£13m Equity Issue, £1m Open Offer and Notice of GM

Verona Pharma plc ("Verona Pharma" or the "Company") Proposed Placing and Subscription of New Ordinary Shares to raise £13.0 million (gross) Proposed Open Offer of New Ordinary Shares to raise up to a further £1.0 million (gross) and Notice of General Meeting 6 March 2014, London- Verona Pharma plc (AIM: VRP), the drug developmentcompany focused on "first-in-class" medicines to treat respiratory diseases,announces a Placing, Subscription and Open Offer of up to 637,324,831 NewOrdinary Shares at 2.2 pence each to raise up to £14.0 million before expenses. The Placing involves the issue of 298,750,000 New Ordinary Shares on anon-pre-emptive basis to raise gross proceeds of approximately £6.6 million.The Placing is not conditional upon the Open Offer being fully subscribed andthe Placing Shares are not subject to clawback. The Subscription involves the issue of 292,000,000 New Ordinary Shares on anon-pre-emptive basis to raise gross proceeds of approximately £6.4 million.The Subscription is not conditional upon the Open Offer being fully subscribedand the Subscription Shares are not subject to clawback. In order to provide Shareholders who have not taken part in the Placing with anopportunity to participate in an issue of New Ordinary Shares at the IssuePrice, the Company is making the Open Offer to provide all QualifyingShareholders with the opportunity to subscribe at the Issue Price of 2.2 pencefor an aggregate of up to 46,574,831 New Ordinary Shares, to raise grossproceeds of up to approximately £1.0 million. The Issue Price is at a discount of 36.4 per cent to the closing middle marketprice of 3.45 pence per Existing Ordinary Share on 5 March 2014. The Placing, Subscriptionand Open Offer are conditional, amongst other things,on the passing of the Resolutions by Shareholders at the General Meeting, whichis to be held at the offices of SGH Martineau LLP at One America Square,Crosswall, London EC3N 2SG at 11.00 am on 24 March2014. If the Resolutions arepassed, the New Ordinary Shares will be allotted after the General Meeting.Admission is expected to occur no later than 8.00 a.m. on 25 March 2014 or suchlater time and/or date(s) as WH Ireland, WG Partners and the Company may agree.Neither the Placing nor the Open Offer is underwritten. Proposed use of proceeds The Company will use the proceeds of the Fund Raising in part to further thedevelopment of RPL554, a novel compound to initially address severe COPD. Threeclinical trials will be performed using a nebulised formulation. These studieswill guide the selection of an active dose and provide insight as to thetherapeutic index. In addition, further pre-clinical studies will be undertakento continue to prepare RPL554 for larger Phase 2b studies in hospitalised COPDpatients. It is expected that the key data from these activities will bereported during 2015. The proceeds will also be used in part for additional pre-clinical work toprepare VRP700 for the next series of clinical studies in patients with chronicsevere cough. In addition, the Company will conduct a dose-finding study withVRP700 to investigate the relationship between dose and effect in patients. Itis anticipated that data from this study will be reported in the second half of2015. Copies of the Circular will be posted to Verona Pharma Shareholders today. TheCircular is also available for download on the Company's website: http://www.veronapharma.com Dr. Jan-Anders Karlsson, CEO of Verona Pharma said: "I am delighted at the strong demand for shares from institutions in both theUK and US for this proposed fundraising, which was significantlyoversubscribed. We intend to progress our lead pipeline asset, RPL554 infurther Phase 2 studies, as soon as possible, through the next significantvalue inflection point. We believe this novel bronchodilator andanti-inflammatory drug has the potential to be an important new option for thetreatment of acute COPD, our initial target indication, where currently usedtreatments are not sufficiently effective. We also believe that RPL554 could beused as a maintenance treatment in patients with moderate to severe forms ofthe disease. The funds raised will also be used to add significant value toVRP700 by performing pre-clinical work and further important Phase 2 clinicalstudies in patients with intractable cough. Additionally, we continue to expectdata from a proof of principle clinical trial with VRP700 in patients withchronic cough in mid-2014." "We would like to thank our existing investors for their continuing support andlook forward to welcoming our new shareholders to the Company. We are confidentthat the progress we will make in the medium and longer term will not onlyresult in important new medicines for patients with respiratory disease butwill also translate into the creation of significant