Verrica Pharmaceuticals Inc. Q2 FY2026 earnings call

Commercial YCAMP (U.S. molluscum indication) Management stated that YCAMP unit growth accelerated in Q2 2026, more than doubling its percentage unit growth from the prior quarter, driven by:

• Retargeting and segmentation of the molluscum prescriber base, which has improved prescriber adoption and concentrated the commercial field force on the highest-productivity clinicians
• Enhanced patient access programs: in July 2026, the company implemented $0 copay refills for eligible commercially insured patients, reducing financial barriers for patients and streamlining treatment for prescribers
• Management sees strong unmet medical need for YCAMP and believes it is on track to become the standard of care for molluscum, with significant remaining untapped patient market penetration

International Expansion

• Verica announced an exclusive distribution, marketing, and supply agreement with Madomi Pharma to commercialize YCAMP for molluscum in Israel. Madomi will submit a regulatory application for approval, and Verica will receive 60% of YCAMP's net selling price plus up to $8.2 million in regulatory and commercial milestone payments. The partnership also allows for future addition of the common warts indication if trials are successful
• Torrey Pharmaceutical continues to grow YCAMP sales following its 2026 launch in Japan, and Verica is actively pursuing additional international partnership opportunities outside the U.S., Japan, and Israel

Pipeline Progress

• YCAMP common warts program: In June 2026, the first patients were dosed in the second pivotal phase 3 trial (COVE-3) in both the U.S. and Japan. Enrollment in the first pivotal trial (COVE-2) and long-term follow-up study (COVE-4) remains on schedule. Torrey is funding the first $40 million of the program, covering ~90% of the current trial budget, with overall costs split 50/50. Verica's share of costs will be covered by future transfer payments, milestones, and royalties from Japanese sales. Common warts impact ~22 million people in the U.S. (over 3x the size of the molluscum patient population) and have no currently FDA-approved therapies
• VP315 (basal cell carcinoma): The company presented encouraging new phase 2 data showing a 67% overall size reduction in 14 untreated non-target basal cell lesions, with 3 lesions achieving complete histological clearance (abscopal effect), alongside strong reductions in treated primary lesions. The company is advancing preparations for the phase 3 registration program, including CRO selection and manufacturing of clinical trial supplies, following favorable FDA feedback on trial design. VP315 is a fully internally owned global asset for non-metastatic skin cancers, representing a large commercial opportunity

Financing Update

• Verica announced a new non-dilutive credit facility from an entity controlled by its largest shareholder and chairman, Paul Manning, providing up to $27.5 million in total capital. $12.5 million is available immediately, with an additional $15 million available upon achievement of revenue, growth, and operational milestones by the end of 2026. There are no scheduled interest or principal payments until maturity in December 2030, giving the company maximum flexibility to deploy cash for business growth and pipeline development

Verica Pharmaceuticals operates two core product and pipeline segments: 1) Commercial YCAMP: Total second quarter 2026 revenue was $5.9 million, of which U.S. net YCAMP product revenue contributed $5.1 million (86.4% of total revenue), and license and collaboration revenue from the Torrey Pharmaceutical partnership contributed $0.8 million (13.6% of total revenue). YCAMP gross product margins were 91.5%, with cost of product revenue of $0.4 million. Dispensed YCAMP applicator units reached 19,626 in the quarter, up 28% quarter-over-quarter. 2) Pipeline Development: Research and development (R&D) expenses for all pipeline assets (YCAMP common warts program, VP315) were $6 million in Q2 2026, up from $1.8 million in Q2 2025, driven by increased costs for the YCAMP common warts global phase 3 program. Selling, general and administrative expenses were $10.3 million, including a $1.7 million net expense from a 2022 legal settlement after insurance recovery.

• The company expects cash runway to extend into 2028 based on its current operating plan, assuming full drawdown of the $27.5 million credit facility
• Top-line data from the YCAMP common warts global phase 3 program is projected to be available in mid-2027, with enrollment remaining on track to meet this timeline
• Management expects continued YCAMP unit growth in the third quarter 2026, though growth will be partially impacted by normal seasonal slowdowns from clinician and patient summer vacations
• Management expects YCAMP net pricing (yield per dispensed applicator) to gradually accrete over time as commercial optimization efforts continue
• Management expects to achieve the milestones required to access the $15 million delayed draw portion of the credit facility before the end of 2026

• Forward-looking statements (including pipeline timelines, regulatory outcomes, revenue growth projections, and cash runway estimates) are inherently uncertain, and actual results could differ materially from expectations based on inherent risks in drug development and commercialization
• The $15 million delayed draw portion of the credit facility is only available if Verica achieves specified revenue, growth, and operational milestones, which may not be met by the end of 2026
• The credit facility has a cost structure tied to a 16% internal rate of return for the lender, increasing the company's total cost of capital
• Pipeline development risks include potential failure to meet efficacy or safety endpoints in clinical trials, slower-than-expected enrollment, and unexpected regulatory requirements that could delay or prevent product approval

Q: What are YCAMP prescription trend expectations for summer 2026, what are the key priorities to maximize adoption, and where will long-term net pricing stabilize? / A: Management confirmed continued Q3 growth, but noted that summer vacations will cause modest seasonal headwinds. Core growth priorities include the already completed field force retargeting to focus on high-prescribing, high-patient-volume clinicians, streamlining order fulfillment processes, and expanding patient affordability via $0 copay refills for eligible patients. Management expects net yield per unit will gradually increase over time as commercial optimization continues. (338 characters)

Q: Can you update on COVE trial enrollment timelines and the opportunity for YCAMP in Israel? / A: Enrollment for COVE-2 remains solid, and COVE-3 has had a strong start in both the U.S. and Japan, with recruitment also on track for the long-term COVE-4 safety study. The program stays on schedule for mid-2027 top-line data. For Israel, the patient population is smaller than the U.S., but molluscum prevalence is consistent, Verica gets 60% of net revenue plus up to $8.2 million in milestones, and the approval pathway is open to add common warts later if trials succeed. (442 characters)

Q: How will the new credit facility impact 2027-2028 R&D planning for VP315, how will quarterly R&D expenses trend, and what are the key terms of the facility? / A: Torrey covers 90% of the common warts program cost via its $40 million initial funding, so Verica has minimal near-term cash burn for that program. Preparations for VP315 phase 3 are fully budgeted through next year. Key facility terms: 1% prepayment fee, no warrants, 16% lender IRR catch-up on repayment, no required minimum draws, no scheduled principal/interest payments until 2030, and it holds a senior secured position on company assets. (453 characters)

Q: Why is unit growth outpacing net product revenue growth, and what level of efficacy is clinically meaningful for the common warts trial? / A: Commercial efforts were recently focused on refining targeting and field deployment rather than maximizing yield, so revenue conversion will improve as the company now shifts focus to driving both volume and yield. For common warts, there are no currently approved therapies, so results aligned with the positive phase 2 data would be clinically meaningful and represent a major new treatment option, which has already driven strong site and patient interest in enrollment. (411 characters)