Vernalis PLC: Unaudited Interim Results for the Periods Ended 31 December 2014

WINNERSH, UNITED KINGDOM--(Marketwired - February 10, 2015) - Vernalis plc (LSE: VER) today announces its results for the six month and twelve month periods ended 31 December 2014.

Following on from the change to the Group's year end date from 31 December to 30 June, the Group's audited results for the 18 month period to 30 June 2015 will be announced by the end of September 2015.

Financial Highlights for six months ended 31 December 2014

• Continued strong financial performance ahead of market expectations:
  • Revenue was £ 5.7 million (H2 2013: £ 6.5 million)
    • Frovatriptan royalty income at £ 1.7 million (H2 2013: £ 4.1 million) was in line with market expectations, with one 12.5 kg batch of API delivered to Menarini
    • Research collaboration income was £ 3.8 million (H2 2013: £ 2.3 million) comprising £ 0.6 million of milestone income (H2 2013; £ nil) and £ 3.2 million derived from FTE income (H2 2013: £ 2.3 million)
  • Operating costs (including R&D) before exceptional items were marginally lower at £ 9.9 million (H2 2013: £ 10.3 million)
  • Operating loss before exceptional items was £ 4.3 million (H2 2013: £ 4.7 million)
  • Profit for the period was £ 1.7 million (H2 2013: loss of £ 8.2 million) including a £ 4.5 million unrealised foreign exchange gain (H2 2013: £ 5.3 million loss) due to the weakening of sterling against the US dollar
  • Underlying cash burn decreased to £ 2.0 million (H2 2013: £ 3.7 million) resulting from an increase in FTE research collaboration income and a reduction in operating costs

Financial Highlights for twelve months ended 31 December 2014

• Revenue was £ 11.9 million (2013: £ 14.1 million)
  • Frovatriptan royalty income at £ 3.5 million (2013: £ 6.7 million) was in line with market expectations, with two 12.5 kg batches of API delivered to Menarini (2013: 3 batches)
  • Research collaboration income was £ 8.1 million (2013: £ 7.1 million) comprising £ 1.7 million of milestone income (2013: £ 2.5 million) and £ 6.4 million of FTE income (2013: £ 4.6 million), resulting in our research business remaining self-funded
• Operating costs (including R&D) before exceptional items were flat at £ 19.4 million (2013: £ 19.3 million)
• Operating loss before exceptional items was £ 8.1 million (H2 2013: £ 7.3 million)
• Loss for the period was £ 2.9 million (2013: £ 4.0 million) including a £ 2.8 million unrealised foreign exchange gain (2013: £ 0.9 million loss) due to the weakening of sterling against the US dollar
• Balance sheet remains strong with £ 70.6 million of cash resources (including cash, cash equivalents and held-to-maturity financial assets) and debt free (2013: £ 76.9 million)
  • Net increase in cash resources of £ 0.3 million for the six months to 31 December 2014 driven by sterling weakening against the US dollar
  • Proof-of-Concept (POC) payments on CCP-07 and CCP-08 of £ 1.8 million were paid to Tris in April 2014 and July 2014 respectively and the NDA filing milestone of £ 1.8 million for Tuzistra XR was paid in August 2014
  • Underlying cash burn decreased marginally to £ 5.8 million (2013: £ 6.3 million)

Operational Highlights for the 12 months to 31 December 2014

Cough Cold Commercial Pipeline:

• NDA for Tuzistra™ XR (CCP-01) was filed with the FDA at the end of June 2014 and accepted for full review in September 2014, with a PDUFA target action date of 30 April 2015
• CCP-07 and CCP-08 achieved POC triggering milestone payments to Tris in April and July 2014 respectively
• Continued progress on both CCP-05 and CCP-06 with POC now targeted during 2015

NCE Development Pipeline:

Frovatriptan (marketed) (Migraine):

• 2014 Menarini frovatriptan sales were in line with the same period in 2013 (EUR 26.4 million vs EUR 26.4 million)

V81444 (CNS diseases):

• Phase Ib/II POC study in Attention Deficit Hyperactivity Disorder (ADHD) completed (April 2014) and a partnering process initiated

V158866 (Pain):

• Phase II POC study in spinal cord injury neuropathic pain continues, with data expected in 2015

AUY922 (Cancer):

