Q1 2024 Verrica Pharmaceuticals Inc Earnings Call

Operator: Ladies and gentlemen, good morning and welcome to the Verrica Pharmaceuticals first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Calabresi from LifeSci Advisors. Please go ahead.

Ladies and gentlemen, good morning, and welcome to the vertical Pharmaceuticals first quarter 'twenty 'twenty four earnings conference call.

At this time all participants are in a listen only mode a brief.

A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Chris Calabresi from Life Science Advisors. Please go ahead.

Chris Hayes: Thank you operator, Hello, everyone and welcome to <unk> Pharmaceuticals first quarter 2020 for corporate update and earnings conference call with me on the line. This morning are Ted White, President and Chief Executive Officer of Dark in Pharmaceuticals, Joe Upon of course, though chief commercial officer.

Chris Hayes: Hello, everyone, and welcome to Verrica Pharmaceuticals' first quarter of 2024 Corporate Update and Earnings Conference Call. With me on the line this morning are Ted White, President and Chief Executive Officer of Verrica Pharmaceuticals, Joe Bonaccorso, Chief Commercial Officer, Terry Kohler, Chief Financial Officer, Dr. Gary Goldenberg, Verrica's Chief Medical Officer, and Chris Hayes, Verrica's Chief Legal Officer.

Speaker Change: Jerry Colella, Chief Financial Officer, Dr. Gary Goldenberg, Americas, Chief Medical Officer, and Chris Hayes, Barrick as Chief legal officer.

Chris Hayes: As a reminder, during today's call, management will make forward-looking statements. These statements may include expectations related to the launch and commercialization of WICANTS for the treatment of molluscum contagiosum in the United States, regulatory developments, the development of Verrica's product candidates, our expected cash runway, our potential agreements with Torrey and Dormer Labs, as well as our overall business strategy and planned operations. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties. Because of those risks and uncertainties, Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements.

Speaker Change: As a reminder, during today's call management will make forward looking statements. These statements may include expectations related to the launch and commercialization of Wildcat for the treatment of model, It's gonna Contagiosum.

Chris Hayes: Please see Verrica's SEC filings for important risk factors. Verrica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in expectations. In addition, during today's call, we will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalent.

I did state regulatory developments the developments of <unk> product candidates, our expected cash runway or potential agreements with Tori dormer labs as well as overall business strategy and planned operations.

Speaker Change: These forward looking statements are based on the company's current expectations and involve inherent risks and uncertainties and based on those risks and uncertainties Barrick as actual results and the timing of events could differ materially from those anticipated in such forward looking statements.

Speaker Change: We see Barracuda S T SEC filings for important risk factors.

Speaker Change: <unk> cautions you not to place undue reliance on forward looking statements and undertakes no duty or obligation to update any forward looking statements as a result of new information future events or changes in expectations.

Speaker Change: In addition, during today's call we will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalents.

Chris Hayes: Our earnings release that we issued today includes gap to non-gap reconciliations for these measures and is also available on the investor relations section of our website. I'll now turn the call over to Verrica's president and CEO, Ted White.

Speaker Change: Our earnings release that we issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of our website.

Speaker Change: I'll now turn the call over to Derek as President and CEO, Ted White God. Thank you, Chris and good morning, everyone and thank you for joining us for the first quarter 2024 earnings call.

Ted White: Thank you, Chris, and good morning, everyone, and thank you for joining us for the first quarter 2024 earnings call. I'd like to begin today's call by discussing the progress we've made with the launch of YCAMP, which remains the top priority for the organization. I will also speak to the progress we have made on removing unlawfully compounded cantharidin from the market. I'll then provide an update on recent regulatory developments and then briefly talk about our pipeline activities. Following my remarks, I'll ask our Chief Commercial Officer, Joe Bonaccorso, to provide a more detailed overview of WhyCan'tLaunch. Our Chief Financial Officer, Terry Kohler, will then review our first quarter financial performance.

Derek: I'd like to begin today's call by discussing the progress we've made with the launch of why can't which remains the top priority for the organization.

Derek: I'll also speak to the progress we have made on removing unlawfully compounded can throw at them from the market.

Derek: I'll then provide an update on recent regulatory developments and then briefly talk about our pipeline activities.

Derek: Following my remarks, I will ask our chief commercial officer, Joe Bonn of Corso to provide a more detailed overview of why can't watch.

Joe Bonaccorso: Our Chief Financial Officer, Terry Kolar will then review our first quarter financial performance. Finally, we will open up the call and take your questions.

Ted White: Finally, we'll open up the call and take your questions. I'm pleased to report that for the first quarter of 2024, we recorded WICANT net revenues of $3.2 million, which reflects continued growth in demand for our product and continued progress in growing our prescriber base. As I stated on our fourth quarter earnings call back in March, the successful launch of Wycanth remains our top priority. We now have two full quarters of commercial operations under our belt, and over this critical time period, we have successfully executed on key launch strategies and tactics, which include securing favorable payer reimbursement, the issuance of a permanent J-code, growing product utilization and our prescriber base, and gaining formulary acceptance at major pediatric institutions and IDNs

Joe Bonaccorso: I'm pleased to report for the first quarter of 2024, we recorded why can't net revenues of $3 2 million, which reflects continued growth in demand for our product and continued progress in growing our prescriber base.

Joe Bonaccorso: As I stated on our fourth quarter earnings call back in March the successful launch of why can't remains our top priority.

Joe Bonaccorso: We now have two full quarters of commercial operations under our belt and over this critical time period, we have successfully executed on key launch strategies and tactics, which include securing favorable payer reimbursement the issuance of a permanent J code.

Joe Bonaccorso: Rowing product utilization and our prescriber base.

Joe Bonaccorso: Gaining formulary acceptance at major pediatric institutions and idms.

Ted White: Removal of Unlawfully Compounded Converting and Why Can't's NCE Listing in the Orange Box. Through April 30th, we significantly expanded our eligible Medicaid patient population by adding New York State, the State of Florida, and Louisiana. The total number of lives eligible to receive Why Can't Therapy covered by insurance now stands at 228 million, which includes lives that are covered commercially through state Medicaid programs and through TRICARE and federal employee programs.

Joe Bonaccorso: Removal of unlawfully compounded comparison and white cats N CE listing in the Orange book.

Joe Bonaccorso: Through April 30th we significantly expanded our eligible Medicaid patient population by adding New York State the state of Florida, and Louisiana the.

Joe Bonaccorso: The total number of lives eligible to receive why can't therapy covered by insurance now stands at $228 million, which include lives that are covered commercially through state Medicaid programs and through Tri care and federal employee programs.

Ted White: We've also secured 31 hospital formulary approvals, including Rady's Children's Hospital, Children's Hospital of Philadelphia, and UNC. A major step in executing our commercial strategy was to secure a permanent J-code for YCAMP. And this went into effect starting on April 1st. As a reminder, the J-code helps determine how managed care organizations reimburse medical providers for products and services. Because the J-code allows providers to use the same code across all payers for reimbursement, the risk of billing errors is significantly reduced. J-codes also allow companies to receive pass-through payments through government-sponsored health care plans.

Joe Bonaccorso: We've also secured 31 hospital formulary approvals, including radius Children's Hospital children's hospital of Philadelphia and UNC.

Ted White: We believe a permanent J-code will help drive Y-canth utilization in the Medicaid-covered patient population and increase overall buy-and-bill account activity by simplifying the billing and reimbursement process. Although it's only been a few weeks since the permanent J code was published, we are clearly seeing an uptick in prescription activity as well as buy-and-bill interest, and we believe the permanent J code is helping to drive patient access and reimbursement.

A major step in executing our commercial strategy was to secure a permanent J code for why can't.

Joe Bonaccorso: And this went into effect starting on April 1st.

