Verona Pharma plc Price & Performance (VRNA)

First, let's review the initial launch of OTIVER which is grounded in its broad indication for the maintenance treatment COPD and its compelling benefit to risk profile. In the first full quarter of commercial availability, net sales of O2VARE were $36,600,000 in the fourth quarter and $42,300,000 for the full year 2024. We are very pleased to report the extremely strong initial launch continues to build momentum with more prescriptions dispensed in the first two months of Q1 twenty twenty five, and in Q4 twenty twenty four. Additionally, we saw month over month growth in dispense prescriptions, new patient starts, and refills These early launch results are remarkable and support our belief that O2VARE can become a blockbuster product. We continue to strengthen our prescriber base with over 4,600 unique HCPs prescribing OTUVAIR including approximately 55% of our 2,500 Tier one HCPs. We continue to see HCPs Specifically, over two seventy five HCPs have now prescribed O2VARE to more than 20 patients in their practice. We continue to be very encouraged by the breadth and depth of prescribers and prescription metrics. In addition to these impressive key launch metrics, we see HCPs are continuing to prescribe O2Vir across a broad range of COPD patients.

Including patients on background single, dual and approximately fifty percent on triple therapy. Fifth utilization across all patient types strengthens our belief that O2Bearer's novel bronchodilator and non steroidal anti inflammatory activity can redefine the treatment paradigm for COPD. Feedback from both patients and healthcare providers about the meaningful impact of O2vera is extremely encouraging and is also supported by our continued refill and persistency data including patients receiving over five refills. Alongside our successful O2BARE launch, we have continued to advance our pipeline with two Phase II clinical programs, Following the end of the year, we successfully completed our Phase two dose ranging clinical trial with glycopyrrolate ALAMA to support a fixed dose combination with nebulized ensifentrine the maintenance treatment of COPD. This study confirmed the appropriate dose range of nebulized glycopyrrolate to support further clinical development of the fixed dose combination. We plan to initiate a dose ranging Phase 2b trial evaluating a fixed dose combination of ensifentrine with glycopyrrolate compared to the individual component in the second half of twenty twenty five. In addition, enrollment continues in our Phase two trial to assess nebulized ensifentrine in patients bronchiectasis. Randomized double blind placebo controlled parallel group trial will enroll 180 subjects with a recent history of pulmonary exacerbation. [indiscernible] The study will assess the effect of ensifentrine thirty three milligrams twice daily on the rate and risk of pulmonary exacerbations symptoms and quality of life.

Finally, turning to our global strategy, Nuance Pharma, our development partner for ensifentrine in Greater China, recently announced the approval of O2Ver in Macau for the maintenance treatment of COPD in adult patients. Marking the first approval of O2Vir outside The U. S. This is an important step in our mission to address the needs of millions of patients across the globe still experiencing persistent COPD symptoms despite current therapies. Nuance Pharma also announced it has completed enrollment its pivotal Phase three clinical trial in China to evaluate ensifentrine for the maintenance treatment of COPD and expects to provide results in mid-twenty twenty five. And finally, we are also initiating activities and The United Kingdom. We look forward to updating you on this progress. I will now turn the call over to Mark to review our financial results for Q4, and full year 2024. Good morning. The fourth quarter was monumental for Varona as we recorded $36,600,000 in O2 Bear sales in the first full quarter of sales, For the year ended 12/31/2024, net O2VARE sales were $42,300,000 Our specialty pharmacy partners continue to maintain inventory at their contracted levels of two to three weeks. Cost of O2BARE sales was $2,000,000 for the quarter ended December 31, and $2,600,000 for the year, These costs include post approval manufacturing costs inventory overhead costs and royalties.

Recall that o2vera was approved in June 2024 and prior to receiving FDA approval, costs associated with the manufacture of OTUVARE were expensed as R and D expense. Research and development costs were $7,900,000 for the quarter ended December 31, 2024, compared to $4,100,000 reported for the fourth quarter of twenty twenty three.