• Novartis ceased all development work on AUY922 in December 2014. The process to return the programme started in early January 2015. Vernalis will review the data to determine whether there is potential for re-partnering

Tosedostat - CHR2797 (Cancer):

• CTI BioPharma replaced Chroma Therapeutics as worldwide licensee (October 2014)
• CTI Biopharma is awaiting data from investigator led trials in acute myeloid leukaemia (AML) and myelodysplastic syndrome (MDS) to inform the appropriate design of a Phase III study

Servier 1 (Cancer):

• Servier signed a global strategic agreement with Novartis to develop and commercialise drug candidates from this collaboration (May 2014)
• Lead molecule from this collaboration with Servier, a selective BCL-2 inhibitor, has progressed into Phase I (June 2014) triggering a £ 0.8 million (EUR 1 million) milestone receipt

Research Collaborations:

• Milestone achieved in collaboration with Asahi Kasei Pharma triggering a £ 0.3 million payment to Vernalis (March 2014)
• Two milestones achieved in collaborations with Servier triggering, in total, a EUR 0.75 million (£ 0.6 million) payment to Vernalis (August 2014)
• Vernalis Research received a Queen's Award for Enterprise (April 2014)

Potential Newsflow

• Tuzistra™ XR NDA action date at FDA (30 April 2015)
• Tris completion of submission stability batches for CCP-07 and CCP-08 (undisclosed)
• Potential Tuzistra™ XR launch (Start 2015/16 cough cold season)
• Achieve POC for CCP-05 and CCP06 (2015)
• V158866 (Pain) - Completion of Phase II POC study (2015)
• Achieve further milestones under existing research collaborations which will trigger further payments
• Secure new research collaborations

Ian Garland, Chief Executive Officer, commented, "Vernalis continues to make progress across all aspects of its business during 2014. Our lead cough cold candidate Tuzistra™ XR has a PDUFA date of 30 April 2015. Proofs-of-concept were achieved for two other cough cold products in 2014 and we aim to achieve proof-of-concept for the remaining two cough cold products in 2015.

We announced promising results from a Phase Ib/II study in ADHD, and the BCL-2 collaborative programme entered Phase I.

Research continues to perform well and remains self-funded with five active collaborations during the period. Our financial results remain strong, whilst we continue to prepare for the potential launch of our first cough cold product into the US market this summer. And our balance sheet is strong, with considerable cash reserves and no debt."

Presentation & Conference Call
Vernalis management will host a presentation at 09.00 am (UK) today (10 February 2015) at Brunswick's offices, 16 Lincoln's Inn Fields, London WC2A 3ED. It will also be available via webcast at http://www.vernalis.com/investor-centre/presentations-and-webcasts and www.cantos.com. Please contact Valerie Mugridge at Brunswick on +44 (0) 207 396 5325 for details.

Notes to Editors

About Vernalis
Vernalis is a revenue generating development stage pharmaceutical company with significant expertise in drug development. The Group has one marketed product, frovatriptan for the acute treatment of migraine, an exclusive licensing agreement to develop and commercialise multiple novel products focussed on the US prescription cough cold market as well as seven programmes in its NCE development pipeline. Vernalis has also significant expertise in fragment and structure based drug discovery which it leverages to enter into collaborations with larger pharmaceutical companies. The Company's technologies, capabilities and products have been endorsed over the last five years by collaborations with leading pharmaceutical companies, including AKP, Biogen Idec, Endo, GSK, Genentech, Lundbeck, Menarini, Novartis, Servier and Tris.

For further information about Vernalis, please visit www.vernalis.com

Vernalis Forward-Looking Statement
This news release may contain forward-looking statements that reflect the Company's current expectations regarding future events including the clinical development and regulatory clearance of the Company's products, the Company's ability to find partners for the development and commercialisation of its products, as well as the Company's future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors including the success of the Company's research strategies, the applicability of the discoveries made therein, the successful and timely completion of clinical studies, the uncertainties related to the regulatory process, the ability of the Company to identify and agree beneficial terms with suitable partners for the commercialisation and/or development of its products, as well as the achievement of expected synergies from such transactions, the acceptance of frovatriptan and other products by consumers and medical professionals, the successful integration of completed mergers and acquisitions and achievement of expected synergies from such transactions, and the ability of the Company to identify and consummate suitable strategic and business combination transactions.

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