VRNA - Verona's Ensifentrine: A Promising Novel Treatment For COPD Patients

2023-03-27 02:31:17 ET

Summary

• Verona Pharma's ensifentrine is a first-in-class, inhaled, dual inhibitor of the enzymes PDE3 and PDE4, targeting both bronchodilation and inflammation.
• Positive Phase 3 results from the ENHANCE trials show significant improvements in lung function, symptoms, and quality of life for COPD patients.
• The global COPD market is projected to grow, with potential peak annual sales for ensifentrine estimated at $1.5 billion, assuming a conservative market share of 5%.
• Even though Verona plans to submit a new drug application in the upcoming quarter, uncertainties remain about the role of ensifentrine in the COPD treatment framework.
• Given positive trials, market needs, and growth, a 'Buy' rating is advised for Verona Pharma with a medium to long-term focus. Yet, investors should note the risks in clinical development, approval, and competition.

Introduction

Verona Pharma ( VRNA ) is a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapeutics for respiratory diseases with significant unmet medical needs. Their lead product candidate, ensifentrine, is an investigational, first-in-class, inhaled, dual inhibitor of the enzymes phosphodiesterase 3 and 4 (PDE3 and PDE4). It is being developed for the treatment of chronic obstructive pulmonary disease ((COPD)), a common, chronic, progressive, and life-threatening respiratory disease with no cure.

In 2023, Verona anticipates a crucial year as they prepare for the potential 2024 commercial launch of ensifentrine in the US, pending approval. They plan to submit an NDA for inhaled ensifentrine to the FDA in Q2 2023 for maintenance treatment of COPD patients and will share more ENHANCE trial data at future scientific events.

The following article discusses the potential of ensifentrine in the treatment of COPD.

Financials

Verona Pharma's cash and cash equivalents as of December 31, 2022 were $227.8 million, with an additional $56.9 million from recent ATM sales, and expected funding from UK tax credit program and debt facility. R&D expenses for Q4 2022 were $6.8 million, and SG&A expenses were $8.3 million. The net loss for Q4 2022 was $10.5 million. Revenue for the full year 2022 was $0.5 million, with R&D expenses of $49.3 million, SG&A expenses of $26.6 million, and a net loss of $68.7 million.

Unmet Needs in COPD Treatment: Addressing the Limitations of Current Therapies

Chronic obstructive pulmonary disease (COPD) continues to be a significant global health concern, with millions of people affected by this progressive and life-threatening respiratory condition. Despite the availability of various therapies, there remains a considerable unmet need for more effective and innovative treatments. The limitations of current COPD treatments, which primarily focus on bronchodilation and anti-inflammatory effects, can be discussed in terms of efficacy, side effects, and drug-device combinations.

• Efficacy: Current treatments for COPD, such as long-acting muscarinic antagonists (LAMAs), long-acting beta-agonists (LABAs), and inhaled corticosteroids ((ICS)), are mainly focused on symptom management and reducing exacerbations. However, these therapies often do not address the underlying pathophysiology of the disease or halt its progression. Moreover, some patients may not respond adequately to these treatments, leaving them with poorly controlled symptoms and a higher risk of exacerbations.
• Side effects: The side effects associated with current COPD treatments can limit their use or cause additional health problems. For example, inhaled corticosteroids can increase the risk of pneumonia, cataracts, and osteoporosis when used long-term. Additionally, long-acting beta-agonists can cause tachycardia, tremors, and increased cardiovascular risks in some patients. Long-acting muscarinic antagonists may cause dry mouth, urinary retention, and constipation. These side effects can lead to treatment discontinuation, reduced adherence, or the need for additional medications to manage the side effects.
• Drug-device combinations: Many COPD medications are administered using inhaler devices, such as dry powder inhalers (DPIs), pressurized metered-dose inhalers (pMDIs), or nebulizers. The effectiveness of these treatments depends on the patients' ability to use the devices correctly and consistently. However, some patients, particularly the elderly or those with cognitive or physical impairments, may struggle with proper inhaler technique, leading to suboptimal drug delivery and reduced therapeutic efficacy. Furthermore, the need for multiple inhalers for different medications can be cumbersome and confusing for patients, affecting adherence and overall treatment outcomes.

The limitations of current COPD therapies highlight the need for novel treatments that can address the disease's underlying mechanisms, offer improved efficacy, and minimize side effects.

Ensifentrine: A Potential Solution to the Limitations of Current COPD Treatments

Verona Pharma's ensifentrine has the potential to address some of the current limitations in COPD treatments by offering a unique mechanism of action that combines bronchodilation and non-steroidal anti-inflammatory activities in one compound. This dual inhibition of PDE3 and PDE4 enzymes can lead to several potential benefits for COPD patients, which may improve upon the limitations of existing treatments in terms of efficacy and side effects.

