7th Sep 2011 07:01
Company Number 05375156 VERONA PHARMA plc ('Verona Pharma' or 'the Company') INTERIM REPORT For the six months ended 30 June 2011
Verona Pharma plc is a biotechnology company dedicated to discovering new drugs for the treatment of chronic respiratory diseases, such as asthma, allergic rhinitis (hay fever), chronic obstructive pulmonary disease (COPD) and cough. Today, the Company announces its unaudited interim results for the six months ended 30 June 2011.
OPERATIONAL HIGHLIGHTS
For the six months to 30 June 2011
* Successfully completed a further Phase I/II clinical trial of RPL554 at the Centre for Human Drug Research ("CHDR") in the Netherlands in order to evaluate the safety and bronchodilator effectiveness of two higher doses (delivered doses of 36 and 72 microgram/kg) of RPL554 in patients with mild asthma. The bronchodilation seen at both doses was equivalent in extent and duration to that seen in a previous trial with a lower dose (18 microgram/ kg). The only statistically significant finding was a small increase in heart rate. * Commenced a further Phase II clinical trial of RPL554 at CHDR to ascertain whether the bronchodilator actions of RPL554 are sustained over a period of 6 days with single daily doses given to patients with mild asthma. * Began a pilot Phase II clinical trial of RPL554 at the University of Tor Vergata in Rome in order to evaluate the safety and bronchodilator effectiveness of single doses of the drug in patients with mild to moderate COPD. * Completed induction of patients for the clinical trial of the Company's cough drug, VRP700, at the University of Florence, Italy, in order to evaluate the effectiveness of the drug in reducing cough in patients with chronic intractable cough.
FINANCIAL HIGHLIGHTS
* Loss after tax of £0.97 million or 0.40 pence per ordinary share. The loss includes a non-cash share based payment charge of £0.16m. * Low cash burn rate and cash and cash equivalents as at 30 June 2011 of £ 1.15 million.
HIGHLIGHTS SUBSEQUENT TO 30 JUNE 2011
* Successfully completed a further Phase II clinical trial at CHDR demonstrating that the extent and duration of RPL554's bronchodilator action was sustained over a period of 6 days of treatment. There was no accumulation of the drug in plasma and no safety issues were observed. There was a minor increase in heart rate at day 6, the last day of the trial. * Successfully completed the VRP700 trial at the University of Florence, Italy demonstrating that the inhalation of a single dose of VRP700 significantly reduced coughing in a group of patients with chronic intractable cough due to underlying lung disease. By all the measures used, including the physicians' and patients' assessments, the drug was effective. There were no adverse effects associated with the treatment. CHAIRMAN AND CEO'S JOINT STATEMENTFOR THE SIX MONTHS ENDED 30 JUNE 2011
INTRODUCTION
The six month period to 30 June 2011 has been an even busier one for Verona Pharma in conducting and completing clinical trials as well as pursuing the licensing of RPL554 to an appropriate pharmaceutical partner. The Company made significant progress in further defining the therapeutic value of RPL554 and establishing the proof of concept of VRP700 for the treatment of cough. The Company continued to test potential lead compounds for its NAIPs programme and assessed other potential opportunities for inclusion in its pipeline in the future as projects are licensed out.
RPL554
The Company continues to pursue licensing of its lead programme, RPL554, a novel inhaled PDE3/4 inhibitor as a treatment for inflammatory diseases of the respiratory tract, including asthma, COPD and allergic rhinitis (hay fever). As the Company has stated previously, it is seeking the most compatible and appropriate licensing partner to develop RPL554 into a marketed medicine. This search is worldwide and encompasses all appropriate and suitably sized pharmaceutical companies with expertise with respiratory drugs used in asthma and COPD.
