Verona Gains Up to $650M for COPD Approval and Launch

Verona Pharma has announced a significant financial arrangement with Oaktree Capital Management and OMERS Life Sciences, securing up to $650 million. This strategic financing consists of a $400 million debt facility, distributed in five separate tranches, and an additional $250 million obtained through a redeemable interest in future revenue from Verona's investigational drug ensifentrine, aimed at treating chronic obstructive pulmonary disease (COPD). The revenue interest purchase and sale agreement (RIPSA) is limited to a maximum of 1.75 times the funded amount.

David Zaccardelli, CEO of Verona, highlighted the importance of this deal, underscoring how it fortifies the company’s financial status and enhances its flexibility in anticipation of U.S. regulatory approval and the subsequent market release of ensifentrine. He mentioned that these funds, when combined with Verona's existing $255 million cash reserve, would support the company's operations and growth well past 2026.

The debt arrangement allows Verona to access $55 million immediately upon closing the deal, with an additional $70 million contingent upon the FDA’s approval of ensifentrine. Moreover, Verona could draw $175 million in two tranches once specific net sales benchmarks are met. There is also a provision for an extra $100 million tranche, subject to lender approval, to support various strategic initiatives.

On the RIPSA side of the agreement, Verona stands to obtain $100 million following FDA approval of ensifentrine, with the possibility of drawing an additional $150 million based on achieving certain sales milestones.

This financing agreement is set against the backdrop of a pivotal date for Verona, as the FDA’s target action date for ensifentrine is June 26. Ensifentrine is an investigational inhaled dual inhibitor of the phosphodiesterase 3 and 4 enzymes, introducing a novel mechanism for COPD treatment. It combines bronchodilator and non-steroidal anti-inflammatory properties into a single compound.

The FDA’s review of ensifentrine is supported by data from the Phase III ENHANCE trials, which indicated that the drug could significantly enhance lung function, improve quality of life, and reduce symptom burden for COPD patients. The trials also demonstrated a 36% reduction in the rate and risk of COPD exacerbations over a 24-week period.

This new contract replaces a previous $400 million debt facility that was managed by Oxford Finance and Hercules Capital, which was due to mature in January 2024.

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