always been applied.
The impact to the Group, therefore, is the restatement of GBP484
thousand from Accumulated Loss to the IP R&D asset, which relates to
re-measurements recorded prior to January 1, 2017. As there were no
re-measurements in the years ended December 31, 2019, 2018 and 2017 the
GBP484 thousand adjustment is the same at each reporting period.
The following table is a summary of the restatement:
Financial Adjustment for the
statement line change in accounting
item As reported policy As adjusted
----------- ------------------------ -------------
January 1, 2017 GBP'000s GBP'000s GBP'000s
Accumulated loss 28,728 (484) 28,244
Intangible
assets - IP
R&D 1,469 484 1,953
This adjustment also increases non-current assets, total assets and
total equity by GBP484 thousand in each of the years presented.
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.
The Group's principal lease arrangements are for office space. 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 as
at the time of adoption. 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 resulted in the recognition of right-of-use assets of
GBP326 thousand and lease liabilities of GBP316 thousand.
GBP'000s
Lease commitments (including prepayments) disclosed
as at December 31, 2018 600
Less: adjustments relating to prepaid lease payments (28)
Lease commitments as at December 31, 2018 572
=======
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 of 8% to a portfolio of leases with
reasonably similar characteristics;
-- accounting for leases with a remaining lease term of less than 12 months
as at January 1, 2019, as short-term leases; and
-- the use of hindsight in determining the lease term where the contract
contains options to extend or terminate the lease.
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 GBP426 thousand are now presented as financing, instead of
operating. General and administrative costs are GBP123 thousand lower
than if IFRS 16 not been adopted, as depreciation of the right of use
asset is less than the lease costs. There is a GBP50 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.
At the time of adoption it was not reasonably certain that the Group
would extend the leases. However, in the period the Group determined
that this was the case and agreed extensions. As a result it recognized
an additional liability and right-of-use asset of GBP1,047 thousand.
2.19 New standards, amendments and interpretations adopted by the Group
The following standard has been adopted by the Group for the first time
for the financial year beginning on or after January 1, 2019:
-- IFRS 16 "Leases"
The Group adopted IFRS 16 on January 1, 2019, and, as a consequence,
changed its accounting policies. See note 2.18.
2.20 New standards, amendments and interpretations issued but not
effective for the financial year beginning January 1, 2019 and not early
adopted
There are no IFRS standards or interpretations not yet effective that
would be expected to have a material impact on the Group.
3. Financial Instruments
3.1 Financial Risk Factors
The Group's activities have exposed it to a variety of financial risks:
market risk (including currency risk and interest rate risk), credit
risk, and liquidity risk. The Group's overall risk management program is
focused on preservation of capital and the unpredictability of financial
markets and has sought to minimize potential adverse effects on the
Group's financial performance and position.
(a) Currency risk
Foreign currency risk reflects the risk that the Group's net assets will
be negatively impacted due to fluctuations in exchange rates. The Group
has not entered into foreign exchange contracts to hedge against gains
or losses from foreign exchange fluctuations.
The summary data about the Group's exposure to currency risk is as
follows. Figures are the pound sterling values of balances in each
currency:
December 31, 2019 December 31, 2018
---------------------------- ------------------------------
GBP USD EUR GBP USD EUR
-------- -------- -------- -------- -------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------- -------- -------- -------- -------- ----------
Cash and
cash
equivalents 18,517 4,399 18 11,293 8,470 21
Short term
Investments 6,316 1,507 -- 19,850 25,069 --
Trade and
other
payables 3,226 4,306 728 2,872 4,329 532
Sensitivity Analysis
A reasonably possible strengthening or weakening of the Euro or U.S.
dollar against pounds sterling as of December 31, 2019 and 2018 would
have affected the measurement of the financial instruments denominated
in a foreign currency (excluding the assumed contingent liability).
The following table shows how a movement in a currency would give rise
to a profit or (loss) and a corresponding entry in equity.
Profit or loss and equity
Strengthening Weakening
------------------- -----------
December 31, 2019 GBP'000s GBP'000s
------------------- -----------
EUR (5% movement) (36) 36
USD (5% Movement) 80 (80)
December 31, 2018 GBP'000s GBP'000s
------------------- -----------
EUR (5% movement) (26) 26
USD (5% Movement) 1,461 (1,461)
Foreign currency denominated trade payables are short term in nature
(generally 30 to 45 days). The Group has a U.S. operation, the net
assets of which are exposed to foreign currency translation risk.
Estimated cashflows relating to the assumed contingent liability are
predominantly denominated in US dollars. In the years ended December 31,
2019, and 2018, movements in foreign exchange rates were not material
and no sensitivity analysis is therefore provided.
(b) Credit risk
Credit risk reflects the risk that the Group may be unable to recover
contractual receivables. As the Group is still in the development stage
no policies are currently required to mitigate this risk.
For banks and financial institutions, only independently rated parties
with a minimum rating of "B+" are accepted. The Directors recognize that
this is an area in which they may need to develop specific policies
should the Group become exposed to further financial risks as the
business develops.
As of December 31, 2019, and December 31, 2018, cash and cash
equivalents and short term investments were placed at the following
banks:
Year ended Year ended
Cash and Cash December 31, Credit December 31, Credit
Equivalents 2019 rating 2018 rating
-------------- ------- -------------- -------
GBP'000 GBP'000
Banks
Royal Bank of
Scotland 1 A1 150 A1
Lloyds Bank 8,355 Aa3 15,862 Aa3
Citibank 6,529 Aa3 3,135 A1
Barclays 1,968 A1 449 A2
Wells Fargo 111 Aa1 188 Aa1
Close Brothers 5,970 Aa3 -- --
-------------- --------------
Total 22,934 19,784
============== ==============
Year ended Year ended
Short Term December 31, Credit December 31, Credit
Investments 2019 rating 2018 rating
--------------- ------- --------------- -------
GBP'000 GBP'000
Banks
Royal Bank of
Scotland 5,616 A1 9,186 A1
Lloyds Bank -- Aa3 1,567 Aa3
Standard
Chartered -- A1 15,450 A1
Citibank -- Aa3 7,053 A1
Barclays 2,207 A1 11,663 A2
Total 7,823 44,919
=============== ===============
(c) Management of capital
The Group considers capital to be its equity reserves. At the current
stage of the Group's life cycle, the Group's objective in managing its
capital is to ensure funds raised meet the research and operating
requirements until the next development stage of the Group 's suite of
projects.
The Group ensures it is meeting its objectives by reviewing its Key
Performance Indicators to ensure the research activities are progressing
in line with expectations, costs are controlled and unused funds are
placed on deposit to conserve resources and increase returns on surplus
cash held.
