Results Announcement for the 12 months ended 30 June 2016

 

29 September 2016
LSE: VER

Vernalis plc
Results Announcement for the 12 months ended 30 June 2016

Significant investment in Tuzistra® XR US launch as transition to a commercial specialty pharmaceutical company continues

Vernalis plc (LSE: VER) today announces its audited results for the 12 month period ended 30 June 2016.

 

(Audited)

12 months

ended

30 June

2016

£000

(Unaudited)

12 months

ended

30 June

2015

£000

(Audited)

18 months

ended

30 June

2015*

£000

Revenue

12,034

13,712

19,882

Sales and marketing expenditure

(20,428)

-

-

Research and development expenditure

(10,932)

(15,687)

(22,563)

General and administrative expenditure (before exceptional items)

(5,289)

(6,019)

(8,635)

Operating loss

     

-       Before exceptional items

(26,223)

(8,224)

(12,078)

-       After exceptional items

(23,572)

(7,981)

(11,835)

Net finance income

8,273

4,252

2,576

Loss before tax

     

-       Before exceptional items

(17,950)

(3,972)

(9,502)

-       After exceptional items

(15,299)

(3,729)

(9,259)

Income tax credit

804

1,946

2,858

Loss after tax

     

-       Before exceptional items

(17,146)

(2,026)

(6,644)

-       After exceptional items

(14,495)

(1,783)

(6,401)

Cash resources

84,018

61,258

61,258

       

*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 commercial business. While the financial highlights and financial review below focus on the audited 12 months ended 30 June 2016 compared to the unaudited 12 months ended 30 June 2015, figures for the audited 18 month period to 30 June 2015 are also presented.

Financial Highlights for the 12 months ended 30 June 2016

  • Revenue was £12.0 million (2015: £13.7 million):
    • Tuzistra® XR net revenue was £1.1 million and represents deliveries mad e to wholesalers by 30 June 2016
    • Research collaboration income was flat at £8.0 million (2015: £7.9 million) but included an increase in FTE income offset by a reduction in milestone receipts. Our research organisation remained self-funded
    • As expected frovatriptan royalty income was lower than the prior year at £2.9 million (2015: £4.9 million); most of this decrease was due to a volume decline, with two 12.5kg batches of API delivered to Menarini during the 12 months to 30 June 2016 (2015: three 12.5kg batches of API)
      • Menarini's underlying sales for the 12 months to 30 June 2016 were down 18 per cent at €20.8 million (2015: €25.2 million)
      • As previously highlighted, major patent expiry occurred in December 2015 and subsequent generic entries have already started to impact both pricing and volumes
  • Operating costs before exceptional items were £36.6 million (2015: £21.7 million); the increase was due to the significant investment in Tuzistra® XR sales, marketing and other US commercial infrastructure
  • Pre-exceptional loss for the period was £17.1 million (2015: £2.0 million) and loss after exceptional items was £14.5 million (2015: £1.8 million), including an exceptional gain on the surrender of an onerous building lease; the increase in the loss was due to the additional operating costs in excess of gross margin following the launch of Tuzistra® XR
  • Cash resources including cash and cash equivalents and held to maturity assets increased by £22.8 million in the 12 months and included:
    • £38.9 million (net of expenses) equity placing completed in May 2016
    • $5.4 million (£3.7 million) payment for the acquisition of Moxatag®
    • £8.0 million foreign exchange gain on retranslation of US dollar and euro cash resources into sterling (2015: £4.1 million)
    • Underlying net cash burn increased to £21.8 million for the year (2015: £8.5 million)
  • Balance sheet remains strong with £84.0 million of cash resources and no debt at 30 June 2016

Operational Highlights

US Commercial Pipeline:

