Verrica Pharmaceuticals Reports Mixed Financial Results, Launches Commercial Operations for YCANTH

Verrica Pharmaceuticals Inc. reported significant financial changes in its 10-Q filing for the quarter ending September 30, 2024. The company experienced a total revenue of $(1.8 million) for the three months ended September 30, 2024, a decrease from $2.9 million in the same period of 2023. However, for the nine months ended September 30, 2024, total revenue increased to $7.2 million, up from $3.1 million in 2023. The negative revenue for the recent quarter was attributed to increased returns reserves of $1.7 million due to lower-than-expected sell-through and product expiration.

Operating expenses for the three months ended September 30, 2024, were $18.9 million, down from $26.8 million in 2023, while total operating expenses for the nine months rose to $61.7 million from $45.8 million in the previous year. The loss from operations for the recent quarter was $(20.7 million), an improvement from $(23.9 million) in 2023, but the nine-month loss from operations increased to $(54.5 million) from $(42.6 million) in 2023. The net loss for the three months was $(22.9 million), compared to $(24.8 million) in 2023, while the nine-month net loss rose to $(60.4 million) from $(42.4 million) in the prior year.

As of September 30, 2024, cash and cash equivalents decreased to $23.0 million from $69.5 million at the end of 2023. Total current assets also fell to $28.2 million from $77.5 million, while total assets decreased to $32.9 million from $81.6 million. Current liabilities increased to $21.0 million from $17.0 million, and total liabilities rose to $67.0 million from $61.8 million. The accumulated deficit grew to $(290.8 million) from $(230.4 million) at the end of 2023.

Strategically, Verrica launched its commercial operations for YCANTH (VP-102) in August 2023 after receiving FDA approval in July 2023. The company is focusing on advancing this product for additional indications, including common and external genital warts. However, on October 1, 2024, Verrica terminated 47 employees as part of a cost-reduction initiative, reducing its sales territories from 80 to approximately 33. This restructuring is expected to incur a one-time charge of about $0.6 million.

The company also entered into a Credit Agreement in July 2023, borrowing $50.0 million, with net proceeds of approximately $44.1 million. As of September 30, 2024, Verrica was in compliance with all covenants under this agreement, which requires maintaining a liquidity of at least $10.0 million. However, the company did not meet its revenue target as of June 30, 2024, which could impact future borrowing capabilities.