Verona Pharma (LON:VRP) has secured £44.7 million ($65.6 million) from big-name investors on both sides of the Atlantic. The cash will enable Verona to deliver Phase IIb data on its PDE3/PDE4 inhibitor RPL554 in patients with chronic obstructive pulmonary disease (COPD), while also broadening its clinical trial program and working toward a listing on Nasdaq.
Cardiff, U.K.-based Verona has traditionally relied on the support of local investors, such as Sir Chris Evans’ Arthurian Life Sciences. But, armed with data from a series of Phase I/II trials of RPL554, it has now persuaded some notable names from the global biopharma finance scene to write checks. Vivo Capital, OrbiMed and Edmond de Rothschild Investment Partners are the cornerstone investors in the placement. New Enterprise Associates, Novo A/S, Abingworth and Aisling Capital all chipped in money, too, as did existing investors Arix Bioscience, Hargreave Hale and Polar Capital.
Verona secured the backing of the investors on the strength of Phase I/II data that suggest RPL554 can deliver bronchodilation and anti-inflammatory effects without also causing the nausea and other side effects that have hindered earlier PDE4 inhibitors. And, having raised the money, it is now ready to ramp up the scope of its clinical development program.
"It's a much bigger program and it's a larger number of studies,” Verona CEO Jan-Anders Karlsson told FierceBiotech.
The centerpiece of the development program is a four-week Phase IIb study. Karlsson expects to enroll 300 to 400 patients in what he describes as a “classical Phase IIb study” that will look at the safety, efficacy and durability of different doses of RPL554. The plan is to start the trial in the first half of 2017 and wrap things up 12 months later.
In parallel, Verona will work on a clutch of other midphase trials. While the multifront Phase I/II trial program enabled Verona to land investors, the company has one eye on a different audience for the results from its upcoming suite of studies.
“We think it will characterize the compound in an attractive fashion for Big Pharma or Big Biotech and for FDA and other regulators,” Karlsson said.
Some of the data could also factor into Verona’s plans to land a listing on Nasdaq. As part of the financing, the company has committed to taking “commercially reasonable efforts” to list on Nasdaq. In practice, this means Verona will spend the next 6 months preparing for a listing before weighing up the best moment to file for a Nasdaq IPO.
A couple of factors suggest Verona could gain a Nasdaq listing, despite fellow European drug developers such as Bavarian Nordic (CPH:BAVA) and Roche ($RHHBY) spinout Basilea Pharmaceutica (SWX:BSLN) having failed to do so over the past 7 months.
One potential tailwind comes from the timing of the IPO. With Verona expecting to take 6 months to prepare itself for a listing, it will be looking to file for an IPO some time after the U.S. election. Uncertainty regarding the result of the presidential election is one factor currently cooling the IPO market. Some uncertainty will be eliminated when the election is held in November, potentially leading to an uptick in IPOs. However, it is also feasible that the implications of the presidential result will be unclear come the turn of the year, or that the outcome will have a negative effect on biotech stocks.
The other, more certain, tailwind for Verona comes from its new syndicate of investors, all of which are supportive of the Nasdaq IPO plan, according to Karlsson. Importantly, the investors are willing to show this support with money.
“There is a good chance that a substantial part of this offering will be underwritten by existing investors,” Karlsson said. “This of course puts us in a very attractive position for making sure that there can be an IPO and we'll not be completely dependent on the market conditions at the time.” Such insider-driven IPOs have fared better than most in the frigid IPO environment as they enable companies to go public without attracting major support from new investors.
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