WEST CHESTER, PA — Verrica Pharmaceuticals Inc. (Nasdaq: VRCA recently announced financial results for the third quarter ended September 30, 2023.
“Following the U.S Food and Drug Administration approval of YCANTH™ for the treatment of molluscum in July, we continue to build momentum across our commercial operations,” said Ted White, Verrica’s President and Chief Executive Officer. “As the only FDA-approved product for the treatment of molluscum, we are seeing broad awareness and interest in prescribing YCANTH across dermatology and pediatric practices. With our commercial and reimbursement teams fully in place, we are focused on executing our launch strategy and expanding our coverage among commercial plans and managed Medicaid plans. To date, over 112 million lives have access to YCANTH™ through commercial insurance or managed Medicaid plans, and YCANTH™ has already gained acceptance of fee-for-service Medicaid coverage in Connecticut, Arkansas, New Jersey and Nevada.
As we previously announced, on August 24, 2023 we received our first commercial sale of YCANTH™ to our exclusive distributor, FFF Enterprises Inc., resulting in net product revenue for the third quarter 2023 of $2.8 million upon its delivery to FFF. This first sale to FFF primarily represented stocking within the channel to allow patients to finally gain access to the first FDA-approved therapy for the treatment of molluscum as we build demand and drive adoption amongst healthcare providers.
We also continue to make progress on our development pipeline. During the quarter, we announced the presentation of lesion clearance data from Part 1 of our ongoing Phase 2 trial for our novel oncolytic peptide, VP-315, at the 2023 AAD Innovation Academy meeting. These data highlighted the antitumor response of VP-315, as determined by clinical and histological clearance of treated BCC lesions. We look forward to the continued advancement of this program for the treatment basal cell carcinoma.”
Business Highlights and Recent Developments
YCANTH™ (formerly VP-102)
- On October 11, 2023, the Company hosted a virtual KOL event discussing the approval of YCANTH™ (cantharidin) topical solution for the treatment of molluscum contagiosum. The event featured Mark Kaufmann, MD (Advanced Dermatology, Miami), Michael Cameron, MD (Cameron Dermatology; Department of Dermatology, Mount Sinai, NY), and Mercedes Gonzalez, MD (Pediatric Dermatology of Miami) who discussed the unmet medical need for patients suffering from molluscum (https://lifescievents.com/event/verrica/).
- On August 24, 2023, the Company announced the first commercial sale of YCANTH™ to its exclusive distributor, FFF Enterprises Inc. Net product revenue for the third quarter 2023 was $2.8 million. As previously disclosed, Verrica recognizes product revenue when the product is delivered to FFF. This first sale to FFF primarily represented stocking within the channel, and therefore management expects orders during the fourth quarter of 2023 may be less than the order during the third quarter of 2023 as the Company continues to build demand and drive adoption amongst healthcare providers. Management expects inventory in the channel to normalize and more closely align with product demand in the first half of 2024.
- On August 23, 2023, the Company issued a statement in support of the FDA’s recent action against retailers and manufacturers of unapproved products for the treatment of molluscum contagiosum, indicating that molluscum is a serious health problem that requires medical intervention with therapies that have been rigorously tested and properly reviewed.
- On July 21, 2023, Verrica announced that the FDA approved YCANTH topical solution as the first FDA approved treatment of pediatric and adult patients with molluscum contagiosum (molluscum) in adult and pediatric patients 2 years of age and older.
VP-315 for Basal Cell Carcinoma
- On August 10, 2023, the Company announced the presentation of lesion clearance data from Part 1 of an ongoing Phase 2 study of VP-315 for the treatment of basal cell carcinoma (BCC). The presentation was titled “VP-315, an Investigational Non-surgical Immunotherapy in Subjects with Biopsy Proven Basal Cell Carcinoma” and highlighted the antitumor response of VP-315 as determined by clinical and histological clearance of treated BCC lesions. Dr. Neal Bhatia MD, Director of Clinical Dermatology Therapeutics Clinical Research in San Diego and Principal Investigator for the study, presented the data at the 2023 American Academy of Dermatology Innovation Academy.
- In July 2023, Verrica implemented plans to expand patient enrollment in Part 2 of the ongoing Phase 2 trial of VP-315. The purpose of expanding Part 2 enrollment is to generate enough patient data so that Verrica can bypass Part 3 of the Phase 2 trial and advance VP-315 directly into a later-stage, potentially registration-enabling trial.
