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spk05: Welcome to Verona Pharma's fourth quarter and full year quarter 2023 financial results and operating highlights conference call. At this time, all participants are in a listen-only mode. Earlier this morning, Verona Pharma issued a press release announcing its financial results for the three months and full year ended December 31, 2023. A copy can be found in the Investor Relations tab on the corporate website. www.veronapharma.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 risks, uncertainties, and other important factors. that may cause our actual results, performance, or achievements to be materially different from our expectations 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 Zacardelli, Chief Executive Officer. Please go ahead.
spk09: Thank you and welcome everyone to today's call. With me today are Mark Hahn, our Chief Financial Officer, Dr. Kathy Rickard, our Chief Medical Officer, Chris Martin, our Chief Commercial Officer, and Dr. Tara Rowe, our Chief Development Officer. 2023 was a pivotal year for Verona Pharma, and importantly, for millions of patients suffering from COPD. Following a very positive data from our phase three enhanced program, we submitted a new drug application to the FDA seeking U.S. approval of ncfentrin for the maintenance treatment of patients with COPD. As you know, the FDA accepted our NDA for review, and assigned a PDUFA target action date of June 26, 2024, and indicated they are not planning to hold an advisory committee meeting to discuss the NDA. We continue to advance our preparations for the planned commercial launch of ncFentrin in the U.S. and look forward to continuing our work with the FDA during their review. If approved, ncFentrin is expected to be the first novel inhaled mechanism available for the treatment of COPD in over 20 years. We believe its dual mechanism providing bronchodilator and non-steroidal anti-inflammatory activity has the potential to change the treatment paradigm for COPD. Currently, more than 390 million patients suffer from COPD worldwide, and it is the third leading cause of death globally. Despite the availability of existing COPD treatments in the U.S., approximately 50% of patients experience persistent symptoms for more than 24 days per month. In addition, approximately 60% of patients who could be considered maximally treated on dual bronchodilators or triple therapy are dissatisfied. This highlights HCP's continued need for new and effective COPD therapies to provide relief to their patients. In October, we hosted an investor event where we presented a comprehensive update on our commercial launch preparation. We continue to make excellent progress on this front, including strengthening our commercial and sales team and continuing to finalize key tactics, including our distribution and patient service programs, our branded HCP and patient engagement plans, and our internal data infrastructure capabilities to allow quick and actionable insights during launch. We have also continued the rollout of our disease awareness campaign, Unspoken COPD, which launched at the CHEST meeting. The campaign is actively highlighting the severe impact of COPD on patients' lives and encourages HCPs to engage patients in a better dialogue to help optimize their care. Overall, we believe we are in a strong position to successfully launch NC-Fentron pending approval in June. This confidence is based on the novel profile of NC-Fentron, the significant unmet need in COPD, our commercial preparation, and the deep experience and capabilities of the Verona team. In addition to the planned US launch of NC-Fentron, we've progressed development of two new phase two programs. First, we are developing a fixed dose combination formulation with ncfentrin and glycopyrrolate, ALAMA, for the maintenance treatment of COPD delivered via nebulizer. Fixed dose combination therapies are commonly used in the treatment of COPD, historically in DPI and PMDI formulations. Based on market research, an unmet need exists for a nebulized fixed-dose combination therapy. We believe the combination of NC-fentrin with ALAMA could provide COPD patients with the first nebulized fixed-dose combination that provides bronchodilation through two complementary mechanisms and also non-steroidal anti-inflammatory effects. This combination was assessed in the enhanced program where NC-fentrin added onto ALAMA a demonstrated robust efficacy and safety compared with placebo added onto a lot. Upon confirmation of an adequate fixed dose combination formulation, we plan to submit an investigational new drug application to the FDA in the second half of 2024 and plan to start a Phase IIb clinical program intending to support dose selection for Phase III. In this program, we anticipate a dose-ranging trial in patients with COPD to identify the appropriate dose of nebulized glycoparylate in the fixed-dose combination, and a second dose-ranging trial with a fixed-dose combination versus individual components using a factorial design. Both trials are planned as randomized double-blind crossover trials in approximately 50 patients, each with lung