Verona Pharma (VRNA) AI Stock Analysis

• Market Cap: $8.94B
• Dividend Yield: N/A
• Average Volume (3M): 5.27M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.71
• Revenue Growth: N/A
• EPS Growth: -157.53%
• Country: US
• Employees: 209
• Sector: Healthcare
• Sector Strength: 40
• Industry: Biotechnology
• EPS (TTM): -0.02
• Shares Outstanding: 85,132,000
• 10 Day Avg. Volume: 13,759,744
• 30 Day Avg. Volume: 5,265,904
• PEG Ratio: -7.32
• Price to Book (P/B): 39.27
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -73.97
• Enterprise Value/Market Cap: 0.95
• Enterprise Value/Revenue: 50.52
• Enterprise Value/Gross Profit: 75.74
• Enterprise Value/Ebitda: -14.22
• 1Y Price Target: $106.22
• Price Target Upside: 1.21% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 11

• Rating: 68 Neutral
• Price Target: ―

Verona Pharma's stock is bolstered by strong revenue growth and a successful product launch, contributing to positive momentum. However, profitability challenges, high valuations, and potential overbought conditions temper enthusiasm. The company's improved financial flexibility is a key strength, though ongoing operating losses and high SG&A expenses are notable risks.

Positive Factors

Pipeline Expansion

Ohtuvayre is a good fit for Merck, strengthening Merck's growing cardio-pulmonary pipeline and portfolio with its dual bronchodilation and anti-inflammation mechanisms.

Product Approval and Growth

Ohtuvayre, a first-in-class PDE3 and PDE4 dual inhibitor, has shown strong revenue growth since its launch, indicating fast adoption among physicians and patients.

Strategic Acquisition

Merck's acquisition of Verona Pharma for $107/ADS is seen as a justifiable value, pricing in its multibillion-dollar potential and expanding Merck's portfolio in cardiopulmonary disease treatments.

Negative Factors

Cost and Income Impact

Increased costs have been modeled, resulting in a reduction in net income for 2025.

Market Competition

Despite inclusion in the GOLD treatment guidelines for COPD, Ohtuvayre is only briefly mentioned with weak language, indicating limited recognition in the competitive landscape.

Stock Rating Downgrade

In the wake of the deal announcement, the rating was downgraded to Neutral from the prior Buy.

Verona Pharma Business Overview & Revenue Model

Company Description

Verona Pharma (VRNA) is a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapies for the treatment of respiratory diseases. The company is primarily involved in the research and development of novel compounds that target unmet medical needs in conditions such as chronic obstructive pulmonary disease (COPD) and asthma. Verona Pharma's lead product candidate, ensifentrine, is an inhaled dual inhibitor of the enzymes phosphodiesterase 3 and 4, designed to improve lung function and reduce inflammation.

How the Company Makes Money

Verona Pharma makes money through the development and potential commercialization of its proprietary drug candidates, primarily focusing on ensifentrine. The company's revenue model is centered around advancing its drug candidates through clinical trials, securing regulatory approvals, and ultimately marketing the approved therapies to healthcare providers and patients. Revenue streams may include sales of approved drugs, milestone payments from strategic partnerships, and potential royalties on licensed products. Additionally, Verona Pharma may engage in collaborations with larger pharmaceutical companies to leverage their resources for co-development and commercialization, which can provide upfront payments and funding support for clinical trials.

Verona Pharma Financial Statement Overview

Summary

Verona Pharma shows strong revenue growth, but remains unprofitable with negative margins and relies on external funding. Liquidity is strong, but there are concerns about profitability and cash flow sustainability.

Income Statement

Verona Pharma's income statement shows a significant year-over-year revenue growth, particularly notable in the TTM period with a revenue of $118.54 million compared to $42.28 million in the previous year. However, despite the revenue increase, the company remains unprofitable, with negative EBIT and Net Income, indicating challenges in managing operational costs. Margins are negative across the board, reflecting ongoing financial instability.

Balance Sheet

The balance sheet reveals a strong liquidity position with substantial cash reserves of $401.42 million in TTM, significantly exceeding its total debt of $2.13 million. The equity ratio is favorable at 43.10%, showcasing financial stability. However, the company has experienced limited equity growth, and the negative net debt indicates reliance on external financing for operations.

Cash Flow

The cash flow statement highlights substantial negative operating cash flow of $119.80 million in TTM, indicating cash burn from operations. Despite negative free cash flow, the company has managed to secure significant financing cash flow of $267.04 million, which has supported its liquidity. Nonetheless, the company's dependency on external financing raises concerns about long-term sustainability.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	42.28M	0.00	458.00K	40.00M	0.00
Gross Profit	39.70M	-679.62K	112.00K	40.00M	-627.85K
EBITDA	-142.19M	-52.47M	-67.29M	-42.19M	-47.81M
Net Income	-173.42M	-54.37M	-68.70M	-55.57M	-65.15M
Balance Sheet
Total Assets	474.24M	308.12M	259.47M	186.59M	204.21M
Cash, Cash Equivalents and Short-Term Investments	399.76M	271.77M	227.83M	148.38M	187.99M
Total Debt	122.70M	51.33M	10.65M	5.81M	5.95M
Total Liabilities	269.68M	58.84M	29.00M	38.58M	19.35M
Stockholders Equity	204.56M	249.28M	230.47M	148.00M	184.85M
Cash Flow
Free Cash Flow	-122.78M	-50.22M	-59.89M	-33.27M	-45.16M
Operating Cash Flow	-122.20M	-50.22M	-59.86M	-33.25M	-45.08M
Investing Cash Flow	-580.00K	0.00	-29.00K	-12.00K	9.71M
Financing Cash Flow	250.78M	92.87M	140.82M	-6.12M	192.34M

Verona Pharma Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 104.95
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRNA, the sentiment is Positive. The current price of 104.95 is above the 20-day moving average (MA) of 99.06, above the 50-day MA of 88.72, and above the 200-day MA of 60.64, indicating a bullish trend. The MACD of 4.88 indicates Positive momentum. The RSI at 70.62 is Negative, neither overbought nor oversold. The STOCH value of 51.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VRNA.

Verona Pharma Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KRYS	80 Outperform	$4.43B	36.91	13.90%	―	247.53%	118.34%
ALKS	73 Outperform	$4.48B	12.95	25.71%	―	-12.31%	-17.53%
VRNA	68 Neutral	$8.94B	―	-72.73%	―	―	-157.53%
GH	57 Neutral	$5.73B	―	-4584.47%	―	28.20%	13.87%
Sector *	52 Neutral	$7.61B	0.04	-62.94%	2.44%	16.14%	0.33%
CYTK	47 Neutral	$4.50B	―	435.49%	―	412.21%	1.75%
NUVL	43 Neutral	$5.79B	―	-35.69%	―	―	-81.09%

Verona Pharma Corporate Events

Verona Pharma Enhances Financial Flexibility with Loan Amendments

On March 27, 2025, Verona Pharma announced an amendment to its credit agreement with Oaktree, increasing the Tranche C Term Loans from $75 million to $125 million and reducing the interest rate from 11% to 9.7%, with a further reduction to 9.35% upon meeting sales milestones. The amendment also includes a $75 million basket for a future working capital facility. On March 28, 2025, Verona Pharma repurchased its $100 million RIPSA obligation with reduced fees and increased its term loan facility to $450 million with improved terms. This strategic move enhances Verona Pharma’s financial flexibility and supports the continued growth of its COPD treatment, Ohtuvayre, while maintaining access to an additional $200 million under the term loan facility.