The Company initiated further clinical trials in order to provide important clinical data to add further value to the overall RPL554 licensing package. The first of these follow-on trials started in November 2010 and took place in Leiden, The Netherlands, at CHDR. The purpose of the trial was to evaluate the safety and bronchodilator effectiveness of higher doses of RPL554 in patients with mild asthma. This was part of the process of establishing an appropriate dose for patients with respect to both effectiveness as a bronchodilator, and safety. The trial was successfully completed in February 2011 without any withdrawals due to adverse effects. Both doses (delivered doses of 36 and 72 micrograms/kg) of RPL554 produced bronchodilation as assessed with standard FEV1 (Forced Expiratory Volume in 1 sec) measurements. The extent of bronchodilation with both doses was equivalent to that seen with the initial trial of RPL554 where a dose of 18microgram/kg was given. Despite these high doses, there were no gastrointestinal symptoms related to the administration of the drug, which is a common limiting side effect of many PDE4 (phosphodiesterase type 4) inhibitors. At the highest dose given, a small increase in heart rate was seen. This study has allowed the Company to set appropriate doses for future studies.
A further follow-on clinical trial with RPL554 began in April 2011 and is ongoing at the University of Tor Vergata in Rome, Italy. This clinical trial is designed to determine whether the 18microgram/kg dose is safe and produces bronchodilator effects in patients with mild to moderate COPD. Progress of the trial is slower than expected due to unavoidable delays in patient recruitment but the Company anticipates that the trial will be completed during Q4 2011.
A further clinical trial with RPL554 began in May 2011 at CHDR to examine the safety, duration of action and maintenance of bronchodilator action of the drug when given as a daily dose of 18microgram/kg for several days. Bronchodilation was assessed by FEV1 (forced expiratory volume at 1 second) measurements which is the most common method used to evaluate the bronchodilator effects of drugs. The trial, which was a single blind, randomised, placebo-controlled trial, successfully demonstrated that the bronchodilator actions of RPL554 had the same maximum effect and duration throughout the treatment period. There was no evidence of any accumulation of the drug in plasma, and no safety issues were observed. A minor increase in heart rate was seen at day 6 only, the extent of which was less than that commonly seen with conventional asthma therapies.
VRP700 CLINICAL TRIAL
The clinical trial of VRP700 for the treatment of cough was begun in 2010 at the University of Florence, Italy. The trial was specifically designed to demonstrate the anti-tussive (cough-suppressive) effects of VRP700 when given by inhalation to patients with chronic intractable cough from underlying lung disease. Since inhaled VRP700 was considered to have a considerable safety margin the decision was taken to test the drug against a severe form of cough, due to pathology, rather than against cough induced in normal volunteers.
The trial was a double-blind, cross-over, placebo-controlled, contingency study with the primary end point being the number of coughs recorded. A single dose of VRP700 was inhaled in a nebulized form for approximately 10 minutes. In an announcement made today, we reported that inhalation of VRP700 significantly reduced coughing for at least 4 hours. There were no adverse effects associated with the treatment.
NAIPS
The Company continues to obtain and evaluate novel fractions from various sources with the intent of identifying compounds with improved potency and efficacy that may be potential clinical candidates for development as an anti-inflammatory drug. Progress of the NAIPs programme has been limited as the Company is focusing its resources on advancing the RPL554 and VRP700 programmes.
FINANCIALS
The loss for the six month period ended 30 June 2011 ("the Period") increased by 24% or £0.19 million to £0.97 million (2010: £0.78 million).
The Company has continued to maintain a low cash burn rate. Research and development expenditures, net of research and development tax credit ("RDTC"), for the Period were £0.45 million as compared to £0.41 million for the comparable period in 2010. RDTC recorded during the period was £0.12 million (2010: £Nil). The focus of the Company's research and development activities during the Period has continued to be the RPL554 programme with expenditures of £0.48 million (2010: £0.33 million) on this project.
Administrative expenses for the Period were £0.52 million (2010: £0.37 million). The increase of £0.15 million over the prior period was primarily due to an increase in the share based payment charge of £0.16m (2010: £0.02m). This resulted from the Period's allocation of the expense for relevant share options issued in 2010 and 2009, and expense for extending the expiry date of director options.