(d) Interest rate risk
As of December 31, 2019, the Group had cash deposits of GBP22.9 million
(2018: GBP19.8 million) and short term investments of GBP7.8 million
(2018: GBP44.9 million). The rates of interest received during 2019
ranged between 0.0% and 2.87%. A 0.25% increase in interest rates would
not have a material impact on finance income. The Group's exposure to
interest rate risk, which is the risk that the interest received will
fluctuate as a result of changes in market interest rates on classes of
financial assets and financial liabilities, was as follows:
December 31, 2019 December 31, 2018
Floating Fixed Floating Fixed
interest rate interest rate interest rate interest rate
-------------- -------------- -------------- ----------------
GBP'000s GBP'000s GBP'000s GBP'000s
Financial
asset
Cash
deposits 10,006 12,928 15,082 4,702
Short Term
Investments -- 7,823 -- 44,919
Total 10,006 20,751 15,082 49,621
============== ============== ============== ==============
(e) Liquidity risk
The Group periodically prepares working capital forecasts for the
foreseeable future, allowing an assessment of the cash requirements of
the Group, to manage liquidity risk. The following table provides an
analysis of the Com Group's financial liabilities. The carrying value of
all balances approximates to their fair value. The Group's maturity
analysis for the derivative financial instrument from the issue of
warrants is given in note 19.
BETWEEN BETWEEN
LESS THAN 1 AND 2 2 AND 5 OVER
1 YEAR YEARS YEARS 5 YEARS
--------- -------- -------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s
At December 31, 2019
Trade payables 1,455 -- -- --
Accruals 6,806 -- -- --
Lease liability(2) 476 557 -- --
Assumed contingent liability(1) -- -- -- 1,807
--------- -------- -------- --------
Total 8,737 557 -- 1,807
========= ======== ======== ========
(1) This table includes the undiscounted amount of the assumed
contingent liability. See note 21.
(2) This table includes the undiscounted amount of the finance lease
liability. See note 2.18.
BETWEEN BETWEEN
LESS THAN 1 AND 2 2 AND 5 OVER
1 YEAR YEARS YEARS 5 YEARS
--------- -------- -------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s
At December 31, 2018
Trade payables 2,839 -- -- --
Other payables 12 -- -- --
Accruals 4,882 -- -- --
Assumed contingent liability(1) -- -- -- 1,807
--------- -------- -------- --------
Total 7,733 -- -- 1,807
========= ======== ======== ========
(1) This table includes the undiscounted amount of the assumed
contingent liability. See note 21.
3.2 Fair value estimation
The carrying amounts of cash and cash equivalents, receivables, accounts
payable and accrued liabilities approximate to fair value due to their
short-term nature. The carrying amount of the assumed contingent
liability approximates to fair value as the underlying assumptions are
currently similar.
For financial instruments that are measured in the Consolidated
Statement of Financial Position at fair value, IFRS 7 requires
disclosure of fair value measurements by level of the following fair
value measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1);
-- Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly or indirectly
(level 2); and
-- Inputs for the asset or liability that are not based on observable market
data (level 3).
For the year ended December 31, 2019, and 2018, fair value adjustments
to financial instruments measured at fair value through profit and loss
resulted in the recognition of finance income of GBP1.6 million in 2019
and a finance loss of GBP1.2 million in 2018.
The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. These valuation
techniques maximize the use of observable market data where it is
available and rely as little as possible on entity specific estimates.
If all significant inputs required to ascertain the fair value of an
instrument are observable, the instrument is included in level 2. If one
or more of the significant inputs are not based on observable market
data, the instrument is included in level 3.
Level 3 Total
-------- ----------
GBP'000s GBP'000s
At December 31, 2019
Derivative financial instrument 895 895
Total 895 895
======== ========
Movements in Level 3 items during the years ended December 31, 2019, and
2018 are as follows:
Derivative financial instrument 2019 2018
-------- ----------
GBP'000s GBP'000s
At January 1 2,492 1,273
Fair value adjustments recognized in profit and loss (1,597) 1,219
-------
At December 31 895 2,492
======= ========
Further details relating to the derivative financial instrument are set
out in notes 4 and 19 of these financial statements.
In determining the fair value of the derivative financial instrument,
the Group applied the Black Scholes model; key inputs include the share
price at reporting date, estimations on timelines, volatility and
risk-free rates. These assumptions and the impact of changes in these
assumptions, where material, are disclosed in note 19.
3.3 Change in liabilities arising from financing activities
The Group has provided a reconciliation so that changes in liabilities
arising from financing activities, including both changes arising from
cash flows and non-cash changes can be evaluated.
2019
Derivative financial instrument
GBP'000s
At January 1 2,492
Fair value adjustments - non cash (1,597)
At December 31 895
=========================== ====
See note 19 for information relating to the derivative financial
instrument.
2019
Lease liability
GBP'000s
At January 1 316
Capitalization of rental leases - non cash 1,061
Payment of lease liability - cash (426)
At December 31 951
=============
See note 14 and note 2.18 for information relating to capitalized
leases.
4. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRS requires
the use of accounting estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Although these estimates are based on management's
best knowledge of current events and actions, actual results ultimately
may differ from those estimates. IFRS also requires management to
exercise its judgment in the process of applying the Group's accounting
policies.
The areas involving a higher degree of judgment or complexity, or areas
where assumptions and estimates are significant to the consolidated
financial statements are as follows:
(a) Assumed contingent liability
The Group has a material liability for the future payment of royalties
and milestones associated with contractual liabilities on ensifentrine,
acquired as part of the acquisition of Rhinopharma. The estimation of
the amounts and timing of future cashflows requires the forecast of
royalties payable and the estimation of the likelihood that the
regulatory approval milestone will be achieved (see notes 2.12 and 21).
The estimates for the assumed contingent liability are based on a
discounted cash flow model. Key estimates included the calculation of
deferred consideration are:
-- development, regulatory and marketing risks associated with progressing
the product to market approval in key target territories;
-- market size and product acceptance by clinicians, patients and
reimbursement bodies;
-- gross and net selling price;
-- launch of competitive products;
-- probabilities of success; and
-- time to crystallization of contingent consideration.
When there is a change in the expected cash flows or probabilities of
success, the assumed contingent liability is re-measured with the change
in value recognized in the IP R&D asset it relates to. This is a change
in accounting policy for the year ended December 1, 2019, (see 2.18).
The assumed contingent liability is measured at amortized cost with the
discount unwinding in finance expense throughout the year. Actual
outcomes could differ significantly from the estimates made.
