VRP.L Regulatory News (VRP)

VERONA PHARMA PLC - Half-yearly Report

PR Newswire

London, September 7

Verona Pharma plc

("Verona Pharma" or the "Company")

Interim results for the six months ended 30 June 2015

Strategic Focus, Clinical Progress and Financial Discipline

8 September 2015, Cardiff – Verona Pharma plc (AIM: VRP), the drug development company focused on first-in-class medicines to treat respiratory diseases, today announces its interim results for the six months ended 30 June 2015.

OPERATIONAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS

POST PERIOD AND OTHER EVENTS

Completed dosing with new nebulized formulation in MAD study in COPD patients with data expected in early Q4 2015.

Dr. Jan-Anders Karlsson, CEO of Verona Pharma commented: “In the first half of 2015 we have continued to make good progress with our lead drug candidate, RPL554. In particular, initial results from studies in healthy volunteers using our new more robust formulation of the drug have been extremely encouraging. These data bode well for the outcome of our ongoing phase 2a multiple ascending dose study with the drug in COPD patients, where we expect to announce results in early Q4 2015. During the period we also initiated a phase 2a trial of RPL554 in asthma patients to explore a dose-response relationship in this setting and will report results early next year. Positive data in these studies will encourage us to move into phase 2b studies. Further studies in cystic fibrosis with RPL554 are planned for 2016. Additionally we continue to seek to develop the Company by searching for suitable products to enhance our pipeline.”

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Notes to Editors

About Verona Pharma plc

Verona Pharma plc is a UK-based clinical stage biopharmaceutical company focused on the development of innovative prescription medicines to treat respiratory diseases with significant unmet medical needs, such as chronic obstructive pulmonary disease (COPD), asthma and cystic fibrosis. 

Verona Pharma's lead drug, RPL554, is a first-in-class drug currently in phase II trials as a nebulised treatment for acute exacerbations of COPD in the hospital setting. The drug is a dual phosphodiesterase (PDE) 3/4 inhibitor and therefore has both bronchodilator and anti-inflammatory effects, which are essential to the improvement of patients with COPD and asthma. 

Verona Pharma is also building a broader portfolio of RPL554-containing products to maximise its benefit to patients and its value. This includes the very significant markets for COPD and asthma maintenance therapy. The Company is also exploring the potential of the drug in different diseases, such as cystic fibrosis, where it is in pre-clinical testing and has recently received a Venture and Innovation Award from the Cystic Fibrosis Trust.

About Chronic Obstructive Pulmonary Disease (COPD)

Sixty-five million people worldwide suffer from moderate to severe COPD and the World Health Organisation (WHO) expects COPD to be the 3rd leading cause of death globally by 2020. It is the only major chronic disease with increasing mortality. Currently available drugs are aimed at long-term maintenance therapy, with the market dominated by large pharma. Despite the wide availability of these therapies, COPD patients suffer acute periods of worsening symptoms (exacerbations), which cause, in the US alone, some 1.5 million A&E visits, 726,000 hospitalisations and 120,000 deaths per annum.

Bronchodilating therapy is considered to be the standard of care, and agents can be administered via handheld devices such as metered dose inhaler (MDI), dry powder inhaler (DPI) and by nebulisers. The nebulised bronchodilator market was worth about $1 billion in 2014 in the US.1 RPL554 is being developed by Verona Pharma as an add-on therapy to the “Standard of Care” with the objectives of providing rapid and pronounced improvement in lung function, reduced symptoms and both shortened duration of hospital stays and reduced re-admission rates 30 days after discharge from hospital. Studies to date on RPL554 have demonstrated that it has a strongly differentiated 3-way mode of action, being: (1) bronchodilation (the relaxation of smooth muscle in the airway); (2) anti-inflammatory effects on cells and (3) ion channel activation in epithelial cells, with increased mucociliary clearance of the airway.

1 IMS Consulting Group market research 2014

CHAIRMAN AND CHIEF EXECUTIVE OFFICER’S JOINT STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2015

INTRODUCTION

Verona Pharma is a UK-based clinical stage biopharmaceutical company focused on the development of innovative prescription medicines to treat respiratory diseases with significant unmet medical needs such as chronic obstructive pulmonary disease (COPD), asthma and cystic fibrosis. The Company’s lead product, RPL554, is a first-in-class drug currently in phase 2 clinical trials as a nebulised formulation for acute exacerbations of COPD. The drug is an inhaled dual phosphodiesterase PDE3/PDE4 inhibitor and has already demonstrated clinically relevant bronchodilator and anti-inflammatory effects which are essential to the improvement of symptoms of patients with COPD and asthma.

