Verona Pharma (VRNA) 6-K/A 25 Aug 20 2020 Q2 Current report (foreign) (amended) Financial data

DEI

DEI	6 Months Ended
	Jun. 30, 2020
Document Information [Abstract]
Document Type	6-K/A
Document Fiscal Year Focus	2020
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Period Focus	Q2
Entity Registrant Name	Verona Pharma plc
Entity Central Index Key	0001657312
Current Fiscal Year End Date	--12-31

CONSOLIDATED STATEMENT OF FINAN

CONSOLIDATED STATEMENT OF FINANCIAL POSITION - GBP (£) £ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Non-current assets:
Goodwill	£ 441	£ 441
Intangible assets	25,430	2,757
Property, plant and equipment	37	43
Right-of-use assets	1,096	971
Total non-current assets	27,004	4,212
Current assets:
Prepayments and other receivables	4,420	2,770
Current tax receivable	2,770	7,396
Short term investments	0	7,823
Cash and cash equivalents	18,081	22,934
Total current assets	25,271	40,923
Total assets	52,275	45,135
Capital and reserves attributable to equity holders:
Share capital	5,324	5,266
Share premium	118,862	118,862
Share-based payment reserve	12,572	10,364
Accumulated loss	(117,565)	(100,627)
Total equity	19,193	33,865
Current liabilities:
Derivative financial instrument	711	895
Lease liabilities	638	460
Trade and other payables	7,111	8,261
Total current liabilities	8,460	9,616
Non-current liabilities:
Assumed contingent liability	23,907	1,103
Non-current lease liability	677	491
Deferred income	38	60
Total non-current liabilities	24,622	1,654
Total equity and liabilities	£ 52,275	£ 45,135

CONSOLIDATED STATEMENT OF COMPR

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - GBP (£) £ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Profit or loss [abstract]
Research and development costs	£ (6,203)	£ (9,916)	£ (12,075)	£ (15,844)
General and administrative costs	(2,315)	(2,130)	(7,616)	(3,961)
Operating loss	(8,518)	(12,046)	(19,691)	(19,805)
Finance income	141	1,011	532	2,202
Finance expense	(395)	(36)	(447)	(187)
Loss before taxation	(8,772)	(11,071)	(19,606)	(17,790)
Taxation - credit	1,422	2,099	2,683	3,412
Loss for the year	(7,350)	(8,972)	(16,923)	(14,378)
Other comprehensive income / (loss):
Exchange differences on translating foreign operations	3	14	43	1
Total comprehensive loss attributable to owners of the Company	£ (7,347)	£ (8,958)	£ (16,880)	£ (14,377)
Loss per ordinary share - basic and diluted (pence per share)	£ (6.90)	£ (8.50)	£ (16)	£ (13.70)

CONSOLIDATED STATEMENT OF CHANG

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - GBP (£) £ in Thousands		Share Capital	Share Premium	Share-based Payment Expenses	Total Accumulated Losses	Total
Impact of change in accounting policy	[1]				£ (20)	£ (20)
Adjusted Balance at January 1, 2019		£ 5,266	£ 118,862	£ 7,923	(68,653)	63,398
Beginning balance (Previously stated) at Dec. 31, 2018		5,266	118,862	7,923	(68,633)	63,418
Loss for the year					(14,378)	(14,378)
Exchange differences on translating foreign operations					1	1
Total comprehensive loss for the year					(14,377)	(14,377)
Share-based payments				1,286		1,286
Ending balance at Jun. 30, 2019		5,266	118,862	9,209	(83,030)	50,307
Beginning balance (Previously stated) at Dec. 31, 2018		5,266	118,862	7,923	(68,633)	63,418
Loss for the year						31,900
Ending balance at Dec. 31, 2019		5,266	118,862	10,364	(100,627)	33,865
Beginning balance at Mar. 31, 2019		5,266	118,862	8,543	(74,072)	58,599
Loss for the year					(8,972)	(8,972)
Exchange differences on translating foreign operations					14	14
Total comprehensive loss for the year					(8,958)	(8,958)
Share-based payments				666		666
Ending balance at Jun. 30, 2019		5,266	118,862	9,209	(83,030)	50,307
Beginning balance at Dec. 31, 2019		5,266	118,862	10,364	(100,627)	33,865
Loss for the year					(16,923)	(16,923)
Exchange differences on translating foreign operations					43	43
Total comprehensive loss for the year					(16,880)	(16,880)
New share capital issued		58			(58)
Share-based payments				2,208		2,208
Ending balance at Jun. 30, 2020		5,324	118,862	12,572	(117,565)	19,193
Beginning balance at Mar. 31, 2020		5,311	118,862	11,811	(110,160)	25,824
Loss for the year					(7,350)	(7,350)
Exchange differences on translating foreign operations					3	3
Total comprehensive loss for the year					(7,347)	(7,347)
New share capital issued		13			(58)	(45)
Share-based payments				761		761
Ending balance at Jun. 30, 2020		£ 5,324	£ 118,862	£ 12,572	£ (117,565)	£ 19,193
[1]	This relates to the adoption of IFRS 16. See note 2.17 of the 2019 20F.

