Q2 2023 Verona Pharma PLC Earnings Call
Welcome to Verona pharma second quarter 'twenty to 'twenty, three financial results and operating highlights conference call.
At this time all participants are in listen only mode earlier. This morning marijuana pharma issued a press release announcing its financial results for the three months ended on June 30 of 2023.
A copy can be found in the Investor Relations tab on the corporate website www, They don't know pharma that come.
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 promise me guaranteed and involve known and unknown risks uncertainties and other important factors that may cause the actual results performance and achievements to be materially different from the expectation expressing planting foot forward looking statement.
Yeah.
Any such forward looking statements he presented management to existing on the date of this conference call, while the company may elect to.
Update such forward looking statements at some point in the future. It would be claims any obligation to do so even if subsequent events causes us to change.
As a reminder, this call is being recorded and will remain available for 90 days I would now like to turn the conference over to Dr. David Zucker Daly Chief Executive Officer.
Thank you and welcome everyone to today's call with me today are Mark Hahn, our Chief Financial Officer.
Doctor Kathy Ricard, our Chief Medical Officer, and Chris Martin, Our senior Vice President of commercial.
During the second quarter, we made substantial progress toward our goal of bringing N. P. Pentron to C. O P D patient with the submission of a new drug application to the FDA for nebulizer and see that trend for the maintenance treatment of COPD.
The NDA submission is comprised of data from the successful phase III enhance program and other N C veteran clinical studies, including safety data from approximately 3000 and subject.
We look forward to working with the F D. A on the submission and providing an update in the third quarter.
In May we presented additional analyses from the enhanced studies at the American Thoracic Society International Conference.
Cross 12, abstracts, and a clinical trial symposium and subgroup data and pooled analyses from enhanced one and enhance to covering exacerbation.
Symptoms quality of life use of rescue medication.
Care utilization and safety.
In addition, an overview of the enhance trial results were presented as part of the clinical trial symposium reserved for highlighting new breakthrough drugs.
In June .
The result would be enhanced trials evaluating empty pantry and C O P D or published in the peer reviewed publication.
Erika and journal of respiratory and critical care medicine.
In parallel with our regulatory progress.
We continue to advance our pre commercial medical affairs and marketing activities as we prepare for the potential U S launch so that would be bad trend in the second half of 'twenty 'twenty four pending FDA approval.
These efforts are critical in setting the stage for Etsy, Pentron, which if approved has the potential to be the first novel mechanism of action launched for and for the maintenance treatment of COPD in over 10 years.
Turning to our global partnering strategy in the second quarter nuance pharma, our development partner in greater China announced they enroll the first subject in their phase III trial evaluating <unk> for the maintenance treatment of COPD in China.
Once a pharma has exclusive rights to develop and commercialize and keep veteran in greater China and as such will play a key role in dressing the global need for a novel treatment for COPD.
We look forward to providing updates as the trial progresses.
We believe empty Pentron if approved has the potential to change the treatment paradigm for COPD.
The data from our phase III enhance program was highly positive and empty federal successfully met the primary endpoints in both enhance one and enhance two demonstrating statistically significant and cleaning the cleaning meaningful improvements in lung function and also successfully met secondary and other endpoints, including.
Reductions in the rate and risk of exacerbation.
The success of these trials and our recent NDA submission frenzy Pentron brings us closer to providing antifa entered to a patient population in urgent need of a new effective treatment options.
Currently more than 380 million patients suffer from COPD worldwide and it is the third leading cause of death.
Despite the availability of existing COPD treatment, approximately 50% of patients experienced symptoms for more than 24 days per month and positions require new and effective COPD therapies to provide relief to their patients.
With its novel mechanism of action has a selective P. D E. Three at P. D. Four inhibitor, we believe and see Pentron if approved will be a transformational advance in the treatment of COPD.
Looking ahead, we plan to present, new analyses of the enhance trial at the upcoming European Respiratory Society International Congress.
And at the chest annual meeting.
I will now turn the call over to Marc to review, our financial results for the second quarter.
Thank you, Dave and good morning.
We ended the second quarter of 2023 with $277 million in cash and equivalents.
We believe our balance sheet remains strong and with the current cash currently on hand expected receipts from the UK tax credit programs and funding expected to be available under the Oxford loan facility, we expect to have sufficient runway at least through the end of 2025.
<unk> the planned commercial launch and she pension in the U S.
