Q2 2024 Verrica Pharmaceuticals Inc Earnings Call
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Unknown Speaker: Thanks for watching, and don't forget to like, share, and subscribe to our channel. Thanks for watching, and don't forget to subscribe to our channel. Thank you very much. A-ha-ha-ha-ha-ha-ha A-ha-ha-ha-ha-ha, Good morning and welcome to the Verrica Pharmaceuticals, 2nd quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Speaker Change: [inaudible]
Speaker Change: Good morning, and welcome to the Verrica Pharmaceuticals' second quarter 2024 earnings conference call .
Operator: After the speaker's remarks, there will be a question and answer session. You may register to ask a question at any time by pressing star one on your telephone keypad. You may remove yourself by pressing star. Please note, today's call will be recorded, and I'll be standing by if you should need any assistance. It is now my pleasure to turn the call over to today's host, Kevin Gardner, Managing Director of Lifesci Partners
Speaker Change: At this time, all participants are in a listen only mode. After the speaker's remarks, there will be a question and answer session. You may register to ask a question at any time by pressing star one on your telephone keypad. You may remove yourself by pressing star two. You may register to ask a question at any time by pressing star two.
Speaker Change: Please note, today's call will be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the call over to today's host, Kevin Gardner, Managing Director with LifeSci Partners. Please go ahead. Thank you.
Kevin Gardner: Please go ahead. Thank you, operator. Hello, everyone, and welcome to Verica Pharmaceuticals' second quarter 2024 corporate update and earnings conference call. With me on the line this morning are Ted White, President and Chief Executive Officer of Verica, Joe Bonaccorso, Chief Commercial Officer, Terry Kohler, Chief Financial Officer, Dr. Gary Goldenberg, Verica's Chief Medical Officer, and Chris Hayes, Verica's Chief Legal Officer. As a reminder, during today's call, management will make forward-looking statements. These statements may include expectations related to the commercialization of Wycant, VP102, for the treatment of molluscum contagiosum in the United States, regulatory developments, the development and potential benefits of Verrica's product candidates, our expected cash runway, as well as our overall business strategy and planned operations.
Kevin Gardner: Thank you, Operator. Hello, everyone, and welcome to Verrica Pharmaceuticals' second quarter 2024 Corporate Update and Earnings Conference Call.
Speaker Change: With me on the line this morning are Ted White and
Speaker Change: President and Chief Executive Officer of Verrica.
Speaker Change: Joe Bonaccorso, Chief Commercial Officer.
Carrie Kohler: Terry Koehler.
Carrie Kohler: Chief Financial Officer.
Speaker Change: Dr. Gary Goldenberg
Speaker Change: Verrica's Chief Medical Officer, and Chris Hayes, Verrica's Chief Legal Officer.
Kevin Gardner: 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.
Kevin Gardner: 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.
Speaker Change: These statements may include expectations related to the commercialization of Wycanth VP-102 for the treatment of molluscum contagiosum in the United States.
Speaker Change: regulatory developments, the development and potential benefits of Verrica's product candidates, our expected cash runway, as well as overall business strategy and planned operations.
Speaker Change: These forward-looking statements are based on the company's current expectations.
Speaker Change: and involve inherent risks and uncertainties. And based on those risks and uncertainties, Verica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements.
Speaker Change: Please see Verica's SEC filings for important risk factors.
Speaker Change: Verica 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.
Speaker Change: 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.
Speaker Change: There are a number of limitations related to the use of these non-GAAP financial measures versus their closest GAAP equivalents.
Speaker Change: 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.
Kevin Gardner: There are a number of limitations related to the use of these non-gap financial measures versus their closest gap equivalent. 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. I'll now turn the call over to Verrica's president and CEO, Ted White.
Speaker Change: I'll now turn the call over to Verica's President and CEO, Ted White. Ted?
Ted White: Thank you, Kevin. And good morning, everyone. And thank you for joining us for our second quarter 2024 earnings call. I'm pleased to report that we continue to make progress across our business, including with the commercial launch of WICAMP and the exciting data being generated from our development stage pipeline, starting with YCAN.
Ted White: Thank you, Kevin, and good morning, everyone. And thank you for joining us for our second quarter 2024 earnings call.
Ted White: I'm pleased to report that we continue to make progress across our business, including with the commercial launch of WICAMP and the exciting data being generated from our development stage pipeline.
Ted White: For the second quarter, we recorded product revenue net of $4.9 million, which reflects growth in demand for why can't, as well as the expansion of our distribution footprint with the addition of St. Cora as a specialty distribution partner and the related impact of a one-time stock in order. Sincora allows us to provide additional customer support through their GPO IPN, which is intended to target dermatologists and drive further by and bill account growth through IPN members.
Ted White: Starting with Wycanth.
Ted White: For the second quarter, we recorded product revenue net of $4.9 million, which reflects growth in demand for Wycanth.
Ted White: As well as the expansion of our distribution footprint with the addition of Sencora as a specialty distribution partner and the related impact of a one-time stock in order.
Ted White: Syncor allows us to provide additional customer support through their GPO IPN which is intended to target dermatologists and drive further buy and bill account growth through IPN membership.
Ted White: We've also added Vizient as a GPO for hospitals, and we believe we will see a positive impact on why we can't pull through demand in the second half of the year. We believe that we've addressed many big operational hurdles, and in the second half of the year, we must focus on capturing market share and driving adoption. We continue to focus on simplifying the process for physicians to treat patients. On April 1st, Wycanth received a permanent J code from CMS, and on July 1st, CMS published the Part B Schedule Listing Wycanth Reimbursement at an average selling price plus 6%. This created visibility for commercial insurers to further establish their own allowables, which represents the maximum amount a plan will pay for covered healthcare services.
Ted White: We've also added Vizient as a GPO for hospitals and we believe we will see a positive impact on why can't pull through demand in the second half of the year.
Ted White: We believe that we have addressed many big operational hurdles, and in the back half of the year, we must focus on capturing market share and driving adoption.
Ted White: We continue to focus on simplifying the process for physicians to treat patients.
Speaker Change: On April 1st, Wycanth received a permanent J code from CMS, and on July 1st, CMS published the Part B Schedule Listing Wycanth Reimbursement at an average selling price plus 6%.
Speaker Change: This created visibility for commercial insurers to further establish their own allowables, which represents the maximum amount a plan will pay for covered health care service.
Ted White: Please report, as of today, insurance companies covering approximately 98% of commercial lives with white camp coverage have formally published their allowables, which are now visible to physicians electronically at the time of diagnosis. We believe that this should drive confidence in payer coverage and additional same-day treatment for established buying bill accounts, in addition to driving growth in buy and build.
Speaker Change: I'm pleased to report that as of today, insurance companies covering approximately 98% of commercial lives with Y-CAMP coverage have formally published their allowables, which is now visible to physicians electronically at the time of diagnosis.
Speaker Change: We believe that this should drive confidence in paired coverage and additional same-day treatment for established buy-and-bill accounts.
Ted White: We continue to promote white hands as a value proposition for specially pharmacy customers, as we look to maximize adoption across both channels. In a moment, Joe will talk more about our commercial strategy and specific efforts to build additional momentum in the commercialization of Y-King. We continue to make progress in removing products containing compound and catharine from the U.S.
Speaker Change: In addition to driving growth in buy and build, we continue to promote WICAN's value proposition for specialty pharmacy customers as we look to maximize adoption across both channels.
Speaker Change: In a moment, Joe will talk more about our commercial strategy and specific efforts to build additional momentum in the commercialization of WICAN.
Joe Bonaccorso: We continue to make progress in removing products containing compounded contheridin in the U.S. In July , we announced a litigation settlement with Dormer Laboratories that will discontinue the sale by Dormer of compounded contheridin products in the United States.
Unknown Speaker: In July, we announced a litigation settlement with Dormer Laboratories that will discontinue the sale by Dormer of compandiant therapy products in the United States. As the largest supplier of non-FDA-approved catharine-containing products into the U.S. market, the settlement with Dormer marks a major win for patients who seek access to safe, effective, and FDA-approved therapy for the treatment of musculoskeletal disease. While we expect this sediment will have a positive impact on demand for white camp, removing compounded confederate for the marketplace will take time, as content of products typically has a six month dating life.
Joe Bonaccorso: As the largest supplier of non-FDA-approved catharetin-containing products into the U.S. market, the settlement with Dormer marks a major win for patients who seek access to a safe, effective, and FDA-approved therapy for the treatment of molluscum.
Joe Bonaccorso: While we expect this sediment will have a positive impact on demand for Y-CAMP, removing compound and converter from the marketplace will take time.
Unknown Speaker: [inaudible] We therefore remain focused on customer conversion, but we recognize it will take some time for your dormers' privacy-sold inventory to work its way through the office. While our main focus remains developing the market opportunity for Y-canth for the treatment of molluscum, we think that's just the beginning for this unique and innovative product. The next major opportunity for Wycanth is for the treatment of common warts. And with a prevalence of approximately 22 million patients in the U.S. alone and no FDA-approved therapies, common warts represent one of the largest unmet needs in all of dermatology.
Speaker Change: As compounded products typically have a six-month dating, we therefore remain focused on customer conversion, but we recognize it will take some time for Dormer's previously sold inventory to work its way through offices.
Speaker Change: While our main focus remains developing the market opportunity for Y-canth for the treatment of molluscum, we think that's just the beginning for this unique and innovative product.
Speaker Change: The next major opportunity for WICANT is for the treatment of common warts. And with a prevalence of approximately 22 million patients in the U.S. alone and no FDA-approved therapies, common warts represents one of the largest unmet needs in all of dermatology.
Ted White: We continue to make important progress in advancing our Common Warts program. During the quarter, we amended our existing licensing agreement with Torrey Pharmaceutical so that both companies will jointly conduct and split the costs of a global, pivotal phase three trial for Wycanth in Common Warts. Torrey will fund Verrica's portion of the cost as an offset to Torrey's future payment obligation.
Speaker Change: We continue to make important progress in advancing our Common Warts Program. During the quarter, we amended our existing licensing agreement with Torrey Pharmaceutical so that both companies will jointly conduct and split the costs of a global pivotal phase three trial for Wycanth in common warts.
Speaker Change: Torrey will fund Verica's portion of the cost as an offset to Torrey's future payment obligations to Verica based on regulatory milestones and sales of Wycanth for molluscum contagiosum and common warts in Japan.
Ted White: To Verrica, based on regulatory milestones and sales of YCANTH from the Luscombe Continuosome and Common Works in Japan. In addition, Tori will make a milestone payment of $8 million to Verrica upon the first patient in Japan in the phase retrial. Importantly, this amendment should benefit both parties from a cost and time to market standpoint, and the new funding structure is expected to have minimal impact on our near-term cash position. However, initiating a global phase 3 study remains subject to feedback from the U.S. FDA and Japan's Pharmaceuticals and Medical Device Agency on the proposed design of the phase 3 trial. We expect to receive feedback from the FDA and the PMDA in Q4 of this year, and based on our current timeline estimates, we anticipate initiating the phase retrial in the first half of 2025.
Speaker Change: In addition, TORI will make a milestone payment of $8 million to Verica upon the first patient dosed in Japan in the Phase III trial.
Speaker Change: Importantly, this amendment should benefit both parties from a cost and time-to-market standpoint, and the new funding structure is expected to have minimal impact on our near-term cash position.
Speaker Change: Initiation of a global Phase III study remains subject to feedback from the U.S. FDA and Japan's Pharmaceuticals and Medical Device Agency on the proposed design of the Phase III trial.
Speaker Change: We expect to receive feedback from the FDA and the PMDA in Q4 of this year. And based on our current timeline estimates, we anticipate initiating the phased retrial in the first half of 2025.
