First-in-Class COPD Treatment Gains FDA Approval

Verona Pharma Plc (VRNA:NASDAQ;  VRP:LON) has received approval from the US Food and Drug Administration (FDA) for its new drug, Ohtuvayre (ensifentrine), for the maintenance treatment of chronic obstructive pulmonary disease (COPD) in adult patients. This marks the first inhaled product with a novel mechanism of action for COPD maintenance treatment in over 20 years. Ohtuvayre is a selective dual inhibitor of the enzymes phosphodiesterase 3 and phosphodiesterase 4 (PDE3 and PDE4), which combines bronchodilator and non-steroidal anti-inflammatory effects in a single molecule. It is administered through a standard jet nebulizer, eliminating the need for high inspiratory flow rates or complex hand-breath coordination.

David Zaccardelli, Pharm. D., President and Chief Executive Officer of Verona Pharma, stated in the company news release, “The approval of Ohtuvayre is a significant advance in COPD care, and we believe Ohtuvayre’s novel profile can change the treatment paradigm for COPD. We plan to launch Ohtuvayre in the third quarter of 2024, ensuring it is available to help the millions of patients who still experience daily COPD symptoms.”

A Look At Pharma

According to the International Trade Administration, "The pharmaceutical and biopharmaceutical industry sector is comprised of companies engaged in researching, developing, manufacturing, and distributing drugs, which are intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease." This sector's diversity is further highlighted by the inclusion of innovative and generic pharmaceuticals, biologics, biosimilars, and over-the-counter medicines, showcasing the industry's broad range of products.

Jeffrey Wessler, in a July 2 article on Forbes titled "What Digital Health Can Learn From Big Pharma," emphasized the sector's commitment to rigorous scientific research and development, stating, "Digital health companies could be better off emulating the methodical approach of the pharmaceutical industry. It conducts excellent science because it invests significantly in research and development. Further, it understands its market well enough to identify what will pay off on the business side." Wessler also noted the stringent regulatory standards that govern the industry, adding, "Everyone likes to complain about regulation, but in many industries, such as pharmaceuticals, strictly enforced standards and a level playing field make for good business and good customer outcomes."

A June 30 report on Britannica highlighted the historical and ongoing significance of the pharmaceutical industry in disease control and elimination, stating, "The continual evolution and advancement of the pharmaceutical industry is fundamental in the control and elimination of disease around the world." The report also underscored the advancements in drug discovery processes, mentioning, "The unification of research in the 20th century in fields such as chemistry and physiology increased the understanding of basic drug-discovery processes."

The pharmaceutical sector has not only focused on developing new drugs but also on ensuring safe and effective drug administration. Britannica further detailed, "Improvements in drug administration, such as the invention of the hollow hypodermic needle, have had a tremendous influence on ensuring rapid and dependable drug action."

Moreover, the sector's commitment to producing safe and accessible treatments is evident in its development of biosimilars and over-the-counter drugs. The International Trade Administration noted, "Biosimilars are versions of biologic products that reference the originator product in applications submitted for marketing approval to a regulatory body, reflecting the industry's commitment to providing accessible and affordable treatments." Additionally, "Over-the-counter (OTC) drugs are considered by regulators to be safe for self-diagnosis and self-medication, highlighting the industry's role in empowering consumers with safe and effective treatment options."

Overall, the pharmaceutical and biopharmaceutical industry continues to play a crucial role in advancing medical science and improving public health through its comprehensive approach to drug development, stringent regulatory adherence, and commitment to innovation and accessibility.

Verona's Catalysts

The approval of Ohtuvayre is being heralded as a major milestone for Verona Pharma by the company, as it brings a first-in-class treatment to the market. Michael Wells, MD, Associate Professor at the University of Alabama Birmingham, highlighted the need for new treatments in COPD care, stating, “In my experience, despite maintenance therapy, most patients report grappling with daily symptoms, including breathlessness and persistent coughing. COPD has a significant impact on both mortality and morbidity in the US, and until today, innovation in inhaled treatment modalities has been limited to combinations of existing treatment classes for over two decades. Ohtuvayre, as a first-in-class PDE3 and PDE4 inhibitor, offers a needed, unique approach and is an important advance in the treatment of COPD.”

The approval was based on extensive data from the Phase 3 ENHANCE trials, which demonstrated the clinical benefits of Ohtuvayre both alone and in combination with other maintenance therapies. The trials, published in the American Journal of Respiratory and Critical Care Medicine, showed that Ohtuvayre was well-tolerated across a broad population of subjects with moderate to severe COPD. With a fully staffed team and plans for an exclusive network of accredited specialty pharmacies, Verona Pharma is positioned to launch Ohtuvayre in the third quarter of 2024, potentially addressing a significant unmet need in COPD treatment.

Experts Are Saying...

According to the Truist Securities report, the approval of Ohtuvayre was seen as a noteworthy achievement with strong launch prospects, leading them to reiterate their BUY rating and raise their price target to US$38 from US$32. Truist highlighted that the label was broad enough to potentially capture a significant portion of the approximately 8.6 million COPD patients in the U.S. on maintenance therapy. They also noted that robust pricing and the closed-loop system (PathwayPlus) were set to drive strong uptake. Furthermore, they modeled US$2.9 billion in U.S. peak sales, which they suggested might be conservative based on comparisons with undifferentiated competitors. Truist emphasized the significance of Ohtuvayre's differentiated mechanism of action (MOA) for COPD, noting it as a refreshing development given the lack of new MOAs in the past decade .

From the Canaccord Genuity perspective, the approval was described as "very clean" and marked the first new MOA for COPD to receive the FDA's approval in nearly 20 years. Canaccord reiterated their BUY rating and maintained a US$35 price target, expressing strong optimism about the drug’s sales revenue and growth potential. They believed the broad label, without restrictions on patients' treatment history, would support extensive use among COPD patients. The firm also expected quick adoption by physicians and broad utilization beyond the over one million patients already on maximal therapies but still symptomatic. They viewed the WAC pricing of US$2,950 per patient per month as conservative, suggesting a significant opportunity for upside growth .

Jefferies highlighted that the market might be underestimating Ohtuvayre's sales potential, given its ability to be prescribed as an add-on to all existing COPD therapies. They acknowledged that while the launch might require some patience, their conversations with doctors indicated a strong intent to prescribe immediately to severe patients. Jefferies noted that every 1% market share could translate to over US$1 billion in annual revenue, factoring in the US$2,950 monthly WAC price. They found consistent demand and interest from the medical community, with over 80% of doctors willing to prescribe Ohtuvayre to a significant portion of their COPD patients. Additionally, Jefferies expressed confidence in achieving Q3 sales targets, attributing this to high physician awareness and patient motivation .

Ownership and Share Structure

According to Reuters, 1.03% of the company is with management and insiders, and 85.21% is with institutions.

Top shareholders include RA Capital Management LP with 7.82% or 6.32 million shares, New Enterprise Associates with 6.32% or 5.11 million shares, Fidelity Management & Research Company LLC. with 6.07% or 4.9 million shares, and Vivo Capital LLC with 4.48% or 3,610,177.

The rest is retail.

At the date of this article, Verona Pharma has a market cap of approximately US$1.34 billion, with 80.82 million shares outstanding and 72.34 million shares in free float. It trades within a 52-week price range of US$23.81 to US$11.83.

With respect to share structure, Verona has 80.82M outstanding shares and 70.27M free float traded shares.

The company's market cap is US$1.121B. Its trading range over the past 52 weeks is US$11.83–23.07 per share.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Verona Pharma Plc.
2. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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