CONSOLIDATED STATEMENT OF CASH

CONSOLIDATED STATEMENT OF CASH FLOWS - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash used in operating activities:
Loss before taxation	£ (19,606)	£ (17,790)
Finance income	(532)	(2,202)
Finance expense	447	187
Share-based payment charge	2,208	1,286
(Increase) / decrease in prepayments and other receivables	(1,710)	65
(Decrease) / increase in trade and other payables	(1,146)	163
Depreciation of property, plant and equipment and right of use asset	247	157
Impairment of right of use asset	232
Unrealized foreign exchange (gains) / losses	(232)	3
Amortization of intangible assets	61	50
Cash used in operating activities	(20,031)	(18,081)
Cash inflow from taxation	7,319
Net cash used in operating activities	(12,712)	(18,081)
Cash flow from investing activities:
Interest received	141	296
Purchase of plant and equipment	(4)	(21)
Payment for patents and computer software	(105)	(90)
Maturity of short term investments	7,848	20,686
Net cash generated from / (used in) investing activities	7,880	20,871
Cash flow used in financing activities:
Repayment of lease liabilities	(263)	(168)
Net cash (used in) / generated from financing activities	(263)	(168)
Net increase / (decrease) in cash and cash equivalents	(5,095)	2,622
Cash and cash equivalents at the beginning of the year	22,934	19,784
Effect of exchange rates on cash and cash equivalents	242	28
Cash and cash equivalents at the end of the year	£ 18,081	£ 22,434

General information

General information	6 Months Ended
	Jun. 30, 2020
General information
General information	1. General information Verona Pharma plc (the "Company") and its subsidiaries are a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapeutics for the treatment of respiratory diseases with significant unmet medical needs. The Company is a public limited company, which is dual listed, with its ordinary shares listed on the AIM market operated by the London Stock Exchange and its American Depository Shares ("ADSs") on the Nasdaq Global Market. The Company is incorporated and domiciled in the United Kingdom. The address of the registered office is 1 Central Square, Cardiff, CF10 1FS, United Kingdom. The Company has two subsidiaries, Verona Pharma Inc. and Rhinopharma Limited ("Rhinopharma"), both of which are wholly owned.

Basis of accounting

Basis of accounting	6 Months Ended
	Jun. 30, 2020
Basis of accounting
Basis of accounting	2. Basis of accounting The unaudited condensed consolidated interim financial statements of Verona Pharma plc and its subsidiaries, Verona Pharma, Inc., and Rhinopharma Limited (together the "Group”), for the six months ended June 30, 2020, do not include all the statements required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as of December 31, 2019. The 2019 Accounts, on which the Company’s auditors delivered an unqualified audit report, have been delivered to the Registrar of Companies. These unaudited condensed interim financial statements were authorized for issue by the Company’s board of directors (the “Directors”) on August 14, 2020. There have been no changes to the accounting policies as contained in the annual consolidated financial statements as of and for the year ended December 31, 2019, which have been prepared in accordance with international financial reporting standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The Group’s activities and results are not exposed to any seasonality. The Group operates as a single operating and reportable segment. Going concern The Group has incurred recurring losses since inception, including net losses of £31.9 million, £19.9 million and £20.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. In addition, as of June 30, 2020, the Group had an accumulated loss of £117.6 million. The Group expects to continue to generate operating losses for the foreseeable future. On July 17, 2020, the Group announced it raised £159 million in a private placement, with net proceeds after transaction related fees and expenses of approximately £145 million (see note 17). As of the issuance date of these condensed consolidated interim financial statements, the Group therefore expects that its cash and cash equivalents would be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance date of these condensed consolidated interim financial statements. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Group will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. Impairment of intangible assets, goodwill and non-financial assets The Group continues to review the effect of the COVID‑19 pandemic on its operations, ongoing and planned clinical trials and the potential disruption to financial markets. Management has determined that the current effect on the Group does not require an impairment of intangible assets or goodwill as the Company’s market value still supports the value of the assets. However, management will continue to monitor the situation for any triggering events that relate to the pandemic. Dividend The Directors do not recommend the payment of a dividend for the six months ended June 30, 2020, (six months ended June 30, 2019: £nil and the year ended December 31, 2019: £nil).

Segmental reporting

Segmental reporting	6 Months Ended
	Jun. 30, 2020
Segmental reporting
Segmental reporting	3. Segmental reporting The Group’s activities are covered by one operating and reporting segment: Drug Development. There have been no changes to management’s assessment of the operating and reporting segment of the Group during the period. All non-current assets are based in the United Kingdom apart from a right-of-use asset relating to a property lease in the United States.

Financial instruments

Financial instruments	6 Months Ended
	Jun. 30, 2020
Financial instruments
Financial instruments	4. Financial instruments The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk), cash flow and fair value interest rate risk, credit risk and liquidity risk. The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and they should be read in conjunction with the Group’s annual financial statements for the year ended December 31, 2019.

Critical estimates and judgemen

Critical estimates and judgements	6 Months Ended
	Jun. 30, 2020
Basis of accounting
Critical estimates and judgements	5. Critical estimates and judgements The preparation of condensed consolidated interim financial statements require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from those estimates. In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended December 31, 2019, with the exception of development of the COVID‑19 pandemic. We have assessed whether the COVID‑19 pandemic has any impact on the key estimates and judgments previously reported in respect of the derivative financial instrument, the assumed contingent obligation or other balances and concluded that there is no significant impact.

