Verona Pharma plc (VRNA)·Q3 2024 Earnings Summary

Executive Summary

• Strong early U.S. launch of Ohtuvayre in Q3: $5.6M net sales in first ~7 weeks; October net sales exceeded the entire Q3, indicating accelerating demand .
• Rapid adoption and breadth: >5,000 prescriptions through October, >2,200 unique prescribers; use spans single, dual, and ~50% triple-therapy backgrounds, with growing depth per prescriber .
• Operating intensity stepped up to support launch and two new Phase 2 programs; Q3 net loss of $43.0M with R&D $10.6M and SG&A $35.2M; cash $336.0M with runway through at least end of 2026 and additional access under $650M facilities .
• Near-term catalysts: CMS permanent, product-specific J-code J7601 effective Jan 1, 2025; potential GOLD guideline placement discussed; continued growth in prescriber reach and refills .

What Went Well and What Went Wrong

What Went Well

• Broad, accelerating launch metrics: “More than 5,000 Ohtuvayre prescriptions [filled] and more than 2,200 unique HCPs [prescribed]… in just 12 weeks”; October net sales exceeded Q3 total, signaling acceleration .
• Favorable access dynamics: 80%+ of dispensed scripts with co-pay < $10; majority of prescriptions processed under medical benefit (Medicare Part B/Advantage) with limited hurdles; non-specific J-code now transitioning to permanent J7601 effective Jan 1, 2025 .
• Pipeline momentum: Initiated two Phase 2 programs (ensifentrine+glycopyrrolate combo in COPD; ensifentrine in NCFBE); supportive conference data presented at ERS/CHEST; China partner completed Phase 3 enrollment .

What Went Wrong

• High operating spend during commercialization ramp: SG&A rose to $35.2M (vs $13.4M YoY), driven by sales team build-out, marketing, and support costs; net loss widened to $43.0M .
• No external revenue guidance for Q4: Management declined to provide Q4 revenue guidance despite investor interest, citing early-stage dynamics, though noted no rationale for slowdown given October trends .
• Channel inventory dynamics will modestly affect revenue recognition: Specialty pharmacies held ~2–3 weeks of inventory; CFO indicated approximately “about 1/4” of Q3 sales were inventory build given >8 weeks in market by quarter-end .

Financial Results

Income statement snapshot (YoY comparison)

Notes: Gross Profit and margin are calculated from reported revenue and cost of sales .

Operating expenses trend (sequential)

Balance sheet snapshot

KPIs and launch metrics

Estimates vs. Actuals

*S&P Global consensus values unavailable at time of analysis due to data access limits. Values would normally be retrieved from S&P Global.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are excited by the continued acceleration as net sales for October exceeded the third quarter. More than 5,000 Ohtuvayre prescriptions were filled and more than 2,200 unique HCPs prescribed Ohtuvayre in just 12 weeks.” — CEO, David Zaccardelli .
• “Ohtuvayre is the first inhaled COPD treatment to provide both bronchodilation and nonsteroidal anti-inflammatory effects, and we are confident that it can redefine the COPD treatment paradigm.” — CEO, David Zaccardelli .
• “With the cash currently on hand and potential future access to the remaining $425 million under the Oaktree facilities, we expect to have sufficient runway through at least the end of 2026.” — CFO, Mark Hahn .

Q&A Highlights

• Run-rate into Q4: Management declined explicit Q4 guidance but noted no rationale for slowdown given October’s net sales outpacing Q3; expect continued acceleration with growing prescriber depth .
• Prescriber behavior: Early “trial” prescribing (1–2 scripts) turning into deeper adoption as physicians see outcomes and engage more frequently with reps .
• Channel inventory: Specialty pharmacies holding 2–3 weeks; CFO indicated about a quarter of Q3 sales represented inventory build given timing .
• Reimbursement and patient affordability: Majority under medical benefit; well over 80% of dispensed scripts have co-pay < $10; prior auth dynamics on pharmacy benefit manageable via SP partners .
• Competition: Dupixent seen as targeting a narrower segment; no expected headwind to Ohtuvayre; potential complementary use in select patients .

Estimates Context

• S&P Global consensus for Q3 2024 revenue and EPS was unavailable at the time of analysis due to data access limits; therefore, we cannot quantitatively assess beats/misses versus S&P consensus at this time (we attempted to retrieve S&P data).
• On the Q2 call, one analyst referenced a third-party “consensus for Q3 is $1.5 million,” but management emphasized early-stage dynamics and channel inventory effects; use caution relying on that figure .

Key Takeaways for Investors

• The launch is tracking ahead of expectations qualitatively: October net sales > Q3, broad prescriber adoption, and strong affordability profile reduce early-stage commercialization risk .
• Access setup is favorable: majority medical benefit, permanent product-specific J-code from Jan 1, 2025, and low patient out-of-pocket levels support sustained uptake and refills .
• Near-term print risk: Channel inventory can modestly skew quarterly revenue; watch refill cadence and prescriber depth for durable demand signals .
• Operating spend is heavy but purposeful: SG&A reflects field build-out and omnichannel promotion; watch operating leverage as revenue scales .
• Pipeline and geographic optionality: Phase 2 combo and NCFBE trials in motion; China pivotal data from partner expected in 2025 could open ex-U.S. value .
• 2025 set-up: GOLD guideline potential, permanent J-code, and growing physician familiarity are meaningful catalysts for continued ramp .
• Risk framing: Absence of explicit quarterly revenue guidance keeps near-term volatility elevated; competitive risk appears manageable given broader Ohtuvayre applicability vs. niche biologics .

Citations:

• Q3 2024 8-K press release and financials
• Q3 2024 earnings call transcript
• Q2 2024 8-K and call
• Q1 2024 8-K and call