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Winner’s spotlight: Verona Pharma

Key learnings:

  • Verona Pharma won the Life Science IPO of the Year Award at the Biotech and Money Awards 2017, after listing on the NASDAQ in April 2017.
  • The company, which is also listed on the AIM market of the London Stock Exchange, raised £70 million through a global offering, including the US IPO, a European private placement, and a shareholder private placement.
  • Dr Jan-Anders Karlsson, Chief Executive Officer, spoke to Biotech and Money about why the company decided to list in the US, why preparation is key to a successful IPO, and how the financing will help Verona Pharma to move its lead compound forward into the next stage of development.

Kenneth Newman, Chief Medical Officer, and Richard Hennings, Commercial Director, receive the award from Emily Vipond, Head of IR at Biotech and Money

Verona Pharma focuses on developing innovative therapies for respiratory diseases with unmet medical need. Dr Jan-Anders Karlsson, Chief Executive Officer, says: “There are a huge number of patients with different types of respiratory conditions all over the world and in many areas there has been little innovation, especially in patients with chronic obstructive pulmonary disease (COPD), so that’s where we focus our work.”

Its lead compound, RPL554, is a dual-inhibitor of enzymes phosphodiesterase 3 and 4. Delivered via inhalation, the compound serves as both a bronchodilator, opening a patient’s airways, and as an anti-inflammatory, addressing underlying inflammation. As well as COPD, RPL554 could also have potential in the treatment of other respiratory diseases, such as cystic fibrosis. Karlsson adds: “There hasn’t been any new class or mode of action in bronchodilators in the last 40-50 years, and there is no compound that is both a bronchodilator and an anti-inflammatory; that’s quite unique.”

The company is supported by healthcare-focused investors from the UK, Europe, and the US. It is dual-listed on the AIM market of the London Stock Exchange and, as of April 2017, the NASDAQ. It is the latter IPO that saw Verona Pharma take home a trophy from the Biotech and Money Awards 2017, winning the IPO of the Year Award in the peer-voting-led ceremony.

Accessing the advantages of a US listing

On 2 May 2017, Verona Pharma successfully closed a global offering comprising its IPO on the NASDAQ, a European private placement, and a shareholder private placement. The global offering raised £70 million ($90 million) gross for the company. In October, Karlsson and his colleagues celebrated their US listing by ringing the closing bell at the NASDAQ Stock Market. “That was very fun,” remarks Karlsson. “And also a way of getting everyone together and celebrating a lot of hard work.”

The US is a key market for Verona Pharma. Not only is it a very large market in terms of the number of patients with COPD, but it is also more common for COPD patients in the US to use nebulisers at home, explains Karlsson. The company is currently focusing on nebulisers as the primary method of administering RPL554.

These factors contributed to the company’s decision to list in the US, as did the volume of specialist healthcare investors in the States. “The later-stage trials that we look forward to [conducting] in the future will require that we have a much broader set of investors backing the company than we can find in Europe. We have that through the [US] IPO, but we need to develop this aspect further,” says Karlsson.

US FDA approval was also a key consideration. “Once the [FDA] accepts the compound and the way we develop it, that will also be a good standard for the rest of the world,” notes Karlsson.

The importance of preparation

Of course, an IPO is a significant undertaking and not without its challenges. “It’s quite a long process and a [US listing] requires a different level of disclosures and a different level of disclosing financing in the company than we have with AIM, so that process required a reengineering of our processes,” says Karlsson. “The different level of legal and regulatory requirements also required us to work with accountants and lawyers who understand the US market.”

Competition in the US marketplace can also intensify the need for profile raising. “Not too different from [the UK], there’s always an extra effort to go out and increase awareness of the company, [we did] this before the IPO and we continue to increase it afterwards,” says Karlsson. “While [the company] is still very attractive in every aspect in the US market, there are a lot of good companies vying for attention. You need to be seen and heard above the noise.”

Karlsson’s tip for other companies looking to list in the US is to be prepared. This not only includes preparation for the due diligence processes and the financial disclosures required in the US, but also preparation of the company’s story: “Is it attractive and does it have the components that US investors would expect?”

He also highlights the importance of selecting the right bank to work with during the IPO process. “It’s important to pick banks that will be relevant and enthusiastically drive the project forward. There are a lot of obstacles, so you need banks who are really committed to getting you out into the new market,” Karlsson adds.

Investor base and senior management expansion

Looking back over the past year, what does Karlsson view as the proudest achievement for the company? “It’s being able to expand the company with quite a large number of very senior and very competent healthcare-focused investors in Europe and the US, and seeing that they are as excited about RPL554 as we are,” he says. “I think that has been the key change in the company that now enables us to do later-stage studies.”

Verona Pharma has also expanded its senior management team. Most recently, this has included the appointment of Richard Hennings as Commercial Director and Dr Desiree Luthman as Vice President of Regulatory Affairs. These appointments further support the company’s work to progress its lead compound into Phase 2b studies.

“We needed to have the expertise in house to understand both the regulatory and clinical requirements of these studies, but also to understand from a commercial perspective how we should try to position the compound in the marketplace one day so that the studies we do now also support the future approval strategy and marketing strategy,” notes Karlsson. “We’ve put a team together with very long experience of both developing and commercialising drugs for patients with COPD. And, of course, now we have the financing to actually execute the studies – and the compound, which is the most important thing.”

Moving forward ahead of schedule

Indeed, as of early November, the company had enrolled over 200 patients in its Phase 2b study into the use of nebulised RPL554 for the maintenance treatment of COPD. The ongoing four-week European clinical trial is ahead of schedule, with more than 50% of patients now enrolled. As a result, Verona Pharma now expects to report top-line data for the study in mid-2018, as opposed to the second half of 2018 as originally anticipated.

Following the successful conclusion of the Phase 2b clinical trial, the company’s subsequent objective for 2018 will be to review the data in order to plan for Phase 3 trials, and move towards FDA filing.

“The longer-term vision is to develop this compound towards the market, where I think we, as a company, could commercialise it or market it and sell it in the US for patients that have very severe COPD,” says Karlsson.

Verona Pharma is also looking to develop RPL554 as a treatment for cystic fibrosis, as well as developing dry powder inhaler (DPI) and metered dose inhaler (MDI) devices for the administration of RPL554 for the treatment of COPD. Expanding its pipeline of innovative product candidates to treat patients with respiratory problems, is also on the longer-term agenda for the company.

As Verona Pharma closes out 2017 with an experienced management team, group of investors, and financing in place, Karlsson is looking forward to what lies ahead. “Right now, I think we’re in a very good spot, we’re all very excited about this.”


Take a look at the full list of winners at this year's Biotech and Money Assembly and Awards Gala Dinner

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