Nebulized ensifentrine as add-on to dual bronchodilator therapy for COPD demonstrated additional increase in lung function on top of maximum current therapy in three-day Phase 2 clinical trial
Single dose of ensifentrine dry powder inhaler formulation showed statistically significant, dose-dependent and clinically meaningful increases in lung function in first part of two-part Phase 2 clinical trial
The Company’s product candidate, ensifentrine (RPL554), has the potential to be the first novel class of bronchodilator in over 40 years, and the first therapy for the treatment of respiratory diseases that combines bronchodilator and anti-inflammatory activities in one compound.
OPERATIONAL AND DEVELOPMENT HIGHLIGHTS
Positive clinical progress with ensifentrine demonstrating additional bronchodilation and positive safety data in Phase 2 trials in COPD.
Post-period end, the Company:
FINANCIAL HIGHLIGHTS
"The Phase 2b clinical trial with nebulized ensifentrine for COPD has begun as planned and we anticipate completing patient dosing in this study by the end of 2019. We then plan to advance into our Phase 3 clinical trial program, which we expect to commence in 2020 following the completion of the end of Phase 2 meeting with the
"We reported positive interim data from our first inhaler study which opens an opportunity to provide an ensifentrine inhaler to the millions of COPD patients who prefer to use a handheld inhaler device. We believe this is a very attractive commercial opportunity."
Conference Call and Webcast Information
Those interested in listening to the conference call live via the internet may do so by visiting the “Investors” page of Verona Pharma’s website at www.veronapharma.com and clicking on the webcast link. A webcast replay of the conference call [audio] will be available for 30 days by visiting the “Investors” page of Verona Pharma’s website at www.veronapharma.com and clicking on the “Events and presentations” link.
An electronic copy of the interim results will be made available today on the Company’s website (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.
This press release contains inside information for the purposes of Article 7 Regulation (EU) No. 596/2014.
About COPD
COPD is a progressive and life-threatening respiratory disease without a cure.
About
Forward Looking Statements
This press release, operational review, outlook and financial review contain forward-looking statements. All statements contained in this press release, operational review, outlook and financial review that do not relate to matters of historical fact should be considered forward-looking statements, including, but not limited to, statements regarding ensifentrine as a first-in-class product candidate, the timing of clinical trials of ensifentrine and trial results, the Company’s “Investor and Analyst R&D Forum,” the market opportunity for an ensifentrine inhaler, ensifentrine as the first novel class of bronchodilator in over 40 years and the first therapy for the treatment of respiratory diseases that combines bronchodilator and anti-inflammatory activities in one compound, the treatment potential of ensifentrine, improvements in air trapping on top of dual bronchodilator treatment translating into further symptom improvement in patients already on maximum standard-of-care therapy, the market potential for ensifentrine in a handheld inhaler formulation, the value of ensifentrine for COPD patients who remain symptomatic and uncontrolled despite treatment with currently available medicine, the number of COPD patients who use inhalers for maintenance therapy, the expansion of the market for ensifentrine in a DPI or pMDI formulation and the size of such market, our goal to become a leading biopharmaceutical company, our review of, and the data from, our next dose ranging Phase 2b study to facilitating and de-risking dose selection for our Phase 3 program and further enhancing ensifentrine's commercial positioning, the treatment potential for ensifentrine in other respiratory disease, strategic collaborations and their value, and in-licensing additional product candidates.
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; 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; the loss of any key personnel and our ability to recruit replacement 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, operational review, outlook and financial review. Any such forward-looking statements represent management's estimates as of the date of this press release and operational and financial review. 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, operational review, outlook and financial review.