And $44,600,000 for the year ended 12/31/2020 compared to $17,200,000 reported for 2023. The increase across the annual periods was primarily due to increases in clinical trial and other development costs related to the initiation of two Phase [indiscernible] of $17,500,000 to $6,300,000 approval milestone an increase in share based compensation of $3,100,000,000 and increases in people related costs and pre approval manufacturing costs. Selling, general, and administrative expenses were $45,100,000 for the quarter ended 12/31/2024, compared to $15,000,000 reported for the same period in 2023. And $149,800,000 for the year ended 12/30/2024, compared to 50,400,000.0 for 2023. The increase across the annual period was primarily due to a $29,700,000 increase in marketing and other commercial related activities supporting the launch of o2ver, the $15,000,000 first sale milestone a $26,800,000 increase in people related costs as we built out our commercial organization and an $18,800,000 increase in share based compensation. For the quarter ended 12/31/2024, net loss after tax was $33,800,000 compared to a net loss after tax of $14,100,000 for the same period in 2023. And $173,400,000 for the year ended 12/31/2024, compared to $54,400,000 for the prior year. This represents a loss of $0.05 per ordinary share or $0.41 per ADS for the For the quarter, compared to a loss of $0.02 per ordinary share or $0.18 per ADS for the fourth quarter of twenty twenty three.

And a loss of $0.27 per ordinary share or $2.13 per ADS for the year compared to a loss of $0.09 per ordinary share or $0.69 per ADS in 2023. Finally, our balance sheet remains strong. With $400,000,000 in cash and equivalents as of 12/31/2024. In addition, have access to up to $425,000,000 of additional capital through the Oaktree facility. I'll now turn the call back over to the operator. For the Q and A. Thank you. You will hear a prompt that your hand has been raised. The first question comes from Andrew Chai with Jefferies. Please go ahead.

Hi, thanks. Good morning. Congrats on all the progress It's just pretty awesome to see the launch progressing nicely. So my first question is the volume trends clearly look very healthy. So maybe a question on the pricing side as it relates to sales cadence. Can you just help us level set expectations for when you report Q1 EPS next, can you help us somehow quantify how much impact there could be to sales with the insurance resets and deductibles that typically occur in Q1. And just to be clear, is it the gross to net that gets affected? And if so, by how much? Or is it the filled prescription side as well?

Hi. Good morning, Andrew. Thank you for the the question. And I'll turn it over to Mark to provide his thoughts on that dynamic and gross to net.

Yes. I'll talk about the gross to net, Andrew, and then Chris can talk about what he sees from perspective, but from a a gross to net, the real thing that you would see impacting it would be related to commercial co pay assistance. If more of the commercial patients have their high deductibles, you could see a higher amount of of copay assistance going to them.

However, as you know, the commercial pay the commercial patients are a very small portion of total shipment. So I don't think if anything it won't have much of an impact on gross to net in Q1. But Chris can talk about the fills. Yes. Andrew, thanks for the question. As far as the fills, I think as we've stated before, we're we at the beginning of the year subject to deductible resets just like every other brand, that works through the Medicare sector or our line of business. I think what we've also said is that we believe very strongly that the momentum in the second full quarter of launch And our expectation is that you would expect to continue to see increasing new page new refills and total dispenses on a monthly basis. I think you are going to deal with at the beginning of the year some deductibles But again, I believe that's very strongly that the momentum of the initial launch is going to outweigh some of those early macro dynamics that every brand faces at the beginning of the year?

Yes, very good. And maybe I'll try to ask is, how do you guys feel about 2025 consensus, which is about $254,000,000 And is it fair to assume you could breakeven Well, let me start with the breakeven. Portion. I've been talking about for a long time now that I think a company like Verona with a single asset small sales, relatively small sales team, very focused team, and and no real discovery engines or R and D overhead. Can get to a cash flow breakeven cash flow breakeven, maybe not profitability breakeven, but cash flow breakeven at a run rate, a quarterly run rate that gets you to a $250,000,000 to $300,000,000 annual rate.

Probably closer to the $300,000,000 than the $250,000,000 actually.

But I think that's where you could get. So yes, if those numbers are right, I think we could be in that in that rate by the end of the year.

Okay. Andrew, I mean, yes, I think with regard to consensus, as you know, we don't really comment on it directly. But I think everyone can see the trajectory is increasing. We're very confident in the uptake of O2VARE, the unmet need is out there, the number of patients And so I think we're very excited about the opportunity as 2020 unfolds. And clearly, you can see the momentum this early in the first quarter.

Right.

Thank you very much. Congrats again.

Thanks.

Thank you.

The next question comes from Yasmeen Rahimi from Piper Sandler. Please go ahead.

Good morning team and congrats on really an incredible launch. Guess the first question that I have is one that we all analysts are getting from many of our clients. I want to more on it is given the outstanding launch, what are some of the headwinds that could be headed our direction? What are some of the risks that we're not foreseeing or anything that could happen. And I would love like I guess what are the things that's keeping you guys up at night because the growth chart looks beautiful. That's sort of one. And question number two is around your thoughts around Europe [indiscernible] Opportunity in I think The U. K. And select countries. I think in the past pricing is substantially lower. In Europe. Like what led to wanting to really pursue that and how do we think about [indiscernible] opportunity there and also [indiscernible] I guess the cost needed to build out a sales force Appreciate sorry, multi part question around that. So Thank you.

