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Verrica Pharmaceuticals Inc. (VRCA)·Q1 2025 Earnings Summary

Executive Summary

  • YCANTH demand accelerated: Q1 product revenue was $3.4M, driven by 10,102 dispensed applicator units, up 16.7% sequentially; management expects revenue to more closely track units as distributor inventories normalize .
  • Operating discipline improved: SG&A fell to $8.8M (–$7.5M YoY) and R&D to $2.3M (–$2.6M YoY), shrinking GAAP net loss to $9.7M (–$10.6M YoY) and non-GAAP net loss to $7.8M (–$10.0M YoY) .
  • Strong beat vs consensus*: Revenue $3.439M vs $2.531M estimate; GAAP EPS –$0.10 vs –$1.32 estimate; gross product margin approximately 88% .
  • Guidance cadence: No formal revenue guidance; cash runway remains contingent on an $8M Torii milestone (global Phase 3 common warts initiation) or Series A warrant exercises ($25M potential proceeds) .
  • Pipeline catalysts: VP-315 post-hoc Phase 2 ORR 97% and end-of-Phase 2 FDA meeting concluded; additional genomic/immune response data and Phase 3 design update expected mid-2025; Phase 3 common warts program co-sponsored with Torii could initiate as early as mid-2025 .

What Went Well and What Went Wrong

What Went Well

  • Demand-led growth: Dispensed YCANTH units reached 10,102 in Q1 (+16.7% QoQ) with $3.4M product revenue; management cited normalized distributor inventory and stronger pull-through .
  • Cost structure reset: SG&A down to $8.8M (–$7.5M YoY) and R&D to $2.3M (–$2.6M YoY) as commercialization strategy was refocused and sales force optimized .
  • Positive margin profile: Gross product margins approximately 88% in Q1, indicating healthy unit economics as obsolete inventory costs taper .

Selected quotes:

  • “For the first time, we dispensed more than 10,000 applicator units in a quarter…translated to $3.4 million in revenue in the first quarter” — Jayson Rieger, CEO .
  • “We believe YCANTH distributor inventory levels have normalized, and we expect that dispensed applicator units will now more closely track to our revenues.” — Jayson Rieger, CEO .
  • “Gross product margins for the first quarter of 2025 were approximately 88%.” — John Kirby, CFO .

What Went Wrong

  • Cash runway uncertainty: Under GAAP, cash and equivalents ($29.6M at 3/31) are not sufficient for one year absent milestone/warrant proceeds .
  • Finance costs persist: Interest expense remained elevated at $2.2M, reflecting OrbiMed borrowing; embedded derivative fair value changes impacted prior quarter results .
  • No formal revenue guidance: Management declined full-year revenue guidance; investors must rely on dispensed unit disclosures and qualitative traction .

Financial Results

Core P&L and Cash (USD)

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($)$(1,781,000) $344,000 $3,439,000
Product Revenue, net ($)$(1,865,000) $315,000 $3,422,000
Collaboration Revenue ($)$84,000 $29,000 $17,000
GAAP Diluted EPS ($)$(0.49) $(0.24) $(0.10)
Non-GAAP EPS ($)$(0.43) $(0.18) $(0.08)
SG&A ($)$16,083,000 $10,019,000 $8,848,000
R&D ($)$2,405,000 $1,168,000 $2,284,000
Net Loss ($)$(22,860,000) $(16,202,000) $(9,742,000)
Cash & Cash Equivalents ($)$22,959,000 $46,329,000 $29,595,000

Revenue Mix (USD)

MetricQ3 2024Q4 2024Q1 2025
Product Revenue ($)$(1,865,000) $315,000 $3,422,000
Collaboration Revenue ($)$84,000 $29,000 $17,000
Total Revenue ($)$(1,781,000) $344,000 $3,439,000

KPIs and Operating Drivers

MetricQ3 2024Q4 2024Q1 2025
Dispensed Applicator Units (#)7,706 8,654 10,102
Gross Product Margin (%)——~88%

Notes: Negative product revenue in Q3 reflects increased returns reserves; Q4/Q1 show normalization and demand-led shipments .

Year-over-Year Benchmarks (Q1)

MetricQ1 2024Q1 2025
Total Revenue ($)$3,826,000 $3,439,000
Product Revenue, net ($)$3,232,000 $3,422,000
Collaboration Revenue ($)$594,000 $17,000
GAAP EPS ($)$(0.44) $(0.10)
Non-GAAP EPS ($)$(0.38) $(0.08)
SG&A ($)$16,339,000 $8,848,000
R&D ($)$4,948,000 $2,284,000

