Tuesday, H.C. Wainwright maintained a Buy rating on Verona Pharma (NASDAQ: NASDAQ:VRNA) shares and raised the price target to $42.00 from the previous target of $36.00. This adjustment came after Verona Pharma announced strong third-quarter financial results on Monday (NASDAQ:MNDY).
Verona Pharma reported $5.6 million in top-line revenue for the third quarter of 2024, surpassing the highest Wall Street estimate of $3.5 million. The revenue was entirely generated from sales of Ohtuvayre (ensifentrine), the company's sole marketed product. Ohtuvayre, used for treating chronic obstructive pulmonary disease (COPD), received FDA approval in June 2024.
The company also revealed that October 2024 sales of Ohtuvayre exceeded the entire third-quarter sales, indicating significant month-over-month growth. In light of these developments, H.C. Wainwright has increased its 2024 revenue forecast for Verona to $22.5 million, up from the earlier projection of $12.5 million. The firm's revenue forecast for the full year 2025 has been revised upwards to $126.2 million from the previous estimate of $117.3 million.
Verona Pharma has been assigned a unique J-code for Ohtuvayre, J7601, which is expected to come into effect in January 2025. The analyst believes that the new J-code will aid in the market uptake of the drug.
The raised stock price target to $42 per American Depositary Share (ADS) reflects not only the updated revenue forecasts but also a lowered discount rate assumption to 11% from 12% and a reduced terminal rate of decline to 2% from 4%.
In other recent news, Verona Pharma reported its Q3 results, revealing a net loss of $43 million. However, the company emphasized the successful launch of its COPD treatment, Ohtuvayre, in the U.S. The drug saw net product sales of $5.6 million within the first seven weeks post-launch, with over 5,000 prescriptions filled by the end of October. The company maintains a strong balance sheet, with $336 million in cash and equivalents.
These recent developments also include the approval of a permanent J-code for Ohtuvayre by CMS, effective January 2025. The company plans to provide detailed revenue guidance in early 2025. Verona Pharma is also focusing on increasing interactions with Tier 1 and Tier 2 physicians to improve prescribing behavior.
Despite the net loss for Q3, the company remains optimistic about continued sales growth and the drug's broad prescription base.
InvestingPro Insights
Verona Pharma's recent financial performance and market position are further illuminated by data from InvestingPro. The company's impressive revenue growth of 1127.95% in the last twelve months as of Q3 2024 aligns with the strong sales performance of Ohtuvayre reported in the article. This growth is complemented by a robust gross profit margin of 90.34%, which InvestingPro Tips highlight as "impressive gross profit margins."
The market's positive reaction to Verona's performance is reflected in the stock's recent momentum. InvestingPro data shows a 19.18% price return over the last month and a substantial 89.24% return over the last three months, corroborating the article's narrative of strong financial results and increased analyst confidence.
However, investors should note that despite the revenue growth, Verona is not yet profitable, with a negative EBITDA of -150.29M USD. This aligns with the InvestingPro Tip stating that "analysts do not anticipate the company will be profitable this year." The company's focus on growth and market penetration with Ohtuvayre appears to be the current priority.
For those seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for Verona Pharma, providing deeper insights into the company's financial health and market position.
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