Sure. Thanks for the question. Yes, good morning. I think addressing the headwinds comment, We're very optimistic clearly that the unmet need is there and has been demonstrated in COPD. We knew that before we launched that's playing out as the launch has unfolded. And there is really a large number of patients in the millions that are currently symptomatic on current standard of care. So we are launching into an indication with a broad label in a patient population with great unmet need. So we don't see really that there is a level of patients being maxed out or tapped out or accessed. And this is merely just needing to address them in the normal cadence of how they see physicians and how they handle their medical care. As you can see, the expanse and the breadth and depth of now with over 4,600 unique ACP prescribers approximately 55% of the Tier one targeted prescribers are prescribing already. I think that shows you of the pent up need for 14,500 HCPs and of course all the HCPs that surround those in the different offices. And so we see an expanding opportunity continually to get to more prescribers and help more patients.

And so from a market dynamic standpoint, from a patient, from an unmet need, we really don't see any specific headwinds. From a competition perspective, again, in any timeframe that of that foreseeable future, We don't see anything that looks like O2 there, a bronchodilator and a non steroidal anti inflammatory. So I think that that fits extremely well with helping these patients. And then I think the things that we always have to attend to that never get maybe as much attention is running a pharmaceutical business has a lot of tasks that have to be handled to manage risk. You have to make product, you have to release product, you have to make sure that you're doing all the regulatory requirements around commercializing the product properly. So we work on to the pharmaceutical business and something that we can never pay enough attention to. We always do and that's something that we work on every day as well. But I put that on just the continued execution our pharmaceutical business. So I think again, very very optimistic on the market as we go through 2025 for sure. As far as ERP and filings, just to make sure we understand, we still don't plan to start operations in Europe.

What we're doing is advancing the regulatory process in Europe. As you know, that takes some time to get through. And as we go through 2025, I think we'll get greater clarity on our strategy in Europe. From a regulatory perspective, from a filing timeline. And then I think that feeds very well into our partnering conversations in Europe, which is still our strategy. And we have the capability and the talent and the people in order to advance the regulatory aspect of the filings, both in the European Union and in The UK. And as we do that, we'll concurrently work with our partnering strategy. So I expect Thank you so much. [indiscernible] Thank you. The next question comes from Chagou Fouth with Wells Fargo. Please go ahead.

Hey, thanks for taking the question and congrats on the progress We've been getting a couple of questions on duration of therapy because that's a key key toggle for average revenue per patient here. In our channel checks, we're not really hearing a lot about potential discontinuations and while still early average duration like this. Is there upside to that six months average duration assumption? How can we think about that? Thanks.

Yes. No. Hi, Thiago. Thanks. Good morning. So yes, I think that in our modeling and how we've described it, we use sort of the benchmark of typical COPD drugs that are their normal persistence. And and use over the year and that has been based on around six refills per year. As you know, the way we distribute O2Vera through specialty pharmacy network and the ability to track the patients very carefully and support them through the specialty pharmacy, we think that there is some upside to that. And it is very early though to actually characterize that. We are encouraged by the refills. I think that comes from the fact that O2 virus of course helping patients and the refills again, very early yet because of course, the most refills, as we talked about patients now receiving over five refills already.

But of course, it's from earlier patients that started in the first part of the launch in 2024.

So, as we get through 2025, we'll have course, a greater number of patients, more refilled information to look at. But yes, we're very encouraged by where we are right now. And yes, we we do think there is upside to the six refills per year.

Fair enough. Thanks again for taking the question.

Thank you. The next question comes from Tom Schreiter with BTIG.

Good morning. Congratulations. I was trying to get up the nerve to ask the breakeven question after one quarter.

Thank you for asking.

I have a couple of surveillance questions Any common themes in the forty five percent who are not prescribing the drug there any structural things you are working on? And then the nebulizer, how big a deal is the nebulizer? This is really a peak sales question. Are you building into patients that have a nebulizer? Or is there are there significant numbers of patients who are adding a nebulizer to add this drug? Thank you.