Joe Bonaccorso: As a reminder, the J code helps determine how managed care organizations reimbursed medical providers for products and services.

Joe Bonaccorso: Cause the J code allows providers to use the same code across all payers for reimbursement the risk of billing errors is significantly reduced.

Joe Bonaccorso: J codes also allow companies to receive pass through payments through government sponsored health care plants.

Joe Bonaccorso: We believe our permanent J code will help drive why can't the utilization in the Medicaid covered patient population and increase overall buy and bill account activity by simplifying the billing and reimbursement process.

Joe Bonaccorso: Though it's only been a few weeks since the permanent J code has been published we are clearly seeing an uptick in prescription activity as well as buy and build interest and we believe the permanent J code is helping to drive patient access and reimbursement.

Ted White: As a reminder, back in December, we signed agreements with two of the largest pharmacy benefit managers in the United States. Coverage for both PBMs went live on January 1st, and we believe these agreements should provide an important growth driver for Wycanth for the remainder of 2024 and beyond. You'll recall that we announced an agreement with Walgreens to distribute Wycanth through its specialty pharmacy back in early January. As a result of this collaboration, we reached an agreement in April to begin supplying Walgreens community health system stores with YQAM, which we believe allows health care providers and their patients to have better accessibility to YCAM. We also started to see growing demand from military treatment facilities who obtained the product through DMS, a prime vendor to the U.S. Department of Defense.

Joe Bonaccorso: As a reminder back in December we signed agreements with two of the largest pbms in the United States coverage for both Pbms went live on January one and.

Joe Bonaccorso: And we believe these agreements should provide an important growth driver for why can't for the remainder of 2024 and beyond.

Joe Bonaccorso: You'll recall that we announced an agreement with Walgreens to distribute why can't through specialty pharmacy back in early January.

Joe Bonaccorso: Under this collaboration we reached an agreement in April to begin supplying Walgreens community health system stores with why cant, which we believe allows health care providers and their patients to have better accessibility to why can't.

Joe Bonaccorso: We also started to see growing demand from military treatment facilities, who obtain product through D. M. S. A prime vendor to the U S Department of defense.

Ted White: We have continually emphasized that addressing the unlawful compounding of cantharidin is a strategic priority for Verrica and crucially important to the success of WICAMP and, more importantly, critical to patient safety. I'm pleased to report that we've reached an agreement in principle with Dormer Labs to favorably resolve our concerns raised in the litigation, and we are in the final stages of negotiating that resolution. I hope to provide you with a more detailed statement on the matter in the coming weeks once the agreement is finalized. The first quarter also produced positive news from a regulatory standpoint.

Joe Bonaccorso: We have continually emphasized that addressing the unlawful compounding of <unk> is a strategic priority for Verica and crucially important to the success of why can't and more importantly critical to patient safety.

Joe Bonaccorso: I'm pleased to report that we've reached an agreement in principle with dormer labs to favorably resolve our concerns raised in the litigation and we are in the final stages of negotiating that resolution.

Joe Bonaccorso: I hope to provide you with more detailed statement on the matter in the coming weeks once the agreement is finalized.

Joe Bonaccorso: The first quarter also produced positive news from a regulatory standpoint on March 26th we announced that why can't received <unk> status from the FDA as reflected in its listing in the Orange book. We are obviously very pleased to have secured NC status for why cant, which provides five years of regulatory exclusivity and <unk>.

Ted White: On March 26th, we announced that Wycanth received NCE status from the FDA, as reflected in its listing in the orange book. We are obviously very pleased to have secured NCE status for YCAMP, which provides five years of regulatory exclusivity and further validates our product's innovation and intrinsic value in the dermatology market. While NCE status will provide Wycanth with a minimum of five years of protection, we fully anticipate our comprehensive patent portfolio to provide additional protection from generic competition for the next decade and potentially beyond. Now, I'd like to provide an update on our pipeline.

Joe Bonaccorso: They're validates our products innovation and intrinsic value in the dermatology market.

Joe Bonaccorso: While N C status will provide why can't with a minimum of five years of protection, we fully anticipate our comprehensive patent portfolio to provide additional protection from generic competition for the next decade and potentially beyond.

Joe Bonaccorso: And now I'd like to provide an update on our pipeline.

Ted White: Based on the minutes from our Type C meeting with the FDA in late 2023, we believe that we've gained mutual alignment with respect to the overall design of a pivotal Phase III trial study with Wycanth that would support an efficacy supplement for the proposed indication of common warts. On this topic, I'm pleased to report that we have reached an agreement with Torrey Pharmaceuticals related to conducting a joint global phase three trial of Wycanth for the treatment of common warts, which we believe will benefit both parties from a cost and time to market standpoint.

Joe Bonaccorso: Based on the minutes from our type C meeting with the FDA in late 2023, we believe that we have gained mutual alignment with respect to the overall design of a pivotal phase III trial study with why can't that would support an efficacy supplement for the proposed indication of common warts.

Joe Bonaccorso: On the topic I am pleased to report that we've reached an agreement with Tori pharmaceuticals related to conducting a joint global phase III trial of <unk> for the treatment of common warts, which we believe will benefit both parties from a cost and time to market standpoint.

Ted White: The terms of the agreement would allow Verrica and TORI to start a pivotal Phase III clinical trial for common warts in 2025 in the United States and Japan with a contemplated funding structure that is expected to have minimal impact on Verrica's cash position. I hope to be able to share a more detailed statement with you on this agreement in the next few days.

Joe Bonaccorso: The terms of the agreement will allow for America, and Tory to start a pivotal phase III clinical trial for common warts in 2025 in the United States and Japan with a contemplated funding structure that is expected to have minimal impact on <unk> cash position.

Joe Bonaccorso: I hope to be able to share more detailed statement to you on this agreement in the next few days.

Joe Bonaccorso: In addition to our positive news on advancing common warts, we continue to be excited about VP315, which is being developed for the treatment of basal cell carcinoma. In December, we completed dosing in our Phase 2 study, and we expect to announce preliminary top-line data later in the second quarter. We expect this upcoming readout will provide us with key efficacy measures, including complete clearance as well as the percent of tumor size reduction.

Joe Bonaccorso: In addition to our positive news on advancing come and awards. We continue to be excited about the V. P 315, which is being developed for the treatment of basal cell carcinoma.

Joe Bonaccorso: In December we completed dosing in our phase III study and we expect to announce preliminary topline data later in the second quarter.

Joe Bonaccorso: We expect this upcoming readout will provide us with key efficacy measures, including complete clearance as well as the percent of tumor size reduction.

Joe Bonaccorso: 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. As a reminder, our ongoing Phase 2 study is an open-label, multi-center, dose-escalation, proof-of-concept trial designed to assess the safety, pharmacokinetics, and efficacy of VP315. As a potential first-in-class oncolytic peptide, VP315 has been engineered to provide more targeted delivery to stimulate the patient's immune system and destroy cancer cells and is being developed either as a potential non-surgical alternative or as a neoadjuvant chemotherapeutic for basal cell carcinoma. I'll now turn the call over to Joe to review our commercial progress. Joe?

Joe Bonaccorso: As the most common type of carcinoma globally, the commercial opportunity for basal cell carcinoma as sizable with an estimated $3 6 million diagnoses each year in the United States alone.

As a reminder, our ongoing phase II study is an open label multicenter dose escalation proof of concept trial designed to assess the safety pharmacokinetics and efficacy of V. P 315.

Joe Bonaccorso: As a potential first in class Oncologic peptide VP 315 has been engineered to provide more targeted delivery to stimulate the patients immune system and destroy cancer cells and is being developed either as a potential non surgical alternative, whereas a neo adjuvant chemotherapy for basal cell carcinomas.

