Verona Pharma plc

Good morning. Ladies and gentlemen, welcome to the Verona Pharma fourth quarter and full year 2024 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. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 27, 2025. I would now like to turn the conference over to David Zaccardelli, the Chief Executive Officer. Please go ahead.

Thank you, and welcome everyone to today's call. During the past quarter, we achieved remarkable progress with the launch of O2Ver, along with advancing our development programs, and look forward to updating you today. With me 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. 2024 was another transformational year for Verona Pharma with the U.S. FDA approval and commercial launch of O2-Ver for the maintenance treatment of COPD. 2024 was also an important year for millions of patients suffering from COPD as O2-Ver is the first inhaled therapy with a novel mechanism of action available for COPD in over 20 years. In addition to the outstanding launch, which I'll walk through in a moment, we progressed our phase two 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 O2Ver, 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 O2Ver were $36.6 million in the fourth quarter and $42.3 million 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 2025 than in Q4 2024. 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 O2Ver can become a blockbuster product. We continue to strengthen our prescriber base with over 4,600 unique HCPs prescribing O2Ver including approximately 55% of our 2,500 Tier 1 HCPs. We continue to see HCPs expanding their prescribing to more patients. Specifically, over 275 HCPs have now prescribed O2-ver 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 O2-Ver across a broad range of COPD patients, including patients on background single, dual, and approximately 50% on triple therapy. This utilization across all patient types strengthens our belief that O2-Ver's novel bronchodilator and nonsteroidal anti-inflammatory activity can redefine the treatment paradigm for COPD. Feedback from both patients and healthcare providers about the meaningful impact of O2-Ver is extremely encouraging and is also supported by our continued refill and persistency data, including patients receiving over five refills. Alongside our successful O2-Ver launch, 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 glycoparylate, ALAMA, to support a fixed-dose combination with nebulized encephalogen for the maintenance treatment of COPD. This study confirmed the appropriate dose range of nebulized glycoparylate to support further clinical development of the fixed-dose combination. We plan to initiate a dose-ranging Phase IIb trial evaluating a fixed-dose combination of n-Cfentrin with glycoparylate compared to the individual components in the second half of 2025. In addition, enrollment continues in our Phase II trial to assess nebulized n-Cfentrin 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 N-C-Fentrin, 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 N-C-Fentrin in Greater China, recently announced the approval of O2-Ver in Macau for the maintenance treatment of COPD in adult patients, marking the first approval of O2-Ver 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 three clinical trial in China to evaluate ncfentrin for the maintenance treatment of COPD and expects to provide results in mid 2025. 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. 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.

Good morning. The fourth quarter was monumental for Verona, as we recorded $36.6 million in O2 bear sales in the first full quarter of sales. For the year ended December 31, 2024, net O2 VAERS sales were $42.3 million. Our specialty pharmacy partners continue to maintain inventory at their contracted levels of two to three weeks. Cost of O2 VAERS sales was $2 million for the quarter ended December 31, and $2.6 million for the year. These costs include post-approval manufacturing costs, inventory overhead costs, and royalties. Recall that O2Ver was approved in June 2024, and prior to receiving FDA approval, costs associated with the manufacture of O2Ver were expensed as R&D expense. Research and development costs were $7.9 million for the quarter ended December 31, 2024, compared to $4.1 million reported for the fourth quarter of 2023, and $44.6 million for the year ended December 31, 2024, compared to $17.2 million reported for 2023. The increase across the annual period was primarily due to increases in clinical trial and other development costs related to the initiation of two phase two trials of $17.5 million, the $6.3 million approval milestone, an increase in share-based compensation of $3.1 billion, and increases in people-related costs and pre-approval manufacturing costs. Selling, general, and administrative expenses were $45.1 million for the quarter ended December 31, 2024, compared to $15 million reported for the same period in 2023. and $149.8 million for the year end of December 31, 2024, compared to $50.4 million for 2023. The increase across the annual period was primarily due to a $29.7 million increase in marketing and other commercial related activities, supporting the launch of O2 there, the $15 million first sale milestone, a $26.8 million increase in people-related costs as we built out our commercial organization, and an $18.8 million increase in share-based compensation. For the quarter ended December 31, 2024, net loss after tax was $33.8 million compared to a net loss after tax of $14.1 million for the same period in 2023. And $173.4 million for the year ended December 31, 2024, compared to $54.4 million for the prior year. This represents a loss of 5 cents per ordinary share, or 41 cents per ADS for the quarter, compared to a loss of 2 cents per ordinary share, or 18 cents per ADS for the fourth quarter of 2023. And a loss of 27 cents per ordinary share, or $2.13 per ADS for the year compared to a loss of 9 cents per ordinary share or 69 cents per ADS in 2023. Finally, our balance sheet remains strong with $400 million in cash and equivalents as of December 31, 2024. In addition, we have access to up to $425 million of additional capital through the Oak Tree facilities. I'll now turn the call back over to the operator for the Q&A.