The Group has judged that the probabilities of success will change when
it moves from one stage of clinical development to another. Management
have determined that, for the purposes of assessing probabilities of
success, the Group will move from Phase 2 to Phase 3 after an End of
Phase 2 Meeting with the Food and Drug Administration ("FDA") in the US
that provides confidence over ensifentrine's historical development
program and planned Phase 3 program. A remeasurement of the liability at
this time is likely to result in a significant increase in both the
liability and the corresponding IPR&D asset. The Group has previously
announced that it expects to meet with the FDA in the first half of
2020. The Group notes that there is no guarantee that the meeting will
take place in the timeframe anticipated or that there will be a
successful outcome.
Should the probabilities of success and estimates of cash flows change
there will be a material increase in the assumed contingent liability
and corresponding IP R&D asset. The amount will be dependent on feedback
from the FDA and the probabilities of success applied. Should the
Company determine that it has moved from Phase 2 to Phase 3 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, as
described further in Note 2.7.
The value of the assumed contingent liability as of December 31, 2019
amounted to GBP1.1 million. (2018: GBP1.0 million).
(b) Valuation of the Derivative Financial Liability
In July 2016, the Company issued 31,115,926 units to new and existing
investors at the placing price of GBP1.4365 per unit. Each unit
comprises one ordinary share and one warrant. The warrants entitle the
investors to subscribe for in aggregate a maximum of 12,401,262 ordinary
shares.
In accordance with IAS 32 and the Group's accounting policy, as
disclosed in note 2.14, the Group classified the warrants as a
derivative financial liability to be presented on the Group's
Consolidated Statement of Financial Position.
The fair value of these warrants is determined by applying the
Black-Scholes model. Assumptions are made on inputs such as term,
volatility and risk free rate in order to determine the fair value per
warrant. For further details see note 19.
5. Earnings per share
Basic loss per ordinary share of 30.3p (2018: 18.9p) for the Group is
calculated by dividing the loss for the year ended December 31, 2019 by
the weighted average number of ordinary shares in issue of 105,326,638
as of December 31, 2019 (2018: 105,110,504). Potential ordinary shares
are not treated as dilutive as the entity is loss making and such shares
would be anti-dilutive.
6. 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 year.
All non-current assets are based in the United Kingdom.
7. Operating loss
Group
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ ---------------------------
GBP'000s GBP'000s
Operating Loss is stated after charging /
(crediting):
Research and development costs:
Employee benefits (note 8) 4,688 3,360
Amortization of patents (note 12) 102 85
Legal, professional consulting and listing fees 537 161
Other research and development expenses 28,149 15,688
------------------ ------ ------------------
Total research and development costs 33,476 19,294
------------------ ------ ------------------
General and administrative costs:
Employee benefits (note 8) 3,093 3,240
Legal, professional consulting and listing fees 2,155 1,296
Amortization of computer software (note 12) 4 5
Depreciation of property, plant and equipment (note
13) 16 8
Depreciation of right-of-use assets (note 14) 382 -
Operating lease charge -- land and buildings - 384
Loss / (gain) on variations in foreign exchange rate 345 (9)
Other general and administrative expenses 1,612 1,373
------------------ ------ ------------------
Total general and administrative costs 7,607 6,297
------------------ ------ ------------------
Operating loss 41,083 25,591
================== ====== ==================
During the periods indicated, the Group obtained the services from and
paid the fees of the Group's auditors and their associates as detailed
below:
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ --------------------
GBP'000s GBP'000s
Audit of Verona Pharma plc and consolidated financial
statements 148 114
Audit related services 52 68
Other services 67 86
------------------ ------------------
Total 267 268
================== ==================
Audit-Related Services
For the year ended December 31, 2019, audit related services include
fees for quarterly interim reviews.
For the year ended December 31, 2018, audit related services include
fees for quarterly interim reviews.
Other Services
For the year ended December 31, 2019, other services related to advice
relating to fund raising.
For the year ended December 31, 2018, other services related to a review
of the Company's F-3 shelf registration statement.
8. Directors' emoluments and staff costs
Group
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ ------------------
The average number of employees (excluding directors)
of the Group during the year:
Research and development 13 7
General and administrative 9 7
------------------ ------------------
Total 22 14
================== ==================
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ ------------------
GBP'000s GBP'000s
Aggregate emoluments of directors:
Salaries and other short-term employee benefits 850 830
Social security costs 112 94
Incremental payment for additional services 26 26
Other pension costs 10 10
------------------ ------------------
Total directors' emoluments 998 960
Share-based payment charge 925 1,337
------------------ ------------------
Directors' emoluments including share-based payment
charge 1,923 2,297
================== ==================
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ ------------------
GBP'000s GBP'000s
Aggregate executive officers
costs:
Wages and salaries 1,150 857
Social security costs 98 83
Share-based payment charge 751 769
Other pension costs 21 19
------------------ ------------------
Total executive officers costs 2,020 1,728
================== ==================
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ ------------------
GBP'000s GBP'000s
Aggregate other staff costs:
Wages and salaries 2,788 1,622
Social security costs 265 150
Share-based payment charge 765 795
Other pension costs 46 34
------------------ ------------------
Total other staff costs 3,864 2,601
================== ==================
The Group considers key management personnel to comprise directors and
executive officers.
The Group operates defined contribution pension schemes for its
employees and executive director. The total pension cost during the year
ended December 31, 2019 was GBP77 thousand (2018: GBP63 thousand). There
were no prepaid or accrued contributions to the scheme at December 31,
2019 (2018 GBPnil)
Company
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ --------------------
The average number of employees (excluding directors)
of the Company during the year:
Research and Development 5 4
General and Administrative 8 4
Total 13 8
================== ==================
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ --------------------
GBP'000s GBP'000s
Aggregate emoluments of directors:
Salaries and other short-term employee benefits 850 830
Social security costs 112 94
Incremental payment for additional services 26 26
Other pension costs 10 10
------------------ ------------------
Total directors' emoluments 998 960
Share-based payment charge 925 1,337
------------------ ------------------
Directors' emoluments including share-based payment
charge 1,923 2,297
================== ==================
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ --------------------
GBP'000s GBP'000s
Aggregate executive officers
costs:
Wages and salaries 592 532
Social security costs 75 73
Share-based payment charge 639 957
Other pension costs 21 19
Total executive officers costs 1,327 1,581
================== ==================
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ --------------------
GBP'000s GBP'000s
Aggregate other staff costs:
Wages and salaries 1,241 984
Social security costs 172 118
Share-based payment charge 447 571
Other pension costs 46 34
Total other staff costs 1,906 1,707
================== ==================
The Group considers key management personnel to be the aggregate of
directors and executive officers.
The Company operates a defined contribution pension schemes for its.
employees and executive director. The total pension cost during the year
ended December 31, 2019 was GBP77 thousand (2018: GBP63 thousand). There
were no prepaid or accrued contributions to the scheme at December 31,
2019 (2018: GBPnil).