value for ourshareholders." Background to the Fund Raising The Company is a biopharmaceutical company focused on the development of highvalue, "first-in-class" drugs for severe, specialist-treated respiratorydiseases. The Company has two drug programmes in Phase 2, both of which areinitially being developed for use in a hospital setting. The lead programme,RPL554, is an innovative inhaled dual phosphodiesterase (PDE) 3 and 4 inhibitorwith both bronchodilator and anti-inflammatory properties, initially focused onpatients with acute worsening of their COPD symptoms (exacerbations). Thesecond programme is VRP700, an innovative inhaled product for suppressingintractable, chronic cough in patients with underlying severe lung disease.Both drugs address specific medical needs in patients that currently are notoptimally treated. There is little competition in the form of novel classes ofbronchodilator or anti-cough drugs for these patient groups and the Boardtherefore believes that these are attractive commercial opportunities for theCompany. During the first 6 months of 2013, the Company completed an anti-inflammatorystudy with RPL554 and reported the first headline data. Importantly, theseclinical data demonstrate that RPL554 is a unique drug combining bothbronchodilator and anti-inflammatory effects in the same molecule, at the samedose. In October 2013, the clinical data obtained to date were published in theLancet Respiratory Medicine. In addition a new commercial formulation of RPL554suitable for use in a nebuliser has been developed. The Company also commenceda second Phase 2 study with VRP700 in patients with chronic, severe cough andstreamlined operations by closing down the Company's office in Vancouver,Canada. The Company continued to implement the strategy to accelerate shareholder valuecreation that was announced at the end of 2012. Further steps have been takento focus the initial development of RPL554 as a nebulised treatment forpatients in hospital with acute exacerbations of COPD. Most of these patientsare in hospital because the symptom flare-ups cannot be prevented by currentmedications and they are in need of more intensive care and treatment. Thebronchodilator and anti-inflammatory properties of RPL554 should be beneficialto these patients and the Company is strongly encouraged by the recent datashowing synergistic effect between RPL554 and anti-muscarinic drugs (animportant drug class currently used in the treatment of patients with COPD) onhuman airway smooth muscle, published in the Journal of Pharmacology andExperimental Therapeutics. The Board believes that the new strategy willaccelerate access to multi-billion dollar commercial markets and increase theflexibility in the timing for achieving attractive commercial partnerships. Reflecting the potential value of both products, further work has beenundertaken by the Company to strengthen the intellectual property portfolio.Preliminary communications with patent offices indicate that new patents willbe granted and provide further protection around both compounds in keycommercial markets. The Company presented scientific data on the bronchodilator effects of RPL554in patients with asthma and COPD at the American Thoracic Society's annualconference in Philadelphia in May 2013, and data on the anti-inflammatoryeffects of the drug at the European Respiratory Society meeting in Barcelona inSeptember 2013, further enhancing the profile of this innovative agent. RPL554 RPL554 is a novel inhaled dual phosphodiesterase 3 and 4 inhibitor that wasselected for clinical development following pre-clinical studies whichdemonstrated both potent bronchodilator and anti-inflammatory properties.RPL554 is currently being developed as a potential "first-in-class" treatmentfor patients with chronic respiratory diseases such as COPD. RPL554 has successfully completed a number of early Phase 1 and 2 clinicalstudies. These single and multiple dose studies suggest that RPL554, wheninhaled across a range of doses, is an effective bronchodilator in patientswith COPD or asthma and is an excellent candidate for further development as anew class of bronchodilator. Importantly for the positioning of RPL554 as anovel inhaled treatment for patients with COPD, in an experimental clinicaltrial at the University Tor Vergata, Rome, the magnitude of the bronchodilatorresponse produced by the drug showed a statistically significant difference toplacebo and was at least equivalent to that produced by a standard dose of thereference bronchodilator beta2-agonist salbutamol in these patients.Importantly, RPL 554 had a rapid onset of action and adverse events appeared tobe similar to those of placebo. A randomised, double blind, placebo-controlled clinical trial to examine thepotential anti-inflammatory effects of RPL554 was completed at the MedicinesEvaluation