Finance income and expense

Finance income and expense	6 Months Ended
	Jun. 30, 2020
Finance income and expense
Finance income and expense	6. Finance income and expense Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 £'000s £'000s £'000s £'000s Finance income: Interest received on cash and short term investments 28 229 81 479 Foreign exchange gain on translating foreign currency denominated cash balances 41 669 267 — Fair value adjustment on derivative financial instruments (note 13) 72 113 184 1,723 Total finance income 141 1,011 532 2,202 Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 £'000s £'000s £'000s £'000s Finance expense: Interest on discounted lease liability 22 6 42 15 Foreign exchange loss on translating foreign currency denominated balances — — — 114 Unwinding of discount factor movements related to the assumed contingent arrangement (note 14) 373 30 405 58 Total finance expense 395 36 447 187

Taxation

Taxation	6 Months Ended
	Jun. 30, 2020
Taxation
Taxation	7. Taxation The tax credit for the six month period ended June 30, 2020, amounts to £2.7 million and consists of the estimated research and development tax credit receivable on qualifying expenditure incurred during the six month period ended June 30, 2020 for an amount of £2.7 million less a tax expense of £52 thousand related to the U.S. operations (six month period ended June 30, 2019: £3.4 million tax credit, comprising £3.4 million for research and development tax credit, less £19 thousand expense for tax on U.S. operations). The tax credit for the three month period ended June 30, 2020, amounts to £1.4 million, and consists of the estimated research and development tax credit receivable on qualifying expenditure incurred during the three month period ended June 30, 2020 for an amount of £1.4 million less a tax expense of £12 thousand related to the U.S. operations (three month period ended June 30, 2019: £2.1 million tax credit, comprising £2.1 million for research and development tax credit, plus tax credit £20 thousand expense for tax on U.S. operations).

Loss per share calculation

Loss per share calculation	6 Months Ended
	Jun. 30, 2020
Loss per share calculation
Loss per share calculation	8. Loss per share calculation For the six months ended June 30, 2020, the basic loss per share of 16.0p (June 30, 2019: 13.7p) is calculated by dividing the loss for the six months ended June 30, 2020 by the weighted average number of ordinary shares in issue of 105,908,648 during the six months ended June 30, 2020 (June 30, 2019: 105,326,638). Potential ordinary shares are not treated as dilutive as the entity is loss making and such shares would be anti-dilutive. For the three months ended June 30, 2020, the basic loss per share of 6.9p (June 30, 2019: 8.5p) is calculated by dividing the loss for the three months ended June 30, 2020 by the weighted average number of ordinary shares in issue of 106,360,580 during the three months ended June 30, 2020 (June 30, 2019: 105,326,638). Potential ordinary shares are not treated as dilutive as the entity is loss making and such shares would be anti-dilutive. Each ADS represents 8 ordinary shares of the Company, so the profit or loss per ADS in any period is equal to eight times the profit or loss per share.

Intangible assets

Intangible assets	6 Months Ended
	Jun. 30, 2020
Intangible assets
Intangible assets	9. Intangible assets Computer IP R&D software Patents Total £'000s £'000s £'000s £'000s Cost At January 1, 2020 1,953 18 1,214 3,185 Additions 22,629 — 105 22,734 At June 30, 2020 24,582 18 1,319 25,919 Accumulated amortization At January 1, 2020 — 15 413 428 Charge for year — 1 60 61 At June 30, 2020 — 16 473 489 Net book value At June 30, 2020 24,582 2 846 25,430 Movements in the assumed contingent liability (see note 14) that relate to changes in estimated cashflows or probabilities of success are recognized as additions to the In-Process Research and Development ("IP R&D") asset that it relates to. In the six months ended June 30, 2020, the Group determined that it moved from Phase 2 of ensifentrine’s clinical development plan to Phase 3. The probability of success and estimated cashflows have changed and the £22.6 million movement in the liability relating to this was recorded as an addition to the IP R&D asset that it relates to. There were no changes in estimated cashflows or probabilities of success in 2019.

Right-of-use assets

Right-of-use assets	6 Months Ended
	Jun. 30, 2020
Right-of-use assets
Right-of-use assets	10. Right-of-use assets In the six months to June 30, 2020, a new lease was signed in North Carolina and a liability and corresponding right-of-use ("ROU") asset of £575 thousand was recognized. The lease terminates on April 30, 2024. As at December 31, 2019, the Group had an ROU asset relating to office space in New York. In the six months to June 30, 2020, the New York office was closed and the ROU asset was subject to an impairment review and its net book value of £232 thousand was subsequently expensed to the income statement. The Group retains a liability of £192 thousand relating to this asset.

Short term investments

Short term investments	6 Months Ended
	Jun. 30, 2020
Short term investments
Short term investments	11. Short term investments Short term investments as at June 30, 2020, amounted to a total of £0.0 million (December 31, 2019: £7.8 million) and consisted of fixed term deposits.

Cash and cash equivalents

Cash and cash equivalents	6 Months Ended
	Jun. 30, 2020
Cash and cash equivalents
Cash and cash equivalents	12. Cash and cash equivalents Included in cash and cash equivalents are cash balances held at bank, term deposits with maturities of less than three months at inception and investments in money market funds. Money market funds have been classified as cash and cash equivalents as they are low risk instruments, readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Management’s intention is to manage these funds as cash and to use them to meet short term cash requirements.

