Q3 2025 Verrica Pharmaceuticals Inc Earnings Call
Speaker #1: Please stand by. Your program is about to begin. Good morning, ladies and gentlemen, and welcome to the Verrica Pharmaceuticals third quarter 2025 corporate update conference call.
Speaker #1: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. As a reminder, this conference is being recorded.
Speaker #1: I will now turn the call over to our host, Kevin Gardner, of LifeSci Advisors. You may begin your conference.
Speaker #2: Thank you, operator. Hello, everyone, and welcome to Verrica Pharmaceuticals' third quarter 2025 corporate update conference call. With me on the line this morning are Jayson Rieger, president and chief executive officer; Noah Rosenberg, chief medical officer; John Kirby, interim chief financial officer; and David Zawitz, chief operating officer.
Speaker #2: As a reminder, during today's call, management will make forward-looking statements. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties.
Speaker #2: 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 filings for important risk factors.
Speaker #2: 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.
Speaker #2: In addition, during today's call, management 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 #2: There are a number of limitations related to the use of these non-GAAP financial measures compared to their closest GAAP equivalents. The earnings release that the company issued Friday includes GAAP to non-GAAP reconciliations for these measures and is also available on the investor relations section of Verrica's website.
Speaker #2: I'll now turn the call over to Verrica's President and CEO, Jayson Rieger.
Speaker #2: Rieger. Thank you, Kevin, and good morning,
Speaker #3: Everyone, thank you for joining us for our third quarter 2025 corporate update call. In the third quarter, Verrica achieved multiple commercial, corporate, scientific, and regulatory milestones, providing a strong foundation for future growth in YCAMP, as well as significant upside potential for our late-stage pipeline.
Speaker #3: Throughout the past year, we've advanced our clinical programs in two of the highest unmet needs in dermatology for future development. We are excited to embark on the first of these programs, our global phase three clinical program of YCAMP, or VP102, in common words.
Speaker #3: This is with our Japanese development partner, Tori Pharmaceutical, and is expected starting to be starting later this year, with first patient targeted for dosing in December.
Speaker #3: Also, as I'll discuss in more detail later on in this call, we've received clear and positive feedback from the FDA about their phase three development program for our oncology asset, VP315, for basal cell carcinoma.
Speaker #3: The most common form of skin cancer. Even while advancing these two programs to Phase 3 readiness, we've reduced our spending by about half in the past year, while more than doubling dispensed units of our commercial product, YCAMP, for molluscum contagiosum.
Speaker #3: I couldn't be more proud of our team's simultaneous achievement of these goals and we are excited to see what's ahead for Verrica in the 2025 and beyond.
Speaker #3: In the third quarter, we continue to see growth in the adoption of YCAMP by healthcare providers in the US. With quarter-over-quarter growth in dispensed applicator units of about 5%.
Speaker #3: Compared to last year, dispensed applicator units increased to 37,642 for the nine months ended September 30, 2025, representing a 120% increase over that same period in 2024.
Speaker #3: This year-over-year growth reflects the progress of our commercial strategy to expand distribution through the pharmacy channel and a concerted effort to expand beyond dermatology into pediatric and primary care offices.
Speaker #3: While the incremental growth in pull-through was softer in Q3, headwinds helped providers treat more patients versus the prior quarter. We powered through seasonality and competition with what we viewed to be the best-in-class therapy for molluscum.
Speaker #3: The growth in the adoption of YCAMP for molluscum serves as the foundation for our strategy of establishing YCAMP as a valuable tool for treating multiple types of skin lesions. The same clinicians familiar with YCAMP would also be those who treat common warts if that expanded indication is approved.
Speaker #3: Through our amended agreement with Tori, we have received $18 million in cash milestone payments in 2025, of which $10 million was received in the third quarter upon the approval of YCAMP for molluscum in Japan.
Speaker #3: Tori continues to be an outstanding and highly collaborative partner to Verrica in this additional non-dilutive capital that has helped our cash position and supported our YCAMP activities in the United States.