In respect of Directors' remuneration, the Company has taken advantage
of the permission in Paragraph 6(2) of Statutory Instrument 2008/410 to
omit aggregate information that is capable of being ascertained from the
detailed disclosures in the audited section of the Directors'
Remuneration Report which form part of these Consolidated Financial
Statements.
9. Finance income and expense
Year ended Year ended
Group December 31, 2019 December 31, 2018
------------------ ------------------
GBP'000s GBP'000s
Finance income:
Interest received on cash balances 754 861
Foreign exchange gain on translating foreign currency
denominated balances -- 1,922
Fair value adjustment on derivative financial instruments
(note 19) 1,597 --
Total finance income 2,351 2,783
================== ==================
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ ------------------
GBP'000s GBP'000s
Finance expense:
Fair value adjustment on derivative financial instruments
(note 19) -- 1,219
Interest on discounted lease liability 50 --
Foreign exchange loss on translating foreign currency
denominated balances 305 --
Unwinding of discount factor related to the assumed
contingent arrangement (note 21) 119 106
------------------ ------------------
Total finance expense 474 1,325
================== ==================
Company
Year ended Year ended
December 31, 2019 December 31, 2018
GBP'000s GBP'000s
Finance income:
Interest received on cash balances 754 861
Foreign exchange gain on translating foreign currency
denominated balances -- 1,922
Fair value adjustment on derivative financial instruments
(note 19) 1,597 --
Total finance income 2,351 2,783
------------------ ------------------
Year ended Year ended
December 31, 2019 December 31, 2018
------------------ ------------------
GBP'000s GBP'000s
Finance expense:
Fair value adjustment on derivative financial instruments
(note 19) -- 1,219
Interest on discounted lease liability 39 --
Foreign exchange loss on translating foreign currency
denominated balances 305 --
Unwinding of discount factor related to the assumed
contingent arrangement (note 21) 119 106
------------------ ------------------
Total finance expense 463 1,325
================== ==================
10. Taxation
Year ended Year ended
December 31, 2019 December 31, 2018
-------------------- --------------------
GBP'000s GBP'000s
Analysis of tax credit for the year
Current tax:
U.K. tax credit (7,250) (4,290)
U.S. tax charge 56 30
Adjustment in respect of prior periods (71) 28
----------- ------ ----------- -------
Total tax credit (7,265) (4,232)
=========== ====== =========== ======
Factors affecting the tax credit for the year
Loss on ordinary activities before taxation (39,206) (24,133)
=========== ====== =========== ======
Multiplied by standard rate of corporation tax of
19% (2018: 19%) (7,449) (4,585)
Effects of:
Non-deductible expenses 515 540
Fair value adjustment on derivative financial
instruments (303) 232
Research and development incentive (3,119) (1,846)
Temporary differences not recognized (6) (3)
Difference in overseas tax rates 16 8
Tax losses carried forward not recognized 3,152 1,394
Adjustment in respect of prior periods (71) 28
----------- ------ ----------- -------
Total tax credit (7,265) (4,232)
=========== ====== =========== ======
U.K. corporation tax is charged at 19% (2018: 19.00%) and U.S. federal
and state tax at 27.6% (2018: 27.6%).
The following tables represent deferred tax balances recognized in the
Consolidated Statement of Financial Position. There were no movements in
either the deferred tax asset or the deferred tax liability.
As at December 31, 2019 As at December 31, 2018
------------------------- -------------------------
GBP'000s GBP'000s
Deferred tax assets 332 250
Deferred tax
liabilities (332) (250)
------------------- --- ------------------- ---
Net balances -- --
=================== ==== =================== ====
The deferred tax liability relates to the difference between the
accounting and tax bases of the IP R&D intangible asset. A deferred tax
asset relating to UK tax losses has been recognized and offset against
the liability.
Factors that may affect future tax charges
The Group has U.K. tax losses available for offset against future
profits in the United Kingdom. However an additional deferred tax asset
has not been recognized in respect of such items due to uncertainty of
future profit streams. As of December 31, 2019, the unrecognized
deferred tax asset at 17% is estimated to be GBP9.27 million (2018:
GBP6.65 million at 17%).
11. Goodwill
Group and Company
As of December 31,
2019 As of December 31, 2018
---------------------- -------------------------
GBP'000s GBP'000s
Goodwill at January 1
and December 31 441 441
Goodwill represents the excess of the purchase price over the fair value
of the net assets acquired in connection with the acquisition of
Rhinopharma in September 2006. Goodwill is not amortized, but is tested
annually for impairment.
The Group has one CGU so goodwill is tested for impairment together with
its intangible assets. It was tested with reference to the Group's
market capitalization as of December 31, 2019, the date of testing of IP
R&D and goodwill impairment. The market capitalization of the Group was
approximately GBP65.3 million as of December 31, 2019, (2018: 92.2
million) compared to the Group's net assets of GBP33.9 million (2018:
GBP63.4 million). Therefore, no impairment was required.
The Group notes that after the reduction in its share price since
December 31, 2018, and before the increase by December 31, 2019, at
various points in the three months to March 31, 2019, the market value
of the Group was less than its net book value. The Group therefore
carried out an impairment review as at March 31, 2019. From market
research the Group 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. The Group 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
Group's value in use exceeded the carrying value of the Group's assets
and that no impairment was required.
At various other points in the year ended December 31, 2019, the market
value of the Group was less than its net book value. Consequently,
management re-performed the impairment review quarterly, and identified
no changes to market conditions, the competitive landscape, market
research insights or other factors that would change its conclusions. As
a result, management determined that the Group's value in use exceeded
the carrying value of the Group's assets and that no impairment was
required at those dates.
12. Intangible assets
Group and Company
Computer
IP R&D software Patents Total
-------- --------- ---------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At January 1, 2018
(Restated) 1,953 11 727 2,691
Additions -- 4 251 255
Disposals -- -- (6) (6)
-------- --------- ------ -------
At December 31, 2018
(Restated) 1,953 15 972 2,940
-------- --------- ------ -------
Accumulated
amortization
At January 1, 2018 -- 6 232 238
Charge for year -- 5 85 90
Disposals -- -- (6) (6)
-------- --------- ------ -------
At December 31, 2018 -- 11 311 322
-------- --------- ------ -------
Net book value
At December 31, 2018
(Restated) 1,953 4 661 2,618
======== ========= ====== =======
Computer
IP R&D software Patents Total
-------- --------- -------- ----------
GBP'000s GBP'000s GBP'000s GBP'000s
Cost
At January 1, 2019 1,953 15 972 2,940
Additions -- 3 242 245
-------- --------- -------- --------
At December 31, 2019 1,953 18 1,214 3,185
-------- --------- -------- --------
Accumulated
amortization
At January 1, 2019 -- 11 311 322
Charge for year -- 4 102 106
-------- --------- -------- --------
At December 31, 2019 -- 15 413 428
-------- --------- -------- --------
Net book value
At December 31, 2019 1,953 3 801 2,757
======== ========= ======== ========
Intangible assets comprise patents, computer software and an IP R&D
asset that arose on the acquisition of Rhinopharma and investment in
patents to protect ensifentrine.
