TIDMVRP
Completed US IPO
Continues to advance lead candidate RPL554 with four clinical trials
commenced
LONDON, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Verona Pharma plc (AIM:VRP)
(NASDAQ:VRNA) ("Verona Pharma" or the "Company"), a clinical-stage
biopharmaceutical company focused on developing and commercializing
innovative therapies for respiratory diseases, announces today a
clinical development update and interim results for the six months ended
June 30, 2017.
The Company's lead product candidate RPL554, is a first-in-class,
inhaled, dual inhibitor of the enzymes phosphodiesterase 3 and 4, or
PDE3 and PDE4, that acts as both a bronchodilator and an
anti-inflammatory agent in a single compound. Verona Pharma is
developing RPL554 for the treatment of chronic obstructive pulmonary
disease ("COPD") and cystic fibrosis ("CF"), and potentially asthma.
CLINICAL AND DEVELOPMENT HIGHLIGHTS
-- Obtained approval for and commenced (post-period) a 4-week, Phase 2b
dose-ranging clinical trial in Europe in approximately 400 patients to
investigate the efficacy, safety, and dose-response of nebulized RPL554
for the maintenance treatment of COPD, with top-line data expected in the
second half of 2018;
-- Commenced a Phase 2a clinical trial evaluating RPL554 as an add-on
therapy to tiotropium (Spiriva(R)), a commonly used long-acting
bronchodilator, for the treatment of COPD. Dosing is completed and
top-line data is expected in the fourth quarter of 2017;
-- Commenced a Phase 1 clinical pharmacokinetic ("PK") trial in the United
States following acceptance of an Investigational New Drug application
("IND") by the US Food and Drug Administration ("FDA") for RPL554. Dosing
is completed and top-line data is expected in the fourth quarter of 2017;
-- Commenced a Phase 2a clinical study to evaluate the PK and
pharmacodynamic ("PD") profile and tolerability of RPL554 in up to 10 CF
patients as well as examine the effect on lung function. Top-line data is
expected in the first half of 2018;
-- Initiated development of RPL554 as dry powder inhaler ("DPI") and metered
dose inhaler ("MDI") formulations for maintenance treatment of COPD; and
-- Entered into a global strategic services agreement with QuintilesIMS, in
which QuintilesIMS agreed to serve as sole provider of core clinical
trial services for Verona Pharma's RPL554 clinical development programs.
Verona Pharma will also have access to QuintilesIMS' global commercial
insights when developing its market access strategy in the United States
and globally for RPL554.
CORPORATE AND FINANCIAL HIGHLIGHTS
-- Successfully raised GBP70 million ($90 million) gross, through a 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;
-- Verona Pharma American Depositary Shares ("ADSs") now listed on NASDAQ
under the symbol VRNA; each ADS represents 8 Verona ordinary shares;
-- Net cash, cash equivalents and short-term investments at June 30, 2017
amounted to GBP94.6 million (December 31, 2016: GBP39.8 million);
-- Strengthened management team through the addition of Richard Hennings as
Commercial Director and Dr Desiree Luthman as VP Regulatory Affairs;
-- For the six months ended June 30, 2017, reported operating loss of
GBP10.9 million (first half of 2016: GBP1.9 million) and reported loss
after tax of GBP5.1 million (first half of 2016: loss after tax of GBP1.8
million), reflecting the preparation and initiation of clinical trials
and expansion of the team;
-- Reported loss per share of 7.3 pence for the six months ended June 30,
2017 (first half of 2016: loss per share 8.7 pence);
-- Net cash used in operating activities for the six months ended June 30,
2017 of GBP8.2 million (first half of 2016: GBP2.2 million) reflecting
increased clinical activities; and
-- Shareholders at the General Meeting on February 8, 2017 approved a 50 for
1 consolidation of the Company's ordinary shares.
Dr. Jan-Anders Karlsson, CEO of Verona Pharma, commented:
"It has been a transformative six months for Verona Pharma. Not only
have we successfully completed our IPO of ADSs on NASDAQ, but we have
also commenced four clinical trials with our lead candidate RPL554,
including our first clinical study in the United States following FDA
acceptance of our IND application and have continued to expand our
senior management.
We now have the team and funding to deliver a comprehensive package of
Phase 2b data for nebulized RPL554 as maintenance therapy for both COPD
and CF, as well as for the treatment of acute exacerbations of COPD. We
are developing additional formulations of RPL554 that we believe would
significantly extend the commercial opportunity in COPD and other
respiratory indications. We look forward to updating the market on
multiple clinical data points in this and coming years."
An electronic copy of the interim results will be made available today
on the Company's website (http://www.veronapharma.com). This press
release does not constitute an offer to sell or the solicitation of an
offer to buy any of the Company's securities, and shall not constitute
an offer, solicitation or sale in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of that jurisdiction.
About Verona Pharma plc
Verona Pharma is a clinical-stage biopharmaceutical company focused on
developing and commercializing innovative therapies for the treatment of
respiratory diseases with significant unmet medical needs.
Verona Pharma's product candidate, RPL554, is a first-in-class, inhaled,
dual inhibitor of the enzymes phosphodiesterase 3 and 4 that acts as
both a bronchodilator and an anti-inflammatory agent in a single
compound. Verona Pharma is developing RPL554 for the treatment of
chronic obstructive pulmonary disease (COPD) and cystic fibrosis (CF),
and potentially asthma.
