Vernalis plc: Results Announcement for the year ended 30 June 2017

WINNERSH, UNITED KINGDOM--(Marketwired - Sep 12, 2017) - Vernalis PLC (LSE: VER) (OTC PINK: VNLPY)

12 September 2017
LSE: VER
Vernalis plc

Results Announcement for the year ended 30 June 2017

Tuzistra^® XR prescriptions growing steadily
In-house salesforce to promote both Tuzistra^® XR and Moxatag^® for the coming season
Independent market research continues to show significant market opportunity for cough cold franchise

Vernalis plc (LSE: VER) today announces its audited financial results for the year ended 30 June 2017, following the year-end trading update published on 18 July 2017.

US Commercial performance:

• Tuzistra^® XR prescriptions increased three-fold to approximately 35,000 for the year (2016: 12,000), reflecting:
  
  
  • increased insurance coverage and pharmacy stocking
    
    
  • improved salesforce effectiveness following expansion to 100 representatives, now brought in-house
    
    
  • refined marketing messaging and physician targeting
    
    
  • improved patient affordability following enhancements in Vernalis' patient assistance program
    
    
• Potential of Tuzistra^® XR remains significant and has been seen across the US, with high performing sales representatives in all targeted regions
  
  

Financial Highlights for the year ended 30 June 2017

• Reported revenue was £20.8 million (2016: £12.0 million), ahead of market expectations, as previously communicated in the July trading update
  • US Commercial net revenues (including Tuzistra^® XR and Moxatag^®) increased to £2.1 million (2016: £1.1 million), which represented deliveries made to wholesalers
    
    
    • Underlying patient prescriptions increased significantly and accounted for 70 per cent of sales volumes (2016: 42 per cent)
      
      
    • The remaining 30 per cent (2016: 58 per cent) reflected expanded pharmacy stocking (29 per cent vs 2016: 48 per cent) and some wholesaler stocking (1 per cent vs 2016: 10 per cent)
      
      
    • Inventory levels with wholesalers at year end remained at similar levels to 30 June 2016
      
      
  • Research collaboration income and milestones increased to £12.0 million in the period (2016: £8.0 million) including £5.0 million of milestones representing a record level of income for the research business
    
    
    • Other collaboration income received was £2.4 million (2016: £nil) and related to the clinical advancement of CPI-444 by Corvus Pharmaceuticals Inc ("Corvus")
      
      
  • Frovatriptan royalty income was £4.3 million (2016: £2.9 million). This 45 per cent increase was primarily due to volume, with three 12.5kg batches of API delivered to Menarini (2016: two 12.5kg batches of API)
    
    
    • Underlying Menarini sales were EUR 16.7 million (2016: EUR 20.8 million) representing a 20 per cent decrease due to continuing competition from generics following patent expiry in December 2015
      
      
• Operating costs before exceptional items were £45.2 million (2016: £36.6 million) with the increase due to the further expansion of the US sales and marketing activities
  
  
• Unrealised foreign exchange gain arising from the conversion of our US dollars and euros into sterling for reporting purposes was £2.2 million (2016: £8.0 million)
  
  
• Loss for the period was £21.6 million (2016: £17.1 million loss before exceptional items)
  
  
• Balance sheet remained strong with £61.3 million of cash resources and no debt at 30 June 2017
  
  
• Cash resources including cash and cash equivalents and held-to-maturity assets reduced by £22.7 million for the year and included:
  
  
  • Cash used in operations of £20.8 million (2016: £23.6 million)
    
    
  • $6.0 million (£4.7 million) milestone payments to Tris Pharma Inc ("Tris") for FDA acceptance to review CCP-07 and CCP-08 NDAs

US Commercial Pipeline:

• CCP-07 and CCP-08 NDAs filed and accepted for review by FDA
  
  Complete response letter (CRL) received in respect of each from FDA in April and August 2017 respectively
  
  
• Two further programmes in active development at Tris, with proof-of-concept ("POC") targeted by the end of 2017/18

Other Operational Highlights:

• NCE Development Pipeline: The Company announced in February 2017 that Corvus had reached the predefined criteria for expansion of the cohort of patients with renal cell carcinoma treated with single-agent CPI-444 in the ongoing Phase 1/1b study. The expansion of this study triggered a $3 million milestone payment to Vernalis under the licensing deal with Corvus. Promising evidence of single-agent activity has also been seen in patients in other disease-specific cohorts, including lung cancer and melanoma

Expected Newsflow:

• CCP-07 and CCP-08: address CRL outstanding items, resubmission and potential FDA approvals
  
  
• POCs on two remaining programmes in cough cold pipeline (CCP-05 and CCP-06) (by end of 2017/18 financial year)
  
  
• Commence full promotion of Moxatag^® from September 2017 from existing inventory
  
  
• Re-establish manufacture of Moxatag^® in 2018
  
  
• Receive milestones under existing collaborations
  
  
• Secure new research collaborations

Ian Garland, Chief Executive Officer, commented,
"We remain very encouraged with the progress we have made in the last 12 months as we continue to grow our sales and further progress our cough cold development pipeline, despite some challenges in the early stages of the commercial launch.

"Independent market research continues to show a significant market opportunity for our cough cold franchise and we remain excited by this prospect. Throughout the 2016/17 cough cold season we saw Tuzistra^® XR prescriptions grow steadily and we expect similar levels of growth for the coming season as we focus on broadening the effectiveness of our salesforce through more focused physician targeting. Importantly, we will commence full promotion of Moxatag^® across this salesforce, starting this month. We are also working closely with our partner Tris and the FDA to resubmit the NDAs for CCP-07 and CCP-08 as quickly as possible.

"We would like to thank our staff for their contribution during the year and our shareholders for their continued support. We look forward to continued progress in the coming year and strong growth in Tuzistra^® XR prescriptions, as we build a major franchise in cough and cold."

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.

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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 ten years by collaborations with leading pharmaceutical companies, including Asahi Kasei Pharma, Biogen Idec, Endo, GSK, Genentech, Lundbeck, Menarini, Novartis, Servier, and Tris.

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

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 salesforce, 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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