function endpoints. Additionally, based on the clinical profile of ncfentrin observed in COPD patients, including a reduction in exacerbation rate and risk, and improvement in symptoms of cough and sputum, we believe ncfentrin could potentially 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 up to 500,000 patients in the U.S., and there is currently no approved therapy. Despite the lack of approved treatments, ACPs use bronchodilators, antibiotics, steroids, mucus thinners, and surgery to treat patients. We plan to commence a phase two clinical trial to assess the efficacy and safety of nebulized NC-Pentrin in patients with non-CF bronchiectasis in the second half of 2024. The trial is planned as a randomized, double-blind, placebo-controlled trial in approximately 180 patients with non-CF bronchiectasis over approximately 24 weeks. Endpoints including exacerbations, symptoms and lung function will be assessed in this trial. Moving on to our finances, I am pleased to report on our strong balance sheet. In support of our commercialization activities, as well as our continued pipeline expansion, in December, we enhanced our financial flexibility through a debt financing facility providing access to up to $400 million. We borrowed $50 million at closing and may draw an additional $100 million upon approval of NCFentron. Future draws are available upon certain commercial milestones and other conditions. With our current cash balance and the expected proceeds available under this debt facility, we believe we are in a strong financial position as we prepare to launch NCFentron in the U.S. and advance new clinical programs. Turning to our global partnering strategy, our development partner, Nuance Pharma, is continuing enrollment in a pivotal phase three trial of MC-Fentrin for the maintenance treatment of COPD in China. As a reminder, Nuance Pharma has exclusive rights to develop and commercialize MC-Fentrin in greater China, and as such, will play a key role in addressing the global need for a novel treatment for COPD. We look forward to providing updates as Nuance Nuance's trial progresses. We are pleased with our progress in important areas, including regulatory accomplishment, commercial preparation, and new program development. I will now turn the call over to Mark to review our financial results for 2023. Thank you, Dave.
spk12: We ended 2023 with $271.8 million in cash and equivalents.
spk08: We believe our balance sheet remains strong and with the cash currently on hand and funding anticipated to be available under the recently closed $400 million debt facility, we expect to have sufficient runway at least through the end of 2026, including the planned commercialization of NC pension in the US, if approved, and the two phase two development programs Dave discussed a few moments ago. For the year ended December 31, 2023, net loss after tax was $54.4 million compared to a net loss after tax of $68.7 million for the prior year. This represents a loss of $0.09 per ordinary share or $0.69 per ADS for the year compared to a loss of $0.13 per ordinary share or $1.04 per ADS in 2022. Research and development costs were $17.2 million for the year ended December 31, 2023, compared to the $49.3 million reported for 2022. This decrease was driven by less cost incurred on the enhanced phase three program, which completed study conduct and analysis early in 2023, whereas in 2022, significant costs were incurred associated with the then ongoing study conduct. Selling general and administrative expenses were $50.4 million for the year ended December 31, 2023, compared to $26.6 million reported for the prior year. This increase was driven primarily by a $15.6 million increase in people-related costs as we expanded our headcount with key hires in medical affairs and commercial positions, inclusive of share-based compensation, as well as an increase of $9.7 million related to the build out of the commercial and information technology infrastructures, marketing and market development expenses, and costs associated with our medical affairs team's increased presence at local, regional, and national medical conferences.
spk12: I'll now turn the call back to the operator for the Q&A.
spk10: We will now begin the question and answer session.
spk05: To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.
spk11: At this time, we will pause momentarily to assemble our roster.
spk10: The first question today comes from Andrew Tsai with Jefferies.
spk05: Please go ahead.
spk07: Hey, thanks. Good morning. Appreciate the updates. Thanks for taking our questions. So a couple on our side. And I guess for the first one, for the ongoing NDA review, I know the FDA continues to indicate no adcom. But since we're basically three to four months away from the PDUFA, I'm just curious how realistic is a scenario at this juncture. Is it fair to essentially rule out a potential adcom or not yet? And secondly, how has the FDA dialogue been? Have they finished with CMC inspections? And if there seems to be no real issues with the review, you know, could an early approval be a possibility? And would you be ready to launch if that were the case? Thanks.
