Verrica (VRCA) Q1 2026 Earnings Transcript

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Date

Tuesday, May 12, 2026 at 8:30 a.m. ET

Call participants

- Chief Executive Officer — Jayson Rieger

- Chief Commercial Officer — Chris Chapman

- Chief Medical Officer — Noah Rosenberg

- Interim Chief Financial Officer — John Kirby

- Chief Operating Officer — David Zawitz

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Full Conference Call Transcript

Jayson Rieger: Thank you, Kevin. Good evening, everyone, and thank you for joining us on our first quarter 2026 corporate update call. I am pleased to report that in the first quarter, we saw accelerating growth in market demand for YCANTH, setting new records for dispensed applicator units during the quarter and in the month of March. This growth continued after the end of the quarter as we observed further increased demand in April. YCANTH also achieved another significant milestone in February as our partner, Torii Pharmaceutical, launched YCANTH in Japan for patients with molluscum following their regulatory approval last year.

Our hope is that Japan is only the beginning of our global expansion efforts for YCANTH as we are actively working to expand the availability of YCANTH into new markets around the world. While we grow the YCANTH business, we're also advancing our product portfolio. As you may recall, in January we announced that the first patient had been dosed in our global Phase III program for the treatment of common warts, which represents a critical milestone in our strategy to expand into new indications.

I'm proud to announce that we have achieved more than 50% of the currently targeted enrollment in the first Phase III trial, also known as COVE-2, and have begun enrolling patients in the long-term follow-up study, COVE-4 in this program. Our target is to initiate the second Phase III trial known as COVE-3 in this program by mid-2026. We also continue to advance our Phase III-ready asset, VP-315, for the treatment of basal cell carcinoma as we've begun efforts to secure clinical supplies and select a CRO to support initiation of the Phase III program. VP-315 is garnering increasing attention within the dermatology community based on compelling proof-of-concept data from our Phase II program.

I'll now provide a detailed update on our YCANTH commercial business. In the first quarter of 2026, we reported total revenue of $5 million, including U.S. YCANTH product revenue of $4.3 million, which was up 25.4% over the first quarter of 2025. First quarter U.S. YCANTH dispensed applicator units increased to 15,302, growing 51.3% over the first quarter of 2025. On a sequential basis, U.S. YCANTH revenue and dispensed applicator units increased 15.3% and 12.1%, respectively, compared to the fourth quarter of 2025.

As noted in our last call in March, while demand for YCANTH in January was likely impacted by severe winter weather across the East Coast, demand accelerated sharply in February and continued into March, which saw the best monthly dispensed applicator unit total since the launch of YCANTH. As we have now seen preliminary results for April, I am pleased to note that April dispensed applicator units also increased from March's then record level, and our team worked diligently every day to help more healthcare providers treat molluscum with what we believe to be is the best treatment available, YCANTH.

As we've noted in prior quarters, as we continue to prioritize the ease of access for healthcare providers and their patients, we continue to make substantial investments in our co-pay assistance program, which is impacted during the first few months of each year by the annual reset of insurance plan deductibles in January. To ensure the broadest access to YCANTH for healthcare providers, we launched YCANTH Rx, our non-dispensing pharmacy in the fourth quarter of 2025. YCANTH Rx simplifies the process for both the healthcare provider and patient by performing an initial benefit investigation and then triaging to an in-network dispensing pharmacy based upon the patient's unique healthcare coverage.

Although YCANTH Rx is still in the early stage of rollout is being well received and in our view, will help further drive demand and coverage for YCANTH. We would again like to congratulate Torii Pharmaceutical, now a subsidiary of Shionogi, on their February commercial launch of YCANTH in Japan for patients with molluscum. This milestone reflects the culmination of significant efforts by many team members from both companies. The launch of YCANTH in Japan means that the commercial supply we provide to Torii has begun to offset Verrica's portion of the clinical costs of the common work program.