Forward Looking Statements
This press release and accompanying Chairman and Chief Executive's Joint
Statement contain forward-looking statements. All statements contained
in this press release and accompanying Chairman and Chief Executive's
Joint Statement that do not relate to matters of historical fact should
be considered forward-looking statements, including, but not limited to,
statements regarding the US IPO and clinical developments boding well
for our future, the timing of top-line data for our clinical trials of
RPL554, our ability to deliver a package of comprehensive Phase 2b data
for RPL554, the ability of additional formulations of RPL554 to
significantly extend the commercial opportunity for RPL554, our ability
to update the market on multiple clinical data points, the treatment
potential for RPL554 for asthma and other respiratory diseases, the
successful progression of RPL554 through Phase 2b development, the value
of the United States as a commercial market for RPL554, the timing and
design of future clinical trials for RPL554, and our planned use of
proceeds from the Global Offering and Shareholder Private Placement.
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 RPL554, 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 RPL554, 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
RPL554, which could adversely affect our ability to develop or
commercialize RPL554; potential delays in enrolling patients, which
could adversely affect our research and development efforts; we may not
be successful in developing RPL554 for multiple indications; our ability
to obtain approval for and commercialize RPL554 in multiple major
pharmaceutical markets; misconduct or other improper activities by our
employees, consultants, principal investigators, and third-party service
providers; 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 RPL554; and lawsuits
related to patents covering RPL554 and the potential for our patents to
be found invalid or unenforceable. These and other important factors
under the caption "Risk Factors" in our final prospectus filed with the
Securities and Exchange Commission ("SEC") on April 28, 2017 relating to
our Registration Statement on Form F-1, 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.
For further information please contact:
Verona Pharma plc Tel: +44 (0)20 3283 4200
Jan-Anders Karlsson, Chief Executive Officer info@veronapharma.com
N+1 Singer (Nominated Adviser and UK Broker) Tel: +44 (0)20 7496 3000
Aubrey Powell / James White / Alex
Laughton-Scott
ICR, Inc. (US Media and Investor Enquiries)
Darcie Robinson Tel: +1 203 682 8379
Darcie.Robinson@icrinc.com
Stephanie Carrington Tel: +1 646 277 1282
Stephanie.Carrington@icrinc.com
FTI Consulting (UK Media and Investor Tel: +44 (0)20 3727 1000
Enquiries)
Simon Conway / Stephanie Cuthbert / Natalie veronapharma@fticonsulting.com
Garland-Collins
CHAIRMAN AND CHIEF EXECUTIVE'S JOINT STATEMENT
We are a clinical-stage biopharmaceutical company focused on developing
and commercializing innovative therapies for the treatment of
respiratory diseases with significant unmet medical needs. Our product
candidate, RPL554, is a first-in-class, inhaled, dual inhibitor of the
enzymes phosphodiesterase 3 and 4, or PDE3 and PDE4, that acts as both a
bronchodilator and an anti-inflammatory agent in a single compound,
giving it a dual mechanism of action to improve lung function. If
successful, RPL554 would represent the first novel class of
bronchodilator developed in decades, and at the same time have
anti-inflammatory effects. RPL554 has been well tolerated in our
clinical trials, and has not been observed to result in the
gastrointestinal or other side effects commonly associated with PDE4
inhibition.
We are developing RPL554 for the treatment of COPD and CF. We may also
explore, alone or with a collaborator, the development of RPL554 to
treat asthma and other respiratory diseases.
Over the last six months we have initiated four clinical trials of
nebulized RPL554; these trials form an important starting point for what
we anticipate will be the successful progression of RPL554 through Phase
2b of its clinical development. This programme of work has included the
FDA's acceptance of our IND for RPL554, enabling us to initiate clinical
development work in the United States, which we believe is the most
valuable commercial market for RPL554. This stage of development builds
on previously completed studies in 282 subjects which have shown RPL554
to be effective in improving lung function whilst also being well
tolerated. The four studies currently ongoing, using a nebulized
formulation of RPL554, are as follows:
-- In February 2017, we commenced a Phase 2a clinical trial of RPL554 in the
United Kingdom for the maintenance treatment of COPD. This trial is
evaluating RPL554 as an add-on therapy to tiotropium (Spiriva(R)), a
commonly used long-acting bronchodilator, in approximately 30 patients.
Dosing is completed and we expect to report top-line data from this trial
in the fourth quarter of 2017.
-- In June 2017, we commenced a single-dose PK trial of RPL554 in
approximately 12 healthy volunteers in the United States, following
acceptance of an IND by the FDA for RPL554, to establish the oral
bioavailability of the swallowed portion of an inhaled dose of RPL554.
Dosing is completed and we expect to report top-line data from this study
in the fourth quarter of 2017.
-- In July 2017, we commenced a four-week Phase 2b dose ranging clinical
trial in Europe in approximately 400 patients, to evaluate RPL554 for the
maintenance treatment of COPD, comparing RPL554 to placebo. We expect to
report top-line data from this trial in the second half of 2018.
-- In March 2017, we commenced a Phase 2a single dose PK and PD trial in the
United Kingdom evaluating RPL554 in up to 10 CF patients and expect to
report top-line data from this trial in the first half of 2018.
In addition, we plan to commence a longer Phase 2b dose-ranging clinical
trial of RPL554 for the maintenance treatment of COPD in the second half
of 2018. In this trial, we plan to evaluate RPL554 as an add-on therapy
to standard COPD treatment in patients with COPD. We are also developing
RPL554 as an add-on therapy to short-acting bronchodilators and other
commonly used therapies for the treatment of hospitalized patients with
acute exacerbations of COPD. We plan to commence a Phase 2 clinical
trial in the United States for RPL554 in this indication in the second
half of 2018. We also plan to commence a proof-of-concept Phase 2b trial
in patients with CF in 2018.
In addition to our nebulized formulation of RPL554, we are also
developing RPL554 in both DPI and MDI formulations for the maintenance
treatment of COPD. We believe these formulations may enable the Company
to address a larger COPD market segment than can be addressed through
the nebulizer formulation. We may explore the development of RPL554 in
these formulations for the treatment of CF and other respiratory
diseases.
