What happened

Shares of Verona Pharma (VRNA -1.69%) were vaulting 12.8% higher as of 11:52 a.m. EDT on Friday. The nice gain came after the drugmaker provided its second-quarter update before the market opened.

So what

Verona's financial results weren't the main story in its Q2 update. As a clinical-stage biopharmaceutical company, Verona doesn't have any consistent revenue coming in and remains unprofitable.

Man wearing a nebulizer mask and holding his thumb up

Image source: Getty Images.

However, investors liked Verona's clinical progress. The company is on track to begin phase 3 testing of nebulized ensifentrine for treating chronic obstructive pulmonary disease (COPD) later in 2020. Ensifentrine is currently Verona's only pipeline candidate.

The big news for Verona, though, was that it has received a green light from the FDA to begin a clinical study evaluating ensifentrine in treating patients with COVID-19. The company plans to initiate a pilot clinical study for patients hospitalized with COVID-19 at the University of Alabama at Birmingham in the third quarter of 2020.

Now what

There are now several potential catalysts for the biotech stock. Verona expects to report results from the second part of a phase 2 study of a pressurized metered-dose inhaler (pMDI) formulation of ensifentrine in treating COPD in the first half of 2021. Investors will also want to closely watch for any results from the COVID-19 clinical study of the drug.

Verona shouldn't have to worry about funding these studies. Its private placement completed in July raised $183 million in net proceeds, enough to support operations and clinical programs into 2023.