Speaker #3: The financial arrangement for the global Phase 3 program in common warts, whereby Verrica and Tori split the costs of the program with the first $40 million funded by Tori, has unlocked the development of this key indication, with the first patient dosed in the United States expected by the end of the year.
Speaker #3: It's also important to note that Verrica retains exclusive global rights to YCAMP outside of Japan. The recent approval of YCAMP in Japan for molluscum is the first of what we hope to and expect to be multiple approvals across the major pharmaceutical markets, including the European molluscum in the EU.
Speaker #3: milestone towards YCAMP's approval for Union. We recently Feedback from the European Medicines Agency on October 20th indicated that no further phase three clinical studies would be needed to proceed with the filing of a marketing authorization application for YCAMP as a treatment for molluscum.
Speaker #3: And we anticipate the filing could occur as early as the fourth quarter of 2026. The feedback was based on compelling efficacy, from the well-controlled phase three studies successfully conducted in both the United States and and underserved market for patients who Japan, Europe represents a large at present have no approved therapy for the treatment of molluscum as well as a large commercial expansion opportunity for Verrica.
Speaker #3: While we've been optimizing our cost structure and building the foundation for YCAMP as a best-in-class therapy for molluscum and common warts, our clinical teams have been developing VP315, or ruxitamatide, our novel oncolytic peptide immunotherapy.
Speaker #3: As one of the most exciting late-stage assets in oncology. We recently announced new data from our phase two study evaluating VP315 for basal cell carcinoma at the Society of Immunotherapy of Cancer, or SITSI, at their 40th annual meeting.
Speaker #3: The presentation revealed supportive immunologic mechanistic data that helps explain why VP315 shrinks treated basal cell carcinomas in many patients, as evidenced by a 97% objective response rate and an 86% reduction in overall tumor size.
Speaker #3: We also observed a potential upscopa-like effect in non-treated lesions, which strongly suggests immune alignment with the FDA on an excited to announce that we reached system engagement.
Speaker #3: We are also efficient in our Phase 3 study design. We couldn't be more excited about VP315 and its prospects to potentially become the standard of care for the most common form of skin cancer.
Speaker #3: We believe the tremendous promise of these pipeline assets may present robust partnering opportunities to advance these programs through development and commercialization as well as bring in meaningful non-dilutive capital.
Speaker #3: these opportunities wherever they present And we are currently exploring themselves. I'd like to provide a more detailed update now on our commercial activities for YCAMP.
Speaker #3: During the third quarter, YCAMP dispensed applicator units reached a total of 14,093, which represents approximately 5% sequential growth over the prior quarter. Not surprisingly, we experienced some seasonality in August.
Speaker #3: As in-office treatment, times of year where there are generally fewer visits for doctors, largely driven we believe by scheduled vacations by both providers and patients, and fewer sick child visits, will have an impact on our volumes.
Speaker #3: And we believe this seasonality did modestly impact our volumes in August. But as we entered the back-to-school season in September, we saw a return to the previous levels of pull-through, which is consistent with the expected product utilization patterns for this indication and patient population.
Speaker #3: We also saw that momentum continue into the beginning of the fourth quarter. Turning to reimbursement, as noted on our last conference call, the substantial investments we have made in our commercial copay assistance program continue to give providers a consistent path for treating their patients with YCAMP.
Speaker #3: As a reminder, our copay assistance program allows all eligible patients with commercial insurance to pay just $25 per YCAMP treatment for up to two applicators.
Speaker #3: This provides physicians with comfort, knowing that their patients will find affordable access to YCAMP. As previously indicated, our commitment to patient affordability and ease of access to YCAMP for healthcare providers had an incremental impact on our gross to net.
Speaker #3: And by extension, revenue for the quarter. Review this investment as the best way to get YCAMP in the hands of providers to use as their frontline treatment for molluscum and to minimize concern for clinicians about whether their prescription will be filled for their patients.