Joe Bonaccorso: I'll now turn the call over to Joe to review, our commercial progress Joe.

Joe Bonaccorso: Thanks very much, Ted. As Ted mentioned in his remarks, we continue to gain traction in expanding coverage for the number of patients who are eligible to receive WhyCan't therapy. As of April 30th, we have reached 228 million lives under coverage, which encompasses commercial, Medicaid, TRICARE, and federal employee health. In addition to expanding coverage, We have been focused on streamlining reimbursement for those lives that are covered by creating momentum around the publishing of our J code on April 1st.

Joe: Thanks, very much Ted.

Joe: As Ted mentioned in his remarks, we continue to gain traction and expanding coverage for the number of patients who are eligible to receive why can't therapy.

Joe: As of April 30, we have reached 228 million lives under coverage, which encompasses commercial Medicaid Tricare and federal employee health plans. In addition to expanding coverage we have been focused on streamlining reimbursement.

Those lives that are covered by creating momentum around the publishing of our J code on April 1st.

Joe Bonaccorso: To date, we have already seen 106 health care plans representing approximately 209 million lives published in the J code, which we believe, over time, will drive broader acceptance by prescribers as the reimbursement process becomes more efficient. We have also been working throughout the first quarter and into April on enhancing our distribution network and capabilities. As we mentioned on last quarter's call, we have onboarded DMS as a distributor for the Department of Defense.

Joe: To date, we have already seen 106 health care plans, representing approximately 209 million lives published the J code, which we believe over time will drive broader acceptance by prescribers as the reimbursement process.

Joe: Becomes more efficient.

Joe: We have also been working throughout the first quarter and into April on enhancing our distribution network and capabilities.

Joe: As we mentioned on last quarters call, we have onboard a DNS as a distributor for the department of defense, we have multiple military treatment facilities currently reordering whitecap and we expect this to continue to expand and additional facilities both in the U S and abroad.

Joe Bonaccorso: We have multiple military treatment facilities currently reordering Y-CAMP, and we expect this to continue to expand to additional facilities both in the U.S. and abroad. We're also excited to announce that, beginning in May, we are expanding our specialty pharmacy network to include Acredo, which is ESI's specialty pharmacy. Our credo is a premier specialty pharmacy partner that brings a strong network of payer contracts to help facilitate the growth of WICAP in 2024 and beyond.

Joe: We're also excited to announce that beginning of May we are expanding our specialty pharmacy network to include Accredo, which as Esi's specialty pharmacy accredo as a premier specialty pharmacy partner that brings a strong network of payer contracts to help facilitate the growth of white cap in 2024 and beyond.

Joe Bonaccorso: In addition to adding a credo as a specialty pharmacy, in April, we reached an agreement to expand our distribution relationship with Walgreens. The broader agreement now provides community health system stores around the country. These stores partner with large health systems and practitioner offices to provide a white glove service that will make WICAMP more readily available to all healthcare professionals seeking to treat patients.

Joe: In addition to adding Accredo as a specialty pharmacy in April we reached an agreement to expand our distribution relationship with Walgreens.

Joe: Broader agreement now provides community health system stores around the country needs.

Joe: These stores partner with large health systems and practitioner offices to provide a white glove service that will make weitkamp more readily available to all health care professionals seeking to treat.

Terry Kohler: We are excited about the progress we are making in these areas, and we will continue to look for ways to enhance our distribution and provide more options for healthcare professionals going forward. And lastly, as we discussed on our prior earnings call, I'm pleased that we have now added 20 pediatric reps in the major MSAs across the country. These reps are in the field on April 1st, and we're already seeing some early wins and continued strong interest from pediatric groups.

Joe: We are excited about the progress we are making in these areas and we will continue to look for ways to enhance our distribution and provide more options for health care professionals going forward.

Joe: And lastly, as we discussed on our prior earnings call I am pleased that we have now added 20, pediatric reps and the major msas across the country.

Joe: These reps are in the field on April 1st and we're already seeing some early wins and continued strong interest from pediatric groups. It's too early to provide more visibility, but this market will be critical and growing the treatment rates are pediatric patients affected by Moscow, and we look forward to providing more updates on this initiative as we.

Terry Kohler: It's too early to provide more visibility, but this market will be critical in growing the treatment rates of pediatric patients affected by molluscum. And we look forward to providing more updates on this initiative as we move forward. I'll now pass it to Terry to review our first quarter financial results.

Joe: We move forward.

Joe: I'll now pass it to Terry.

Terry Kolar: Our first quarter financial results Barry.

Terry Kohler: Thanks, Joe. YCANF revenues were $3.2 million in the first quarter of 2024. We also recognized collaboration revenues of $594,000 in the first quarter of 2024 related to the clinical supply agreement with Torrey Pharmaceuticals. Cost of product revenue was $546,000 in the quarter, which included $316,000 of inventory write-offs. Research and development expenses of $4.9 million in the first quarter of 2024 increased versus the first quarter of 2023 by $2.2 million, driven primarily by additional clinical trial costs related to VP315, as well as costs related to increased headcount.

Terry Kolar: Thanks, Joe.

Terry Kolar: Why can't revenues were $3 2 million in the first quarter of 2024. We also recognized collaboration revenues of 594000 in the first quarter of 2024 related to the clinical supply agreement with <unk> Pharmaceuticals.

Terry Kolar: Cost of product revenue was 546000 in the quarter, which included 316000 of inventory write offs Reese.

Terry Kolar: Research and development expenses of $4 9 million in the first quarter of 2024 increased versus the first quarter of 2023 by $2 2 million driven primarily by additional clinical trial costs related to BP 315.

Terry Kolar: As well as costs related to increased head count.

Terry Kohler: Selling general and administrative expenses of $16.3 million in the first quarter of 2024 increased versus the first quarter of 2023 by $12 million, driven primarily by commercial activity for Ycamp. Gap net loss was $20.3 million, or $0.44 per share, for the first quarter of 2024, compared to a gap net loss of $6.6 million, or $0.15 per share, for the first quarter of 2023. On a non-GAAP basis, which excludes stock-based compensation and non-cash interest expense, the first quarter of 2024, the net loss was $17.8 million, or $0.38 per share, compared to a net loss of $5.5 million, or $0.13 per share, in the first quarter of 2023.

Terry Kolar: Selling general and administrative expenses of $16 3 million in the first quarter of 2024 increased versus the first quarter 2023 by $12 million driven primarily by commercial activity for whitecap.

Terry Kolar: GAAP net loss was $20 3 million or <unk> 44 per share for the first quarter of 2024 compared to a GAAP net loss of $6 6 million or <unk> 15 per share for the first quarter of 2023.

Terry Kolar: On a non-GAAP basis, which excludes stock based compensation and noncash interest expense. The first quarter of 2024 net loss was $17 8 million or <unk> 38 per share.

Terry Kolar: Compared to a net loss of $5 5 million or <unk> 13 per share in the first quarter of 2023.

Terry Kohler: And finally, as of March 31st, 2024, Verrica had aggregate cash and cash equivalents of $48.9 million. The company expects that its cash and cash equivalents as of March 31st, 2024 will be sufficient to fund operations into the first quarter of 2025. I'll now turn the call back to Ted for closing remarks. Thanks, Terry.

Terry Kolar: Finally as of March 31, 2020 for Barrick and aggregate cash and cash equivalents of $48 $9 million. The company expects that its cash and cash equivalents as of March 31, 2024 will be sufficient to fund operations into the first quarter of 2025.

Terry Kolar: I'll now turn the call back to Todd for closing remarks, Thanks Terry.