For further information please contact:
Verona Pharma plc | Tel: +44 (0)20 3283 4200 |
Jan-Anders Karlsson, Chief Executive Officer | info@veronapharma.com |
Victoria Stewart, Director of Communications | |
N+1 Singer | Tel: +44 (0)20 3283 4200 |
(Nominated Adviser and UK Broker) | |
Aubrey Powell / Jen Boorer / Iqra Amin (Corporate Finance) | |
Mia Gardner (Corporate Broking) | |
Optimum Strategic Communications | Tel: +44 (0)20 3922 0891 |
(European Media and Investor Enquiries) | verona@optimumcomms.com |
Mary Clark / Anne Marieke Ezendam / Hollie Vile | |
Westwicke, an ICR Company | |
(US Media and Investor enquiries) | |
Darcie Robinson | Tel: +1 203-919-7905 |
Darcie.Robinson@icrinc.com | |
Stephanie Carrington | Tel: +1 646 277 1282 |
Stephanie.Carrington@icrinc.com | |
OPERATIONAL REVIEW
Company overview
In clinical trials, the nebulized formulation of ensifentrine has been observed to result in bronchodilator effects when used alone or as an add-on treatment to other COPD bronchodilators. It has shown clinically meaningful and statistically significant improvements in lung function when administered in addition to frequently used short- and long-acting bronchodilators, such as tiotropium (Spiriva®), compared with such bronchodilators administered as a single agent. Ensifentrine improved FEV1 over four weeks in patients with moderate-to-severe COPD when compared to placebo and improved COPD symptoms and quality of life in a Phase 2b multicenter European study performed in 403 patients. In addition, ensifentrine has shown anti-inflammatory effects in a standard challenge model producing COPD-like inflammation in human subjects. In a recent three day clinical pharmacology study, ensifentrine was observed to significantly increase bronchodilation, compared to placebo, even in patients already on background treatment of LAMA/LABA dual bronchodilator therapy, with or without inhaled steroids. The improvement in lung function following a 1.5 mg dose of ensifentrine was statistically significant over a number of time points, including over the first 4 hours after the morning dose, over 24 hours and after the evening dose, despite the primary endpoint of improvement at morning peak not having been met. Importantly, ensifentrine produced clinically relevant and statistically significant improvements in air trapping (residual volume) on top of dual bronchodilator treatment, which we believe may translate into further symptom improvement in these patients already on maximum standard-of-care therapy. Ensifentrine has been observed to be well tolerated in these studies, having been administered to more than 800 subjects in 13 clinical trials.
Despite treatment with currently approved therapies, many patients with COPD experience daily symptoms impairing their quality of life. Airway obstruction and air trapping due to narrow air passages are major causes of debilitating breathlessness (dyspnoea), reducing physical ability and causing anxiety and depression. Of the patients treated with dual bronchodilator (LAMA/LABA) and triple therapy (LAMA/LABA/ICS), research suggests that up to 40% (approximately 800,000 patients in the US alone) are uncontrolled, remaining symptomatic and at an increased risk of exacerbations.
We believe ensifentrine has demonstrated improvement in lung function, as measured by FEV1, and symptoms (which commonly are a precursor to exacerbations) in clinical trials, and may therefore be an attractive additional treatment for these uncontrolled patients. Furthermore, in COPD patients, novel anti-inflammatory therapies are required as current treatments such as ICS and PDE4 inhibitors are either effective only in specific subsets of exacerbating COPD patients or are associated with distressing side effects which can reduce treatment compliance. We have already observed that ensifentrine improves lung function, as measured by FEV1 and/or Residual Volume, when used either as a stand-alone treatment or as an addition to single or dual bronchodilators and we believe it is well placed to potentially meet the need for an effective and well tolerated additional treatment for those COPD patients who remain symptomatic and uncontrolled despite using currently available COPD medications.
Operational performance in the first quarter
On
In addition to our nebulized formulation of ensifentrine, we are also developing ensifentrine in both DPI and pMDI formulations for the maintenance treatment of COPD patients who prefer to use a handheld inhaler device. We estimate that, in the US, approximately 90% of the 3.7 million mild/moderate COPD patients and 80% of the 2.7 million severe/very severe COPD patients use inhalers for maintenance therapy. We believe that the successful development of a DPI or pMDI formulation of ensifentrine for moderate disease would greatly expand the addressable market for the drug and represents a multi-billion dollar potential opportunity.
On
In the current quarter we expect to commence a pMDI study in moderate to severe COPD patients, with single dose data from Part 1 of this study expected in the second half of 2019 and final data expected in the first quarter of 2020.
Opportunities also exist to explore the development of ensifentrine in DPI and/or pMDI formulations for the treatment of asthma and other respiratory diseases.