Thanks Tom for the question. Let's start with the the 45% that haven't written yet. I want to focus on the or the other side or the number of writers that we have to date. I mean, to have over 4,600 riders nominally in the second full quarter of launch is an incredible start and I think highlights what we saw in market research of the unmet need and the profile of O2VARE. What you see today is typical launch dynamics of early adopters mid adopters and late adopters. And I think that's the dynamic that you face. There's no specific trend except for their adoption characteristics of these physicians. I think one of the things that keeps us very encouraged and excited about the future of O2Bare is when we do market research on physicians that have ridden those that haven't ridden yet, all doctors see the benefits of O2Ver in the with profile and the potential in their patients, They also talk about how they would start writing within the next three, six, twelve months. So I think when we look at our market research, we understood [indiscernible] these doctors that haven't ridden so far because of the profile of O2VARE.

As far as the nebulizer, I think this is something that we got as a question very early on of can this drug will people use a nebulized drug and our hypothesis going into this was that innovation would trump ratavitin stages of launch or this early part of launch. In fact, when we look at our data, we have patients that don't have a nebulizer, patients that do have a nebulizer. And the core underlying feature that the doctors are prescribing O2VAR is is around persistent symptoms and route of administration has become kind of a non issue. It's not something that comes up from a field perspective with the doctors It's not something that comes up with patients. In fact, many patients talk about how nebulizer is a comforting way to deliver their product because they know it gets to their lungs. So I think that's been something early in launch that I think has been dispelled and it really showcases the innovation that O2VARE is bringing to the COPD marketplace.

Great. Thank you.

Thank you. The next question comes from Ram Selvaraju with HCW. Please go ahead.

Thanks so much for taking my questions and congrats really on the phenomenal progress with the launch. It's really very impressive. Firstly, I wanted to ask whether you see any underlying market dynamic trends emerging with respect to prescriber preferences regarding the deployment of OTUVARE. Especially now that we've gotten a little bit further into the commercial trajectory. And in particular, if you can comment on whether you expect the proportion of patients on O2vera who are also receiving try therapy to increase over time or remain constant.

And then also with respect to the ex U. S. Picture, I was just wondering if there are territories beyond EU and Greater China that you believe are likely to be particularly lucrative for Ensissentrine And What Your Strategic Plans Are To Target Those Territories? And If You Could Also Perhaps Comment On The Pricing Situation In Greater China what the pricing dynamics look like in Macau?

Now that the product has been approved there?

Just so we can get a bit of a handle on what performance Nuance might be able to realize with the drug once it's available? Thank you.

There's a lot to unpack there. So let me start sort of near the the back of that question list and we'll work our way through it. Our strategy is still of course to partner outside The U. S. As we have already, as you mentioned in Greater China.

I think the other regions are all important in their own way. Clearly incremental and in totality are very significant in the growth of for O2Ver on a global basis.

Other regions again outside Europe, Greater China, but even in Japan, in other parts of Asia as well.

And of course the other emerging markets South America, all become incremental and are important. Now I've been always saying that there was nothing more important than having a successful launch in The U. S, which we continue to execute on. And that's what we'll continue to focus for sure. But we'll carry on with the strategy for in 2025. In partnering. And as I mentioned, we're already starting that in more progressive state by working with with the regulatory authorities in Europe and The UK. And maybe I'll turn it over to to Chris to talk about sort of the dynamics the market dynamics and how that has been what we've seen balanced on what we did in the market research.

Thanks, Dave. When we look at the pace consistent theme about who's getting prescribed O2vera, it's it goes back to some very simple truth. These patients all have persistent symptoms particularly dyspnea. And that's a very big trigger for the physician to add or change therapies within these patients. So when our reps go in these offices, it's not about what the background therapy is. It's more about what is the patient dealing with today in regards to persistent symptoms, either dyspnea, decreasing activities, and how O2 Air could potentially help with these patients over time. The other thing that I think we're very encouraged by is as Dave about in his opening comments, which is fifty percent of our patients are on therapies that are not considered triples. So either single bronchodilator or dual bronchodilator or a lab eye ICS or no long acting bronchodilator. I think this is going to increase over time. As we've heard from physicians and research and seen from our interactions in the field, doctors are looking for another mechanism and another way to provide bronchodial using steroids. So I believe over time the addition to triple will potentially become less than the addition to earlier lines of therapy for these patients as they look to move ICS into maybe a more appropriate place than it is used today.

It really talks about the long term potential of O2VAR, not only in its current form, but potentially as a combination product as Dave has mentioned in his comments earlier about our pipeline expansions. So I really feel like that's that's a great opportunity as we move through 2025 and into 2026 as well.

Thank you very much.

Thank you. The next question comes from Joon Lee from Truist. Please go ahead.

Thanks for the updates and for taking our questions.