In May 2017, we announced that we had successfully completed a global
offering, consisting of the initial public offering in the United States
and listing on NASDAQ of our ADSs, with each ADS representing eight
ordinary shares, and the private placement in Europe of our ordinary
shares (the Global Offering). Existing and new healthcare focused,
US-based investment firms participated in the Global Offering and our
ADSs are listed on NASDAQ under the symbol "VRNA". At the same time as
the Global Offering we closed a separate private placement of our
ordinary shares with certain existing shareholders (the "Shareholder
Private Placement"). Through the Global Offering and shareholder private
placement, including additional ADSs sold upon the exercise by the
underwriters of their option to purchase additional ADSs, we raised
approximately $90 million before deducting underwriting discounts and
commissions and expenses payable by us. These proceeds, together with
our cash and cash equivalents, will be used to fund our planned clinical
trials of RPL554 for the treatment of COPD and CF, current and future
research and development activities and for working capital and other
general corporate purposes.
In the first six months of the year we are pleased to have also
strengthened our management team through the addition of commercial and
regulatory expertise. In March 2017, we hired Mr Richard Hennings as our
Commercial Director and in June 2017 we hired Dr Desiree Luthman as our
Vice President of Regulatory Affairs. We have also entered into a global
strategic services agreement with QuintilesIMS, a leading provider of
biopharmaceutical development and commercial outsourcing services, in
which QuintilesIMS has agreed to serve as sole provider of core clinical
trial services for our RPL554 clinical development programs, beginning
with the ongoing four-week Phase 2b dose-ranging clinical trial for the
maintenance treatment of COPD in Europe and the single-dose PK trial in
the United States. We will also have access to QuintilesIMS' global
commercial insights when developing our market access strategy in the
United States and globally for RPL554.
In April 2017, we also announced the retirement of Dr Patrick Humphrey
from the Board as a Non-Executive Director.
For the six months ended June 30, 2017 the Company recorded a loss after
tax of GBP5.1m (2016: loss of GBP(1.8)m) and a loss per share of (7.3)p
(2016: loss of (8.7)p). Net cash outflows from operating activities
during the six month period ended June 30, 2017 were GBP(8.2)m (2016:
outflow of GBP(2.2)m), and at June 30, 2017 the Company held cash, cash
equivalents and short term investments of GBP94.6m (2016: GBP39.8m).
OUTLOOK
Having successfully completed a Global Offering and IPO on NASDAQ, we
believe that we now have the team and funding in place to deliver a
comprehensive package of Phase 2b data for nebulized RPL554 as
maintenance therapy for both COPD and CF, as well as for the treatment
of acute exacerbations of COPD. We are also developing DPI and MDI
formulations of RPL554 which we believe would significantly extend the
commercial opportunity in COPD and other respiratory indications, as we
believe RPL554's properties as a dual inhibitor of PDE3 and PDE4 give it
broad potential applicability in this therapeutic area. Additionally, we
are seeking strategic collaborative relationships and opportunities to
acquire or in-license product candidates for the treatment of additional
unmet clinical needs in respiratory diseases.
Dr David Ebsworth Dr Jan-Anders Karlsson
Chairman CEO
August 8, 2017 August 8, 2017
FINANCIAL REVIEW
Financial review of the three and six months periods ended June 30, 2017
Three months ended June 30, 2017
The operating loss for the three months ended June 30, 2017 was
GBP(6.8)m (2016: GBP(0.9)m) and the loss after tax for the period was
GBP(3.2)m (2016: GBP(0.8)m).
Research and development costs for the three months ended June 30, 2017
were GBP(4.8)m (2016: GBP(0.5)m), an increase of GBP4.3m. This increase
related to the expense of preparation for, initiation and progression of
clinical trials as well as the build-out of the management team,
including the expansion of clinical and regulatory capacity in the
United States. Included in the increase was an amount of GBP(0.4)m
related to share-based payment charges (2016: GBP(0.0)m).
General and administrative costs for the three months ended June 30,
2017 were GBP(2.0)m (2016: GBP(0.4)m), an increase of GBP1.6m. This
increase included certain expenses relating to the Global Offering and
shareholder private placement which completed in May 2017, together with
an expansion in the commercial and administrative structure of the
Company. Included in the increase was an amount of GBP(0.3)m related to
share-based payment charges (2016: GBP(0.1)m).
Finance income for the three months ended June 30, 2017 was GBP3.4m
(2016: GBP0.0m). The increase in Finance income was primarily due to a
decrease in the fair value of the warrant liability of GBP3.4m caused by
changes in the underlying assumptions for measuring the liability of the
warrant, including the price and volatility of the Company's shares, the
unwinding of the expected life of the warrant, as well as a small
reduction in the number of the warrants outstanding.
Finance expense for the three months ended June 30, 2017 was GBP0.8m
(2016: GBP0.1m). The increase was primarily due to increased losses
following changes in exchange rates as well as an increase in the
calculated value of the assumed contingent obligation resulting from the
Vernalis licence agreement.
Taxation for the three months ended June 30, 2017 amounted to a credit
of GBP1.0m (2015: GBP0.1m), an increase in the credit amount of GBP0.9m.
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.
Six months ended June 30, 2017
The operating loss for the six months ended June 30, 2017 was GBP(10.9)m
(2016: loss of GBP(1.9)m) and the loss after tax for the period was
GBP(5.1)m (2016: loss of GBP(1.8)m).
Research and development costs for the six months ended June 30, 2017
were GBP(7.9)m (2016: GBP(1.2)m), an increase of GBP6.7m. This increase
related to the expense of preparation for, and initiation and
progression of clinical trials as well as the build-out of the team,
including the expansion of clinical and regulatory capacity in the
United States. Included in the increase was an amount of GBP(0.6)m
related to share-based payment charges (2016: GBP(0.1)m).
