vrna-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________ TO __________

Commission File Number: 001-38067

Verona Pharma plc

(Exact name of Registrant as specified in its Charter)


United Kingdom									98-1489389
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

3 More London Riverside London SE1 2RE United Kingdom									Not Applicable
(Address of principal executive offices)									(Zip Code)

Registrant’s telephone number, including area code: +44 203 283 4200

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, nominal value £0.05 per share*	VRNA	The Nasdaq Stock Market LLC (Nasdaq Global Market)

* The ordinary shares are represented by American Depositary Shares (each representing 8 ordinary shares), which are exempt from the operation of Section 12(a) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 12a-8 thereunder.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2025, the registrant had 689,536,966 ordinary shares, nominal value £0.05 per share, outstanding, which if all held in ADS form, would be represented by 86,192,121 American Depositary Shares, each representing eight (8) ordinary shares.


		Page
PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4	Controls and Procedures	30
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3	Defaults Upon Senior Securities	81
Item 4	Mine Safety Disclosure	81
Item 5	Other Information	81
Item 6	Exhibits	82
Signatures		83

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our ADSs. The principal risks and uncertainties affecting our business include the following:

•Our pending acquisition by Merck may not be completed within the expected timeframe, or at all, and significant delay or the failure to complete the acquisition could adversely affect our business and the market price of our ADSs;

•The announcement and pendency of our acquisition by Merck could adversely affect our business, prospects, financial condition, and results of operations;

•We have a limited operating history and may not generate sufficient product revenue to sustain profitability;

•We may need additional funding to complete development and commercialization of any future product candidates and to continue to commercialize Ohtuvayre. If we are unable to raise capital when needed, or if a failure of any financial institution where we maintain our cash and cash equivalents prevents or delays us from accessing uninsured funds, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts;

•The terms of our credit facility place restrictions on our operating and financial flexibility, and our existing and any future indebtedness could adversely affect our ability to operate our business;

•Changes in our tax rates, unavailability of certain tax credits or reliefs or exposure to additional tax liabilities or assessments could affect our profitability, and audits by tax authorities could result in additional tax payments for prior periods;

•We depend solely on the success of ensifentrine, which was recently approved by the FDA as Ohtuvayre. If we are unable to continue to commercialize Ohtuvayre, or successfully develop ensifentrine for other indications, our ability to generate revenue and our financial condition will be adversely affected;

•We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates;

•Our product and product candidates may have serious adverse, undesirable or unacceptable side effects which may delay or prevent marketing approval;

•If we are unable to enroll patients in our clinical trials for other indications, or enrollment is slower than anticipated, our research and development efforts could be adversely affected;

•We may become exposed to costly and damaging liability claims, either when testing ensifentrine in the clinic or at the commercial stage, and our product liability insurance may not cover all damages from such claims;

•Regulatory approval processes are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed;

•Enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and may affect the prices we may set;

•Our business operations and current and future relationships with investigators, healthcare professionals, consultants, third-party payors and customers will be subject to applicable healthcare regulatory laws, which could expose us to penalties;

•We operate in a highly competitive and rapidly changing industry, which may result in others discovering, developing or commercializing competing products before or more successfully than we do;

•If our products, including Ohtuvayre, do not gain market acceptance or if we fail to accurately forecast demand or manage our inventories, our business will suffer because we might not be able to fund future operations;

•Our commercial capabilities and infrastructure, including sales, marketing, operations, manufacturing, distribution, and reimbursement infrastructure, may not be adequate to successfully commercialize Ohtuvayre;

•We rely, and expect to continue to rely, on third parties, including independent clinical investigators and clinical research organizations, to conduct our pre-clinical studies and clinical trials;

•If our pending acquisition by Merck is not completed, and we fail to enter into new strategic relationships for ensifentrine, our business, research and development and commercialization prospects could be adversely affected;

•We rely, and expect to continue to rely, on third party manufacturers and suppliers for production of the active pharmaceutical ingredient ensifentrine and formulated drug products derived therefrom. Our dependence on these third parties may impair continued commercialization of Ohtuvayre and the advancement of our research and development programs;

•We rely, and expect to continue to rely, on third parties for the sales, marketing, reimbursement and distribution of our drug products, and a failure by these third parties to adequately perform would adversely affect our business;

•Our and our manufacturers’, suppliers’ and other critical third parties’ cybersecurity risk management program and processes may not be effective in protecting our systems, networks and Confidential Information;

•We rely on patents and other intellectual property rights to protect ensifentrine, the enforcement, defense and maintenance of which may be challenging and costly;

•Our information technology systems, and those of our manufacturers, suppliers and other third parties that we use to perform services for us or otherwise collaborate with, may fail or suffer security breaches, which could distract our operations and cause delays in our research and development and commercialization activities, and may adversely affect our business, operations and financial performance;

•We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent which might adversely affect our ability to develop, manufacture and market ensifentrine;

•We may be involved in lawsuits to protect or enforce patents covering ensifentrine, which could be expensive, time consuming and unsuccessful, and issued patents could be found invalid or unenforceable if challenged in court;

•Our future growth and ability to compete depends on our ability to retain our key personnel and recruit additional qualified personnel;

•We expect to expand our development, regulatory and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations;

•The price of our American Depositary Shares may be volatile and may fluctuate due to factors beyond our control;

•We will continue to incur increased costs as a result of operating as a public company in the United States, and our senior management are required to devote substantial time to new compliance initiatives and corporate governance practices; and

•Business interruptions could adversely affect our operations.