Regulatory approval.
For the quarter ended June 32023, net loss after tax was $8 $8 million compared to a net loss after tax of $17 $8 million for the same period in 2022.
This represents a loss of one cent per ordinary share or 11 cents per ADR for the quarter.
Compared to a loss of four cents per ordinary share.
Our 29 cents per ADR for the second quarter of 2022.
Research and development costs were a net reversal of expense of $2 $5 million for the three months ended June 32023.
Compared to costs of $15 million for the three months ended June 32022, a.
A decrease of $17 $5 million.
The study conduct another phase III enhance program was essentially complete late in 2022.
R&D expense was dramatically lower in Q2 2023.
Compared to Q2 2022, when the program was in full operation.
In addition, we favorably resolved the matter with the supplier as well as certain disputed invoices in Q2 2023, resulting in the reversal of approximately $6 $3 million of costs accrued in prior periods.
This resulted in a net negative R&D expense for the three months ended June 32023.
Selling general and administrative expenses were.
Were $12 4 million for the quarter ended June 32023.
An increase of $6 $9 million.
This increase was primarily due to a $5 million increase in people related costs, including share based compensation.
As well as an increase of $1 $7 million in costs related to the build out of our commercial infrastructure as we prepare for potential commercial launch.
We expect SG&A expenses to continue to be the main driver of expense for Corona pharma as we prepare for a commercial launch in 2024.
In the aggregate, we expect total expenses to be in the range of $20 million to $25 million per quarter until we had sales reps at FDA approval.
I'll now turn the call back 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 one on you touched on the telephone.
We are using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed you in you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
You mean, the Rahimi your line is open.
Good morning team and congrats on all the updates maybe two question.
The first one would be.
Directly to credit you know, we would love to just sort of get an update on what are some of the key priorities on your to do list you know between I guess now and have to do a date and then second.
Why is it so critical.
Four.
You have to really implement these strategies early on I guess, a lot of them and Doctor may not recognize the importance of building product awareness.
And all the prep that goes so I guess, what I'm trying to trying.
Trying to get at it.
Why is the work needed to be done now to ensure that launch was highly successful and I. Appreciate really that's the color around these two questions, but I'll jump back into the queue.
Go ahead.
Yes, thanks, guys on the questions I'll I'll start really with the priorities between now and <unk>.
And it really falls into three categories. One is as we think about how we need to build the organization to get ready for launch there is a variety of things we need to do across market access and trade operations and systems and then in marketing and sales. So if I take each one of those individually.
Look at market access and trade between now and produce.
You know a vast majority of our work will be spent setting up our channel and our distribution pathway to ensure that empty venturing can get from.
Our our three PL, our third party logistics organization to the patient in an efficient and effective manner that takes time that takes integration of systems and it also leaves us time to test to make sure that the channel is working appropriate appropriately before launch.
The other thing that we'll be doing during that time is really continuing to evolve our payer discussions as we know MTF entrant is we believe will be primarily reimbursed through a medical benefit and that can come through.
Neither traditional Medicare part B, but also through Medicare advantage as they have to follow the Medicare part b pathway as well.
So our team from a payer standpoint has really been focusing on those Medicare advantage plans and getting out there and engaging in conversations around.
If I switch gears now to operations and as an organization that is transitioning from a.
A clinical development organization to a really a commercially focused organization. There's many systems that we have to put in place probably the biggest system that we're implementing and actually has already gone live is a data warehouse.
Really a minute by minute basis.
This is this internal capability is so important when it comes to launch because we can effectively look at all our tactics that we're putting out to the field.
Through non personal channels and personal channels and see what are more effective.
What tactics, maybe are less effective and redistribute our spend in a very quick manner. We've actually started testing this already as we did some social media campaigns.
Ats conference, where we're able to get some get some physician interaction data and now can start to use that to test the system as we speak and then on the third area is really the marketing side.
<unk> will be the first new product launched it and the mechanism in over a decade.
And when we think about that you know the market has become very used to Lama LABA Ics products, so conducting disease to shape a disease state market shaping work is essential to ensure that when <unk> comes to market that the physicians are receptive to to the drug when it comes out.
There is a significant symptom burden that affects their overall quality of life and ability to interact with members of their families that may be the physicians are underestimating and this is some work that we'll be doing very well.