Speaker #3: One new development on the commercial front that we are excited to share is YCAMP Rx. Our new non-dispensing pharmacy that we expect to launch in the fourth quarter of 2025.
Speaker #3: YCAMP Rx will give prescribers a single place to write all YCAMP prescriptions, and will assist with benefits investigations, processing any prior authorizations, and enrollment in our copay program.
Speaker #3: Prescriptions written to YCAMP Rx will then be routed to a dispensing pharmacy in our pharmacy network that is contracted with the patient's insurance plan.
Speaker #3: We believe YCAMP Rx can improve speed to therapy for patients by navigating the prior authorization process with fewer delays. Prescribers will also enjoy this simplified, seamless experience that will reduce the paperwork burden on their offices and let them spend more time doing what they do best: treating patients.
Speaker #3: I'm also pleased to note the recent expansion of our sales force, which will continue into the next year. Our total sales force has risen to 45 sales reps this quarter, and we plan on increasing it to 50 in 2026.
Speaker #3: For the third consecutive quarter, YCAMP inventory remained at normalized levels, with YCAMP applicator units shipped to distributors continuing to closely track underlying market demand for dispensed applicator units.
Speaker #3: I will now provide an update on our pipeline programs. Regarding our common warts program, as I mentioned earlier, we remain on track to enroll our first patient in the phase three program in the US in the fourth quarter.
Speaker #3: We provide updates on the estimated timing of completion of the program and the estimated availability of top-line data as those items become clearer in the future.
Speaker #3: Moving to our novel oncolytic peptide VP315, which is being developed for basal cell carcinoma. As we have previously discussed, BCC is one of the most common skin cancer indications, with over 3.6 million cases per year representing a potential multi-billion dollar opportunity.
Speaker #3: As I mentioned, last week we presented an oral presentation and a poster on VP315 at the SITSI 40th Annual Meeting. The new data presented at SITSI underscores VP315's potential to redefine how basal cell carcinoma is treated.
Speaker #3: We are particularly encouraged by the immunologic profile we're seeing with VP315, which supports our view that this local, short-term therapy not only destroys tumors directly, but also stimulates a potent local immune response.
Speaker #3: The histological assessment in non-injected lesions suggests a potential upscopa-like effect. These data help explain the mechanism for the clinical safety and efficacy data previously reported and support the development of VP315 as a potential non-surgical immunotherapy option for patients with BCC. Furthermore, it reinforces our confidence in VP315's ability to address a significant unmet need in dermatologic oncology.
Speaker #3: As this data release has prompted significant inquiries into the VP315 program and the nature of our Phase Three development plans, we are also pleased to share feedback regarding our end-of-Phase Two meeting with the FDA and our plans to advance the asset.
Speaker #3: In the meeting, the FDA confirmed alignment with our plans for the phase three program to encompass two placebo-controlled phase three studies with approximately 100 subjects each, and a primary endpoint of complete clearance as assessed at week 14.
Speaker #3: Based on the FDA feedback, we expect these studies will be adequate to support an NDA filing, with long-term follow-up studies to be conducted as post-approval commitments.
Speaker #3: We are extremely pleased with this collaborative and thoughtful discussion with the FDA, which provides us with an efficient path to making VP315 available for patients with BCC.
Speaker #3: We are continuing our preparatory activities for the VCC program and are exploring new funding opportunities, which may include strategic non-dilutive partnerships for both the development as well as post-approval commercialization.
Speaker #3: As we finalize our preparation for phase three with CROs and clinical site investigators, we will provide additional details on costs, timing, and other key aspects of this exciting oncology program.
Speaker #3: As we approach the new year, we believe our company remains well-positioned to realize strong organic growth as YCAMP continues to establish itself as the leading therapy for the treatment of molluscum.