Ted White: I could not be more pleased with how our team has executed over the first quarter of 2024, which has positioned our company to reach its next stage of growth over the next several quarters. To summarize, we received a permanent J code for WICANF effective April 1st. We've signed agreements with two of the largest PBMs in the United States. We entered into a product distribution agreement with Walgreens, and we strengthened Wycant's exclusivity by obtaining NCE status and a listing in the FDA's Orange Book.

Todd: Could not be more pleased with how our team has executed over the first quarter of 2024, which has positioned our company to reach our next stage of growth over the next several quarters to summarize we received a permanent J code for why can't effective April one we.

We signed agreements with two of the largest Pbms Eni states.

Todd: We entered into a product distribution agreement with Walgreens.

Todd: And strength in white cans exclusivity by obtaining <unk> status and a listing in the Fda's Orange book.

Ted White: The collective impact from these milestones, coupled with our successful efforts to date on compounded contheridin, provides a solid foundation for the launch of white canth, and as I mentioned earlier, we are already beginning to see an increased uptick in white canth prescriptions just weeks after receiving our permanent J-code. I'm equally excited about the prospects for advancing Wycanth into a global pivotal phase three trial for Common Warts with our partner, Torrey Pharmaceuticals, and the opportunity to share additional data on VP315 later this year.

Todd: The collective impact from these milestones coupled with our successful efforts to date on compounded comparison provides a solid foundation for the launch of why can't and as I mentioned earlier, we're already beginning to see increased uptake and white cap prescriptions just weeks after receiving our permanent J code.

Todd: I'm equally excited about the prospects for advancing <unk> into a global pivotal phase III for common warts with our partner Tory pharmaceuticals, and the opportunity to share additional data on V. P. 315 later this year.

Ted White: Both a common warts indication for YKANF and a non-surgical primary or neoadjuvant therapy for basal cell represent significant potential value drivers for our company with a large addressable market. We look forward to providing you updates on both of those opportunities in the near future.

Todd: The common warts indication for why can't in a non surgical primary or neo adjuvant therapy for basal cell represents a significant potential value drivers for our company with a large addressable markets.

Todd: We look forward to providing you updates on both of those opportunities in the near future.

Speaker Change: That concludes our formal remarks, and now I'll turn the call over to the operator for Q&A.

Speaker Change: Thank you.

Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. Ladies and gentlemen, we will wait for a moment while we poll you for questions. Our first question is from the line of Stacy Ku with TD Carvin. Please go ahead.

Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session.

Speaker Change: He would like to ask a question please star and one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue.

Speaker Change: You May press star two if you'd like to remove your question from the queue.

Since using speaker equipment, it may be necessary to pick up your handset before pressing the stock east.

Speaker Change: Ladies and gentlemen, we will wait for a moment, while we poll for questions.

Speaker Change: My first question is from the line of Stacy <unk> with TD carbon. Please go ahead.

Stacy Ku: Good morning. Congratulations on the progress and thanks so much for taking our questions. We have a few.

Stacy: Good morning, congratulations on the progress and thanks, so much for taking our questions we haven't seen.

Stacy Ku: So, first, are you able to discuss any additional early metrics around the J-code in April in terms of account demand? Maybe discuss key learnings as you're walking clinicians through the publication of the April J-code and transition to buy and build. So, that's the first question.

Stacy: First are you able to discuss any additional early metrics around the J code in April in terms of account demand and maybe discuss key learnings as you're walking questions that are kind of publication of the April J code and transition to find out. So that's the first question and then the second it feels like we're making a lot of momentum with why can't especially in April.

Stacy Ku: And then second, it feels like we're making a lot of momentum with QICANF, especially in April. So, can you comment on the sales trajectory expectations for the year? How should we be thinking about Q2, just given so much progress versus kind of quarter-to-quarter seasonality, which might impact certain regions?

Stacy: Can you comment on the sales for next year your expectations for the year, how should we be thinking about Q2, just given so much progress versus kind of quarter to quarter seasonality, which impacts certain regions and then last on <unk>.

Stacy Ku: And then last, you talked about broadening to pediatricians. Do you want to talk about that progress? Are you able to capture patients before they refer them to dermatologists? Just walk through your decision again to target pediatricians in addition to pediatric dermatologists. Thanks so much.

Stacy: <unk> talked about broadening to Pee attrition. So do you want to talk about that progress are you able to capture patient before they were switched in the colleges Sean just walked through our decision again to hit the target.

Stacy: Peter.

Jim: Yeah Jim.

Jim: Thanks, so much.

Ted White: Great. Thank you, Stacy. Good morning. This is Ted. I'll turn the call over to Joe to answer the first part of your question regarding the JCOs. Good morning.

Jim: Great. Thank you Stacey and good morning. This is Ted I'll turn the call over to Joe to answer the first part of your question regarding the J code.

Joe Bonaccorso: Good morning, Stacy. Yeah, so the J-code is making nice progress. We had an uptick in new accounts. And just to remind you, the J-code, you know, it rolls into being published April 1st, and then the second piece of that is the insurance companies have to start posting their allowables on what positions can expect in reimbursement. So we had a build going into April with some pre-work prior to the publication, and then we had accounts come online right when the J-code was published.

Good morning, Stacy, yes, so the J code is making nice progress we had an uptick in new accounts and just to remind you that J code. It rolls into being published April 1st and then the second piece of that is the insurance companies have to start posting their allowable on what patient what physicians can expect on reimbursement. So we had a build going into April.

Jim: With some pre work prior to the publication and then had accounts come online right. When the J code was published we saw a nice uptake in both private practices and additional hospitals coming on board as well and also as our pediatric team was just hitting the field we saw some pediatric.

Joe Bonaccorso: We saw a nice uptake in both private practices and additional hospitals coming on board as well. And also, as our pediatric team was just hitting the field, we saw some pediatric expansion as well as buy-in bills.

Jim: That expansion as well as to buy and bill.

Terry Kohler: And then, Stacy, this is Terry. Good morning. I think your second question was just around revenue cadence and expectations maybe for the back half of the year. As you know, we're not going to give any type of formal guidance, but I think what we can say is that we would expect to continue to see quarter over quarter growth in our revenue as we go forward for the remainder of 2024.

And then Stacy this is Terry good morning, I think your second question was just around revenue cadence and expectations, maybe for the back half of the year. As you know, we're not going to give any type of formal guidance, but I think what we can say is that we would expect to continue to see quarter over quarter growth in our revenue as we go forward for the remainder of 2024.

Joe Bonaccorso: Okay, wonderful. And then, just on the pediatricians, are you finding that a lot of these pediatricians are now prescribing Y-canth, or is this just really early days, and you're seeing early interest? Thanks so much.

Speaker Change: Okay Wonderful and then the last question just on that question.

Speaker Change: Are you finding that orders.

Speaker Change: Thank you.

Speaker Change: Are now prescribing <unk>.

Speaker Change: Many of you are staying around.

Speaker Change: Thanks, so much.

Joe Bonaccorso: Yeah, so Stacy, we're early into it, but we were bullish about pediatricians prior to the expansion, and you know, we were getting a lot of inbound traffic and calls on that since we got our approval last July. The expansion into pediatrics, I'm very pleased where we are right now. We're seeing an uptick in pediatric prescribers week over week. We have our pediatric offices, and several of them have jumped on board with the buy-and-build model.

Speaker Change: So Stacy we're early into it but we were bullish about pediatricians prior to the expansion as we were getting a lot of inbound traffic and calls on that since we had our approval last July.

Speaker Change: The expansion the pediatrics I'm very pleased where we are right now we're seeing.

Speaker Change: We're seeing an uptick in pediatric prescribers week over week.

Joe Bonaccorso: Obviously, for them, it's an opportunity to grow revenue in their practices. And also, in the hospital setting, the pediatricians are picking up on prescribing as well because the demand in the clinic for pediatric dermatology is very high, and that takes some of the volume load off of them. So overall, we expect continued growth in pediatrics, and we think that'll be a nice part of our model moving forward.