OUTLOOK
We intend to become a leading biopharmaceutical company focused on the treatment of respiratory diseases with significant unmet medical needs. We recognize that our proposed strategy for achieving this goal depends on the totality of the data from all clinical trials conducted with ensifentrine, future interactions with regulatory authorities and our commercial assessment of different development options for ensifentrine. Key elements of this strategy include:
FINANCIAL REVIEW
Financial review of the three month period ended March 31, 2019
The operating loss for the three months ended March 31, 2019, was £7.8 million (March 31, 2018: £5.9 million) and the loss after tax for the three months ended March 31, 2019, was £5.4 million (March 31, 2018: £15.2 million).
Research and Development Costs
Research and development costs were £5.9 million for the three months ended March 31, 2019, as compared to £4.4 million for the three months ended March 31, 2018, an increase of £1.5 million. The increase was predominantly attributable to a £1.3 million increase in clinical trial expenses relating to four clinical trials (ongoing or in preparation) of ensifentrine in the three months ended
General and Administrative Costs
General and administrative costs were £1.8 million for the three months ended March 31, 2019, as compared to £1.5 million for the three months ended March 31, 2018, an increase of £0.3 million. The increase was primarily attributable to a £0.3 million increase in professional fees.
Finance Income and Expense
Finance income was £1.9 million for the three months ended March 31, 2019, and £0.2 million for the three months ended March 31, 2018. The increase in finance income was primarily due to a decrease in the fair value of the warrant liability of £1.6 million during the three months ended
Finance expense was £0.8 million for the three months ended March 31, 2019, compared to £10.3 million for the three months ended March 31, 2018. The decrease was due to a decrease in the fair value of the warrant liability (recorded in finance income) compared to an increase in the value of the warrant liability during the three months ended
Taxation
Taxation for the three months ended March 31, 2019, amounted to a credit of £1.3 million compared to a credit of £0.8 million for the three months ended March 31, 2018, an increase of £0.5 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 attributable to our increased expenditure on research and development, compared to the prior period.
Cash Flows
Net cash used in operating activities increased to £9.9 million for the three months ended March 31, 2019, from £6.2 million for the three months ended March 31, 2018. This was due to an increase in operating costs driven by higher research and development costs, as well as differences in the timing of supplier payments.
Net cash generated from investing activities predominantly reflects the net movement of cash being placed on deposit for more than three months and such deposits maturing, because deposits of more than three months are disclosed as short term investments, separately from cash. The increase in net cash generated in investing activities to £9.0 million for the three months ended March 31, 2019, from £4.5 million for the three months ended March 31, 2018, was due to the net movement of funds from short term investments to cash being greater during the three months ended
Cash, cash equivalents and short-term investments
Cash, cash equivalents and short-term investments at March 31, 2019, decreased to £54.0 million from £64.7 million at December 31, 2018 due to the utilization of cash in the ordinary operating activities and the effect of the GBP exchange rate strengthening on our USD cash and cash equivalents and short term investments.
Net assets
Net assets decreased to £58.1 million in the three month period ended March 31, 2019, from £62.9 million at December 31, 2018. This decrease was primarily due to the operating activities of the Company.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 31, 2019 AND DECEMBER 31, 2018 (UNAUDITED)
Notes | As of March 31, 2019 |
As of December 31, 2018 |
|||||
£'000s | £'000s | ||||||
