Verrica slashes costs, refocuses sales strategy By Investing.com

WEST CHESTER, Pa. – Verrica Pharmaceuticals Inc. (NASDAQ:), a company specializing in dermatology therapeutics, today announced a strategic restructuring aimed at reducing its operational costs by approximately 50%. This move includes a significant reduction in sales territories and a pivot to focus on pediatricians for the promotion of YCANTH®, their FDA-approved treatment for molluscum contagiosum.

The company’s restructuring plan involves decreasing the number of sales territories from 80 to roughly 35, targeting areas with a higher incidence of molluscum, a history of cantharidin usage, and substantial insurance coverage for YCANTH®. This shift in strategy also extends to reducing headcount in various support functions, which is expected to halve the company’s total operating expenses.

YCANTH® (VP-102) is a cantharidin-based drug-device combination product, uniquely positioned as the first FDA-approved treatment for molluscum contagiosum in adults and children over two years old. This skin condition affects an estimated six million people in the United States, predominantly children. The product’s approval was supported by positive outcomes from two Phase 3 clinical trials involving around 500 patients, demonstrating its safety and efficacy.

In addition to the restructuring, Verrica has completed Phase 2 studies for VP-102’s potential application in treating common and external genital warts. The company is also developing another cantharidin-based candidate, VP-103, for plantar warts and has a licensing agreement to develop VP-315 for non-melanoma skin cancers.

The operational changes will result in a one-time restructuring charge of about $1.0 million. Verrica’s announcement highlighted their commitment to maintaining adequate resources to support YCANTH® as a new standard of care for molluscum contagiosum, with insurance covering approximately 228 million lives for the treatment. The product is accessible to both insured and uninsured patients, with a treatment cost ranging from $25 to $75, and financial assistance available for those in need.

This news is based on a press release statement and reflects Verrica Pharmaceuticals Inc.’s current plans for its sales and operational infrastructure. The company’s forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ, as detailed in their SEC filings.

In other recent news, Verrica Pharmaceuticals has been active on multiple fronts. The company announced a workforce reduction of 47 employees, a move aimed at streamlining operations and conserving capital. This restructuring is expected to result in around $1.0 million in total expenses. The company’s Chief Financial Officer, Terence Kohler, also announced his resignation, and two agreements were formalized with former Chief Commercial Officer, Joe Bonaccorso.

Verrica’s second quarter of 2024 showed robust growth, with net product revenue reaching $4.9 million, primarily driven by increased demand for YCANTH and an expanded distribution network. Total revenues for the quarter stood at $5.2 million, despite a GAAP net loss of $17.2 million.

RBC Capital revised its outlook on Verrica, reducing the stock’s price target to $13 from $14, while maintaining an Outperform rating. This adjustment followed challenges in the launch of YCANTH, Verrica’s treatment for molluscum contagiosum.

Verrica also reported positive preliminary open-label phase II data from VP-315 for the treatment of basal cell carcinoma. The study reported complete clearance in 51% of treated lesions, surpassing management’s expectations. Further insights into VP-315’s clinical profile are anticipated to be revealed in the first quarter of 2025. These are the recent developments for Verrica Pharmaceuticals.

InvestingPro Insights

Verrica Pharmaceuticals’ strategic restructuring aligns with several key financial metrics and trends highlighted by InvestingPro. The company’s market capitalization stands at $58.46 million, reflecting its current position as a smaller player in the pharmaceutical industry. This restructuring comes at a critical time, as InvestingPro data shows that Verrica’s revenue for the last twelve months as of Q2 2024 was $13.91 million, with a significant revenue growth of 61.61% over the same period.

However, the company faces financial challenges that underscore the necessity of its cost-cutting measures. An InvestingPro Tip indicates that Verrica is “quickly burning through cash,” which is consistent with the company’s decision to reduce operational costs by 50%. This is further supported by the negative gross profit of $8.41 million and an operating income margin of -563.14% for the last twelve months as of Q2 2024.

The market’s reaction to Verrica’s recent performance and restructuring announcement is reflected in its stock price movements. InvestingPro data shows that the stock has experienced a significant decline, with a 41.7% drop in the past month and an 81.66% decrease over the last three months. This aligns with another InvestingPro Tip noting that the stock is “trading near its 52-week low.”

Despite these challenges, analysts anticipate sales growth in the current year, according to an InvestingPro Tip. This positive outlook could be linked to the potential of YCANTH® and Verrica’s strategic focus on pediatricians for its promotion.

For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Verrica Pharmaceuticals, providing a deeper understanding of the company’s financial health and market position.

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