Verona Pharma plc (VRNA) Earnings Call Transcript & Summary

[Audio Gap] biotech analyst at Goldman Sachs. I'm really pleased to be joined by the Verona team, Dave Zaccardelli, President and CEO; as well as Chris Martin, Chief Commercial Officer. Thank you both for joining.

Thank you very much.

So maybe let's just jump right into the Ohtuvayre launch [indiscernible] now for almost a year. Maybe to start, I would love your perspective here on what have been the biggest takeaways from the early days of the launch? And what do you attribute the robust growth to?

So I think if we go back to the beginning and before we even launched, there was -- we had done a significant amount of market research that highlighted a very substantial unmet need in the marketplace. When we look back on that early market research, what it told us was a couple of things was that from a physician perspective, they were struggling with patients that kept having persistent symptoms, particularly dyspnea. And with that struggle, they were lacking a significant amount of options to help these patients. And if we look at the patient perspective, it was met on the same side with the patient. The patient was having these uncontrolled symptoms. They were dealing with a chronically progressive disease, and they really needed other options. So as we looked at what Ohtuvayre could provide the market early on, we thought that there was a significant opportunity for Ohtuvayre to really penetrate that unmet need. I think fundamentally, that was what grounded us in the launch was understanding that the unmet need was there and also understanding how Ohtuvayre could fit into it. And we look today, I think what we've seen so far in these nominally 2.5 quarters is that unmet need and the profile of Ohtuvayre is really coming out in full force. And if we think about it, we've been able to establish within those 9 months of launch almost 5,300 prescribers. We had 2,500 dispenses through in Q1. 60% of our Tier 1 prescribers had already written. And I think that just goes back and highlights what these doctors were missing within the COPD marketplace. They were struggling for new therapies. And more importantly, their patients were struggling with new therapies. And when Ohtuvayre comes in the market, you have a drug with a benefit/risk profile that is similar -- high benefit/risk profile that allows these doctors to add drug to these patients that are continuing to be symptomatic, which has led to the uptake that we're seeing to date.

Maybe just digging in there about the patient journey from diagnosis to treatment. Where exactly -- based off of what you've been seeing over the last couple of quarters, where exactly is Ohtuvayre fitting in as it relates to inhaled corticosteroids or biologics?

Yes. Great question. I think if we look at how our reps go in today, our reps go into an office talking about a patient with persistent symptoms. We know that when a patient has persistent symptoms that physicians and the patients are looking for therapeutic intervention. So that's the core of our messaging. What we see in the data that comes back to us is about 50% of our patients are on a background triple medication, so LAMA/LABA/ICS. I would classify those patients probably in the more severe category. Then you have 50% of patients that are what we would call moderate. They're on LAMA/LABA combination, LABA/ICS or LAMA/LABA. I think when we think about the launch and the health of a launch, that split is extraordinarily encouraging because what it's highlighting is in the market research that we saw back before launch, we saw a desire for HCPs to use Ohtuvayre or ensifentrine earlier in the treatment paradigm. They wanted to use it before potentially ICS. They wanted to use it as the "first" add-on therapy to these patients because it provided bronchodilation and nonsteroidal anti-inflammatory effects. I think that split today highlights that meaningful use case that I believe will play out even more as we move through '25 and really into '26 and '27. If we think about how biologics fit into this whole scenario, biologics, when we talk to physicians are very -- for a very small subset of patients. And it's great to have new anti-inflammatory options for these patients. But when they look broadly at all their patients, Ohtuvayre is really a base drug that they can apply to every single patient because regardless of where they are in their treatment paradigm, they're going to deal with dyspnea and trouble breathing at some point in time. And the doctors at some point in time are going to need new therapies for that. What Dupixent and the other biologics potentially provide is when a patient has significant exacerbation, high EOs, it gives them another anti-inflammatory option, but in a much more smaller subset than what we see with Ohtuvayre in the marketplace.

Got it. And when you think about that 50-50 split that you're seeing right now, where does that ultimately go? How does the split evolve?