The IP R&D asset acquired through the business combination was initially
recognized at fair value. Subsequent movements in the assumed contingent
liability that relate to changes in estimated cash flows or
probabilities of success are recognized as additions to the IP R&D asset
that it relates to. This is a change in accounting policy (see note
2.18). The asset is not amortized and is tested annually for impairment.
Patents are amortized over a period of ten years and are tested annually
for impairment.
Intangible assets are tested for impairment with goodwill, as the Group
has only one CGU. See note 11 for information about the impairment
review.
13. Property, plant and equipment
Group and Company
Computer
hardware Total
--------- ----------
GBP'000s GBP'000s
Cost
At January 1, 2018 26 26
Additions 13 13
--------- --------
At December 31, 2018 39 39
--------- --------
Accumulated depreciation
At January 1, 2018 10 10
Charge for the year 8 8
--------- --------
At December 31, 2018 18 18
--------- --------
Net book value
At December 31, 2018 21 21
========= ========
Computer
hardware Total
--------- ----------
GBP'000s GBP'000s
Cost
At January 1, 2019 39 39
Additions 38 38
At December 31, 2019 77 77
--------- --------
Accumulated depreciation
At January 1, 2019 18 18
Charge for the year 16 16
--------- --------
At December 31, 2019 34 34
--------- --------
Net book value
At December 31, 2019 43 43
========= ========
14. Right-of-use assets - property leases
The right-of-use asset relates to rented office space in London and New
York where the Group generally enters in to leases for terms of less
than three years. Before the adoption of IFRS 16 these leases were
classified as operating leases.
Group
The Consolidated Statement of Financial Position shows the following
amounts relating to leases:
Year ended
December 31, 2019 As of January 1, 2019*
-------------------- ------------------------
GBP'000s GBP'000s
Right-of-use assets
Right-of-use assets 971 326
971 326
=============== === ================== ====
Lease liabilities
Current (460) (316)
Non Current (491) --
--------------- ------------------ ----
(951) (316)
=============== ================== ===
Additions to the right-of-use assets were GBP1,047,000 and were
recognized when the Group was reasonably certain to extend the leases.
The additions related to both of the Group's office locations, both of
which agreements have similar terms and conditions.
To calculate the value of the lease liabilities the Group applied a
discount rate of 8%.
The leases end in 2021 and 2022 and include options to extend them. The
Group has determined it is not yet reasonably certain to operate the
option to extend the leases and so has recognized lease payments only to
these points in its calculation of the lease liabilities.
The right-of-use lease assets are depreciated over the term of the
leases.
The Consolidated Statement of Comprehensive Income includes the
following amounts relating to leases:
Year ended Year ended
December 31, 2019 December 31, 2018
-------------------- --------------------
GBP'000s GBP'000s
Depreciation charge of right-of-use assets
Right-of-use assets (382) --
(382) --
=========== ====== ==================
Interest expense (including finance cost) 50 --
Expense relating to short-term leases (included in 78 --
general and administrative expenses)
The total cash outflow for leases in 2019 was GBP492,000.
Company
The right-of-use asset relates to rented office space in London where
the Company generally enters in to leases for terms of less than three
years. Before the adoption of IFRS 16 these leases were classified as
operating leases.
The Company's Statement of Financial Position shows the following
amounts relating to leases:
Year ended
December 31, 2019 As of January 1, 2019*
-------------------- ------------------------
GBP'000s GBP'000s
Right-of-use assets
Right-of-use assets 731 326
731 326
=============== === ================== ====
Lease liabilities
Current (335) (316)
Non Current (419) --
--------------- ------------------ ----
(754) (316)
=============== ================== ===
Additions to the right-of-use assets were GBP718,000 and were recognized
when the Company was reasonably certain to extend the leases. The
additions related to the Company's office location.
To calculate the value of the lease liabilities the Company applied a
discount rate of 8%.
The leases end in 2022. The Company has determined it is not yet
reasonably certain to operate the option to extend the leases and so has
recognized lease payments only to these points in its calculation of the
lease liabilities.
The right-of-use lease assets are depreciated over the term of the
leases.
The Consolidated Statement of Comprehensive Income includes the
following amounts relating to leases:
Year ended Year ended
December 31, 2019 December 31, 2018
-------------------- --------------------
GBP'000s GBP'000s
Depreciation charge of
right-of-use assets
Right-of-use assets (313) --
(313) --
=============== ==================
Interest expense (including 39 --
finance cost)
The total cash outflow for leases in 2019 was GBP348,000.
15. Prepayments and other receivables
Group
As of December 31,
2019 As of December 31, 2018
---------------------- -------------------------
GBP'000s GBP'000s
Prepayments 1,309 1,362
Other receivables 1,461 1,101
---------------------- -----------------------
Total prepayments and
other receivables 2,770 2,463
====================== =======================
The prepayments balance includes prepayments for insurance and clinical
activities.
Company
As of December 31,
2019 As of December 31, 2018
---------------------- -------------------------
GBP'000s GBP'000s
Prepayments 1,331 1,346
Other receivables 1,437 1,069
Amounts due from group
undertakings 325 187
---------------------- -----------------------
Total prepayments and
other receivables 3,093 2,602
====================== =======================
Amounts due from group undertakings are unsecured, interest free and
repayable on demand.
The prepayments balance includes prepayments for insurance and clinical
activities.
16. Investment in subsidiaries
The Company has two wholly owned subsidiaries, Rhinopharma Limited and
Verona Pharma Inc.
As of December 31,
2019 As of December 31, 2018
---------------------- -------------------------
GBP'000s GBP'000s
Net book value:
At the start of the
year 913 877
Capital contribution
arising from
share-based payments 429 36
---------------------- -----------------------
Net book amount at the
end of year 1,342 913
====================== =======================
A capital contribution arises where share-based payments are provided to
employees of the subsidiary undertaking, Verona Pharma Inc, settled with
equity to be issued by the Company.