spk09: Good morning, Andrew. Thanks for the questions. Good. So let me talk about the adcom. You know, I think, of course, anything is possible, but as you sort of outlined, you know, time continues to move forward. And the FDA has communicated to us twice that they're not planning to have an adcom. So that's our operating philosophy on that. But again, let's be aware that anything can happen. With regard to the review, I mean, I think I would just say it continues and is ongoing. And, you know, I think that with regard to inspections, we've had clinical inspections. I think that both our API and drug product manufacturer are facilities that are known to the agency. And so how they're managing inspections is in their courts. And with regard to, you know, early approvals, you know, I would just say that the Bidoof is June 26th. That's how we think about it. And we'll adjust accordingly. Are we prepared to launch? In many ways, yes. I think that some of the things that affect that timing always at the end are, you know, the label, the final, you know, artwork, packaging, labeling, distribution aspects that happen no matter when an approval occurs. But overall, we're very pleased with where we are with our supply chain.
spk07: Okay, very good. Thanks. And maybe just one more is, let's just say you guys are approved and are launching in second half. Hypothetically speaking, if the launch trajectory doesn't ramp up It doesn't look strong right off the bat. Why would that be the case? Just curious how you think what could go wrong and how you're thinking about these potential risks. Thank you.
spk09: Yeah. So, you know, I'll make a general statement. I think based on all our work we've done to date, all the market research, the work that we have done with HCPs, we feel confident that the need is there and that the launch will go well in our view. But I'll ask Chris to comment on anything that is on his mind with regard to risks.
spk00: Yeah, thank you, Dave. And Andrew, I appreciate the question as well. If we think about launches, what you typically see in a lot of launches that are slower challenges with market access, I think we've been able to mitigate that risk partly due to the channel that NC Fenton will flow through being that it is primarily a Medicare Part B medical reimbursement pathway. You know, that risk of slower uptake of new product launches is not essentially eliminated, but it is mitigated by the pathway of reimbursement of NCFentron. You know, and I think internally we've done a very good job of ensuring that we understand that pathway. Our limited distribution network that we talked about in the October meeting allows for those specialty DME accredited pharmacies to really understand and adjudicate prescriptions the appropriate way. And we think, you know, when we think about how NC Fentron's launch would be versus potentially other launches that people are familiar with, that market access dynamic is something that always is in the back of your mind. But because of the reimbursement channel, we believe that NC Fentron will flow through the channel in an appropriate fashion and and in a fashion that meets what we've seen in market research, which is physicians' willingness to add antifentorin across the spectrum in a variety of patients who remain persistently symptomatic. That dynamic, I think, is very favorable for us as we move forward into launch.
spk11: Great. Thanks again.
spk10: The next question comes from Yasmeen Rami with Piper Sandler.
spk05: Please go ahead.
spk02: Good morning, team, and thank you so much for all your thoughtful comments. A few questions for you. I guess the first question is, have you started the discussion with the agency in regards to label negotiations? What is your perspective on what your ask is in regards to the label? That's part one. Part two is as we go into June 26, obviously once the label is available, you'll host a call. Could you tell us if you're going to be able to be in a position to also share pricing at that junction and maybe the pricing range that you guys have given us has been quite wide. would love to get your perspective how you're thinking about it and how payers are perceiving that range. And then the third question is for Mark, which is, you know, how should we be thinking about OPEX over this year and next year as you're building a commercial infrastructure? And thank you again, Tim, for allowing me to ask these three-part questions.
spk09: Good morning, yes. Thanks for that. I'll start with the first one with regard to labeling. Again, we won't really comment on all the review back and forth with the agency. I would point out that it, you know, is fairly early still in the process with labeling. maybe around four months or so to go. And so I think that from my experience in past reviews, we're about where we need to be. But of course, they're all different in their own right. But I think that it is a little early in the process right now on the labeling end of things. And with regard to what's in the label, I mean, I think that we put forward many of the aspects that I think everyone knows with regard to the indication for the maintenance treatment of COPD. And, of course, we represented comprehensively the results from the clinical trials, of course, with the emphasis from the enhanced program and, of course, all the other important elements that you'd expect in a label from CMC to non-clinical that are included. So I think our submission was comprehensive in nature. With regard to pricing, you know, yes, I think that with approval, we'll be well-versed in how we're pricing NC-Fentron. But I'll ask Chris just to comment on the range of pricing.