I think the split evolves -- I mean, without giving numbers, I think we feel like the split is going to move much more to the more moderate patient population. If you think about how patients are treated today, about 6 million patients are on either a LABA/ICS, a LAMA or a LABA. So the opportunity for Ohtuvayre in that moderate patient population as you grow into launch is significant. And really, when you look at the profile, the profile allows that drug to be used very broadly in that patient population as well. Bronchodilation is something that these doctors are looking for. And that long-term nonsteroidal anti-inflammatory effects are things that can prevent or help with exacerbations or some of the symptoms and quality of life aspects that these patients deal with on a day-to-day basis. So I would suspect, as you move '26, '27 as Ohtuvayre becomes less of a -- they're using it kind of as a patient walks in, I'm going to use it today. As it becomes more entrenched in the treatment paradigm, I would expect that shift to be much more to the moderate patient population where it's a single LAMA, LABA, LAMA/LABA-type patient add-on.

Yes. I think just to add to that, it's the first time that physicians have had a chance to use a nonsteroidal anti-inflammatory by the inhaled route. To date, if they wanted to give anti-inflammatory by inhalation, it was a corticosteroid. And so it's a very exciting time for them to have that opportunity, but it also takes some time to get entrenched in how they're going to use it. But if you look at the GOLD guidelines or the general recommendations around ICS, it should be used much less frequently than it is today. Now they have never had another opportunity. So I think all of that has changed. And so as Chris has mentioned, as we look out into '26 and '27, instead of Ohtuvayre being used tactically as it is today, which is typical early in a launch, you're going to see it being utilized as a core aspect of treatment and an ability to use an anti-inflammatory that's not steroidal earlier in the treatment paradigm. And that's when -- if you think this launch has gone well so far, that's when it really starts to get interesting and exciting. And there are millions of patients out there that need additional therapy. So it really is an amazing and large opportunity with a huge unmet need. And Ohtuvayre satisfies that requirement to look at approaching inflammation from a nonsteroidal point of view, which, as Chris mentioned, is another reason why targeted biologics, I think, are part of the solution and part of the plan. And ultimately, our view is that Ohtuvayre can be used with biologics. It makes sense that you should address inflammation from a couple of different mechanisms and really utilize steroids for those that really require it.

And as you think about the new patient starts, you've shown really nice quarter-over-quarter growth as of your last EPS report and that even takes into account the seasonality that typically occurs in the first quarter. How should we think about the adoption curve moving forward from here? And as you think about other COPD launches, recognizing Ohtuvayre is very, very different than other available therapies, but how would you characterize the outer year trajectory?

Yes. I'll let Dave talk a little bit about the outer year trajectory. I'll cover kind of new patient adds. If we get really simple here, our reps are incentive -- like our IC is around new patient adds. The life of a launch is new patient adds. I think we believe over time that we'll continue to add new patients. There are millions of patients that remain symptomatic. We are adding 30 new reps to the sales force today. And that's based on data. It's based on the fact that we understand from the first 9 months of launch, what it takes to get a new writer, what it takes to move a writer from writing their first patient to writing over 20. And we believe that, as Dave said, if we believe that we can accelerate that launch. And I think if we look at where the launch is today, adding 30 more people, I think we feel like the launch will continue to accelerate over the end of this year. As you think about peak, and Dave can give more color here, there hasn't been a really good argument given to us why Ohtuvayre can't be 5%, 10%, 15% of the market. You look at drugs today, TRELEGY has over 12%, 13%; Symbicort has 22% of the market. There are drugs that have profiles that aren't differentiated like Ohtuvayre that have significant market share. So when we think conceptually, there's not an argument in our mind where it hasn't -- one, it hasn't been done. And two, when you look at the profile of Ohtuvayre, it's very differentiated from what has done it in the past. So Dave, I'm going to...

Yes. I mean I think and typical in COPD, peak comes maybe around year 5 to 7. So that should be kept in mind. It sort of talks about how physicians adopt drugs, how physicians treat patients and the size and magnitude of the opportunity. Clearly, we would do everything in order to accelerate that. But that sort of sets a general time frame for that. And as Chris mentioned, the opportunity is massive in the sense that 5% or 10% market penetration, which is actually quite modest and not a precedent setting in any way is, I think, right in front of us and a huge opportunity just in the U.S. for COPD.

And as you think about that path to peak, 5 to 7 years to get to peak, but what does the shape of that curve look like? Is it linear? Or is it...