The Company's investments comprise interests in Group undertakings,
details of which are shown below:
Name of undertaking Verona Pharma Inc. Rhinopharma Limited
Country of incorporation Delaware British Columbia
USA Canada
------------------ -------------------
Description of shares held $0.001 Without Par Value
Common stock Common shares
------------------ -------------------
Proportion of shares held by
the Company 100% 100%
Verona Pharma Inc. was incorporated on the 12 December 2014 under the
laws of the State of Delaware, USA and has its registered office at 2711
Centerville Road, Suite 400, City of Wilmington 19808, County of New
Castle, Delaware, United States of America.
Rhinopharma Limited is incorporated under the laws of the Province of
British Columbia, Canada and has its registered office at Suite 700, 625
Howe Street, Vancouver, British Columbia, Canada V6C 2T6. Rhinopharma
Limited was a drug discovery and development company focused on
developing proprietary drugs to treat allergic rhinitis and other
respiratory diseases prior to its acquisition by the Company on
September 18, 2006.
17. Share Capital
Group and Company
The movements in the Company's share capital are summarized below:
Number of Share Capital
Date Description shares amounts in GBP'000s
---------------- ---------------- ----------- --------------------
January 1, 2018 105,017,401 5,251
August 9, 2018 Vesting of RSUs 58,112 3
September 20,
2018 Vesting of RSUs 251,125 12
As at December 31, 2018 105,326,638 5,266
As at December 31, 2019 105,326,638 5,266
The total number of authorized ordinary shares, with a nominal value of
GBP0.05 each, is 200,000,000 (share capital of GBP10,000,000). All
105,326,638 ordinary shares at December 31, 2019 are allotted,
unrestricted, called up and fully paid. All issued shares rank pari
passu.
During 2018, the Company issued 309,237 ordinary shares upon vesting of
employee restricted share units.
18. Share-based payments charge
Group and Company
The Group operates various share based payment incentive schemes for its
staff.
In accordance with IFRS 2 "Share Based Payments," the cost of
equity-settled transactions is measured by reference to their fair value
at the date at which they are granted. Where equity-settled transactions
were entered into with third party service providers, fair value is
determined by reference to the value of the services provided. For other
equity-settled transactions fair value is determined using the
Black-Scholes model. The cost of equity-settled transactions is
recognized over the period until the award vests. No expense is
recognized for awards that do not ultimately vest. At each reporting
date, the cumulative expense recognized for equity-based transactions
reflects the extent to which the vesting period has expired and the
number of awards that, in the opinion of the Directors at that date,
will ultimately vest.
The costs of equity-settled share-based payments to employees are
recognized in the Statement of Comprehensive Income, together with a
corresponding increase in equity during the vesting period. During the
twelve months ended December 31, 2019, the Group recognized a
share-based payment expense of GBP2.44 million (2018: GBP2.90 million).
The charge is included within both general and administrative costs as
well as in research and development costs and represents the current
year's allocation of the expense for relevant share options.
The Group operates an Unapproved Share Option Scheme under which options
were issued before 31 December 2016. The Group also operates a tax
efficient EMI Option Scheme under which options were issued before 31
December 2016. In 2017 the Group commenced the 2017 Incentive Award Plan
under which the Group grants share options and Restricted Stock Units
("RSUs") to employees and directors.
Since 2017 options are issued with an exercise price at the share price
the evening before the date of issue. They vest over terms of one to
four years.
RSUs also vest over terms of one to four years. In the year ended
December 31, 2019, the Company modified the terms of all the RSUs issued
prior January 1, 2019, to include a market based performance condition.
The Company's share price must be maintained above GBP2 for thirty days
for the RSUs to vest, in addition to the existing service condition. The
RSUs vest after a five year term irrespective of whether the GBP2 market
condition was met. This modification did not result in an increase in
the fair value of the RSUs. The RSUs issued in the year ended December
31, 2019, also include the same market condition and five year term.
In the year ended December 31, 2019, under the 2017 Incentive Award Plan,
the Group granted 5,569,050 (2018: 2,090,847) share options and 740,496
RSUs (2018: 273,390). The total fair values of the options and RSUs
were estimated using the Black-Scholes option-pricing model for
equity-settled transactions and amounted to GBP2.25 million (2018:
GBP2.32 million). The cost is amortized over the vesting period of the
options and RSUs on a straight-line basis.
The following assumptions were used for the Black-Scholes valuation of
share options and RSUs granted in 2018 and 2019. For the options granted
under the Unapproved Scheme the table indicates the ranges used in
determining the fair-market values, aligning with the various dates of
the underlying grants. The volatility is calculated using historical
weekly averages of the Group's share price over a period that is in line
with the expected life of the options and RSUs.
Unapproved Restricted Stock
Issued in 2018 Scheme Units
Options granted 2,090,847 273,390
Risk-free interest rate 1.08% - 1.22% 1.08% - 1.22%
Expected life of options 5.5 - 7 years 5.5 - 7 years
Annualized volatility 69.88% -71.35% 69.88% -71.35%
Dividend rate 0.00% 0.00%
Vesting period 1 to 4 years 1 to 4 years
Unapproved Restricted Stock
Issued in 2019 Scheme Units
------------------------- --------------- ----------------
Options granted 5,569,050 740,496
Risk-free interest rate 0.39% - 0.82% 0.76% - 0.82%
Expected life of options 5.5 - 7 years 5.5 - 7 years
Annualized volatility 67.98% - 69.71% 63.82% - 69.71%
Dividend rate 0.00% 0.00%
Vesting period 1 to 4 years 1 to 4 years
The Group had the following share options movements in the year ended
December 31, 2019:
Year At At
of Exercise January Options Options Options December Expiry
issue price (GBP) 1, 2019 granted forfeited expired 31, 2019 date
------ ------------ --------- --------- ---------- -------- ---------- ---------
June 1,
2012 2.50 - 7.50 99,993 -- -- -- 99,993 2022
April 15,
2013 2 99,990 -- -- (19,998) 79,992 2023
July 29,
2013 2.00 159,999 -- -- -- 159,999 2023
May 15,
2014 1.75 109,998 -- -- -- 109,998 2024
May 15,
2014 1.75 49,998 -- -- -- 49,998 2024 *
January
2015 1.25 41,997 -- -- -- 41,997 29, 2025 *
January
2015 1.25 549,999 -- -- -- 549,999 29, 2025
February
2016 2 240,000 -- -- -- 240,000 2, 2026
February
2016 2.00 21,996 -- -- -- 21,996 2, 2026 *
August 3,
2016 1.80 676,664 -- -- -- 676,664 2026
September
2016 1.89 299,997 -- -- -- 299,997 13, 2026
September
2016 2.04 300,000 -- -- -- 300,000 16, 2026
April 26,
2017 1.32 - 1.525 4,093,164 -- -- -- 4,093,164 2027
March 8,
2018 1.46 2,008,319 -- (34,614) -- 1,973,705 2028
March 29,
2019 570.00 -- 3,903,050 (87,356) -- 3,815,694 2029
June 11,
2019 595.00 -- 346,000 -- -- 346,000 2029
August
2019 457.00 -- 100,000 -- -- 100,000 22, 2029
November
2019 0.436 -- 720,000 -- -- 720,000 6, 2029
November
2019 445.00 -- 500,000 -- -- 500,000 26, 2029
Total 8,752,114 5,569,050 (121,970) (19,998) 14,179,196
======= ============ ========= ========= ========= ======= ========== =========
* Options granted under the EMI Scheme.