VP-102 for Common Warts
- On November 6, 2023, the Company held a Type-C meeting with the FDA regarding the Phase 3 clinical program studying VP-102 for common warts. The Company expects to receive written meeting minutes within 30 days of the meeting.
Debt Financing
- On July 26, 2023, Verrica announced the closing of a $125 million debt facility with OrbiMed. Verrica borrowed $50 million at closing and has the ability to access $75 million in additional capital upon achievement of certain future revenue milestones. As of September 30, 2023 Verrica had $84.3 million in cash on hand, including the net debt proceeds, which is expected to be sufficient to fund operations into the first quarter of 2025.
Financial Results
Third Quarter 2023 Financial Results
- Verrica recognized product revenue of $2.8 million in the third quarter of 2023 related to the initial delivery of YCANTH to FFF, its distribution partner.
- Verrica recognized collaboration revenues of $0.1 and $8.3 million in the third quarter of 2023 and 2022, respectively, related to the Clinical Supply Agreement with Torii Pharmaceutical Col, Ltd (Torii). The decrease of $8.2 million was primarily attributable to a license revenue milestone payment of $8.0 million made in 2022.
- Selling, general and administrative expenses were $20.1 million in the third quarter of 2023, compared to $3.9 million for the same period in 2022. The increase of $16.1 million was primarily a result of higher expenses related to commercial activities for YCANTH of $3.7 million, increase in compensation-related costs due to ramp-up of sales force of $3.8 million and increase in stock compensation expense related to the vesting of restricted stock units of $7.4 million.
- Research and development expenses were $6.5 million in the third quarter of 2023, compared to $2.8 million for the same period in 2022. The increase of $3.7 million was primarily attributable to an increase in clinical costs for VP-315 as well as increased CMC costs related to Verrica’s preapproval activities.
- Interest income was $0.8 million in the third quarter of 2023, compared to $0.1 million for the same period in 2022, primarily due to higher cash balance and higher interest rates.
- Interest expense of $1.7 million for the three months ended September 30, 2023 consisted of interest expense related to the OrbiMed Credit Agreement, while the three month period ended September 30, 2022 consisted of interest expense on Verrica’s previous debt facility with SVB.
- For the third quarter of 2023, net loss was $24.8 million, or $0.54 per share, compared to a net income of $0.1 million, or $0.00 per share, for the same period in 2022.
- For the third quarter of 2023, non-GAAP net loss was $14.8 million, or $0.32 per share, compared to a non-GAAP net income of $2.9 million, or $0.07 per share, for the same period in 2022.
Year-to-Date September 2023 Financial Results
- Verrica recognized product revenue of $2.8 million in the nine months ending September 30, 2023 related to the initial delivery of YCANTH to FFF, the Company’s distribution partner.
- Verrica recognized collaboration revenues of $0.3 million for the nine months ended September 30, 2023, compared to $9.0 million for the same period in 2022, related to the Clinical Supply Agreement with Torii. The decrease of $8.7 million was primarily attributable to a license revenue milestone payment of $8.0 million made in 2022.
- Selling, general and administrative expenses were $30.3 million for the nine months ended September 30, 2023, compared to $14.2 million for the same period in 2022. The increase of $16.1 million was primarily a result of higher expenses related to commercial activities for YCANTH including increase in marketing and sponsorship costs, increase in compensation related costs due to ramp-up of sales force in the third quarter and increase in stock compensation expense related to the vesting of restricted stock units of $7.4 million.
- Research and development expenses were $15.0 million for the nine months ended September 30, 2023, compared to $9.2 million for the same period in 2022. The increase of $5.8 million was primarily attributable to an increase of $5.4 million in CMC and clinical costs related to Verrica’s development of VP-102 for molluscum, external genital warts and common warts.
- For the nine months ended September 30, 2023, net loss was $42.4 million, or $0.94 per share, compared to a net loss of $18.6 million, or $0.58 per share, for the same period in 2022.
- For the nine months ended September 30, 2023, non-GAAP net loss was $29.7 million, or $0.66 per share, compared to a non-GAAP net loss of $12.7 million, or $0.40 per share, for the same period in 2022.
- As of September 30, 2023, Verrica had aggregate cash and cash equivalents of $84.3 million.
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