Ted White: If Whitehands is successfully developed, approved, and commercialized for the treatment of common warts, we anticipate a high degree of coal-point overlap and marketing synergies with our current Meluskin Promotion of White. Now I'd like to briefly review the exciting data we announced this morning for our lead pipeline candidate, VP315, which is being developed for the treatment of basal cell carcinoma. By the way of background, VP315 is a potential first-in-class oncolytic peptide that has been engineered to provide more targeted delivery to stimulate the patient's immune system and destroy cancer cells. We are developing BP-315 as a therapy that can serve as a potential non-surgical alternative to surgery, including most surgeries, or as a new adjuvant therapy for basal cell carcinomas, including advanced basal cells.
Speaker Change: If Wycanth is successfully developed, approved, and commercialized for the treatment of common warts, we anticipate a high degree of cold point overlap and marketing synergies with our current molluscum promotion of Wycanth.
Ted White: As the most common type of cancer globally, we expect that the commercial opportunity for basal cell carcinoma is sizable, with approximately 3.6 million diagnoses each year in the United States alone. The Phase 2 study is an open-label, proof-of-concept trial designed to assess the safety and tolerability, dose regimen, and efficacy of VP315 in biopsy-confirmed basal cell carcinoma. Preliminary efficacy data based on 90 out of 93 lesions treated show that treatment with VP315 resulted in approximately 51% complete histologic clearance rate of basal cell carcinoma.
Speaker Change: Now I'd like to briefly review the exciting data we announced this morning for our lead pipeline candidate, VP315, which is being developed for the treatment of basal cell carcinoa.
Speaker Change: By the way of background, VP315 is a potential first-in-class oncolytic peptide that has been engineered to provide more targeted delivery to stimulate the patient's immune system and destroy cancer cells.
Speaker Change: We are developing BP315 as a therapy that can serve as a potential non-surgical alternative to surgery, including Mohs surgery, or as a neoadjuvant chemotherapeutic for basal cell carcinomas, including advanced basal cell.
Speaker Change: As the most common type of cancer globally, we expect that the commercial opportunity for basal cell carcinoma is sizable, with approximately 3.6 million diagnoses each year in the United States alone.
Ted White: In addition, of the patients who had residual carcinoma, those residual tumors showed approximately 71% reduction in tumor size. Taken together, this represents approximately 86% overall reduction in tumor size across all lesions treated. These results, if confirmed in a pivotal study, make a strong argument for the use of VP315 as first-line therapy in the treatment of local and advanced basal cell carcinoma, which will either eliminate the need for additional treatment entirely or significantly reduce the size of the excision and the surgical burden associated with other treatment regimens, including bone surgery. No treatment-related serious adverse events were reported in the Phase II study, and most treatment-related adverse events were classified as mild to moderate, as expected, with injection-site pain being the most common adverse event.
Speaker Change: The Phase 2 study is an open-label, proof-of-concept trial designed to assess the safety and tolerability, dose regimen, and efficacy of BP315 in biopsy-confirmed basal cell carcinoma.
Speaker Change: Preliminary efficacy data based on 90 out of 93 lesions treated show that the treatment with DP315 resulted in approximately 51% complete histologic clearance rate of basal cell carcinoma.
Speaker Change: In addition, of the patients who had residual carcinoma,
Speaker Change: Those residual tumors showed approximately 71% reduction in tumor size.
Speaker Change: Taken together, this represents approximately 86% overall reduction in tumor size across all lesions treated.
Speaker Change: These results, if confirmed in a pivotal study, make a strong argument for the use of BP-315 as first-line therapy in the treatment of local and advanced basal cell carcinoma.
Speaker Change: which will either eliminate the need for additional treatment entirely or significantly reduce the size of the excision and the surgical burden associated with other treatment regimens, including bow surgery.
Speaker Change: No treatment-related serious adverse events were reported in the Phase 2 study, and most treatment-related adverse events were classified as mild to moderate, as expected, with injection-site pain being the most common adverse event.
Ted White: Based on these positive efficacy and safety data from the Phase 2 trial, we believe BP315 has significant potential to become an important first-line treatment option for basal cell cancer, for use prior to surgery or instead of oral therapies, which have significant systemic side effects. We are obviously very pleased with these clinical data, and we intend to hold a KOL event in the near future to discuss in more detail the results from the VP315 Phase 2 study and provide additional insight into physician use cases. I'll now turn the call over to Joe to review our commercial progress. Joe?
Speaker Change: Based on these positive efficacy and safety data from the Phase 2 trial,
Speaker Change: We believe VP315 has significant potential to become an important first-line treatment option for basal cell carcinoma for use prior to surgery or instead of oral therapies which have significant systemic side effects.
Speaker Change: We are obviously very pleased with these clinical data, and we intend to hold a KOL event in the near future to discuss in more detail the results from the VP315 Phase 2 study and provide additional insight into physician use case.
Speaker Change: I'll now turn the call over to Joe to review our commercial progress. Joe?
Joe Bonaccorso: Thanks very much, Ted. As Ted mentioned earlier, in the second quarter, we saw pull-through demand for Wycanth grow sequentially quarter over quarter. The increase in demand reflects an increase in unit suspense through a specialty pharmacy and a higher number of units sold to hospitals and buying bill offices, including Walgreens community stores. Although White Camp showed growth versus the prior quarter, we remained focused on accelerating growth in the second half of the year.
Joe Bonaccorso: Thanks very much, Ted. As Ted mentioned earlier, in the second quarter, we saw pull-through demand for Wycanth grow sequentially quarter over quarter. The increase in demand reflects an increase in unit suspense through a specialty pharmacy, and a higher number of units sold to hospitals and buying bill offices, including Walgreens community stores.
Joe Bonaccorso: We believe that many of our accomplishments from the second quarter, including our settlement with dormer labs and the receipt of a permanent J code from CMS and the establishment of allowables across commercial coverage will translate into increased demand for White Camp in the second half of 2024 and beyond. In the second half of the year, we will continue to focus on the future of White Camp. We will continue to focus on the future of White Camp in the second half of the year.
Speaker Change: Although YCAMP showed growth versus the prior quarter,
Speaker Change: We remain focused on accelerating growth in the second half of the year. We believe that many of our accomplishments from the second quarter
Speaker Change: including our settlement with Dormer Labs and the receipt of a permanent J-code from CMS and the establishment of allowables across the commercial coverage will translate into increased demand for WICAN in the second half of 2024 and beyond.
Joe Bonaccorso: In the third quarter, we are working aggressively to grow applicator demand by focusing on the extension of our buy-and-bill accounts, which includes the addition of GPOs Visient for Hospitals and IPN for Dermatology Practice, as well as the targeted conversion of physician practices that were former users of compounded contraceptives and placing an emphasis on driving adherence through treat-to-clear messaging and medical education. Our coverage for print also continues to expand, and in the second quarter, we added a number of new Medicaid states, including Michigan, Louisiana, Alabama, and West Virginia. With respect to total lives under coverage, as of July 31st, we have reached 234 million lives under coverage, which encompasses 139 health care plans, spanning commercial, Medicaid, TRICARE, and federal employee plans.
Speaker Change: In the third quarter, we are working aggressively to grow applicator demand by focusing on the expansion of our buy-and-bill accounts, which includes the addition of GPOs Vizient for hospitals and IPN for dermatology practices.
Speaker Change: The targeted conversion of physician practices that were former uses of compounded cathartin and placing an emphasis on driving adherence through treat-to-clear messaging and medical education.
Speaker Change: Our coverage for a print also continues to expand, and in the second quarter, we added a number of new Medicaid states, including Michigan, Louisiana, Alabama, and West Virginia.
Speaker Change: With respect to total lives under coverage as of July 31st, we have reached 234 million lives under coverage, which encompasses 139 health care plans, spanning commercial, Medicaid, TRICARE, and federal employee plans.
Joe Bonaccorso: With the permanent J code in place and allowables established on most commercial plans, we believe broader acceptance by prescribers will continue as the reimbursement process becomes more efficient. We're also very focused on optimizing coverage under the commercial and state Medicaid plans by working with the payer universe to eliminate prior authorizations and other administrative burdens that may potentially be a barrier to patients being able to receive an approved treatment. Finally, on our last call, I discussed the addition of 20 new pediatric reps in the major MSAs across the country.
Speaker Change: With the permanent J-code in place and allowables established on most commercial plans, we believe broader acceptance by prescribers will continue as the reimbursement process becomes more efficient.
Speaker Change: We're also very focused on optimizing coverage under the commercial and state Medicaid plans by working with the payer universe to eliminate prior authorizations and other administrative burdens that may potentially be a barrier to patients being able to receive an approved treatment.
Speaker Change: Finally, on our last call, I discussed the addition of 20 new pediatric reps in the major MSAs across the country.
Terry Kohler: I am very pleased with the productivity of these new professionals to our sales force, which we believe is driving increased awareness and utilization of WICAMP in major pediatric medical practices. Pediatricians are also showing interest in buying Bill as they prefer to control the patient journey and have the ability to treat same-day. I'll now pass it to Terry to review our fourth quarter and year-end financial results.
Speaker Change: I am very pleased with the productivities of these new professionals to our sales force, which we believe is driving increased awareness and utilization of WICAMP and major pediatric medical practices.
Speaker Change: Pediatricians are also showing interest in buying Bill as they prefer to control the patient journey and have the ability to treat same day.
Speaker Change: I'll now pass it to Terry to review our fourth quarter and year-end financial results. Terry?
Terry Kohler: Thanks, Joe. For the second quarter of 2024, we reported total revenues of $5.2 million, which included YCAMP net revenues of $4.9 million. Wycanth revenue reflects a combination of X factory shipments to FFF related to demand pull through, as well as a one-time impact of an initial stock order from our new specialty distributor, Sencora, which represented approximately 54% of YCAMP revenue in the quarter. Gross product margins for the second quarter of 2024 were 93%, which continued to benefit from certain components of the standard cost of goods sold, including bulk production and the assembly of applicators from our registration batches, having been expensed as R&D prior to approval.
Terry: Thanks, Joe. For the second quarter of 2024, we reported total revenues of $5.2 million, which included YCANF net revenues of $4.9 million.
Terry: Why can't revenue reflects a combination of ex-factory shipments...
Terry: to FFF related to demand pull through as well as a one-time impact of an initial stock in order from our new specialty distributor, Sankora, which represented approximately 54% of YCAMPF revenue in the quarter.
Terry: Gross product margins for the second quarter of 2024 were 93 percent, which continued to benefit from certain components of standard cost of goods sold, including bulk production and the assembly of applicators from our registration batches having been expensed as R&D prior to approval.
Terry Kohler: Research and development expenses of $3.3 million in the second quarter of 2024 decreased versus the second quarter of 2023 by $2.4 million, driven primarily by a reduction in clinical trial costs related to VP315 and CMC costs related to pre-approval YCAMP spend in the prior year period. Selling general and administrative expenses of $16.5 million in the second quarter of 2024 increased versus the second quarter of 2023 by $10.6 million, driven primarily by commercial activity for WICAN. Gap Met Laws' revenue was $17.2 million, or $0.37 cents per share, for fiscal second quarter 2024.
Terry: Research and development expenses of $3.3 million in the second quarter of 2024 decreased versus the second quarter of 2023 by $2.4 million, driven primarily by a reduction in clinical trial costs related to VP315 and CMC costs related to pre-approval YCAMP spend in the prior year period.
Speaker Change: Selling General Administrative Expenses of $16.5 million in the second quarter of 2024, increased versus the second quarter of 2023 by $10.6 million to remain primarily by commercial activity for Whitehands.
Ted White: Compared to a Gap Met Laws of $11 million, or $24 cents per share for the prior year period, the company's non-GAAP net loss for the second quarter of 2024 was $14.4 million, or $0.31 per share, compared to a net loss of $9.4 million, or $0.21 per share, for the second quarter of 2023. And finally, as of June 30th, 2024, Verrica had aggregate cash and cash equivalents of $31.9 million.
Speaker Change: Gap net loss was $17.2 million or $0.37 per share for fiscal second quarter 2024, compared to a gap net loss of $11 million or $0.24 per share for the prior year period.
