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Verona Pharma Plc (VRNA)
NASDAQ:VRNA

Verona Pharma (VRNA) AI Stock Analysis

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Verona Pharma

(NASDAQ:VRNA)

Rating:68Neutral
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
Market Potential
The potential for Ohtuvayre in the bronchiectasis market is seen positively and could significantly impact the stock's valuation.
Product Performance
Ohtuvayre's launch is performing exceptionally well, exceeding expectations by tracking above Trelegy by over three times.
Sales Growth
Ohtuvayre sales nearly doubled in Q1, resulting in a +35% beat over consensus.
Negative Factors
Competitor Benchmark
The risk of underperforming Trelegy has been declining with each passing quarter, justifying ~$3B+ in potential peak sales.
Guideline Mention
Despite inclusion in the GOLD treatment guidelines for COPD, Ohtuvayre is only briefly mentioned with weak language.

Verona Pharma (VRNA) vs. SPDR S&P 500 ETF (SPY)

Verona Pharma Business Overview & Revenue Model

Company DescriptionVerona Pharma plc, a clinical stage biopharmaceutical company, focuses on development and commercialization of therapies for the treatment of respiratory diseases with unmet medical needs. The company's product candidate is ensifentrine, an inhaled and dual inhibitor of the phosphodiesterase (PDE) 3 and PDE4 enzymes that acts as both a bronchodilator and an anti-inflammatory agent in a single compound, which is in Phase 3 clinical trials for the treatment of chronic obstructive pulmonary disease, asthma, and cystic fibrosis. It is developing ensifentrine in three formulations, including nebulizer, dry powder inhaler, and pressurized metered-dose inhaler. Verona Pharma plc was incorporated in 2005 and is headquartered in London, the United Kingdom.
How the Company Makes MoneyVerona 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 Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: 30.87%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call for Verona Pharma plc reflected a positive sentiment overall, driven by the successful launch and strong sales of O2VERE, significant financial achievements, and robust progress in global regulatory and intellectual property strategies. Despite some financial losses and high expenses, the company's strong cash position and strategic financing provide a solid foundation for continued growth.
Q1-2025 Updates
Positive Updates
Successful US Launch of O2VERE
O2VERE, the new COPD treatment, nearly doubled its sales from Q4 2024 to Q1 2025, reaching $71.3 million in net product sales. Prescriptions increased to approximately 25,000 filled during the first quarter, with a 25% growth in new patient starts compared to Q4 2024.
Financial Milestones
For the first time, Verona's quarterly revenue exceeded quarterly operating expenses excluding noncash charges. Adjusted net income for the quarter was $20.5 million, excluding $36.8 million in share-based compensation.
Strong Global Strategy and Regulatory Progress
O2VERE was approved in Macau for the treatment of COPD, marking the first regulatory approval outside the US. Nuance Pharma is expected to report results from its pivotal phase three trial for COPD treatment in China in Q2.
Expansion of Intellectual Property
A new Orange Book listed patent for O2VERE with an expiration date in 2044 was granted, bringing the total to four Orange Book listed patents.
Strong Financial Position
Verona ended Q1 2025 with $401.4 million in cash and equivalents, and amended its strategic financing arrangement for increased financial flexibility and reduced cost of capital.
Negative Updates
Operating Loss
Despite strong revenue growth, Verona reported an operating loss of $10.3 million and a net loss after tax of $16.3 million for Q1 2025.
High Selling, General, and Administrative Expenses
SG&A expenses were $69.1 million in Q1 2025, driven by share-based compensation and costs related to the O2VERE launch.
Company Guidance
In the first quarter of 2025, Verona Pharma plc reported significant progress in the launch of O2VERE, their new COPD treatment, with quarterly revenue surpassing operating expenses excluding noncash charges. O2VERE sales almost doubled compared to the previous quarter, reaching $71.3 million in net product sales. The company recorded a total net revenue of $76.3 million, buoyed by a $5 million milestone from Nuance Pharma. In terms of prescriptions, 25,000 were filled, new patient starts increased by over 25% compared to Q4 2024, and refills accounted for 60% of all expenses. The prescriber base grew by approximately 50%, with around 5,300 prescribers, 60% of whom are tier one healthcare providers. Financially, the company maintained a strong balance sheet with $401.4 million in cash and equivalents and an adjusted net income of $20.5 million, excluding $36.8 million in share-based compensation. Additionally, Verona Pharma amended its financing arrangement, increasing its debt facility to $450 million and repurchasing a $100 million obligation, enhancing financial flexibility.

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
60
Neutral
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
70
Positive
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
55
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue118.53M42.28M0.00458.00K40.00M0.00
Gross Profit112.28M39.70M-679.62K112.00K40.00M-627.85K
EBITDA-176.07M-142.19M-52.47M-67.29M-42.19M-47.81M
Net Income-164.02M-173.42M-54.37M-68.70M-55.57M-65.15M
Balance Sheet
Total Assets525.94M474.24M308.12M259.47M186.59M204.21M
Cash, Cash Equivalents and Short-Term Investments401.42M399.76M271.77M227.83M148.38M187.99M
Total Debt2.13M122.70M51.33M10.65M5.81M5.95M
Total Liabilities299.34M269.68M58.84M29.00M38.58M19.35M
Stockholders Equity226.59M204.56M249.28M230.47M148.00M184.85M
Cash Flow
Free Cash Flow-120.37M-122.78M-50.22M-59.89M-33.27M-45.16M
Operating Cash Flow-119.80M-122.20M-50.22M-59.86M-33.25M-45.08M
Investing Cash Flow-1.10M-580.00K0.00-29.00K-12.00K9.71M
Financing Cash Flow267.04M250.78M92.87M140.82M-6.12M192.34M

Verona Pharma Technical Analysis

Technical Analysis Sentiment
Positive
Last Price90.08
Price Trends
50DMA
79.38
Positive
100DMA
70.94
Positive
200DMA
55.57
Positive
Market Momentum
MACD
4.06
Positive
RSI
55.59
Neutral
STOCH
23.61
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 90.08 is below the 20-day moving average (MA) of 91.18, above the 50-day MA of 79.38, and above the 200-day MA of 55.57, indicating a neutral trend. The MACD of 4.06 indicates Positive momentum. The RSI at 55.59 is Neutral, neither overbought nor oversold. The STOCH value of 23.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VRNA.

Verona Pharma Risk Analysis

Verona Pharma disclosed 72 risk factors in its most recent earnings report. Verona Pharma reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Verona Pharma Peers Comparison

Overall Rating
UnderperformOutperform
Sector (46)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$4.02B34.0413.90%247.53%118.34%
77
Outperform
$4.78B13.8125.71%-12.31%-17.53%
68
Neutral
$7.67B-72.73%-157.53%
GHGH
57
Neutral
$6.22B-4584.47%28.20%13.87%
46
Neutral
C$194.85M-4.28-8.56%2.84%13.52%-1.74%
45
Neutral
$4.02B435.49%412.21%1.75%
43
Neutral
$5.78B-35.69%-81.09%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VRNA
Verona Pharma
90.08
73.97
459.16%
ALKS
Alkermes
29.00
4.71
19.39%
CYTK
Cytokinetics
34.36
-21.15
-38.10%
KRYS
Krystal Biotech
141.35
-42.99
-23.32%
GH
Guardant Health
50.18
21.43
74.54%
NUVL
Nuvalent
80.50
7.63
10.47%

Verona Pharma Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Verona Pharma Enhances Financial Flexibility with Loan Amendments
Positive
Mar 28, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: May 01, 2025