spk00: Yeah, thanks, Dave, and Yaz, appreciate the question as well. When it comes to pricing, we have provided a fairly large range there. I think, you know, when we think about the market today, we know that the current nebulized products like Upelri are somewhere in the $1,400 a month range, and then we also use Dupixen upwards of $3,800 a month as kind of an upper bound of pricing. The other thing that we have done from a work standpoint is understand kind of the value that NC Ventron brings to the marketplace, to patients, to physicians in the system. We believe that value is substantial. You know, when we think about exacerbation data, lung function data, symptom improvement data, and a benefit-risk profile that Dave's described numerous times, we believe that value is very high. And so when we've had discussions with primarily on the Medicare Advantage side with those payers, what they've told us is they expect NC Fenton to be a premium to Medicare. the current nebulized products. Remember, the current nebulized products are single llamas or lavas. So the profile of NC Fentron with bronchodilation, non-steroidal anti-inflammatory is very different. So we believe we do have some pricing flexibility based on the value NC Fentron brings to the marketplace. I think we are also looking at other dynamics that are in play, including IR, Inflation Reduction Act, to ensure that we're We're pricing NC-Fenton appropriate to the value that it provides the patients and the physicians and the system. And as Dave said, we'll be in a very good place come PDUFA to be able to provide specifics around that.
spk08: I think Mark was... Yep, I'll take the OPEX question. So, yes, the OPEX for Q4 was about $19 million, a little over $19 million. I think you can expect that over the course of 2024 to tick up sequentially with a couple of caveats and get to maybe a little bit more than double where it is today by the end of the year. Along the way, there will be a couple of a couple of bumps in spend. One is upon approval, we have a five million pound milestone payment that's due to Ligan. So that'll be an incremental one time expense. in Q2, presumably. And then upon launch, we have a $15 million milestone payment due to Ligand as well. So another one-time payment expense in the period of launch.
spk10: Thank you so much, Mark.
spk11: Thanks, yes.
spk10: The next question comes from Caroline Pocher with Wedbush Securities. Please go ahead.
spk03: Hi, good morning. This is Caroline for Andreas, and thanks for taking our questions. So just one for us. We noticed the Dupixent S-BLA for COPD has a PDUFA date of June 27th, which happens to be the day after ENSAfentorin's PDUFA date. Even though Dupixent can only be used in a subset of COPD patients and ENSAfentorin more broadly, does this proximity and potential approval and launch change anything about your commercial strategy?
spk09: I think, hi, good morning, Caroline. I think the short answer is no. I think also, you know, we noted that and I think it's good for COPD in general and the attention this severe disease is getting. And I think it's great for the patients that Depixen applies to as well, as you mentioned, is a fairly small subset of the entire COPD population in the US that's under treatment. But it doesn't change our view of ncfentrin, how ncfentrin would be utilized in patients who are symptomatic across the spectrum of the disease. And for that matter, you know, I don't know if there's anything that really conflicts with ncfentrin and dupixent from a pharmacology basis as well. So we see ncfentrin's application the same as we did before.
spk03: Okay. Awesome.
spk10: Thank you so much, and congrats on all the progress.
spk12: Great. Thanks so much.
spk10: The next question comes from Xinwei An with Canaccord Genuity. Please go ahead.
spk04: Hi. Good morning. This is Xinwei An for Edward. Sort of a follow-up question after the DuPixent one. We would like to ask about the physicians' mindshare. So based on the feedbacks that you have collected from prescribers, do you maybe projected or do you foresee if they would have a preference in how they would use different therapies? Thank you.
spk09: Yes. Thank you so much for the question. Maybe I'll have Chris comment on that in general.
spk00: Thanks, Dave. When we look at our market research, I mean, the market research that we've done is extraordinarily extensive. I think we're close to well over 1,000 physicians surveyed across all specialties, both pulmonology, primary care, and we've also spent a lot of focus on nurse practitioners and PAs. What we see in that market research is, I'm going to boil it down to really two things. One is we see consistency in the unmet need that exists. And we see this both from patients and physicians. We see that patients are complaining, as Dave described in his opening comments, of persistent symptoms. At least half of these patients are having persistent symptoms regardless of therapy. And then we also hear from The physicians, when a patient is persistently symptomatic, they lack options or new ways to treat these patients. What they're excited about in our market research is how broad of a utilization Ncfentrin can have. They see this drug in a very wide variety of places, and they see it as potentially as an add-on to all therapeutic classes that exist today when a patient remains persistently symptomatic. but they also continue to express to us why this drug couldn't be potentially used on its own and maybe push ICS and the steroids to a later line therapy. You know, across all of our research, what we see is that, you know, the adoption and the willingness to try ncfentrin is very high. I think when we presented in October, we talked about almost 90% of the physicians surveyed talking about adopting ncfentrin within the first 12 months that doesn't change uh with you know entry of of dupixen or even uh potentially either other products that are in the pipeline because foundationally what ncfentrin provides them is the first novel mechanism that works broadly across all their patient populations regardless of background therapy regardless of eosinophil counts it allows them a really a found a new foundational therapy that their their patients and the doctors desire to have within their practice.