General and administrative costs for the six months ended June 30, 2017
were GBP(3.0)m (2016: GBP(0.7)m), an increase of GBP2.3m. This increase
included certain expenses relating to the Global Offering and
Shareholder Private Placement completed in May 2017, together with an
expansion in the commercial and administrative structure of the Company.
Included in the increase was an amount of GBP(0.4)m related to
share-based payment charges (2016: GBP(0.1)m).
Finance income for the six months ended June 30, 2017 was GBP5.2m (2016:
GBP0.0m). The increase in Finance income was primarily due to a decrease
in the fair value of the warrant liability of GBP5.1m caused by changes
in the underlying assumptions for measuring the liability of the warrant,
including the price and volatility of the Company's shares, the
unwinding of the expected life of the warrant, as well as a small
reduction in the number of the warrants outstanding.
Finance expense for the six months ended June 30, 2017 was GBP(1.0)m
(2016: GBP(0.1)m). The increase was primarily due to increased losses
following changes in exchange rates as well as an increase in the
calculated value of the assumed contingent obligation resulting from the
Vernalis licence agreement.
Taxation for the six months ended June 30, 2017 amounted to a credit of
GBP1.6m (2015: GBP0.3m), an increase in the credit amount of GBP1.3m.
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.
Cash Flow - Operating activities: net cash used by operating activities
increased by GBP6.0m to GBP(8.2)m for the six months period ended June
30, 2017 compared to GBP(2.2)m for the six month period ended June 30,
2016. This increase is due to the increases in both research and
development, and general and administrative expenses described above.
Cash Flow - Investing activities: net cash used in investing activities
for the six month period ended June 30, 2017 amounted to GBP32.1m,
reflecting the placing of funds on term deposits with maturity of
greater than 3 months together with certain patent costs, compared to
GBP(0.1)m for the six months ended June 30, 2016.
Cash Flow - Financing activities: net cash inflow from financing
activities for the six month period ended June 30, 2017 amounted to
GBP63.5m and relates to the net proceeds from the Global Offering and
Shareholder Private Placement that completed on May 2, 2017. For the
period ended June 30, 2016 the net cash outflow of GBP21 thousand
related to expense prepayments for a private funding round that took
place in July of 2016.
Financial position
As at June 30, 2017 Verona Pharma plc and its subsidiaries had
approximately GBP94.6m in cash, cash equivalents and short-term
investments (December 31, 2016: GBP39.8m).
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME FOR THE THREE AND SIX MONTHSING JUNE 30, 2016 AND JUNE 30,
2017
Three months Three months Six months Six months
ended ended ended ended
June 30, 2016 June 30, 2017 June 30, 2016 June 30, 2017
Notes (unaudited) (unaudited) (unaudited) (unaudited)
GBP GBP GBP GBP
Research and development costs (522,136) (4,838,167) (1,244,715) (7,942,855)
General and administrative costs (350,453) (1,968,617) (661,114) (3,000,924)
Operating loss (872,589) (6,806,784) (1,905,829) (10,943,779)
Finance income 9 2,492 3,439,511 7,375 5,204,518
Finance expense 9 (77,255) (796,822) (147,910) (978,107)
Loss before taxation (947,352) (4,164,095) (2,046,364) (6,717,368)
Taxation - credit 11 130,085 963,765 284,977 1,603,453
Loss for period (817,267) (3,200,330) (1,761,387) (5,113,915)
Other comprehensive income:
Items that may be subsequently reclassified to profit
or loss
Exchange differences on translating foreign operations 12,376 (9,778) 15,866 (14,037)
Total comprehensive loss for the period attributable
to owners of the Company (804,891) (3,210,108) (1,745,521) (5,127,952)
Loss per ordinary share - basic and diluted (pence) 10 (4.0)p (3.6)p (8.7)p (7.3)p
The accompanying notes form an integral part of these
condensed consolidated interim financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2016 AND JUNE 30, 2017
As of As of
December 31, 2016 June 30, 2017
Notes (audited) (unaudited)
GBP GBP
ASSETS
Non-current assets:
Property, plant and
equipment 13,838 12,703
Intangible assets 1,876,684 1,961,631
Goodwill 441,000 441,000
2,331,522 2,415,334
Current assets:
Prepayments and other
receivables 2,958,587 2,434,900
Current tax receivable 1,067,460 2,809,932
Short term investments 6 - 31,956,817
Cash and cash equivalents 39,785,098 62,613,988
43,811,145 99,815,637
Total assets 46,142,667 102,230,971
EQUITY AND LIABILITIES
Capital and reserves
attributable to equity
holders:
Share capital 2,568,053 5,244,203
Share premium 58,526,502 118,721,212
Share-based payment reserve 2,101,790 3,070,095
Accumulated loss (28,728,038) (33,855,990)
Total equity 34,468,307 93,179,520
Current liabilities:
Trade and other payables 2,823,489 5,308,334
Tax payable - US operations 126,063 97,762
Derivative financial
instrument 7 7,922,603 2,809,670
Total current liabilities 10,872,155 8,215,766
Non-current liabilities:
Assumed contingent
obligation 8 802,205 835,685
Total non-current
liabilities 802,205 835,685
Total equity and liabilities 46,142,667 102,230,971
The accompanying notes form an integral part of these
condensed consolidated interim financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR
THE SIX MONTHSED JUNE 30, 2016 AND JUNE 30, 2017
Six months Six months
ended ended
June 30, 2016 June 30, 2017
(unaudited) (unaudited)
GBP GBP
Cash used in operating activities:
Loss before taxation (2,046,364) (6,717,368)
Finance income (7,375) (5,204,518)
Finance expense 147,910 978,107
Share-based payment charge 177,962 968,305
Decrease/(increase) in prepayments and other
receivables 15,503 (978,585)
(Decrease)/increase in trade and other payables (539,372) 2,930,239
Depreciation of plant and equipment 5,095 2,881
