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Verona Pharma Plc (VRNA)
NASDAQ:VRNA
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Verona Pharma
(NASDAQ:VRNA)
Rating:68Neutral
Price Target:―
Positive Factors
Intellectual Property
A newly granted patent expiring 2044 was listed in the FDA's Orange Book, indicating long-term protection for the product.
Market Expansion
Ohtuvayre has been approved in Macau for the maintenance treatment of COPD in adult patients, marking the first regulatory approval outside of the U.S.
Sales Performance
Ohtuvayre sales of $71M marks the third straight quarter in which Ohtuvayre is tracking above Trelegy (as well as Breztri) by ~3x+.
Negative Factors
Financial Agreements
Verona amended its strategic financing agreements by repaying the revenue interest purchase and sales agreement and increasing the debt facility to $450M under more favorable terms.
Market Competition
The risk of underperforming Trelegy has been declining with each passing quarter, justifying ~$3B+ in potential peak sales.
Sales Forecast
The company reported $71.3M in 1Q25 product sales, solidly outperforming our forecast for top-line sales of only $49.7M.
Verona Pharma (VRNA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.36B
Dividend YieldN/A
Average Volume (3M)1.42M
Price to Earnings (P/E)―
Beta (1Y)1.79
Revenue GrowthN/A
EPS Growth-157.53%
CountryUS
Employees209
SectorHealthcare
Sector Strength44
IndustryBiotechnology
Share Statistics
EPS (TTM)-0.02
Shares Outstanding85,132,000
10 Day Avg. Volume1,314,241
30 Day Avg. Volume1,417,424
Financial Highlights & Ratios
PEG Ratio-5.05
Price to Book (P/B)27.08
Price to Sales (P/S)0.00
P/FCF Ratio-51.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$92.00Price Target Upside24.17% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Verona Pharma Business Overview & Revenue Model
Company DescriptionVerona 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 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 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.60
Neutral
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.70
Positive
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.55
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 118.53M | 42.28M | 0.00 | 458.00K | 40.00M | 0.00 | Gross Profit |
| 112.28M | 39.70M | -679.62K | 112.00K | 40.00M | -627.85K | EBIT |
| -137.82M | -154.63M | -67.83M | -66.12M | -73.31M | -74.28M | EBITDA |
| -176.07M | -142.19M | -52.47M | -67.29M | -42.19M | -47.81M | Net Income Common Stockholders |
| -164.02M | -173.42M | -54.37M | -68.70M | -55.57M | -65.15M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 401.42M | 399.76M | 271.77M | 227.83M | 148.38M | 187.99M | Total Assets |
| 525.94M | 474.24M | 308.12M | 259.47M | 186.59M | 204.21M | Total Debt |
| 2.13M | 122.70M | 51.33M | 10.65M | 5.81M | 5.95M | Net Debt |
| -399.28M | -277.06M | -220.44M | -217.18M | -142.57M | -182.04M | Total Liabilities |
| 299.34M | 269.68M | 58.84M | 29.00M | 38.58M | 19.35M | Stockholders Equity |
| 226.59M | 204.56M | 249.28M | 230.47M | 148.00M | 184.85M |
| 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 | -580.00K | 0.00 | -29.00K | -12.00K | 9.71M | Financing Cash Flow |
| 267.04M | 250.78M | 92.87M | 140.82M | -6.12M | 192.34M |
Verona Pharma Technical Analysis
Positive
74.09
Price Trends
64.68
Positive
60.98
Positive
46.99
Positive
Market Momentum
2.44
Negative
64.28
Neutral
94.18
Negative
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 74.09 is above the 20-day moving average (MA) of 69.75, above the 50-day MA of 64.68, and above the 200-day MA of 46.99, indicating a bullish trend. The MACD of 2.44 indicates Negative momentum. The RSI at 64.28 is Neutral, neither overbought nor oversold. The STOCH value of 94.18 is Negative, 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 3 New Risks
1.
The terms of the RIPSA place restrictions on our operating and financial flexibility, and if we fail to comply with certain covenants in the RIPSA, our results of operations and financial condition may be harmed. Q4, 2024
2.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in which we participate, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. Q4, 2024
3.
Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition. Q4, 2024
Verona Pharma Peers Comparison
Overall Rating
UnderperformOutperform
Sector (53)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $5.22B | 14.54 | 25.71% | ― | -12.31% | -17.53% | |
72 Outperform | $3.80B | 30.51 | 13.90% | ― | 247.53% | 118.34% | |
68 Neutral | $6.36B | ― | -72.73% | ― | ― | -157.53% | |
53 Neutral | $5.24B | 3.07 | -43.58% | 2.80% | 16.87% | -0.11% | |
52 Neutral | $4.95B | ― | -4584.47% | ― | 28.20% | 13.87% | |
43 Neutral | $5.45B | ― | -35.69% | ― | ― | -81.09% | |
36 Underperform | $3.90B | ― | 435.49% | ― | 412.21% | 1.75% |
* Healthcare Sector Average
Performance Comparison
VRNA
Verona Pharma
74.09
62.09
517.42%
ALKS
Alkermes
30.53
6.53
27.21%
CYTK
Cytokinetics
31.31
-17.67
-36.08%
KRYS
Krystal Biotech
126.68
-36.94
-22.58%
GH
Guardant Health
37.09
14.58
64.77%
NUVL
Nuvalent
73.66
6.98
10.47%
Verona Pharma Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: 7.64%|
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 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
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.