Yes. I mean there's -- linearity is a concept that you can see in other launches in COPD that is more true than not. As we continue to progress, and Chris mentioned adding the 30 sales reps in the second half of this year, starting actually in July, while it's linear, we would expect to change the slope because you're not going to add 30 reps and keep the same slope that we have right now. So I think it has a level of steady growth, but also we can, I think, change the shape -- change the slope and increase that at a rapid rate.

Got it. How important are your direct-to-patient activities?

They're growing day by day, I think, month by month. If we look at the long-term kind of view of the brand, patient activation is going to be an important aspect of growing, accelerating to peak. What we know from patients today is they want nonsteroidal options that provide them the ability to breathe better. And well, now if you look at Ohtuvayre's profile, it matches very well with that. We also understand from patients that they're starved for information. They feel sometimes left behind on the communication pathway with physicians and even pharma. So we think there's an opportunity to insert Verona and Ohtuvayre in that conversation. We've started very -- at launch doing some patient work, we were always involved in search, where patients were searching for new therapies, Ohtuvayre was there. As the launch has progressed, we've continued to expand that, being involved in social, also being involved in the office, and that's where we are right now. And I think that's an important test. We're doing in those office, what I would call DTP is trying to activate patients that are going into accounts that we have reps in so that we know that the physician understands what Ohtuvayre is. They know how to prescribe, and we can see how the messaging and how that conversation kind of further accelerates maybe a physician's adoption. We do that in a variety of ways today. We do that with in-office brochures, wall charts, but we also do it with a TV ad. So on closed-circuit TV, we have an ad in some of these offices. I think as you go through 2025, we will continue to expand what I call DTP activities. And as you move to 2026, I think more broader scale DTC becomes a question that we have to continually contemplate. The nice thing is from an organization standpoint, we've always contemplated it in our budget and in our planning, and the team is well ahead of any type of those activities. The other thing that I want to always preface this by is DTC doesn't have to look like your old DTC. Like it doesn't have to look like a Super Bowl ad or on every channel. With the way that data has progressed today and the addition of the way that we own our data, it allows for very targeted and high-return investment in programs that we believe will drive the right patients to the right physicians. So I think as you move through '25 and into '26, it definitely will be -- continue to be part of our playbook and probably an increasing part of the playbook as well.

How promotionally sensitive are these patients? And have you started to see benefits from these campaigns that you've initiated?

So I'll talk about both because physicians are promotionally sensitive. So let's talk about the physician first. The physician has been doing the same thing for 20-plus years. So they have LAMA/LABA and ICS. So if we think about that, sometimes we want our behaviors, we want to tell them 1 or 2 times and they change everything. But in reality, we know that they're promotionally sensitive in the way that they interact and the way that they absorb information. That's part of the reason why we've used data to really think about accelerating the launch with the 30 reps. We believe that we can increase the activity and the overall promotional noise around Ohtuvayre that will help doctors not only write there first, but more importantly, put a lot of patients that we believe can benefit from Ohtuvayre on it. So I think that's the first part of promotional sensitivity. On the patient side, what we see from our early [indiscernible] a return. Like we wouldn't continue to invest. As Dave said, we're very data driven. We're very conscious of how we invest. And what we're seeing is that the patients are -- I don't want to say the lack of a better word, starved for information. Many of these patients are stuck sitting in their house, not doing activities that we all take for granted, and they haven't seen innovation. So there's an opportunity with Ohtuvayre to be able to provide that information and provide that option or hope. And we're seeing early return from those programs, which is why we would want to expand that into -- at the back end of '25 and into '26. So it's part of our plan, and it's driven by the data that we're seeing so far.

Great. So maybe as it relates to the physicians and the prescribers, and you've talked about the effort here now to expand your sales force. But maybe speak to us a little bit about the breadth of prescribing that you're seeing across your different targeted tiers as well as the depth that you're trying to get to over the course of this year?