As at 30 June 2011 the Company had approximately £1.15 million in cash and cash equivalents.
OUTLOOK
All current evidence continues to indicate that RPL554 has the potential to be a significant new respiratory drug that could capture a significant market share. Verona Pharma expects to find a suitable partner to assist in taking this `first in class' respiratory drug to market. In the meantime, the higher dose trial which was successfully completed in February 2011, the repeated dose trial over a period of days which was successfully completed in August 2011, and the COPD trial which is expected to be completed in Q4 2011, add value to the RPL554 licensing package.
The Company is delighted to see the positive results achieved from the clinical trial of VRP700, and it plans to advance the clinical development of the programme with the aim of taking it to a stage where the drug could be licensed.
We remain very positive about the progress to date and we look forward to updating the market on further developments in due course.
Professor Clive P. Page Professor Michael J. A. Walker Chairman Chief Executive Officer 6 months 6 months Year ended 31 ended ended December 30 June 2011 30 June 2010 2010 Notes (unaudited) (unaudited) (audited) £ £ £ Revenue - - - Cost of sales - - - Gross profit/(loss) - - - Research and development 2 (454,084) (411,643) (1,150,904) Administration expenses (518,579) (367,806) (745,256) Operating loss (972,663) (779,449) (1,896,160) Finance revenue 2,273 4,202 7,898 Loss before taxation (970,390) (775,247) (1,888,262) Taxation - (4,532) (4,532) Loss and comprehensive loss (970,390) (779,779) (1,892,794)for the period Loss per ordinary share - 3 (0.40)p (0.33)p (0.79)pbasic and diluted GROUP STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2011 As at As at As at 30 June 30 June 31 December 2011 2010 2010 (unaudited) (unaudited) (audited) £ £ £ ASSETS Non current assets Tangible assets 10,374 17,120 15,513 Intangible assets 93,611 88,353 100,452 Goodwill 1,469,112 1,469,112 1,469,112 1,573,097 1,574,585 1,585,077 Current assets Trade and other receivables 201,668 78,085 68,808 Cash and cash equivalents 1,149,706 2,907,373 2,003,012 1,351,374 2,985,458 2,071,820 Total assets 2,924,471 4,560,043 3,656,897 EQUITY AND LIABILITIES Capital and Reserves attributable to Equity holders Called up share capital 239,906 238,747 239,906 Option reserve 517,359 374,976 359,008 Share premium account 9,373,526 9,328,298 9,373,526 Retained losses (7,492,281) (5,447,836) (6,521,891) Total equity 2,638,510 4,494,185 3,450,549 Current liabilities Trade and other payables 285,961 65,858 206,348 Total liabilities 285,961 65,858 206,348 Total equity and liabilities 2,924,471 4,560,043 3,656,897 GROUP STATEMENT OF CASH FLOWSFOR THE SIX MONTHS ENDED 30 JUNE 2011 6 months 6 months Year ended 31 ended ended December 30 June 2011 30 June 2010 2010 £ £ £ Net cash outflow from (855,352) (723,671) (1,655,540)operating activities Cash outflow from taxation - (4,532) (4,532) Cash flow from investing activities Interest received 2,125 4,118 7,898 Purchase of tangible assets - (2,749) (7,081) Purchase of intangible assets (79) (23,313) (41,640) Net cash inflow(outflow) from 2,046 (21,944) (40,823)investing activities Cash flow from financing activities Deferred financing cost - 54,365 54,365 Net proceeds from issue of - 773,174 819,561 shares Net cash inflow from - 827,539 873,926 financing activities Net (decrease)/increase in (853,306) 77,392 (826,969) cash and cash equivalents Cash and cash equivalents at 2,003,012 2,829,981 2,829,981 the beginning of the period Cash and cash equivalents at 1,149,706 2,907,373 2,003,012 the end of the period Reconciliation of operating loss to net cash outflow from operating activities Operating loss (972,663) (779,449) (1,896,160) Cost of issuing share options 158,351 18,766 41,758 (Increase)/decrease in trade (132,712) 248,893 258,086and other receivables Increase/(decrease) in trade 79,613 (221,044) (80,554) and other payables Non-cash expense - - - Depreciation of tangible 5,139 3,634 9,572 assets Amortisation of intangible 6,920 5,529 11,758 assets Net cash outflow from (855,352) (723,671) (1,655,540)operating activities GROUP STATEMENT OF CHANGES IN EQUITYFOR THE SIX MONTHS ENDED 30 JUNE 2011 Share Share Option Retained capital premium reserve earnings Total £ £ £ £ £ Balance at 1 January 2011 239,906 9,373,526 359,008 (6,521,891) 3,450,549 Total comprehensive loss - - - (970,390) (970,390)for the period 239,906 9,373,526 359,008 (7,492,281) 2,480,159 Share based payment - - 158,351 - 158,351 Balance at 30 June 2011 239,906 9,373,526 517,359 (7,492,281) 2,638,510(unaudited) Balance at 1 January 2010 232,378 8,561,493 356,210 (4,668,057) 4,482,024 Total comprehensive loss - - - (779,779) (779,779)for the period 232,378 8,561,493 356,210 (5,447,836) 3,702,245 Issue of shares 6,369 821,570 - - 827,939 Issue costs - (54,765) - - (54,765) Share based payment - - 18,766 - 18,766 Balance at 30 June 2010 238,747 9,328,298 374,976 (5,447,836) 4,494,185(unaudited) Balance at 1 January 2010 232,378 8,561,493 356,210 (4,668,057) 4,482,024 Total comprehensive loss - - - (1,892,794) (1,892,794)for the Year 232,378 8,561,493 356,210 (6,560,851) 2,589,230 Issue of shares 7,528 866,798 - - 874,326 Issue costs - (54,765) - - (54,765) Share based payment - - 41,758 - 41,758 Transfer of previously - - (38,960) 38,960 - expensed share based payment charge upon exercise of options Balance at 31 December 239,906 9,373,526 359,008 (6,521,891) 3,450,5492010(audited) NOTES TO THE FINANCIAL INFORMATIONFOR THE SIX MONTHS ENDED 30 JUNE 2011
1. Publication of non-statutory accounts
i) This interim financial information for the six months ended 30 June 2011 is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. It was approved by the board of directors on 6 September 2011. The figures for the year ended 31 December 2010 have been extracted from the statutory accounts which have been reported on by the Company's auditor. The financial statements for the year ended 31 December 2010 have been delivered to the Registrar of Companies and the auditor's report on those financial statements was unqualified and did not contain a statement made under section 498 (2) or section 498 (3) of the Companies Act 2006.
ii) Accounting policies
The interim financial statements for the six months ended 30 June 2011 includes the results of Verona Pharma plc and its wholly-owned subsidiary Rhinopharma Limited. The unaudited results for the period have been prepared on the basis of accounting policies adopted in the audited accounts for the year ended 31 December 2010.
iii) The directors do not recommend the payment of a dividend (period to 30 June 2010 - £Nil, year ended 31 December 2010 - £Nil).
iv) A copy of the interim report is available on the Company's website www.veronapharma.com.
2. Research and development
The figure for the six months ended 30 June 2011 of £454,084 is after deduction of a research and development tax credit of £124,407. The tax credit is a cash refundable tax credit for the PAYE and national insurance contributions paid by the Company in fiscal years 2009 and 2010.
3. Earnings per share
i) The basic loss per share of 0.40p (30 June 2010: loss of 0.33p, 31 December 2010: loss of 0.79p) for the Group is calculated by dividing the loss for the period by the weighted average number of ordinary shares in issue of 239,906,705 (30 June 2010: 238,448,621, 31 December 2010: 238,761,092).
ii) The diluted loss per share has not been presented since the Company's stock options are anti-dilutive.
4. Comparatives
The comparatives include audited figures for the year ended 31 December 2010 and unaudited figures for the six months ended 30 June 2010.
XLONRelated Shares:
VRP.L