ASSETS | |||||||
Non-current assets: | |||||||
Goodwill | 441 | 441 | |||||
Intangible assets | 2,171 | 2,134 | |||||
Property, plant and equipment | 270 | 21 | |||||
Total non-current assets | 2,882 | 2,596 | |||||
Current assets: | |||||||
Prepayments and other receivables | 2,476 | 2,463 | |||||
Current tax receivable | 5,808 | 4,499 | |||||
Short term investments | 10 | 35,309 | 44,919 | ||||
Cash and cash equivalents | 18,726 | 19,784 | |||||
Total current assets | 62,319 | 71,665 | |||||
Total assets | 65,201 | 74,261 | |||||
EQUITY AND LIABILITIES | |||||||
Capital and reserves attributable to equity holders: | |||||||
Share capital | 5,266 | 5,266 | |||||
Share premium | 118,862 | 118,862 | |||||
Share-based payment reserve | 8,543 | 7,923 | |||||
Accumulated loss | (74,556 | ) | (69,117 | ) | |||
Total equity | 58,115 | 62,934 | |||||
Current liabilities: | |||||||
Derivative financial instrument | 11 | 882 | 2,492 | ||||
Finance lease liabilities | 241 | — | |||||
Trade and other payables | 4,850 | 7,733 | |||||
Total current liabilities | 5,973 | 10,225 | |||||
Non-current liabilities: | |||||||
Assumed contingent obligation | 12 | 1,018 | 996 | ||||
Deferred income | 95 | 106 | |||||
Total non-current liabilities | 1,113 | 1,102 | |||||
Total equity and liabilities | 65,201 | 74,261 |
The accompanying notes form an integral part of these consolidated financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND MARCH 31, 2018 (UNAUDITED)
Notes | Three Months Ended March 31, 2019 |
Three Months Ended March 31, 2018 |
|||||
£'000s | £'000s | ||||||
Research and development costs | (5,928 | ) | (4,421 | ) | |||
General and administrative costs | (1,831 | ) | (1,458 | ) | |||
Operating loss | (7,759 | ) | (5,879 | ) | |||
Finance income | 7 | 1,860 | 160 | ||||
Finance expense | 7 | (820 | ) | (10,324 | ) | ||
Loss before taxation | (6,719 | ) | (16,043 | ) | |||
Taxation — credit | 8 | 1,313 | 820 | ||||
Loss for the year | (5,406 | ) | (15,223 | ) | |||
Other comprehensive loss: | |||||||
Items that might be subsequently reclassified to profit or loss | |||||||
Exchange differences on translating foreign operations | (13 | ) | (27 | ) | |||
Total comprehensive loss attributable to owners of the Company | (5,419 | ) | (15,250 | ) | |||
Loss per ordinary share — basic and diluted (pence) | 9 | (5.1 | ) | (14.5 | ) |
The accompanying notes form an integral part of these consolidated financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2018, AND MARCH 31, 2019 (UNAUDITED)
Note | Share Capital |
Share Premium |
Share- based Expenses |
Total Accumulated Losses |
Total Equity |
|||||||||||
£'000s | £'000s | £'000s | £'000s | £'000s | ||||||||||||
Balance at January 1, 2018 | 5,251 | 118,862 | 5,022 | (49,254 | ) | 79,881 | ||||||||||
Loss for the year | — | — | — | (15,223 | ) | (15,223 | ) | |||||||||
Other comprehensive loss for the year: | ||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | (27 | ) | (27 | ) | |||||||||
Total comprehensive loss for the period | — | — | — | (15,250 | ) | (15,250 | ) | |||||||||
Share-based payments | — | — | 1,019 | — | 1,019 | |||||||||||
Balance at March 31, 2018 | 5,251 | 118,862 | 6,041 | (64,504 | ) | 65,650 | ||||||||||
Balance at January 1, 2019 as previously reported | 5,266 | 118,862 | 7,923 | (69,117 | ) | 62,934 | ||||||||||
Impact of change in accounting policy | 3 | — | — | — | (20 | ) | (20 | ) | ||||||||
Adjusted balance at January 1, 2019 | 5,266 | 118,862 | 7,923 | (69,137 | ) | 62,914 | ||||||||||
Loss for the year | — | — | — | (5,406 | ) | (5,406 | ) | |||||||||
Other comprehensive loss for the year: | ||||||||||||||||
Exchange differences on translating foreign operations | — | — | — | (13 | ) | (13 | ) | |||||||||
Total comprehensive loss for the period | — | — | — | (5,419 | ) | (5,419 | ) | |||||||||
Share-based payments | — | — | 620 | — | 620 | |||||||||||
Balance at March 31, 2019 | 5,266 | 118,862 | 8,543 | (74,556 | ) | 58,115 |
The currency translation reserve for March 31, 2018, and March 31, 2019, is not considered material and as such is not presented in a separate reserve but is included in the total accumulated losses reserve.