Speaker Change: on a non-GAAP basis, which excludes stock-based compensation and non-cash interest expense.
Speaker Change: The second quarter of 2024, net loss was $14.4 million, or $0.31 per share, compared to a net loss of $9.4 million, or $0.21 per share, for the second quarter of 2023.
Speaker Change: And finally, as of June 30th, 2024, Verica had aggregate cash and cash equivalents of $31.9 million. The company expects that its cash and cash equivalents as of June 30th, 2024, will be sufficient to fund operations into the first quarter of 2025.
Ted White: The company expects that its cash and cash equivalents as of June 30th, 2024, will be sufficient to fund operations into the first quarter of 2025. I'll now turn the call back over to Ted for closing remarks. Thanks, Terry. As we progress through the third quarter, we are liaison focused on the launch of White Camp and accelerating White Camp demand in the second half of the year. We achieved important wins across multiple areas of our business. For example, significant amounts of compounded catherin have been removed from the U.S. market.
Speaker Change: I'll now turn the call back over to Ted for closing remarks.
Ted White: Thanks, Terry. As we progress through the third quarter, we are laser-focused on the launch of YCAMP and accelerating YCAMP demand in the second half of the year.
Speaker Change: We achieved important wins across multiple areas of our business.
Ted White: We will continue to be vigilant on this front. We will continue to be vigilant on this front. CMS, Public Favorable, Why Can't The Laubles On July 1st?
Speaker Change: Significant amounts of compounded contheragin have been removed from the U.S. market.
Speaker Change: And we will continue to be vigilant on this front.
Ted White: And we continue to focus on expanding our bi- and bill accounts and demand with the addition of St. Cora, IPN, and Visient as GPOs, targeting physician groups and hospitals. We have also made considerable progress in our pipeline. We expect to continue advancing white hands for the treatment of common works through our amended agreement with Tori and the exciting top-line data we released today on our Phase 2 data for VP315 for the treatment of baseless warts. Our company remains very excited about VP315's unique and differentiated product profile, which has the potential to be a primary and new adjuvant, non-invasive therapy that addresses a significant unmetical need in dermatolog
Speaker Change: CMS published favorable WICANT allowables on July 1st, and we continue to focus on expanding our buy and bill accounts and demand with the addition of Sincora, IPN, and Vizient as GPOs, targeting physician groups and hospitals.
Speaker Change: We also made considerable progress in our pipeline. We expect to continue advancing Y-cans for the treatment of common warts through our amended agreement with Torrey and the exciting top-line data we released today on our phase two data for VP315 for the treatment of basal cell carcinoma.
Speaker Change: Our company remains very excited about VP315's unique and differentiated product profile, which has the potential to be a primary and neoadjuvant non-invasive therapy that addresses a significant unmet medical need in dermatology.
Ted White: Our company remains very excited about our unique and differentiated product profile, which has the potential to be a primary and new adjuvant, non-invasive therapy that addresses a significant unmetical need in dermatology. That concludes our formal remarks, and I'll now turn the call over to the operator for Q&A. Thank you. The floor is now open for your questions. As a reminder, if you would like to ask a question... Please press star 1 on your telephone keypad.
Speaker Change: That concludes our formal remarks, and I'll now turn the call over to the operator for Q&A.
Speaker Change: Thank you. The floor is now open for your questions. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: If at any time your question has been answered, you may need to remove yourself from the queue by pressing star 2.
Stacy Ku: If at any time your question has been answered, you may need to remove yourself from the queue by pressing start. Again, to ask a question, please press star. Our first question will come from Stacy Ku with TD Cowan. Please go ahead. We had a few questions, just first on why can't you put some metrics around the progress you've made and removing compounded cantharidin and just a better understanding around the timeline of when things might resolve, just help set some expectations there, and a quick follow-up on kind of the stocking you've discussed in a lot of detail, where do you expect it to normalize versus where it is now. And I'm curious about the success you've seen maybe on the face. Thanks so much. Thank you, Stacy. This is Ted.
Speaker Change: Again, to ask a question, please press star 1.
Speaker Change: Our first question will come from Stacy Ku with TD Cowan. Please go ahead.
Speaker Change: All right.
Stacey Koo: We had a few questions, just first on WhyCamp.
Speaker Change: Can you put some metrics around the progress you've made in removing compounded cantharidin?
Speaker Change: And just a better understanding around the timeline of when things might resolve just helps set some expectations there. And a quick follow-up on kind of the stocking, you've discussed in a lot of detail, where do you expect it to normalize versus where it is now? So those are our why can't questions. And then for BP 315.
Speaker Change: Obviously, the treatment paradigm for BCC has a lot of surgery, so kind of curious, what's the pathway forward that could help build enthusiasm beyond?
Speaker Change: for the typical cutting out the lesion. What are your early thoughts on study design?
Speaker Change: And what kind of follow-up do you think will be necessary to confirm long-term complete histological clearance? What do you think clinicians will want to see? And then one more question, if possible, and I can come back and follow up. Do you see any greater success in certain lesions?
Operator: Good morning and welcome to the Verrica Pharmaceuticals 2nd quarter of 2024 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's remarks, there will be a question and answer session. You may register to ask a question at any time by pressing star one on your telephone keypad. You may remove yourself by pressing star two. Please note today's call will be recorded, and I'll be standing by if you should need any assistance.
Speaker Change: And I'm curious about the success you've seen maybe on the face. Thanks so much.
Ted White: I'll handle the first part on the compounded contheridin and then turn it over to Terry and then over to Gary Goldenberg for the BP315. So on the compounded contheridin, as you know, we've announced that we've been successful with both lidars and dormer laboratories. Typically, compounded contheridin has a shelf life of around six months.
Speaker Change: Thank you, Stacey. This is Ted. I'll handle the first part on the compounded
Speaker Change: to Terry and then over to Gary Goldenberg for the BP 315.
Speaker Change: So, on the compounded contheridin, as you know, we've announced that we've been successful with both lidars and dormer laboratories. Typical compounded contheridin has a shelf life of around six months.
Ted White: We know that in Dormer laboratories specifically, there are over 24,000 vials shipped to the United States. So we expect that that inventory has to bleed out from offices. And so when you think about it, the last shipment was made in April of 2024. So with a six-month shelf life, we expect that to bleed out in the second half of the year. And I'll turn the next part over to Terry. Good morning, Stacy.
Kevin Gardner: It is now my pleasure to turn the call over to today's host, Kevin Gardner, managing director with lifestyle partners. Please go ahead. Thank you operator.
Speaker Change: We know that in Dormer Laboratories specifically, there were over 24,000 vials shipped to the United States.
Speaker Change: So, you know, we expect that that inventory has to, you know, has to bleed out from offices. And so.
Kevin Gardner: Hello everyone and welcome to Verrica Pharmaceuticals 2nd quarter 2024 corporate update and earnings conference call. With me on the line this morning are Ted White, President and Chief Executive Officer of Verrica, 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. As a reminder during today's call, management will make forward-looking statements. These statements may include expectations related to the commercialization of YCAMP, VP 102, for the treatment of Velocom Contagiosum in the United States.
Speaker Change: When you think about it, the last shipment was made in April of 2024.
Speaker Change: So with a six-month shelf life, we expect that to bleed out in the second half of the year.
Terry Kohler: So your question on inventory and normalization. I think our expectations are going to continue to grow demand aggressively over the back half of the year here. So I think we expect inventory to normalize in the channel in the back half of the year and be normalized by early 2025. I think we're going to have a little bit of time.
Speaker Change: And I'll turn the next part over to Terry.
Terry: Sure. Morning, Stacey. So your question on inventory and normalization, I think, you know, our expectations are we're going to continue to grow demand aggressively over the back half of the year here. And so I think we expect inventory to normalize in the channel in the back half of the year and be normalized by early 2025.
Kevin Gardner: Regulatory developments, the development and potential benefits of Verrica's product candidates are expected cash runway as well as overall business strategy and planned operations. 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, Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements. Please see Verrica's SEC violence for important risk facts. 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.
Terry Kohler: Okay, do you expect it to have some kind of expectations or guidance around the percentage of realized revenue from the inventory? Just to help set expectations. Well certainly, you know, we know the distributors are going to take into account inventory on hand and future demand expectations as they think about what the appropriate level of X factory orders will be after the year, but we can't give any guidance on revenues at this stage or comment really on the cadence of any future X factory. Thank you. Okay, under.
Speaker Change: Okay, do you expect it to have some kind of expectations or guidance around the percentage of realized revenue from the inventory?
Speaker Change: is the help of certain expectations.
Speaker Change: Yeah, well, certainly, you know, we know distributors are going to take into account inventory on hand and future demand expectations as they think about what the appropriate level of X factory orders will be in the back half of the year, but we can't give any guidance on revenues at this stage or comment really on the cadence of any future X factory orders.
Unknown Speaker: Thank you. Our next question will come from Gregory Renza with RBC Capital Markets. Todd, hold on a second.
Speaker Change: Okay, understood.
Speaker Change: Thank you. Our next question will come from Gregory Renza with RBC Capital Markets.
Unknown Speaker: We haven't answered all the questions yet. Just as a pause, I want to make sure we answer the 315 question as well. Yes. Can you hear me, Stacy?
Speaker Change: Todd, hold on a second. We haven't answered all the questions. Just as a pause, I want to make sure we answer the 315 question as well.
Gary Goldenberg: Hi. Thank you for the questions. Okay. Regarding the paradigm, we believe that based on our phase 2 data, and it's phase 2, not phase 3, but based on the phase 2 data, we believe that this product, VP315, has the ability to shift the treatment paradigm. I think if you look at our favorable safety profile in the phase two study, we're very pleased with that. And, as you know, phase two really is a safety study.
Speaker Change: Yes, can you hear me? Stacey, hi, thanks for the questions. Yes. Thank you. Okay.
Speaker Change: Regarding the paradigm, we believe that based on our Phase 2 data, and it's Phase 2, not Phase 3, but based on the Phase 2 data, we believe that this product, VP315, has the ability to shift the treatment paradigm.
Kevin Gardner: In addition, during today's call we will discuss certain non-gap financial measures. These non-gap financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAP. There are a number of limitations related to the use of these non-gap financial measures versus their closest GAP equivalents. 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.
Speaker Change: I think if you look at our favorable safety profile in the phase 2 study, we're very pleased with that.
Gary Goldenberg: It's a dose escalation safety study. We did not see any severe adverse events related to the treatment, so that's a very positive development. If you look at efficacy data for complete histologic clearance and also for tumor size reduction, essentially shrinking the tumor, we believe that BP315 has the potential to be the treatment of choice between biopsy and diagnosis and the potential need for surgery. Right now, in the vast majority of patients, you get a diagnosis with a biopsy, and your next step is surgery. We believe that BP315 has the potential to be that step in between. In 51% of subjects in our study, there was complete histologic clearance, meaning that there would be no need for surgical intervention.
Speaker Change: And as you know, Phase 2 really is a safety study. It's a dose escalation safety study. We did not see any severe adverse events related to the treatment, so that's a very positive development.
Gary Goldenberg: And those patients who did not have histologic clearance, there was a 71% reduction in lesion size. What does that mean for a patient? It means that if they do have to have surgery later on, the surgery now is much smaller. It's decreased by more than 50%. So their surgical scar, the operation itself, is now much smaller than it would have been prior to using DP315. And we really believe that this has the potential to shift the treatment paradigm. As far as the follow-up time needed and what dermatologists would like to see, I think it's too early to comment.
Speaker Change: If you look at efficacy data for complete histologic clearance and also for tumor size reduction, essentially shrinking the tumor.
Speaker Change: We believe that VP315 has the potential.
Speaker Change: to be the treatment of choice between biopsy and diagnosis.
Speaker Change: and potential need for surgery. Right now, in vast majority of patients, you get a diagnosis with a biopsy, your next step is surgery. We believe that BP315 has the potential to be that step in between.