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue GuidanceFY 2025No formal revenue guidance No formal revenue guidance Maintained
Cash Runway (GAAP)Next 12 monthsNot sufficient absent $8M Torii milestone or Series A warrant exercises Not sufficient absent $8M Torii milestone or Series A warrant exercises Maintained
Phase 3 Common Warts (YCANTH)Mid-2025Initiation could begin as early as mid-2025; $8M milestone at start Working with Torii to initiate; timing still as early as mid-2025 Maintained
VP-315 (Basal Cell Carcinoma)Mid-2025Additional genomic/immune data; end-of-Phase 2 minutes expected H1 2025 Additional genomic/immune data and Phase 3 design update planned mid-2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Distributor inventory normalizationQ3: Inventory expected to support demand into Q1 2025 ; Q4: inventory reduced, normalization, single-applicator launch Management says inventories normalized; orders smaller/more frequent; revenue aligns with units Improving
Sales force and cost actionsQ3: Restructuring to cut OpEx ~50% ; Q4: cost savings realized Leaner, capital-efficient; selective additions to coverage; SG&A down sharply YoY Improving
Access and pharmacy benefitQ4: Added independent specialty pharmacies; buy-and-bill facilitation Robust coverage growing in Medicaid and commercial; pharmacy and medical benefit mix expanding Improving
Seasonality/market dynamicsQ4: Anticipated spring/summer tailwinds Expect modest seasonality uptick; targeted marketing/social media to drive awareness Improving
VP-315 (BCC)Q3: Positive top-line Phase 2; 51% complete histologic clearance Post-hoc ORR 97%; EOP2 meeting concluded; mid-2025 data/design update Advancing
Common warts Phase 3 (YCANTH)Q3: Co-sponsored global Phase 3 planning; Torii funds Verrica share via offsets Working to initiate global Phase 3; $8M milestone at initiation Advancing
Cash runway/debt & derivativesQ3: Cash into Q1 2025 GAAP insufficiency reiterated; milestone/warrants could bridge Stable/Watch
Regulatory/legalQ3: Dormer settlement removed 503B cantharidin competition Continued focus on YCANTH standard of care Stable

Management Commentary

  • “We believe shipments of YCANTH applicator units will more closely reflect the underlying demand… translating into steadier revenue growth as we continue the relaunch.” — Jayson Rieger, CEO .
  • “Gross product margins for the first quarter of 2025 were approximately 88%.” — John Kirby, CFO .
  • “Under GAAP, the cash and cash equivalents… would not be sufficient to fund operations for the 1-year period… however, [Torii $8M milestone] or [Series A warrants] could have sufficient cash” — John Kirby, CFO .
  • “We are working with Torii Pharmaceutical to initiate our global Phase 3 program of YCANTH for the treatment of common warts.” — Jayson Rieger, CEO .

Q&A Highlights

  • Mix of prescribers: Pediatricians’ participation is growing, but dermatologists remain a large share; management expects both channels to expand .
  • Seasonality and demand: Potential summer uptick from increased transmission settings; marketing/social media to build awareness and drive penetration .
  • Receivables/payments: 60-day distributor terms; smaller, more frequent orders expected to stabilize cash conversion .
  • Access expansion: Pharmacy benefit and buy-and-bill both growing; independent pharmacies adding convenience; robust Medicaid/commercial coverage cited .
  • Gross-to-net: Company did not provide explicit split; implied alignment can be inferred from unit tracking to demand .
  • Utilization: Reordering strengthening; typical clinical use around 2–3 treatment cycles per patient (up to four in studies) .

Estimates Context

Q1 2025 vs Wall Street consensus (S&P Global)*

MetricConsensusActualSurprise
Revenue ($)$2,531,000*$3,439,000 +$908,000 / +35.8%*
GAAP EPS ($)$(1.32)*$(0.10) +$1.22*
EPS Estimates (#)5*——
Revenue Estimates (#)6*——

*Values retrieved from S&P Global.

Implications: Strong beat on revenue and EPS suggests estimates may move higher near-term, particularly if unit momentum and inventory normalization persist .

Key Takeaways for Investors

  • Revenue/units alignment is a positive inflection; sequential unit growth and normalized inventory underpin steadier revenue recognition .
  • Operating expense reset materially improves loss trajectory; SG&A cuts are flowing through while maintaining commercial execution .
  • Near-term cash lens: Watch for Torii Phase 3 initiation (common warts) and potential warrant exercises to alleviate GAAP runway constraints .
  • Pipeline could re-rate valuation: VP-315’s 97% ORR post-hoc and upcoming data/Phase 3 design update present upside optionality .
  • Access broadening: Growth in pharmacy benefit and buy-and-bill channels + robust Medicaid/commercial coverage expands TAM capture .
  • Seasonality could boost Q2/Q3 demand; company’s marketing and field coverage should capture incremental volume .
  • No formal revenue guidance—track dispensed applicator units; smaller, more frequent distributor orders should improve cash conversion and reduce volatility .

Citations: Press release and 8-K exhibit for Q1 financials and KPIs ; Q1 call transcript for margin and commentary ; Prior quarter materials for trend context .