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 on June 26 for its lead drug candidate, ensifentrine for the 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 US$32 per share target price on Verona, noted Selvaraju.

Given the England-based biopharma is trading now at about US$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 to 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 the full year 2023 (FY23), Verona reported a net loss of US$0.09 per share, consistent with H.C. Wainwright's expectations.

Regarding its balance sheet, the biopharma had US$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 US$400M, which will mature on December 1, 2028.

Progression to Cash Flow Positivity

Looking forward, for Verona in FY24, H.C. Wainwright models topline revenue of US$18.1M and a net loss of US$0.16 per share, Selvaraju wrote. For FY25, the financial institution forecasts topline revenue of US$166.3M and a net loss of US$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 the 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 company may start a Phase 2 trial to evaluate 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.

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. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for H.C. Wainwright & Co., Verona Pharma Plc., March 4, 2024

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H.C. Wainwright & Co, LLC (the “Firm”) is a member of FINRA and SIPC and a registered U.S. Broker-Dealer. I, Raghuram Selvaraju, Ph.D. , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies. None of the research analysts or the research analyst’s household has a financial interest in the securities of Verona Pharma plc and Karuna Therapeutics, Inc. (including, without limitation, any option, right, warrant, future, long or short position). As of February 29, 2024 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Verona Pharma plc and Karuna Therapeutics, Inc.. Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report. The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services. Mr. Selvaraju, who is [the][an] author of this report, is the Chairman of and receives compensation from Relief Therapeutics Holding SA, a Swiss, commercial-stage biopharmaceutical company identifying, developing and commercializing novel, patent protected products in selected specialty, rare and ultra-rare disease areas on a global basis ("Relief"). You should consider Mr. Selvaraju's position with Relief when reading this research report. The firm or its affiliates received compensation from Karuna Therapeutics, Inc. for non-investment banking services in the previous 12 months. The Firm or its affiliates did not receive compensation from Verona Pharma plc and Karuna Therapeutics, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report. The Firm does not make a market in Verona Pharma plc and Karuna Therapeutics, Inc. as of the date of this research report.

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