Speaker #3: We are also excited about the value creation surrounding YCAMP's potential label expansion into common warts, the potential for expansion of YCAMP for molluscum around the world, and the nearly universal positive feedback we are receiving for VP315 for basal cell carcinoma.
Speaker #3: I'll now turn the call over to our Interim Chief Financial Officer, John Kirby.
Speaker #2: Thanks, Jason. I'll now take a few minutes to summarize our financial results for the quarter ended September 30th, , 2025. For the third quarter of 2025, we reported total revenue of $14.3 million, compared to total negative revenue of $1.8 million, in the third quarter of 2024.
Speaker #2: Total revenue for the third quarter of 2025 primarily consisted of $10.7 million of Tory milestone and collaboration revenue, and net YCAMP revenue of $3.6 million.
Speaker #2: Compared to $84,000 in collaboration revenue from Tory and negative $1.9 million of net YCAMP revenue in the third quarter of 2024, net YCAMP revenue in the third quarter of 2025 reflects shipments to our distribution partners, offset by standard gross-to-net adjustments, including actual or anticipated product returns, off-invoice discounts, distribution fees, rebates, and copay assistance program expenses.
Speaker #2: Recall that in the third quarter of 2024, negative net YCAMP revenue was due to an increase in our returns reserve for estimated returns from certain distributors and no revenues from ex-factory sales.
Speaker #2: This year, as Jayson mentioned earlier, net YCAMP revenue represents orders from our distribution partners to meet demand from their customers. Gross product margins for the third quarter of 2025 were 79.1%, and the cost of product revenue was $0.8 million, including $0.4 million of obsolete inventory costs.
Speaker #2: Research and development expenses of $2.2 million in the third quarter of 2025 increased by $0.1 million when excluding the impact of stock-based compensation, which is in line with the third quarter of 2024.
Speaker #2: Selling, general, and administrative expenses of $9.4 million in the third quarter of 2025 decreased compared to the third quarter of 2024 by $5.8 million, excluding the impact of stock-based compensation. This was driven primarily by the implementation of our more focused commercial strategy for YCAMP, including decreases in compensation, benefits, and travel due to a reduced sales force of $3.5 million, decreased commercial costs of $1.2 million, and decreased marketing and sponsorship costs of $0.8 million.
Speaker #2: Before I discuss net income and net loss per share, I will note that on July 24th, we effected a reverse stock split at a ratio of 1 for 10 shares of our common stock.
Speaker #2: As a result, every 10 shares of our issued and outstanding common stock were automatically combined into one share. The 2025 and 2024 per share amounts I will note reflect the impact of the reverse stock split.
Speaker #2: Gap net loss was $0.2 million, or $0.03 per share for the third quarter of 2025, compared to a gap net loss of $22.9 million, or $4.88 per share for the third quarter of 2024.
Speaker #2: On a non-GAAP basis, which excludes stock-based compensation, non-cash interest expense, and change in fair value of embedded derivatives, the third quarter of 2025 net income was $1.2 million, or $0.13 per share, compared to a net loss of $20.2 million, or $4.30 per share, for the third quarter of 2024.
Speaker #2: And finally, as of September 30, 2025, Verrica had aggregate cash and cash equivalents of $21.1 million. As Jayson mentioned earlier, we received a total of $18 million in cash milestone payments from Tory during 2025.
Speaker #2: In consideration of the $10 million minimum liquidity covenant in our debt facility, on a gap basis, our cash balance as of September 30th, 2025, funds operations into the late fourth quarter.
Speaker #2: We will continue to apply discretion in our uses of cash and explore opportunities to further bolster the strength of our balance sheet, while still advancing our commercial and clinical development efforts.
Speaker #2: I'll now turn the call back over to Jason for closing.
Speaker #2: remarks. Thanks,
Speaker #1: John, since my appointment as CEO just over one year ago, I'm incredibly proud to report that Verrica has plotted a course to build a foundation in our commercial-stage asset YCAMP and further advance our pipeline of potential products for two of the largest unmet needs in dermatology.