Unit ("MEU"), University of Manchester and reported in March 2013.The trial was conducted in healthy subjects, treated once daily for 6consecutive days with either inhaled RPL554 or inhaled placebo before beingchallenged on the last day by an irritant agent that provokes a COPD-likeinflammatory response in their airways. At the dose tested, RPL 554 showed a statistically significant inhibition ofthe inflammatory response. The absolute numbers of all types of inflammatorycells were statistically significantly reduced in the 6 hour sputum sampleafter only one week of once-daily treatment: neutrophils (p=0.002), eosinophils(p=0.001), lymphocytes (p=0.001), and macrophages (p=0.04), in addition to thetotal number of inflammatory cells (p=0.002). These data indicate that RPL554has anti-inflammatory properties and it is believed that this adds to thedirect bronchodilator effect of the drug and contributes to the improvement ofsymptoms of COPD. A novel nebulised formulation of RPL554 expected to be suitable forcommercialisation has been developed. This will allow the further developmentof this unique drug with both bronchodilator and anti-inflammatory propertiesfor the treatment of hospitalised patients with severe COPD. In October 2013, a paper entitled "Efficacy and safety of RPL554, a dual PDE3and PDE4 inhibitor, in healthy volunteers and in patients with asthma orchronic obstructive pulmonary disease: findings from four clinical trials" waspublished in the Lancet Respiratory Medicine. This peer-reviewed paperhighlighted the potential of RPL554 to reverse the narrowing and reduce theinflammation of airways and provide a novel treatment for patients notadequately treated with currently available treatments. The proceeds from the Fund Raising will be used in part to further thedevelopment of RPL554. With the new nebulised formulation, three clinicaltrials will be performed. The tolerability of the compound will be examinedwhen administered as a single dose repeatedly for up to a week; thebronchodilator dose will be confirmed in patients with airways obstruction; andthe effect of RPL554 will be studied in patients also receiving other nebulisedbronchodilator drugs. These studies will guide the selection of an active doseand provide insight as to the therapeutic index. In addition, furtherpre-clinical studies will be undertaken to continue to prepare RPL554 forlarger Phase 2b studies in hospitalised COPD patients. It is expected that thekey data from these activities will be reported during 2015. VRP700 Cough is the most common symptom of many lung diseases. Chronic cough of morethan eight weeks duration can be a debilitating symptom when associated withsevere lung diseases such as interstitial lung disease, including idiopathicpulmonary fibrosis (IPF), lung cancer and cystic fibrosis. Currently availablecough remedies are widely considered to be relatively ineffective, often withsignificant side effects. To the best of the Company's knowledge, there are nonovel and effective inhaled therapies for treating the severe, intractablecough associated with these lung diseases in clinical development. The Companyis initially evaluating VRP700 as a potential "first-in-class" inhaledtreatment in patients with chronic cough due to severe lung disease. An exploratory clinical trial of VRP700 at the University of Florence, Italy,showed a very effective reduction of coughing in a small group of patients withvarious forms of severe lung disease. A follow-on study in patients with IPFwas commenced at the Respiratory and Allergy Centre at the University ofManchester, UK, during the reporting period. In this randomised, double-blind,placebo-controlled clinical study with inhaled VRP700, IPF patients are treatedwith a single dose of either VRP700 or placebo and the effect on cough andother symptoms is recorded. The study is expected to be completed in the firsthalf of 2014. The proceeds from the Fund Raising will be used in part for additionalpre-clinical work to prepare VRP700 for the next series of clinical studies inpatients with chronic cough. In addition, the Company will conduct adose-finding study with VRP700 to investigate the relationship between dose andeffect in patients. It is anticipated that data from this study will bereported in the second half of 2015. Intellectual property The Company has filed a number of new patents around both RPL554 and VRP700,based upon further in-depth exploration of the properties of these novelcompounds. Preliminary communications with patent offices have been positiveand the Company expects new patents to be granted and thereby provideadditional effective protection for both agents in important commercialmarkets. Use of Proceeds The Directors intend that the net proceeds of the Fund Raising will be used: * as to approximately £4.2 million to finance the three