Speaker Change: Our pediatric offices.

Speaker Change: Several of them are have jumped on board with the buy and Bill model, obviously for them, it's an opportunity to grow revenue in their practices and also in the hospital setting the pediatricians are picking up on prescribing as well because the demand in the clinic and pediatric dermatology is very high and that takes some of the volume load off of them. So overall, we expect.

Speaker Change: <unk> growth in pediatrics, and we think that'll be a nice part of our model moving forward.

Stacy Ku: Okay, wonderful. Thanks again.

Speaker Change: Okay wonderful thanks again.

Thank you.

Operator: Thank you. Our next question is from the line of Gregory Renza with RBC Capital Market. Please go ahead. Gregory Renza, RBC Capital Market. Thank you. Our next question is from the line of Gregory Renza with RBC Capital Market.

Gregory James Renza: Next question is from the line of Gregory rents out with RBC capital market. Please go ahead.

Gregory James Renza: Hi, Ted and team, it's Anishan on behalf of Greg. Congratulations on the progress this quarter, and thanks for taking our questions. Just a couple from us. You know, just wanted to get your expectations around the seasonality of molluscum prevalence through the spring, summer, and fall, and potential pull through to Y camp usage in pediatrics and even adults. And then also, lastly, on 315 in the top line this quarter, you know, just if you could set expectations for bars of success and even internal or external benchmarks that we can, you know, gauge success from. Thanks so much.

Gregory James Renza: Hi, Ted and team, it's a niche on for Greg Congrats on the progress this quarter and thanks for taking our questions just a couple from us.

Niche: Just wanted to get your expectations around the seasonality of molluscum prevalence through the spring summer and fall and potential pull through to why can't that usage and in pediatrics and even adults and then also lastly on 315 in the top line. This quarter I'm, just if you could set expectations for bars of success even in.

Niche: Internal or external benchmarks that we can you know gauge success from thanks, so much.

Ted White: Thank you, Anish, for the question, and I'll take the first question, and then I'll turn it over to Gary Goldenberg for the second question. Regarding seasonality, molluscum contagiosum is seen throughout the year. However, you do see peaks in obviously the warmer weather months. Typically, you're talking June, July, and August timeframes, where more kids, as you would expect, are out congregating; they're at summer camps, etc., swimming pools, and so you definitely see a higher prevalence of molluscum during those key months. But again, molluscum is seen throughout the year. And then, regarding 315, I will turn it over to Dr. Goldenberg to provide that information. Thanks, Ted and Anish.

Speaker Change: Yes. Thanks for the question and then I'll take the first question and then I'll turn it over to Gary for Gary Goldberg for the second question regarding seasonality Molluscum Contagiosum is seen throughout the year. However, if you do see peaks in and obviously the warmer.

Gary Goldberg: Warmer weather months typically Youre talking June July August.

Gary Goldberg: Timeframe, where more kids as you would expect are congregating at summer camps et cetera, swimming pools, and so you definitely see a higher prevalence of less of them.

Gary Goldberg: During the during those key months, but again molluscum is seen throughout the year.

Gary Goldberg: And then regarding 315, let me turn it over to Dr. Goldenberg to provide that information to you.

Gary Goldenberg: Thanks, Ted and Anish, thanks for the question. Regarding VP315, we are expecting to release some preliminary data by the end of this quarter. This will include our safety data, which is really the point of the Phase II program. As far as efficacy, the way I would think about it is like some of the other drugs that are in the basal cell space that have complete clearance data as well as tumor size reduction data.

Goldenberg: Thanks, Stephanie Thanks for the question regarding <unk> 16, we are expecting to release some preliminary data by the end of this quarter.

Gary Goldenberg: And there are some parameters that are said by the agency for neoadjuvant therapy, and I would think about it in those terms, whereas there'll be a certain percent of subjects that have complete clearance, meaning that there's no tumor remaining on histology. And then there are some subjects that have residual tumors, but the tumor size has decreased, whereas in those subjects, the drug could potentially be used as a neoadjuvant therapy, and that's kind of how I would think about the data that we're gonna release by the end of this quarter.

Goldenberg: This will include our safety data, which is really the point of the phase two of the phase two program as far as efficacy the way I would think about it is like some of the other.

Goldenberg: Drugs that are in the in the basal cell space.

Goldenberg: That movie that have complete clearance data as well as tumor size reduction data.

Goldenberg: And there are some parameters that are sent to the agency for a new adjuvant therapy, and I would think about it in those terms, whereas there'll be a certain percent of subjects that have completed half complete clearance, meaning that there is no tumor remaining on histology and then there's some subjects that have residual tumors the tumor sizes decreased.

Goldenberg: Whereas dose subjects, the drug could be potentially used as a new adjuvant therapy.

Goldenberg: <unk> therapy, and that's kind of how we think about the data that we're going to release by by the end of this quarter.

Speaker Change: Thank you.

Speaker Change: Great. Thank you so much.

Speaker Change: Thank you.

Operator: Our next question is from the line of Glenn Santangelo with Jeffreys. Please go ahead.

Speaker Change: Our next question is from the line of Glen Santangelo with Jefferies. Please go ahead.

Glenn Santangelo: Oh, yeah. Thanks for taking my question. Hey, Ted, I think in previous quarters you sort of gave us the mix of prescribing being mixed between specialty and sort of buy and bill. And I think you said in the past it was sort of 80-20. And I'm kind of curious that, post the J-code being published on April 1, are you starting to see a meaningful shift towards buy and bill? And I understand the difference in the economics for the clinician, but is there any sort of economic differential for you, depending upon which route the clinician takes?

Glen Santangelo: Oh, yes, thanks for taking my question.

Glen Santangelo: Hey, Ted I think in quarters past, you sort of gave us the mix of.

Glen Santangelo: What the prescribing being mixed between specialty and sort of buy and Bill and I think you said in the past it was sort of 80 20, and I'm kind of curious that pose the J code being published on April one are you starting to see a meaningful shift towards buy and bill and I understand the difference in the economics for the clinician, but is there any sort of economic deferral.

Glen Santangelo: Rachel for you the depending upon which route the clinician tanks.

Ted White: Thank you for the question, Glenn. Absolutely, we're seeing an increase on the buy-and-bill accounts. And then I'll turn it over to Joe to provide more details on that, but with regard to the economics, obviously, it's more economical for Verrica if physicians move to a buy-and-bill model. On the specialty pharmacy side, the costs are a little bit higher only because of the fact that it's a white-bag model. The product has to be shipped to the physician's office, so that just incurs a little bit of extra cost. But I'll turn it over to Joe Bonaccorso with regard to the uptick in accounts.

Rachel: Yes. Thank you for the question Glenn absolutely, we're seeing an increase on the buy and Bill accounts and then for me I'll turn it over to Joe to provide more details on that but with regards to the economics, obviously, it's more economical for four verica, if physicians move to a buy and bill on the specialty pharmacy.

Joe: <unk> costs are a little bit higher only because the fact that the it's a white bag model the.

Joe: Product has to be shipped to the physician's office, so that just incurs a little bit of extra cost, but I'll turn it over to Joe but of course, it with regards to the uptick in accounts.

Joe Bonaccorso: Yeah, so just to follow up on the question around the optimization of Specialty Pharmacy to Buying Bill, we are starting to see the Buying Bill side pick up. It's still early, right? We're only about a month or so into this, but we're seeing about, you know, somewhere about a 60-40 right now in the early going Specialty Pharmacy to Buying Bill, and as we continue to get the allowables published by the insurance companies now to give doctors even more certainty on what they can expect in reimbursement, we're going to expect that shift to continue to happen, right? In our out-year models, we expect Buying So I was very pleased with the progress early on.

