Verona Pharma plc

Based on O2VAIR's novel mechanism of action and compelling benefit-to-risk profile, our market research shows HCPs have significant interest in prescribing O2VAIR broadly across all symptomatic COPD patient types. Initially, our launch efforts are focused on promoting O2VAIR to the most active HCPs that treat COPD patients, which our market analysis shows is approximately 14,500 providers. These providers include pulmonologists, primary care physicians, nurse practitioners, and physician assistants. Our sales and field reimbursement teams are fully hired and have been in the field since late July. During that time, they have interacted with over 2,000 HCPs with over 85% being top prescribers. Although it has just been a few days, over 100 HCPs have prescribed O2-VeR. In addition to the U.S. launch of O2-VeR, we plan to initiate two new Phase II programs in the third quarter. First, we are developing a fixed-dose combination formulation with N-Defensin and glycopyrrolate, ALAMA, for the maintenance treatment of COPD delivered via standard jet nebulizers. In July, we submitted an IND to the FDA, and subject to clearance, we plan to start a Phase II dose-ranging trial in the third quarter. The trial is a randomized, double-blind, placebo-controlled, one-week crossover trial to assess lung function, safety, and the pharmacokinetic profile of glycoparylate in the novel formulation delivered via nebulizer in approximately 40 patients with COPD. Following identification of an appropriate glycoparylate dose range, a Phase II trial assessing the fixed-dose combination of N-Difentrin and glycoparylate compared to placebo and individual components will be conducted. Additionally, we plan to initiate a Phase II trial to assess nebulized N-Difentrin in patients with non-cystic fibrosis bronchiectasis in the third quarter. The randomized, double-blind, placebo-controlled, parallel group trial will enroll 180 patients with a recent history of pulmonary exacerbation. The trial will assess the effect of three milligrams of n-subentrin twice daily on the rate and risk of pulmonary exacerbation, in addition to symptoms and quality of life. To ensure robust powering, the trial is planned as event-driven, where all patients enrolled will be treated for at least 24 weeks and until the required number of exacerbation events are observed. Lastly, our balance sheet remains strong with over $400 million of cash on hand and optionality for future draws under our Oak Tree facility. I will now turn the call over to Mark to review our financial results for the second quarter. Mark, please go ahead. As Dave mentioned, our balance sheet is strong. with in excess of $400 million in cash and equivalents at June 30, 2024. This includes $70 million drawn under our debt facility and $100 million drawn under the RPSA at approval. With the cash currently on hand and potential future access to the remaining $425 million under the Oak Tree facilities, we expect to have sufficient cash runway beyond 2026, including the commercial launch of O2 there in the U.S., and our two new Phase II clinical programs. Total operating expenses for the second quarter of 2024 were higher than historical levels as a result of the recognition of one-time expenses for milestone payments due to ligands and performance-based RSUs. Excluding these one-time costs, our quarterly R&D and SG&A expenses would be approximately $37 million for the quarter, in line with our previous guidance. Research and development costs were $19.4 million for the quarter, compared to a net reversal of costs of $2.5 million reported for the second quarter of 2023. This increase was primarily due to accrual of the $6.3 million approval milestone to LIGAN, a $2.5 million increase in share-based compensation largely driven by the recognition of expense related to performance-based RSUs, $1.7 million of expense related to pre-approval inventory production, and an $8.8 million increase in clinical trial costs from Q2 2023 to Q2 2024. selling, general, and administrative expenses for $49 million for the quarter ended June 30, 2024, compared to $12.4 million reported for the same period in 2023. This increase was driven primarily by an accrual of the $15 million first sale milestone due to Ligand, and increases of $7.4 million from marketing and other commercial launch-related activities $4.3 million in people-related costs as we built out our commercial organization, as well as an increase in share-based compensation of approximately $8 million, largely driven by performance-based RSU expense. I'll now turn the call back over to the operator for the Q&A.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you were 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. At this time, we will pause momentarily to assemble our roster. The first question comes from Andrew Tsai with Jefferies. Please go ahead.

Hey, thanks, good morning, and congratulations on the execution and launch. Thanks for taking my questions. So first one is, as we tweak around our models, what kind of payer rejection and patient abandonment rate should we be modeling for end-to-end? And can you remind us if there will be free drug?