Ted White: I'll now turn the call over to Verrica's president and CEO, Ted White. Thank you, Kevin, and good morning everyone, and thank you for joining us for our second quarter of 2024 earnings call. I'm pleased to report that we continue to make progress across our business, including with the commercial launch of YCAMP and the exciting data being generated from our YCAMP. For the second quarter, we recorded product revenue net of $4.9 million, which reflects growth and demand for YCAMP, as well as the expansion of our distribution footprint with the addition of St. Cora as a specialty distribution partner and the related impact of a one-time stock in order.
Speaker Change: In 51% of subjects in our study, there was complete histologic clearance, meaning that there would be no need for a surgical intervention. In those patients who did not have histologic clearance,
Speaker Change: There was a 71% reduction in lesion size.
Speaker Change: What does that mean for a patient? It means that if they do have to have surgery later on, the surgery now is much smaller. It's decreased by more than 50%.
Speaker Change: So, their surgical scar, the operation itself, is now much smaller than it would have been prior to using BP315. So, we really believe that this has potential to shift the treatment paradigm.
Speaker Change: As far as the follow-up time needed and what dermatologists would like to see, I think it's too early to comment. I think these are the things that we will discuss with the agency in our end-of-phase student meeting, which we anticipate to happen in the first half of next year.
Ted White: St. Cora allows us to provide additional customer support through their GPO IPN, which is intended to target dermatologists and drive further by and bill account growth through IPN's membership. We've also added vision as a GPO for hospitals, and we believe we will see a positive impact on why can't pull through demand in the second half of the year. We believe that we've addressed many big operational hurdles, and in the back half of the year, we must focus on capturing market share and driving adoption.
Gary Goldenberg: I think these are the things that we will discuss with the agency in our end-of-phase student meeting, which we anticipate will happen in the first half of next year. But I think at this point, we're all very excited about the potential of this molecule to shift the treatment paradigm for the 3.6 million-plus patients with basal cell carcinoma in the United States alone. Thank you. We'll now go to our next question. Comes from Gregory Renza, with the RBC Capitol Mark. Thanks. Good morning, Ted.
Speaker Change: but I think at this point we are all very excited about the potential of this molecule to shift the treatment paradigm for the 3.6 million plus patients with basal cell carcinoma in the United States alone.
Speaker Change: [inaudible]
Ted White: We continue to focus on simplifying the process for physicians to treat patients. On April 1st, YCAMP received the Permanid J Code from CMS, and on July 1st, CMS published the Part B schedule listing YCAMP reimbursement at an average selling price plus 6%. This created visibility for commercial insurance to further establish their own allowables, which represents the maximum amount a plan will pay for covered healthcare service. I'm pleased to report that as of today, insurance companies covering approximately 98% of commercial lives with YCAMP coverage have formally published their allowables, which is now visible to physicians electronically at the time of diagnosis.
Speaker Change: Thank you. We'll now go to our next question. It comes from Gregory Renza with RBC Capital Markets.
Gregory Rinsa: Great. Thanks. Good morning, Ted. Congrats on the progress. Thanks for taking my question.
Gregory Renza: But as you and Joe. The Bulletproof Executive 2013, I just wanted to ask. Holler on... Prioritizing, and detailing there. I know you provided. You're curious about how important it is.
Speaker Change: Ted, as you and Joe and the team talk about it really accelerating and doubling down on execution for Wycanton.
Speaker Change: I just wanted to ask if you could just add additional color on some of those levers that you're pulling. How are you prioritizing the detailing there? I know you provided some color.
Speaker Change: prepared remarks, just curious. rar how important is that same day treatment and lowering those barriers for prior authorizations, know that you have seen that come down. And now, about now we are about a year or so into launch, just wanted to provide, wanted to just share
Joe Bonaccorso: We're lowering those barriers for priorities, or about a year or so into launch, just wanted to provide some of your commentary on the trajectory from here in light of all... Sure. Thank you, Greg, for the question. So listen, I would tell you a couple of things about prior authorization. We typically see that in our Medicaid and our managed Medicaid area of business. And we are actively working with those accounts as we speak to negotiate to get those PAs removed.
Ted White: We believe that this should drive confidence in air coverage and additional same-day treatment for established buying bill accounts. In addition to driving growth in buying bill, we continue to promote why can't value proposition for specialty pharmacy customers, as we look to maximize adoption across both channels.
Speaker Change: Please provide some of your commentary on...
Speaker Change: On the trajectory from here in light of all the executions.
Joe Bonaccorso: You know, the difference between the medical benefit and a pharmacy benefit in a medical benefit policy is that you cannot treat the same day until you get the authorization code. So it's not like a pharmacy benefit where you can do an electronic prior authorization, you know, cover my meds, etc.
Speaker Change: Thank you for the great presentation and detailing that you're doing.
Speaker Change: Thanks.
Speaker Change: Sure. Thank you, Greg, for the question. So listen, I would tell you a couple things. Prior authorizations, we typically see that in our Medicaid and our managed Medicaid area of business, and we are actively working with those accounts as we speak to negotiate to get those PAs removed.
Ted White: In a moment, Joe will talk more about our commercial strategy and specific efforts to build additional momentum in the commercialization of YCAM. We continue to make progress in removing products containing compounding content in the U.S. In July, we announced a litigation settlement with Dorma Laboratories that will discontinue the sale by Dorma of compounding content content in products in the United States.
Speaker Change: You know, difference between a medical benefit and a pharmacy benefit in a medical benefit policy, you cannot treat the same day until you get the authorization code. So it's not like a pharmacy benefit where you can do
Joe Bonaccorso: The medical benefit is different. So this is a key area that we're focusing on in order to get these PAs removed. Again, we typically see it in managed Medicaid and state Medicaid and then also the Blue Cross Blue Shields of the world. So that's number one. Number two is we're looking to pull a lever with our co-pay program. Right now, our co-pay program is, there's a variance between 25 to
Ted White: As the largest supplier of non-FDA approved contenting products into the U.S, market, the settlement with Dorma marks a major win for patients who seek access to a safe, effective, and FDA-approved therapy for the treatment of Alaska. While we expect this settlement will have a positive impact on demand for YCAM, removing compounding content from the marketplace will take time. As compounding products typically have a six-month dating, we therefore remain focused on customer conversion, but we recognize it will take some time for Dorma's privacy-sold inventory to work its way through offices.
Speaker Change: An electronic prior authorization, you know, covering my meds, etc. Medical benefit is different.
Speaker Change: So, this is a key area that we're focusing on in order to get these PAs removed. Again, we typically see it in managed Medicaid and state Medicades, and then also the Blue Cross Blue Shields of the world.
Speaker Change: So, that's number one.
Speaker Change: Number two is...
Speaker Change: We're looking to pull a lever with our co-pay program. Right now our co-pay program is There's a variance between 25 to 75 dollars You'll be hearing shortly that we'll be streamlining that process and making it more simplistic for for customers and and for for the patients
Joe Bonaccorso: You'll be hearing shortly that we'll be streamlining that process and making it more simple for customers and for patients. So that's another lever. I also think that the other lever we have with IPN, which is in the quarter, they have a strong footprint in dermatology, and now we'll be able to do contracting with them and be able to talk, spread things that, as you know, our field force cannot talk about with customers.
Ted White: While our main focus remains developing the market opportunity for YCAM for the treatment of Melluscom, we think that's just the beginning for this unique and innovative product. The next major opportunity for YCAM is for the treatment of common warts, and with a prevalence of approximately 22 million patients in the U.S, alone and no FDA-approved therapies, common warts represents one of the largest unmet needs in all of Dermatology. We continue to make important progress in advancing our common warts program.
Speaker Change: So that's another lever. I also think that the other lever we have with IPN, which is in Cora, they have a strong footprint in dermatology, and now we'll be able to do, you know, contracting with them and be able to talk spread that, you know, as you know, our field force cannot talk about with customers.
Joe Bonaccorso: And then, of course, we are working for the institution. And then, finally, looking at payers, why we have strong coverage, we would like to get even stronger coverage and look to go to a dual benefit where we have a pharmacy benefit as well as a medical benefit.
Speaker Change: And then, of course, we have Vizient for the institutions. And then finally, looking at payers, why we have strong coverage, we would like to get even stronger coverage and look to go to a dual benefit where we have a pharmacy benefit as well as a medical benefit. And those are the levers that we're actively working on as we speak.
Ted White: During the quarter, we amended our existing licensing agreement with Tori Pharmaceutical, so that both companies will jointly conduct and split the costs of a global pivotal Phase 3 trial for YCAM in common warts. Tori will fund Verkus' portion of the costs as an offset to Tori's future payment obligations to Verkus based on regulatory milestones and sales of YCAM from Melluscom, Contigiosum, and common warts in Japan. In addition, Tori will make a milestone payment of $8 million to Verkus upon the first patient-dost in Japan in the Phase 3 trial.
Joe Bonaccorso: And those are the levers that we're actively working on as we speak. That's great. Thank you. And just one more, maybe.
Terry Kohler: Terry, just on the sampling, can you just give us a state of the contribution there? And then maybe I'll just log in as you see the demand and maybe some of that predictability, but they didn't provide. For more information, please visit www.fema.gov.
Speaker Change: That's great. Thank you. And just one more, maybe for Terry. Just on the sampling, can you just give us a state of the contribution there and the expectations?
Speaker Change: And then maybe I'll just lob in as you see the demand and maybe some of that predictability. I know you didn't provide.
Speaker Change: Referring from guidance on, of course, inventory, but just largely, do you have a timeline as to when you would feel comfortable just internally on projections to provide larger, longer-term guidance when it comes to why cancer remedies? Thanks again, and congrats, guys, on the quarter and the data.
Terry Kohler: The opinions expressed herein are those of the guests and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult with a professional financial advisor before making any financial decisions. Again, congratulations. Thank you. Thanks Craig, good morning. So on the guidance front, you know, that's something that we'll consider as we get closer to 2025. It's not something that we'll do in the back after this year.
Ted White: Importantly, this amendment should benefit both parties from a cost and time-to-market standpoint, and the new funding structure is expected to have minimal impact on our near-term cash position. Initiation of a global Phase 3 study remains subject to feedback from the US FDA and Japan's pharmaceuticals and medical device agency on the proposed design of the Phase 3 trial. We expect to receive feedback from the FDA and the PMDA in Q4 this year, and based on our current timeline estimates, we anticipate initiating the Phase 3 trial in the first half of 2025. If YCAM is successfully developed approved and commercialized for the treatment of common warts, we anticipate a high degree of coal-point overlap and marketing synergies with our current Melluscom promotion of YCAM.
Terry Kohler: And then on the sample program. So, you know, we continue to sample, but I would tell you the sampling has gone significantly down, and we'll continue to go down. We believe it will come back up after the end of the year. Joe is that.
Speaker Change: Thanks, Greg. Good morning. So, on the guidance front, you know, that's something that we'll consider as we get closer to 2025. It's not something that we'll do in the back half of this year.
Speaker Change: And then on the sample program, so, you know, we continue to sample, but I would tell you the sampling has gone significantly down and will continue to go down, we believe, over the back half of the year. Joe, is that? Yeah, I mean, we look at the sample program as trade doses because they are a starter dose, right, to help the patient.
Joe Bonaccorso: Yeah, I mean, we look at the sample program as trade doses because they are starting those right to help the patient. So we're that continues to go down as we're continuing to build our coverage and same day treatment for physicians. So to Terry's point, that's going to continue to taper down dramatically on the back after the year.
Terry: So, that continues to go down as we're continuing to build our coverage and same-day treatment for physicians. So, to Terry's point, that's going to continue to taper down dramatically on the back half of the year here.
Joe Bonaccorso: Great. Thanks, guys. Thank you. Our next question will come from Glenn Santangelo with Jeffries. Please go ahead. Oh, yeah, thanks for taking my questions. Hey, Ted, I mean, you commented multiple times, obviously, about the settlement against Dormer Labs.