The accompanying notes form an integral part of these consolidated financial statements.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND MARCH 31, 2018 (UNAUDITED)
Three Months Ended March 31, 2019 |
Three Months Ended March 31, 2018 |
||||
£'000s | £'000s | ||||
Cash used in operating activities: | |||||
Loss before taxation | (6,719 | ) | (16,043 | ) | |
Finance income | (1,860 | ) | (160 | ) | |
Finance expense | 820 | 10,324 | |||
Share-based payment charge | 620 | 1,019 | |||
Decrease in prepayments and other receivables | 84 | 35 | |||
Decrease in trade and other payables | (2,899 | ) | (1,434 | ) | |
Depreciation of property, plant and equipment | 78 | 2 | |||
Unrealized foreign exchange gains | (11 | ) | — | ||
Amortization of intangible assets | 24 | 21 | |||
Net cash used in operating activities | (9,863 | ) | (6,236 | ) | |
Cash flow from investing activities: | |||||
Interest received | 125 | 65 | |||
Purchase of plant and equipment | (2 | ) | (1 | ) | |
Payment for patents and computer software | (61 | ) | (140 | ) | |
Purchase of short term investments | — | (3,858 | ) | ||
Maturity of short term investments | 8,972 | 8,386 | |||
Net cash generated in investing activities | 9,034 | 4,452 | |||
Cash flow from financing activities: | |||||
Repayment of finance lease liabilities | (84 | ) | — | ||
Net cash used in financing activities | (84 | ) | — | ||
Net decrease in cash and cash equivalents | (913 | ) | (1,784 | ) | |
Cash and cash equivalents at the beginning of the period | 19,784 | 31,443 | |||
Effect of exchange rates on cash and cash equivalents | (145 | ) | (646 | ) | |
Cash and cash equivalents at the end of the period | 18,726 | 29,013 |
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2019
1. General information
Verona Pharma plc (the "Company") and its subsidiaries are a clinical-stage biopharmaceutical company 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, with its ordinary shares listed on the Alternative Investment Market of the
The Company has two subsidiaries, Verona Pharma Inc. and
2. Basis of accounting
The unaudited condensed consolidated interim financial statements of Verona Pharma Plc and its subsidiaries, Verona Pharma, Inc., and
The 2018 accounts, on which the Company’s auditors delivered an unqualified audit report, have been delivered to the Registrar of Companies.
These unaudited condensed interim financial statements were authorized for issue by the Company’s board of directors (the “Directors”) on
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 March 31, 2019, believes the Group has sufficient funds to continue as a going concern for at least 12 months from the date this report is issued.
The Group’s activities and results are not exposed to any seasonality. The Group operates as a single operating and reportable segment.
Dividend
The Directors do not recommend the payment of a dividend for the three months ended March 31, 2019, (three months ended March 31, 2018: £nil and the year ended December 31, 2018: £nil).
3. Change in accounting policy: adoption of IFRS 16
IFRS 16 ‘Leases’ is effective for accounting periods beginning on or after
The Group’s principal lease arrangements are for office buildings. 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
Initial adoption has resulted in the recognition of right-of-use assets of £325 thousand and lease liabilities of £316 thousand and the reclassification of prepaid lease rentals of £29 thousand.
As of January 1, 2019 |
||
£'000s | ||
Operating lease commitments (including prepayments) disclosed as at December 31, 2018 | 600 | |
Less: adjustments relating to prepaid lease payments | (29 | ) |
Operating lease commitments as at December 31, 2018 | 571 | |
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 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 whereby cash outflows of £84 thousand are now presented as financing, instead of operating. There is a decrease of £9 thousand in general and administrative costs as depreciation of the right of use asset is less than the lease costs and a £9 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.
4. 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 period.
All non-current assets are based in the
5. 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, 2018.
6. 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, 2018. In addition the company carried out a value in use impairment review.
Impairment of intangible assets, goodwill and non-financial assets
The Company notes that after the reduction in the share price since
7. Finance income and expense
Three months ended March 31, 2019 |
Three months ended March 31, 2018 |
||||
Finance income: | £'000s | £'000s | |||
Interest received on cash balances | 250 | 160 | |||
Fair value adjustment on derivative financial instruments (note 11) | 1,610 | — | |||
Total finance income | 1,860 | 160 |
Three months ended March 31, 2019 |
Three months ended March 31, 2018 |
||||
Finance expense: | £'000s | £'000s | |||
Fair value adjustment on derivative financial instruments (note 11) | — | 8,977 | |||
Interest on discounted lease liability | 9 | — | |||
Foreign exchange loss on translating foreign currency denominated balances | 783 | 1,332 | |||
Unwinding of discount factor related to the assumed contingent arrangement (note 12) |
28 | 15 | |||
Total finance expense | 820 | 10,324 |
8. Taxation
The tax credit for the three months ended
9. Loss per share calculation
The basic loss per share of 5.1p (March 31, 2018: 14.5p) for the three months ended
Each ADS represents 8 shares of the Company, so the loss per ADS is any period is equal to 8 times the loss per share.