We spoke with several pulmonologists and there seems to be a wide range of prescription reimbursement rates ranging from over ninety percent to less than half for some pulmonologist. Could you help us understand some of the pushes and pulls reimbursement and what you are doing to improve this? And just a classification question on European partnership. Is it your plan to have some clawback clause like the one you have in Nuance? In case someone else may merge that may want the global right?

Hi, June. Good morning. Thanks for the question. Let me start with the last one and then I'll turn it over to Chris. Well, I think we'll have to see how our partnership discussions go. As you know, we're also looking for a partner that may have a broader base of capabilities with regard to development of MDI DPI, manufacturing of the drug product, [indiscernible] attributes of the partnership that are quite different than the one we have with Nuance Pharma at the moment. So we'll see how that looks as we continue. But we understand your point And clearly, we always want to make sure we do the best for O2Ver.

And our shareholders in the kind of structured deal that we do. And with that, I'll turn it over to Chris.

Yes, June. As far as reimbursement, I think we've been very pleased with how the reimbursement looks in this early stage of launch. As we talked about at launch, we anticipated about 80% of our reimbursement or claims would fall under a medical benefit. Either under Medicare Part B or Medicare Advantage and that's holding consistent as we go into these launches. I think one of the things that I always have talked about is that, we have access in those channels, meaning patients can get it. There's no prior auth. There's no real step edits. There's access to O2Ver in those channels. What it becomes is an out of pocket cost for patients as a pay has supplemental insurance, We see their co pays are usually less than $10 patients met their deductible in Medicare Advantage, their co pays less than $10 or even nothing, And so that's the driver of potentially reimbursement. It's not necessarily access, it's more of an out of pocket cost. [indiscernible] have some supplemental insurance. On the commercial side, we have robust co pay card programs and provide that to patients. Additionally, we've created other services with including patient assistance programs for patients that are of low income So But I would say within these first two quarters, normally first two quarters of launch, we are very in And And more importantly, when we get a patient on drug, we're seeing many of these these patients, the vast majority, I would say over eighty percent of them having co pays less than $10 as well.

Thank you.

Thank you. The next question comes from [indiscernible] Good morning, Tim. Can you hear me okay?

Yes. Good morning.

All right.

Hi. Okay.

So I just have a couple of questions. So one of them focusing on the refill process. So as more and more patients are going for refill, so I'm wondering how does the process work in the real world setting? So do patients have to take like spirometry tests or anything just to make sure they are getting some benefit in terms of when they take the drug or when they call the doctor asking for prescription or when the doctor asked them what kind of symptom improvements are you seeing, So are there specific symptoms that get improved with auto wear usage? That's the first one. And the second, are there any side effect profile, especially the ones that are listed in the FDA label Are physicians seeing any of those, including the psychiatric events that are listed in the label. Are there any instances of those side effects recurring in this patients in real world setting?

Great.

Move on. Maybe I'll turn it over to Chris to start with the refill process and how that goes.

Yes. I mean, this is the benefit of our distribution pathway. We have amazing specialty pharmacy partners like DirectRx and CVS and CenterWell and Acaria that have individualized processes to ensure that a patient can refill their prescription in a timely manner. Each of them will reach out individually to the patients early in the in the process to encourage or talk to them about refilling their Medicaid I would say, a very organized and systematic approach to ensuring patients stay on therapy. They also have the talk and ask questions to the pharmacy about what's going on. And I think that encourages our patients to stay on therapy and see the value of O2VARE within their lives. One of the things that I think is very encouraging early on is as Dave mentioned is this early persistency or refill data that we're seeing. Again, a little bit too early to say it's different than the initial [indiscernible] our forecast, but I think we believe there's a significant upside there potential upside there. But one of the things that is also encouraging is the feedback that we're getting from patients across the spectrum really highlights how O2VARE long term is going to be very beneficial for for the patient.

In And Boulan, with regards to side effects, as you know, we are subject and have an active pharmacovigilance program as all commercial drugs do and obligated to make sure we capture side effects, reported side effects on a commercial level and that program of course is in place. I would say there is nothing that we have determined be inconsistent with the label. And so I think it's of course fairly early in the process at this time. I would say, her side effect profile is consistent with the labeling. Thank you very much.

Thank you. This concludes our question and answer session. I would like to turn the conference back over to David Zagardelli for any closing remarks.

Well, thank you Verona. For joining us this morning. And of course, we look forward to seeing all of you at upcoming conferences. As we continue to progress through 2025. As you can see, we're very excited about the impact of O2 there in helping patients with COPD. And we'll continue to execute that both in The U. S. And as we continue globally as well. Look forward to keeping everyone updated as we progress and hope you have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.