Yes, so just to follow up on the question around the optimization of specialty pharmacy to buy and Bill we are starting to see the buy and bill side uptick. It's still early right. We're only about a month or so into this but we are seeing about somewhere about a 60 40 right now.

Joe: And the early gallon specialty pharmacy to buy and Bill and as we continue to get the allowable as published by the insurance companies now to give doctors, even more certainty on what they can expect on reimbursement, we're going to expect that shift to continue to happen right in our out year models, we expect buy and bill to start.

Joe: Being the horse that closed the card here so.

Joe: Very pleased with the progress early on.

Joe Bonaccorso: Okay, and Joe, maybe I'll just stick with you. It kind of sounds like we're at 228 million lives now covered via commercial insurance, Medicaid, and eye care. Are you pretty much fully penetrated at this point? And I know you gave an update on sort of the pediatric sales force you have at this point, but you know, just your overall sort of sales effort, where you are at this point, do you think you're pretty much staffed to sort of where you want to be? Yeah, so our penetration of the number is very low.

Okay, and Joe maybe I'll, just stick with you it kind of sounds like we're at 228 million lives now covered via commercial insurance.

Brian are you pretty much fully penetrated at this point and I know you gave the update on sort of the.

Joe: The pediatric sales force you have at this point, but just your overall sort of sales effort, where you are at this point and.

Joe: Do you think you're pretty much staff to sort of where you want to be.

Joe Bonaccorso: Yeah, so our penetration of the number of lives covered is, you know, we're way up there, right? There's not going to be much headway left there.

Joe: Yes, so our penetration of number of lives covered as we're way up there right. There is not going to be much headway left there it's really around working around the edges now getting prior authorizations remove that are typical with new to market drugs any prior authorization will weitkamp is a streamline prior authorization to label so very.

Joe Bonaccorso: It's really about working around the edges now, getting prior authorizations removed for typical and new to market drugs. Any prior authorization with YCAMP is a streamlined prior authorization label. So you know, very often insurance carriers may implement that for the first six months to 12 months post-launch, and we're working on getting that removed, and that should happen, and that should continue to melt away. Your second question, I believe, was around pediatrics.

Joe: Often insurance carriers may implement that in the first six months to 12 months post.

Post launch and we're working on getting that removed and that should happen and that should continue to melt away. Your second question I believe was around the pediatrics.

Joe Bonaccorso: You know, again, the uptake there looks very promising for us as an organization. We're a couple weeks into being fully staffed in that area, but you know, as we've seen, we're doing a bunch of different tactics to reach that audience, including virtual pediatric medical education programs that run monthly. The response is very high there, and we're seeing continued inbound. The Redbook recently published a need to treat molluscum, which is a change from what they've had in the past, and YCAMP was mentioned as one of the therapies in there that you would consider as an optimal choice to treat molluscum when deciding to do that. So a lot of momentum continues there as well.

Joe: Again, the uptake there it looks very promising for us as an organization. We're a couple of weeks into being fully staffed in that area, but you know as we've seen where we're doing a bunch of different tactics to reach that audience, including virtual pediatric.

Joe: Medical education programs that run monthly. The response is very high there. We're seeing continued inbound the Red book recently published.

Joe: A need to treat molluscum, which is a change in what they've had in the past and why can't was mentioned as one of the therapies in there that you would consider as a as an optimal choice to treat molluscum when deciding to do that so a lot of momentum continues there as well.

Speaker Change: Okay. Thank you.

Youre welcome.

Speaker Change: Thank you.

Operator: Our next question is from the line of Oren Livnat with HC Wainwright. Please go ahead.

Speaker Change: Our next question is from the line of Owen Loopnet with H C. Wainwright. Please go ahead.

Oren Gabriel Livnat: Thanks. I have a few.

Owen Loopnet: Thanks, I have a few just.

Owen Loopnet: Just to follow up on the.

Oren Gabriel Livnat: Just to follow up on the impact of the J code and uptake. Can you just talk about what you're hearing in the field with regard to growing success with same-day treatments in the office? Are people who are doing buy-in bill or opting in successfully? Adjudicating, I guess, at the front desk, so to speak, that insurance is able to do the same day, or are they still having to schedule revisits?

Owen Loopnet: The impact of the J code and uptake can you just talk about what youre hearing in the field with regards to <unk>.

Owen Loopnet: Growing success with same day treatments in the office.

Owen Loopnet: Are people, who are doing buy and bill or have opted in RNA successfully.

Owen Loopnet: Adjudicating I guess at the front desk, so to speak that insurance and able to do same day or are they still having to reschedule revisits and follow ups.

Joe Bonaccorso: Yeah, so, Oren, it's really going to be dependent on who that physician has as their insurance carrier. So, recently, UnitedHealthcare Optum removed prior authorization, Aetna removed prior authorizations, and Cigna has no prior authorization.

Speaker Change: So it's really going to be dependent on who that physician has as their insurance carriers. So recently United.

Speaker Change: Health care, often remove prior authorization aetna remove prior authorizations Cigna has no prior authorization. So the major carriers are allowing.

Joe Bonaccorso: So, the major carriers are allowing, you know, no prior authorization, which opens the window for same-day treatment for buy-in patients, which is outstanding. We also have our hub services, and what we're doing in our model is we're trying to set the offices up for success, right? So, we're working with them on running claims through our Y-Access program, which is benefit verification driven, and we're getting the staff and office comfortable with claims coming through and seeing that they will be approved by insurance. And then, you know, that's turning on the switch for more and more same-day treatment.

Speaker Change: No prior authorization, which opens the window for same day treatment for buy and Bill which is outstanding. We also have our hub services and what we're doing in our model as we are trying to assess the offices up for success right. So we're working with them on running claims through our wide access program, which is benefit verification driven and we're getting the staff and office comfortable.

Speaker Change: With claims coming through and seeing that they will be approved.

Speaker Change: Approved by insurance and then that's turning on the switch for more and more same day treatment. Our philosophy here is we want a partner wholly with the customer to set their offices up for success and limiting any type of denied claims they may get and sometimes very often is thats just from filing incorrectly or not putting the right codes on but we.

Joe Bonaccorso: Our philosophy here is we want to partner wholly with the customer to set their offices up for success and limit any type of denied claims they may get. And sometimes, very often, that's just from filing incorrectly or not putting the right codes on, but we want to make sure we're really serving as a trusted advisor, especially in the early going here. You know, we want to walk them through the process, you know, and make sure it's going to be a clean prescription coming back, and they're not going to encounter any additional work on staff. That model seems to be working. I think our customers truly appreciate it, and it's going to allow for, you know, a lot of short-term work for the long-term success of the brand.

Speaker Change: Want to make sure we're really serving as a trusted adviser, especially in the early going here, we want to walk them through the process.

And make sure it is going to be a clean prescription coming back and they're not going to encounter any additional work on staff that model seems to be working I think our customers truly appreciate it and it's going to allow for.

Speaker Change: A lot of short term work for long term success of the brand.

Joe Bonaccorso: And Oren, I just want to add that the PAs that are in place currently are really, as we said earlier, they're confirmatory prior authorizations, meaning that it's a diagnosis of molluscum, the patient is two years of age and older, and they have at least one molluscum lesion. So that's the extent of the prior authorizations.

Speaker Change: And or does it said I just want to add to that on the Ppas that are in place. Currently they are really we said earlier their conformance confirmatory.

Speaker Change: Prior authorizations, meaning that its a diagnosis of molluscum. It's the patient is two years of age and older and they have at least one molluscum lesions. So thats the extent of the prior authorizations that are in place.

Joe Bonaccorso: So in practice, I imagine, you know, these offices really want to please their patients, and patients want to be pleased, right? So, you know, of that 40% of your business, I think you mentioned that's already buy and bill, is a large portion of those already doing same day, or is that still like an upside and a work in progress with regards to getting everybody's... Oren, great question. It's a work in progress, right?

