Earnings call transcript: Verona Pharma Q4 2024 beats EPS & revenue forecasts

Verona Pharma PLC ADR (NASDAQ:VRNA) reported its fourth-quarter 2024 earnings, significantly surpassing analyst expectations with a reported earnings per share (EPS) of -$0.05 against a forecasted -$0.07. The company’s revenue reached $35.65 million, far exceeding the anticipated $6.14 million. Following this announcement, Verona Pharma’s stock saw a notable increase of 5.98%, reflecting strong market confidence in the company’s performance and outlook. According to InvestingPro data, the stock has delivered an impressive 254.66% return over the past year, with current analysis suggesting the stock is trading above its Fair Value.

Key Takeaways

• Verona Pharma’s Q4 2024 revenue exceeded forecasts by $29.51 million.
• The stock price surged by 5.98% post-earnings announcement.
• Strong adoption of the O2VARE therapy among healthcare providers.
• Significant cash reserves and additional capital access ensure financial stability.
• Continued net losses highlight the need for a focus on profitability.

Company Performance

Verona Pharma demonstrated robust performance in Q4 2024, driven by the successful launch of its O2VARE therapy for COPD maintenance. The therapy’s unique mechanism has seen rapid adoption, with over 4,600 healthcare providers prescribing it. The company’s strong revenue figures reflect this adoption, positioning Verona Pharma favorably against industry competitors. InvestingPro analysis reveals an impressive gross profit margin of 90.34%, while maintaining a moderate debt level. Discover 14 additional exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Financial Highlights

• Revenue: $35.65 million, significantly above the forecasted $6.14 million.
• Earnings per share: -$0.05, outperforming the expected -$0.07.
• Net loss for the quarter: $33.8 million.
• Cash and equivalents: $400 million as of December 31, 2024.

Earnings vs. Forecast

Verona Pharma’s earnings per share of -$0.05 surpassed the forecasted -$0.07, marking a positive surprise of 0.02. The revenue of $35.65 million was notably higher than the expected $6.14 million, highlighting strong market demand for O2VARE.

Market Reaction

Following the earnings announcement, Verona Pharma’s stock price increased by 5.98%, closing at $67.32. This positive movement indicates strong investor confidence, supported by the company’s significant revenue beat and strategic product launch success.

Outlook & Guidance

Looking forward, Verona Pharma aims to achieve cash flow breakeven with an annual revenue run rate of $250-300 million. The company is preparing for European and global regulatory expansion and expects continued growth in its prescription and patient base. While InvestingPro data indicates three analysts have revised their earnings upward for the upcoming period, the platform’s analysis suggests net income may face challenges this year. Access the full Pro Research Report for comprehensive analysis of Verona Pharma’s growth trajectory and financial outlook.

Executive Commentary

CEO David Zaccardelli emphasized the importance of 2024 for COPD patients, stating, "Twenty twenty-four was an important year for millions of patients suffering from COPD." Chief Commercial Officer Chris Martin highlighted the innovation behind O2VARE, noting, "Innovation would trump route of administration."

Risks and Challenges

• Sustained net losses may concern investors focused on short-term profitability.
• Potential competitive pressures in the COPD market, despite no immediate threats.
• Achieving long-term profitability targets amidst potential market saturation.

Q&A

During the earnings call, analysts inquired about reimbursement strategies, with Verona Pharma confirming an 80% reimbursement rate through Medicare channels. The company also reported positive early patient persistency and refill data, indicating strong product adoption and satisfaction.

Full transcript - Verona Pharma PLC ADR (VRNA) Q4 2024:

Conference Operator: Good morning. Ladies and gentlemen, welcome to the Verona Pharma Fourth Quarter and Full Year twenty twenty four Financial Results and Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session.

Conference Moderator: This call is being recorded on Thursday, 02/27/2025. I would now like to turn the conference over to David Zaccardelli, the Chief Executive Officer. Please go ahead.

David Zaccardelli, Chief Executive Officer, Verona Pharma: Thank you, and welcome everyone to today’s call. During the past quarter, we achieved remarkable progress with the launch of OTUVAIR along with advancing our development programs and look forward to updating you today. With me are Mark Hahn, our Chief Financial Officer Doctor. Kathy Rickard, our Chief Medical (TASE:BLWV) Officer Chris Martin, our Chief Commercial Officer and Doctor. Tara Rowe, our Chief Development Officer.

