Verrica Pharmaceuticals (VRCA) Q2 2024 earnings summary

Executive summary

• Q2 2024 total revenue was $5.2 million, with $4.9 million from YCANTH, driven by growing demand, expanded distribution, and a one-time stocking order from Cencora.

• Positive Phase 2 data for VP-315 in basal cell carcinoma showed a 51% complete histologic clearance rate and 86% overall tumor size reduction.

• Settlement with Dormer Labs led to the removal of compounded cantharidin from the U.S. market, expected to boost YCANTH demand as inventory depletes.

• Expanded coverage for YCANTH to 234 million lives, including new Medicaid states and broader commercial insurer allowables.

• Amended agreement with Torii to co-fund a global Phase 3 trial for YCANTH in common warts, with trial start expected in H1 2025.

Financial highlights

• Q2 2024 total revenue: $5.2 million; YCANTH net revenue: $4.9 million; collaboration revenue: $0.3 million.

• Gross product margin for Q2 2024 was 93%, benefiting from prior R&D expensing of certain costs.

• Q2 2024 net loss: $17.2 million ($0.37/share) GAAP; non-GAAP net loss: $14.4 million ($0.31/share).

• SG&A expenses increased to $16.5 million, up $10.6 million year-over-year, driven by YCANTH commercial activity.

• R&D expenses decreased to $3.3 million, down $2.4 million year-over-year.

• Cash and equivalents at June 30, 2024: $31.9 million, expected to fund operations into Q1 2025.

Outlook and guidance

• Expect YCANTH demand and revenue to accelerate in the second half of 2024 as compounded cantharidin inventory depletes.

• Gross margins anticipated to normalize in the low 90s% in the second half of 2024 and into 2025.

• No revenue guidance provided for the remainder of 2024; long-term guidance may be considered closer to 2025.

• Phase 3 trial for YCANTH in common warts expected to initiate in H1 2025, pending regulatory feedback and in partnership with Torii.

• Cash on hand expected to support operations only into Q1 2025; additional financing is required.