The Board believes that broadening the development strategy for RPL554 over time, to include combination products and new indications, together with strengthening the IP coverage around the programme, has the potential to add significant value to the Company. The Board further believes that this approach should accelerate access to multi-billion dollar commercial markets, increase Verona Pharma’s flexibility in negotiating attractive commercial partnerships and prolong patent protection for the emerging franchise.

Phase 2 clinical programme for RPL554 in new formulation yields encouraging interim results

We are initially developing RPL554 as a treatment for acute exacerbations of COPD. Despite the many recently introduced novel maintenance treatments for COPD, patients frequently experience acute exacerbations and become hospitalised. The older, short-acting nebulized bronchodilators are still used on hospital wards and there is clearly a need for effective treatments in this acute hospital setting. We believe RPL554 can become an attractive add-on therapy to provide extra clinical benefit in patients with acute exacerbations of COPD. There is little innovation in the form of novel classes of bronchodilator drugs for these acutely ill patients, or for the maintenance treatment of COPD patients, and the Board therefore believes that these are very attractive commercial opportunities for Verona Pharma.

An increasing awareness of the problem of COPD patients returning for hospital treatment within 30 days of discharge has triggered a strong interest from industry, regulators and healthcare payers in optimising treatment of acute COPD exacerbations and beyond, when patients are discharged from hospital. This provides a unique opportunity for RPL554 that we intend to explore in further phase 2 clinical studies.

RPL554 successfully completed a number of early clinical phase 1 and phase 2 studies based on the previous nebulized formulation. These single and multiple dose studies demonstrate that RPL554, when inhaled across a range of doses, is an effective bronchodilator in patients with COPD and asthma. RPL554 has a rapid onset of action and the magnitude of the bronchodilator effect seems to be at least as profound as that of other commonly used bronchodilator drugs.1

RPL554 has also been demonstrated to have a potent anti-inflammatory effect in a clinical trial. This property is unique to RPL554 and is not shown by other bronchodilator drugs of the beta2-agonists or anti-muscarinic classes. RPL554 showed a broad inhibitory effect on inflammatory cells in the airways, including a significant reduction in the number of neutrophils, a cell type thought to be involved in COPD (and cystic fibrosis). This effect sets RPL554 apart from steroids as this class of drugs seem to have little effect on neutrophils and increasingly the use of inhaled steroids in COPD patients is being questioned as they seem to have limited beneficial effects. Therefore, RPL554 as a combined bronchodilator and anti-inflammatory agent offers unique benefits to COPD patients, both as a novel type of bronchodilator, and as an anti-inflammatory compound offering additional benefits over and above those of steroids.

In line with the new development strategy announced in 2014, a novel nebulized proprietary formulation of RPL554 was developed which is stable, scalable and suitable for commercial use. The first phase 1/2a study with the new nebulized formulation started at the end of 2014 and the clinical phases of the SAD and MAD (5 days, twice daily dosing) study in healthy subjects and the MAD study in COPD patients have been completed. Initial observations from the SAD part of the study indicated that the new formulation is well tolerated as 16 times the previously used bronchodilator dose (with the old formulation) could be administered without reaching a maximum tolerated dose. Pharmacokinetic analysis revealed lower peak plasma concentrations and a longer plasma half-life than the previously used formulation, suggesting that twice daily dosing could perhaps be achieved. A more comprehensive data-set from these studies is expected in early Q4 2015.

We have also initiated a second, single-dose phase 2a dose-finding study in up to 30 asthma patients. This study with the new formulation is being carried out in asthma patients because typically a dose response relationship to bronchodilators can be more accurately established in this group of patients with highly reversible airways obstruction compared to patients with COPD. A wide range of RPL554 doses will be compared to two different doses of salbutamol, a standard bronchodilator used in both asthma and COPD patients, and placebo. The primary objective is to establish the bronchodilator effect and duration of action and data are expected in Q1 2016.

We are also investigating RPL554 as a combination product with an anti-muscarinic drug, such as glycopyrrolate, a class of drugs that is widely used in treating COPD patients. We have been strongly encouraged by data showing a synergistic effect of RPL554 in combination with anti-muscarinic drugs in isolated human airway smooth muscle. Such a combination product could have significant advantages over the many dual long-acting beta2-agonists / long acting-muscarinic antagonists (LABA / LAMA) bronchodilator inhalers available to COPD patients and could be used both in acute hospital care and in long-term maintenance treatment.