Twenty twenty four was another transformational year for Verona Pharma with the U. S. FDA approval and commercial launch of Otvare for the maintenance treatment of COPD. Twenty twenty four was also an important year for millions of patients suffering from COPD as OTUVARE is the first inhaled therapy with a novel mechanism of action available for COPD in over twenty years. In addition to the outstanding launch, which I’ll walk through in a moment, we progressed our Phase II pipeline programs in COPD and bronchiectasis and have made key advances in our global partnering and regulatory strategy.

First, let’s review the initial launch of OTUVAIR, which is grounded in its broad indication for the maintenance treatment of 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 than in Q4 twenty twenty four. Additionally, we saw month over month growth in dispensed 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 O2VARE, including approximately 55% of our 2,500 Tier one HCPs. We continue to see HCPs expanding their prescribing to more patients. 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 Otvare across a broad range of COPD patients, including patients on background single, dual and approximately fifty percent on triple therapy.

This utilization across all patient types strengthens our belief that O2VAR’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 OTUVAIR is extremely encouraging and is also supported by our continued refill and persistency data, including patients receiving over five refills.

Mark Hahn, Chief Financial Officer, Verona Pharma: Alongside our successful Otvare launch,

David Zaccardelli, Chief Executive Officer, Verona Pharma: we have continued to advance our pipeline with two Phase II clinical programs. Following the end of the year, we successfully completed our Phase II dose ranging clinical trial with glycopyrrolate, ALAMA, to support a fixed dose combination with nebulized ensifentrine for 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 components in the second half of twenty twenty five. In addition, enrollment continues in our Phase two trial to assess nebulized ensifentrine in patients with bronchiectasis.

The randomized double blind placebo controlled parallel group trial will enroll 180 subjects with a recent history of pulmonary exacerbations. The study will assess the effect of ensifentrine 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 OTUVAIR in Macau for the maintenance treatment of COPD in adult patients, marking the first approval of OTUVAIR 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 in its pivotal Phase III 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 with regulatory authorities in preparation for potential marketing authorization application submissions in the Europe Union and The United Kingdom (TADAWUL:4280). 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.

Conference Operator: Good

Mark Hahn, Chief Financial Officer, Verona Pharma: morning. The fourth quarter was monumental for Varona as we recorded $36,600,000 in O2Vare 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 OTUVA 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 Otwovera was approved in June 2024 and prior to receiving FDA approval, costs associated with the manufacture of Otwovera were expensed as R and D expense. Research and development costs were $7,900,000 for the quarter ended 12/31/2024, compared to $4,100,000 reported for the fourth quarter of twenty twenty three and $44,600,000 for the year ended 12/31/2024 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 II trials 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 12/31/2024 compared to $50,400,000 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 OTUVAIR, 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 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, we 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.

Conference Moderator: Thank The first question comes from Andrew Trier with Jefferies. Please go ahead.

Andrew Trier, Analyst, Jefferies: 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? Thank you.

David Zaccardelli, Chief Executive Officer, Verona Pharma: Good morning, Andrew. Thank you for the question. I’ll turn it over to Mark and 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 a Phil perspective.

But from a gross to net, the real thing that you would see impacting it would be related to commercial co pay assistance.

Mark Hahn, Chief Financial Officer, Verona Pharma: If more of the commercial patients have their high deductibles, you could see a higher amount of

Mark Hahn, Chief Financial Officer, Verona Pharma: co pay assistance going to them. However, as

Mark Hahn, Chief Financial Officer, Verona Pharma: you know, 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.

Chris Martin, Chief Commercial Officer, Verona Pharma: 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 of the launch outweighs any potential deductible resets that many of these patients may have. Remember, we’re still nominally in the second full quarter of launch and our expectation is that you would expect to continue to see increasing new patients, new refills and total dispenses on a monthly basis.

I think you are going to deal with at the beginning of the year some deductible reset with patients that have Medicare Advantage and high deductible plans. 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.

Andrew Trier, Analyst, Jefferies: Yes, very good. And maybe I’ll try to ask is, how do you guys feel about 2025 consensus, which is about two fifty four million dollars And is it fair to assume you could breakeven this year?