Speaker #1: The Verrica team is always focused on delivering best-in-class therapies, and I can say with confidence that we are fully executing on this strategy.
Speaker #1: And doing so utilizing a highly efficient operating model that prioritizes growth while prudently allocating capital resources to that growth. We will enter 2026 with significant accomplishments across all facets of our business in 2025 that I believe will lay the foundation for continued growth and success.
Speaker #1: With that, we'd be happy to take any questions. Operator?
Speaker #2: Thank you. At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw your question by pressing star and two.
Speaker #2: And once again, to ask a question, please press the star and one on your telephone keypad. We'll take our first question from Stacy Ku with TD Cohen.
Speaker #2: Please go ahead. Your line is open.
Speaker #3: Hey, good morning. Thanks so much for taking our questions, and great to hear about the stepwise sales for expansion and the YCAMP Patient Hub. But first, can you further speak to the YCAMP demand that you're seeing in Q4?
Speaker #3: And then second, maybe go into more detail on the competitive headwinds. What kind of counter-detailing are you seeing, and what has been the prescriber feedback on Zolzumi, and maybe the efficacy that you're seeing when it comes to the competitor?
Speaker #3: Thanks so
Speaker #3: much. Sure.
Speaker #1: Thanks, Stacy. Nice to talk to you again. In terms of Q4, as we indicated earlier, the momentum we saw rounding up September has continued into this quarter.
Speaker #1: In terms of the competitive landscape, we continue to view the largest competitor to the treatment of molluscum as being watch and wait. And converting Dr. behaviors from simply watch and wait or referral to actual treatment.
Speaker #1: The Zolzumi launch is, in our view, a positive for the marketplace as there's now shared voice talking about the need to treat and the ability to treat molluscum.
Speaker #1: And we're still excited about the prospects of YCAMP as being a best-in-class option for those patients, with most patients seeing their disease addressed in as few as one to two.
Speaker #3: Thank you so much.
Speaker #1: Yep. Thank
Speaker #2: you. Our next question comes from Dennis Deng with Jefferies. Please go
Speaker #2: ahead. Hi.
Speaker #4: Good morning. Thanks for taking my question time, too. Number one, just on the recent sales force expansion, I'm just curious, when do you expect productivity to fully ramp?
Speaker #4: And is 2026 sort of the right way to think about it? And then number two, on the EU, I appreciate the guidance around filing in Q4 '26, but that's still in 12 months despite no additional clinical trials, etc., required.
Speaker #4: So, just curious, why do you need the 12 months? Is that a situation where you could find a partner first before filing? Thanks.
Speaker #4: you. Sure.
Speaker #1: No problem. So, in regards to your first question about sales productivity, yes, it typically takes a few months for any rep to be up to speed.
Speaker #1: So we would expect that many of our reps that we've hired recently to be hitting the ground running and being quite productive in the early part of next year.
Speaker #1: In terms of the EU, there are some mechanical things that relate to filing in the EU that require sequential steps in time. One of those, in particular, is around securing a pediatric waiver, even though our drug has already been completed in pediatric patients.
Speaker #1: We have to go through the process of securing that waiver in the EU, and that adds a few months to the beginning of the timeline.
Speaker #1: We're doing everything we can to expedite the process, but there are a number of sequential steps in Europe that require you to go through step one before you go to step two.
Speaker #1: And we're continuing to do all those things, actually, right now. It also, in terms of your question about partnership and that general runway, would provide us just fine with a commercial plan ourselves or work with a partner and give us sort of that timeline to prepare.
Speaker #1: For commercial launch. So we don't believe it's going to adversely impact the timeline to commercial.
Speaker #4: Thank
Speaker #2: Thank you. We will move next with Serge Bellinger from Needham & Company. Please go ahead. Your line is open. Serge, your line is open.