RPL554 clinical trials; * as to approximately £2.6 million to finance the VRP700 clinical trial; * as to approximately £2.2 million to finance pre-clinical work on VRP700; * as to approximately £1.1 million to finance pre-clinical work on RPL554; and * as to the balance to finance ongoing operating and licencing expenditure and general working capital. Principal terms of the Placing and the Subscription The Company has conditionally raised approximately £13.0 million beforeexpenses by the Placing of 298,750,000 Placing Shares at the Issue Price to thePlacees and by the issue of 292,000,000 Subscription Shares at the Issue Priceto the Cornerstone Investor and one other investor. The Placing and Subscription are conditional, inter alia, upon: i. the passing of all of the Resolutions; ii. the Placing and Open Offer Agreement becoming or being declared unconditional in all respects iii. and not having been terminated in accordance with its terms prior to Admission; and iv. Admission becoming effective by no later than 8.00 a.m. on 25 March 2014 or such later time and/or date (being no later than 8.00 a.m. on 30 April 2014) as WH Ireland, WG Partners and the Company may agree. If any of the conditions are not satisfied or waived (where capable of waiver),the Placing Shares and the Subscription Shares will not be issued and allmonies received from the investor. In the Placing and Subscription will bereturned to them (at the risk of these investors and without interest) as soonas possible thereafter. Neither the Placing nor the Subscription is conditional upon the Open Offerbeing fully subscribed and the Placing Shares and the Subscription Shares arenot subject to clawback. The Placing Shares and the Subscription Shares will be issued free of allliens, charges and encumbrances and will, when issued and fully paid, rank paripassu in all respects with the Existing Ordinary Shares, including the right toreceive all dividends and other distributions declared, made or paid after thedate of their issue. In connection with part of the Subscription, the Company has entered into theSubscription Agreement pursuant to which the Cornerstone Investor has agreed tosubscribe for 210 million of the Subscription Shares at the Issue Price. TheSubscription is conditional, inter alia, upon: (i) the Placing becomingunconditional in all respects (save for Admission), representing approximately20.8 per cent. of the Enlarged Share Capital assuming the Open Offer is fullysubscribed) for a total consideration of approximately £4.6 million; and (ii)Admission becoming effective by no later than 8.00 a.m. on 25 March 2014). Under the terms of the Subscription Agreement, the Cornerstone Investor will beentitled to appoint one non-executive director to the Board for as long as itholds a ten per cent. shareholding in the Company, and the Company will agreeto relocate certain of its operations to Wales. Application will be made to the London Stock Exchange for the admission of thePlacing Shares and Subscription Shares to trading on AIM. It is expected thatAdmission will occur and that dealings will commence at 8.00 a.m. on 25 March2014, at which time it is also expected that the Placing Shares andSubscription Shares will be enabled for settlement in CREST. Principal terms of the Open Offer In addition to the Placing and Subscription, a total of 46,574,831 New OrdinaryShares will be made available to Qualifying Shareholders pursuant to the OpenOffer to raise up to approximately £1.0 million before expenses. Any OfferShares not subscribed for by Qualifying Shareholders will be available toQualifying Shareholders under the Excess Application Facility. The balance ofany Offer Shares not subscribed for under the Excess Application Facility willnot be available to Placees under the Placing. Qualifying Shareholders may apply for Offer Shares under the Open Offer at theIssue Price on the following basis: 1 Offer Share for every 8 Existing Ordinary Shares and so in proportion for any number of Existing Ordinary Shares held on theRecord Date. Entitlements of Qualifying Shareholders will be rounded down tothe nearest whole number of Offer Shares. Fractional entitlements which wouldotherwise arise will not be issued to the Qualifying Shareholders but will bemade available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply forOffer Shares in excess of their Open Offer Entitlement. Not all Shareholderswill be Qualifying Shareholders. In particular, Shareholders who are locatedin, or are citizens of, or have a registered office in certain overseasjurisdictions will not qualify to participate in the Open Offer. The attentionof Qualifying Shareholders and in particular Overseas Shareholders is drawn toparagraph 6 of Part 3 of the Circular. Valid applications by Qualifying Shareholders will be satisfied in full up totheir Open Offer