  • Tuzistra® XR, the only 12-hour, extended-release, codeine based cough cold suspension product, launched in the US ahead of the 2015/16 cough cold season
  • Focused US primary care sales force fully recruited, trained and deployed to the field
  • US rights to Moxatag®, the only US approved once-a-day formulation of amoxicillin, acquired in October 2015, validating the Company's ability to expand its US commercial portfolio
  • CCP-07 filed with FDA and accepted for review in September 2016. PDUFA date of 20 April 2017
  • CCP-08 pivotal single-dose and multiple dose comparative bioavailability studies successfully completed and NDA submission remains on track for calendar year 2016
  • Two further programmes in active development at Tris, with proof-of-concept ("POC") now targeted during the 2016/17 financial year

Other:

  • NCE Development Pipeline: Completion of the Phase 2 POC study of V158866 in August 2015 which ended in-house investment in NCE pipeline
  • Corvus Pharmaceuticals, Inc. announced (in January 2016) as the worldwide licensee for the adenosine antagonist programme with CPI-444 (formerly V81444), initially being developed for immuno-oncology with clinical studies expected in 2016
  • RedoxTherapies, our partner for vipadenant (V2006), acquired by Juno Therapeutics Inc. (Juno), a leader in CAR[-T] and TCR technologies. Juno will continue to explore the utility of vipadenant in immuno-oncology
  • Verona Pharma plc announced positive phase II study results for RPL554 in COPD and raised £45 million via an equity placing
  • Research Collaborations: Six active collaborations during the year ended 30 June 2016; business remained self-funded

Expected 2016/17 Newsflow (all dates calendar year unless otherwise stated):

  • CCP-07: potential approval by FDA (Q2 2017 calendar year)
  • CCP-08: NDA submission (2016 calendar year )
  • Re-launch Moxatag® in the US market through our focused US primary care sales force (H2 2016 calendar year)
  • POCs on two remaining programmes in cough cold pipeline (CCP-05 and CCP-06) (during 2016/17 financial year)
  • Achieve milestones under existing collaborations
  • Secure new research collaborations
  • Continue to leverage our US commercial infrastructure with possible complementary new product acquisitions/in-licensing

Ian Garland, Chief Executive Officer, commented, "The last twelve months have seen a major transformation in our business as we launched the first product from our cough cold franchise, Tuzistra® XR, into the US market. We have made a significant investment in our commercial infrastructure to support the launch of Tuzistra® XR, and this will continue during the product's launch phase as we seek to gain a greater share of the US cough cold market. We will leverage this investment and our US commercial infrastructure to launch the once-a-day antibiotic, Moxatag® in the second half of 2016. The cough cold pipeline continues to mature with CCP-07 and CCP-08 on track for potential approvals in 2017.

Our cash position was bolstered following the recent equity raise to continue the promotional investment in Tuzistra® XR as well as launch Moxatag® and our additional products, CCP-07 and CCP-08 in the near term. We remain very excited about the growth potential of the business."


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. Please contact Matthew Moss at FTI consulting +44 (0) 20 3727 1000 for details.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.


-- ends –

Vernalis plc:

+44 (0) 118 938 0015

Ian Garland, Chief Executive Officer

 

David Mackney, Chief Financial Officer

 

Canaccord Genuity Limited (Nominated Adviser and Joint Broker):

+44 (0) 20 7523 8000

Dr Julian Feneley

 

Rupert Winckler

 

Henry Fitzgerald-O’Connor

 

Emma Gabriel

 

Shore Capital (Joint Broker):

+44 (0)20 7408 4090

Bidhi Bhoma

 

Toby Gibbs

 

FTI Consulting:

+44 (0) 20 3727 1000

Ben Atwell

 

Simon Conway

 

Notes to Editors

About Vernalis
Vernalis is a revenue generating, commercial stage pharmaceutical company with significant expertise in drug development. The Group has three approved products: Tuzistra® XR, targeting the US prescription cough-cold market; Moxatag®, a once-a-day formulation of the antibiotic, amoxicillin, indicated for the treatment of tonsillitis and/or pharyngitis secondary to Streptococcus pyogenes in adults and pediatric patients 12 years and older; 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 Asahi Kasei Pharma, 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 NCE pipeline, the Company's ability to successfully commercialise its cough-cold products and Moxatag® through its own sales force, 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 Tuzistra® XR, Moxatag®, 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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