Ted White: Now, I'd like to briefly review the exciting data we announced this morning for our lead pipeline candidate BP315, which is being developed for the treatment of basal cell carcinoma. By the way of background, BP315 is a potential first-in-class, oncologic peptide that has been engineered to provide more targeted delivery to stimulate the patient's immune system and destroy cancer cells. We are developing VP315 as a therapy that can serve as a potential non-surgical alternative to surgery, including most surgery, or as a new adjuvant chemotherapeutic for basal cell carcinomas, including advanced basal cell.
Speaker Change: Great. Thanks, guys.
Speaker Change: Thank you. Our next question will come from Glenn Santangelo with Jeffries. Please go ahead.
Glenn Santangelo: And that's obviously a major step forward. But can you say, sort of confidently, at this point, you're not really seeing any incremental compounded cathartin sort of come into the market at this point? Do you feel like that window has closed? Yeah, so listen, I could tell you gradually, no; we're not seeing any incremental compounded contheridin in the market. Are there isolated cases where compounded contheridin has been seen?
Glenn Centangelo: Oh, yeah, thanks for taking my questions. Hey, Ted, I mean, you commented multiple times, obviously, about the settlement against Dormer Labs, and that's obviously a major step forward. But can you say sort of confidently at this point, you're not really seeing any incremental compounded cathartin sort of come into the market at this point? Do you feel like that window has closed?
Speaker Change: Hi, Glenn. Yeah, so listen, I could tell you incrementally, no, we're not seeing any incremental compounded contheragin in the market. Are there isolated cases where there's been compounded contheragin seen? Yes, absolutely. And what I mean by that is, that's the dormer.
Ted White: As the most common type of cancer globally, we expect that the commercial opportunity for basal cell carcinoma is sizable, with approximately 3.6 million diagnoses each year in the United States alone. The Phase II study is an open label proof of concept trial designed to assess the safety and tolerability dose regimen and efficacy of VP315 in biopsy confirmed basal cell carcinoma. Preliminary efficacy data, based on 90 out of 93 lesions treated, showed that the treatment would VP315 resulted in a approximately 51% complete histologic clearance rate of basal cell carcinoma.
Ted White: Yes, absolutely. And what I mean by that is, that's the dormer inventory that's bleeding out. Right, so I think what we're all trying to do is we're all trying to sort of reconcile maybe the 2.3 million in revenues you had this quarter with FFF, you know, with the sort of comments that you made in the press release that you expect prescription growth quarter over quarter in the back half, you know, sort of taking into consideration that it may take some time for compounded cathartin to bleed out, you know, the compounded I mean, we're midway through 3Q.
Speaker Change: Inventory that's bleeding out.
Ted White: In addition, of the patients who had residual carcinoma, those residual tumors showed approximately 71% reduction in tumor size. Taken together, this represents a approximately 86% overall reduction in tumor size across all lesions treated. These results, if confirmed in a pivotal study, make a strong argument for the use of VP315 as first line therapy in the treatment of local and advanced basal cell carcinoma, which will either eliminate the need for additional treatment entirely or significantly reduce the size of the excision and the surgical burden associated with other treatment regimens, including most surgery.
Speaker Change: Right, so I think what we're all trying to do is we're all trying to sort of reconcile maybe the 2.3 million in revenues you had this quarter.
Speaker Change: with FFF, you know, with the sort of the comments that you made in the back in the press release that you expect prescription growth quarter over quarter in the back half, you know, sort of taken into consideration that it may take some time to bleed out, you know, the compounded cathartin sort of in the market. So you think we start, we're starting to see that now. I mean, we're midway through 3Q. I don't know if there's any sort of commentary you can give us sort of at this point, but maybe you feel like we're at the point where we're going to start to see that inflection in scripts because, you know, the compounded cathartin is sort of, you know, almost worked its way fully through the system. Is that kind of the message you're trying to send? Dr. Joe Bonaccorso, Kevin Gardner, Ted White, FFF, Joe Bonaccorso, Kevin Gardner, Ted White, FFF, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH, FFMH,
Ted White: I don't know if there's any sort of commentary you can give us sort of at this point, but maybe you feel like we're at the point where we're going to start to see that inflection in scripts because, you know, the compounded cathartin has sort of, you know, almost worked its way fully through the system. Is that kind of the message you're trying to send? Absolutely. I mean, we expect to see the inflection with the dormer now bleeding out.
Ted White: We're already seeing, Glenn, accounts that were, you know, on the dormer target list. As you know, Dormer, we know those accounts, and we're already seeing orders from those accounts starting to come in as those accounts bleed out their inventory. And maybe my last question is sort of on Ligand's product. You're obviously aware that there's another company that got approval. I don't know if you could sort of comment on the competitive landscape, if there's anything else you're paying attention to, and how that approval, you know, might ultimately be impacting the market positively or negatively for you. Yeah, no great question. We're fully aware of Zelzumi's activities.
Speaker Change: Absolutely. I mean, we expect to see the inflection with the dormer now bleeding out. We're already seeing, Glenn, accounts that were, you know, on the dormer target list. As you know, dormer, you know, we know those accounts, and we're already seeing orders from those accounts starting to come in as those accounts bleed out their inventory.
Speaker Change: Perfect. And maybe my last question is sort of on Ligand's product. You're obviously aware that there's another company that got approval. I don't know if you could sort of comment on the competitive landscape, if there's anything else sort of you're paying attention to and how that approval, you know, might ultimately be impacting the market positively or negatively for you.
Ted White: No treatment-related serious adverse events were reported in the Phase II study, and most treatment-related adverse events were classified as mild to moderate, as expected, with injections like pain being the most common adverse event. Based on these positive efficacy and safety data from the Phase II trial, we believe VP315 has significant potential to become an important first line treatment option for basal cell carcinoma, for use prior to surgery or instead of oral therapies, which have significant systemic side effects.
Ted White: And listen, I would tell you, you know, we think it's great that somebody else recognizes the opportunity within within molluscum. And look, for us, I think it only helps Verrica because it's going to increase the share of voice around molluscum. You know, our customers know that cantharidin is the gold standard for the treatment of molluscum contagiosum.
Speaker Change: Yeah, no, great question. We're fully aware of Zelzoumi, and listen, I would tell you, you know, we think it's great that, you know, somebody else recognized that the opportunity within within molluscum.
Speaker Change: And look, for us, I think it only helps America because it's going to increase the share of voice around molluscum.
Speaker Change: You know, our customers know that cantharidin is the gold standard for the treatment of molluscum contagiosum, so that, you know, again, we only see that as a benefit to us.
Ted White: We are obviously very pleased with these clinical data, and we intend to hold a K-Well event in the near future to discuss in more detail the results from the VP315 Phase II study, and provide additional insight into physician use case.
Ted White: So, you know, again, we only see that as a benefit to us. Okay, thanks, Ted. Thank you, Brian. Thank you. Our next question will come from Oren Livnat with HC Wainwright. Please go ahead. I'll unmute first.
Speaker Change: Okay, thanks.
Speaker Change: Thank you. Bye.
Speaker Change: Thank you. Our next question will come from Oren Livnat with HC Wainwright. Please go ahead.
Joe Bonaccorso: I'll now turn the call over to Joe to review our commercial progress. Thanks very much, Ted. As Ted mentioned earlier in the second quarter, we saw pull-through demand for white camp growth sequentially quarter over quarter. The increase in demand reflects in increasing unit suspense through a specialty pharmacy and a higher number of units sold to hospitals and buying bill offices, including Walgreens community stores.
Oren Livnat: Thank you. Pretty exciting time over there. I have a couple questions about 315NY campus. Can I, First of all, I'm really curious if you saw shrinkage in any tumors that weren't directly treated with 315. Essentially, I'm wondering if you saw a systemic immunological response, and was there any control against matching tumors in for a patient?
Oren Livnat: Let me unmute first. Thank you. Pretty exciting time over there. I have a couple of questions on 315NY campus. If I may.
Oren Livnat: Just firstly, I'm really curious if you saw...
Oren Livnat: Shrinkage and any tumors that weren't directly treated with 315. Essentially, I'm wondering if you saw a systemic immunological response and was there any control against matched tumors, you know, in for a patient?
Joe Bonaccorso: Although white camp showed growth versus the prior quarter, we remained focused on accelerating growth in the second half of the year. We believe that many of our accomplishments from the second quarter, including our settlement with dormer labs and the receipt of a permanent J-code from CMS and the establishment of allowables across the commercial coverage, will translate into increased demand for white camp in the second half of 2024 and beyond. In the third quarter, we are working aggressively to grow applicator demand by focusing on the extension of our buying bill accounts, which includes the addition of GPOs, Visient for Hospitals, and IPN for Dermatology Practices, the targeted conversion of physician practices that were former uses of compounded content and placing an emphasis on driving adherence through treat to clear messaging and medical education.
Ted White: And bigger picture, if you think about this product strategically, obviously, this is also medical dermatology, which overlaps with where you're at, but it's clearly a different market than the pediatric focus you have now. Presumably, it could be maximized by a larger company as well when you talk about multi-blockbuster potential. So, you know, going forward, do you think about trying to maybe partner this and focus on YCAMP, or are you keeping all your options open, which I assume will be your answer? And then I have YCAMP follow-ups. Sure, this is Ted.
Speaker Change: And, you know, bigger picture, if you think about this product strategically, you know, obviously this is also medical dermatology, which overlaps with where you're at, but, you know, it's clearly a different market than the pediatric focus you have now.
Speaker Change: Presumably, it could be maximized by a larger company as well when you talk about multi-blockbuster potential. So, you know, going forward, do you think about trying to maybe partner this and focus on Wycanth, or are you keeping all your options open, which I assume will be your answer? And then I have Wycanth follow-ups after that. Thanks.
Ted White: So absolutely, we want to keep all of our options open as it relates to 315, including partnerships. So and I'll turn that next part over to Gary to answer the other questions that you have. Thanks, Ted. Oren, hi, thanks for the question. So regarding the Pscobal effect, it was one of...
Ted White: Sure, this is Ted, so absolutely, we want to keep all of our options open as it relates to 315, including partnerships. So, and I'll turn that the next part over to Garrett to answer the other questions that you had.
Joe Bonaccorso: Our coverage for a print also continues to expand, and in the second quarter, we added a number of new Medicaid states, including Michigan, Louisiana, Alabama, and West Virginia. With respect to total lives under covers as of July 31st, we have reached 234 million lives under coverage, which encompasses 139 healthcare plans, spanning commercial, Medicaid, try care, and federal employee plans. With the permanent J-code in place and allowables established on most commercial plans, we believe broader acceptance by prescribers will continue as the reimbursement process becomes more efficient.
Garrett: Thanks, Ted. Orrin, hi. Thanks for the question. So regarding the obscobal effect, it was one of the...
Gary Goldenberg: Secondary endpoints in our protocol. At this point, we're not ready to comment regarding the Epsicopal effect. The only thing I can say is that we did have a few tumors where we did look for the Epsicopal effect, and just stay tuned for those data.
Garrett: Secondary endpoints in our protocol. At this point, we're not ready to comment.
Speaker Change: regarding Epsicopal Effect. The only thing I can say is that we did have a few tumors where we did look for Epsicopal Effect and just stay tuned for those for those data. The only things we're able to discuss now are the safety and the preliminary top-line results.
Gary Goldenberg: The only things that we're able to discuss now are safety and the preliminary top-line results. Oh, and just lastly, on 315, you mentioned in the press release that you're excited to continue to explore these properties and tissues and blood samples. Does that indicate potentially trying to quickly broaden the potential indications you might target, you know, learning more on that front, or is this about needing to better characterize the product, maybe in the mechanism of action in the current BCC program?