Derivative financial instrument

Derivative financial instrument	6 Months Ended
	Jun. 30, 2020
Derivative financial instrument
Derivative financial instrument	13. Derivative financial instrument On July 29, 2016 the Company issued 31,115,926 units to new and existing investors at the placing price of £1.4365 per unit. Each unit comprises one ordinary share and one warrant and the warrant holders may subscribe for 0.4 of an ordinary share at a per share exercise price of £1.7238. The warrant holders can opt for a cashless exercise of their warrants, whereby they can choose to exchange the warrants held for a reduced number of warrants exercisable at nil consideration. The reduced number of warrants is calculated based on a formula considering the share price and the exercise price of the warrants. The warrants are therefore classified as a derivative financial liability, since their exercise could result in a variable number of shares to be issued. The warrants entitled the investors to subscribe for, in aggregate, a maximum of 12,401,262 shares. The warrants can be exercised until May 2, 2022. At June 30, 2020, and December 31, 2019, warrants over 12,401,262 shares were in effect. As of June 30, As of December 31, 2020 2019 Shares available to be issued under warrants 12,401,262 12,401,262 Exercise price £ 1.7238 £ 1.7238 Risk-free interest rate — % 0.54 % Remaining term to exercise 1.84 years 2.34 years Annualized volatility 81.86 % 65.56 % Dividend rate — % — % As of June 30, 2020, the Group updated the underlying assumptions and calculated a fair value of these warrants of £0.7 million. The variance for the six month period ending June 30, 2020, was £0.2 million (six month period ending June 30, 2019: £1.7 million) and is recorded as finance income in the Consolidated Statement of Comprehensive Income. Derivative Derivative financial financial instrument instrument 2020 2019 £'000s £'000s As of January, 1 895 2,492 Fair value adjustments recognized in profit or loss (184) (1,723) As of June, 30 711 769 For the amount recognized as at June 30, 2020, the effect if volatility were to deviate up or down is presented in the following table. Volatility (up / down 10 % pts) £'000s Variable up 989 Base case, reported fair value 711 Variable down 463

Assumed contingent obligation r

Assumed contingent obligation related to the business combination	6 Months Ended
	Jun. 30, 2020
Assumed contingent obligation related to the business combination
Assumed contingent obligation related to the business combination	14. Assumed contingent obligation related to the business combination The value of the assumed contingent obligation as of June 30, 2020, amounted to £23.9 million (December 31, 2019: £1.1 million). The increase in value of the assumed contingent obligation during the six months ended June 30, 2020, amounted to £22.8 million (six months ended June 30, 2019: £60 thousand). The assumed contingent liability relates to the acquisition, in 2006, of rights to certain patents and patent applications relating to ensifentrine and related compounds under which the Company is obliged to pay royalties to Ligand. The assumed contingent liability is accounted for as a liability and its value is measured at amortized cost using the effective interest rate method, and is re-measured for changes in estimated cash flows or when the probability of success changes. The expected cash flows are based on estimated future royalties payable, derived from sales forecasts, and an assessment of the probability of success using standard market probabilities for respiratory drug development. The risk-weighted value of the assumed contingent arrangement is discounted back to its net present value applying an effective interest rate of 12%. Re-measurements relating to changes in estimated cash flows and probabilities of success are recognized in the IP R&D asset it relates to. The unwinding of the liability is recorded in finance expense. As at May 13, 2020, the Group determined that it had moved from Phase 2 of ensifentrine’s clinical development plan to Phase 3. As a consequence, the probability of success has changed, reducing the risk-weighting adjustment applied to estimated cashflows. Furthermore, the Group has carried out market research and updated its forecasts for ensifentrine’s revenue for the maintenance treatment of chronic obstructive pulmonary disorder using a nebulized formulation in the U.S. The Group therefore updated estimated cashflows. In 2019 there were no events that triggered remeasurement. 2020 2019 £'000s £'000s January 1 1,103 996 Re-measurement of contingent liability 22,629 — Impact of changes in foreign exchange rates (230) 2 Unwinding of discount factor 405 58 June 30 23,907 1,056 There is no material difference between the fair value and carrying value of the financial liability. For the amount recognized as at June 30, 2020, of £23.9 million, the effect if underlying assumptions were to deviate up or down is presented in the following table (assuming the probability of success does not change): USD/GBP Probability exchange rate of success Revenue up/down 1 % up/down 5 % (up / down pt pt 10%) £'000s £'000s £'000s Variable up 23,693 25,683 26,071 Base case, reported fair value 23,907 23,907 23,907 Variable down 24,125 22,131 21,742

Share option plans

Share option plans	6 Months Ended
	Jun. 30, 2020
Share option plans
Share option plans	15. Share option plans During the six months ended June 30, 2020 the Company granted a total of 1,605,000 share options and 8,442,048 Restricted Stock Units (“RSUs”) (six months ended June 30, 2019, the Company granted 4,249,050 share options, and 740,496 RSUs). The movement in the number of the Company’s share options is set out below: Weighted Weighted average average exercise exercise price 2020 price 2019 £ £ Outstanding at January 1 1.15 14,179,196 1.53 8,752,114 Granted during the period 0.55 1,605,000 0.57 4,249,050 Expired during the period 1.39 (589,129) 2.00 (19,998) Forfeited during the period 1.04 (1,899,284) — — Outstanding options at June 30 1.08 13,295,783 1.22 12,981,166 The movement in the number of the Company’s RSUs is set out below: 2020 2019 Outstanding at January 1 1,602,969 862,473 Granted during the period 8,442,048 740,496 Exercised during the period (1,154,368) — Forfeited during the period (84,889) — Outstanding RSUs at June 30 8,805,760 1,602,969 1,069,184 of the RSUs issued related to an element of annual base salary and 7,372,865 related to additional equity grants for Dr. Zaccardelli and Mr. Hahn (see note 16). Using the Black-Scholes valuation model the fair value of each RSUs relating to annual base salary was £0.55 and the fair value of each RSU relating to the additional grants was at £0.43. The share-based payment expense for the six months ended June 30, 2020, was £2.2 million (six months ended June 30, 2019: £1.3 million).