PART I - FINANCIAL INFORMATION

Item 1. Financial statements

Verona Pharma plc

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)


	June 30,		December 31,
	2025		2024
ASSETS
Current assets:
Cash and cash equivalents	$	438,016	$	399,757
Accounts receivable, net	82,858		31,496
Prepaid expenses	11,432		7,573
Tax incentive receivable	4,061		5,762
Inventory	8,612		6,249

Other current assets	3,872		2,735
Total current assets	548,851		453,572

Non-current assets:
Furniture and equipment, net	991		1,105
Inventory, long-term	5,910		1,972
Goodwill	545		545
Equity interest	15,000		15,000
Right-of-use assets	1,574		2,048
Total non-current assets	24,020		20,670
Total assets	$	572,871	$	474,242

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,434	$	11,266
Accrued expenses	43,328		16,757
Royalties payable	3,088		1,100
Revenue interest purchase security agreement	—		687
Current operating lease liabilities	1,014		1,120
Taxes payable	—		8,889
Other current liabilities	374		2,862
Total current liabilities	51,238		42,681

Non-current liabilities:

Term loan	242,434		120,341
Revenue interest purchase security agreement	—		105,420
Non-current operating lease liabilities	926		1,241
Total non-current liabilities	243,360		227,002
Total liabilities	294,598		269,683

Commitments and contingencies

Shareholders' equity:
Ordinary £0.05 par value shares; 703,189,462 and 703,189,462 issued, and 687,930,486 and 677,008,254 outstanding, at June 30, 2025 and December 31, 2024, respectively	45,021		45,021
Additional paid-in capital	805,918		728,199
Ordinary shares held in treasury	(964)		(1,659)
Accumulated other comprehensive loss	(4,601)		(4,601)
Accumulated deficit	(567,101)		(562,401)
Total shareholders' equity	278,273		204,559
Total liabilities and shareholders' equity	$	572,871	$	474,242

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Verona Pharma plc

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except per share amounts)


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
Revenue:
Product sales, net	$	102,939	$	—	$	174,195	$	—
Other revenue	199		—		5,199		—
Total revenue, net	103,138		—		179,394		—
Operating expenses:
Cost of sales	4,756		—		8,163		—
Research and development	12,950		19,388		27,004		26,152
Selling, general and administrative	72,127		49,035		141,239		69,469
Total operating expenses	89,833		68,423		176,406		95,621
Operating income/(loss)	13,305		(68,423)		2,988		(95,621)
Other income/(expense):
Research and development tax credit	—		847		—		1,432
Loss on extinguishment of debt	—		(3,653)		(407)		(3,653)
Interest income	4,302		3,140		8,193		6,518
Interest expense	(6,822)		(1,757)		(17,017)		(3,343)
Foreign exchange gain/(loss)	1,097		25		1,567		(194)
Total other (expense)/income, net	(1,423)		(1,398)		(7,664)		760
Income/(loss) before income taxes	11,882		(69,821)		(4,676)		(94,861)
Income tax benefit/(expense)	39		(1,014)		278		(1,768)
Net income/(loss)	$	11,921	$	(70,835)	$	(4,398)	$	(96,629)





Income/(loss) per ordinary share - basic	$	0.02	$	(0.11)	$	(0.01)	$	(0.15)
Income/(loss) per ordinary share - diluted	$	0.02	$	(0.11)	$	(0.01)	$	(0.15)

Income/(loss) per ADS - basic	$	0.14	$	(0.87)	$	(0.05)	$	(1.19)
Income/(loss) per ADS - diluted	$	0.13	$	(0.87)	$	(0.05)	$	(1.19)

Weighted-average ordinary shares outstanding - basic	685,155		648,217		682,296		646,959
Weighted-average ordinary shares outstanding - diluted	727,223		648,217		682,296		646,959

Weighted-average ADS outstanding - basic(1)	85,644		81,027		85,287		80,870
Weighted-average ADS outstanding - diluted(1)	90,903		81,027		85,287		80,870

(1) Weighted-average ADS outstanding has been converted with a ratio of one ADS per eight ordinary shares

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Verona Pharma plc

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited)

(in thousands except share data)


	Ordinary shares			Additional paid-in capital		Ordinary shares held in treasury		Accumulated other comprehensive loss		Accumulated deficit		Total shareholders' equity
	Number	Amount
Balance at December 31, 2024	703,189,462	$	45,021	$	728,199	$	(1,659)	$	(4,601)	$	(562,401)	$	204,559
Net loss	—	—		—		—		—		(16,319)		(16,319)

Restricted share units vested	—	—		—		72		—		(72)		—

Share options exercised	—	—		4,980		185		—		—		5,165
Common shares withheld for taxes on vested share awards

SEC Form 10-Q filed by Verona Pharma plc