The Company had the following RSU movements in the year ended December
31, 2019:
At
Exercise January At
Year of price 1, Units Units Units December Expiry
issue (GBP) 2019 granted vested forfeited 31, 2019 date
--------- ------- -------- ------- ---------- --------- ------
April
26,
2017 729,987 -- -- -- 729,987 2027
March
8,
2018 132,486 -- -- -- 132,486 2028
March
29,
2019 740,496 -- -- 740,496 2027
------- -------- ------- ---------- ---------
Total 862,473 740,496 -- -- 1,602,969
===================== ======= ======== ======= ========== ========= ======
Outstanding and exercisable share options by scheme as of December 31,
2019:
Weighted
average Weighted
exercise average
price in exercise price
GBP for in GBP for
Plan Outstanding Exercisable Outstanding Exercisable
----------- ----------- ----------- ----------- --------------
Unapproved 13,965,212 5,552,293 1.12 1.55
EMI 213,984 213,984 3.06 3.06
Total 14,179,196 5,766,277 1.15 1.61
=========== =========== =========== =========== ============
As of December 31, 2019 there were no restricted share options
exercisable (2018: nil) and there is no exercise price for restricted
share options.
The options outstanding at December 31, 2019 had a weighted average
remaining contractual life of 7.7 years (2018: 8.0 years). For 2018 and
2019, the number of options granted and expired and the weighted average
exercise price of options were as follows:
Weighted average
Number of exercise price
options (GBP)
---------- ------------------
At January 1, 2018 7,527,458 1.53
Options granted in 2018:
Employees 1,222,089 1.46
Directors 868,758 1.46
Options forfeited in the year (799,524) 1.43
Options expired in the year (66,667) 1.75
--------- ----------------
At December 31, 2018 8,752,114 1.53
========= ================
Exercisable at December 31, 2018 3,542,884 1.66
========= ================
Weighted average
Number of exercise price
options (GBP)
----------- ------------------
At January 1, 2019 8,752,114 1.53
Options granted in 2019:
Employees 4,042,106 0.55
Directors 1,526,944 0.53
Options forfeited in the year (121,970) 0.82
Options expired in the year (19,998) 2.00
---------- ----------------
At December 31, 2019 14,179,196 1.15
========== ================
Exercisable at December 31, 2019 5,766,277 1.60
========== ================
The following table shows the number of RSUs issued, exercised and
forfeited in 2018. The fair value of each unvested RSU at grant date was
GBP1.46.
Number of
RSUs
------------
At January 1, 2018 1,052,236
Granted:
Employees 136,404
Directors 136,986
RSUs vested in the year (309,237)
RSUs forfeited in the year (153,916)
At December 31, 2018 862,473
=========
The following table shows the number of RSUs issued in 2019. There were
no RSUs forfeited, canceled or vested in 2019. The fair value of each
unvested RSU granted in 2019 was GBP0.57.
Number of
RSUs
-----------
At January 1, 2019 862,473
Granted:
Employees 474,072
Directors 266,424
RSUs vested in the year --
RSUs forfeited in the year --
---------
At December 31, 2019 1,602,969
=========
The cost is amortized over the vesting period of the options on a
straight-line basis. The expense for the Group during 2019 amounted to
GBP2.9m and GBP0.04m in relation to Verona Pharma Inc is held as an
investment.
19. Derivative financial instrument
Group and Company
On July 29, 2016, the Group 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 subscribe for 0.4 of an ordinary share at a per
share exercise price of GBP1.7238. The warrant holders can opt for a
cashless exercise of their warrants, whereby the warrant holders can
choose to exchange the warrants held for 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.
In the year ended December 31, 2019, no warrants were forfeited (2018:
nil).
The table below presents the assumptions in applying the Black-Scholes
model to determine the fair value of the warrants.
As of December 31, 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 0.540% 0.760%
Expected term to
exercise 2.34 years 3.34 years
Annualized
volatility 65.56% 60.72%
Dividend rate 0.00% 0.00%
As per the reporting date, the Group updated the underlying assumptions
and calculated a fair value of these warrants amounting to GBP0.9
million. The variance of GBP(1.6) million is recorded as finance income
in the Consolidated Statement of Comprehensive Income.
Derivative Derivative
financial financial
instrument instrument
----------- -------------
2019 2018
----------- -------------
GBP'000s GBP'000s
At January 1 2,492 1,273
Fair value adjustments recognized in profit or
loss (1,597) 1,219
---------- -----------
At December 31 895 2,492
========== ===========
For the amount recognized at December 31, 2019, the effect when the
following parameter deviates up or down is presented in the below table.
Volatility
(up / down
10% pts)
-------------
GBP'000s
Variable up 1,306
Base case, reported fair value 895
Variable down 535
20. Trade and other payables
Group
As of December 31,
2019 As of December 31, 2018
---------------------- -------------------------
GBP'000s GBP'000s
Trade payables 1,455 2,839
Other payables -- 12
Accruals 6,806 4,882
---------------------- -----------------------
Total trade and other
payables 8,261 7,733
====================== =======================
Company
As of December 31,
2019 As of December 31, 2018
---------------------- -------------------------
GBP'000s GBP'000s
Trade payables 1,455 2,839
Other payables -- 12
Amount due to group
undertakings 1,474 722
Accruals 6,327 4,696
---------------------- -----------------------
Total trade and other
payables 9,256 8,269
====================== =======================
Amounts due to group undertakings are unsecured, interest free and
repayable on demand.
21. Assumed contingent liability related to the business combination
Group and Company
The value of the assumed contingent liability as of December 31, 2019 is
GBP1.1 million (2018: GBP1.0 million). The increase in value of the
assumed contingent liability during 2019 amounted to GBP0.1 million
(2018: GBP0.1 million).
The assumed contingent liability relates to the acquisition, in 2006, of
rights to certain patents and patent applications relating to
ensifentrine and related compounds under which the Group is obliged to
pay royalties to Ligand (see 2.12).
The assumed contingent liability is measure 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 ("see 2.7"). This is a change in accounting policy for the year ended
December 1, 2019 (see 2.18). The unwind of the discount is recognized in
finance expense.