Speaker Change: Oh, and just lastly, on 315, you know, you mentioned in the press release you're excited to continue to explore these properties in tissue and blood samples, I think. Does that indicate potentially trying to quickly broaden the potential indications you might target, you know, learning more on that front, or is this about needing to…
Joe Bonaccorso: We're also very focused on optimizing coverage under the commercial and state Medicaid plans by working with the payer universe to eliminate prior authorizations and other administrative burdens that may potentially be a barrier to patients being able to receive and approve treatment.
Speaker Change: Attendee, Joe Bonaccorso, Kevin Gardner, Ted White
Gary Goldenberg: And then on why can't... Can you just talk about the forward deployed inventory model a little more, which I don't think you addressed recently? You know, how's that playing out in the field when you look at orders? Are physicians stocking essentially in the office to have some on the table if and when they want to actually pull the trigger and use it? How much of that, you know, versus, Just in time, essentially ordering even in the office, so they're just, you know, we can see what they're using. Do you have visibility with FFF on that front, how much is actually being used?
Joe Bonaccorso: Finally, on our last call, I discussed the addition of 20 new pediatric reps in the major MSAs across the country. I am very pleased with the productivities of these new professionals to our sales force, which we believe is driving increased awareness and utilization of white camp and major pediatric medical practices. Pediatricians are also showing interest in buying bill as they prefer to control the patient journey and have the ability to treat same day.
Speaker Change: Can you just talk about the forward deployed inventory model a little more, which I don't think you addressed recently. You know, how's that playing out in the field when you look at orders?
Speaker Change: Attendee, Joe Bonaccorso, Kevin Gardner, Ted White
Speaker Change: just in time, essentially ordering, even in office, so they're just, you know, we can see what they're using. Do you have visibility with FFF on that front, how much is actually being used?
Terry Kohler: I'll now pass it to Terry to review our fourth quarter and year end financial results. Terry? Thanks, Joe.
Gary Goldenberg: Okay, first question. Yeah, sorry, Ted, please. No, no, no, okay. [inaudible] So I just want to address the tissue in the blood samples. So I think we're just looking at the basal cell subjects that we studied in our face to study at this point. And if you look at VP315 as an immune modulator, as an oncolytic peptide, it works by, at least the proposed mechanism of action, or the one that's been elucidated to this point, is that it works by activating a local immune response to tumor-specific antigens. So when you lyse tumor cells, you reveal those antigens which are normally protected by the tumor, and then you get immune stimulation.
Terry Kohler: For the second quarter of 2024, we reported total revenues of 5.2 million, which included white camp net revenues of 4.9 million. White camp revenue reflects a combination of X factory shipments to triple F related to demand pull-through, as well as a one-time impact of an initial stock-in order from our new specialty distributor, St. Cora, which represented approximately 54% of white camp revenue in the quarter. Gross product margins for the second quarter of 2024 were 93%, which continued to benefit from certain components of standard calls to goods sold, including bulk production and the assembly of applicators from our registration batches, having been expense as R&D prior to approval.
Speaker Change: Okay, Oren, I'll let Gary get first question, yeah, sorry Ted, please.
Ted White: No, no, good.
Speaker Change: So I just want to address the tissue in the blood samples. So I think we're just looking at the basal cell subjects that we studied in our phase two study at this point.
Speaker Change: And if you look at VP315 as an immune modulator, as an oncolytic peptide it works by at least the proposed mechanism of action or the one that's been elucidated to this point.
Speaker Change: is that it works by activating a local immune response to tumor-specific antigens. So, your life's tumor cells, you reveal those antigens which are normally protected by the tumor, and then you get an immune stimulation.
Gary Goldenberg: We wanna study this further. We wanna see exactly what kind of immune response we're getting in the tissue and whether or not we are getting one in the blood samples, which would give us a window into understanding whether or not we're gonna see a systemic response to basal cell antigens, which I think would be exciting. But at this point, it's just to characterize further the MOA and the immune response we're getting by injecting BP315 into the. Perfect, thank you. Yeah, it's Joe. Oren, how are you?
Terry Kohler: Research and development expenses of 3.3 million in the second quarter or 2024 decreased versus the second quarter of 2023 by $2.4 million, driven primarily by a reduction in clinical trial costs related to VP315 and CMC costs related to pre-approval white camp spend in the prior year period. Selling general administrative expenses of $16.5 million in the second quarter of 2024 increased versus the second quarter of 2023 by $10.6 million to driven primarily by commercial activity for white camp.
Speaker Change: We want to study this further. We want to see exactly what kind of immune response we're getting in the tissue and whether or not we are getting one in the blood samples, which would which would give us a window to understanding of whether or not we're going to see a systemic response to basal cell antigens.
Speaker Change: which I think would be exciting, but at this point it's just simply to characterize further the MOA and the immune response we're getting by injecting BP315 into the tumors.
Speaker Change: Perfect. Thank you.
Terry Kohler: Gap Met Laws was $17.2 million or $0.37 per share for fiscal second quarter of 2024, compared to a Gap Met Laws of $11 million or $24 cents per share for the prior year period. On a non-gap basis, which excludes stock-based compensation and non-cash interest expense, the second quarter of 2024, Met Laws was $14.4 million or $31 cents per share compared to a Met Laws of $9.4 million or $21 cents per share for the second quarter of 2023.
Speaker Change: and Orrin, it's Joe, Orrin, how are you?
Joe Bonaccorso: Great, thanks. All right. So regarding your question, the forward deployed inventory is still a part of our core model. That is an opportunity for physicians who would rather consign inventory, if you will, forward deployed, and then get billed as they're treating patients. We also like to keep our buy and build model agile.
Orrin: Great, thanks.
Orrin: Good. So, regarding your question, you know, the forward deployed inventory is still a part of our core model.
Speaker Change: That is an opportunity for physicians who would rather consign in the inventory, if you will, forward deployed in.
Joe Bonaccorso: We have some physicians that are more interested in volume tier discounts and off invoice discounting as well. So we're seeing a blended approach on the buy and build side. And again, we try to keep our program agile enough to reflect the needs of the customer and what that particular customer is interested in.
Speaker Change: and then get billed as they're treating patients. We also like to keep our buy-and-bill model agile.
Speaker Change: We have some physicians that are more interested in volume tier discounts and off-invoice discounting as well. So we're seeing a blended approach on the buy and build side. And again, we try to keep our program agile enough to reflect the needs of the customer and what that particular customer is interested in.
Terry Kohler: And finally, as of June 30th, 2024, Verrica had aggregate cash and cash equivalence of $31.9 million.
Joe Bonaccorso: All right. Thanks. I'll follow up after. Appreciate it. You're welcome.
Ted White: The company expects that its cash and cash equivalence as of June 30th, 2024 will be sufficient to fund operations into the first quarter of 2025, and will now turn the call back over to Ted for closing remarks. Thanks, Terry.
Speaker Change: All right. Thanks. I'll follow up after. Appreciate it.
Serge Belanger: Thank you. Our next question will come from Serge Belanger with Needham. Please go ahead. Hi, good morning. Thanks for taking the question. A couple of white hands to start off with.
Speaker Change: You're welcome.
Speaker Change: Thank you. Our next question will come from Serge Bellinger with Needham. Please go ahead.
Serge Bellinger: Thanks for taking the questions. A couple on Why Can't to start off with.
Ted White: As we progress through the third quarter, we are lazy to focus on the launch of White Camp and accelerate White Camp demand in the second half of the year. We achieved important wins across multiple areas of our business. Significant amounts of compounded content have been removed from the US market, and we will continue to be vigilant on this front. CMS published favorable White Camp allowables on July 1st, and we continue to focus on expanding our buy and bill accounts and demand with the addition of St. Cora, IPN, and Visient as GPOs, targeting physician groups and hospitals.
Serge Belanger: I guess going forward, should we expect any additional rebate or GPO partnership, and maybe what the impact is on the overall net price.
Serge Bellinger: I guess going forward, should we expect any additional distributor or GPO partnerships?
Serge Belanger: As you continue expanding the GPO field here, and then on VP315, I guess for Gary. I've seen pretty exciting data on basal cell carcinoma, you feel this is a de-risk. The program for squamous cell carcinoma, and is that one of the other non-millanomas you expect to target going forward? Thanks. I'm Serge.
Serge Bellinger: And maybe what the impact is on the overall net pricing as you continue expanding the GPO field here. And then on VP315, I guess for Gary.
Speaker Change: Pretty exciting data in basal cell carcinoma. Do you feel this de-risks the program for squamous cell carcinoma and is that a one of the other non melanomas you expected to target going forward? Thanks.
Ted White: We also made considerable progress in our pipeline. We expect to continue advancing White Camp for the treatment of common works through our amended agreement with Tori, and the exciting top-line data we released today on our phase two data for VP315 for the treatment of baseless El Cora Sonoma. Our company remains very excited about VP315's unique and differentiated product profile, which has the potential to be a primary and new adjuvant, non-invasive therapy that addresses a significant unmetical need in dermatology.
Terry Kohler: Good morning. It's Terry. I'll answer the first part about pricing. So, you know, with the addition of Syncora, we still believe that our overall net sales as a percentage of gross sales is going to continue to be in that 45 to 50% range over time. We'll continue to evaluate that and monitor as we move forward. But that's still our expectation.
Terry: Hi, Serge. Good morning. It's Terry. I'll answer the first part around the pricing. So, you know, with the addition of Synchora, we still believe that our overall net sales as a percentage of gross sales is going to continue to be in that 45 to 50 percent range over time. We'll continue to evaluate that and monitor as we move forward, but that's still our expectation.
Joe Bonaccorso: Yeah, and Serge, for the second part about, you know, the possibility of activating our market further with distributors or opportunities. Look, I mean, we have to remain opportunistic as an organization. This is a big market, and we certainly are exploring ways to make sure we can reach the customers that need the product. It could be through an expansion, perhaps to some degree, that some regional pharmacies or, you know, we can look into further opportunities that might help in areas such as the Department of Defense and other customer segments that we're investing time in.
Serge Bellinger: Yeah, it serves for the second part about, you know, the possibility of...
Operator: That concludes our formal remarks, and I'll now turn the call over to the operator for Q&A. Thank you. The floor is now open for your questions. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. If at any time your question has been answered, you may need to remove yourself from the Q&A by pressing star two. Again, to ask a question, please press star one.
Speaker Change: Activating our market further with distributors or opportunities. Look, I mean, we have to remain opportunistic as an organization. This is a big market. And we certainly are exploring ways to make sure we can reach the customers that need the product. It could be through an expansion perhaps of some degree to some regional pharmacies or
Speaker Change: We can look into further opportunities that might help in areas such as the Department of Defense and other customer segments that we're spending time in. So really the message here is we'll look to be opportunistic and be mindful as we're building it out.
Stacy Kuh: Our first question will come from Stacy Kuh with TD Cowan. Please go ahead. We had a few questions.
Joe Bonaccorso: So really, the message here is we'll look to be opportunistic and be mindful as we're building it out. Serge, regarding your question on STC, just as a reminder that we do have the global rights to develop VP315 for basal cell carcinoma, squamous cell carcinoma, and non-metastatic melanoma, and non-metastatic Merkel cell carcinoma. I think at this point we're focused on basal cells since it is the most common malignancy in humans, with over 3.6 million cases in the United States, but it doesn't mean that we wouldn't think about, you know, another opportunity like squamous cell, which is the second most common skin cancer in humans.
Speaker Change: [inaudible]
Speaker Change: Serge, regarding your question on SEC, just as a reminder that we do have the global rights
Stacy Kuh: Just first on White Camp, you put some metrics around the progress you've made and removing competitive care and just a better understanding around the timeline of when things might resolve. This helps set the expectations there and a quick follow-up on the stocking you've discussed in a lot of detail. Where do you expect it to normalize versus where it is now?
Gary Goldenberg: It doesn't mean that we wouldn't think about that at some point, but right now, I think our focus remains basal cell moving forward with the end of phase two meeting sometime in the first half of next year, discussing a phase three program with the agency, and then hopefully moving forward and into the phase three program. Just a follow-up on why can't you just talk about the mix of prescribers between derms and peds. Since you deployed your pediatric salesforce, maybe just comment on if you've seen any off-label use of the product for some of the ward indications. Yes, the search, you know, can't.
