UK-based biotech company Verona Pharma has successfully completed a placing to raise gross proceeds of approximately £3.25 million pounds ($5 million). Verona Pharma’s largest institutional shareholder, Henderson Global Investors, has supported the issue, increasing its overall interest in the company.
Verona Pharma plc (AIM: VRP.L), the biotechnology company dedicated to discovering new drugs for the treatment of chronic respiratory diseases, announces that it has successfully completed a placing, conditional on admission and in part on shareholder approval, to raise gross proceeds of approximately £3.25 million pounds ($5 million).
The placing, which was arranged by WH Ireland Limited, involved the issue of up to 65,020,120 new ordinary shares at 5 pence per share. Up to 43,660,800 of these new ordinary shares have been placed firm (the “Firm Shares”) and up to 21,359,320 of these new ordinary shares (the “Conditional Shares”) have been placed conditional upon shareholder approval. Application has been made for the new ordinary shares to be admitted to trading on AIM and dealings in the Firm Shares and the Conditional Shares are expected to commence on 14 December 2011 and 11 January 2012, respectively. Following the placing of all of the new ordinary shares, the number of ordinary shares in issue will increase to 307,204,395.
The net proceeds of the placing will be used:
• to finance the ongoing RPL554 clinical trial programme, including a low dose response study planned to be completed by mid 2012, and a Phase II anti-inflammatory trial planned to be completed by late 2012. In the meantime, discussions related to the licensing of RPL554 continue;
• to finance further clinical trials with VRP700 to obtain vital dose response and duration of action data. These studies are planned to be initiated and concluded in 2012; and
• to meet ongoing corporate expenditures.
The Directors believe that the placing will provide Verona Pharma with sufficient working capital to finance the development programme described above, without taking into account any potential licensing income from RPL554.
Magic Bullet Enterprises Limited (“Magic Bullet”), a company controlled by Michael Walker, Chief Executive of Verona, and Clive Page, Chairman of Verona, has agreed to subscribe for 500,000 Conditional Shares at the placing price.
Under the AIM Rules, Magic Bullet is treated as a related party of the Company. The Directors, excluding Messrs Walker and Page by reason of their interest in Magic Bullet, consider, having consulted with WH Ireland, the Company’s nominated adviser, that the terms of the subscription by Magic Bullet are fair and reasonable insofar as shareholders are concerned.
A circular convening the general meeting to approve the placing of the Firm Shares is being sent to shareholders today and a copy will be placed on the Company’s website shortly.
Michael Walker, CEO of Verona Pharma, stated:
“This financing will enable us to substantially reinforce our RPL554 licensing package while continuing to expand our clinical knowledge base for VRP700. The Directors believe that progressing the development of our drug projects whilst pursuing partnering opportunities strengthens the Company’s negotiating position both by increasing the value of the projects and by making them more attractive to potential partners. Therefore, the studies planned for RPL554 and VRP700 have been designed with this in mind, at low cost and with short time lines.
The Directors are particularly pleased that Verona Pharma’s largest institutional shareholder, Henderson Global Investors, has supported the issue, increasing its overall interest in the Company.”
Notes to Editors
About Verona Pharma plc
Verona Pharma is a biotechnology company dedicated to discovering new drugs for the treatment of chronic respiratory diseases, such as chronic obstructive pulmonary disease (COPD), asthma, allergic rhinitis (hay fever) and cough. The Company has three drug projects under development, all aimed at the substantial respiratory and inflammatory disease markets; RPL554, Verona’s lead product is in Phase II clinical studies; VRP700, a novel treatment for chronic cough is also in Phase II clinical studies; and novel anti-inflammatory polysaccharides (NAIPs) are in preclinical experimental studies as potential treatments for a wide range of respiratory and inflammatory diseases.
About RPL554 for the treatment of COPD and Asthma
RPL554, Verona Pharma’s lead drug project, is an inhaled long acting bronchodilator and anti-inflammatory drug that is in a novel class of drugs known as mixed phosphodiesterase (PDE) 3/4 inhibitors. RPL554 is intended for use in the treatment of COPD, asthma and allergic rhinitis (hay fever). After four positive clinical trials to date with RPL554, the Company is performing further Phase II clinical trials of the drug in patients with COPD and asthma, while simultaneously continuing discussions with potential licensees or partners to take this drug through Phase III clinical development and associated regulatory studies to allow subsequent commercialisation.
COPD is a chronic lung disease with significant unmet need and for which current treatment is far from optimal. COPD is most commonly characterised by fixed airflow obstruction and chronic airways inflammation resulting from exposure to tobacco smoke. Asthma, which remains one of the most common chronic diseases in the world, is characterised by recurrent breathing problems and symptoms such as breathlessness, wheezing, chest tightness, and coughing. The market for COPD and asthma drugs is currently estimated to be £20 billion [source: visiongain].
About VRP700 for the treatment of Cough
VRP700 is Verona Pharma’s lead drug compound for the treatment of cough, having a novel mechanism of action involving the suppression of cough initiating signals originating from cough sensory nerve endings located in the lungs. A recent clinical trial completed at the University of Florence, Italy in September 2011 clearly demonstrated significant anti-tussive effects with nebulised VRP700 in hospitalized patients with chronic intractable cough.
Cough can be a very debilitating comorbidity reported by patients, especially those with respiratory conditions such as asthma, COPD, lung cancer, interstitial lung disease, fibrosis or lung infections. It is a neglected symptom which is often self-medicated. Consumer spending on OTC medications, including those for cough, grew by 10% over 2005-10, to reach £532 million [source: Mintel]. However, there is very little clinical evidence for such OTC cough medications being really effective and it is widely recognised by the medical community that there is a large need for more effective drugs to control and prevent pathologically induced coughing.