Item 1.01. Entry into a Material Definitive Agreement.
On June 9,
2021, Verona Pharma plc (the “Company”) and Nuance Pharma Limited, a Shanghai-based specialty pharmaceutical company (“Nuance
Pharma”), entered into a collaboration and license agreement (the “Agreement”).
Under the
terms of the Agreement, the Company granted Nuance Pharma the exclusive rights to develop and commercialize products containing
ensifentrine (the “Licensed Products”) in Greater China (mainland China, Taiwan, Hong Kong and Macau). Pursuant to the Agreement,
Nuance Pharma agreed to make an upfront payment to the Company of $25 million in cash and grant to the Company an equity interest valued
at $15 million as of the date of the Agreement in Nuance Biotech, the parent company of Nuance Pharma. Pursuant to the Agreement, the
Company is eligible to receive future milestone payments of up to $179 million upon achievement of certain clinical, regulatory, and commercial
milestones related to the Licensed Products in Greater China. The Company is also entitled to tiered double-digit royalties as a percentage
of net sales of the Licensed Products in Greater China.
Nuance Pharma
will be responsible for all costs related to clinical development and commercialization of the Licensed Products in Greater China.
Under the Agreement, the Company and Nuance Pharma agreed to establish a joint steering committee to oversee and coordinate the overall
conduct of the clinical development and commercialization of the Licensed Products in Greater China. The Company intends to use the joint
steering committee to help ensure the clinical development of ensifentrine in the region aligns with the Company’s overall global
development and commercialization strategy.
Pursuant to the Agreement, at any time until three (3) months
prior to the expected submission of the first New Drug Application for a Licensed Product in Greater China, if (i) a third party is
interested in partnering with the Company, either globally or in territory covering at least the United States or Europe, for the
development and/or commercialization of the Licensed Products, or (ii) the Company undergoes a change of control, the Company will
have an exclusive option right to buy back the license granted to Nuance Pharma pursuant to the Agreement and all related assets, at
a price equal to the aggregate of (i) all prior amounts paid by Nuance Pharma to the Company in cash under the Agreement and (ii)
all development and regulatory costs incurred and paid by Nuance Pharma in connection with the development and commercialization of
the Licensed Products under the Agreement multiplied by a single-digit factor range dependent upon achievement of certain
milestones, subject to a specified maximum amount.
The Agreement
will continue on a jurisdiction-by-jurisdiction and product-by-product basis until the expiration of royalty payment obligations
with respect to such product in such jurisdiction unless earlier terminated by the parties. Either party may terminate the Agreement for
an uncured material breach or bankruptcy of the other party. Nuance Pharma may also terminate the Agreement at will upon 90 days' prior
written notice.
Forward-Looking Statements
This Current
Report on Form 8-K (the “Form 8-K”) contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements contained in this Form 8-K that do not relate to matters of historical fact should be considered
forward-looking statements, including, but not limited to, statements regarding milestone payments, royalties and other financial terms
and activities under the Agreement with Nuance Pharma. 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: the reliance of our business on the success of ensifentrine,
our only product candidate under development; if we, and any collaborators with whom we may enter into agreements for the development
and commercialization of ensifentrine, are unable to commercialize ensifentrine, or experience significant delays in doing so, our ability
to generate revenue and our financial condition will be adversely affected; the lengthy and expensive process of clinical drug development,
which has an uncertain outcome; our reliance on third parties, including clinical research organizations, clinical investigators, manufacturers
and suppliers, and the risks related to these parties’ ability to successfully develop and commercialize ensifentrine; lawsuits
related to patents covering ensifentrine and the potential for our patents to be found invalid or unenforceable; and our vulnerability
to natural disasters, global economic factors and other unexpected events, including health epidemics or pandemics like the COVID-19 pandemic,
which has and may continue to adversely impact our business. These and other important factors under the caption “Risk Factors”
in our Annual Report on Form 10-K for the year ended December 31, 2020, and our other reports filed with the SEC, could cause actual results
to differ materially from those indicated by the forward-looking statements made in this Form 8-K. Any such forward-looking statements
represent management's estimates as of the date of this Form 8-K. 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 Form 8-K.