Verona Pharma plc

30.06.2016 - Equity Research Einzelstudie // kaufen

Research Report (Anno) - Verona Pharma plc - english

pdf For the original study, click here
Unternehmen: Verona Pharma plc
Branche: Biotechnologie-Pharma
Rating: kaufen
Kurs bei Erstellung in €: 0,04
Kursziel in €: 0,15
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 5a;6a;11

In the extraordinary general meeting on 22/07/2016, Verona Pharma plc plans to receive approval for the so far largest capital increase in the company’s history. Firm subscription commitments for the planned gross issuing proceeds of GBP 44.70m have already been given by existing shareholders and other well-known biotech investors. Furthermore, Verona plans a listing at the NASDAQ (US IPO) and in this context Verona also aims for an additional capital increase in the coming quarters. The largest portion of the raised capital should be used for the further clinical development of RPL554.

The company focuses on the development of pharmaceuticals to treat respiratory diseases (COPD, cystic fibrosis, and asthma) and currently Verona Pharma plc’s lead product RPL554 is in the clinical development phase. The clinical approval for the treatment of COPD (chronic obstructive pulmonary disease), which has signifi-cant unmet medical needs and large market volume, is most advanced.

The focus in the last fiscal year 2015 was on the acceleration of the development and the expansion of clinical trials for RPL554. In three clinical trials new data was gathered and different areas of application were examined. In May 2016, Verona published promising results of the first clinical phase IIa trial (COPD in combination with standard treatment). Both the primary objective (bronchodilator effect) as well as the secondary objective (reduction of trapped air in the lung) were met with high significance.

We expect, based on the marketing time plan, the first sales from the fiscal year 2020 on. Our estimations focus on the marketing of RPL554 to hospitals and specialists, primarily in the area of COPD. Resulting from the big population of patients, Verona should quickly reach sales of about EUR 200m (fiscal year 2023). The estimations are very conservative, because we initially expect a self-marketing approach and therefore only a small market share. Also, the company has an extremely scalable business model. Hence, we expect a high and sustainable EBIT-margin of 78,3 %. The currently announced capital increase should ensure enough liquidity for the coming years.

Based on our DCF-valuation model, we determine a fair value (post money) for the company of GBP 308.36m or EUR 0.15 (GBP 0.12) per share. Therefore, we significantly increased our previous fair value of GBP 114.30m (research study from the 22/02/2016). The increase results from the considerable reduction of risk if the capital increase is successful. Hence, the financing of the clinical development of the product RPL554 is virtually secured. The valuation is post money and assumes a successful capital increase. The target price is subjected to a valuation discount of 77.2 %. The valuation discount stems from a risk meta-analysis of pharmaceuticals in phase IIa, which shows that 77,2% of all products in that phase do not reach market approval. This means that if more progress in the clinical trials is made, the discount is reduced and the target price increases. Based on the current share price of GBP 0.03 we give a BUY rating.


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