Yes. So from a breadth perspective, at the end of Q1, we had 5,300 writers approximately out of our 14,500 doctors that we call on. We also have -- of those 14,500, about 2,500 of those are what we classify as Tier 1 prescribers. 60% of those had written at the end of Q1. Remember, this is within the first 2 quarters of launch. So when I look at that activation that quickly, it goes back to the start of this conversation, which is unmet need and differentiated profile. That's what the drug is doing because you can't get that writer base without unmet need and a novel profile. As we think about how we look at expansion and growing, I would expect to see our new writers continue to grow over the course of the year, but we really are focused -- between new writers, we're focused on depth of prescribing. We want to see doctors move from writing their first prescription to writing 10, 15, 20. The importance of that is twofold. One, they got to get more patient experience that we know drives more utilization. And the second thing that we know from the data is as a doctor moves from writing their first prescription, which is typically on top of a triple to writing their 20th, they move to earlier lines of therapy. So if we go back to the concept of inserting Ohtuvayre earlier in the treatment paradigm, as they write more for more patients, they start inserting it earlier. So that is a key priority for us because we believe that it helps us establish, as Dave mentioned, Ohtuvayre as really the baseline treatment for many of these patients in that early setting. So our field force and the way that we execute are driven around those 2 factors, and I would expect them to continue to increase. If you think about historically, what happens, COPD and pulmonologists tend to adopt drugs within the first 24 or 36 months. So we're really early in that curve. And what I would say again is I think we're ahead of that curve based on what we're seeing. So we have a lot of momentum moving into that back half of the first 2 years of launch.

What would you characterize the reason for some of these laggards? I mean clearly, 60% is amazing in 2 quarters of launch, but some are clearly still waiting to maybe either see evidence in the real-world setting from their peers. How important is the inclusion in the GOLD paper? Maybe talk to us about some of those dynamics.

Great question. We wanted to understand -- we've done a lot of work to understand those that have written versus those that are, what we would say, haven't started yet. There's an important concept that I think comes through in all our research that we've done recently is no matter where they are in their journey today. So if they've written 20 or if they've written 0, they get to a very similar place at peak. So it's a matter of their time to get there. Some are a little bit quicker, some are a little bit slower. When we talk about the ones that are maybe "slower adopters," there's a couple of factors that they're waiting on or looking for. One is the guidelines. So they look at the guidelines as an influential piece in their journey to writing a product. So if we think about what's happened with Ohtuvayre, Ohtuvayre was just included in the guidelines at the end of November, and our reps have been promoting that in the field since that time. So that's a tailwind to help us kind of accelerate these doctors. The second thing that these physicians are looking for is peer-to-peer kind of influence. And so we have a heavy budget against speaker programs and peer-to-peer programs because we understand that there are certain doctors that want to hear from another provider about their experiences. At the end of 2024, we had done over 120 programs. You would expect that to continue to increase as we move through 2025 as it's a key initiative to help get other writers comfortable in understanding what Ohtuvayre can provide their practice.

And then just one more here on the depth of prescribing. So for your Tier 1 or your Tier 2, obviously, they have quite a number of patients that they're seeing on a monthly basis. What proportion, I guess, maybe how penetrated are they into the population that could be addressed by Ohtuvayre?

As far as just the overall population, if you think about how the -- let's go back to the journey, our Tier 1s and Tier 2s are primarily pulmonologists or pulmonology-based or primary care that looks like pulmonology in the fact that they're in probably, what I would call, a pulmonology desert in the U.S. When we think about how patients move through their prescribing journey, when a patient becomes persistently symptomatic, our data suggests that they end up in one of these places at some point in time. So at some point in time, we believe that this 14,500 is the key to overall penetrating the market because the patients will eventually look to be there. I think when you look long term at these doctors, they tend to be much more productive than any other physician that's out there. Specifically, if we look at BREZTRI and TRELEGY, these doctors are 8 to 23 times more productive. So when we think about who and how many patients they have, what they're doing with Ohtuvayre right now is the tip of the iceberg. They have thousands of patients that they have in these practices. We have doctors that are "Tier 3" that have 750 patients in their practice. So if you think about Tier 1s and Tier 2s, there's a significant number of patients that these doctors have that have yet to even experience what Ohtuvayre is. We get questions a couple of times of why don't they put all their patients on Ohtuvayre now. And the way pulmonology works and the way they work with, they see their patients as they come in. And so what they're doing right now is seeing a patient when they come in, they're expressing symptomatology and treating them in the moment. They don't treat them as like a bolus disease where they bring all their patients back. So for many of these doctors, they're just working through their yearly patient load. And as they come in, Ohtuvayre gets added to them, which is another reason why we believe your new patient growth is going to continue or sustain over the course of the year because we're not talking about this bolus group of patients that were given to you at the beginning, it's actually the way that their whole practice dynamics work from a seeing patient standpoint.