Related party transactions

Related party transactions	6 Months Ended
	Jun. 30, 2020
Related party transactions
Related party transactions	16. Related party transactions The Directors and Officers have authority and responsibility for planning, directing and controlling the activities of the Company and they therefore comprise key management personnel as defined by IAS 24 ("Related Party Disclosures"). During the six months ended June 30, 2020, Dr. Jan-Anders Karlsson, the Company’s former CEO, and Piers Morgan, the Company’s former CFO, resigned and were replaced by Dr. David Zaccardelli as CEO and President, and Mark Hahn as CFO. Dr. Jan-Anders Karlsson’s severance agreement included severance pay equal to £479,160, a cash bonus of £40,000, a payment as compensation of termination of employment of £100,000 and base salary in lieu of notice of £363,000. Other benefits included continued medical and life insurance and continued pension contributions. Piers Morgan’s severance agreement included severance pay equal to £123,930 as payment in lieu of notice, a cash bonus of £82,620, ex gratia compensation of £30,000 and £40,000 additional compensation for termination of employment. Pursuant to the terms of his employment agreement Dr. Zaccardelli is entitled to receive an annual base salary of $750,000, payable $250,000 in cash and $500,000 in restricted stock units, and a target annual bonus opportunity of 50% of his annual base salary. Dr. Zaccardelli is also entitled to receive an award of restricted stock units, equal to 4% of the Company’s outstanding ordinary shares, and an additional award of restricted stock units if the Company raises additional equity capital during fiscal year 2020, which is intended to result in Dr. Zaccardelli’s equity awards (other than the portion of his base salary payable in restricted stock units) being equal to 4% of the Company’s outstanding ordinary shares on the applicable date of issuance. Following an equity capital raise in July, 2020, Dr. Zaccardelli is now entitled to this additional award (see note 17). Pursuant to the terms of his employment agreement Mr. Hahn is entitled to receive an annual base salary of $500,000, payable $250,000 in cash and $250,000 in restricted stock units, and a target annual bonus opportunity of 50% of his annual base salary. Mr. Hahn is also entitled to receive an initial award of restricted stock units, equal to 3% of the Company’s outstanding ordinary shares and an award of restricted stock units equal to 1% of the Company’s outstanding ordinary share after six months of employment. He will also be entitled to an additional award of restricted stock units if the Company raises additional equity capital during fiscal year 2020, which is intended to result in Mr. Hahn’s equity awards (other than the portion of his base salary payable in restricted stock units) being equal to 4% of the Company’s outstanding ordinary shares on the applicable date of issuance. Following an equity capital raise in July 2020 Mr. Hahn is now entitled to this additional award (see note 17). During the six months ended June 30, 2020, 178,192 and 89,096 RSUs that were issued to Dr. Zaccardelli and Mr. Hahn respectively vested. The shares were issued on May 12, 2020.

Post balance sheet events

Post balance sheet events	6 Months Ended
	Jun. 30, 2020
Post balance sheet events
Post balance sheet events	17. Post balance sheet events On July 17, 2020, Verona Pharma announced that it raised approximately £159 million in a private placement with new and existing institutional and accredited investors (the "Financing"). The Financing comprised a private placement of 39,090,009 of the Company’s American Depository Shares (“ADSs”), each representing eight Ordinary Shares or non-voting Ordinary Shares of the Company, at a price of $4.50 per ADS, and 43,111,112 of the Company’s Ordinary Shares at the equivalent price per Ordinary Share, being £0.45 or $0.5625. The net proceeds of the Financing will be approximately £145 million after deducting placement agent fees and estimated expenses.

Basis of accounting (Policies)

Basis of accounting (Policies)	6 Months Ended
	Jun. 30, 2020
Basis of accounting
Going concern	Going concern The Group has incurred recurring losses since inception, including net losses of £31.9 million, £19.9 million and £20.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. In addition, as of June 30, 2020, the Group had an accumulated loss of £117.6 million. The Group expects to continue to generate operating losses for the foreseeable future. On July 17, 2020, the Group announced it raised £159 million in a private placement, with net proceeds after transaction related fees and expenses of approximately £145 million (see note 17). As of the issuance date of these condensed consolidated interim financial statements, the Group therefore expects that its cash and cash equivalents would be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the issuance date of these condensed consolidated interim financial statements. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Group will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Impairment of intangible assets, goodwill and non-financial assets	Impairment of intangible assets, goodwill and non-financial assets The Group continues to review the effect of the COVID‑19 pandemic on its operations, ongoing and planned clinical trials and the potential disruption to financial markets. Management has determined that the current effect on the Group does not require an impairment of intangible assets or goodwill as the Company’s market value still supports the value of the assets. However, management will continue to monitor the situation for any triggering events that relate to the pandemic.
Dividend	Dividend The Directors do not recommend the payment of a dividend for the six months ended June 30, 2020, (six months ended June 30, 2019: £nil and the year ended December 31, 2019: £nil).

