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Breathe easy: Verona Pharma plc

Friday, October 24, 2008

Professor Clive Page can’t breathe easy just yet. Next month a clinic in the Netherlands is due to start early stage clinical trials of his company’s lead drug. For the chairman of AIM-listed biotech group Verona Pharma plc it will be the latest stage in a process that could ultimately have a big influence on the way breathing diseases such as asthma and hay fever are treated.

Together with chief executive – and perennial asthma sufferer – Professor Michael Walker, Page has collated a portfolio of intellectual property and is now pushing hard on the development of RPL554, a molecule that has the potential to both prevent and treat the symptoms of hay fever and asthma simultaneously.

In fact, some quarters of the pharmaceuticals industry have been so impressed by Verona’s progress to date that the company has already received – and rejected – expressions of interest in its projects. Instead, Page says that confidence in RPL554 and the company’s other IP potential is so high that the team is happy to sit and wait for the results of the pending trials. It’s a heady blend of business, science… and substance.

Page knows a thing or two about breathing illnesses. The professor of pharmacology and director of the Sackler Institute of Pulmonary Pharmacology in the pharmaceutical sciences division of King's College, London, divides his time between academia and Verona. With Walker based in Canada, the company is light on costly back office staff but heavy on the hard-hitting expertise.

Walker himself is an emeritus professor at the Department of Anesthesiology, Pharmacology & Therapeutics at Canada’s University of British Columbia. He is also the brains behind many of the existing drugs used to treat respiratory illnesses.

While RPL554 was actually invented by Sir David Jack, the former research director of GlaxoSmithKline, both Walker and Page have been closely involved in researching new therapies in the field. The team picked up the intellectual property for the compound for next to nothing after it was shelved in favour of other projects.

It is a similar story with Verona’s other intellectual property. Page reckons the constant stream of mergers and acquisitions in the pharma industry has created a market for the IP and technologies that get left behind.

As result, Verona has been able to balance its interests by acquiring a portfolio of data at low cost and is now looking into other drugs sources that have anti-inflammatory action. Indeed, the team is currently working on the presence of what are known as Novel Anti-Inflammatory Polysaccharides (NAIPS) in marine life such as starfish. Other work is also being undertaken in potential treatment for cough.

New approach

Verona Pharma started life back in 2006 when Rhinopharma, a private company run by Walker and Page was snapped up by AIM listed Australian natural resources group Isis. Some of the original board members stayed on and Page says their input has been invaluable in driving the company forward and helping to crystallise a business model where costs are kept to a minimum and projects that look uncertain get the chop early on.

Figures on precisely how many early stage compounds fail to make the grade as new drugs are uncertain, although it is widely acknowledged in the pharma industry that the figures are huge. As a result, Verona’s progress to date and its ability to draw big name institutional shareholders, including Fidelity, hinges on the world-renowned expertise of Walker and Page to spot a winner.

It was with apparent ease that the company raised £2.3 million in a share placing in January this year as part of a move to firm up the funding capacity for all of its key projects. Page says that cash is more than adequate to see the company through its development plans – particularly as it keep such a close eye on costs.

Indeed, at the half year to June 2008 Verona produced a pre-tax loss of just £0.6 million and held cash of around £3.2 million. In the previous year to December 2007 it lost £1.2 million. The company is currently worth around £5.9 million.

“At the first sign that any of these projects look like failing, we’ll end them there and then,” Page says. It’s an approach often lacking in what he describes as traditionally costly and inefficient biotech companies. It also means Verona’s theories and technologies are tested rigorously at every stage so that any problems can be identified as early a possible.

With RPL554, he is quietly confident. The imminent combined phase I and phase IIa clinical trial have been put together to test both the safety of the compound and provide evidence that it actually works in asthmatics and patients with allergic rhinitis.

What is notable is that, unlike many other drugs trials at this stage, the Verona team has carefully planned the trial itself – rather than simply handing it over to the testing lab – and will be on hand when the trials are carried out. Again, Page says this reflects the team’s focus on spotting problems early on.

Indeed, by drafting in actual asthma sufferers to test the compound at this stage, Verona is putting its drug through overtly demanding tests that are often reserved for later stage trials.

The reasoning behind this attention to detail is simple. Every year an estimated US$20 billion is spent treating common respiratory illnesses, usually with a combination of inhaled drugs that prevent and treat sufferers. RPL554 is designed to address both issues in one drug that can be administered once a day – a concept that Page believes could have a major impact on an industry that is running out of ideas, patents and IP in the field.

If Verona achieves its objectives with the early stage trials in the Netherlands, the company will have made big progress in shaking off the risks of an early stage failure. Instead, it could be looking at many more options, including the possibility of lining up industry partnerships or licensing deals that could take the compound on towards commercialisation.

Ben Hobson, SmallCapNews.co.uk