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Verrica Pharmaceuticals Inc. (VRCA)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 total revenue was $12.70M, driven by $4.53M YCANTH product revenue and an $8.0M Torii milestone; GAAP EPS was $0.02 and non-GAAP EPS was $0.25 .
  • Major beat versus S&P Global consensus: revenue $12.70M vs $4.27M consensus, and EPS $0.25 vs -$0.83 consensus; management highlighted normalized distributor inventory and demand-led revenue, with YCANTH dispensed units up 32.8% sequentially, indicating strengthened commercial execution * Values retrieved from S&P Global.
  • Strategic catalysts: Torii accelerated $8M milestone (received July) and will pay $10M in cash upon Japanese approval (decision expected by year-end 2025); Torii funds first $40M (~90%) of global Phase 3 for common warts; first patient expected Q4 2025 .
  • VP-315 advanced with successful End-of-Phase 2 meeting; company preparing Phase 3 and exploring non-dilutive financing; additional genomic and immune data expected later this year .
  • Balance sheet: cash and equivalents $15.4M at 6/30/25; OrbiMed waived “going concern” for remainder of 2025; receivables rose partly due to Torii milestone and 60-day collections; management remains disciplined on cash uses .

What Went Well and What Went Wrong

What Went Well

  • YCANTH demand accelerated: record 13,434 dispensed applicator units in Q2, +32.8% sequential growth; CEO: “YCANTH’s strong sequential quarterly growth…” reflecting focused commercialization and broader access via pharmacy network and $25 copay assistance .
  • Non-dilutive capital and trial funding: Torii accelerated $8M milestone (received July) and will pay $10M upon Japanese approval; Torii to fund first $40M (~90%) of global Phase 3 costs, materially de-risking development spend .
  • Operating discipline: SG&A down to $8.9M (vs $16.5M YoY) and R&D down to $1.8M (vs $3.3M YoY), enabling GAAP operating income of $1.51M and non-GAAP net income of $2.38M in the quarter .

What Went Wrong

  • Cash declined to $15.4M at 6/30/25 (from $29.6M at 3/31/25), and management noted GAAP cash alone would be insufficient to fund 12 months absent additional inflows; reliance on milestone, warrants, and disciplined spend remains a watch item .
  • Product revenue of $4.53M was below the prior-year quarter ($4.89M) due to Q2’24 one-time stock-in effects; underscores sensitivity of reported revenue to channel dynamics despite strong end-user demand .
  • Interest expense remained elevated at $2.13M; while principal declined modestly, debt service continues to weigh on GAAP net income sustainability .

Financial Results

Core P&L vs prior quarters and year

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($USD)$0.344M $3.439M $12.702M
Product Revenue, net ($USD)$0.315M $3.422M $4.534M
License & Collaboration Revenue ($USD)$0.029M $0.017M $8.168M
Income from Operations ($USD)$(11.410)M $(8.130)M $1.510M
Net Income (Loss) ($USD)$(16.202)M $(9.742)M $0.204M
GAAP EPS ($USD)$(0.24) $(0.10) $0.02
Non-GAAP EPS ($USD)$(0.18) $(0.08) $0.25

Year-over-Year (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025
Total Revenue ($USD)$5.177M $12.702M
Product Revenue, net ($USD)$4.892M $4.534M
License & Collaboration Revenue ($USD)$0.285M $8.168M
Income from Operations ($USD)$(15.206)M $1.510M
Net Income (Loss) ($USD)$(17.186)M $0.204M
GAAP EPS ($USD)$(3.70) $0.02
Non-GAAP EPS ($USD)$(3.11) $0.25

Versus S&P Global Consensus (Q2 2025)

MetricConsensusActualSurprise
Revenue ($USD)$4.267M*$12.702M +$8.435M (beat)*
Primary EPS ($USD)$(0.83)*$0.25*+$1.08 (beat)*

Values retrieved from S&P Global.

Segment/Source Breakdown

Revenue ComponentQ4 2024Q1 2025Q2 2025
Product Revenue, net ($USD)$0.315M $3.422M $4.534M
License & Collaboration Revenue ($USD)$0.029M $0.017M $8.168M
Total Revenue ($USD)$0.344M $3.439M $12.702M