Finance income and expense (Tab

Finance income and expense (Tables)	6 Months Ended
	Jun. 30, 2020
Finance income and expense
Disclosure of finance income	Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 £'000s £'000s £'000s £'000s Finance income: Interest received on cash and short term investments 28 229 81 479 Foreign exchange gain on translating foreign currency denominated cash balances 41 669 267 — Fair value adjustment on derivative financial instruments (note 13) 72 113 184 1,723 Total finance income 141 1,011 532 2,202
Disclosure of finance expense	Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2020 2019 2020 2019 £'000s £'000s £'000s £'000s Finance expense: Interest on discounted lease liability 22 6 42 15 Foreign exchange loss on translating foreign currency denominated balances — — — 114 Unwinding of discount factor movements related to the assumed contingent arrangement (note 14) 373 30 405 58 Total finance expense 395 36 447 187

Intangible assets (Tables)

Intangible assets (Tables)	6 Months Ended
	Jun. 30, 2020
Intangible assets
Schedule of reconciliation of changes in intangible assets and goodwill	Computer IP R&D software Patents Total £'000s £'000s £'000s £'000s Cost At January 1, 2020 1,953 18 1,214 3,185 Additions 22,629 — 105 22,734 At June 30, 2020 24,582 18 1,319 25,919 Accumulated amortization At January 1, 2020 — 15 413 428 Charge for year — 1 60 61 At June 30, 2020 — 16 473 489 Net book value At June 30, 2020 24,582 2 846 25,430

Derivative financial instrume_2

Derivative financial instrument (Tables)	6 Months Ended
	Jun. 30, 2020
Derivative financial instrument
Disclosure of indirect measurement of fair value of goods or services received, other equity instruments granted during period	As of June 30, As of December 31, 2020 2019 Shares available to be issued under warrants 12,401,262 12,401,262 Exercise price £ 1.7238 £ 1.7238 Risk-free interest rate — % 0.54 % Remaining term to exercise 1.84 years 2.34 years Annualized volatility 81.86 % 65.56 % Dividend rate — % — % Derivative Derivative financial financial instrument instrument 2020 2019 £'000s £'000s As of January, 1 895 2,492 Fair value adjustments recognized in profit or loss (184) (1,723) As of June, 30 711 769 Volatility (up / down 10 % pts) £'000s Variable up 989 Base case, reported fair value 711 Variable down 463

Assumed contingent obligation_2

Assumed contingent obligation related to the business combination (Tables)	6 Months Ended
	Jun. 30, 2020
Assumed contingent obligation related to the business combination
Schedule of contingent liabilities in business combination	2020 2019 £'000s £'000s January 1 1,103 996 Re-measurement of contingent liability 22,629 — Impact of changes in foreign exchange rates (230) 2 Unwinding of discount factor 405 58 June 30 23,907 1,056
Schedule of effect in underlying assumptions to deviate up or down	USD/GBP Probability exchange rate of success Revenue up/down 1 % up/down 5 % (up / down pt pt 10%) £'000s £'000s £'000s Variable up 23,693 25,683 26,071 Base case, reported fair value 23,907 23,907 23,907 Variable down 24,125 22,131 21,742

Share option plans (Tables)

Share option plans (Tables)	6 Months Ended
	Jun. 30, 2020
Share option plans
Schedule of Number of shares and weighted average exercise prices of share options	The movement in the number of the Company’s share options is set out below: Weighted Weighted average average exercise exercise price 2020 price 2019 £ £ Outstanding at January 1 1.15 14,179,196 1.53 8,752,114 Granted during the period 0.55 1,605,000 0.57 4,249,050 Expired during the period 1.39 (589,129) 2.00 (19,998) Forfeited during the period 1.04 (1,899,284) — — Outstanding options at June 30 1.08 13,295,783 1.22 12,981,166
Schedule of Number of shares of RSUs	The movement in the number of the Company’s RSUs is set out below: 2020 2019 Outstanding at January 1 1,602,969 862,473 Granted during the period 8,442,048 740,496 Exercised during the period (1,154,368) — Forfeited during the period (84,889) — Outstanding RSUs at June 30 8,805,760 1,602,969

General information (Details)

General information (Details)	6 Months Ended
	Jun. 30, 2020subsidiary
General information
Number of subsidiaries	2

Basis of accounting - Going con

Basis of accounting - Going concern and Dividend (Details) - GBP (£)	Jul. 17, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Disclosure of non-adjusting events after reporting period [line items]
Loss for the year		£ (7,350,000)	£ (8,972,000)	£ (16,923,000)	£ (14,378,000)	£ 31,900,000	£ 19,900,000	£ 20,500,000
Accumulated loss		£ (117,565,000)		(117,565,000)		(100,627,000)
Payment of a dividend				£ 0	£ 0	£ 0
Financing
Disclosure of non-adjusting events after reporting period [line items]
Amount raised in private placement	£ 159,000,000
Forecast | Financing
Disclosure of non-adjusting events after reporting period [line items]
Net proceeds from private placement after transaction related fees and expenses	£ 145,000,000

Segmental reporting (Details)

Segmental reporting (Details)	6 Months Ended
	Jun. 30, 2020segment
Segmental reporting
Number of operating and reportable segments	1

Finance income and expense (Det

Finance income and expense (Details) - GBP (£) £ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Finance income:
Interest received on cash balances	£ 28	£ 229	£ 81	£ 479
Foreign exchange gain on translating foreign currency denominated balances	41	669	267
Fair value adjustment on derivative financial instruments	72	113	184	1,723
Total finance income	141	1,011	532	2,202
Finance expense:
Interest on discounted lease liability	22	6	42	15
Foreign exchange loss on translating foreign currency denominated balances				114
Unwinding of discount factor related to the assumed contingent arrangement	373	30	405	58
Total finance expense	£ 395	£ 36	£ 447	£ 187

Taxation (Details)

Taxation (Details) - GBP (£) £ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Total tax credit	£ 1,400	£ 2,100	£ 2,700	£ 3,400
Tax expense	(1,422)	(2,099)	(2,683)	(3,412)
US
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Tax expense	£ 12	£ 20	£ 52	£ 19

Loss per share calculation (Det

Loss per share calculation (Details) - £ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Jun. 30, 2020	Jun. 30, 2019
Loss per share calculation
Basic earnings (loss) per share (per share)	£ 0.069	£ 0.085		£ 0.160	£ 0.137
Weighted average number of ordinary shares (in shares)	106,360,580	105,326,638	105,908,648		105,326,638