Amortization of intangible assets 26,092 32,152
Cash used in operating activities (2,220,549) (7,988,787)
Cash outflow from taxation (14,057) (165,593)
Net cash used in operating activities (2,234,606) (8,154,380)
Cash flow from investing activities:
Interest received 7,375 67,027
Purchase of plant and equipment (1,640) (1,747)
Payments for patents (84,934) (117,100)
Short term investments - (32,035,023)
Net cash used in investing activities (79,199) (32,086,843)
Cash flow from financing activities:
Gross proceeds from issue of shares - 69,884,838
Transaction costs on issue of shares and warrants (20,724) -
Transaction costs on Global Offering - (6,356,529)
Net cash (used) / generated from financing
activities (20,724) 63,528,309
Net (decrease) / increase in cash and cash
equivalents (2,334,529) 23,287,086
Cash and cash equivalents at the beginning of the
period 3,524,387 39,785,098
Effect of exchange rates on cash and cash
equivalents 15,866 (458,196)
Cash and cash equivalents at the end of the period 1,205,724 62,613,988
The accompanying notes form an integral part of these
condensed consolidated interim financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED JUNE 30, 2016 AND JUNE 30, 2017
Share-based Total
Share Share payment Accumulated Total
capital premium reserve losses Equity
GBP GBP GBP GBP GBP
Balance at
January 1,
2016 1,009,923 26,650,098 1,525,897 (23,752,204) 5,433,714
Loss for the
period (1,761,387) (1,761,387)
Other
comprehensive
income for the
period:
Exchange
differences
on
translating
foreign
operations - - - 15,866 15,866
Total
comprehensive
loss for the
period - - - (1,745,521) (1,745,521)
Share-based
payments - - 177,962 - 177,962
Balance at June
30, 2016 1,009,923 26,650,098 1,703,859 (25,497,725) 3,866,155
Balance at
January 1,
2017 2,568,053 58,526,502 2,101,790 (28,728,038) 34,468,207
Loss for the
period (5,113,915) (5,113,915)
Other
comprehensive
income for the
period:
Exchange
differences
on
translating
foreign
operations - - - (14,037) (14,037)
Total
comprehensive
loss for the
period (5,127,952) (5,127,952)
New Share
Capital issued 2,676,150 67,647,737 - - 70,323,887
Transaction
costs on new
Share Capital
issued - (7,453,027) - - (7,453,027)
Share-based
payments - - 968,305 - 968,305
Balance at June
30, 2017 5,244,203 118,721,212 3,070,095 (33,855,990) 93,179,520
The currency translation reserve is currently not material and as such
is not presented in a separate reserve but has been included in the
total accumulated losses reserve.
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
VERONA PHARMA PLC
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHSED JUNE 30, 2017
1. General information
On February 10, 2017 the Company effected a 50-for-1 consolidation of
its shares. All references to ordinary shares, options and warrants, as
well as share, per share and related information in these consolidated
financial statements have been retroactively adjusted to reflect the
consolidation as if it had occurred at the beginning of the earliest
period presented.
On May 2, 2017 the Company announced the closing of its global offering
of an aggregate of 47,399,001 new ordinary shares, consisting of the
initial public offering in the United States of 5,768,000 American
Depositary Shares ("ADSs") at a price of $13.50 per ADS and the private
placement in Europe of 1,255,001 ordinary shares at a price of GBP1.32
per ordinary share, for gross proceeds of $80.0 million (the "Global
Offering"). Each ADS offered represents eight ordinary shares of the
Company. The ordinary shares offered were allotted and issued in a
concurrent private placement in Europe and other countries outside of
the United States and Canada.
In addition, the Chairman of Verona Pharma's board of directors, Dr
David Ebsworth, and an existing shareholder agreed to subscribe for
254,099 new ordinary shares at a price of GBP1.32 per ordinary share in
a shareholder private placement separate from the Global Offering (the
"Shareholder Private Placement"), contingent on and concurrent with the
Global Offering and generating additional gross proceeds of GBP335
thousand.
On May 15 and May 23, 2017, pursuant to the Global Offering, the
underwriters purchased an additional 733,738 ADSs, representing
5,869,904 ordinary shares, at a price of $13.50 per ADS, for additional
gross proceeds of $9.9 million bringing the total gross proceeds in the
Global Offering to $89.9 million (GBP70.0 million). Including the
Shareholder Private Placement, the total gross proceeds of the capital
raising amounted to $90.3 million (GBP70.3 million).
Following the Global Offering and the Shareholder Private Placement the
number of ordinary shares in issue was 104,884,068.
The ADSs began trading on the NASDAQ Global Market under the ticker
symbol "VRNA" on April 27, 2017. Verona Pharma's ordinary shares
continue to trade on the AIM market of the London Stock Exchange ("AIM")
under the symbol "VRP".
2. Basis of accounting
The unaudited condensed consolidated interim financial statements of
Verona Pharma Plc (the "Company") and its subsidiaries, Verona Pharma,
Inc., and Rhinopharma Limited (together "the Group"), for the six months
ended June 30, 2017 do not include all the statements required for full
annual financial statements and should be read in conjunction with the
consolidated financial statements of the Group as of December 31, 2016.
These unaudited condensed interim financial statements were authorized
for issue by the Company's board of directors (the "Directors") on
August 8, 2017. There have been no changes, except as otherwise stated,
to the accounting policies as contained in the annual consolidated
financial statements as of and for the year ended December 31, 2016,
which have been prepared in accordance with international financial
reporting standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB").
