Verona Pharma(VRNA) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Verona Pharma plc's unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, Shareholders' Equity, and Cash Flows, with accompanying notes for the period ended March 31, 2025 Condensed Consolidated Balance Sheets The condensed consolidated balance sheets show the company's financial position as of March 31, 2025, compared to December 31, 2024, highlighting changes in assets, liabilities, and shareholders' equity | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $401,415 | $399,757 | | Accounts receivable, net | $62,159 | $31,496 | | Total current assets | $501,025 | $453,572 | | Total assets | $525,936 | $474,242 | | Total current liabilities | $56,544 | $42,681 | | Total liabilities | $299,341 | $269,683 | | Total shareholders' equity | $226,595 | $204,559 | Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations detail the company's revenue, operating expenses, and net loss for the three months ended March 31, 2025, compared to the same period in 2024, reflecting the commercial launch of Ohtuvayre | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Product sales, net | $71,256 | $— | | Other revenue | $5,000 | $— | | Total revenue, net | $76,256 | $— | | Cost of sales | $3,407 | $— | | Research and development | $14,054 | $6,764 | | Selling, general and administrative | $69,112 | $20,434 | | Operating loss | $(10,317) | $(27,198) | | Net loss | $(16,319) | $(25,794) | | Loss per ordinary share - basic and diluted | $(0.02) | $(0.04) | Condensed Consolidated Statements of Shareholders' Equity This statement outlines the changes in shareholders' equity for the three months ended March 31, 2025, and 2024, including net loss, share-based compensation, and share option exercises | Metric | Balance at Dec 31, 2024 (in thousands) | Net Loss (in thousands) | Share options exercised (in thousands) | Share-based compensation (in thousands) | Balance at Mar 31, 2025 (in thousands) | | :----------------------- | :----------------------------- | :---------------------- | :------------------------------------- | :-------------------------------------- | :----------------------------- | | Additional paid-in capital | $728,199 | — | $4,980 | $37,477 | $766,369 | | Accumulated deficit | $(562,401) | $(16,319) | — | — | $(578,792) | | Total shareholders' equity | $204,559 | $(16,319) | $5,165 | $37,477 | $226,595 | Condensed Consolidated Statements of Cash Flows The cash flow statement provides a summary of cash generated from or used in operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 | Metric | Three months ended March 31, 2025 (in thousands) | Three months ended March 31, 2024 (in thousands) | | :----------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash used in operating activities | $(11,561) | $(13,610) | | Net cash used in investing activities | $(535) | $(16) | | Net cash provided by/(used in) financing activities | $13,457 | $(3,123) | | Cash and cash equivalents at end of the period | $401,415 | $254,882 | Notes to Condensed Consolidated Financial Statements These notes provide additional details and context for the condensed consolidated financial statements, covering company organization, significant accounting policies, inventory, equity interest, accrued expenses, debt, share-based compensation, and net loss per share Note 1 - Organization and description of business operations Verona Pharma launched Ohtuvayre in the U.S. in August 2024, pursuing global regulatory activities and pipeline programs, expecting sufficient funding for the next 12 months - Ohtuvayre (ensifentrine) was approved by the FDA on June 26, 2024, for maintenance treatment of COPD in adult patients and launched in the U.S. in August 2024, marking the company's first commercial product and the first inhaled therapy with a novel mechanism of action for COPD in over 20 years[25] - Nuance Pharma, a strategic collaborator, announced Ohtuvayre's approval in Macau in February 2025, marking the first approval outside the U.S., with China Phase 3 trial results expected in Q2 2025[28] - The company plans to initiate a dose-ranging Phase 2b trial for a fixed-dose nebulized combination of ensifentrine with glycopyrrolate (LAMA) for COPD in H2 2025 and commenced a Phase 2 clinical trial for nebulized ensifentrine in patients with non-cystic fibrosis bronchiectasis in Q3 2024[29][30] - Verona Pharma has an accumulated deficit of $578.8 million as of March 31, 2025, and expects to incur additional losses, but current cash, anticipated product sales, and Term Loan funding are projected to cover operating expenses for at least the next 12 months[31][32] Note 2 - Basis of presentation and summary of significant accounting policies The financial statements are prepared in conformity with U.S. GAAP, consolidating Verona Pharma plc and its subsidiary, operating as a single segment, with significant estimates and reliance on five specialty pharmacies for Ohtuvayre sales - The company operates as a single operating and reportable segment: the development and commercialization of pharmaceutical products[39] - For the three months ended March 31, 2025, five specialty pharmacies accounted for 100% of Ohtuvayre net product sales and all outstanding accounts receivable from product sales[40] Note 3 - Inventory The company's inventory significantly increased from December 31, 2024, to March 31, 2025, primarily driven by an increase in finished goods and raw materials, with no write-downs during the period | Inventory Class | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | Raw materials | $1,823 | $228 | | Finished goods | $11,929 | $7,993 | | Total Inventory | $13,752 | $8,221 | Note 4 - Equity interest The company holds a $15.0 million equity interest in Nuance Biotech, and recognized a $5.0 million development milestone payment from Nuance Pharma as other revenue in March 2025 - The company holds an equity interest valued at $15.0 million in Nuance Biotech, recorded at cost[48][49] - A $5.0 million development milestone payment from Nuance Pharma was due in March 2025 upon completion of the last patient treatment in their Phase 3 clinical study, recorded as Other revenue[50] Note 5 - Accrued expenses Accrued expenses significantly increased from December 31, 2024, to March 31, 2025, primarily due to higher rebates and other sales deductions, and the recognition of VAT due to Ligand