Intangible assets (Details)

Intangible assets (Details) £ in Thousands	6 Months Ended
	Jun. 30, 2020GBP (£)
Disclosure of detailed information about intangible assets [line items]
Beginning balance	£ 2,757
Ending balance	25,430
Cost
Disclosure of detailed information about intangible assets [line items]
Beginning balance	3,185
Additions	22,734
Ending balance	25,919
Accumulated amortization
Disclosure of detailed information about intangible assets [line items]
Beginning balance	(428)
Charge for year	61
Ending balance	(489)
IP R&D
Disclosure of detailed information about intangible assets [line items]
Ending balance	24,582
IP R&D | Cost
Disclosure of detailed information about intangible assets [line items]
Beginning balance	1,953
Additions	22,629
Ending balance	24,582
Computer software
Disclosure of detailed information about intangible assets [line items]
Ending balance	2
Computer software | Cost
Disclosure of detailed information about intangible assets [line items]
Beginning balance	18
Ending balance	18
Computer software | Accumulated amortization
Disclosure of detailed information about intangible assets [line items]
Beginning balance	(15)
Charge for year	1
Ending balance	(16)
Patents
Disclosure of detailed information about intangible assets [line items]
Ending balance	846
Patents | Cost
Disclosure of detailed information about intangible assets [line items]
Beginning balance	1,214
Additions	105
Ending balance	1,319
Patents | Accumulated amortization
Disclosure of detailed information about intangible assets [line items]
Beginning balance	(413)
Charge for year	60
Ending balance	£ (473)

Right-of-use assets (Details)

Right-of-use assets (Details) - GBP (£) £ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Disclosure of quantitative information about right-of-use assets [line items]
Right-of-use assets	£ 1,096	£ 971
Impairment of right of use assets charged to income statement	232
North Carolina lease assets
Disclosure of quantitative information about right-of-use assets [line items]
Right-of-use assets	575
Lease liabilities	575
Office space in New York
Disclosure of quantitative information about right-of-use assets [line items]
Lease liabilities	192
Impairment of right of use assets charged to income statement	£ 232

Short term investments (Details

Short term investments (Details) - GBP (£) £ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Short term investments
Total short term investments	£ 0	£ 7,823

Warrants - Narrative (Details)

Warrants - Narrative (Details) £ / shares in Units, £ in Thousands	Jun. 30, 2020GBP (£)£ / sharesshares	Dec. 31, 2019GBP (£)£ / sharesshares	Jun. 30, 2019GBP (£)	Dec. 31, 2018GBP (£)	Jul. 29, 2016USD ($)instrument£ / sharesshares
Disclosure of classes of share capital [line items]
Number of units issued (in shares)					31,115,926
Placing price (in pounds per unit) | £ / shares					£ 1.4365
Number of ordinary shares (in shares) | $					1
Number warrants (in warrants) | instrument					1
Number of shares subscribed (in shares)	0.4
Fair value warrant | £	£ 711	£ 895	£ 769	£ 2,492
Warrants
Disclosure of classes of share capital [line items]
Exercise price (pounds per share)	1.7238%
Exercise price (pounds per share) | £ / shares	£ 1.7238	£ 1.7238
Number of shares subscribed from warrant maximum (in shares)	12,401,262	12,401,262

Warrants - Assumptions in apply

Warrants - Assumptions in applying the Black-Scholes model, fair value warrants (Details) - Warrants - £ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Disclosure of classes of share capital [line items]
Warrants (in shares)	12,401,262	12,401,262
Exercise price (pounds per share)	£ 1.7238	£ 1.7238
Risk-free interest rate		0.54%
Expected term to exercise	1 year 10 months 2 days	2 years 4 months 2 days
Annualized volatility	81.86%	65.56%
Dividend rate	0.00%	0.00%

Warrants - Fair value adjustmen

Warrants - Fair value adjustments (Details) - GBP (£) £ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Derivative financial instrument
Beginning balance			£ 895	£ 2,492
Fair value adjustments recognized in profit or loss	£ (72)	£ (113)	(184)	(1,723)
Ending balance	£ 711	£ 769	£ 711	£ 769

Warrants - Effect when underlyi

Warrants - Effect when underlying parameters deviate (Details) - GBP (£) £ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Derivative financial instrument
Variable up, Volatility (up / down 10% pts)	£ 989
Base case, Volatility (up / down 10% pts)	711	£ 895	£ 769	£ 2,492
Variable down, Volatility (up / down 10% pts)	£ 463

Assumed contingent obligation_3

Assumed contingent obligation related to the business combination (Details) - GBP (£) £ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2006	Jun. 30, 2019	Dec. 31, 2018
Disclosure of detailed information about business combination [line items]
Assumed contingent liability	£ 23,907	£ 1,103		£ 1,056	£ 996
Rhinopharma Limited
Disclosure of detailed information about business combination [line items]
Increase in value of the assumed contingent obligation	£ 22,800	£ 60
Discount percent			12.00%

Assumed contingent obligation_4

Assumed contingent obligation related to the business combination - Reconciliation of changes in contingent liabilities (Details) - GBP (£) £ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Reconciliation of changes in contingent liabilities recognised in business combination [abstract]
Beginning balance	£ 1,103	£ 996
Re-measurement of contingent liability	22,629
Impact of changes in foreign exchange rates	(230)	2
Unwinding of discount factor	405	58
Ending balance	£ 23,907	£ 1,103