The interim condensed consolidated financial statements have been
prepared on a going-concern basis. Management, having reviewed the
future operating costs of the business in conjunction with the cash held
as of June 30, 2017, believes the Group has sufficient funds to continue
as a going concern for at least 12 months from the end of the reporting
period.
The Group's activities and results are not exposed to any seasonality.
The Company operates as a single operating and reportable segment.
Dividend
The Directors do not recommend the payment of a dividend for the six
months ended June 30, 2017 (Six months ended June 30, 2016: GBPNil; year
ended December 31, 2016: GBPNil).
Update to accounting policies: Short Term Investments
Short term investments include fixed term deposits held at banks and
other investments with original maturities of three months or more but
less than a year. They are classified as loans and receivables and are
measured at amortised cost using the effective interest method.
3. Segmental reporting
The Group's activities are covered by one operating and reporting
segment: Drug Development, as detailed more fully in the annual
consolidated financial statements as of and for the year ended December
31, 2016. There have been no changes to management's assessment of the
operating and reporting segment of the Group during the period.
4. Financial Instruments
The Group's activities expose it to a variety of financial risks: market
risk (including foreign currency risk); cash flow and fair value
interest rate risk; and credit risk and liquidity risk. The condensed
consolidated interim financial statements do not include all financial
risk management information and disclosures required in the annual
financial statements, and they should be read in conjunction with the
Group's annual financial statements for the year ended December 31,
2016.
5. Estimates
The preparation of condensed consolidated interim financial statements
require management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts
of assets and liabilities, income and expenses. Actual results may
differ from those estimates.
In preparing these condensed consolidated interim financial statements,
the significant judgments made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were
the same as those applied to the consolidated financial statements for
the year ended December 31, 2016.
6. Short term investments
The short term investments as at June 30, 2017 amounted to a total of
GBP31,957 thousand (December 31, 2016: GBP nil) and consisted of fixed
term deposits, in both US Dollars and UK Pounds.
7. Warrants
Pursuant to the July 2016 placement the Company issued 31,115,926 units
to new and existing investors at the placing price of GBP1.4365 per
unit. Each unit comprises one ordinary share and one warrant. The
warrant holders can subscribe for 0.4 of an ordinary share at a per
share exercise price of 120% of the placing price or GBP1.7238. The
warrant holders can opt for a cashless exercise of their warrants. The
warrant holders can choose to exchange the warrants held for a reduced
number of warrants exercisable at nil consideration. The reduced number
of warrants is calculated based on a formula considering the share price
and the exercise price of the shares. The warrants were therefore
classified as a derivative financial liability, since their exercise
might result in a variable number of shares to be issued.
At December 31, 2016 warrants over 12,446,370 shares were in effect.
During the 6 months ended June 30, 2017 warrants over 45,108 shares were
forfeited.
At December 31, 2016 At June 30, 2017
Warrants 12,446,370 12,401,262
Stock price GBP1.5650 GBP1.1400
Exercise price GBP1.7238 GBP1.7238
Risk-free interest rate 0.088% 0.36%
Expected life of options 2.43 years 2.04 years
Annualized volatility 73.53% 58.61%
Dividend rate 0.00% 0.00%
As per the reporting date the Company updated the underlying assumptions
and calculated a fair value of these warrants, using Black-Scholes
(level 3), amounting to GBP2,810 thousand.
The variance for the six month period ending June 30, 2017 was GBP5,113
thousand (six month period ending June 30, 2016: GBP nil) and is
recorded as finance income in the Consolidated Statement of
Comprehensive Income. Of this amount a total of GBP12 thousand related
to the warrants that were forfeited.
The variance for the three month period ending June 30, 2017 was
GBP3,382 thousand (three month period ending June 30, 2016: GBP nil) and
is recorded as finance income in the Consolidated Statement of
Comprehensive Income. Of this amount a total of GBP12 thousand related
to the warrants that were forfeited.
Derivative
financial
instrument
At December 31, 2016 GBP
Derivative financial instrument 7,922,603
Fair value adjustments recognized in profit or loss (5,112,933)
At June 30, 2017 2,809,670
For the amount recognized at June 30, 2017, the effect, when some of
these underlying parameters would deviate up or down, is presented in
the below table.
Time to
Volatility maturity
(up / down (up / down
10 % pts) 6 months)
GBP thousands GBP thousands
Variable up 3,593 3,336
Base case, reported fair value 2,810 2,810
Variable down 1,993 2,174
8. Assumed contingent obligation related to the business combination
The value of the assumed contingent obligation as of June 30, 2017
amounted to GBP835,685 (December 31, 2016: GBP802,205).
The increase in value of the assumed contingent obligation during the
six months ended June 30, 2017 amounted to GBP33,480 (six months ended
June 30, 2016: GBP147,910) and was recognized as a finance expense.
June 30, 2016 June 30, 2017
GBP GBP
January 1, 593,941 802,205
Re-measurement of contingent arrangement 86,128 -
Impact of changes in foreign exchange
rates 20,915 (12,803)
Unwinding of discount factor 40,867 46,283
Period end 741,851 835,685
There is no material difference between the fair value and carrying
value of the financial liability.
The table below describes the reported change to the value of the
liability during the first six months of 2017 of GBP33,480 compared to
what this number would be following the presented variations to the
underlying assumptions:
Change in value of the assumed contingent obligation GBP33,480
for the reported period
1% lower discount rate % GBP31,102
1% higher discount rate % GBP35,476
10% lower revenue assumption GBP33,374
10% higher revenue assumption GBP33,586
1% lower assumed probability of progression GBP31,826
1% higher assumed probability of progression GBP35,134
The increase in value of the assumed contingent obligation during the
three months ended June 30, 2017 amounted to GBP14,507 (three months
ended June 30, 2016: GBP77,255) and was recognized as a finance expense.