Speaker Change: to develop VP315 for basal cell carcinoma, squamous cell carcinoma.
Stacy Kuh: Those are our White Camp questions.
Speaker Change: and Non-Metastatic Melanoma and Non-Metastatic Markle Cellcar Sonoma.
Speaker Change #100: I think at this point we're focused on basal cells since it is the most common malignancy in humans.
Speaker Change #100: with over 3.6 million cases.
Speaker Change #100: in the United States.
Stacy Kuh: For VP315, obviously the treatment paradigm for BCC has a lot of surgery, so curious, what's the pathway forward that could help build enthusiasm behind the typical cutting out the vision? What are your early thoughts on study design? What kind of follow-up do you think will be necessary to confirm long-term, complete histological clearance? What do you think clinicians will want to see?
Speaker Change #100: But it doesn't mean that we wouldn't think about, you know, another opportunity like squamous cell, which is the second most common skin cancer.
Speaker Change #100: Inhumans, doesn't mean that we wouldn't think about that at some point, but right now I think our focus remains. Basel Cell, moving forward with the end of face to meeting some time in the first half of next year. Discussing a face through program with the agency and then hopefully moving forward into the face through program. Discussing a face through program. Discussing a face through program. Discussing a face through program. Discussing
Stacy Kuh: One more question is possible and I can come back and follow-up.
Speaker Change #101: Great. Just a follow-up on why can't you just talk about the mix of prescribers between
Stacy Kuh: Do you see any greater success in certain regions? I'm curious about the success you've seen maybe on the face.
Ted White: Thanks so much. Thank you, Stacy. This is Ted.
Speaker Change #102: Since you deployed your pediatric sales force, maybe just comment on if you've seen any off-label use of the product, too, for some of the ward indications.
Ted White: I'll handle the first part on the compounding in third and then turn it over to Terry and then over to Gary Goldenberg for the BP315. So on the compounding in third and as you know, we've announced that we've been successful with both lighters and dormant laboratories. So we expected that inventory has to bleed out from offices. And so when you think about it, the last shipment was made in April of 2024. So with a six month shelf life, we expect that to bleed out in the second half of the year.
Joe Bonaccorso: Yeah, we can't support off-label uses, you know; our copay program doesn't cover that. So we have no visibility into what's happening in the field, in the practice, because we can't support it. The second piece of it is the dermatologists, and pediatric dermatologists at the hospital base continue to be the, you know, the major treaters of molluscum, but our pediatric team is making quick inroads here having just deployed in April. What's been fascinating to us is not only the outreach and the interest from the pediatricians but the willingness to take the product into their office for direct purchase because they'd like to treat patients the same day and do it under the supervision of a healthcare professional.
Speaker Change #103: Yes, sir, Joe, thank you.
Speaker Change #104: Yeah, we can't support off-label uses, you know, and our co-pay program doesn't cover for that. So we have no visibility into what's happening in the
Speaker Change #104: in the practice because we can't support it. The second piece of it is the dermatologist, pediatric dermatologist, hospital-based.
Speaker Change #105: We continue to be the major treaters of molestum, but our pediatric team is making quick inroads here, having just deployed in April . What's been fascinating to us is not only the outreach and the interest from the pediatrician, but the willingness to take the product into their office on direct purchase.
Speaker Change #105: because they like to treat patients same day and do it under the supervision of a healthcare professional.
Terry Kohler: And I'll turn the next part over to Terry. Sure, good morning, Stacy. So your question on inventory and normalization. I think our expectations that we're going to continue to grow demand aggressively over the back half of the year here.
Terry Kohler: And so I think we expect inventory to normalize in the channel in the back half of the year and be normalized by early 2025.
Speaker Change #105: Hello, I'm Joe Bonaccorso, I'm Joe Bonaccorso, I'm Joe Bonaccorso, I'm
Joe Bonaccorso: Thank you. Our last question will come from Kemp Dolliver with Brookline Capital Markets. Please go ahead. Great, thank you. Two brief questions on why we can't.
Speaker Change #105: [inaudible]
Speaker Change #105: Thank you. Our last question will come from Kemp Dolliver with Brookline Capital Markets. Please go ahead.
Kemp Dolliver: Thank you. Two brief questions on why can't First,
Kemp Dolliver: First, you had previously expected gross margin to start to normalize at a lower level around this time, which hasn't, you know, hasn't yet occurred. What are you thinking about that now? Has this been pushed out into, say, 2025? Or will we start to see it in the second half of the year?
Terry Kohler: Okay, do you expect it to have some kind of expectations or guidance around the percentage of realized revenue in the inventory just to help set expectations? Yeah, we'll certainly, you know, we know the true distributors are going to take into account inventory on hand and future demand expectations as they think about what the appropriate level of X factory orders will be in the back half of the year. But we can't give any guidance on revenues at this stage or comment really on the cadence of any future X factory orders.
Speaker Change #107: You had previously expected gross margin to start to normalize at a lower level around this time.
Speaker Change #108: which hasn't, you know, hasn't yet occurred. What are you thinking about that now? Has this been pushed out into say 2025 or will we start to see it in the second half of the year?
Terry Kohler: Okay, understood. Thank you.
Terry Kohler: Morning, Kev. This is Terry. Yes, we would expect to see that start to happen in the second half of the year.
Terry: Morning, Kev. This is Terry. Yes, we would expect to see that start to happen the second half of the year. But just as a reminder, over the long term, we still expect gross margins to be in that low 90s percentage. You know, obviously we have, you know, we're focused on, you know, continuing to drive costs down as we move forward. So, you know, there's a potential that we could see some of that benefit pull through in 2025. But too early to talk about that at this stage. So I think, you know, that low 90s is still a good place for us to be from a gross margin standpoint.
Terry Kohler: Our next question will come from Gregory Rinda with RBC capital markets. Todd, hold on. This is a poll, but I think we'll make sure we answer the 315 question as well. Yes, can you hear me? Stacy, how do you answer the questions? Okay, so regarding the paradigm, we believe that based on our face to data and it's face to not face 3. But based on the face to data, we believe that this product, the VP315 has the ability to shift the treatment paradigm.
Speaker Change #109: Great, thank you. And the second question is going back to the compounded shipments by Dormer and Lighters. Ted, I think you quoted a number. What was that number again?
Terry Kohler: I think if you look at our favorable safety profile in the face to study, we're very pleased with that. And as you know, face to really is a safety study. It's a dose escalation safety study. We did not see any any severe adverse events related to the treatment. So that's a very positive development. If you look at efficacy data for complete histologic clearance and also for tumor size reduction, essentially shrinking the tumor.
Speaker Change #110: Well, what we know is about 24,000 vials have been shipped to the U.S. from Dormer Laboratories.
Speaker Change #111: Okay, great. And no visibility on what lighters had been doing prior to your agreement with them.
Speaker Change #111: No.
Speaker Change #111: Great, thank you.
Speaker Change #111: Thank you.
Terry Kohler: We believe that VP315 has the potential to be the treatment of choice between biopsy and diagnosis and potential need for surgery. Right now, in vast majority of patients, you get a diagnosis with a biopsy, your next step of surgery. We believe that VP315 has the potential to be that step in between. In 51% of subjects in our study, there was complete histologic clearance, meaning that there would be no need for a surgical intervention.
Speaker Change #111: Thank you. That concludes our question and answer session. I will now turn the call back to Ted White for closing remarks.
Terry Kohler: But just as a reminder, over the long term, we still expect gross margins to be in the low 90s. You know, obviously, we have, and we're focused on, continuing to drive costs down as we move forward. So, you know, there's the potential that we could see some of that benefit pull through in 2025. But it's too early to talk about that at this stage. So I think, you know, that the low 90s is still a good place for us to be from a gross margin standpoint.
Kemp Dolliver: Great, thank you. And the second question is going back to the compounded shipments by Dormer and Lighters. Yeah, Ted, I think you quoted a number. What was that number again? Well, what we know is about 24,000 vials have been shipped to the U.S. from Dormer Laboratories. Okay, great. But do you have no visibility on what Lighters had been doing prior to your agreement with them?
Ted White: No. Great. Thank you. Thank you. Thank you. That concludes our question and answer session. I will now turn the call back to Ted White for his closing remarks. Thank you, operator. I'd like to thank all of you for joining us this morning. We're obviously very pleased with the significant accomplishments in the second quarter of 2024, including today's announcement about the positive top-line results of 315 for basal cell carcinoma. And we look forward to providing another update on our third quarter earnings call in November.
Ted White: Thank you, operator. I'd like to thank all of you for joining us this morning. We're obviously very pleased with the significant accomplishments in the second quarter of 2024, including today's announcement on the positive top-line results of 315 for basal cell carcinoma.
Ted White: And we look forward to providing another update on our third quarter earnings call in November . Thank you.
Ted White: Thank you. Thank you. This does conclude the Verica Pharmaceuticals second quarter 2024 earnings conference call. You may disconnect your line at this time and have a wonderful day.
Terry Kohler: And those patients who did not have histologic clearance. There was a 71% reduction in lesion size. What does that mean for a patient? It means that if they do have to have surgery later on, the surgery now is much smaller. It's decreased by more than 50%. So their surgical scar, the operation itself, is now much smaller than it would have been prior to using DPC-15.
Speaker Change #112: Thank you. This does conclude the Verica Pharmaceuticals second quarter 2024 earnings conference call. You may disconnect your line at this time and have a wonderful day.
Unknown Speaker: The Ultimate Parody Site! BF-WATCH TV 2021, Thanks for watching, please subscribe The Bulletproof Executive 2013, The Bulletproof Executive 2013,...
Gary Goldenberg: So we really believe that this has potential to shift the treatment paradigm. As far as the follow-up time needed, and what dermatologists would like to see, I think it's too early to comment. I think these are the things that we'll discuss with the agency and our end-of-face due meeting, which we anticipate to have it in the first half of next year. But I think at this point, we're all very excited about the potential of this molecule to shift the treatment paradigm for the 3.6 million plus patients with basal cell carcinoma in the United States alone. Thank you.
Speaker Change #113: Thanks for watching!
Gregory Renza: We'll now go to our next question. Comes from Gregory Rinsa with RBC Capital Markets. Great. Thanks. Good morning, Ted. Congrats on the progress. Thanks for taking my question. Ted, as you and Joe and the team talk about it, it's really accelerating and doubling down on execution for YCANF in the market. I just wanted to ask if you could just add additional color on some of those lovers that you're pulling. How are you prioritizing the detailing there?
Gregory Renza: I know you provided some comments in your prepared remarks. Just curious how important it is that same-day treatment and lowering those barriers for prior authorizations. I know you've seen that come down. And as we're about a year or so into launch, just wanted to provide some of your commentary on the trajectory from here in light of all the execution detail that you're doing. Thanks.
Ted White: Sure. Thank you, Greg, for the question. So listen, I would tell you a couple things. Prior authorizations. We typically see that in our Medicaid and our managed Medicaid area of business. And we are actively working with those accounts as we speak to negotiate to get those PAs removed. The difference between a medical benefit and a pharmacy benefit. In a medical benefit policy, you cannot treat the same day until you get the authorization code.
Ted White: So it's not like a pharmacy benefit where you can do an electronic prior authorization, cover my meds, et cetera. Medical benefit is different. So this is a key area that we're focusing on in order to get these PAs removed. Again, we typically see it in managed Medicaid and state Medicaid and then also the Blue Cross Blue Shields of the world. So that's number one. Number two is we're looking to pull a lever with our co-pay program.
Ted White: Right now our co-pay program is there's a variance between 25 to 75 dollars. You'll be peering shortly that will be streamlining that process and making more simplistic for customers and for the patients. So that's another lever. I also think that the other lever we have with IPN, which in quarter they have a strong footprint in dermatology. And now we'll be able to do, you know, contracting with them and be able to talk spread that, you know, as you know our field force cannot talk about with customers.
