VRNA - Verona Pharma: Upcoming PDUFA Expired Patent Strong Data

2024-01-19 17:30:12 ET

Summary

• Verona Pharma plc develops respiratory disease medicines, with its lead asset being ensifentrine, an inhaled dual inhibitor of PDE3 and PDE4 enzymes.
• Ensifentrine is being developed in multiple formulations and is currently under FDA review for the treatment of COPD.
• Positive phase 3 data showed a reduction in exacerbation rates and improvements in lung function with ensifentrine compared to placebo.

Verona Pharma plc ( VRNA ) develops medicines for respiratory diseases. Its lead (and only) asset is ensifentrine, an inhaled and dual inhibitor of the phosphodiesterase ("PDE") 3 and PDE4 enzymes. Ensifentrine is being developed in three formulations, as a nebulizer, a dry powder inhaler or DPI and pressurized metered-dose inhaler or MDI. Ensifentrine works as a bronchodilator and an anti-inflammatory agent in a single compound.

The pipeline is as follows:

Lead program is Ensifentrine as a nebulizer under FDA review after a successful phase 3 trial as maintenance treatment of COPD. PDUFA is on June 26. In the same nebulizer formulation, it is in 4 other phase 2 trials in Non-Cystic Fibrosis Bronchiectasis, in combination with glycopyrrolate, a LAMA (Long-Acting Muscarinic Antagonist) in Maintenance treatment of COPD, in Cystic Fibrosis and in Asthma. Its DPI/MDI formulation is in 3 phase 2 trials targeting Maintenance treatment of COPD, Cystic Fibrosis and Asthma. Some of these phase 2 trials seem to have not yet begun, see their November press release . As they also mention in their earnings call:

…in the very near term, you should expect R&D expenses to be fairly limited because we're not running any clinical trials.

Three types of mechanisms of action are currently in use - LAMA: Long acting muscarinic agent, LABA: Long acting beta-adrenoceptor agonist, ICS: Inhaled corticosteroids. The COPD space is highly differentiated, and there are dozens of approved drugs, however they all use one or more than one of these mechanisms. Ensifentrine has a different MoA.

In 2022, the company posted positive phase 3 data from the ENHANCE-2 trial, which saw a 42% reduction in exacerbation rate over 24 weeks with ensifentrine versus placebo. It also met the primary endpoint and key secondary endpoints with high p-value.

Here’s the complete ENHANCE data :

Totals of 760 (ENHANCE-1) and 789 (ENHANCE-2) patients were randomized and treated, with 69% and 55% receiving concomitant long-acting muscarinic antagonists or long-acting ?2-agonists, respectively. Post-bronchodilator FEV1 percentage predicted values were 52% and 51% of predicted normal. Ensifentrine treatment significantly improved average FEV1 area under the curve at 0–12 hours versus placebo (ENHANCE-1, 87 ml [95% confidence interval, 55, 119]; ENHANCE-2, 94 ml [65, 124]; both P < 0.001). Ensifentrine treatment significantly improved symptoms (Evaluating Respiratory Symptoms) and quality of life (St. George’s Respiratory Questionnaire) versus placebo at Week 24 in ENHANCE-1 but not in ENHANCE-2. Ensifentrine treatment reduced the rate of moderate or severe exacerbations versus placebo over 24 weeks (ENHANCE-1, rate ratio, 0.64 [0.40, 1.00]; P = 0.050; ENHANCE-2, rate ratio, 0.57 [0.38, 0.87]; P = 0.009) and increased time to first exacerbation (ENHANCE-1, hazard ratio, 0.62 [0.39, 0.97]; P = 0.038; ENHANCE-2, hazard ratio, 0.58 [0.38, 0.87]; P = 0.009). Adverse event rates were similar to those for placebo.

The QoL and ERS lack of improvement in ENHANCE-2 has been attributed to an unnatural placebo response. This sounds reasonable because ENHANCE-1 did meet these endpoints and there was not much difference between ENHANCE-1 and ENHANCE-2 besides the fact that ENHANCE-1 includes an additional safety assessment at week 48.

The current treatment landscape for COPD consists of the following drug classes:

LAMA : Long-Acting Muscarinic Antagonists. These are bronchodilator medications that work by blocking the action of acetylcholine, a neurotransmitter, in the airways. This leads to the relaxation of the muscles around the airways, resulting in bronchodilation. Common LAMA medications include tiotropium, aclidinium, and umeclidinium.

LABA : Long-Acting Beta-Agonists. LABAs are another class of bronchodilators that work by stimulating beta receptors in the airway smooth muscles. This stimulation results in the relaxation of the muscles and dilation of the airways. Examples of LABA medications include salmeterol and formoterol.

ICS : Inhaled Corticosteroids. Inhaled corticosteroids are anti-inflammatory medications that help reduce inflammation in the airways. They are often used to manage asthma and can also be part of the treatment for COPD, particularly in combination with LABAs. Examples of ICS medications include fluticasone, budesonide, and beclomethasone.

COPD causes progressive obstruction of airflow, inflammation and mucus production, affecting the quality of life through exacerbations and other symptoms. These 3 classes of medications have been in existence for over 40 years, and no new medication with a novel mechanism of action has been approved. These medications are given in multiple variations, however there is a large unmet need as patients still have symptoms despite taking these medicines, causing disruptions to everyday life. ICS is used to resolve exacerbations despite their known proclivity to cause pneumonia. LABA/LAMA therapies may cause cardiovascular and urinary tract risks.

According to the company’s published research, dual inhibition of PDE3 and PDE4 regulates “cAMP and cGMP in airway smooth muscle, which mediates bronchial tone.” Targeting both of these two together has been shown to have better results than targeting just one of them, showing enhanced synergistic effects.

Financials

VRNA has a market cap of $1.38bn and a cash balance of $257mn. In January, the company increased its existing debt facility with Oxford Finance and Hercules Capital to $400mn, $50mn of which it immediately drew. The company can further draw an additional $100M upon approval of ensifentrine, $150M in two separate tranches upon achievement of certain net sales milestones. That, of course, leaves out another $100mn, which has not been discussed. They will also receive tax credits from the UK tax credit program, the country where they are based.

Research and development (“R&D”) expenses were $3.0 million for the third quarter ended September 30, 2023, while selling, general and administrative expenses (“SG&A”) were $13.4 million. The low R&D expenses are due to them having completed the phase 3 trials and not running any more trials right now. Upcoming costs will include regulatory and commercialization costs, for which they are set for funds. At that rate of expense, they have a cash+debt (funds) runway of 16-18 quarters, which leaves them with ample funds.

Bottom Line

A problem I have not touched upon here is that Ensifentrine’s key composition of matter patent expired in 2020, and the company plans to hold its own against potential ANDA rivals using a patent for the nebulizer formulation, which expires in 2037. Apart from that, data here seems pretty good and the upcoming PDUFA is a major catalyst for Verona Pharma plc.

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