9. Finance income and expense
Three months Three months Six months Six months
ended ended ended ended
June 30, 2016 June 30, 2017 June 30, 2016 June 30, 2017
GBP GBP GBP GBP
Finance income:
Interest received on cash balances 2,492 57,435 7,375 91,585
Fair value adjustment on derivative financial instrument
(note 7) - 3,382,076 - 5,112,933
Total finance income 2,492 3,439,511 7,375 5,204,518
Three months Three months Six months Six months
ended ended ended ended
June 30, 2016 June 30, 2017 June 30, 2016 June 30, 2017
GBP GBP GBP GBP
Finance expense:
Re-measurement of contingent arrangement (note 8) - - 86,128 -
Impact of changes in foreign exchange rates on the
contingent arrangement (note 8) 54,953 (8,838) 20,915 (12,803)
Unwinding of discount factor related to the contingent
arrangement (note 8) 22,302 23,345 40,867 46,283
Foreign exchange loss on receivables relating to financing
activities (note 12) - 486,431 - 486,431
Foreign exchange loss on translating other foreign
currency denominated balances - 295,884 - 458,196
Total finance expense 77,255 796,822 147,910 978,107
10. Loss per share calculation
The basic loss per share of 7.3p (June 30, 2016: loss of 8.7p) for the
six months ended June 30, 2017 is calculated by dividing the loss for
the six months ended June 30, 2017 by the weighted average number of
ordinary shares in issue of 70,143,171 during the 6 months ended June
30, 2017 (June 30, 2016: 20,198,469).
The basic loss per share of 3.6p (June 30, 2016: loss of 4.0p) for the
three months ended June 30, 2017 is calculated by dividing the loss for
the three months ended June 30, 2017 by the weighted average number of
ordinary shares in issue of 88,516,972 during the three months ended
June 30, 2017 (June 30, 2016: 20,198,469). Since the Group has reported
a net loss, diluted loss per ordinary share is equal to basic loss per
ordinary share.
11. Taxation
The tax credit for the six month period ended June 30, 2017, amounts to
GBP1,603 thousand, and consists of the estimated research and
development tax credit receivable on qualifying expenditure incurred
during the six month period ended June 30, 2017 for an amount of
GBP1,742 plus a tax expense of GBP139 thousand related to the US
operations (six month period ended June 30, 2016: GBP285 thousand tax
credit, comprising GBP290 thousand for research and development tax
credit, less GBP5 thousand expense for tax on US operations).
The tax credit for the three month period ended June 30, 2017, amounts
to GBP964 thousand, and consists of the estimated research and
development tax credit receivable on qualifying expenditure incurred
during the three month period ended June 30, 2017 for an amount of
GBP1,073 plus a tax expense of GBP109 thousand related to the US
operations (three month period ended June 30, 2016: GBP130 thousand tax
credit, comprising GBP132 thousand for research and development tax
credit, less GBP2 thousand expense for tax on US operations).
12. Issuance of Share Capital
On May 2, 2017 the Company announced the closing of its Global Offering
of an aggregate of 47,399,001 new ordinary shares, comprising 5,768,000
American Depositary Shares ("ADSs") at a price of $13.50 per ADS and
1,255,001 ordinary shares at a price of GBP1.32 per ordinary share.
During May 2017 the underwriters purchased an additional 733,738 ADSs,
representing 5,869,904 ordinary shares, at a price of $13.50 per ADS.
The total gross proceeds in the Global Offering amounted to $89.9
million (GBP70.0 million).
In addition, the Chairman of Verona Pharma's board of directors, Dr
David Ebsworth, and an existing shareholder agreed to subscribe for
254,099 new ordinary shares at a price of GBP1.32 per ordinary share in
the Shareholder Private Placement, contingent on and concurrent with the
Global Offering and generating gross proceeds of GBP0.3m.
Following the Global Offering, the exercise of the over-allotment and
the Shareholder Private Placement, as per the reporting date of June 30,
2017, the number of ordinary shares in issue was 104,884,068. All new
ordinary shares rank pari passu with existing ordinary shares.
Where there is a time and foreign exchange difference between proceeds
from a share issue becoming due and being received, the movement is
taken to Finance income or Finance expense as appropriate. In respect of
the Global Offering and Shareholder Private Placement, the Company
recorded a finance expense of GBP439,049 arising from movements in
exchange rates on funds receivable, offset by a saving on commission
payable of GBP30,822, for a net finance expense of GBP408,277.
13. Share option scheme
During the six months ended June 30, 2017 and following the Global
Offering the Company granted a total of 4,656,828 share options and
1,052,236 Restricted Stock Units ("RSUs") (six months ended June 30,
2016 the Company granted a total of 292,000 share options, and nil
RSUs). The numbers presented reflect ordinary shares although some of
grants made in 2017 are in ADSs. Each ADS represents eight ordinary
shares.
The movement in the number of the Company's share options is set out
below:
Weighted Six months Weighted Six months
average ended average ended
exercise June 30, exercise June 30,
price 2016 price 2017
GBP GBP
Outstanding at January
1 1.78 1,792,000 1.87 3,037,333
Granted during the
period 2.45 292,000 1.32 4,656,828
Expired during the
period 2.40 (100,000) 1.90 (33,333)
Number of outstanding
options 1.85 1,984,000 1.53 7,660,828
The movement in the number of the Company's RSUs is set out below:
Weighted Six months Weighted Six months
average ended average ended
exercise June 30, exercise June 30,
price 2016 price 2017
GBP GBP
Outstanding at January 1 n/a - - -
Granted during the period - - 1.32 1,052,236
Expired during the period - - - -
Number of outstanding RSUs n/a - 1.32 1,052,236
The share-based payment expense for the three months ended June 30, 2017
was GBP693,991 (three months ended June 30, 2016: GBP106,613). The
share-based payment expense for the six months ended June 30, 2017 was
GBP968,305 (six months ended June 30, 2016: GBP177,962).