In addition to treatment of acute exacerbations, RPL554 clearly has potential as a chronic maintenance therapy in patients with COPD. Both the bronchodilator and the anti-inflammatory properties would be beneficial to these out-patients and it is a larger market opportunity. The new nebulized formulation could be developed into an attractive maintenance treatment for moderate to severe COPD patients.

We believe there is also an opportunity to develop RPL554 as a maintenance therapy for mild to moderate COPD patients, a much larger addressable market. These patients are routinely treated with Dry Powder Inhaler (DPI) or pressurized Metered Dose Inhaler (pMDI) and we have previously demonstrated that RPL554 can be formulated for use in both a DPI and a pMDI. The Board takes the view that larger, later-stage clinical studies and commercialisation in this out-patient setting are better undertaken together with a suitable partner.

RPL554 also shows promise in cystic fibrosis

Additional pre-clinical data demonstrates that RPL554 is an activator of the cystic fibrosis transmembrane conductance regulator (CFTR) that is dysfunctional in cells of cystic fibrosis patients. This adds a further dimension to the potential utility of the drug. Asthma patients may also benefit from this action of RPL554, as it may improve mucociliary clearance in addition to its bronchodilator and anti-inflammatory properties. Further studies exploring the potential of RPL554 in cystic fibrosis are planned for 2016.

FINANCIALS

The loss from operations after tax for the six month period ended 30 June 2015 (the “Period”) was £3.69 million (2014: £1.39 million) or 0.37 pence (2014: 0.19 pence) per ordinary share. The reported loss includes a non-cash share-based payment charge of £0.26 million (2014: £0.06 million) and receipt of a research and development tax credit of £0.74 million (2014: £Nil).

Research and development expenditure, which was expensed as incurred, amounted to £3.48 million (2014: £0.87 million). Development programme expenditures expensed during the period amounted to £3.37 million for RPL554 (2014: £0.57 million), and £0.11 million (2014: £0.30 million) for VRP700.

Expenditures in RPL554 increased by £2.80m as a result of accelerating the clinical trials for the SAD/MAD and asthma studies and advancing preparations for a commercially scaleable formulation of the compound.

Administrative expenses for the six month period were £0.98 million (2014: £0.53 million). The increase of £0.45 million over the prior period was due to an increase in the share-based payments and other administrative items including the strengthened Board and senior management team.

As at 30 June 2015, the Group had approximately £6.09 million (2014: £12.10 million) in cash and cash equivalents.

FURTHER DEVELOPMENT & COMMERCIALISATION STRATEGY

The fundraising in March 2014 enabled us to advance the new commercial formulation of RPL554 through clinical studies up to the start of phase 2b, which is expected in H2 2016. Additional pre-clinical and manufacturing work will be performed to satisfy certain regulatory guidelines. In parallel, we are continuing to strengthen the IP coverage to provide comprehensive patent protection for RPL554 in its various forms with the intent to expand the use of RPL554 in new indications and in combination products.

Our initial focus to develop the nebulized formulation of RPL554 for hospital use is motivated in part by the increasing concern and intent to tackle the high rates of 30-day hospital re-admissions for COPD. This has recently gained impetus following the implementation by the US Government in Q4 2014 of a new policy which penalizes hospitals with high 30-day re-admission rates for select conditions, including COPD. Interestingly, such a policy has already been introduced by the NHS in the UK. In our clinical studies in hospitalised patients, we will explore the possibility that treatment with RPL554 will reduce such re-admission rates and so demonstrate a clear health-economic benefit of treatment with the drug.

The Board believes that products combining RPL554 with other classes of bronchodilators are potentially highly attractive for the respiratory market and expand the RPL554 product franchise. Indeed, while there has been significant interest in the novel dual bronchodilator products containing a LABA and a LAMA recently introduced as chronic treatments for COPD, a combination between RPL554 and, for example, the LAMA glycopyrrolate, would contain two different bronchodilator components, with the added benefit that RPL554 would also provide an anti-inflammatory component to create in essence a triple-combination product.