We're finalizing that work and we'll be launching towards the back half of the year into 2024. So I really think about the work that we need to do between now and because the duping. Those three functions and then you mentioned why the cricket critical to implement these now if we don't do this today or as if were slow in doing these activities. It can you know it.
In effect the Ram specifically, you know, sometimes biotechs launch without market shaping or doing some pre marketing work for a new product in that that that potentially limits the physician receptivity to the product when it comes to launch. So all of this work is essential to ensure ensure that smooth transition from product.
To patient and the physician uptake at launch.
Great. Thank you so much Chris I'll jump back into the queue.
The next question comes from Andreas <unk> from Wedbush. Please go ahead.
Hi, Good morning, guys and thanks for taking our questions and congrats on the progress as well.
Just two from us to start here at what additional analyses from enhanced and we expect to see it.
And chest.
And then can you provide any updates on where you stand with the combination product events. Eventually myeloma. There is certain amount that you think that we're best in conjunction with that spectrum.
Hi, good morning. Thanks.
Yeah. So let me take the second one first and I'll turn it over to Kathy to talk about ear and chest that we continue to work on.
Combination Nebulize product Bay Lama, plus anti pension, which we think will work extremely well well suited for the COPD space give us a.
Dual bronchodilator as well as anti inflammatory and a nebulizer delivery so as far as the next product we think that that makes a lot of sense. We're currently in.
In the earlier stages of the formulation development, making sure that we have a formulation that can stand up and be stable of course before we launch into our clinical activities will be much more informed on that later this year and so I think as we get towards the end of 'twenty two.
Three will be articulated where we are with that a little bit clear for everyone as well as our.
Plans for 2024 and that development. So I would stand by for that and then Kathy you want to comment on Iraq and chest.
Sure. So I'll take E. R. S. First so for E. R S, which is going to be in the early and mid part of September we have a number of abstracts.
First abstract is a 48 week exacerbation data again further confirming that over 48 weeks, we continue to see a 44% decrease in exacerbation rate and a 52% decrease in our risk which is the time to first.
That is a poster presentation, we have an oral presentation again looking at health resource utilization.
In moderate to severe exacerbations and again, we're continuing to show again, the decrease in rate and a risk of Investor base. We've got we're also showing the decrease in fees in the position the physics and hospitalization over 24 weeks of the study.
Then per test, which is in October we have a couple of abstract being shown these are all in a.
Somewhat of a short form oral format.
So we have the full result by exacerbation history again, demonstrating that the exacerbation. Despite exacerbation history, we continue to see a strong decrease in exacerbations and then side by sides symptoms from the two pivotal trials.
That we are able to decrease symptoms and in these two trials.
Also have a poll.
Data looking at whether patients who are originally on Lama or a LABA again, demonstrating that equal efficacy occurs whether they're on llama Llama and then lastly, theres a full safety from both large studies.
Again, showing the consistency of our are very good safety profile. So those are the ones that you'll expect to see at your estimates yet.
Okay, Great control that follow what's going on what kind of our global progress.
Back in the queue.
The next question comes from Andrew Tsai from Jefferies. Please go ahead.
Hi, good morning, Thanks for taking my questions and again congrats on the progress so two questions on our side, maybe one on the ongoing filing as.
As we wait for the accepted potential acceptance from the F. T has the agency are you know what kinds of questions has the agency may be sent you since you've submitted the filing whats the correspondents been like and if there havent been any correspondence would you then say no news is good news and then secondly, you know as we.
Think about the sales trajectory of events of entrants and think about launch precedents are there any relevant launch comps that you think apply so that's a factor and not necessarily within the COPD space, but maybe even in the neuro space in general.
Any other kind of smid cap type launches with a similar situation you've got like a novel MLA for a big market strong efficacy clean safety and so forth. So what would be the best case studies for investors. Thank you.
You know as you would expect.
We're not going to comment on regulatory interactions in detail.
But just to say that you know the submission is in as you know and that we are in a proper communication with the FDA.
I think that that's from my perspective normal course of business with them and.
I think that we will see where where do they stand right now you know near the end of August .
It would be our target expectation of around a 60 and as you know.
They will also deliver a day 74 letter as well that that provides additional detail on.
The submission includes the Paducah date et cetera. So you know I would say normal course of business from my perspective, and with that I'll turn it over to.
Correct.
Thanks, Andrew on the question on sales trajectory in comp you know in the COPD space.