What is the time frame over which these patients are coming back in for their checkups or their normal visits?

Typical COPD patients are 2 to 3 months. So you get treated, you see a doctor back, let's just say, 2 to 3 months later. And then some patients may be longer. We'll hear doctors say if a patient is stable, I'll wait 6 months. The importance about the follow-up is really about them understanding the experience with Ohtuvayre. So if they put a patient on Ohtuvayre, we don't want them waiting 2 to 3 months before they hear how that patient is doing. So our teams have done a very nice job of building some tactical elements that can help solicit feedback before that doctor waits 2 to 3 months for that patient back. Because, again, what we know is that patient feedback actually drives them to use it quicker and more often in their patient population. So our marketing teams have developed really nice tactics. Our training teams have developed really nice sales techniques to help the rep interact with the physician when they say, "Well, I haven't heard back from a patient in 2 months." Well, okay, well, how did that patient look? How much interaction did you have before you put them on Ohtuvayre? And sometimes that's a light bulb that goes off in the physician's mind of, wait, this is making a difference within my practice. So those things are helping us accelerate very quickly how many people go from 1 to, say, 20 patients in a practice.

Got it. So lots of stuff going on with your U.S. launch, super exciting there. As you think about ex U.S. opportunities, so Ohtuvayre was also recently approved in Macau, but you also are looking at ex or I guess, maybe Europe regulatory activities right now. Just update us on where you stand with those.

Yes. So as you mentioned, we are progressing our interaction with both the EMA and the MHRA. It's a very scheduled process, as you may know. And so we've been meeting with the repertoires and getting through the data. And I think that all is progressing. We're expecting when we give our Q2 results or end of July, early August, I think we'll have a fulsome update on the regulatory path and strategy that we have in Europe that is also tied nicely to partnering conversations. As you can imagine, regulatory clarity is a key element in partnering discussions. And so all that fits together. And we felt that we were more than capable as the team has already done European submissions in the past and felt very comfortable in getting through this process with it. So more to come, but good progress.

Great. And then as you think about Ohtuvayre, which could potentially be a product in the pipeline, you are looking at studying this drug in non-CF bronchiectasis. Maybe just talk about the mechanistic rationale, what you've seen from your prior studies that gives you conviction in this opportunity.

Yes, absolutely. Yes, we do have a Phase II program going on with Ohtuvayre in non-CF bronchiectasis. And our conviction comes around in various ways. One is the observations that we saw in the ENHANCE trial. As many of you know, there are no preclinical animal models of bronchiectasis that really are applicable. And so human data is what you need to do and progress and do the work. But bronchiectasis presents very similarly clinically to COPD. And we believe as well as KOLs believe that there's a lot of read-through in the observations that we saw in COPD, specifically around the mechanisms that we think PDE3, PDE4 inhibition apply to, and we saw cough reductions, sputum reduction, improvement of symptoms, quality of life concepts, all, I think, around the impact of anti-inflammation that we saw in COPD. And so along with a number of KOLs, which have a high conviction that's why we launched the Phase II program. And we think the read-through is there. So very exciting. It is an exacerbation endpoint trial, takes a bit of time to enroll and then, of course, read out. So we expect that top line data maybe at the back end of '26 or early '27 as we stand here today, and we'll continue to update on a quarterly basis.

What is the -- maybe what is the proportion of COPD patients who have non-CF bronchiectasis as well?

Yes. It's a good question. Of course, the study that we did ENHANCE doesn't specifically set up to define and pick apart that. We do know that there is a portion of patients. There are patients that have mixed that is COPD and some bronchiectasis in there. Of course, they are all classified and classically diagnosed for COPD, not bronchiectasis. So difficult to answer, and it takes a lot of assumptions to sort of get there. But even with that said, I think, again, the underlying pharmacology leads us to believe that the read-through is there.