Entitlements. Applicants can apply for less or more than theirentitlements under the Open Offer but the Company cannot guarantee that anyapplication for Excess Shares under the Excess Application Facility will besatisfied as this will depend on the extent to which other QualifyingShareholders apply for less than or more than their own Open OfferEntitlements. The Company may satisfy valid applications for Excess Shares ofapplicants in whole or in part but reserves the right not to satisfy any excessabove any Open Offer Entitlement. The Board may scale back applications made inexcess of Open Offer Entitlements on such basis as it reasonably considers tobe appropriate. Application has been made for the Open Offer Entitlements to be admitted toCREST. It is expected that such Open Offer Entitlements will be credited toCREST on 10 March 2014. The Open Offer Entitlements will be enabled forsettlement in CREST until 11.00 a.m. on 21 March 2014. Applications through theCREST system may only be made by the Qualifying CREST Shareholder originallyentitled or by a person entitled by virtue of bona fide market claims. TheOffer Shares must be paid in full on application. The latest time and date forreceipt of completed Application Forms or CREST application and payment inrespect of the Open Offer is 11.00 a.m. on 21 March 2014. Qualifying Shareholders should note that the Open Offer is not a rights issueand therefore Offer Shares which are not applied for by Qualifying Shareholderswill not be sold in the market for the benefit of the Qualifying Shareholderswho do not apply under the Open Offer. The Application Form is not a documentof title and cannot be traded or otherwise transferred. Further details of the Open Offer and the terms and conditions on which it isbeing made, including the procedure for application and payment, will becontained in the Circular on the Application Form. The Open Offer is conditional on the Placing and Subscription becoming or beingdeclared unconditional in all respects and not being terminated beforeAdmission. The principal conditions to the Placing and the Subscription are: a. the passing of all of the Resolutions at the General Meeting; b. the Placing and Open Offer Agreement having become unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; c. the Subscription Agreement having become unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and d. Admission becoming effective by no later than 8.00 a.m. on 25 March 2014 or such later time and/or date (being no later than 8.00 a.m. on 30 April 2014) as WH Ireland, WG Partners and the Company may agree. Accordingly, if these conditions are not satisfied or waived (where capable ofwaiver), the Open Offer will not proceed and the Offer Shares will not beissued and all monies received by the Registrars will be returned to theapplicants (at the applicants' risk and without interest) as soon as possiblethereafter. Any Open Offer Entitlements admitted to CREST will thereafter bedisabled. The Offer Shares will be issued free of all liens, charges and encumbrances andwill, when issued and fully paid, rank pari passu in all respects with theExisting Ordinary Shares, including the right to receive all dividends andother distributions declared, made or paid after the date of their issue. Application will be made to the London Stock Exchange for the admission of theOffer Shares which are subscribed for to trading on AIM. It is expected thatAdmission will occur and that dealings will commence at 8.00 a.m. on 25 March2014 at which time it is also expected that the Offer Shares will be enabledfor settlement in CREST. Current Trading and Prospects The Company has continued to trade in line with management's expectations since30 June 2013. At 28 February 2014, the Company had cash of £0.3 million. Following the Fund Raising, the Company will have sufficient financialresources to significantly progress the development and clinical trialprogramme of RPL554 and prepare VRP700 for further clinical development. TheDirectors therefore anticipate that during 2014 the results of the on-goingclinical trial with VRP700 will be reported around the middle of the year, andthe clinical programme with RPL554 will commence during 2014 and that data willbe presented in the middle to later part of 2015. Risk factors and additional information The attention of Shareholders is drawn to the risk factors set out in Part 2 ofthe Circular and the information contained in Parts 3 and 4 of the Circular,which provide additional information on the Open Offer and the Verona Group. General Meeting The Directors do not currently have authority to allot all of the New OrdinaryShares and, accordingly, the Board is seeking the approval of Shareholders toallot the New Ordinary Shares at the General Meeting. A notice convening the General Meeting, which is to be held at