• Enhanced efficacy: Ensifentrine's dual inhibition of PDE3 and PDE4 enzymes may result in synergistic benefits for COPD patients. PDE3 inhibition leads to bronchodilation, which can directly improve airflow and lung function. PDE4 inhibition, on the other hand, targets inflammation, a critical component of COPD pathophysiology. By addressing both bronchodilation and inflammation, ensifentrine could provide improved symptom control, better lung function, and a reduced rate of exacerbations compared to therapies that focus solely on bronchodilation or anti-inflammatory effects.
• Reduced side effects: As a non-steroidal anti-inflammatory, ensifentrine may have a better safety profile and a lower risk of such side effects, making it more suitable for long-term use in COPD patients.
• Simplified treatment regimen: Ensifentrine's dual action could potentially simplify COPD treatment regimens by combining the bronchodilator and anti-inflammatory effects in a single compound. This could reduce the number of medications patients need to manage their disease, leading to improved adherence and, ultimately, better treatment outcomes. Furthermore, its compatibility with standard jet nebulizers may offer additional convenience for patients, as they would not require a separate device for ensifentrine administration.

Positive Phase 3 Results Show Ensifentrine's Efficacy in COPD Treatment

The ENHANCE trials aimed to assess ensifentrine as a monotherapy and in combination with a single bronchodilator. In ENHANCE-1, about 69% of subjects were given background COPD therapy (either LAMA or LABA), and approximately 20% received ICS with concomitant LAMA or LABA. In ENHANCE-2, around 55% of subjects received background COPD therapy (either LAMA or LABA), and about 15% were given ICS with concomitant LAMA or LABA. Demographics and disease characteristics were evenly distributed across treatment groups in both trials.

Verona Pharma reported positive top-line results from two Phase 3 trials, ENHANCE-1 and ENHANCE-2, in 2022. Ensifentrine showed statistically significant and clinically meaningful improvements in lung function for moderate to severe COPD patients, meeting primary endpoints in both trials. It also improved symptoms and quality of life measures, reaching statistical significance in ENHANCE-1.

Key data points include:

• In both trials, the primary endpoint (FEV1 AUC 0-12 hr) was met: At week 12, ensifentrine showed an 87 mL (p<0.0001) and 94 mL (p<0.0001) improvement from baseline in average FEV1 area under the curve 0-12 hours post-dose in ENHANCE-1 and ENHANCE-2, respectively. This improvement was consistent across various subgroups.
• Secondary endpoints related to lung function were also met: At week 12, there were placebo-corrected increases in peak FEV1 of 147 mL (p<0.0001) in ENHANCE-1 and 146 mL (p<0.0001) in ENHANCE-2. Morning trough FEV1 saw placebo-corrected increases of 35 mL (p=0.0413) in ENHANCE-1 and 49 mL (p=0.0016) in ENHANCE-2, supporting twice-daily dosing.
• Exacerbation rate and risk were reduced: In ENHANCE-1, ensifentrine resulted in a 36% reduction in moderate to severe COPD exacerbations over 24 weeks (p=0.0503), and in ENHANCE-2, a 43% reduction (p=0.0090). Pooled data showed a 40% reduction in exacerbation rate (p=0.0012) and a 41% reduction in risk of moderate/severe exacerbation as measured by time to first exacerbation (p=0.0009).
• COPD symptoms and quality of life improved: In ENHANCE-1, significant improvements in E-RS Total Score and SGRQ Total Score were observed compared to placebo at week 24. Similar improvements were seen in ENHANCE-2, although statistical significance was not achieved.
• The safety profile was favorable: Ensifentrine was well tolerated with minimal adverse events occurring in more than 1% of subjects and greater than placebo over 24 and 48 weeks.

Possible Explanations for Discrepancy in ENHANCE-1 and ENHANCE-2 Data

While the exact reason for the discrepancy between ENHANCE-1 and ENHANCE-2 data cannot be definitively determined, one possible explanation could be the differences in the use of background COPD therapies between the two trials.

The higher percentage of subjects receiving background COPD therapies in ENHANCE-1 could have contributed to more consistent treatment effects in the ensifentrine group, leading to statistically significant improvements in symptoms and QOL. Conversely, the lower percentage of subjects on background COPD therapies in ENHANCE-2 could have influenced the results, making it more difficult to achieve statistical significance in symptom and QOL improvements.

Another potential explanation could be related to the natural variability between different clinical trials, which can be influenced by factors such as patient population, study design, and outcome measurement. It is also possible that the placebo group in ENHANCE-2 showed greater improvements over time due to factors unrelated to the study intervention, such as placebo effects or improved adherence to existing COPD therapies.

Market Potential for Ensifentrine in COPD Treatment

According to the World Health Organization ((WHO)), over 64 million people worldwide suffer from COPD, and this number is expected to increase in the coming years due to aging populations.

According to Transparency Market Research, the global COPD market was valued at around $19.8 billion in 2021 and is projected to grow at a compound annual growth rate of approximately 4.4% until 2031. This growth could result in a market value of around $30.4 billion by 2031.

Current COPD treatments include bronchodilators, inhaled corticosteroids and combination therapies, with prices ranging from $100 to over $400 per month , depending on the drug and region. Given the novel mode of action and dual benefits of ensifentrine, it is reasonable to assume that its pricing could be in the upper range of current COPD therapies.