10. Short term investments
Short term investments as at March 31, 2019, amounted to a total of £35.3 million (December 31, 2018: £44.9 million) and consisted of fixed term deposits, in both US dollars and pounds sterling.
11. Derivative financial instrument
Pursuant to the
At December 31, 2018, and March 31, 2019, warrants over 12,446,370 shares were in effect.
At March 31, 2019 |
At December 31, 2018 |
||||||
Shares available to be issued under warrants | 12,401,262 | 12,401,262 | |||||
Exercise price | £ | 1.7238 | £ | 1.7238 | |||
Risk-free interest rate | 0.63 | % | 0.76 | % | |||
Time to expiry | 3.09 years | 3.34 years | |||||
Annualized volatility | 60.69 | % | 60.72 | % | |||
Dividend rate | 0.00 | % | 0.00 | % | |||
Dilution discount | 7.47 | % | 5.66 | % |
As at March 31, 2019, the Group updated the underlying assumptions and calculated a fair value of these warrants, using the Black-Scholes pricing model (including level 3 assumptions), amounting to £0.9 million.
The variance for the three months ended
Derivative financial instrument |
Derivative financial instrument |
||||
2019 | 2018 | ||||
£'000s | £'000s | ||||
At January 1, | 2,492 | 1,273 | |||
Fair value adjustments recognized in profit or loss | (1,610 | ) | 8,977 | ||
At March 31, | 882 | 10,250 |
For the amount recognized as at March 31, 2019, the effect if volatility were to deviate up or down is presented in the following table.
|
Volatility (up / down 10 % pts) |
£'000s | |
Variable up | 1,323 |
Base case, reported fair value | 882 |
Variable down | 500 |
12. Assumed contingent obligation related to the business combination
The value of the assumed contingent obligation as of March 31, 2019, amounted to £1,018 thousand (December 31, 2018: £996 thousand). The increase in value of the assumed contingent obligation during the three months ended March 31, 2019, amounted to £22 thousand (three months ended
2019 | 2018 | ||||
£'000s | £'000s | ||||
At January 1, | 996 | 875 | |||
Impact of changes in foreign exchange rates | (6 | ) | (9 | ) | |
Unwinding of discount factor | 28 | 24 | |||
At March 31, | 1,018 | 890 |
There is no material difference between the fair value and carrying value of the financial liability.
For the amount recognized as at March 31, 2019, of £1,018 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 (up / down 1 % pt) |
Revenue (up / down 10 % pts) |
|
£'000s | £'000s | ||
Variable up | 978 | 1,047 | |
Base case, reported fair value | 1,018 | 1,018 | |
Variable down | 1,061 | 988 |
13. Share option scheme
During the three months ended
The movement in the number of the Company’s share options is set out below:
Weighted average exercise price |
2019 | Weighted average exercise price |
2018 | ||||||||
£ | £ | ||||||||||
Outstanding at January 1 | 1.53 | 8,752,114 | 1.54 | 7,527,457 | |||||||
Granted during the period | — | — | 1.46 | 2,090,847 | |||||||
Outstanding options at March 31 | 1.53 | 8,752,114 | 1.52 | 9,618,304 |
The movement in the number of the Company’s RSUs is set out below:
2019 | 2018 | ||||
Outstanding at January 1 | 862,473 | 1,052,236 | |||
Granted during the period | — | 273,390 | |||
Outstanding RSUs at March 31 | 862,473 | 1,325,626 |
The share‑based payment expense for the three months ended
The remuneration committee has authorized the issue of 3,903,050 options over ordinary shares and 740,496 RSUs to be issued to employees and one director in
14. Related party transactions
Dr
At
In the period a director provided consultancy services for £11 thousand.
