Biopharma's New Drug for COPD Likely to be Approved
Research Report

Verona Pharma Plc (VRNA:NASDAQ; VRP:LON) has a PDUFA date coming up of June 26 for its lead drug candidate ensifentrine for treatment of chronic obstructive pulmonary disease, reported H.C. Wainwright & Co. analyst Dr. Ram Selvaraju in a March 4 research note. Also, the biopharma's 2023 financial results are in.

"Verona appears substantively risk mitigated, and we continue to believe that there ought to be substantial interest in Verona as a mergers and acquisitions target if ensifentrine wins U.S. Food and Drug Administration (FDA) approval," Selvaraju commented.

Potential gain of 76%

H.C. Wainwright maintained its $32 per share target price on Verona, noted Selvaraju.

Given the England-based biopharma is trading now at about $18.19 per share, the implied return for investors is 76%.

Verona is still Buy rated.

FDA approval likely

Selvaraju discussed ensifentrine, its potential approval, next steps and competition.

The drug is an inhaled, dual inhibitor of the phosphodiesterase 3 and 4 enzymes and has a unique mechanism of action.

"Ensifentrine's benign safety and tolerability profile as well as its intrinsic potential for combinability with other existing approved COPD drugs make it an intriguing commercial prospect," wrote Selvaraju.

H.C. Wainwright expects the FDA will approve the drug and will do so quickly, as the agency has not requested an Advisory Committee meeting to review the regulatory submission.

Verona has proactively planned for an ensuing commercial launch of ensifentrine and is continuing with preparations. For example, the company is working on pricing, distribution, patient services as well as plans for patients and healthcare professionals. As well, it is pressing on with "Unspoken COPD," its campaign to raise awareness about the burden of COPD on patients.

"The company ought to be able to execute a comprehensive launch of ensifentrine in H2/24," Selvaraju purported.

As far as competition, it does not change the market outlook for ensifentrine, the analyst noted. As for Sanofi and Regeneron Pharmaceuticals' Dupixent, the data for COPD are positive, but, Selvaraju pointed out, "the drug is only likely to be prescribed—if approved in this indication—for a small subpopulation of COPD patients due to its high cost, status as a biologic, requirement for needle-based administration and likely limitation to treatment of patients who exhibit high eosinophil counts."

FY23 financials in line

For full-year 2023 (FY23), Verona reported a net loss of $0.09 per share, consistent with H.C. Wainwright's expectation.

Regarding its balance sheet, the biopharma had $272 million ($272M) in cash and cash equivalents as of year-end 2023, enough for operations through the initial launch of ensifentrine, Selvaraju indicated.

In January of this year, the biopharma entered into a debt facility for up to $400M, which will mature on Dec. 1, 2028.

Progression to cash flow positivity

Looking forward, for Verona in FY24 H.C. Wainwright models topline revenue of $18.1M and a net loss of $0.16 per share, Selvaraju wrote. For FY25, the financial institution forecasts topline revenue of $166.3M and a net loss of $0.05 per share.

"Verona Pharma could reach cash flow-positive status in 2026," the analyst added.

More near-term events

Selvaraju reported that potential upcoming catalysts for Verona include submission of an investigational drug application for a nebulized, fixed-dose combination formulation of ensifentrine and glycopyrrolate, a long-acting muscarinic antagonist, for maintenance COPD treatment. This is on track for completion in H2/24.

Following that, the biopharma may start a Phase 2 trial evaluating this combination therapy in COPD patients. Another Phase 2 trial, of nebulized ensifentrine for non-cystic fibrosis bronchiectasis, also is planned and could commence in H2/24 as well.