Trading and Development Programme Update

Verona Pharma plc ("Verona Pharma" or the "Company") Trading and Development Programme Update Solid progress leads to acceleration of RPL554 trials 3 March 2015, Cardiff - Verona Pharma plc (AIM: VRP.L), the drug developmentcompany focused on first-in-class medicines to treat respiratory diseases,today announces a trading update for the year ended 31 December 2014, as wellas an update on the Company's development programme for its lead drug, RPL554.It is expected that financial results for the year ended 31 December 2014 willbe published during the first week of May. The closing cash position at year end was £9.97m, in line with marketexpectations. The Board continues to believe that this is sufficient capital toprogress RPL554 to the start of Phase IIb clinical trials in 2016. The Company expects to report a slightly lower than expected loss before tax ofapproximately £3.7m for the year ended 31 December 2014. The loss reflectsslightly lower than expected expenditure on R&D and slightly lower expenditurethan expected on general and administrative costs. Costs associated withexpansion of the senior management team and board only incurred towards the endof the year. Update on RPL554 Development Programme Verona Pharma is fully focused on developing RPL554 and in January this yearannounced that the first subjects had successfully been dosed in the initialclinical trial with its new proprietary and commercially scalable nebulizedformulation of RPL554. The initial clinical trials are designed to prepareRPL554 for the treatment of acute exacerbations of chronic obstructivepulmonary disease (COPD). The Board remains excited by the prospects for RPL554 as it advances furtherinto development in 2015. Following a thorough review of the planneddevelopment and associated expenditure for RPL554, the Board has concluded thatit is now timely to accelerate the work on the drug to progress to the start ofphase IIb clinical trials in 2016. Therefore, gross R&D expense to be incurredin 2015 will be substantially greater than previously expected. The higher R&Dspending in 2015 essentially results from moving work forward from 2016 intothe current year. The overall expenditures for 2015 are currently expected to be approximately athird higher than previously anticipated, before taking into account theprospective benefit of R&D tax credits. The Company will continue to apply forthese and reasonably expects such recovery to rise proportionately with theincreased R&D expenditure and be realised in the subsequent accounting period. In Q4 2014, the Board was strengthened by the addition of a highly experiencednew Chairman and a full-time Chief Financial Officer with significanttransaction experience. In addition, senior management was augmented at thebeginning of this year with the appointment of an experienced Chief MedicalOfficer, a pulmonologist with deep respiratory expertise. Dr Jan-Anders Karlsson, Chief Executive Officerof Verona Pharma, said: "We plan to start a number of additional studies with the new proprietaryformulation of RPL554 this year. The aim of these studies is to confirm itsbenign safety profile while further demonstrating the pronounced bronchodilatoractivity in healthy subjects, asthmatics and COPD patients of this uniquefirst-in-class drug. Results from these trials will be reported as they occuron an ongoing basis during the year. We will be able to provide the firstupdate from the on-going study in the Medicines Evaluation Unit, Manchester, atthe beginning of the second quarter, which is earlier than expected." -Ends- For further information please contact: Verona Pharma plc Tel: +44 (0) 20 3283 4200 Jan-Anders Karlsson, Chief ExecutiveOfficer N+1 Singer Tel: +44 (0)20 7496 3000 Aubrey Powell / Jen Boorer FTI Consulting Tel: +44 (0)20 3727 1000 Julia Phillips / Simon Conway Notes to Editors About Verona Pharma plc Verona Pharma plc is a UK-based clinical stage biopharmaceutical companyfocused on the development of innovative prescription medicines to treatrespiratory diseases with significant unmet medical needs, such as chronicobstructive pulmonary disease (COPD), asthma and cystic fibrosis. Verona Pharma's lead drug, RPL554, is a first-in-class drug currently in PhaseII trials as a nebulised treatment for acute exacerbations of COPD in thehospital setting. The drug is a dual phosphodiesterase (PDE) 3/4 inhibitor andtherefore has both bronchodilator and anti-inflammatory effects, which areessential to the improvement of patients with COPD and asthma. Verona Pharma is also building a broader portfolio of RPL554-containingproducts to maximise its benefit to patients and its value. This includes thevery significant markets for COPD and asthma maintenance therapy. The Companyis also exploring the potential of the drug in different diseases, such ascystic fibrosis, where it is in pre-clinical testing and has recently receiveda Venture and Innovation Award from the Cystic Fibrosis Trust. About Chronic Obstructive Pulmonary Disease (COPD) Sixty-five million people worldwide suffer from moderate to severe COPD and theWorld Health Organisation (WHO) expects COPD to be the 3rd leading cause ofdeath globally by 2020. It is the only major chronic disease with increasingmortality. Currently available drugs are aimed at long-term maintenancetherapy, with the market dominated by large pharma. Despite the wideavailability of these therapies, COPD patients suffer acute periods ofworsening symptoms (exacerbations), which cause, in the US alone, some 1.5million A&E visits, 726,000 hospitalisations and 120,000 deaths per annum. IMS Consulting Group considers bronchodilating therapy to be the standard ofcare, and agents can be administered via handheld devices such as metered doseinhaler (MDI), dry powder inhaler (DPI) and by nebulisers. The nebulisedbronchodilator market was worth about $1 billion in 2014 in the US. RPL554 isbeing developed by Verona Pharma as an add-on therapy to the "Standard of Care"with the objectives of providing rapid and pronounced improvement in lungfunction, reduced symptoms and both shortened duration of hospital stays andreduced re-admission rates 30 days after discharge from hospital. Studies todate on RPL554 have demonstrated that it has a strongly differentiated 3-waymode of action, being: (1) bronchodilation (the relaxation of smooth muscle inthe airway); (2) anti-inflammatory effects on cells and (3) ion channelactivation in epithelial cells, with increased mucociliary clearance of theairway.