Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) is a dermatology therapeutics company developing and selling medications for skin diseases requiring medical intervention. The company's current product portfolio consists of one approved product, YCANTH (VP-102), and two additional pipeline products, VP-315 and VP-103.
Business Overview
Verrica Pharmaceuticals was formed in 2013 and is headquartered in West Chester, Pennsylvania. The company is primarily focused on developing clinician-administered therapies in areas of high unmet need. On July 21, 2023, the U.S. Food and Drug Administration (FDA) approved YCANTH (VP-102) topical solution for the treatment of molluscum contagiosum in adult and pediatric patients two years of age and older. Verrica commercially launched YCANTH in the United States in August 2023.
The company is also developing YCANTH (VP-102) for potential follow-on indications for the treatment of common warts and external genital warts. Verrica's two additional product candidates are VP-315, an oncolytic peptide-based injectable therapy for the potential treatment of dermatology oncologic conditions, including basal cell carcinoma, and VP-103, a second cantharidin-based drug-device combination for the potential treatment of plantar warts.
Financials
For the full year 2023, Verrica reported annual revenue of $5.1 million, annual net loss of $66.9 million, annual operating cash flow of -$38.6 million, and annual free cash flow of -$38.9 million.
In the first quarter of 2024, the company reported product revenue, net of $3.2 million and collaboration revenue of $0.6 million. Selling, general and administrative expenses were $16.3 million, while research and development expenses were $4.9 million. The company reported a GAAP net loss of $20.3 million, or $0.44 per share, for the first quarter of 2024.
Liquidity
As of March 31, 2024, Verrica had $48.9 million in cash and cash equivalents. The company expects its current cash and cash equivalents will be sufficient to fund operations into the first quarter of 2025.
Commercial Launch of YCANTH
The successful launch of YCANTH remains Verrica's top priority. In the first quarter of 2024, the company made significant progress in expanding coverage and streamlining reimbursement for YCANTH. As of April 30, 2024, YCANTH is covered by 228 million lives, encompassing commercial, Medicaid, Tricare, and federal employee health plans.
A key milestone was the publication of a permanent J-Code for YCANTH, effective April 1, 2024. The J-Code simplifies the billing and reimbursement process, which Verrica believes will drive increased YCANTH utilization, particularly in the Medicaid-covered patient population. The company has also secured 31 hospital formulary approvals for YCANTH, including at major pediatric institutions.
Verrica has also been focused on enhancing its distribution network and capabilities. The company has onboarded DMS as a distributor for the Department of Defense, and in May 2024, expanded its specialty pharmacy network to include Accredo, ESI's specialty pharmacy. Additionally, Verrica reached an agreement to expand its distribution relationship with Walgreens, providing YCANTH access through Walgreens' community health system stores.
The company has also made progress in addressing the unlawful compounding of cantharidin, which is crucial to the success of YCANTH. Verrica has reached an agreement in principle with Dormer Labs to resolve its concerns, and the company expects to finalize the agreement in the coming weeks.
Pipeline Advancement
In addition to the commercial launch of YCANTH, Verrica is also advancing its pipeline. The company has gained alignment with the FDA on the design of a pivotal Phase 3 clinical trial for YCANTH in the treatment of common warts. Verrica has also reached an agreement with its partner, Torii Pharmaceuticals, to conduct a joint global Phase 3 trial for YCANTH in common warts, which is expected to have a minimal impact on Verrica's cash position.
Regarding VP-315, Verrica's oncolytic peptide-based therapy for the treatment of basal cell carcinoma, the company completed dosing in its Phase 2 study in December 2023 and expects to announce preliminary top-line data in the second quarter of 2024. As the most common type of carcinoma globally, the commercial opportunity for basal cell carcinoma is sizable, with an estimated 3.6 million diagnoses each year in the United States alone.
Risks and Challenges
Verrica faces several risks, including the potential for delays or setbacks in the development and commercialization of its product candidates, competition from other dermatology therapies, and the ability to maintain and expand its intellectual property portfolio. The company's financial performance is also dependent on the successful commercialization of YCANTH and the advancement of its pipeline.
Outlook
Despite these risks, Verrica's management team remains focused on executing on the commercial launch of YCANTH, advancing its pipeline, and securing additional financing to support its operations. The company's recent progress in expanding coverage, streamlining reimbursement, and addressing the unlawful compounding of cantharidin provides a solid foundation for the continued growth of YCANTH. Additionally, the potential opportunities in common warts and basal cell carcinoma represent significant value drivers for the company.
Conclusion
Verrica Pharmaceuticals is making significant strides in the commercialization of YCANTH and the advancement of its pipeline. The company's focus on expanding coverage, streamlining reimbursement, and addressing the unlawful compounding of cantharidin has positioned YCANTH for continued growth. Additionally, the potential opportunities in common warts and basal cell carcinoma represent significant value drivers for the company. While Verrica faces several risks, the company's management team remains committed to executing on its strategic priorities and delivering value for shareholders.