Verrica Pharmaceuticals Inc. Q2 FY2024 earnings call

YCANTH Commercial Progress - In Q2 2024, YCANTH had net revenues of $4.9 million, with growth in demand and expansion of distribution footprint including Cencora as a specialty distribution partner and Vizient as a GPO for hospitals. - Received permanent J-Code from CMS on April 1 and CMS published Part B schedule listing YCANTH reimbursement. As of July 31, 234 million lives were under coverage across various plans. - Settled with Dormer Laboratories in July to discontinue sale of compounded cantharidin products, but removal of compounded products will take time due to six-month shelf life. - Amended licensing agreement with Torii Pharmaceutical for joint conduct of global pivotal Phase 3 trial for YCANTH in common warts, with Torii funding Verrica's portion and a $8 million milestone payment upon first patient dosed in Japan.### VP-315 Developments - VP-315 is a potential first-in-class oncolytic peptide for basal cell carcinoma. Phase 2 trial showed preliminary efficacy with ~51% complete histologic clearance rate and ~71% reduction in residual tumor size. Safety profile was favorable with no treatment-related serious adverse events. - Intends to hold a KOL event to discuss VP-315 Phase 2 study results.### Commercial Strategy - Focus on accelerating YCANTH growth in H2 2024, including expanding buy and bill accounts, driving adherence through treat to clear messaging, optimizing coverage to eliminate prior authorizations, and expanding coverage to new Medicaid states. - Added 20 new pediatric reps in major MSAs, driving increased awareness and utilization of YCANTH in pediatric medical practices.

In the second quarter of 2024, Verrica Pharmaceuticals reported total revenues of $5.2 million. YCANTH contributed net revenues of $4.9 million, which was approximately 94.23% of the total revenues. Gross product margins for the second quarter were 93%.

Forward-Looking Statements - Expect to initiate the global Phase 3 trial for YCANTH in common warts in the first half of 2025, subject to feedback from US FDA and Japan's PMDA. - Cash and cash equivalents as of June 30, 2024, are sufficient to fund operations into the first quarter of 2025. - Continues to advance YCANTH for common warts through amended agreement with Torii and progress on VP-315's potential as a treatment for basal cell carcinoma.

Risks - Forward-looking statements involve inherent risks and uncertainties, and actual results may differ materially from expectations. - Regulatory uncertainties related to approval and commercialization of product candidates. - Competition in the dermatology and oncology markets could impact market share and commercial success. - Dependence on key partners and potential challenges in maintaining partnerships.

Q: Can you put some metrics around the progress you've made in removing compounded cantharidin and the timeline?

A: Ted White said Dormer Laboratories shipped over 24,000 vials to the US, with a six-month shelf life, expecting it to bleed out in H2 2024. Terry Kohler mentioned inventory expected to normalize in H2 2024 and early 2025.

Q: For VP-315, what's the pathway forward and follow-up needed?

A: Gary Goldenberg said VP-315 has potential to shift treatment paradigm with favorable safety profile. Phase 2 is a safety study, and they anticipate end of Phase 2 meeting in first half of 2025 to discuss Phase 3 program.

Q: How are you prioritizing detailing for YCANTH and the impact of prior authorizations?

A: Ted White said focusing on removing prior authorizations, streamlining copay program, leveraging partnerships like Cencora and Vizient, and working on dual benefit coverage.

Q: Can you comment on the competitive landscape for YCANTH and impact of other approvals?

A: Ted White said other approvals in molluscum help increase share of voice, and only benefit Verrica as cantharidin is gold standard for molluscum contagiosum.

Q: On VP-315, any systemic immunological response and strategic plans?

A: Gary Goldenberg said abscopal effect was a secondary endpoint, and they are focused on basal cell carcinoma now but keep options open for partnerships. On YCANTH, no visibility on off-label use as they can't support it.

Q: Thoughts on YCANTH gross margin normalization and compounded shipments?

A: Terry Kohler said expect gross margin normalization in H2 2024, with long-term expectation of low 90s percentage. Ted White said Dormer shipped ~24,000 vials to US, with no visibility on Lighters' prior shipments.