Interview – Verona investors still holding their breath

Verona Pharma today fired the starting gun on a substantial phase IIb programme of its lead respiratory asset. Four trials, which will seek to recruit a total of around 1,000 patients with COPD or cystic fibrosis, will wrap up in early 2020. Coincidently this is the year that the main patent around the molecule expires – RPL554 first entered the clinic almost a decade ago.

Development dead ends and lack of funding contributed to the painfully slow progress, but last year Verona managed to persuade new investors that the path forward was clear and new intellectual property secure. The $150m in new funds raised represents an impressive sum for a small listed UK drug developer that has long disappointed. Its chief executive, Jan-Anders Karlsson, tells EP Vantage that lack of innovation in the COPD space helped pique interest.

“As far as we can see there isn’t anything out there with the potential to change patient outcomes in a meaningful way. COPD is wide open,” he says.

The company hopes that RPL554, a dual inhibitor of PDE3 and PDE4, can fill the gap. Highly encouraging results from a phase IIa trial last year acted as a trigger for the fund-raisings – in 36 COPD patients, RPL554 on top of the bronchodilator salbutamol or anti-muscarinic Spiriva improved lung function by 60%.

Naturally, the company had to go to the US to find most of the cash. New investors include Orbimed, Vivo Capital and Edmond De Rothschild who, among others, bankrolled a $63m placing in mid-2016 and supported a $90m secondary listing on Nasdaq in May.

Slow burn

Unlike some other UK-based companies that have successfully trodden this path, however, Verona’s share price has not benefited from US exposure. Its AIM-listed stock is currently trading at £1.17, a two-and-a-half year low, while its ADSs are 10% below their offer price.

Concerns about exclusivity probably do not help. Mr Karlsson says sorting out intellectual property was one of the first issues he turned to on becoming chief executive in 2012. He believes that RPL554 is now protected until at least 2032, though he concedes that the composition-of-matter patent expires in 2020.

Other red flags are the problematic nature of the progressive disease, treatment of which is dominated by bronchodilators and steroids that in many cases are available generically. And, despite the best efforts of big pharma, no mechanism of action has shown an effect on outcomes or mortality in COPD, or managed to arrest the steady decline in lung function that is its hallmark.

“The only thing we can do is reduce symptoms and hospitalisations, to some effect. But hospitalisations due to exacerbations each year are increasing, despite all the treatments, and more than half of patients stay in hospital for a week,” Mr Karlsson says.

A product that could keep patients out of hospital and, hopefully, improve other measures of life quality would be considered very valuable to patients and payers, he maintains.

The phase IIb programme about to start will measure RPL554’s ability to fit this bill; one trial will act as a proof of concept in cystic fibrosis, an attractive niche indication that will also have helped get investors on board.

It is notable that RPL554’s protracted developmental path mirrors in some ways that of Daxas, a similar drug that finally reached the market in 2011 (Forest finally out of the woods with Daliresp approval, March 1, 2011)

However Daxas hits only PDE4 and is administered orally. Its systemic delivery is largely responsible for off-target side effects that have limited its use, such as gastro-intestinal issues including nausea, vomiting and weight loss.

Astrazeneca – Daxas’s third big pharma owner – recorded sales of only $154m last year. Mr Karlsson argues that the agent has been finding fans, helped by the React study published in 2015. This found that the pill reduced exacerbations by around 25% when given on top of fixed dose bronchodilator/steroid combinations, irrespective of whether patients were also on Spiriva.

“That was surprising to the community,” he says. “People are now beginning to appreciate this mechanism of action. If we don’t have [Daxas]-like side effects – and we don’t appear to have any – this could be a significant advantage.

“And we believe that the combination of PDE3 and 4 inhibition at the same time gives a much more profound anti-inflammatory and bronchodilatory response.”

At this stage Verona is focusing on a nebuliser-delivered formulation of RPL554, which Mr Karlsson maintains is most appropriate for the severely sick patients they are initially targeting. A formulation that can be delivered via inhalers is being taken into earlier phase II studies, although this would only be progressed further by a partner.

The inhaler market “is important, but we cannot do that – the programme would be far too big. But smaller focused programmes for hospitalised patients, or CF patents, that is something we could do,” he says.

After more than a decade working on this molecule, Verona now has the cash in place to generate some hard clinical data, though investors still have quite a wait on their hands. Mr Karlsson hopes that a sparse COPD pipeline will keep interest alive in the meantime.

“Baseline lung function decreases with age, and with COPD it goes even quicker. No drug has managed to change that,” he says. “We still need to do the studies but we and the investors see that there is a possibility that this drug could be helpful here. That’s what’s keeps us going.”

To contact the writer of this story email Amy Brown in London at [email protected] or follow @ByAmyBrown on Twitter