the offices ofSGH Martineau LLP at One America Square, Crosswall, London EC3N 2SG at 11.00a.m. on 24 March 2014, will form part of the Circular. At the General Meeting,the following Resolutions will be proposed: * Resolution 1 which is an ordinary resolution to authorise the Directors to allot relevant securities up to an aggregate nominal amount of £637,324.84, being equal to 637,324,831 New Ordinary Shares (i.e. the maximum number of New Ordinary Shares available under the Placing, the Subscription and the Open Offer); and * Resolution 2 which is conditional on the passing of resolution 1 and is a special resolution to authorise the Directors to issue and allot 637,324,831 New Ordinary Shares pursuant to the Placing, the Subscription and the Open Offer. The authorities to be granted pursuant to resolutions 1 and 2 shall expire onthe conclusion of the Annual General Meeting of the Company to be held in 2014(unless renewed varied or revoked by the Company prior to or on that date) andshall be in addition to the Directors' authorities to allot relevant securitiesand disapply statutory pre-emption rights granted at the Company's GeneralMeeting held in 2013. Recommendation and voting intentions The Directors, acting in good faith, believe that the Placing, the Subscriptionand Open Offer and the passing of the Resolutions are most likely to promotethe success of the Company for the benefit of its members as a whole. TheDirectors (other than Trevor Jones who is a non executive director of theCornerstone Investor) unanimously recommend the Shareholders to vote in favourof the Resolutions as they intend to do in respect of their aggregatebeneficial holdings of 30,205,746 Ordinary Shares representing approximately8.1 per cent of the Existing Ordinary Shares. -Ends- For further information please contact: Verona Pharma plc Tel: 020 7863 3300Clive Page, ChairmanJan-Anders Karlsson, CEORichard Bungay, CFO WH Ireland Limited(NOMAD) Tel: 020 7220 1666Chris FieldingNick Field WG Partners Tel: 020 7149 6327David WilsonClaes SpångJonathan Gosling FTI Consulting Tel: 020 7831 3113Julia PhillipsSimon Conway Expected Timetable of Principal Events Announcement of the Placing, the Subscription and Open 6 March 2014Offer, publication of the Circular, the Application Formand Form of Proxy Record Date for entitlement under the Open Offer 6.00 p.m. on 4 March 2014 Ex-entitlement Date of the Open Offer 7 March 2014 Posting of Application Forms to Qualifying Non-CREST 6 March 2014Shareholders Open Offer Entitlements and Excess CREST Open Offer 10 March 2014Entitlements credited to stock accounts of QualifyingCREST Shareholders Recommended latest time and date for requesting withdrawal 4.30 p.m. on 17 March 2014of Open Offer Entitlements from CREST Latest time and date for depositing Open Offer 3.00 p.m. on 18 March 2014Entitlements into CREST Latest time and date for splitting Application Forms (to 3.00 p.m. on 19 March 2014satisfy bona fide market claims only) Latest time and date for receipt of completed Forms of 11.00 a.m. on 20 MarchProxy to be valid at the General Meeting 2014 Latest time and date for acceptance of the Open Offer and 11.00 a.m. on 21 Marchreceipt of completed Non-CRESTApplication Forms and pa 2014yment in full under the Open Offer or settlement of relevant CREST instruction (if appropriate) General Meeting 11.00 a.m. on 24 March 2014 Announcement of result of General Meeting 24 March 2014 Announcement of result of Open Offer 24 March 2014 New Ordinary Shares credited to CREST members' accounts 25 March 2014 Admission and commencement of dealings in the New Ordinary 25 March 2014Shares on AIM Despatch of definitive share certificates for New Ordinary by 4 April 2014Shares in certificated form Ifanyofthedetailscontainedinthetimetableaboveshouldchange,therevisedtimesanddateswill be notified by means of an announcement through a Regulatory Information Service. Certainoftheeventsintheabovetimetableareconditionalupon,amongstotherthings,theapproval of the Resolutions to be proposed at the General Meeting. All references are to London time. Definitions The following definitions apply throughout this announcement, unless thecontext requires otherwise: "Act" the Companies Act 2006 (as amended) "Admission" the admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules for Companies "AIM" AIM, the market of that name operated by the London Stock Exchange "AIM Rules for Companies" the AIM Rules for Companies and guidance notes as published by the London Stock Exchange from time to time "Board" or "Directors" the directors of the Company "Business Day" a day other than a Saturday, Sunday or public holiday on which banks are open in London for normal banking business "Circular" the circular to Shareholders dated 6 March 2014 "Company" or "Verona" Verona Pharma PLC "Cornerstone Investor" The Wales Life