Mark Hahn, Chief Financial Officer, Verona Pharma: 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 or relatively small sales team, very focused team 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

David Zaccardelli, Chief Executive Officer, Verona Pharma: to 300,000,000 annual rate, probably closer to

Mark Hahn, Chief Financial Officer, Verona Pharma: the $300,000,000 than the $250,000,000 actually. But I

Mark Hahn, Chief Financial Officer, Verona Pharma: think that’s where we could get. So yes, those numbers are right.

Mark Hahn, Chief Financial Officer, Verona Pharma: I think we could be in that rate by the end of the year.

David Zaccardelli, Chief Executive Officer, Verona Pharma: Okay. Yes. Very good. Thank you. 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 OTUVAIR, 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.

Andrew Trier, Analyst, Jefferies: Right. Thank you very much. Congrats again.

Mark Hahn, Chief Financial Officer, Verona Pharma: Thanks.

Conference Moderator: Thank you. The next question comes from Yasmeen Rahimi from Piper Sandler. Please go ahead.

Yasmeen Rahimi, Analyst, Piper Sandler: Good morning, team and congrats on really an incredible launch. I guess the first question that I have is one that we all analysts are getting from many of our clients when we’re 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, European filings. Help us understand like what is the market opportunity in, I think, The UK 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 the opportunity there?

And also, I guess the cost needed to build out a sales force. Appreciate, sorry, multipart question around that. So thank you.

David Zaccardelli, Chief Executive Officer, Verona Pharma: 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 needs. 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 prescribing continues. Now with over 4,600 unique HCP prescribers, approximately 55% of the Tier one targeted prescribers are prescribing already. I think that shows you the pent up need for O2 there and for helping patients who remain symptomatic. So we expect that to continue. There are, you know, clearly in our target list, you know, 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, you know, 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 O2Vare, 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 execution underlying all the activities and clearly that is an inherent risk 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 for our pharmaceutical business. So I think again, very optimistic on the market as we go through 2025 for sure. As far as the European filing, 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 partner and strategy. So I expect them to come together, especially as we walk through 2025.

Yasmeen Rahimi, Analyst, Piper Sandler: Thank you so much.

Mark Hahn, Chief Financial Officer, Verona Pharma: The

Conference Moderator: next question comes from Chargo Fauth with Wells Fargo (NYSE:WFC). Please go ahead.

Chris Martin, Chief Commercial Officer, Verona Pharma: 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 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, curious how to think about average duration like this. Is there upside to that six months average duration assumption? How can we think about that?

Thanks.

David Zaccardelli, Chief Executive Officer, Verona Pharma: Yes. Hi, Tiago. Thanks. Good morning. So, yes, I think that in our modeling and as we’ve described it, we use sort of the benchmark of typical COPD drugs that are their normal persistence and use over the year and that has been based on around six refills per year.

As you know, the way we distribute TOTO VIR through a 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 O2VARIS, of course, helping patients and, 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 of 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 do think there is upside to the six refills per year.

Mark Hahn, Chief Financial Officer, Verona Pharma: Fair enough. Thanks again for taking the question. Thanks.

Conference Moderator: Thank you. The next question comes from Tom Schroeder with BTIG. Please go ahead.

Tom Schroeder, Analyst, BTIG: Good morning. Congratulations. I was trying to get up the nerve to ask the breakeven question after one quarter. So thank you for asking.

David Zaccardelli, Chief Executive Officer, Verona Pharma: I have a couple of

Tom Schroeder, Analyst, BTIG: surveillance questions. Any common themes in the forty five percent who are not prescribing the drug? Is 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.

Chris Martin, Chief Commercial Officer, Verona Pharma: Thanks, Tom, for the question. Let’s start with the 45% that haven’t written yet. I want to focus on the or the other side of the or the number of writers that we have today. 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 O2 there. 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 trends 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 OTUVAIR is when we do market research on physicians that have ridden and those that haven’t ridden yet, all doctors see the benefits of OTUVAIR with the 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 understand that our writer group base will continue to grow and we will continue to penetrate 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 out of administration and we’re very clearly seeing that in the early 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 O2Vare 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.

Ram Selvaraju, Analyst, HCW: Great. Thank you.

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

Ram Selvaraju, Analyst, HCW: 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 OTUVAIR, 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 OTUVAIR 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 ensisentrine 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.

David Zaccardelli, Chief Executive Officer, Verona Pharma: Hi, Ram. Well, there’s a lot to unpack there. So let me start sort of near the back of that question list and we’ll work our way through it. You know, 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 for Eau2Vir 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 the regulatory authorities in Europe and The UK.

