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Verona eyes lung drug success as US investors fund GSK-inspired molecule

Verona Pharma PLC is hoping its experimental lung drug ensifentrine will experience a Lazarus-like resurrection decades after its discovery by the former head of research at GlaxoSmithKline PLC, thanks to $200 million raised from new U.S. investors.

Ensifentrine was discovered by pharmacologist Sir David Jack, the son of a coal miner who started his professional life as an apprentice at British pharmacy chain Boots and went on to lead GSK's research in the late 1970s and 1980s. Jack's expertise in asthma led to the development of the blockbuster Advair, and the first inhaled steroid, beclomethasone. Before retiring, he turned his attention to RPL554, or ensifentrine, believing a new class of drugs could combine both bronchodilator and anti-inflammatory activity in one compound. This molecule has been through 16 clinical trials for chronic obstructive pulmonary disease, or COPD, and its novel approach has shown clinical benefit while eliciting no side effects.

But, like other experimental compounds abandoned on the shelves of Big Pharma over the years, it has had a few setbacks along the way. A failed phase 2 trial of ensifentrine in January 2019 knocked more than 30% off the shares of Verona, which had been languishing on the London Stock Exchange's AIM market since its 2006 listing. A new CEO was appointed in 2020, and the biotech pivoted to the U.S. where Verona's clinical team of mostly female scientists, many of whom hail from GSK's labs at Research Triangle Park, N.C., are based in search of fresh capital. Fundraising in July yielded $200 million, three times its market capitalization, allowing Verona to embark on phase 3 trials that will determine ensifentrine's potential.

"Despite what's gone before, there hadn't been a lot of real innovation [in COPD]," said Liam Ratcliffe, head of biotechnology at New York City-based investment fund Access Biotechnology, and a recent Verona investor. "We're very familiar with [Verona's management] and their background. We knew of them and knew of the GSK team in particular, it had been very successful in pulmonary drug development. So, we had portals into that world, hence our confidence," Ratcliffe told S&P Global Market Intelligence in an interview.

Ratcliffe conceded that Verona has had "bumps along the way" attributed to a poorly designed phase 2 trial but said a good management team, along with the need for new treatments and the potential to make a difference to a fairly significant number of patients, make Verona an appealing bet. "It's an executional risk play that we see here," he said. "It's all about now getting the right patients on trial and running the trials properly."

Peter Barnes, Margaret Turner-Warwick Professor of Medicine at the National Heart and Lung Institute in London, said that while ensifentrine has a well-established bronchodilator effect, whether it would be useful to add to existing bronchodilators is still unclear.

"I think the problem is that it's been developed by a small company and they have been rather slow at doing the clinical studies that are needed," said Barnes, a world-renowned expert in COPD who has published over 1,000 peer-reviewed papers. "But whether it adds to what we now give, which is dual, long-acting bronchodilators, is not clear, because they haven't done that study," Barnes said in an interview with S&P Global Market Intelligence.

Opportunities in COPD

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Verona CEO David Zaccardelli thinks U.S. investors have a better understanding of ensifentrine as a compound. He attributed the successful recent fundraising to a mixture of the dynamics in the U.S. and his relationships with investors; he plans to commercialize the drug in the U.S. market but seek partners elsewhere.

"The investors understood the value of ensifentrine," Zaccardelli said in an interview with S&P Global Market Intelligence. "And it was an odd situation where the market cap really did not reflect at all the underlying value of ensifentrine. But I think we've really unlocked that now."

Analysts are optimistic that ensifentrine's ongoing phase 3 trials as a nebulized therapy will have a positive read-out, based on promising efficacy and clean safety data so far. Wedbush Securities forecast over $1 billion in 2029 U.S. sales after an estimated launch in the first quarter of 2024, while Jefferies analyst Lucy Codrington, who rates Verona a "buy," is confident that the new management can market the drug in the lucrative U.S. COPD market.

Codrington has penciled in $800 million peak sales for nebulized ensifentrine in the U.S. alone. The drug is simultaneously being developed as an inhaled medicine, making it a potential option for the estimated 5 million COPD patients who use hand-held devices in the U.S., in addition to the 1.2 million Americans with a more severe form of the condition who could potentially benefit from a nebulized version, she said.

Beyond COPD, Verona is exploring the efficacy of ensifentrine in treating asthma, cystic fibrosis and even COVID-19.

After early investors waited patiently for ensifentrine to reach its potential and with final results now in sight Verona will be delisting its shares from London's AIM market at the end of October to focus on the Nasdaq, where it can readily benefit from the backing of U.S. investors seeking a promising bet.

"People are looking for opportunities outside of more crowded spaces," said Access Biotechnology's Ratcliffe. "We are always looking in the space of inflammation in general ... and COPD is just one version of that, it just happens to be in the lungs."

Article amended at 6:20 a.m. ET on Oct. 23 to include comments from Professor Peter Barnes and at 5.18 a.m. ET to clarify the circumstances of the molecule's discovery.