29 September 2015
LSE: VER
Vernalis plc

TuzistraTM XR US launch underway, transition to a commercial specialty pharmaceutical company on track

Investment in NCE pipeline complete

Vernalis plc (LSE: VER) today announces its audited results for the 18 month period ended 30 June 2015 and unaudited results for the 12 month period ended 30 June 2015.

The Group changed its accounting reference date from 31 December to 30 June on 18 November 2014 to align the external reporting period with the seasonality of the US cough cold market, which will become a major component of the Group's future commercial business following the approval and launch of TuzistraTM XR. While the financial highlights and financial review below focus on the 12 months ended 30 June 2015 compared to the 12 months ended 30 June 2014, figures for the audited 18 month period to 30 June 2015 are also presented. The interim performance, for the first 6 months through to June 2014, was published on 5 August 2014.

 

(Audited)

18 months

ended

30 June

2015

£000

(Audited)

12 months

ended

31 Dec

2013

£000

(Unaudited)

12 months

ended

30 June

2015

£000

(Unaudited)

12 months

ended

30 June

2014

£000

Revenue

19,882

14,084

13,712

12,693

R&D expense

(22,563)

(14,416)

(15,687)

(14,805)

G&A expense (before exceptional items)

(8,635)

(4,907)

(6,019)

(4,950)

Operating (loss)/profit

       

-       Before exceptional items

(12,078)

(7,303)

(8,224)

(8,602)

-       After exceptional items

(11,835)

(5,695)

(7,981)

(7,499)

Net Finance income/ (expense)

2,576

(579)

4,252

(6,876)

Loss before tax

       

-       Before exceptional items

(9,502)

(7,882)

(3,972)

(15,478)

-       After exceptional items

(9,259)

(6,274)

(3,729)

(14,375)

Income tax credit

2,858

2,273

1,946

1,606

Loss after tax

       

-       Before exceptional items

(6,644)

(5,609)

(2,026)

(13,872)

-       After exceptional items

(6,401)

(4,001)

(1,783)

(12,769)

Cash resources

61,258

76,918

61,258

70,336

Financial Highlights for the 12 months ended 30 June 2015

  • Financial performance at the top end of market expectations
    • Revenue was £13.7 million (2014: £12.7 million, 18 months: £19.9 million)
      • Research collaboration income was £7.9 million (2014: £6.6 million, 18 months £12.3 million) up £1.3 million or 20% due to an increase in FTE income, with milestone receipts flat at £1.1 million (18 months: £2.2 million). The research organisation remains self-funding
      • $1.0 million (£0.7 million) was received following the out-licensing of V81444
      • Frovatriptan royalty income was down 17% at £4.9 million (2014: £5.9 million 18 month: £6.6 million): 5% due to a decrease in volume of active pharmaceutical ingredient (API) supplied, 4% due to pricing and 8% due to foreign exchange
    • Operating costs before exceptional items were £21.7 million (2014: £19.8 million, 18 month: £31.2 million), up 10% due to preparation costs associated with the launch of TuzistraTM XR
    • Operating loss for the year before exceptional items was £8.2 million down marginally compared to 2014 (2014: £8.6 million, 18 months: £12.1 million) and £8.0 million on a post exceptional basis (2014: £7.5 million, 18 months £11.8 million)
    • Net finance income for the year was £4.3 million (2014: £6.9 million loss, 18 month: £2.6 million income) driven by an unrealised foreign exchange gain from the retranslation of our US dollar cash into sterling for reporting purposes
    • Pre-exceptional loss for the year was substantially reduced to £2.0 million (2014: £13.9 million, 18 months £6.6 million) and £1.8 million (2014: £12.8 million, 18 months £6.4 million) on a post-exceptional basis due to unrealised foreign exchange movements on our US dollar cash
    • Cash resources including cash and cash equivalents and held to maturity assets reduced by £9.0 million in the year (for 18 months reduced by £15.7 million) and included:
      • $12.0 million (£7.5 million) milestone payments in total to Tris for TuzistraTM XR filing and approval milestones and POC for CCP-08 (the 18 month period additionally included a $3.0 million milestone for POC of CCP-07)
      • £4.3 million (18 months £2.6 million) unrealised foreign exchange gain on the conversion of cash resources held in US dollars into sterling
    • Balance sheet remains strong with £61.3 million of cash resources and no debt at 30 June 2015

Operational Highlights for the 18 months
Cough Cold Commercial Pipeline:

  • TuzistraTM XR approved by FDA on 30 April 2015
  • POC achieved for both CCP-07 and CCP-08 triggering milestone payment to Tris in April and July 2014 respectively
  • CCP-07 12 months stability testing commenced in June 2015 with NDA submission now expected in 2016
  • Two further programmes in active development at Tris, and we aim to achieve POC on these remaining programmes by the end of 2016

Frovatriptan (marketed):

  • Underlying Menarini sales for the 12 months to 30 June 2015 down 11% at €25.2 million (2014: €28.4 million)
  • Menarini current outlook foresees three 12.5kg shipments of API for 2015/16 but underlying sales and tablet volumes are likely to be affected by generic entries in 2016

