Verrica Pharmaceuticals Inc. (VRCA)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 total revenue was $14.34M, driven by $10.7M license/collaboration revenue from Torii and $3.61M product revenue; this materially exceeded Wall Street consensus revenue of $9.75M* and S&P Primary EPS consensus of -$0.06*, as non-GAAP EPS printed $0.13 while GAAP EPS was -$0.03 .
• Strength came from the $10M milestone for Japan YCANTH approval, positive EMA feedback enabling a YCANTH EU MAA without additional Phase 3, and FDA alignment on VP-315 Phase 3 (two pivotal trials, ~100 subjects each, complete clearance at Week 14) .
• Sequential dispensed applicator units rose ~4.9% to 14,093; SG&A fell sharply to $9.4M; gross product margin was 79.1% amid $0.4M obsolete inventory costs; cash was $21.1M, with CFO noting operations funded into late Q4 under a $10M liquidity covenant .
• Near-term catalysts: YCANTH Rx launch in Q4 2025, first patient for YCANTH common warts Phase 3 by year-end, EU MAA path, and expanding field force to 50 reps in 2026; competitive narrative centers on converting “watch and wait” and positioning vs Zelsuvmi .

What Went Well and What Went Wrong

What Went Well

• Non-GAAP profitability with net income of $1.19M ($0.13/share) vs GAAP loss of $0.27M; SG&A down to $9.4M, reflecting disciplined commercial focus and lower sales-force costs .
• Strategic/regulatory momentum: EMA feedback supports a YCANTH MAA in EU without new Phase 3; FDA aligned on efficient VP-315 Phase 3 program design (two studies, ~100 subjects each, complete clearance at Week 14) .
• CEO emphasized resilience: “we powered through seasonality and competitive headwinds” and highlighted dispensed units growth and pipeline progress, underpinning future catalysts .

What Went Wrong

• Gross product margin compression to 79.1% due to $0.4M obsolete inventory, and gross-to-net pressure from copay assistance investments; interest expense remained elevated at $2.1M .
• Liquidity constrained by debt covenant: $21.1M cash but CFO stated operations funded into late Q4 on GAAP basis under $10M minimum liquidity requirement .
• Seasonality tempered QoQ demand in August; management flagged likely Q4 slowdown from holidays, with momentum expected to resume into early next year .

Financial Results

Revenue, EPS, Operating Metrics (YoY and QoQ comparison)

Notes:

• Gross product margin was 79.1% in Q3 2025 (includes $0.4M obsolete inventory costs) vs ~93% in Q2 2025 .

Consensus vs Actual (S&P Global)

Values with asterisk retrieved from S&P Global; actuals cited from company documents where available.

Revenue Breakdown (mix)

KPIs

Implications:

• Q3 beat vs consensus largely driven by Torii milestones ($10M) and continued adoption, with QoQ product revenue lower on seasonality and copay gross-to-net impact; non-GAAP profitability aided by SG&A reduction and milestone mix .

Guidance Changes

No formal revenue, margin, tax, or OpEx numerical guidance provided.

Earnings Call Themes & Trends

Management Commentary

• CEO: “we powered through seasonality and competitive headwinds to help providers treat more patients… while advancing our late-stage clinical programs” .
• On YCANTH Rx: “single place to write all YCANTH prescriptions… improve speed to therapy… reduce paperwork burden” .
• On EU: “no further phase III clinical studies would be needed… anticipate the filing could occur as early as the fourth quarter of 2026” .
• On VP-315: “97% objective response rate and an 86% reduction in overall tumor size… FDA confirmed alignment… adequate to support an NDA filing” .

Q&A Highlights

• Demand trajectory: Momentum continued into Q4 despite expected holiday seasonality; molluscum often a secondary diagnosis, with potential uptick during cold/flu season .
• Competitive positioning: “largest competitor… watch and wait”; Zelsuvmi launch creates “shared voice” highlighting treatment need, with YCANTH positioned as best-in-class .
• Sales force ramp & productivity: Recently expanded to 45; productivity expected to ramp early next year; plan for 50 reps in 2026 .
• EU timeline: Sequential regulatory steps (e.g., pediatric waiver) drive ~12-month MAA prep; considering partnering but not delaying commercialization timelines .
• KPIs for YCANTH Rx: Focus on time-to-fill and fulfillment counts; early KOL feedback positive .

Estimates Context

• Revenue: Q3 actual $14.34M vs consensus $9.75M* → significant beat; Q2 actual $12.70M vs $4.27M* → significant beat; Q4 2025 consensus $4.95M* reflects typical seasonality and absence of large milestones .
• Primary EPS (Normalized): Q3 actual $0.13 vs -$0.06* estimate → beat; Q2 actual $0.25 vs -$0.83* estimate → beat; Q4 2025 consensus -$0.99* [GetEstimates].
• Drivers of beats: Torii milestones ($10M in Q3; $8M in Q2), SG&A reductions, continued unit growth; GAAP EPS impacted by interest expense and gross-to-net dynamics .

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

• Q3 was a clear top-line and EPS beat versus consensus, underpinned by milestone revenue and disciplined OpEx, with non-GAAP profitability achieved .
• Near-term growth lever: YCANTH Rx launch should streamline prior auth and accelerate pull-through; monitor Q4 seasonality and gross-to-net .
• Structural de-risking: EMA feedback enables EU MAA for YCANTH without new Phase 3; Japan approval validates global opportunity and provides cash milestones .
• Pipeline value: VP-315’s SITC data and FDA Phase 3 alignment create an efficient path to potential NDA; partnering could provide non-dilutive funding .
• Watch liquidity: $21.1M cash with a $10M minimum covenant; management exploring options to bolster balance sheet while advancing programs .
• Competitive narrative: Focus on converting “watch and wait” in pediatrics/dermatology; Zelsuvmi adds market awareness—execution remains key .
• FY cadence: Expect more normalized product revenue absent milestones; estimates imply a softer Q4—track dispensed units, YCANTH Rx impact, and any additional milestones* [GetEstimates].