As we announced in February, we also brought on board Chris Chapman as our new Chief Commercial Officer in the first quarter. Chris and his team are already doing an outstanding job in optimizing our resources to maximize the productivity of the YCANTH commercial efforts. Finally, as noted on our fourth quarter call, the Committee for Medicinal Products for Human Use of the European Medicines Agency provided positive feedback that supports the filing of a marketing authorization application for YCANTH as a treatment for molluscum. With no further Phase III clinical trials required for product approval, we are actively progressing through the next steps for submission in the EU.

The EU represents a substantial market opportunity for YCANTH, and we look forward to evaluating potential commercialization partnerships in this large and underserved region. With respect to our pipeline, the common warts and basal cell carcinoma clinical programs continue to move ahead, representing what we believe can be multibillion-dollar opportunities. As I mentioned, in December of 2025, we dosed the first patient in the first Phase III trial, COVE-2, evaluating YCANTH for common warts, which continues to enroll patients. The second Phase III trial in the common wart program, COVE-3, with sites in both the United States and Japan is targeted to be initiated by mid-2026.

If the Phase III program is successful, YCANTH could become the first therapy ever approved in the United States and Japan to treat common warts, a condition that impacts over 22 million people in the U.S. alone. As a reminder, Verrica and Torii will split the cost of the program 50-50 with Torii funding the first $40 million of trial costs, representing approximately 90% of the current trial budget. We expect to repay our portion by offsetting future transfer payments, milestones and royalties relating to YCANTH sales in Japan.

As a reminder, all of the efforts we are undertaking for the commercialization of YCANTH for molluscum lay the foundation for ultimate commercialization for the common warts indication, if approved, and there will be significant overlap in the clinicians treating both molluscum and common warts with the ability to access the same applicator through the same distribution channels. With respect to VP-315 for basal cell carcinoma, our program continues to drive strong interest with clinicians and patients alike as potential alternative approach to the existing surgical and non-surgical options.

In our Phase II study, treatment with VP-315 demonstrated a 97% objective response rate and an 86% reduction in overall tumor size with more than half of the treated lesions achieving complete histological resolution. We continue to share additional data from the ongoing analysis of the results from the Phase II at scientific conferences. As reported last week, we will formally be presenting at the 2026 Society for Investigative Dermatology, or SID, at their annual meeting in Chicago later this week, and we'll be sharing additional data regarding the abscopal-like observations from the Phase II study.

With a strong scientific foundation from our Phase II results and regulatory engagement, we have also recently completed several market research activities to better understand how VP-315 would be received by various stakeholders. This work supports broad potential utilization and acceptance across general dermatologists, medical oncologists and most surgeons as well as office managers and payers. We also conducted market research to evaluate the patient perspective, which indicated that a substantial majority of patients would elect to try VP-315 before other existing therapeutic options, regardless of whether they had previously been treated for skin cancer.

While the best outcome for patients is to completely eliminate the tumor, which we have observed in many patients in our Phase II study, overall tumor size was reduced on an average of by 86%, which we view as clinically meaningful. This highlights the potential for VP-315 to improve the patient experience by reducing the size and potential complexity of future procedures even where surgical excision is ultimately required. In totality, this market research reinforces our conviction and enthusiasm for the potential of VP-315 to change the paradigm for treatment of basal cell carcinoma.

We continue to actively assess a variety of funding opportunities for this program and have initiated clinical and CMC activities to proactively prepare for the commencement of the Phase III program. As previously noted, Verrica has retained 100% global commercial rights to YCANTH for all approved and potential indications outside of Japan as well as full global rights to VP-315 for non-metastatic skin cancers, including basal cell and squamous cell carcinoma. These programs represent a robust opportunity for potential partnership to create shareholder value and optimize global access to patients that can benefit most from these medicines. I'll now turn over the call to our Interim Chief Financial Officer, John Kirby, to review our first quarter 2026 financials.