We further plan to expand the use of RPL554 beyond COPD, and explore the possible use of nebulized RPL554 to treat acute asthma attacks in the A&E unit. When used as an addition to standard treatment, it is expected that RPL554 would rapidly improve lung function, reduce symptoms and reduce the number of hospital admissions from the A&E unit. Again, this treatment would generate a clear health-economics benefit. In addition, pre-clinical work demonstrating a potentiating activity on CFTR, suggests that cystic fibrosis could be a potential novel indication. We will further explore this opportunity in pre-clinical and exploratory clinical trials.

The Company recognises that an experienced and resourceful commercial partner could bring significant value to the development of RPL554 for chronic maintenance treatment in COPD and perhaps asthma and therefore continues to be involved in business development discussions around the RPL554 programme. However, the Company intends to partner its drug candidates only when it can extract a commercially attractive return for the Company and its shareholders. 

BOARD CHANGES

Post period end, and as announced today Ms Claire Poll, Executive Director, Mr Stuart Bottomley and Professor Trevor Jones, both Non-Executive Directors, will be retiring from the Verona Board after having served since 2006. Ms Poll will continue to provide legal and corporate services to the Company. We would like to thank Claire, Stuart and Trevor for all their hard work and support over the years. Their long tenure on our Board is testament to the value of their advice and their numerous contributions on many fronts. They have all been instrumental in nurturing the Company on AIM as it progressed its pipeline into the clinic. We warmly wish them the very best for the future.

We were also pleased to announce the appointment of Ken Cunningham, MD and Anders Ullman, MD, PhD, as Non-Executive Directors to the Board. Both are highly respected industry leaders with invaluable expertise in the field of respiratory drug development. We very much look forward to working with them as we continue our focused clinical development of lead pipeline asset RPL554.

OUTLOOK

We continue to develop the Company by searching for suitable products to enhance our pipeline, and by expanding the expertise of our management team and Board of Directors, especially in developing and commercialising respiratory products. The Company operates with a strong focus and financial discipline, and we remain very positive about progress to date in our lead drug development programme, RPL554, and the opportunities for its further development and commercialisation.

1 Pre-clinical studies in isolated airway muscle have demonstrated that RPL554 is an effective bronchodilator also in highly constricted airways, to some extent mimicking bronchospasm in patients with respiratory disease, where other bronchodilators of the currently used beta2-agonist and anti-muscarinic types are less effective. If a similar effect is seen in patients with highly obstructed airway muscles, RPL554 has the potential to be advantageous compared to other types of bronchodilators.

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2015

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2015

GROUP STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2015

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2015

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2015

1. Publication of non-statutory accounts

i) This interim financial information for the six months ended 30 June 2015 is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. It was approved by the Board of Directors on 7 September 2015. The figures for the year ended 31 December 2014 have been extracted from the audited statutory accounts which have been reported on by the Company’s auditor. The financial statements for the year ended 31 December 2014 have been delivered to the Registrar of Companies and the auditor’s report on those financial statements was unqualified and did not contain a statement made under section 498 (2) or section 498 (3) of the Companies Act 2006.

ii) Accounting policies

The interim financial statements for the six months ended 30 June 2015 includes the results of Verona Pharma plc and its wholly-owned subsidiaries Verona Pharma Inc. and Rhinopharma Limited. The unaudited results for the period have been prepared on the basis of accounting policies adopted in the audited accounts for the year ended 31 December 2014 and expected to be adopted in the financial year ending 31 December 2015.

In the opinion of the Directors, the interim financial information for the period presents fairly the financial position and the results from operations and cash flows for the period.

No new IFRS standards, amendments or interpretations became effective in the six months to 30 June 2015 which had a material effect on this interim financial information.

iii) The Directors do not recommend the payment of a dividend (period to 30 June 2014 - £Nil; year ended 31 December 2014 - £Nil).

iv) A copy of the interim report is available on the Company’s website www.veronapharma.com.

2. Taxation

The current period tax credit, £743,762, represents the estimated research and development tax credit receivable on qualifying expenditure incurred during the six month period ended 30 June 2015.

3. Loss per share

i) The basic loss per share of 0.37p (30 June 2014: loss of 0.19p; 31 December 2014: loss of 0.32p) for the Group is calculated by dividing the loss for the period by the weighted average number of ordinary shares in issue of 1,009,923,481 (30 June 2014: 721,190,685; 31 December 2014: 866,743,656).

ii) The diluted loss per share has not been presented since the Company’s stock options are anti-dilutive. 

4. Comparatives

The comparatives include audited figures for the year ended 31 December 2014 and unaudited figures for the six months ended 30 June 2014.