NCE Development Pipeline:

  • Completed in-house investment in studies and successfully out-licenced V81444 (CNS disease) and V2006 (cancer) to partners. Seeking partners for the remaining three un-partnered programmes

Research Collaborations:

  • New collaboration with Taisho announced (April 2015)
  • £2.2 million of milestones earned from successful collaborations with Servier (June and August 2014) and AKP (March 2014 and March 2015)

Post Year End Highlights

  • TuzistraTM XR, the only 12-hour, extended-release, codeine-based cough cold suspension, launched in the US ahead of the 2015/2016 cough cold season
  • Specialist US primary care sales force now fully recruited, trained and deployed to the field

Expected 2015/16 Newsflow:

  • CCP-07: pivotal single and multi-dose pharmacokinetic study results and NDA submission (2016)
  • CCP-08: completion of stability batches for stability testing, pivotal single and multi-dose pharmacokinetic study results and NDA submission (2015 and 2016)
  • Proofs-of-concept on two remaining programmes in cough cold pipeline (by end of 2016)
  • Achieve milestones under existing collaborations (undisclosed)
  • Secure new research collaborations (undisclosed)

Ian Garland, Chief Executive Officer, commented, "We have continued to make significant progress in the transition of Vernalis to a commercial specialty pharmaceutical company during the last 18 months and have delivered across all three elements of our strategy. Pivotally, the approval and recent launch of our lead cough cold programme, TuzistraTM XR has validated our low risk, fast path to market, commercial strategy. There are a further four programmes in active development with Tris that should follow the same approval route. TuzistraTM XR alone has the potential to be a significant product that will transform Vernalis into a profitable and cash generative business, targeting a market worth over $1.8 billion at current brand pricing, with little competition.

In the NCE pipeline we completed our investment in our in-house studies and our partnering model is beginning to deliver.

Additionally our research business secured multiple milestones during the period as well as a new collaboration. Our research business continues to be self-funding.

The outlook for 2015/2016 is very exciting as we begin to commercialise TuzistraTM XR in the US prescription cough cold market and we continue to look for complementary products to leverage our specialist sales force."

Presentation & Conference Call
Vernalis management will host a presentation at 9.30am (UK) at the offices of FTI Consulting 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. It will also be available via webcast at http://www.vernalis.com/investor-centre/presentations-and-webcasts and www.cantos.com and via conference call, which can be joined by dialling: +44 (0) 20 3003 2666, Passcode 7767597 # Please contact Matthew Moss at FTI consulting +44 (0) 20 3727 1000 for details.

-- ends --

Enquiries:

Vernalis plc:

 

Ian Garland, Chief Executive Officer

+44 (0) 118 938 0015

David Mackney, Chief Financial Officer

 

Canaccord Genuity Limited (Nominated Adviser):

+44 (0) 20 7523 8000

Dr Julian Feneley

 

Emma Gabriel

 

Henry Fitzgerald-O'Connor

 

Shore Capital (Joint Broker)

+44 (0)20 7408 4090

Bidhi Bhoma

 

Toby Gibbs

 

FTI Consulting:

+44 (0) 20 3727 1000

Ben Atwell

 

Simon Conway

 

Stephanie Cuthbert

 

Notes to Editors

About Vernalis
Vernalis is a revenue generating, commercial stage pharmaceutical company with significant expertise in drug development. The Group has two approved products; Tuzistra™ XR targeting the US prescription cough cold market and, frovatriptan for the acute treatment of migraine. It has an exclusive licensing agreement to develop and commercialise multiple novel products focussed on the US prescription cough cold market as well as eight programmes in its NCE development pipeline. Vernalis has also significant expertise in fragment and structure based drug discovery which it leverages to enter into collaborations with larger pharmaceutical companies. The Company's technologies, capabilities and products have been endorsed over the last five years by collaborations with leading pharmaceutical companies, including AKP, Biogen Idec, Endo, GSK, Genentech, Lundbeck, Menarini, Novartis, Servier Taisho and Tris.

For further information about Vernalis, please visit www.vernalis.com.

Please click here to access the full PDF of this press release

Vernalis Forward-Looking Statement
This news release may contain forward-looking statements that reflect the Company's current expectations regarding future events including the clinical development and regulatory clearance of the Company's products, the Company's ability to find partners for the development and commercialisation of its products, as well as the Company's future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of the Company's research strategies, the applicability of the discoveries made therein, the successful and timely completion of clinical studies, the uncertainties related to the regulatory process, the ability of the Company to identify and agree beneficial terms with suitable partners for the commercialisation and/or development of its products, as well as the achievement of expected synergies from such transactions, the acceptance of frovatriptan and other products by consumers and medical professionals, the successful integration of completed mergers and acquisitions and achievement of expected synergies from such transactions, and the ability of the Company to identify and consummate suitable strategic and business combination transactions.

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F: 0118 938 0001

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To report SUSPECTED ADVERSE REACTIONS, contact Vernalis Therapeutics, Inc. at 1-855-705-9546 and drugsafety@propharmagroup.com or FDA at 1-800-FDA-1088 or www.fda.gov/medwatch