I guess if there is that overlap, are you able to capture those patients on your existing label because they classify they're being diagnosed as COPD, you would still be able to treat them presumably.

Yes. Well, I think the label is for COPD, so patients have to have that. We do know in talking with physicians that it is -- there is a proportion of patients that have mixed disease, and they do have -- if they look carefully, they do have bronchiectasis as well. Which portion is controlling their symptoms and how that looks is a sort of an endless conversation. So I think we -- what we needed to do is take that all into consideration, which we did and then actually do the work, which is this Phase II trial that will give us great clarity on effect size, variability of data and really the true effect of ensifentrine in bronchiectasis, which will allow us to design the proper study.

And as you think about Insmed's brensocatib potentially being approved in August this year for bronchiectasis, how does that influence how you think about the development pathway for Ohtuvayre or even what the clinical or commercial bars for success would be?

Right. Excellent. Yes. I mean I think that, as you know, there's no approved drug in bronchiectasis. And so I think it's great to have Insmed's brenso come out in August. I think that with nominally a 20% reduction in exacerbation rate that it has, there's plenty of room to operate within that disease. I think it's going to be treated much like COPD that is with multiple different treatments. I think approaching inflammation from 2 different mechanisms makes great sense. And ultimately, from a pharmacologic basis, I don't see why both of them can't be used together to treat bronchiectasis. And as far as thresholds and impact, I think, of course, 20% reduction in exacerbations maybe is a benchmark. But ultimately, drugs are approved in a value add on a benefit-to-risk assessment. So I don't think there's a hard number, but that's the kind of effect that we'll be looking at. And we will integrate -- once it's approved, we will integrate some patients that are on it into our Phase II trial. We want to understand if the signal is notably different and how those patients respond with ensifentrine on board, maybe they do even better. So I think we're looking forward to integrating it in the trial.

Great. And then maybe one question here on life cycle management. As you think about the combination that you're studying of Ohtuvayre with the glycopyrrolate, what is the incremental benefit that you think you could attain by adding on another agent here?

Right. Well, we do know from the ENHANCE trials that ensifentrine works extremely well with LAMAs. So we have great insight that the effect on bronchodilation is quite strong with the 2 of them. So we think the combination is stronger on a bronchodilator than either one of them alone and comes from the data that we have in place. And we think over time that it will be very common that Ohtuvayre is used with a LAMA. So you can imagine it's convenient to give glycopyrrolate or a LAMA along with ensifentrine as a combination from convenience. You can see that convenience plays very well in COPD. That's how the current drugs are really marketed. And so we think it's an advantage for convenience for how patients will be typically treated. We think that could be really the case base for how the treatment paradigm looks then in order to avoid ICS when you can and makes a lot of sense. It also is the first time an inhaled combination with anti-inflammatory is available. So it really is like the new triple as we would see it would take place. And of course, it does a number of things. Our patent is longer. It goes out to 2041. It does, in our view, reset the IRA clock as well as a new entity. So it does a number of things in life cycle management that are important.

Any risk to combining those 2 in a single nebulized or inhaled product?

Risk, not particularly. I mean from a safety pharmacologic basis, no. From a physical-chemical, of course, that's something that we have to work through, and we have worked through in a formulation development. I wouldn't characterize it as easy. And I won't get into all the details, but it's pH sensitive and how you formulate it and how you get the 2 to interact well from a physiochemical perspective is important, but everything that we knew about and worked through in the development program.

Great. Maybe one last question here as we close out. But just your thoughts on BD and what you might be interested in as it relates to augmenting the pulmonary or respiratory pipeline that you have?

Yes. I mean, clearly, we have plenty in front of us as we sit here today with the launch in our current 2 Phase II programs. But as we look beyond that, yes, I think we have our eye on a number of [indiscernible] in-licensing and BD opportunities. Our bias is to stay in the pulmonary respiratory space, leveraging our clinical regulatory commercial footprint and biased on having past proof of concept, whether that's Phase II and beyond and really open to different size of opportunity. It doesn't need to be necessarily a blockbuster drug either. And there are a number of drugs that may have orphan status in that space and other options that we have as well.

Great. Well, with that, thank you, guys, both so much.

Thank you.

Thank you.