Really not a comp that does that.
It fits the NC ephedrine profile because.
One as we think about the launch for NC Pentron MTF entrant is not a drug that needs to replace another drug in the treatment armamentarium. It's a drug that can be added to what the patient is currently taking.
And so it provides that extra benefit, but if I look more broadly at other categories in diseases, where you know you have a mid to mid sized biotech competing against larger pharma.
I really go back to the most recent example of bio Haven and the.
Migraine space, where you know they were able to successfully launch an oral drug for migraine indication against a large competitor and do it very effectively.
And I think part of what we've what we've learned and got an insight from around that as part of the work that were doing that was explained with yes around how you set up the launch beforehand with market shaping how you use data to be more efficient in your deployment are things that we've learned from that launch to make us very competitive.
And an overly competitive against against.
No the larger pharma players within there. So I really look at that example, as a as a precedent for Verona and N C for interim.
Makes sense. Thanks.
Could you just remind us.
I think you've spoken to this before but how quickly do patients move from first line therapy to the point of needing into venturing.
And then another question I have is just.
I guess just on the as far as the future R&D development. Besides combo therapy are there any specific or potential interstitial lung diseases, where you could see inter country being applied.
Great. Thanks. Thanks for the question, let me take the second one first and I'll turn it over to Chris on sort of the patient journey.
You know besides our combination product, which we were definitely focused on it and we think as.
The other indications may require a different formulations as well, possibly different dosing.
And working with partners that may have IP on different devices and expertise on different devices and so.
Some of that is staged and will it be following as we progressed the nebulizer formulation.
But we are attentive to it and again I would expect.
Have an eye towards the approval of empty pension and the launch in C. O P. D. I think other indications open up as well so that's our general plan on R&D. So.
Do you want to comment on the patient journey.
Yeah. Thanks, Dave.
As we think about the patient journey you know the patients are typically treated based on two pathways. The first pathway is really a symptom based pathway, where if they have this year is the primary driver of symptoms and issues.
Physician moves down a treatment algorithm there the other pathways exacerbations, what we know from our market research is that you know the patient typically sees the physician between two and four times a year and that the overall symptomatology of the patient will drive therapy changes. So if a patient is having increase.
<unk> to breathe and and really what the physician talks about not only is the inability to breathe, but the inability to do certain activities or if their activity level is changing the physicians will make therapeutic changes. So when I look at that journey. There are significant opportunities for MTF entering to be inserted into a patient's treatment algorithm.
Over the course of a year I think the important thing. There is you know MTF enter and you don't have to wait until a patients on it on a dual or triple NCI venturing can be inserted into the treatment paradigm very early and the data supports <unk> venture and it being added to us alarm or a LABA or LABA Ics.
In a very early situation for these patients and the great thing is as the physicians are looking for products that can help the patient kind of continue to keep some sense of normalcy in their lives.
Through either a reduction in symptoms and improvement in quality of life and improvement in S. E V one or the potential for help with exacerbations as well so as I look at the treatment journey you, we see multiple intervention points over the course of the year. Both early in their treatment cycle, but also late in a patient's treatment cycle were empty vendor and can be inserted.
Great. That's very helpful. Thank you.
The next question comes from John Lee from <unk> Securities. Please go ahead.
Hi, This is Jeremy on for Joe Thanks for taking our questions.
Two quick ones for me, what do you see as the greatest risk to the probability of Ensign veteran and what do you expect SG&A ramp as you prepare for commercial launch thanks.
Great. Thanks, Thanks for the question.
When it comes to risk and submission you know I think you know the regulatory process isn't inherently has its underlying risk that are quite broad and consistent across any new chemical entity.
We feel like we've we've handled that very comprehensively in the submission.
All the way from how we view and data package in CMC.
Clinical because the clinical data and of course, the overall safety. So we spent an enormous amount of time to make sure that we were looking at that broadly comprehensively.
And I think where it is.
And as we can be that we've addressed all of those areas of course.
During the regulatory process.
Feedback from the FDA.
Of course, it will be highly responsive to items that may need to be addressed if any are and so we'll handle that as this team has been through the process that numerous times previously so.
You know early in <unk>.
It's early days in the submission.
So much more to come but I think for where we are right now I think we're in a let's go to places we can be.
With that I'll turn it over to Mark.
We'll take the next question from Tom Shrader from BTG. Please go ahead.
