Verona Pharma plc

Welcome to Verona Pharma's third quarter 2023 financial results and operating highlights conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal the conference by pressing star and zero. Earlier this morning, Verona Pharma issued a press release announcing its financial results for the three months ended September 30, 2023. A copy can be found in the investor relations tab on the corporate website, www.veronafarma.com. Before we begin, I'd like to remind you that during today's call, statements about the company's future expectations, plans, and prospects are forward-looking statements. These forward-looking statements are based on management's current expectations. These statements are neither promises nor guarantees and involve known and unknown risk uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from our expectation expressed or implied by the forward-looking statements. Any such forward-looking statements represent management's estimates as of the date of this conference call. While the company may elect to update such forward-looking statements at some point in the future, It disclaims any obligation to do so even if subsequent events cause its views to change. As a reminder, this call is being recorded and will remain available for 90 days. I'd now like to turn the call over to Dr. David Zaccardelli, Chief Executive Officer. Please go ahead.

Thank you and welcome everyone to today's call. With me today are Mark Khan, our Chief Financial Officer, Dr. Kathy Rickard, our Chief Medical Officer, and Chris Martin, our Senior Vice President of Commercial. The third quarter continued our constant progress toward our goal of providing N-C-Pentrin as a novel treatment for COPD patients. In August, the FDA accepted for review our new drug application seeking approval of N-C-Pentrin for the maintenance treatment of patients with COPD. The agency assigned a PDUFA target action date of June 26, 2024, and is not currently planning to hold an advisory committee meeting to discuss the application. We look forward to continuing our work with the FDA during the review. If approved, Ncfentrin is expected to be the first novel mechanism available for the treatment of COPD in more than 10 years. We believe its bronchodilator and non-steroidal anti-inflammatory activity has the potential to change the treatment paradigm for COPD. Recently, we hosted an in-person investor meeting in New York to provide an overview of our commercial preparations for the potential U.S. launch of NC Veterans with the company's senior management team and key opinion leader, Dr. Jamie Rutland. During the meeting, we shared detailed overview of preparations for the planned launch of NC-Fentron, including a review of the current COPD market, unmet treatment needs, launch access, distribution, reimbursement strategies, and plans for field deployment. For those who may have missed it, a replay of the meeting is available on our website. Overall, we believe we are very well positioned to launch NCFentron, with many key hires already in place across our commercial team and strong relationships being built on both the physician and payer fronts. With this, we are confident we will be able to quickly capitalize on the U.S. launch of NCFentron, pending approval next June. In September, we presented additional analyses of the Enhance One 24-week exacerbation data at ERS, which demonstrated treatment with ncfentrin resulted in a substantial decrease in the rate and risk of moderate and severe COPD exacerbations. In addition, it highlighted the impact of ncfentrin treatment on healthcare resource utilization related to COPD, including fewer physician's office visits, emergency department visits, and hospitalizations compared with placebo treatment. In October, we presented additional analyses from the ENHANCE-1 and ENHANCE-2 studies at the CHESS annual meeting. The data from pooled analyses demonstrated that treatment with encipentrin resulted in substantial reductions in the rate and risk of COPD exacerbations regardless of recent exacerbation history. And the medication was well tolerated across patient groups. Additionally, subgroup data analyses demonstrated treatment with NC-Phengrin resulted in improvements in lung function, symptoms, quality of life endpoints, and reductions in the rate and risk of exacerbations, regardless of background therapy, as well as reductions in daily rescue medication use. Also at CHESS, we launched the disease awareness campaign titled Unspoken COPD, The campaign highlights the severe impact COPD has on patients' daily life and encourages HCPs to engage in deeper conversations to fully understand COPD's impact on each patient in their practice. Turning to our global partnering strategy, Nuance Pharma, our development partner in Greater China, has continued their phase three trial evaluating NC-Pentron for the maintenance treatment of COPD in China. As a reminder, Nuance Pharma has exclusive rights to develop and commercialize MC-Fenton in Greater China, and as such, will play a key role in addressing the global need for novel treatment for COPD. We look forward to providing updates as the trial progresses. Looking ahead, we are expanding our pipeline, starting with a plan to initiate two clinical programs. We are developing a fixed-dose combination formulation with N-C-Pentrin and glycopyrrolate, ALAMA, for the maintenance treatment of COPD delivered via a nebulizer. Fixed-dose combination therapies are commonly used in the treatment of COPD, historically in DPI and PMDI therapies only. Based on market research, there is an unmet need for a nebulized fixed-dose combination therapy. We believe the combination of ncfentrin with ALAMA will provide COPD patients with the first nebulized six-dose combination that has bronchodilation through a dual mechanism and also non-steroidal anti-inflammatory effects via PDE inhibition. If a feasible formulation is developed, we plan to submit an investigational drug application to the FDA, and, if cleared, start a Phase II clinical trial assessing the safety and efficacy of a fixed-dose formulation of n-C-fentrin and glycopyrrolate in the second half of 2024. Additionally, based on the clinical profile of n-C-fentrin in COPD patients, including data that supports reduction in exacerbation burden, improvement in lung function, and the PDE3 and PDE4 mechanism of action supporting enhanced mucociliary clearance, we believe N-chefentrin could be an effective treatment for non-cystic fibrosis bronchiectasis. This is a severe chronic condition where the airways of the lung become abnormally widened, leading to a cycle of infection, inflammation, and exacerbation that cause lung tissue damage. The condition affects approximately 370,000 patients in the U.S. And there are currently no therapies approved specifically for non-CF bronchiectasis. Physicians use bronchodilators, antibiotics, steroids, and surgery to treat patients. If our NDA is approved, we plan to commence a phase two clinical trial to assess the efficacy and safety of nebulized end-definition in patients with non-CF bronchiectasis in the second half of 2024, subject to clearance by the FDA. We are pleased with our constant progress in all areas, including regulatory, commercial preparation, and new program development. I will now turn the call over to Mark to review our financial results for the third quarter.

Thank you, Dave, and good morning, everyone. We ended the third quarter of 2023 with $257.4 million in cash and equivalents. We believe our balance sheet remains strong with the cash currently on hand expected cash receipts from the UK tax credit program, and funding anticipated to be available under the Oxford Loan Facility, we expect to have sufficient runway at least through the end of 2025, including the planned commercial launch of NC-Fentron in the US pending regulatory approval. For the quarter ended September 30, 2023, net loss after tax was $14.7 million compared to a net loss after tax of $15.6 million for the same period in 2022. This represents a loss of 2 cents per ordinary share or 18 cents per ADS for the quarter, compared to a loss of 3 cents per ordinary share or 24 cents per ADS for the third quarter of 2022. Research and development costs were $3 million for the quarter ended September 30, 2023, compared to costs of $9.8 million for the third quarter of 2022. The decrease was primarily due to a $7.9 million decrease in clinical trial costs as all study conduct and analyses under the phase three enhanced program were complete, whereas in the same period in 2022, significant costs were incurred associated with the then ongoing study conduct. The 2023 third quarter clinical trial and other development costs also include the impact of $2.2 million of credits received related to the final financial reconciliation of a Phase 3 enhanced program supplier. This decrease was partially offset by an increase of $.7 million in people-related costs. Selling, general, and administrative expenses were $13.4 million for the quarter ended September 30, 2023, compared to $5.3 million reported for the same period in 2022. This increase was primarily due to a $4.7 million increase in people-related costs, as well as an increase of $2.9 million for costs primarily related to the build-out of the distribution network and work related to payer and disease education, as well as advancing the commercial and information technology infrastructure in preparation for potential commercial launch.