Vernalis PLC Regulatory News (VER)

18 November 2010

LSE: VER

Vernalis plc: Interim Management Statement

For the period to 18 November 2010

Vernalis plc today publishes its interim management statement for the period 1 July 2010 to 18 November 2010.

Financial Update

The Group's cash and cash equivalents at 30 October 2010 were £33.6m. These include receipt of the €0.75m research milestone from Servier, announced in October, and one receipt in respect of the delivery of frovatriptan API to Menarini, which is in-line with expectations. Management anticipates cash and cash equivalents to be in excess of £30m at the year end, which is ahead of analyst expectations.

Operational Update

·; Menarini's year-to-date September 2010 frovatriptan net sales are 2% above equivalent net sales in the same period of 2009.

·; On 16 July 2010, Vernalis announced that its novel A2A receptor antagonist programme for Parkinson's disease, partnered with Biogen Idec, will continue with a next generation Vernalis compound. Although positive results were achieved in Phase II clinical studies, the decision was taken to discontinue development of V2006/BIIB014 (vipadenant) based on a review of findings in preclinical toxicology studies. Biogen Idec expects the second generation compound to enter Phase I in H1 2011 and this programme is unaffected by the recently announced restructuring at Biogen Idec where the streamlined business will focus on neurology.

·; On 6 October 2010, Vernalis announced that it had earned a €0.75m research milestone in one of its oncology drug collaborations with Servier.

·; As announced separately today, Vernalis has reviewed interim data under a small pilot study of V3381 in chronic cough, being undertaken in collaboration with Professor Ashley Woodcock from the University Hospitals of South Manchester NHS Foundation. The interim data indicate only marginal efficacy and some issues with tolerability. Vernalis has therefore decided to discontinue this pilot study and is now no longer investing in studies of V3381.

Outlook

The Group continues to focus on its three strategic priorities.

1. Realising value from the pipeline:

·; Novartis is investigating the Vernalis Hsp90 inhibitors AUY922 and HSP990 in a total of eight active clinical studies.

·; Biogen Idec anticipates initiating Phase I clinical studies of Vernalis' next generation A2A receptor antagonist in H1 2011.

·; In-house, both V158866 for pain and V158411 for cancer remain on-track to enter Phase I studies in 2011 and the partnering process for V85546 continues.

2. Expanding the pipeline through in-licensing and acquisition.

·; Opportunities continue to be reviewed and management anticipates announcing successes in this area over the coming 12-18 months. 

3. Continued balanced investment in research:

·; Management aims to earn further milestones and secure new research collaborations over the coming 12-18 months.

By continuing to manage cash tightly, Vernalis has cash resources through to the end of 2013 at current investment levels.

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Enquiries:

Notes to Editors

About Vernalis

Vernalis is a development stage pharmaceutical company with significant expertise in taking promising product candidates along a commercially-focused path to market. The Group has one marketed product, frovatriptan for the acute treatment of migraine, and nine candidates in development, six of which are designated priority programmes. Three of these priority programmes are currently unpartnered and three are partnered. Pipeline programmes are derived from both our own research activities where we have significant expertise in fragment and structure based drug discovery, as well as from collaborations. Our technologies, capabilities and products are endorsed by collaborations with Biogen Idec, Chiesi, Endo, GSK, Menarini, Novartis and Servier.

For further information about Vernalis, please visit www.vernalis.com

Vernalis Forward-Looking Statement

This news release may contain forward-looking statements that reflect the Company's current expectations regarding future events including the clinical development and regulatory clearance of the Company's products, the Company's ability to find partners for the development and commercialisation of its products, as well as the Company's future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of the Company's research strategies, the applicability of the discoveries made therein, the successful and timely completion of clinical studies, the uncertainties related to the regulatory process, the ability of the Company to identify and agree beneficial terms with suitable partners for the commercialisation and/or development of its products, as well as the achievement of expected synergies from such transactions, the acceptance of Frova® and other products by consumers and medical professionals, the successful integration of completed mergers and acquisitions and achievement of expected synergies from such transactions, and the ability of the Company to identify and consummate suitable strategic and business combination transactions.