Verona Pharma plc

Verona Pharma issued a press release announcing its financial results for the three months ended March 31st, 2025. 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 the 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 Zaccadadi, Chief Executive Officer.

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. The first quarter of 2025 was phenomenal for Verona Pharma as we continue to drive the highly successful US launch of O2Ver for the maintenance treatment of COPD, as well as advance our clinical development programs and global regulatory strategy. I am incredibly pleased to report for the first time Verona's quarterly revenue exceeded our quarterly operating expenses excluding non-cash charges. First, let's review the ongoing launch of O2Ver, which continues to accelerate quarter over quarter. The remarkable uptake of O2Ver, which is the first inhaled product with a novel mechanism of action to treat COPD in more than 20 years, underscores the unmet need of patients with COPD. Its rapid adoption is grounded in O2VAIR's broad indication for the maintenance treatment of COPD and its compelling benefit to risk profile. In the first quarter of 2025, which is only the second full quarter of commercial availability, we almost doubled sales of O2VAIR compared to the fourth quarter of 2024, recording $71.3 million in net product sales with continued month-over-month growth. The launch is demonstrating success across every measure. Prescriptions increased to approximately 25,000 filled during the first quarter. New patient starts grew over 25% compared to Q4 2024, and refills represented 60% of all dispenses during the first quarter. Total prescribers grew about 50% relative to Q4, to approximately 5,300, of which 60% are Varonis Tier 1 HCPs. Prescriber depth is also increasing, with over 425 HCPs prescribing O2-Ver to 20 patients or more. This dramatic early adoption reinforces our belief that O2-Ver is the most successful COPD launch and is tracking to become what we consider a blockbuster product. HCPs continue to prescribe O2-VER to a wide spectrum of their COPD patients, including patients on background single, dual, and approximately 50% on triple therapy. This broad application across diverse patient types highlights our confidence that O2-VER's novel bronchodilator and non-steroidal anti-inflammatory activity has the potential to redefine the standard of care in COPD treatments. We continue to receive meaningful and extremely encouraging feedback from patients and HCPs regarding the impact of O2Vir, which is reflected in our growing refill and persistency data. With our launch momentum, we are planning to expand our field sales team to around 30 representatives to about 120 total in the third quarter. We believe this expanded field presence will enable us to further support accelerating the launch. As part of our ongoing strategic work to solidify the long-term success of O2VAIR, a new orange book listed patent has been granted with an expiration date in 2044, giving us a total of four orange book listed patents. In parallel with our successful launch of O2-VeR, we continue to advance our pipeline with two Phase II clinical programs. We plan to initiate a dose-ranging Phase IIb trial in the second half of this year, evaluating a fixed-dose combination of Ncfentrin with glycopyrrolate compared to the individual components. In addition, enrollment is ongoing in our Phase II clinical trial of nebulized Ncfentrin in non-CF bronchiectasis. The study will assess the effect of Ncfentrin, three milligrams, twice daily on the rate and risk of pulmonary exacerbations, symptoms, and quality of life. Turning to our global strategy, in February, Nuance Pharma, our development partner for Ncfentrin in Greater China, announced O2vera was approved in Macau for the maintenance treatment of COPD in adults. This is the first regulatory approval of O2Vir outside the US. In addition, Nuance Pharma is expected to report results from its pivotal phase three trial evaluating antifungal for the maintenance treatment of COPD in China in the second quarter. Finally, we continue to advance regulatory activities for potential marketing authorization application submissions for O2Vir for the maintenance treatment of COPD in the European Union and in the UK. We look forward to keeping you updated on this progress. I will now turn the call over to Mark to review our financial results for the quarter.

Good morning. Our full financial results can be found in the press release issued this morning with additional details in the Form 10Q also filed today. I'll walk through the financial results for the first quarter of 2025 and review our recent strategic financing. As Dave described, in the first quarter, we recorded $71.3 million in O2Var net sales. With the achievement of a $5 million clinical milestone from Nuance Pharma, total net revenue for the first quarter was $76.3 million. And in line with prior quarters, our specialty pharmacy partners continue to maintain inventory at their contracted levels of two to three weeks. Cost of O2Vir sales was $3.4 million for the quarter ending March 31, 2025, in line with the level of net sales of O2Vir. Research and development expenses were $14.1 million for the first quarter, reflecting increases in share-based compensation and clinical trial and development costs related to our two Phase II studies. Selling, general, and administrative expenses were $69.1 million in the first quarter, reflecting increases in share-based compensation and the hiring of our field-based sales team, marketing, and other commercialization expenses related to the launch of O2 there. In total, our operating expenses for the first quarter were $86.6 million, resulting in an operating loss of $10.3 million and a net loss after tax of $16.3 million for the period. Excluding the $36.8 million in share-based compensation recorded in Q1, on an adjusted basis, we had an adjusted net income for the quarter of $20.5 million. You can find the gap to non-gap reconciliation for adjusted net income on the last page of today's press release. Finally, our balance sheet remains strong with $401.4 million in cash and equivalents as of March 31, 2025, compared to $399.8 million as of December 31, 2024. In addition, in March of this year, we amended our strategic financing arrangement with Oaktree and OMERS, repurchasing the previously existing $100 million obligation under the RPSA, and increasing the existing debt facility to $450 million on more favorable terms. With this amendment, we have increased our financial flexibility, reduced the cost of capital, and simplified the balance sheet, leaving us in a strong financial position. As a result of this amendment, at March 31, 2025, the company had $250 million outstanding under the Oak Tree and Omer's facility and $200 million available in potential future draws. With our cash and equivalent and up to $200 million of additional potential draws under the debt facility, we feel very confident in our ability to fund the ongoing U.S. launch of O2Vera as well as our development programs. Given the success of the O2VAIR launch, it is our intention to use future draws on the deck facility primarily to support the in-license or acquisition of products as needed. With that, I'll now turn the call back over to the operator for the Q&A.