Ted White: And then of course we have vision for the institutions. And then finally looking at payers, why we have strong coverage. We like to get even stronger coverage and look to go to a dual benefit where we have a pharmacy benefit as well as a medical benefit. And those are the levers that we're actively working on as we speak. That's great. Thank you.
Terry Kohler: And just one more.
Terry Kohler: Maybe maybe for Terry, just on the sample and can just give us a state of the contribution there. And the expectation. And then maybe I'll just log in as you see the demand and maybe some of that predictability and they didn't provide.
Joe Bonaccorso: Referring from guidance on, of course, some inventory, but just largely, do you have a timeline as to when you would feel comfortable just internally on projections to provide larger, longer term guidance when it comes to why I can't review. Thanks again and congrats guys on the quarter of the data. Thanks Craig. Good morning. So on the guidance front, you know, that's something that we'll consider as we get closer to 2025. It's not something we'll do in the back after this year.
Joe Bonaccorso: And then on the sample program. So, you know, we continue to sample, but I would tell you the sampling has gone significantly down and we'll continue to go down. We believe over the back after the of the year. Joe, is that yeah, I mean, we look at the sample program as trade doses because they are started those right to help the patient. So we're that continues to go down as we're continuing to build our coverage and same day treatment for physicians. So to Terry's point, that's going to continue to taper down dramatically on the back after the year here. Great. Thanks guys.
Glenn Centangelo: Thank you our next question will come from Glenn Centangelo with Jeffries. Please go ahead. Oh, yeah, thanks for taking my questions. Hey Ted, I mean, you commented multiple times obviously about the settlement against dorm or labs. And that's obviously a major step forward. But can you say sort of confidently at this point, you're not really seeing any incremental compounded to third and sort of come into the market at this point. Can you feel like that window has closed?
Glenn Centangelo: Yeah, so let's like to tell you, incrementally, no, we're not seeing any incremental compounded content in the market. Are there isolated cases where there's been compounded content and seeing yes, absolutely. And what I mean by that is, you know, that's the dorm or inventory that's bleeding out. Right. So, so I think what we're all trying to do is we're all trying to sort of reconcile maybe the 2.3 million in revenues. You had this quarter with that that you know with with the sort of the comments that you made in the back in the press release that you expect prescription growth quarter of a quarter in the back half, you know, sort of taken into consideration that it may take some time to bleed out.
Glenn Centangelo: You know, the compounded to third and sort of in the market. So you think we start, we're starting to see that now. I mean, we're midway through 3Q. I don't know if there's any sort of commentary. You can give us sort of at this point, but maybe you feel like we're at the point where we're going to start to see that inflection scripts because, you know, the compounded to third and is sort of, you know, almost worked its way fully through the system. Is that kind of the message you're trying to send?
Ted White: Absolutely. I mean, we expect to see the inflection with the dormer now bleeding out. We're already seeing Glenn accounts that were, you know, on the dormer target list. As you know, dormer, you know, we know those accounts and we're already seeing orders from those accounts starting to come in as those as those accounts bleed out their inventory.
Ted White: Perfect. And maybe my last question is sort of on ligand's product, you're obviously aware that there's another company that got approval. I know if you could sort of comment on the competitive landscape, if there's anything else sort of your pay and attention to and how that approval, you know, might ultimately be impacted the market positively or negatively for you. Yeah, no great question. We're fully aware of Zelzumi and listen, I would tell you, you know, we think it's great that, you know, somebody else recognized the opportunity.
Ted White: And look for us, I think it only helps Verrica because it's going to increase the share of voice around malostrum. You know, our customers know that can tolerate and is the gold standard for the treatment of malostrum contagiosum. So that, you know, again, we only see that as a benefit to us.
Oren Livnat: Okay. Thanks, Ted. Thank you.
Ted White: Our next question will come from Orrin Livnet with HC Wainwright. Please go ahead. Let me unmute first. Thank you. The exciting time over there. I have a couple questions on 315 and why can't this? I may. Just firstly, I'm really curious if you saw shrinkage or something. Are there any tumors that weren't directly treated with 315? Essentially, I'm wondering if you saw a systemic immunological response. And was there any control against match tumors, you know, intra patient?
Ted White: And, you know, bigger picture, you think about this product strategically. You know, obviously, this is also medical dermatology, which overlaps with where you're at, but, you know, it's clearly a different market than the pediatric focus you have now. Presumably, it could be maximized by a larger company as well, and you talk about multi blockbuster potential. So, you know, going forward, do you think about trying to maybe partner this and focus on why can't or are you keeping all your options open, which I assume will be your answer.
Ted White: And then I have why can't follow ups after that. Thanks. Sure, this is absolutely, we want to keep all of our options open as it relates to 315, including partnerships. So, and I'll turn that to the next part over to Gary to answer the other questions that you had. Thanks, Ted. Orin. Hi. Thanks for the question. So regarding the scope of effect, it was one of the secondary endpoints in a protocol.
Ted White: At this point, we're not ready to comment regarding the scope of effect. The only thing I can say is that we did have a few tumors where we did look for Episcopal effect and just stay tuned for those for those data. The only things that we're able to discuss now are the safety and the preliminary top line results. Oh, and just lastly on 315, you know, you mentioned in the press release, you're excited to continue to explore these properties and tissue and blood samples, I think.
Ted White: Does that indicate potentially trying to quickly broaden the potential indications you might target, you know, learning more on that front door. This is about needing to better characterize the products, maybe in the mechanism of action in the current BCC program. And then on why can't? Can you just talk about the forward deployed inventory model a little more, which I don't think you addressed recently. You know, have that playing out in the field when you look at orders are positions stocking essentially in the office to have some on the table, if and when they want to actually pull the trigger and use it.
Ted White: How much of that, you know, versus. Just in time, essentially, ordering even in office, we can see what they're using. Do you have visibility with FFF on that front? How much is after being used? Okay, Oren, I'll answer your first question. Yes, sorry, Ted, please. No, no, good. So I just want to address the tissue in the blood samples. So I think we're just looking at the basal cell subjects that we studied in ourselves.
Ted White: In our FASTER study at this point. And if you look at VP-15 as an immune modulator, as an oncologic peptide, it works by at least the proposed mechanism of action, or the one that's been elucidated to this point, is that it works by activating a local immune response to tumor-specific antigens. So, you slice tumor cells, you reveal those antigens, which are normally protected by the tumor, and then you get an immune stimulation.
Ted White: We want to study this further, we want to see exactly what kind of immune response we're getting in the tissue, and whether or not we are getting one in the blood samples, which would give us a window to understanding whether or not we're going to see a systemic response to basal cell antigens, which I think would be exciting. But at this point, it's just simply to characterize further the MLA and the immune response we're getting by injecting VP-15 into the tumors.
Ted White: Perfect, thank you. And Erin, why are you laughing? Yeah, it's Joe, we're an RU. Great, thanks. Good, so regarding your question, you know, the forward-deployed inventory is still a part of our core model. That is an opportunity for physicians who would rather consign in the inventory if you will forward-deploy it in, and then get billed as they're treating patients. We also like to keep our bioindole model agile. We have some physicians that are more interested in volunteer discounts, and often voice discounting as well.
Ted White: So we're seeing a blended approach on the bioindole side. And again, we try to keep our program agile enough to reflect the needs of the customer and what that particular customer is interested in. All right, thanks, I'll follow-up after. Appreciate it.
Serge Belanger: Thank you, our next question will come from Serge Belinger with Needham. Please go ahead. Hi, good morning, thanks for taking the questions.
Terry Kohler: A couple on why can't to start off with. I guess going forward, should we expect any additional distributor or GPO partnerships? And maybe what the impact is on the overall net pricing as you continue expanding the GPO field here.
Joe Bonaccorso: And then on VP315, I guess for Gary. Obviously, pretty exciting data in basal cell carcinoma. Do you feel this be risks the program for squamous cell carcinoma? And is that one of the other nonmillanomas you expected to target going forward? Thanks. Serge Good morning, it's Terry. I'll answer the first part around the pricing. So, you know, with the addition of St. Coral, we still believe that our overall med sales as a percentage of gross sales is going to continue to be in that 45 to 50 percent range over time. We'll continue to evaluate that and monitor as we move forward, but that's still our expectation.
Gary Goldenberg: Yeah, Serge, for the second part about, you know, the possibility of activating our market further with distributors or opportunities. Look, I mean, we have to remain opportunistic as an organization. This is a big market. And, you know, we certainly are exploring ways to make sure we can reach the customers that need the product. It could be through an expansion, perhaps, of some degree, to some regional pharmacies or, you know, we can look into further opportunities that, you know, might help in areas such as the Department of Defense and other customer segments that we're sending time in. So, really, the message here is we'll look to be opportunistic and and be mindful as we're building it out.
Gary Goldenberg: Serge, regarding your question and SCC, just a reminder that we do have the global rights to develop DP-15 for Basel Cell, carcinoma, squamous cell carcinoma, and non-metastatic melanoma and non-metastatic Markle Cell carcinoma. I think at this point we're focused on basel cell since it is the most common malignancy in humans with over 3.6 million cases in United States. But it doesn't mean that we wouldn't think about, you know, another opportunity like squamous cell, which is the second most common skin cancer in humans.
Gary Goldenberg: It doesn't mean that we wouldn't think about that at some point. But right now, I think our focus remains basel cell moving forward with the end of face-to-meeting sometime in the first half of next year, discussing a face-to-me program with the agency, and then hopefully moving forward into the face-to-me program.
Serge Belanger: Great.
Joe Bonaccorso: Just a follow-up on why can't you just talk about the mix of the prescribers between germs and peeds since you deployed your pediatric cells force. Maybe just comment on, you've seen any off-label use of the product for some of the ward indications. Yes, the surgery, you know. We can't support off-label uses, you know, on our co-pay program doesn't cover for that, so we have no visibility into what's happening in the practice because we can't support it.
Joe Bonaccorso: The second piece of it is the dermatologist, pediatric dermatologist, hospital-based continue to be the major treaters of molostum, but our pediatric team is making quick inroads here having just deployed in April. What's been fascinating to us is not only the at the outreach and the interest from the pediatrician, but the willingness to take the product into their office on direct purchase because they'd like to treat patients the same day and do it under the supervision of a health care professional. Thank you.
Kemp Dolliver: Our last question will come from Kemp Oliver with Brookline Capital Markets. Please go ahead. Great. Thank you. Two brief questions on why Kemp, first. You had previously expected gross margin to start to normalize at a lower level around this time, which hasn't yet occurred. What are you thinking about that now? Has it been pushed out into say 2025, or we start to see it in the second half of the year?
Terry Kohler: Morning, Kemp. This is Terry. Yes, we would expect to see that start to happen in the second half of the year, but just as a reminder, over the long term, we still expect gross margins to be in that low 90s percentage. You know, obviously we have, you know, we're focused on, you know, continuing to drive costs down as we move forward. So, you know, there's a potential that we could see some of that benefit pulled through in 2025, but too early to talk about that at this stage. So I think, you know, that will 90s is still a good place for us to be from a gross margin standpoint.
Terry Kohler: Great. Thank you.
Ted White: And the second question is going back to the compounded shipments by dormer and liars. Ted, I think you quoted a number. What was that number again? Well, what we know is about 24,000 vials have been shipped to the U.S, from dormer laboratories. Okay, great. And no visibility on what lighters had been doing prior to your agreement with them. No. Great.
Ted White: Thank you.
Ted White: That concludes our question and answers session. I will now turn the call back to Ted White for closing remarks. 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 second quarter of 2024, including today's announcement on the positive top line results of 315 for Basel's Alcar Sonoma. And we look forward to providing another update on our third quarter earnings call in November. Thank you. This does conclude the Verica Pharmaceuticals Second Quarter 2024 earnings conference call.
Operator: You may disconnect your mind at this time and have a wonderful day.
Operator: Thank you.