The options and RSUs granted during the six months ended June 30, 2017,
were awarded under the Company's 2017 Long Term Incentive Plan with
total fair values estimated using the Black-Scholes option-pricing model
of GBP4.8m. The cost is amortized over the vesting period of the options
and the RSUs on a straight-line basis. The following assumptions were
used for the Black-Scholes valuation of share options and RSUs granted
in the six months ended June 30, 2017.
Share options RSU
Issued in the six months ended Issued in the six months ended
June 30, 2017 June 30, 2017
Options /
RSUs
granted 4,656,828 1,052,236
Risk-free
interest
rate 0.29 % - 0.62 % 0.42 % - 0.62 %
Expected
life of
options /
RSUs 5.5 - 7.0 years 5.5 - 7.0 years
Annualized
volatility 71.3 % - 73.3 % 71.3 % - 73.1%
Dividend
rate 0.00% 0.00%
Vesting 3 and 4 years 3 and 4 years
period
14. Related party transactions
In the six months ended June 30, 2016, and 2017, executive directors
received regular salaries, post-employment benefits and share-based
payments. Additionally, non-executive directors received compensation
for their services in the form of cash compensation and equity grants.
The compensation costs for the Directors and senior staff for the six
months ended June 30, 2016 and 2017 was as follows:
Short
term
employee Share-based Post-employment
benefits payments benefits Total
(in GBP thousands)
Six months
ended
June 30,
2016 Directors 197 95 5 297
Other key management
personnel 453 168 11 632
650 263 16 929
Six months
ended
June 30,
2017 Directors 494 342 8 844
Other key management
personnel 731 575 11 1,317
1,225 917 19 2,161
David Ebsworth, a Non-Executive Director, purchased GBP18 thousand of
our ordinary shares as part of the Shareholder Private Placement and
Vikas Sinha, a Non-Executive Director, purchased of GBP234 thousand of
our ordinary shares, in the form of ADSs, as part of the Global
Offering.
The Company recognizes Vivo Capital and Novo A/S as related parties.
Both these funds participated in the Global Offering, as per the table
below presenting their equity contributions:
Equity Contributions at Global Offering
GBP thousands
Novo A/S 7,791
Vivo Capital 7,407
15. 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, 2016 and June 30, 2017 and for the three and six month
periods ended June 30, 2016 and 2017 into US dollars at the noon buying
rate of the Federal Reserve Bank of New York on June 30, 2017, which was
GBP1.00 to $1.2995. These translations should not be considered
representations that any such amounts have been, could have been or
could be converted into US dollars at that or any other exchange rate as
of that or any other date.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE
THREE AND SIX MONTHSING JUNE 30, 2016 AND JUNE 30, 2017
Three months Three months Six months Six months
ended ended ended ended
June 30, 2016 June 30, 2017 June 30, 2016 June 30, 2017
(unaudited) (unaudited) (unaudited) (unaudited)
$ $ $ $
Research and development costs (678,516) (6,287,198) (1,617,507) (10,321,740)
General and administrative costs (455,414) (2,558,218) (859,118) (3,899,701)
Operating loss (1,133,930) (8,845,416) (2,476,625) (14,221,441)
Finance income 3,238 4,469,645 9,584 6,763,271
Finance expense (100,393) (1,035,471) (192,209) (1,271,050)
Loss before taxation (1,231,085) (5,411,242) (2,659,250) (8,729,220)
Taxation - credit 169,046 1,252,413 370,327 2,083,687
Loss for period (1,062,039) (4,158,829) (2,288,923) (6,645,533)
Other comprehensive income:
Exchange differences on translating foreign
operations 16,083 (12,707) 20,618 (18,241)
Total comprehensive loss for the period attributable
to owners of the Company (1,045,956) (4,171,536) (2,268,305) (6,663,774)
Loss per ordinary share - basic and diluted (0.05) (0.05) (0.11) (0.09)
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
As of As of
December 31, 2016 June 30, 2017
(audited) (unaudited)
$ $
ASSETS
Non-current assets:
Property, plant and equipment 17,982 16,508
Intangible assets 2,438,751 2,549,139
Goodwill 573,080 573,080
3,029,813 3,138,727
Current assets:
Prepayments and other receivables 3,844,684 3,164,153
Current tax receivable 1,387,164 3,651,507
Short term investments - 41,527,884
Cash and cash equivalents 51,700,735 81,366,877
56,932,583 129,710,421
Total assets 59,962,396 132,849,148
EQUITY AND LIABILITIES
Capital and reserves attributable to
equity holders:
Share capital 3,337,185 6,814,842
Share premium 76,055,189 154,278,215
Share-based payment reserve 2,731,276 3,989,588
Accumulated loss (37,332,085) (43,995,859)
Total equity 44,791,565 121,086,786
Current liabilities:
Trade and other payables 3,669,124 6,898,181
Tax payable - US operations 163,819 127,042
Derivative financial instrument 10,295,423 3,651,166
Total current liabilities 14,128,366 10,676,389
Non-current liabilities:
Assumed contingent obligation 1,042,465 1,085,973
Total non-current liabilities 1,042,465 1,085,973
Total equity and liabilities 59,962,396 132,849,148
16. Subsequent Events
No events occurred after the reporting date that would have a material
impact on the financial position of the Company.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Verona Pharma plc via Globenewswire
http://www.veronapharma.com/
(END) Dow Jones Newswires
August 08, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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