spk10: Okay, great. Thank you. The next question comes from Julie with True Securities. Please go ahead.
spk01: Hi, good day and congrats on the quarter and thanks for taking our question. What are your expectations for this fixed dose nebulized encipentrin plus LAMA in COPD space? Are there any specific subpopulations being unlocked with this combo? Any color would be helpful. Thank you.
spk09: Thanks so much for the question. I'll just make a brief comment and then ask Dr. Tera Rowe to comment as well. Our view is that it's a natural progression with regard to products for the treatment in COPD. You may know the combination products are very commonly used in combining different bronchodilators, anti-inflammatories together. And combining ncfentrin with ALAMA, I think, makes natural sense. I think our view is that it would address a fairly broad population in COPD as well as this is the typical treatment. And with that, I'll turn it over to Tara to make any comments.
spk13: Sure. I think one of the real important features of the fixed-dose combination that we're preparing is that you've got encephentrine with bronchodilatory and anti-inflammatory pharmacology combined with another bronchodilator. So you have essentially two bronchodilator mechanisms and an anti-inflammatory mechanism that's non-steroidal, essentially giving you the profile of a triple in this fixed-dose combination. So we think it will be a very important alternative to triple therapy for quite a few patients.
spk01: Thank you. And I'm sorry, I forgot to mention this was maybe on for June. Thanks for taking our question. Thanks so much.
spk10: As a reminder, if you have a question, please press star then one to be joined into the queue.
spk05: The next question comes from Tom Schrader with BTIG. Please go ahead.
spk06: Good morning. Good luck on the PDUFA date. We've been waiting for this forever. Good morning, Tom. I have a follow-up on the mixed product. You're doing an awful lot of dosing when you've already shown it's safe and efficacious at doses. Is the hope that this would really be a different product? than the combination and that you would maybe get at some of the synergies that you saw in your early data?
spk09: Thanks so much, Tom, for that question. Tara, if you'd like to comment on our strategy on dose selection and exploring that in these trials.
spk13: Sure. Yep. So this is a new product. It's a new formulation. That's a requirement in order to feasibly combine encephentrin and Alama. And so, let's see. What was the second part of your question again?
spk06: I'm sorry. Well, there's some interesting synergies between encephentrin and LAMAs in the early preclinical data about rapidity of action. And the question is, are you hoping to capture some of that?
spk13: Oh, of course. You know, that early data did show some synergistic effects with encephentrin and glycopyrrolate and other muscarinic antagonists, and that certainly was mirrored in the phase 3 data we saw on top of long-acting muscarinic antagonists.
spk06: Okay, and if I could follow up quickly on bronchiexasus, would you try to develop a second product? Would it look different than the COPD product? Because you're kind of in an orphan indication, so the price points might be very different.
spk09: Yeah, no, I think, Tom, our strategy is actually to progress with the current formulation. Of course, that's very efficient, as you can imagine. And I think as an incremental indication, while it's not technically an orphan, I appreciate that the number is closer to an orphan than not, we're addressing it as just another indication, which is great in helping patients that NC-Fence in its current formulation could serve.
spk06: Okay, great. And again, good luck.
spk12: Thanks so much.
spk10: This concludes our question and answer session.
spk05: I would like to turn the conference back over to David Zaccardelli for any closing remarks.
spk09: Great. Thank you everyone for your questions today. And in addition, I'd like to thank our shareholders for their continued support. and the dedicated and talented team at Verona for their work and commitment. And we look forward to updating you on our progress over the next few months.
spk12: Have a great day.
spk10: The conference is now concluded. Thank you for attending today's presentation.
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