Assumed contingent obligation_5

Assumed contingent obligation related to the business combination - Reported change to the value of the liability (Details) - GBP (£) £ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Disclosure of detailed information about business combination [line items]
Assumed contingent liability	£ 23,907	£ 1,103	£ 1,056	£ 996
USD/GBP exchange rate 1% Variable | Rhinopharma Limited
Disclosure of detailed information about business combination [line items]
Contingent liabilities recognised in business combination, variable up	23,693
Assumed contingent liability	23,907
Contingent liabilities recognised in business combination, variable down	24,125
Probability of Success 5% Variable | Rhinopharma Limited
Disclosure of detailed information about business combination [line items]
Contingent liabilities recognised in business combination, variable up	25,683
Assumed contingent liability	23,907
Contingent liabilities recognised in business combination, variable down	22,131
Revenue Concentration Risk, 10% Variable | Rhinopharma Limited
Disclosure of detailed information about business combination [line items]
Contingent liabilities recognised in business combination, variable up	26,071
Assumed contingent liability	23,907
Contingent liabilities recognised in business combination, variable down	£ 21,742

Share option plans (Details)

Share option plans (Details) £ / shares in Units, £ in Thousands	6 Months Ended
	Jun. 30, 2020GBP (£)instrument£ / sharesshares	Jun. 30, 2019GBP (£)instrument
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of share options granted (in shares) | instrument	1,605,000	4,249,050
RSUs issued related to an element of annual base salary | shares	1,069,184
RSUs issued related to additional equity grants | shares	7,372,865
Fair value of each RSUs relating to annual base salary | £ / shares	£ 0.55
Fair value of each RSUs relating to additional grants | £ / shares	£ 0.43
Share-based payment charge | £	£ 2,208	£ 1,286
Restricted Stock Units
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of RSUs granted | instrument	8,442,048	740,496

Share option plans - Number of

Share option plans - Number of share options (Details)	6 Months Ended
	Jun. 30, 2020instrument£ / shares	Jun. 30, 2019instrument£ / shares	Dec. 31, 2019£ / shares	Dec. 31, 2018£ / shares
Share option plans
Beginning balance (in shares)	14,179,196	8,752,114
Options granted (in shares)	1,605,000	4,249,050
Options expired (in shares)	(589,129)	(19,998)
Options forfeited (in shares)	(1,899,284)
Ending balance (in shares)	13,295,783	12,981,166
Exercise price, outstanding (per share) | £ / shares	£ 1.08	£ 1.22	£ 1.15	£ 1.53
Exercise price, granted (per share) | £ / shares	0.55	0.57
Exercise price, forfeited (per share) | £ / shares	1.04
Exercise price, expired (per share) | £ / shares	£ 1.39	£ 2

Share option plans - Number o_2

Share option plans - Number of RSUs (Details) - Restricted Stock Units - instrument	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Disclosure of terms and conditions of share-based payment arrangement [line items]
Beginning balance (in shares)	1,602,969	862,473
Options granted (in shares)	8,442,048	740,496
Options exercised (in shares)	(1,154,368)
Options forfeited (in shares)	(84,889)
Ending balance (in shares)	8,805,760	1,602,969

Related parties transactions an

Related parties transactions and other shareholder matters (Details) - 6 months ended Jun. 30, 2020	GBP (£)shares	USD ($)
Former CEO
Disclosure of transactions between related parties [line items]
Severance Pay	£ 479,160
Cash bonus	40,000
Compensation of termination of employment	100,000
Base salary	363,000
Former CFO
Disclosure of transactions between related parties [line items]
Severance Pay	123,930
Cash bonus	82,620
Compensation of termination of employment	40,000
Ex gratia compensation	£ 30,000
CEO and President
Disclosure of transactions between related parties [line items]
Key management personnel annual base compensation | $		$ 750,000
Annual base salary in cash | $		250,000
Annual base salary in restricted stock units | $		$ 500,000
Target annual bonus opportunity as percent of base salary		50.00%
Annual restricted stock unit awards, as a percent of outstanding ordinary shares		4.00%
Restricted stock units for raising capital, as a percent of outstanding ordinary shares		4.00%
RSUs vested | shares	178,192
CFO
Disclosure of transactions between related parties [line items]
Key management personnel annual base compensation | $		$ 500,000
Annual base salary in cash | $		250,000
Annual base salary in restricted stock units | $		$ 250,000
Target annual bonus opportunity as percent of base salary		50.00%
Annual restricted stock unit awards, as a percent of outstanding ordinary shares		3.00%
Restricted stock units for raising capital, as a percent of outstanding ordinary shares		4.00%
Restricted stock unit award after six months of employment as percent of outstanding ordinary shares		1.00%
RSUs vested | shares	89,096

Post balance sheet events (Deta

Post balance sheet events (Details) £ / shares in Units, £ in Millions	Jul. 17, 2020$ / sharesshares	Jul. 17, 2020GBP (£)£ / sharesshares
Ordinary shares
Post balance sheet events
Issue price (amount per share) | $ / shares	$ 0.5625
Financing
Post balance sheet events
Amount raised in private placement | £		£ 159
Financing | Forecast
Post balance sheet events
Proceeds from issuing shares | £		£ 145
Financing | ADSs
Post balance sheet events
Number of shares issued	39,090,009	39,090,009
Number of ordinary shares represented	8	8
Issue price (amount per share) | $ / shares	$ 4.50
Financing | Ordinary shares
Post balance sheet events
Number of shares issued	43,111,112	43,111,112
Issue price (amount per share) | £ / shares		£ 0.45