Assuming ensifentrine captures a conservative market share of 5% in the COPD market, the potential peak annual sales could be $1.5 billion. This estimate takes into account the projected COPD market value, the pricing of comparable COPD drugs, and potential market penetration. However, it is important to note that this is a rough estimate and should be treated with caution, as actual sales will depend on various factors such as regulatory approval, competition, marketing, and pricing strategies.

Moreover, ensifentrine's potential to address other respiratory diseases like asthma and cystic fibrosis, along with the development of additional formulations, could further increase its revenue potential beyond the COPD market.

Questions Raised About Ensifentrine's Clinical Implications for COPD Treatment

A touchREVIEWS article from December 2022 brings up several questions about the clinical implications of ensifentrine. Firstly, the article highlights the weak evidence supporting the combination of ensifentrine with a ?2-agonist, while the pairing of ensifentrine with a muscarinic receptor antagonist has shown encouraging outcomes in terms of quality of life and FEV1 endpoints in a Phase 2 trial. This limited evidence is due to the similar pharmacological pathways of ensifentrine and ?2-agonists, which reduces the likelihood of a synergistic effect.

Secondly, the article stresses the importance of comparing ensifentrine's combination with LAMAs or LABAs to the existing LAMA/LABA fixed-dose combinations on the market. This comparison is essential for determining the clinical value of ensifentrine and its potential to replace dual bronchodilation.

Thirdly, the article questions the duration of ensifentrine's bronchodilatory effect, noting that it would be helpful to know if ensifentrine can maintain bronchodilation beyond 12 hours during regular use. If its action is shorter than that of current long-acting bronchodilators, it may be less effective or convenient for treating COPD patients.

Finally, the article underscores the need to explore the possibility of rebound bronchoconstriction when stopping ensifentrine treatment. Rebound bronchoconstriction could counteract ensifentrine's benefits, leading to aggravated COPD symptoms and a reduced quality of life for patients.

My Analysis & Recommendation

Verona Pharma's ensifentrine shows promise as a novel treatment for COPD, with its dual mechanism of action targeting both bronchodilation and inflammation. The positive results from the ENHANCE trials demonstrate the potential of ensifentrine in improving lung function, symptoms, quality of life, and reducing exacerbation rates in COPD patients. However, certain limitations in the data and questions raised in the touchREVIEWS article warrant further investigation to fully assess the clinical implications of ensifentrine.

The global COPD market is expected to grow significantly, with a potential peak annual sales of $1.5 billion for ensifentrine, assuming a conservative market share of 5%. This projection, along with the potential to address other respiratory diseases, suggests a promising revenue outlook for Verona Pharma.

Considering the positive clinical trial data, unmet needs in the COPD market, and projected growth, I recommend a 'Buy' rating for Verona, with a medium to long-term investment horizon. However, investors should be aware of the uncertainties and potential risks associated with the clinical development and regulatory approval process, as well as the competitive landscape in the COPD market. I also recommend monitoring further clinical trials and developments to better understand ensifentrine's clinical utility and address the questions raised in the touchREVIEWS article.

Risks to Thesis

Several risks and challenges could potentially affect my optimistic outlook on Verona:

1. Regulatory approval risk: Ensifentrine's approval by regulatory authorities like the FDA and EMA is not guaranteed. Regulatory authorities might require additional data, impose stringent conditions, or even reject the application altogether. Delays or failure in obtaining regulatory approval can significantly impact the company's valuation and stock price.

2. Competition: The COPD market is highly competitive, with several established players and novel therapies under development. There is a risk that ensifentrine may face stiff competition from other therapies, limiting its market share and revenue potential.

3. Patent protection and intellectual property: Ensifentrine's commercial success will largely depend on Verona Pharma's ability to maintain strong patent protection and defend its intellectual property rights. Competitors may challenge the company's patents, which could result in costly litigation and potentially affect the company's market exclusivity.

4. Reimbursement and pricing pressure: Ensifentrine's pricing and reimbursement could be influenced by factors such as cost-effectiveness analyses, payer negotiations, and government policies. Pricing pressures and limitations on reimbursement could impact the company's revenue potential.

5. Clinical trial failures or adverse events: Ensifentrine's long-term safety and efficacy are not fully established. Future clinical trials may reveal safety concerns, adverse events, or lack of efficacy that could negatively impact the drug's commercial potential or lead to its withdrawal from the market.

6. Manufacturing and supply chain issues: Ensuring a consistent and high-quality supply of ensifentrine is crucial for its success. Any disruptions in manufacturing or the supply chain could impact the company's ability to meet market demand, leading to potential revenue losses and a negative impact on the stock price.

7. Execution risk: Verona Pharma's ability to successfully commercialize ensifentrine will depend on its execution capabilities, including hiring and retaining key personnel, effective marketing strategies, and strong partnerships with healthcare providers and payers.

8. Market adoption: The adoption of ensifentrine by healthcare professionals and patients may be slower than anticipated due to factors such as perceived clinical value, ease of use, or preference for existing therapies. Slower market adoption could negatively impact the company's revenue projections.

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