KPIs and Balance Sheet

KPI / MetricQ4 2024Q1 2025Q2 2025
YCANTH Dispensed Applicator Units8,654 10,102 13,434
Sequential Growth (Units)+12.3% +16.7% vs Q4 +32.8% vs Q1
Cash & Cash Equivalents ($USD)$46.329M $29.595M $15.396M
SG&A ($USD)$10.019M $8.848M $8.852M
R&D ($USD)$1.168M $2.284M $1.846M
Interest Expense ($USD)$2.349M $2.203M $2.131M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Global Phase 3 (YCANTH – Common Warts) first patientQ4 2025“as early as mid-2025” (Q4/Q1 commentary) Expects first patient in U.S. Q4 2025 Lowered/clarified timeline to Q4 2025
Torii Milestone – Phase 3 Initiation2025$8M upon initiation $8M accelerated, received July 2025 Pulled forward / received
Torii Milestone – Japanese Approval (molluscum)2025E (decision by YE25)Previously offset to trial costs $10M cash upon approval; decision expected by end of 2025 Raised (cash vs offset)
YCANTH Japan Manufacturing TransferMulti-yearN/ABegin staged manufacturing transfer; interim transfer price; future royalties after component transfer New detail provided
Revenue/Profitability Guidance2025No formal numeric guidanceNo formal numeric guidance; focus on sustainable growth via YCANTH unit expansion; disciplined SG&A Maintained (no numeric guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Commercial execution & distributor inventoryNormalized inventory; redesigned territories; Q4 units +12.3% ; Q1 units 10,102 (+16.7%) Units 13,434 (+32.8%); demand-led shipments; strong pharmacy network; $25 copay Strengthening demand and access
Torii partnership & non-dilutive fundingNDA submitted in Japan; $8M milestone upon Phase 3 initiation $8M accelerated (received); $10M cash on Japan approval; Torii funds first $40M (~90%) of Phase 3; 50/50 split with offsets Funding visibility improved
Debt/credit & liquidityOrbiMed credit amendment; equity raise in Nov-2024 OrbiMed waived going concern for 2025; cash would be insufficient absent inflows; explore warrants up to $25M Risk moderated but watch liquidity
VP-315 (Basal Cell Carcinoma)Phase 2 positive: 97% ORR; up to 51% histologic clearance Successful EOP2; planning Phase 3; additional genomic/immune data later in 2025; exploring non-dilutive funding Advancing toward pivotal
Coverage & access (Medicaid/Commercial)Focused territories & coverage build Ongoing coverage expansion; increased copay card utilization; broader pharmacy distribution Improving coverage/access
Competitive (compounded cantharidin)Not prominent priorMore YCANTH use for molluscum; compounded cantharidin seen more for common warts; YCANTH adoption rising Favorable shift in usage patterns

Management Commentary

  • CEO on commercial momentum: “YCANTH’s strong sequential quarterly growth in dispensed applicator units of 32.8%… increased adoption… best option for healthcare providers to treat molluscum contagiosum” .
  • CEO on Torii amendment: “We secured Torii’s financial commitment… received an $8,000,000 milestone… path to receive up to $18,000,000 in non-dilutive capital in 2025… preserve 100% global rights to YCANTH outside Japan” .
  • CFO on Q2 financials: “Total revenue of $12.7M primarily consists of $8.0M Torii milestone and $4.5M net YCANTH revenue… GAAP net income $0.2M… non-GAAP net income $2.4M” .
  • CEO on VP-315: “Following our End-of-Phase 2 meeting… advancing this unique and promising therapy into a pivotal Phase 3 program… plan to explore non-dilutive partnerships” .

Q&A Highlights

  • Sales force sizing and drivers: Reps ~35 currently, may add 5–10; success driven by rep tenacity, pharmacy network access, $25 copay, buy-and-bill option; compounded cantharidin increasingly used for non-molluscum indications; YCANTH adoption rising for molluscum .
  • Seasonality and coverage: Molluscum is year-round; growth driven by access and coverage expansion (Medicaid/commercial), broader pediatric and dermatology adoption; no explicit quarterly growth guidance .
  • Receivables and gross-to-net: Receivables increased due to 60-day terms and Torii $8M milestone; gross-to-net impacted by copay program; WAC unchanged since launch .
  • Consensus trajectory: Analysts at ~$15–$20M revenue for FY; management focused on executing to grow applicator units and revenue rather than issuing formal guidance .

Estimates Context

  • Q2 2025 results materially beat S&P Global consensus: revenue $12.70M vs $4.27M consensus; EPS $0.25 vs -$0.83 consensus; implies upward estimate revisions near term as demand and milestone timing exceeded expectations * Values retrieved from S&P Global.
  • Note: S&P “Primary EPS” actual of $0.25 aligns with management’s non-GAAP EPS disclosure; GAAP EPS was $0.02. Use care when comparing EPS types in models * Values retrieved from S&P Global.

Key Takeaways for Investors

  • YCANTH adoption inflecting: dispensed units +32.8% sequential; demand-led revenue should continue as coverage/access expand; watch continued copay utilization and pharmacy network scaling .
  • Non-dilutive capital and de-risked development: $8M received; $10M approval milestone expected by YE25; Torii funds first $40M (~90%) of Phase 3 costs, preserving U.S./ex-Japan rights and value optionality .
  • Profitability signal: Q2 GAAP operating income and non-GAAP net income demonstrate operating leverage from SG&A/R&D discipline; sustained revenue growth could support path to cash-positive operations in 2025 .
  • Balance sheet watch items: Cash $15.4M at quarter-end; OrbiMed waiver helps, but execution on milestones, warrant exercises, and expense control remain key for runway .
  • VP-315 pipeline catalyst: Successful EOP2; pivotal planning underway; additional data later 2025; non-dilutive funding strategy can preserve shareholder value .
  • Model updates: Raise near-term revenue and EPS assumptions given Q2 beats and unit momentum; ensure EPS definition alignment (GAAP vs non-GAAP/Primary) when benchmarking to consensus * Values retrieved from S&P Global.
  • Trading implications: Near-term catalysts include Japanese approval decision (YE25) and Phase 3 first patient (Q4 2025); sustained unit growth and incremental coverage wins likely to drive sentiment; liquidity events (milestone/warrants) can reduce financing overhang .