Speaker Change: So in practice I imagine though.

Speaker Change: Officers really want to please.

Speaker Change: Please their patients and patients want to be pleased right.

Speaker Change: Of that 40% of your business I think you mentioned thats already buy and bill.

Speaker Change: A large portion of those already doing same day or is that still like upside in working progress with regards to <unk>.

Joe Bonaccorso: And you have to remember, prior to publication, we were working with offices on running claims, even though they were filling prescriptions through the specialty pharmacy, we were running the claims in the background in our Y-Access program to start educating offices on, hey, when the J-Code is published, these plans right now are favorable with no prior authorization, so you can get started right away. Even with prior authorization, we're finding physicians are either clearing the PA before the patient comes to the office, remember, a lot of these patients are coming in with referral diagnosis already, or they're willing to diagnose the patient and bring them back, and in those instances where they absolutely got a treat same day, they may opt into a sample on the first visit, but that's not a big number.

Speaker Change: Alright, Great question, it's a work in progress right and you have to remember prior to publication, we were working with offices on running claims even though they were.

Speaker Change: Filling prescriptions through the specialty pharmacy, we were running the claims in the background in our why access program to start educating offices on hey, when the J code is published these plans right now are favorable with no. Prior authorization. So you can get started right away even with the prior authorization. We're finding physicians are either clearing the before.

Speaker Change: Before the patient comes to the office remember a lot of these patients are coming in what referral diagnosis already or they are willing to diagnose the patient and bring them back and in those instances, where they absolutely got to treat same day. They may opt into a sample on the first visit but that's not that's not a big number.

Joe Bonaccorso: And with regard to compounding, I was expecting to see some formal response from the FDA of one kind or another by now, and I don't think I have, but it sounds like you're making progress on your own on the back end. So can you just talk about where we stand on the availability of compounding? Compadocantheridin, if any, and do you expect there to be any official top-down regulation on that front that's public from the FDA?

Okay.

Speaker Change: And with regards to compounding.

Speaker Change: He was expecting to see some formal response from the FDA, one kind or another by now and I don't think I did but it sounds like youre, making progress on your own on the backend. So can you just talk about where we stand.

Speaker Change: On the availability of.

Speaker Change: Comparator comparator and if any.

Speaker Change: And do you expect there to be any official top down regulation on that front, that's public from the FDA.

Speaker Change: Yes, great Great question I'll start and then I'll turn it over to our Chief legal officer. So to your point, we did file a citizen's petition and we also filed a drug import alert we were due to hear back from the agency call. It mid April and we have not heard from the agency.

Ted White: Yeah, great. A great question, Oren.

Ted White: I'll start and then I'll turn it over to our chief legal officer. So to your point, we did file a citizen's petition, and we also filed a drug import alert. We were due to hear back from the agency, call it mid-April, and we have not heard from the agency. So that's number one.

Ted White: So we're still waiting to hear. Number two is that we reported that we were successful in shutting down one of the 503B compounding pharmacies here in the United States. We know that there were no 503Bs that compounded Converitin in 2024, and we also announced that the last piece of the compounding was to work with Dormer Labs in Canada, where they were importing Converitin into the country illegally. And so I'm going to turn that part over to Chris Hayes because we made significant strides and are again looking to provide more information to everyone here in the coming days.

Speaker Change: So that's number one so we're still waiting to hear.

Speaker Change: Number two is that we reported that we were successful in shutting down one of the <unk> III <unk> compounding pharmacies here United States. We know that there were no 503, BS that have that are compounding third in 2024.

Speaker Change: And we also announced that the last piece of the compounding was to work with dormer labs in Canada, where they were importing converted into the country illegally.

Speaker Change: Illegally and so I'm going to turn that part over to Chris Hays, because we've made significant strides in again looking to provide more information to everyone here in the coming days, So I'll turn it over to Chris.

Chris Hayes: Thanks, Ted, and Oren. Ted hits the nail on the head. We have not received a response to our citizen's petition yet. It was due April 16th. We did request a response, but, as you aptly noted, we seem to organically be getting to the same end result on our own with taking out the 503As, the larger 503As, and the 503Bs. If you go on the FDA outsourcing website, the last report has no 503Bs compounding, confounding, and obviously, the Dormer is a very good result for us.

Chris Hayes: Thanks, Ted <unk> hit the nail on the head.

Chris Hayes: We have not received the response to our citizens petition yet it was due April <unk>.

We did request the response, but as you aptly noted.

Chris: We've seen that organically be getting to the same end result on our own with taking out the 500 <unk> the larger <unk> to.

Chris: <unk> hundred <unk>. If you go on the FDA outsourcing website. The last report has no <unk> compounding can vary.

Chris: And obviously the dorm or is a.

Chris: A very good result for us.

Chris Hayes: Okay, and just, yep, sorry.

Speaker Change: Okay, and just yeah sorry.

Chris Hayes: No, I was going to say, so although we have not heard back from the FDA and we still do intend to pursue that, we do, we would like to get that blanket coverage, but we are getting to the same place on our own.

Speaker Change: No I was going to say so although we have not heard back from the FDA and we still do intend to pursue that we would like to get that blanket coverage, but we are getting to the same place on our own.

Oren Gabriel Livnat: Okay, just lastly, if I may, you did announce some additional distribution agreements this quarter with Credo and Walgreens. Thank you.

Speaker Change: Okay, and just lastly, if I may.

You did announce some additional distribution agreement this quarter with Accredo and the Walgreens.

Speaker Change: Community distribution, there and that along with the J code update are there any changes to I guess <unk> or more importantly, long term steady state gross to net expectations for <unk>.

Oren Gabriel Livnat: No, Oren, everything is still in line with what we expected pre-launch; no changes there. All right. Thanks. I appreciate it.

Speaker Change: No were and everything is still in line with what we are expecting the prelaunch no changes there.

Speaker Change: Alright, Thanks, I appreciate it congrats on the momentum.

Speaker Change: Thank you.

Operator: Thank you. Our next question is from the line of Serge Belanger with Needham & Company. Please go ahead.

Speaker Change: Thank you.

Ankur Jain: Our next question is from the line of <unk> Jain with Needham and company. Please go ahead.

Serge D. Belanger: Hi, good morning. Thanks for taking my questions. First one, maybe for Joe or Ted, can you just talk about inventory levels at the end of the first quarter, as well as where gross profits stand and where you expect them to progress to? And then lastly, Ted, you talked about the Commonwealth Program and an agreement with your partner, Tory. I know we're going to get more details possibly later this week, but should we assume that TORI is going to carry the heavy load on the investment for this program?

Vikram Jain: Hi, good morning, Thanks for taking my questions.

Nitin Jain: First one maybe for Joe or Ted can you just talk about inventory levels at the end of the first quarter.

Speaker Change: Well as well.

Vikram Jain: Gross to net stand and where you expect them to progress to.

Vikram Jain: And then lastly, Tad you talked about.

Vikram Jain: And warrants program and.

Vikram Jain: In agreement with your partner Tory.

Vikram Jain: Are we going to get more details, possibly later this week, but should we assume that torii is going to.

Vikram Jain: Carrying that heavy load on the investment for this program.

Speaker Change: Thank you.

Serge D. Belanger: Thank you, sir, for the question. I'll turn it over to Terry first with regard to the inventory, and then I'll handle the common award study.

Speaker Change: Thank you Sir for the question I'll turn it over to Terry first with regards to the inventory and then I'll handle the common wart study.