The Group considers that probabilities of success will change when it
moves from one stage of clinical development to another. See note 4 for
a further discussion of this.
2019 2018
-------- ----------
GBP'000s GBP'000s
January 1 996 875
Impact of changes in foreign exchange rates (12) 15
Unwinding of discount factor 119 106
------- --------
December 31 1,103 996
======= ========
There is no material difference between the fair value and carrying
value of the financial liability.
For the amount recognized as at December 31, 2019, of GBP1,103 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 1,067 1,135
Base case, reported fair value 1,103 1,103
Variable down 1,141 1,071
22. Related parties transactions and other shareholder matters
(i) Related party transactions
The Directors have authority and responsibility for planning, directing
and controlling the activities of the Group and they therefore comprise
key management personnel as defined by IAS 24, ("Related Party
Disclosures").
Directors and key management personnel remuneration is disclosed in note
8.
(ii) Other shareholder matters
The Group has entered into the following arrangements with parties who
are significant shareholders of the Group, though they are not classed
as related parties.
The Group entered into relationship agreements with Vivo Ventures Fund
VII, L.P., Vivo Ventures VII Affiliates Fund, L.P., Vivo Ventures Fund
VI, L.P., Vivo Ventures VI Affiliates Fund, L.P. (collectively, "Vivo
Capital"), Orbimed Private Investments VI L.P. ("Orbimed") and
Abingworth Bioventures VI L.P. ("Abingworth"). As agreed in these
relationship agreements, the above parties invested in the Group as part
of the July 2016 Placement, and the Group agreed to appoint
representatives designated by Vivo Capital, OrbiMed and Abingworth to
the board of directors, who are Dr. Mahendra Shah, Mr. Rishi Gupta, and
Dr. Andrew Sinclair.
The appointment rights within the relationship agreement with Arix and
Arthurian terminated on closing of the Global Offering on April 26,
2017. Dr Cunningham agreed to continue to serve on the Group's board of
directors as an independent director. The respective appointment rights
under the remaining relationship agreements will automatically terminate
upon (i) Vivo Capital, OrbiMed or Abingworth (or any of their
associates), as applicable, ceasing to beneficially hold 6.5% of the
issued ordinary shares, or (ii) the ordinary shares ceasing to be
admitted to AIM.
Piers Morgan, Chief Financial Officer of the Group, and his spouse
purchased 88,415 ordinary shares in total for GBP53 thousand from the
market in the year ended December 31, 2019 (2018: GBPnil).
Dr. Jan-Anders Karlsson, Chief Executive Officer of the Group, purchased
3,250 ordinary shares for GBP5 thousand from the market in the year
ended December 31, 2018. There was no similar transaction as at December
31, 2019.
Dr. David Ebsworth, Chairman of the Group, purchased 247,600 ordinary
shares for GBP124 thousand from the market in the year ended December
31, 2019 (2018: GBP14 thousand).
At December 31, 2018, there was a receivable of GBP126 thousand due from
one director and two key management personnel relating to tax due on
RSUs that vested in the year ended December 31, 2018. This receivable
was repaid, together with interest at a rate of 3.9% per annum, by March
6, 2019. There was no such balance as at December 31, 2019.
In the year ended December 31, 2019, a director provided consultancy
services for GBP26 thousand (2018: GBP26 thousand).
23. Events after the reporting date
On February 3, 2020, the Group announced the appointment of David
Zaccardelli as chief executive officer with effect from February 1,
2020, following the retirement of Jan-Anders Karlsson, PhD. The Group
also announced the appointment of Mark Hahn as chief financial officer
with effect from March 1, 2020, as successor to Piers Morgan.
VERONA PHARMA PLC
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
December 31, 2019, and for the year ended December 30, 2019 into US
dollars at the noon buying rate of the Federal Reserve Bank of New York
on December 31, 2019, which was GBP1.00 to $1.3269. These translations
should not be considered representations that any such amounts have been,
could have been or could be converted into US dollars at that or any
other exchange rate as of that or any other date.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED DECEMBER 31, 2019 (UNAUDITED)
Year Ended December 31,
2019 2018
--------------------- ----------
GBP' 000s $'000s GBP'000s
Research and development costs GBP(33,476) $(44,419) GBP(19,294)
General and administrative costs (7,607) (10,094) (6,297)
Operating loss (41,083) (54,513) (25,591)
Finance income 2,351 3,120 2,783
Finance expense (474) (629) (1,325)
---------- ------- ----------
Loss before taxation (39,206) (52,022) (24,133)
Taxation -- credit 7,265 9,640 4,232
Loss for the year (31,941) (42,382) (19,901)
---------- ------- ----------
Other comprehensive (loss) / income
Exchange differences on translating foreign
operations (33) (44) 38
---------- ------- ----------
Total comprehensive loss attributable to owners of
the company GBP(31,974) $(42,426) GBP(19,863)
=========== ======= =============
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER
31, 2019, AND DECEMBER 31, 2018 (UNAUDITED)
As of December 31, As of December 31, As of December 31,
2019 2019 2018
GBP'000s $'000s GBP'000s
ASSETS
Non-current
assets:
Goodwill 441 586 441
Intangible
assets 2,757 3,658 2,618
Property,
plant and
equipment 43 57 21
Right-of-use
asset 971 1,288 --
Total
non-current
assets 4,212 5,589 3,080
-------------- -------------- --------------
Current
assets:
Prepayments
and other
receivables 2,770 3,676 2,463
Current tax
receivable 7,396 9,814 4,499
Short term
investments 7,823 10,380 44,919
Cash and cash
equivalents 22,934 30,431 19,784
Total current
assets 40,923 54,301 71,665
-------------- -------------- --------------
Total assets 45,135 59,890 74,745
============== ============== ==============
EQUITY AND
LIABILITIES
Capital and
reserves
attributable
to equity
holders:
Share capital 5,266 6,987 5,266
Share premium 118,862 157,718 118,862
Share-based
payment
reserve 10,364 13,752 7,923
Accumulated
loss (100,627) (133,522) (68,633)
Total equity 33,865 44,935 63,418
-------------- -------------- --------------
Current
liabilities:
Derivative
financial
instrument 895 1,188 2,492
Lease
liability 460 610 --
Trade and
other
payables 8,261 10,961 7,733
Total current
liabilities 9,616 12,759 10,225
-------------- -------------- --------------
Non-current
liabilities:
Assumed
contingent
liability 1,103 1,464 996
Non-current
lease
liability 491 652 --
Deferred
income 60 80 106
Total
non-current
liabilities 1,654 2,196 1,102
-------------- -------------- --------------
Total equity
and
liabilities 45,135 59,890 74,745
============== ============== ==============
(END) Dow Jones Newswires
February 27, 2020 02:00 ET (07:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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