Verrica Pharmaceuticals Inc. Q2 FY2025 earnings call

Commercial Activities - YCANTH: Second quarter saw 13,434 YCANTH dispensed applicator units, a 32.8% sequential quarterly growth. Focused on territories with high molluscum prevalence and good coverage. Co-pay assistance program allows commercial patients to pay $25 for up to 2 applicators. Expanding distribution network with local independent regional pharmacies and national specialty partners. ### Torii Agreement: Amended agreement secures Torii's commitment to global Phase III program for YCANTH in common warts, received $8M milestone, potential $10M more if Japan approves YCANTH by end 2025. Torii funding $40M for program, Verrica funds remainder. ### VP-315: Ready for Phase III trials for basal cell carcinoma, ongoing planning for pivotal program, seeking strategic partnerships for funding.

For the second quarter of 2025, total revenue was $12.7 million compared to $5.2 million in the second quarter of 2024. Total revenue primarily consisted of $8 million of Torii milestone revenue and net YCANTH revenue of $4.5 million (compared to no milestone revenue and $4.9 million of net YCANTH revenue in Q2 2024). Gross product margins for Q2 2025 were approximately 93%. Research and development expenses were $1.8 million, down $1.5 million from Q2 2024. Selling, general and administrative expenses were $8.9 million, down $7.7 million from Q2 2024.

Growth: Expect strong and sustainable growth in second half of 2025 driven by YCANTH's unique attributes. ### Torii: Amended agreement provides funding for global Phase III program and potential for label expansion. ### VP-315: VP-315 program moving into pivotal trials with planning underway.

Uncertainties: Uncertainties related to forward-looking statements. ### Clinical/Regulatory: Risks associated with clinical trial outcomes, regulatory approvals. ### Market Dependence: Dependence on Torii's success in Japan and global Phase III program.

Q: Congrats on the quarter. Now have been 2 quarters discussing high level the expansion of the sales force. Could you provide more details how many additional folks are you considering in the near term? And then for those areas of success, are you able to pinpoint what exactly is maybe the few reasons for increased YCANTH adoption?

A: Jayson Rieger says they were around 35 late last year and into the beginning of this year, expect that number to stay within that range to maybe 5 or 10 more in the short-term. Reasons for success include sales reps' tenacity, clinical/safety/efficacy benefits, improved access through buy-and-bill and expanding pharmacy network.

Q: Second question is compounded cantharidin, something that we haven't asked about recently. So just kind of curious with the sales force that's really now reacquainting themselves with YCANTH and the prescribers, what are they experiencing currently in terms of maybe the feedback you're hearing there?

A: Jayson Rieger says compounded cantharidin is on the book drugs list, clinicians can access it, but they've seen a significant change in utilization, with more adoption of YCANTH for molluscum.

Q: Last question is on consensus, which has now increased to between $15 million to $20 million, so a touch above the $15 million from before. So curious what are your views? And of course, as a housekeeping -- for housekeeping purposes, maybe provide some additional color around the specialty distributor. Is that going to result in any lumpiness between quarters?

A: Jayson Rieger says they appreciate the question, but they don't give direct guidance on consensus. Regarding the specialty distributor, he mentions no specific lumpiness issues mentioned.

Q: Receivables had a pretty sharp increase quarter-to-quarter. Can you comment on the drivers of that because they looked like they were in excess of the growth in revenue sequentially? And then also, what are you seeing with GTN, particularly with the increased use of the $25 co-pay program?

A: John Kirby says receivables increase due to 60-day collection terms and gross to net adjustments. On GTN, they haven't changed WACC since launch.