Sciences Investment Fund LP, a limited partnership registered under the Limited Partnerships Act 1907 "CREST" the relevant system (as def ined in the CREST Regulations) in respect of which Euroclear is the operator (as def ined in the CREST Regulations) "CREST member" a person who has been admitted to CREST as a system-member (as defined in the CREST Manual) "CREST member account ID" the identification code or number attached to a member account in CREST "CREST participant" a person who is, in relation to CREST, a system-participant (as defined in the CREST regulations) "CREST participant ID" shall have the meaning given in the CREST Manual issued by Euroclear "CREST payment" shall have the meaning given in the CREST Manual issued by Euroclear "CREST Regulations" the Uncertif icated Securities Regulations 2001 (SI 2001/3755) (as amended) "CREST sponsor" a CREST participant admitted to CREST as a CREST sponsor "CREST sponsored member" a CREST member admitted to CREST as a sponsored member "EIS" Enterprise Investment Scheme under the provisions of Part 5 of the ITA 2007 "Enlarged Share Capital" the entire issued share capital of the Company following completion of the Placing, Subscription and Open Offer (assuming the Open Offer is fully subscribed) "EU" the European Union "Euroclear" Euroclear UK & Ireland Limited "Excess Application Facility" the arrangement pursuant to which Qualifying Shareholders may apply for additional Offer Shares in excess of their Open Offer Entitlement in accordance with the terms and conditions of the Open Offer "Excess CREST Open Offer in respect of each Qualifying CRESTEntitlements" Shareholder, the entitlement (in addition to his Open Offer Entitlement) to apply for Offer Shares pursuant to the Excess Application Facility, which is conditional on him taking up his Open Offer Entitlement in full "Excess Shares" Offer Shares applied for by Qualifying Shareholders under the Excess Application Facility "Ex-entitlement Date" the date on which the Existing Ordinary Shares are marked "ex" for entitlement under the Open Offer, being 7 March 2014 "Existing Ordinary Shares" the 372,598,650 Ordinary Shares in issue on the date of the Circular "FCA" the Financial Conduct Authority of the United Kingdom "Form of Proxy" the form of proxy for use in relation to the General Meeting "FSMA" the Financial Services and Markets Act 2000 (as amended) "Fund Raising" the Placing, Subscription and Open Offer "General Meeting" the General Meeting of the Company, convened for 11.00 a.m. on 24 March 2014 (or any adjournment thereof) "HMRC" HM Revenue and Customs "Issue Price" 2.2 pence per New Ordinary Share "ITA 2007" Income Taxes Act 2007 "London Stock Exchange" London Stock Exchange Plc "Money Laundering Regulations" Money Laundering Regulations 2007, the money laundering provisions of the Criminal Justice Act 1993, Part VIII of FSMA (together with the provisions of the Money Laundering Sourcebook of the FCA and the manual of guidance produced by the Joint Money Laundering Steering Group in relation to financial sector firms), the Terrorism Act 2000, the Anti Terrorism Crime and Security Act 2001, the Proceeds of Crime Act 2002 and the Terrorism Act 2006 "New Ordinary Shares" the Placing Shares, the Subscription Shares and the Offer Shares, or any part thereof "Non-CREST Application Form" or the personalised application form on which"Application Form" Qualifying Non-CREST Shareholders may apply for Offer Shares under the Open Offer "Notice of General Meeting" the notice convening the General Meeting "Offer Shares" the 46,574,831 Ordinary Shares being made available to Qualifying Shareholders pursuant to the Open Offer "Open Offer" the conditional invitation made to Qualifying Shareholders to apply to subscribe for the Offer Shares at the Issue Price on the terms and subject to the conditions set out in the Circular and in the Application Form "Open Offer Entitlement" the entitlement of Qualifying Shareholders to subscribe for Offer Shares allocated to Qualifying Shareholders on the Record Date pursuant to the Open Offer "Ordinary Shares" ordinary shares of 0.1 pence each in the capital of the Company "Overseas Shareholders" a Shareholder with a registered address outside the United Kingdom "Placees" subscribers for Placing Shares "Placing" the conditional placing by the Company of the Placing Shares, otherwise than on a pre-emptive basis, at the Issue Price "Placing and Open Offer the conditional agreement entered intoAgreement" between the Company, WG Partners and WH Ireland in respect of the Placing and Open Offer dated 6 March 2014 "Placing Shares" 298,750,000 New Ordinary Shares to be issued pursuant to the Placing "Qualifying CREST Shareholders" Qualifying Shareholders holding Existing Ordinary Shares in a CREST account "Qualifying Non-CREST Qualifying Shareholders holding