Convenience translation
The Company maintains its books and records in pounds sterling and prepares its financial statements in accordance with IFRS, as issued by the IASB. It reports its results in pounds sterling. For the convenience of the reader the Company has translated pound sterling amounts in the tables below as of March 31, 2019, and for the three months ended
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION AS AT MARCH 31, 2019 AND DECEMBER 31, 2018 (UNAUDITED)
As of March 31, 2019 |
As of March 31, 2019 |
As of December 31, 2018 |
||||||
£'000s | $'000s | £'000s | ||||||
ASSETS | ||||||||
Non-current assets: | ||||||||
Goodwill | 441 | 576 | 441 | |||||
Intangible assets | 2,171 | 2,829 | 2,134 | |||||
Property, plant and equipment | 270 | 352 | 21 | |||||
Total non-current assets | 2,882 | 3,757 | 2,596 | |||||
Current assets: | ||||||||
Prepayments and other receivables | 2,476 | 3,227 | 2,463 | |||||
Current tax receivable | 5,808 | 7,569 | 4,499 | |||||
Short term investments | 35,309 | 46,015 | 44,919 | |||||
Cash and cash equivalents | 18,726 | 24,404 | 19,784 | |||||
Total current assets | 62,319 | 81,215 | 71,665 | |||||
Total assets | 65,201 | 84,972 | 74,261 | |||||
EQUITY AND LIABILITIES | ||||||||
Capital and reserves attributable to equity holders: | ||||||||
Share capital | 5,266 | 6,863 | 5,266 | |||||
Share premium | 118,862 | 154,901 | 118,862 | |||||
Share-based payment reserve | 8,543 | 11,133 | 7,923 | |||||
Accumulated loss | (74,556 | ) | (97,161 | ) | (69,117 | ) | ||
Total equity | 58,115 | 75,736 | 62,934 | |||||
Current liabilities: | ||||||||
Derivative financial instrument | 882 | 1,149 | 2,492 | |||||
Finance lease liabilities | 241 | 314 | — | |||||
Trade and other payables | 4,850 | 6,322 | 7,733 | |||||
Total current liabilities | 5,973 | 7,785 | 10,225 | |||||
Non-current liabilities: | ||||||||
Assumed contingent obligation | 1,018 | 1,327 | 996 | |||||
Deferred income | 95 | 124 | 106 | |||||
Total non-current liabilities | 1,113 | 1,451 | 1,102 | |||||
Total equity and liabilities | 65,201 | 84,972 | 74,261 |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND MARCH 31, 2018 (UNAUDITED)
Three months ended March 31, 2019 |
Three months ended March 31, 2019 |
Three months ended March 31, 2018 |
||||||
£'000s | $'000s | £'000s | ||||||
Research and development costs | (5,928 | ) | (7,726 | ) | (4,421 | ) | ||
General and administrative costs | (1,831 | ) | (2,386 | ) | (1,458 | ) | ||
Operating loss | (7,759 | ) | (10,112 | ) | (5,879 | ) | ||
Finance income | 1,860 | 2,424 | 160 | |||||
Finance expense | (820 | ) | (1,069 | ) | (10,324 | ) | ||
Loss before taxation | (6,719 | ) | (8,757 | ) | (16,043 | ) | ||
Taxation — credit | 1,313 | 1,711 | 820 | |||||
Loss for the year | (5,406 | ) | (7,046 | ) | (15,223 | ) | ||
Other comprehensive loss: | ||||||||
Items that might be subsequently reclassified to profit or loss | ||||||||
Exchange differences on translating foreign operations | (13 | ) | (17 | ) | (27 | ) | ||
Total comprehensive loss attributable to owners of the Company | (5,419 | ) | (7,063 | ) | (15,250 | ) | ||
Loss per ordinary share — basic and diluted (pence) | (5.1 | ) | (6.7 | ) | (14.5 | ) |
Source: Verona Pharma plc
For further information please contact:
Verona Pharma plc
Jan-Anders Karlsson, CEO
Victoria Stewart, Director of Communications
Tel: +44 (0)20 3283 4200
info@veronapharma.com
N+1 Singer (Nominated Adviser and UK Broker)
Aubrey Powell /Jen Boorer /Iqra Amin (Corporate Finance)
Brough Ransom /Mia Gardner (Corporate Broking)
Tel: +44 (0)20 3283 4200
Optimum Strategic Communications
(European Media and Investor enquiries)
Mary Clark, Annemarieke Ezendam
Hollie Vile
Tel: +44 (0) 203 950 9144
verona@optimumcomms.com
Argot Partners (Investor enquiries)
Stephanie Marks
Tel. +1 646 644 9590
verona@argotpartners.com