FDA has issued a complete response letter (CRL) to Vernalis’ CCP-07 NDA following its 20 April PDUFA date, outlining questions that need to be addressed in an NDA resubmission for potential FDA approval. Given limited disclosure regarding possible timelines for dealing with these questions and the probable class of resubmission, we conservatively push back our CCP-07 approval assumption by one year, delaying launch into the 2018/19 cough cold season. However, we acknowledge that there are scenarios under which CCP-07 could still be launched into the 2017/18 season, albeit later than previously anticipated. Separately, Vernalis has received a $2m milestone relating to an existing research collaboration.
vely, the CRL raised no concerns related to the formulation or pharmacokinetic profile of CCP-07. However, there are outstanding questions that must be resolved prior to NDA resubmission and an FDA approval decision. We continue to expect CCP-07 to be ultimately approved, but as both the nature of the FDA questions and the length of time to address them is undisclosed, we conservatively assume a one-year delay to CCP-07 approval and launch. This timeline could be brought forward once there is clarity on: (i) timing, and (ii) classification of the NDA resubmission. A Class 1 classification indicates a twomonth review cycle; Class 2 would be six months.
Updating our near-term assumptions to reflect the delayed CCP-07 launch lowers forecast cough cold revenues in FY18 (2017/18 season), and more modestly for FY19 as sales ramp up. Our assumptions for the other cough cold programmes are unchanged. At this stage, we anticipate limited read-through to CCP-08 (PDUFA date: 4 August) from the CCP-07 NDA CRL; however, a delay to CCP-08 approval could result if resolution of CRL issues/CCP-07 NDA resubmission is protracted.
Updating our model and financial forecasts for new CCP-07 expectations, the $2m milestone receipt and the prevailing FX rate (now $1.28/£ from $1.24/£) lowers our valuation to £399m or 76p/share (from £427m or 81p/share). In our view, this valuation reflects the downside scenario for CCP-07 approval timelines. Clarity on CCP-07 NDA resubmission, portfolio progress, launches and sales upgrades would unlock upside. Our valuation continues to consist of US cough cold and NCE pipeline rNPV, explicit cost modelling and inclusion of cash; we assume zero NPV for the research business.