Hi, Good morning, Thanks for taking the question this is really for Chris.
Okay.
Yes, well I'll start with kind of the process on you know the Medicare.
Part B pathway.
So if we if we think about the Medicare part B pathway. You know is that pathway as a medical benefit for these patients. So at launch as you discussed we get we launched with a temporary J code.
<unk> for COPD delivered through nebulizer so.
During that time that you're working under a non specific J code you're also working to make sure that the coverage policies are updating to insurance the veterans and there we would apply for a product specific J code as quickly as possible that product specific J code now can be submitted quarterly so depending on the approval date, we could have between a three and six.
A month lag between when we get a product specific J code.
And a and using that non specific J code.
The other important thing here is that you know when we think about Medicare advantage Medicare advantage has to follow the Medicare part B pathway and so they have to provide coverage for these drugs under the Medicare advantage plans. However, your Medicare advantage can put use criteria in place unlike Medicare.
Part B traditional Medicare part B, and what I mean by use criteria as they could have simple step edits or prior authorizations that are needed before a patient could use our product.
In our early discussions with the major Medicare advantage plans, they see highly differentiated data with empty bedroom.
Because they control both the pharmacy and medical benefit side of the business there.
They're very interested in some of the data that Kathy talked about that's being presented at E. R. S like health care utilization.
Acervation data and that makes sense, the pentagon potentially attractive to them from a payer standpoint, so that you know in most conversations that we've had.
Oh, Oh, Oh really a worst case scenario is they you'd have to step through a generic lama reliability before going to empty veteran.
That's on therapy that needs additional help that's a very low hurdle for many of these providers in that setting as.
As far as the non specific J code reimbursement is tied back to one of our WAC pricing.
So it's more of a whack pricing reimbursement related to anti venter in versus you know a set a set price there and the other.
<unk> processed during the non specific J code is a manual adjudication, which takes US a couple more days than when you have your product specific J code.
Okay, great. Thanks for all the corporate glaucoma.
Yes.
As a reminder, if you wish to register for a question. Please press star followed by one.
The next question comes from <unk> from H C. Wainwright. Please go ahead.
Hi, This is Bob Allen Thanks for taking my question. So assuming the FDA accepts your NDA and intervention gets approved next year.
What are your preliminary talks about LTE pinching subgroup usage during the early period of launch given and has studies primarily conducted in cold be patient.
Moderate to severe symptoms.
Yeah.
Move on thanks for the question if we look at our market research what we see is empty pentron being added to patients that remain symptomatic on current therapies.
I'll bucket this into two groups of patients one of the groups of patients that are on a single alarm or a LABA or a LABA Ics.
And based on the enhanced data you would you would say that the next logical choice for a physician to choose as NC venter in our data is outstanding in those patients. It provides a new mechanism of action.
For the physician to layer onto these patients therapies and we see from our market research significant uptake within that patient population. The second group of patients are patients that are on potentially dual or triple therapy that remained symptomatic and we know there's at least 40% to 50% of these patients that are just <unk>.
Having tremendous symptom burden and when we think about how the physicians treating those patients today when they come into an office, they're getting oral steroids oral antibiotics.
Dow your <expletive> and potentially referred for surgery.
So the physicians options are very limited and given the benefit to risk profile than the center and we see physicians also adding empty venture into those patients as well if we think about the potential for what's the first patient most physicians will prescribe NC veteran and it's more than likely.
The latter patient because that patients in the most immediate need but as we see in our market research and our conversations with HCP is their use of empty friends, who moves earlier and earlier into the treatment paradigm because they see.
The potential that empty venture could provide this nonsteroidal anti inflammatory effect.
That they have been really looking for within the COPD classes over the course of the last decade or so.
Okay.
Hey, thanks, so much.
Okay.
Gentlemen, there are no more questions from the phone.
Great. So thank you everyone for your questions today, and thank you to the patients and health care.
Professionals that participated in the hands program, enabling us to submit a new drug application to the FDA for Nebulize density Pentron for the maintenance treatment of COPD. We are very excited about the potential of empty pension and look forward to providing further updates.
Finally, I'd like to thank our shareholders for their continued support and the dedicated and talented team at Rona for their commitment operator that concludes today's call.
Ladies and gentlemen, the conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines Goodbye.
Okay.
[music].
Yeah.
[music].
Yes.
Okay.