The Company has three potential drug treatments under development aimed at the respiratory diseases markets:

• RPL554: Verona Pharma's lead drug compound, RPL554, is a long acting bronchodilator/anti-inflammatory drug (belonging to a class of drugs known as a mixed phosphodiesterase (PDE) 3/4 inhibitor) for the treatment of allergic rhinitis (hay fever) and potentially asthma. In September 2009, the Company completed a Phase I/IIa clinical trial of the drug which showed clear clinical benefits in patients with asthma and allergic rhinitis. The Company is currently carrying out further clinical trials of the drug to provide additional clinical data and to take the drug through to the next development stage. The Company is simultaneously seeking licensing agreements or partnerships for the further development and commercialisation of the drug.
• Cough: Verona Pharma is also developing an anti-tussive drug to deal with unresolved coughing. In September 2011, the Company successfully completed a trial demonstrating that the inhalation of a single dose of VRP700 significantly reduced coughing in a group of patients with chronic intractable cough due to underlying lung disease. There were no adverse effects associated with the treatment. The Company is now working on further advancing the clinical value of VRP700, including identifying and developing a second generation of compounds as well as planning further clinical studies.
• NAIPs: Verona Pharma's longer term focus is to investigate and apply new synthetic and analytical chemical techniques to develop novel anti-inflammatory polysaccharides (NAIPs) for the treatment of a wide range of respiratory and inflammatory diseases. The Company is in the process of identifying and screening compounds that may be taken forward as a potential drug candidate.

• R&D Pipeline for Continued Growth: Leverage the experience and network of the Company's board and management team to build a pipeline of new potential drug candidates for the treatment of respiratory and inflammatory diseases.
• Targeting significant markets: Focus on markets that offer significant potential. There is currently no ideal drug treatment for rhinitis and asthma and each disease represents a multi-million dollar market.
• Rapid Route to Market: Pursue drug development programmes with a relatively rapid and low cost route to market, such as allergic rhinitis.
• Early Crucial Milestones: Define early crucial milestones for the Company's programmes so that any scientific or other issues can be identified before a significant investment is made.
• Virtual R&D Model: Outsource much of the Company's research and development, thereby reducing the need for a large specialized workforce and investment in physical infrastructure.
• Commercialization through strategic partnerships and business associations: Enter into out-licensing or other arrangements with commercial development partners at the clinical proof of concept or earlier, with the intention of accelerating commercialization and increasing the chances of success.