On May 7, 2021 Verrica Pharmaceuticals Inc. ("Verrica") (Nasdaq: VRCA), a dermatology therapeutics company developing medications for skin diseases requiring medical interventions, reported financial results for the first quarter ended March 31, 2021 (Press release, Verrica Pharmaceuticals, MAY 7, 2021, View Source [SID1234579473]).
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"This is a significant time for the Company as we ramp up our commercial readiness plans in preparation for potential FDA approval this year of VP-102 for the treatment of molluscum, a common, highly contagious skin disease with no FDA-approved treatments," said Ted White, Verrica’s President and Chief Executive Officer. "In parallel, we strengthened our financial position, raising funds and generating licensing revenues that we believe will support planned operations at least through the second quarter of 2023."
Ted White continued: "Further, we expanded our global reach by granting Torii an exclusive license to develop and commercialize VP-102 in Japan for the treatment of molluscum and common warts, executing the first strategic step in potentially bringing VP-102 to global markets."
Business Highlights and Recent Developments
The Company continued to expand its U.S. commercial operations during the quarter in preparation for the potential FDA approval of VP-102 (cantharidin 0.7% Topical Solution), and has made key hires in marketing, sales and payor functions to support product launch and commercialization. The Company has been assigned a Prescription Drug User Fee Act (PDUFA) goal date of June 23, 2021 for its NDA for VP-102. If approved, VP-102 will be marketed in the United States under the conditionally accepted brand name YCANTH.
On March 25, the Company closed an underwritten public offering of 2,033,899 shares of its common stock at a price to the public of $14.75 per share. The gross proceeds from the offering to Verrica were approximately $30.0 million, before offering expenses.
The Company entered into a Collaboration and License Agreement (the "Torii Agreement") with Torii Pharmaceutical Co., Ltd. ("Torii") granting Torii an exclusive license to develop and commercialize VP-102 in Japan for the treatment of molluscum and common warts. Under the terms of the Agreement, Torii made an up-front payment of $11.5 million to Verrica and has also agreed to make up to an additional $58 million in aggregate payments contingent on achievement of specified development, regulatory, and sales milestones. Torii will also make tiered transfer price payments for supply of product in the range of the mid-30s to mid-40s as a percent of net sales. Torii is responsible for all development activities and costs in support of obtaining regulatory approval in Japan.
Positive pooled results from the pivotal CAMP trials evaluating the safety and efficacy of VP-102 in the treatment of molluscum were published in the March 2021 issue of the American Journal of Clinical Dermatology.
Financial Results
First Quarter 2021 Financial Results
Verrica recognized license revenues of $12.0 million in the first quarter of 2021 related to the Torii Agreement. There were no license revenues recognized in 2020.
Research and development expenses were $5.4 million in the first quarter of 2021, compared to $4.9 million for the same period in 2020. The increase was primarily attributable to a one-time $2.3 million milestone payment to Lytix Biopharma AS upon the achievement of a regulatory milestone for LTX-315, partially offset by decreased Chemistry, Manufacturing and Controls (CMC) and clinical costs related to Verrica’s development of VP-102 for molluscum contagiosum, external genital warts, and common warts in 2020.
General and administrative expenses were $6.6 million in the first quarter of 2021, compared to $5.0 million for the same period in 2020. The increase was primarily a result of expenses related to increased headcount, an increase in insurance, professional fees and other operating costs, and an increase in expenses related to pre-commercial activities for VP-102.
For the first quarter of 2021, net loss on a GAAP basis was $0.9 million, or $0.04 per share, compared to a net loss of $9.8 million, or $0.39 per share, for the same period in 2020.
For the first quarter of 2021, non-GAAP net income was $0.6 million, or $0.02 per share, compared to a non-GAAP net loss of $8.8 million, or $0.35 per share, for the same period in 2020.
As of March 31, 2021, Verrica had aggregate cash, cash equivalents, and marketable securities of $87.7 million. The Company believes that its existing cash, cash equivalents, and marketable securities as of March 31, 2021, combined with the $11.5 million up-front payment received pursuant to the Torii Agreement in April 2021, will be sufficient to support planned operations at least through the second quarter of 2023.
Non-GAAP Financial Measures
In evaluating the operating performance of its business, Verrica’s management considers non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share. These non-GAAP financial measures exclude stock-based compensation charges and non-cash interest expense that are required by GAAP. Verrica believes that non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share provides useful information to both management and investors by excluding the effect of certain non-cash expenses and items that Verrica believes may not be indicative of its operating performance, because either they are unusual and Verrica does not expect them to recur in the ordinary course of its business, or they are unrelated to the ongoing operation of the business in the ordinary course. non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Non-GAAP income from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share have been reconciled to the nearest GAAP measure in the tables following the financial statements in this press release.
About VP-102
Verricaʼs lead product candidate, VP-102, is a proprietary drug-device combination product that contains a GMP-controlled formulation of cantharidin (0.7% w/v) delivered via a single-use applicator that allows for precise topical dosing and targeted administration. VP-102 is currently under U.S. Food and Drug Administration (FDA) review, with a PDUFA goal date of June 23, 2021, and could potentially be the first product approved by the FDA to treat molluscum contagiosum ― a common, highly contagious skin disease that affects an estimated six million people in the United States, primarily children. If approved, VP-102 will be marketed in the United States under the conditionally accepted brand name YCANTH. In addition, Verrica has successfully completed a Phase 2 study of VP-102 for the treatment of common warts and a Phase 2 study of VP-102 for the treatment of external genital warts.
About Molluscum Contagiosum (Molluscum)
There are currently no FDA-approved treatments for molluscum, a highly contagious viral skin disease that affects approximately six million people — primarily children — in the United States. Molluscum is caused by a pox virus that produces distinctive raised, skin-toned-to-pink-colored lesions that can cause pain, inflammation, itching and bacterial infection. It is easily transmitted through direct skin-to-skin contact or through fomites (objects that carry the disease like toys, towels or wet surfaces) and can spread to other parts of the body or to other people, including siblings. The lesions can be found on most areas of the body and may carry substantial social stigma. Without treatment, molluscum can last for an average of 13 months, and in some cases, up to several years.