ExistingShareholders" Ordinary Shares in certificated form "Qualifying Shareholders" holders of Existing Ordinary Shares on the register of members of the Company at the Record Date (but excluding any Overseas Shareholder who has a registered address in any Restricted Jurisdiction) "Record Date" 6.00 p.m. on 4 March 2014 in respect of the entitlements of Qualifying Shareholders under the Open Offer "Registrars" Computershare Investor Services PLC, registrars to the Company and receiving agents to the Open Offer "Regulatory Information Service" has the meaning given in the AIM Rules for Companies "Resolutions" the resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting "Restricted Jurisdiction" United States of America, Canada, Australia, New Zealand, Japan the Republic of South Africa or the Republic of Ireland and any other jurisdiction where the extension or availability of the Placing and Open Offer would breach any applicable law "Securities Act" US Securities Act of 1933 (as amended) "Shareholders" the holders of Existing Ordinary Shares "Subscription" the proposed subscription for the Subscription Shares at the Issue Price by the Cornerstone Investor and one other investor "Subscription Agreement" the conditional agreement entered into between the Company and the Cornerstone Investor in respect of part of the Subscription dated 6 March 2014 "Subscription Shares" 292,000,000 New Ordinary Shares to be issued pursuant to the Subscription "UK" the United Kingdom of Great Britain and Northern Ireland "United States", "United States the United States of America, its territoriesof America" or "US" and possessions, any state of the United States of America and the District of Columbia and all areas subject to its jurisdiction "VCT" Venture Capital Trust "Verona Group" or "Group" Verona and its subsidiaries "WG Partners" WG Partners, a trading name of Charles Stanley & Co. Limited, joint financial advisor and broker to the Company "WH Ireland" WH Ireland Limited, nominated adviser and joint broker to the Company Notes to Editors About Verona Pharma plc Verona Pharma is developing "first-in-class" drugs to treat respiratorydisease, such as COPD, asthma and chronic, severe cough. The Company has threedrug programmes, two of which are in Phase II. The lead programme, RPL554, isan innovative dual phosphodiesterase (PDE) 3 and 4 inhibitor with bothbronchodilator and anti-inflammatory properties. VRP700 is an innovativeproduct for suppressing chronic, severe cough in patients with underlying lungdisease. In its third programme, Verona Pharma is investigating novelanti-inflammatory molecules, called NAIPs, for a wide range of respiratory andinflammatory diseases. About RPL554 for the treatment of COPD and Asthma Verona's lead drug, RPL554, is a dual phosphodiesterase (PDE) 3 and 4 inhibitorbeing developed as a novel treatment for chronic obstructive airways diseasesuch as COPD and asthma with bronchodilator and anti-inflammatory effects. Botheffects are essential to improve symptoms in patients with COPD or asthma.RPL554 is currently in phase II for both diseases. COPD is a chronic lung disease with significant unmet need for which currenttreatment is far from optimal, as it often has unwanted side-effects and/orlimited effectiveness. COPD is most commonly characterised by fixed airflowobstruction and chronic airways inflammation resulting from exposure toirritants like tobacco smoke. Asthma, which remains one of the most commonchronic diseases in the world, is characterised by recurrent breathing problemsand symptoms such as breathlessness, wheezing, chest tightness, and coughing.The market for COPD and asthma drugs is currently estimated to be GBP20 billion[source: visiongain]. About VRP700 for the treatment of Cough VRP700 is Verona Pharma's lead drug compound for the treatment of cough, havinga novel mechanism of action involving the suppression of cough initiatingsignals originating from cough sensory nerve endings located in the lungs. Aclinical trial completed at the University of Florence, Italy in September 2011clearly demonstrated significant anti-tussive effects with nebulised VRP700 inhospitalized patients with chronic severe cough. Cough can be a very debilitating comorbidity reported by patients, especiallythose with respiratory conditions such as asthma, COPD, lung cancer,interstitial lung disease, fibrosis or lung infections. It is a neglectedsymptom which is often self-medicated. Consumer spending on OTC medications,including those for cough, grew by 10% over 2005-10, to reach GBP532 million inUK [source: Mintel]. However, there is very little clinical evidence for suchOTC cough medications being really effective and it is widely recognised by themedical community that there is a large need for more effective drugs tocontrol and prevent pathologically induced coughing.