Speaker #5: Oh, hello. Hey, good morning, everyone. This is John on for Serge today. Thanks for taking our questions. So first on YCAMP RX, I guess it's kind of getting ramped up in the next month or so.
Speaker #5: Has there been feedback from KOLs that you've spoken to that kind of led you to instilling this mechanism, and how could that kickstart further dispensed applicator growth moving forward? I'm curious about some of your feedback.
Speaker #5: And then, back on the expansion of the sales force, just curious if the goal here is kind of an expansion in the breadth of your current call points or more so an increase in depth and prescribing from your current prescribers.
Speaker #5: Thanks.
Speaker #1: Sure. Thanks, Serge. So we were very excited about the YCAMP RX. The feedback has been in general, we've worked very hard over the past year to continue to simplify the process for clinicians, their patients.
Speaker #1: And we believe a single point of referral for writing these prescriptions to a non-dispensing pharmacy will make that continue to be easier for the clinicians.
Speaker #1: And make it easier for their patients. So there'll be a one-stop shop that has familiarity with the commercial payers, the contracts, the insurance for the patients, and also to facilitate expeditious ways to get that fulfilled for the patients.
Speaker #1: And the general feedback we've seen so far has been very positive. But it's still in the early stage, and we'll continue to explore and share details as that rolls out.
Speaker #1: In terms of the breadth and call point, I would say it's still a bit of both. We're seeing greater demand, and given that we're expanding into both the pediatric primary care in addition to our core business in dermatology, this allows our reps to spend more time calling on the existing customers, but also to expand in some of their call points and high-value opportunities in the commercial space.
Speaker #1: What we see, as I mentioned earlier, in terms of the largest competitor being doing nothing or watch-and-wait, this means there are a lot of clinician targets out there for which there is no deciding data.
Speaker #1: And we just need to engage with them through conferences, through trade shows, and through social media and marketing efforts, as well as simply knocking on doors the old-fashioned way.
Speaker #1: So we're excited about that opportunity. There's plenty of targets for our reps, and I think that we'll start to see that traction going into this.
Speaker #1: year. Thank
Speaker #2: You. And once again, that is.
Speaker #1: And once again , that is . And once again , that is . We will move next with . The capital markets . Please go ahead .
Speaker #2: Hi. Thank you for taking my call. Can you hear me? All right.
Speaker #3: little A bit .
Speaker #2: Okay . A couple of questions for me . How should we think about the . How how should we think about seasonality impact in Q4 ?
Speaker #2: Sales and another one is on Ycanth. Do we have any benchmarks from a similar pharmacy model in a similar kind of indication?
Speaker #2: And what kind of KPI will you be tracking to measure Y success in the first 6 to 12 months?
Speaker #3: Can you please repeat the first part of the first question ? It was it was staticky . I didn't hear it right .
Speaker #2: So my first question was , how think should we about seasonality impact in Q4 , sales ?
Speaker #3: Okay . No problem . So in terms of we would Q4 , expect , you know , some of the traditional could see slowdown you in November , December , based on vacations and holiday and sort of times the calendar in general .
Speaker #3: But expect that that we momentum will continue into the first part of next year for prescriptions , especially as we that Molluscum is often a secondary diagnosis for believe patients .
Speaker #3: as we get And into cold and flu season , we expect there'll be more doctor visits and could be more diagnosis molluscum of going forward .
Speaker #3: In terms of the NDP at this point , we're not giving any expectations or metrics at moment , but you would expect that we would follow all the the core metrics of time to time to fill the number of scripts are fulfilled , etc.
Speaker #3: that . And as we get more data on know , we'll that , you continue to evolve and monitor that process . But those would be expectations of a typical NDP .
Speaker #2: Okay . Thank you .
Speaker #1: Thank you . And this will our Q&A session . I will now turn the call back to CEO Jayson Rieger .
Speaker #3: Thank you, operator. I'd like to thank all of you for joining us, and we look forward to providing updates on our progress in 2026.
Speaker #3: Have a nice day .