Terry Kohler: Hi Serge, good morning. I think you also asked around gross to net. So again, our gross to net assumptions remain in line with where we were, you know, pre-launch. So we're still expecting to be in that 45% to 50% range over time. You know, we think getting buy and bill to grow will help us get closer to that 50% mark. But no changes in terms of those expectations, either within the quarter or as we go forward.

Terry Kolar: Hi, Good morning, I think you also asked around gross to net so again, our gross to net assumptions remain in line with where we were.

Terry Kolar: So we're still expecting to be in that 45% to 50% range over time.

We think getting buy in bill obviously to grow will help us get closer to that 50% Mark.

Terry Kolar: But no changes in terms of those expectations either within the quarter or as we go forward in terms of inventory.

Terry Kohler: In terms of inventory, you know, we continue to supply into the channel based on, you know, sort of forward-looking demand expectations. So, there's not any additional detail I can really provide you at this time about that. But, you know, we are supplying inventory in the channel to meet what we think the future demand curve will be, and then search on the commonwealth.

Terry Kolar: We continue to add supply entered channel based on sort of a forward looking demand expectations.

Terry Kolar: Additional detail I can really provide you at this time for that but we are supplying inventory in the channel to me when we think about future demand curve will be.

Ted White: And then, Serge, on common warts, obviously, we're very pleased with our strong partnership that we have in place with Torrey Pharmaceuticals in Japan. And I think, you know, the question you posed is, is, is very accurate that it's going to have a very minimal impact on Verrica's cash position the way this will be structured. And again, I'm hopeful that I'll be able to share more details on that agreement that will be put in place by, you know, by the end of this week.

Terry Kolar: And then surge on the Comm Awards, obviously, we're very pleased with our strong partnership that we have in place with Tori Pharmaceuticals in Japan and.

Terry Kolar: And I think.

Question you posed as is very accurate that it's going to be it's going to have very minimal impact on <unk>.

Terry Kolar: Cash position the way this will be structured and again.

Terry Kolar: Im hopeful that he'll be able to share more details on that.

Terry Kolar: Agreement that can be put in place by by the end of this week.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Operator: Our next question is from the line of Kemp Dolliver with Brookline Capital Markets. Please go ahead.

Speaker Change: Our next question is from the line of Camp Danava with Brookline capital markets. Please go ahead.

Speaker Change: Yeah.

Brian Kemp Dolliver: Great, thanks, and good morning. Looking at SG&A and the addition of the pediatric sales force, I'm assuming what we saw in the first quarter is probably not the full run rate. You know, how should we be thinking about the incremental cost near term with the pediatric sales force on board?

Camp Danava: Great Thanks, and good morning.

Camp Danava: Yeah.

Camp Danava: Looking at SG&A and the addition of the pediatric sales force.

Camp Danava: Assuming what we saw in first quarter.

Camp Danava: Not the full run rate.

Camp Danava: How should we be thinking about the incremental costs.

Camp Danava: Near term with the pediatric sales force onboard.

Terry Kohler: Sure, Ken, good morning. For the most part, you're absolutely correct. The majority of those additional PDREPs were in the field starting April 1. So you will see a step up in the second quarter and for the remainder of the year in SG&A. I wouldn't expect it to materially step up, but you will see a step.

Speaker Change: Sure Ken good morning.

Ken: So youre absolutely correct.

Any of those additional feed reps are in the field starting April one so you will see a step up in the second quarter and for the remainder of the year and SG&A I wouldn't expect it to materially step up you will see a style.

Speaker Change: Great. Thank you.

Brian Kemp Dolliver: Great, thank you. Admittedly, it's early days, but what are you seeing with regard to the number of ampules used per patient so far?

Speaker Change: And admittedly it's early days, but what are you seeing with regard to the number.

Speaker Change: And fuels used per patient.

So far.

Joe Bonaccorso: Yeah, we're seeing right now somewhere. You know, between, I'd say around one and a half, you know, moving towards two. We expect our model for patients to be closer to three, you know, as they're going through refills, et cetera. Now, remind you, we also lose visibility inside the hospitals. You know, we have no way of tracking what the refill rate looks like there, right, because we're blinded to that patient claims data. You know, it doesn't come through like at the specialty pharmacy. So our specialty pharmacies are a marker for that, Tim.

Speaker Change: Yeah, we're seeing right now somewhere.

Speaker Change: Between I'd say around one and a half.

Speaker Change: Moving towards two we expect our model for patients to be closer to three as they're going through refills et cetera.

Speaker Change: Remind you we also lose visibility inside the hospitals, we have no way of tracking what the refill rate looks like in there right because we're blinded to that patient claims data it doesn't come through like on the specialty pharmacy. So our specialty pharmacies are marker for that.

Brian Kemp Dolliver: That's great. Thank you. And with regard to the runway, I'm assuming that does not factor in any additional proceeds from the OrbaMed credit line, is that correct?

That's great. Thank you and.

Speaker Change: With regard to the runway I'm, assuming that does not factor in any additional proceeds from the orbit med credit line is that correct.

Terry Kohler: Yes, that is absolutely correct.

Speaker Change: Yes, but that is absolutely correct.

Brian Kemp Dolliver: Okay, thank you. And my last question relates to Ken Theridan, who is still out in the field with practices. You know, how much do you think is still out there? And do any of these, particularly the Dormer Agreement, contemplate taking any inventory in the field back from their customers?

Speaker Change: Okay. Thank you and my last question relates to can they are at and that is still out in the field with practices.

Speaker Change: How much do you think is still out there and.

Speaker Change: Do any of these particularly the dormer agreement contemplate.

Speaker Change: Taking any inventory in the field back.

Speaker Change: From their customers.

Ted White: Yeah, Ken, this is Ted. I would tell you that, first of all, we have no data to show how much compounded converitin is in the market. I could just tell you that there is more out there than we realize. Let's just put it that way.

Speaker Change: Yeah, Ken This is Ted I would tell you that first we have no.

Ted White: We have no data to show how much compound of <unk> is in the market I can just tell you that there is more out there than than we realized let's let's just put it that way, but there is no. There is no data to give us an actual accurate account one of the things that will we'll work on in the agreement with dormer is.

Ted White: But there's no data to give us an actual, accurate account. You know, one of the things that we'll work on in the agreement with Norma is, you know, they'll be providing us with customers once that agreement gets signed. So that will give us, you know, additional information to help understand how much is out there and also, you know, who the targets are.

Ted White: As you know.

Ted White: There'll be providing us with them with customers once that agreement gets gets signed so that will give us.

Additional information to help understand how much is out there and also who the targets are.

Brian Kemp Dolliver: Super. Thank you so much. Yeah, you bet.

Speaker Change: Super Thank you so much.

Speaker Change: Yeah, you bet.

Operator: Thank you. Ladies and gentlemen, this concludes our question and answer session. I would now hand the conference over to Ted White for his closing comments. Ted?

Speaker Change: Thank you ladies and gentlemen, this concludes our question and answer session I would now hand, the conference silver to Ted White for his closing comments Ted.

Thank you operator.

Ted White: I'd like to thank all of you for joining us this morning. We're obviously very pleased with the significant accomplishments in the first quarter of 2024, and we look forward to providing another update on our second quarter earnings call this August.

Ted White: I would like to thank all of you for joining us. This morning, we're obviously very pleased with the significant accomplishments in the first quarter of 2024, and we look forward to providing another update on our second quarter earnings call. This August thank.

Operator: Thank you. The conference of Verrica Pharmaceuticals has now concluded. Thank you for your participation. You may now disconnect your lines.

Ted White: Thank you.

Thank you the conference of America Pharmaceuticals has now concluded. Thank you for your participation you may now disconnect your lines.

Ted White: Yeah.

Ted White: [music].

Okay.

Ted White: Yeah.

Ted White: [music].

Ted White: Yeah.

Ted White: Yeah.

Ted White: [music].