And maybe I’ll turn it over 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 market research.

Chris Martin, Chief Commercial Officer, Verona Pharma: Thanks, Dave. When we look at the patients and what’s the consistent theme about who’s getting prescribed OTUVAIR, it goes back to some very simple kind of truce. 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 into 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 O2Air could potentially help with these patients over time. The other thing that I think we’re very encouraged by is as Dave talked 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 Lava ICS or no long acting bronchodilator. I think this is going to increase over time. As we heard from physicians and research and seen from our interactions in the field, doctors are looking for another mechanism and another way to provide bronchodilation and non steroidal anti inflammatory effects that don’t involve using steroids. So I believe over time, the addition to triple will potentially become less than the addition to earlier lines of therapies 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 O2Vare 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 a great opportunity as we move through 2025 and into 2026 as well.

Mark Hahn, Chief Financial Officer, Verona Pharma: Thank you very much.

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

Conference Moderator0: 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 pulmonologists. Could you help us understand some of the pushes and pulls on reimbursement and what you are doing to improve this? And just a clarification 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?

Thank you.

David Zaccardelli, Chief Executive Officer, Verona Pharma: 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, manufacturing of DPI and MDI. So there may be other 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 O2Vare and our shareholders in the kind of structured deal that we do. And with that, I’ll turn it over to Chris.

Chris Martin, Chief Commercial Officer, Verona Pharma: 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 auths, there’s no real step edits, there’s access to O2VAR in those channels. What it becomes is an out of pocket cost for patients.

If a patient has supplemental insurance, we see their co pays are usually less than $10 If the patient’s met their deductible in Medicare Advantage, their co pay is 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. Within the Medicare side, we cannot provide any assistance to patients within Medicare.

So they really have to work through their deductibles or 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 low income that they can get this product through that process as well. But I would say within these first two quarters, nominally first two quarters of launch, we are very encouraged by the way reimbursement and access is presenting itself. And more importantly, when we get a patient on drug, we’re seeing many of these patients, the vast majority, I would say over eighty percent of them having co pays less than $10 as well.

Mark Hahn, Chief Financial Officer, Verona Pharma: Thank you.

Conference Moderator: Thank you. The next question comes from Lubalin Pachayapan with ROTH. Please go ahead.

Conference Operator: Good morning, Tim. Can you hear me okay?

David Zaccardelli, Chief Executive Officer, Verona Pharma: Yes. Good morning.

Conference Operator: All right. Hi. Okay. Thanks for that. 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, you know, how does the process work in the real world setting? So do patients have to take spirometry tests or anything just to, you know, make sure they are getting some benefit in terms of when they take the drug or when they call the doctor asking for prescription and then the doctor asks what kind of symptom improvements are you seeing. So are there specific symptoms that get improved with Otaware 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, you know, including the psychiatric events that are listed in the label? Are there any instances of those side effects recurring in these patients in real world setting?

David Zaccardelli, Chief Executive Officer, Verona Pharma: Great. Hi. Bhavan, maybe I’ll turn it over to Chris to start with the refill process and how that goes.

Chris Martin, Chief Commercial Officer, Verona Pharma: Yes. I mean, this is the benefit of our distribution pathway. We have amazing specialty pharmacy partners like Direct Rx and CVS and CenterWell in a carrier 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 process to encourage or talk to them about refilling their medication. And it’s a very, I would say, a very organized and systematic approach to ensuring patients stay on therapy.

They also have the opportunity in these situations to be able to 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, little bit too early to say, it’s different than the initial six month assess our forecast, but I think we believe there’s a significant upside there, a potential upside there. But one of the things that is also encouraging is the feedback that we’re getting from patients across the spectrum to specialty pharmacies to the doctors really highlights how OTUVAIR long term is going to be very beneficial for the patient.

David Zaccardelli, Chief Executive Officer, Verona Pharma: And with regards to side effects, as you know, we are subject and have an active pharmacovigilance program as all commercial drugs do. And I will get it 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 to be inconsistent with the label. And so I think it’s of course fairly early in the process at this time. I would say our side effect profile is consistent with the labeling.

Conference Operator: Thank you very much.

Conference Moderator: 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.

David Zaccardelli, Chief Executive Officer, Verona Pharma: Well, thank you everyone 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.

So look forward to keeping everyone updated as we progress and hope you have a great day.

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

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