United Kingdom-based Verona Pharma Plc. (VRNA:NASDAQ; VRP:LON) will find out on its June 26, 2024, PDUFA date whether the U.S. Food and Drug Administration (FDA) will approve its investigational drug ensifentrine for symptomatic chronic obstructive pulmonary disease (COPD) in the maintenance setting.
"PDUFA is fast approaching, and Verona is firing on all cylinders," wrote Truist Analyst Dr. Joon Lee in a May 9 equity research report.
Ensifentrine, inhaled by a nebulizer, relaxes muscles and widens airways in the lungs and also reduces inflammation, by blocking the proteins phosphodiesterase (PDE) 3 and PDE 4, a GoodRx article explained.
"If approved, ensifentrine would be the first new maintenance COPD medication in over 10 years that works differently than existing options," noted the article.
Market Rebound To Continue
Were ensifentrine greenlighted, it would be yet another in a series of drug approvals this year. In Q1/24 alone, the FDA approved 15 new molecular entities for various indications, according to the agency.
Also, in the first quarter, the U.S. biopharmaceuticals market saw 105 total offerings, eight acquisitions, and 10 partnering deals, according to an April William Blair article. This surge of activity is evidence that "biopharma's rebound came into full effect in Q1/24."
The outlook for the rest of the 2024 year is more of the same, with the market forecasted to reach US$636.90 billion (US$636.90B) in revenue by year-end, according to Statista.
Beyond the current year, steady expansion of the market, at a 5.96% compound annual growth rate, is expected, taking revenue to an estimated US$802.80B by 2028.
Analysts' Takes
Four biotechnology analysts shared, in recent research reports, that they are bullish on Verona and ensifentrine.
Jefferies Analyst Andrew Tsai is 95–95% certain the FDA will approve Verona's ensifentrine for COPD next month, he wrote on May 9, and believes the company's stock "could climb +10–30% on a positive label and favorable wholesale acquisition cost."
Ensifentrine has a novel mechanism of action and favorable safety profile, and showed robust efficacy in two pivotal clinical trials, noted Tsai. Also, the drug was shown in Phase 3 data to support patients with severe COPD as well as those with less severe disease. More than 1.2 million (1.2M) patients in the U.S. have the former, this segment representing about a US$14 billion (US$14B) market opportunity, and roughly 3M patients have the latter.
"Given a large market opportunity, if ensifentrine is successfully developed and commercialized, we expect meaningful upside potential from current valuations," commented Tsai.
On Verona, Jefferies Analyst Andrew has a Buy rating and a target price reflecting a 172% return for investors.
Also noteworthy, Tsai wrote, is that Verona already has a strategy in place for commercializing the drug in the U.S. as early as H2/24.
Further, after discussing ensifentrine with several pulmonologists, the analyst concluded that physicians generally are well aware of the ensifentrine and intend to prescribe it immediately once available.
"Importantly, ensifentrine could expand the US$10B-plus branded market (rather than take share) since the drug will likely be prescribed as an add-on to existing COPD therapies, which are limited to just three primary drug classes currently," Tsai wrote.
On Verona, Tsai has a Buy rating and a target price reflecting a 172% return for investors.
According to Canaccord Genuity Analyst Edward Nash, two factors bode well for the approval of ensifentrine next month, he wrote on May 12. The FDA did not request from Verona additional data or material to support its new drug application, and the biopharma does not anticipate any further updates to or revisions of its commercial plan for its COPD drug until the PDUFA.
Nash also noted that biopharma's recent US$650 million financing and expected milestone payments should cover its operations beyond 2026, including the potential commercial launch of ensifentrine in the U.S.
The analyst reiterated his Buy rating and his price target, reflecting a 150% upside.
Truist Analyst Lee pointed out that the recent weakness in Verona's stock represents a buying opportunity "as we think ensifentrine was studied on [an] all-comer basis and plugs nicely into existing treatment," he wrote. "We see significant value in Verona."
His rating on the biopharma is Buy. His target price implies a return of 139%.
BTIG Analyst Dr. Thomas Shrader's confidence in Verona's ability to successfully launch ensifentrine in a "gigantic market" (8.6M maintenance COPD patients) increased after he learned about the company's commercial strategy and data on which it is based, he wrote on May 9.
The biopharma can market its new drug as one to help patients feel better versus one to help them avoid a potential medical problem or condition, and with this approach, noted Shrader, garnering patient buy-in is easier.
Verona already has determined how to easily reach about 25% of the target patient population, reported Shrader. It is through the already identified Top 3,000 prescribers of COPD treatments who see more than 150 patients with COPD per month on average or a total of 2M patients. Verona's sales force of 100 representatives should have no problem targeting 3,000 physicians.
The biopharma determined that Medicare covers 70% of COPD patients, and for about three-quarters of them, Part B would cover a mature nebulized product, like ensifentrine.
According to Canaccord Genuity Analyst Edward Nash, two factors bode well for the approval of ensifentrine next month
Verona still considers partnerships a viable option, Shrader noted, and a strong initial uptake of ensifentrine would show prospects that patients and physicians are interested in it.
"Second, we see the combination with a long-acting muscarinic antagonist to potentially be a powerful way to derisk the idea that ensifentrine will work well in the multidrug formats that dominate COPD," the analyst added.
Along with a Buy rating, Shrader has a target price on Verona that suggests a 144% return on investment.
Streetwise Ownership Overview*Ownership and Share Structure
According to Reuters, 1.03% of the company is with management and insiders, and 85.21% is with institutions.
Top shareholders include RA Capital Management LP with 7.82% or 6.32 million shares, New Enterprise Associates with 6.32% or 5.11 million shares, Fidelity Management & Research Company LLC. with 6.07% or 4.9 million shares, and Vivo Capital LLC with 4.48% or 3,610,177.
The rest is retail.
At the date of this article, Verona Pharma has a market cap of approximately US$1.34 billion, with 80.82 million shares outstanding and 72.34 million shares in free float. It trades within a 52-week price range of US$23.81 to US$11.83.
With respect to share structure, Verona has 80.82M outstanding shares and 70.27M free float traded shares.
The company's market cap is US$1.121B. Its trading range over the past 52 weeks is US$11.83–23.07 per share.
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