John Kirby: Thanks, Jayson. I'll now take a few minutes to summarize our financial results for the first quarter ended March 31, 2026. Total revenue for the first quarter of 2026 was $5 million, consisting of $4.3 million of U.S. net YCANTH revenue and $0.7 million of license and collaboration revenue associated with our Torii partnership compared to $3.4 million of U.S. net YCANTH revenue and $17,000 of license and collaboration revenue in the first quarter of 2025. Net YCANTH revenue in the first quarter of 2026 reflects shipments to our distribution partners, offset by standard gross to net adjustments, including actual or anticipated product returns, off-invoice discounts, distribution fees, rebates and co-pay assistance program expenses.

Gross product margins for the first quarter of 2026 were 87.3% compared to gross product margins of 87.6% for the prior year period. Cost of product revenue for the first quarter of 2026 was $0.5 million versus $0.4 million for the prior year period, consisting primarily of product costs related to the sale of YCANTH. Research and development expenses of $3.9 million in the first quarter of 2026 increased by $1.5 million when excluding the impact of stock-based compensation compared to $2.3 million in the first quarter of 2025 due to increased spend on the common warts program.

Selling, general and administrative expenses of $10 million in the first quarter of 2026 increased by $1.3 million when excluding the impact of stock-based compensation compared to the expense of $8.8 million in the first quarter of 2025, driven primarily by increased commercial spend related to the expansion of our sales force. GAAP net loss was $9.7 million or $0.45 per share for the first quarter of 2026 compared to a GAAP net loss of $9.7 million or $1.03 per share for the first quarter of 2025.

On a non-GAAP basis, which excludes stock-based compensation, non-cash interest expense and change in fair value of embedded derivatives, the first quarter of 2026 net loss was $8.8 million or $0.41 per share compared to a net loss of $8.3 million or $0.88 per share for the first quarter of 2025. And finally, as of March 31, 2026, Verrica had aggregate cash of $20.6 million, which is expected to fund operations into the first quarter of 2027. I'll now turn the call back over to Jayson for closing remarks.

Jayson Rieger: Thanks, John. We are steadfastly advancing our efforts to establish YCANTH as the new standard of care for molluscum and are seeing traction with our strongest quarter in dispensed applicator units since launch. We are also positioning our company to fully capture the significant opportunities which lie ahead for our advanced stage pipeline if these programs successfully complete their development and are approved. Based on our Phase II data, the feedback from the dermatology community and alignment with the FDA on the Phase III program design, we believe VP-315 truly has the potential to fundamentally change the treatment paradigm of basal cell carcinoma.

In addition, the opportunity to expand YCANT's label into common warts would open a new addressable patient population for which there are currently remains no FDA-approved therapies. We believe each of these 2 opportunities represent significant potential upside for our company and for our shareholders, and we are excited about the future for Verrica and the potential impacts for patients. With that, we'd be happy to answer your questions. Operator?

Operator: [Operator Instructions] We'll take our first question from Stacy Ku with TD Cowen.

Stacy Ku: Congratulations on the enrollment progress for your common warts program and also on the quarter for YCANTH. First, consensus for the year seems to be around kind of the mid-$20 million kind of range. To the extent that you can comment, what are your views given what seems to be very encouraging growing demand in April? That's the first question. And then second, I know this can be a little location specific, but are you expecting to see seasonality with molluscum this year? And what are you doing to ensure you can capture any type of increased rates in the summertime?

Would you also assume the YCANTH prescription hub services to start driving adoption and improving fulfillment around that time frame? That's the second question. The third is to get an update on the progress of expanding the sales force in regions that you're seeing good YCANTH adoption. So just help us understand what you're seeing in terms of the additional stepwise expansion and if we should expect any additional updates with the sales force. Just help us understand the progress when it comes to YCANTH adoption and also maybe potentially YCANTH access.

And then last, as you think about VP-315, just maybe help us understand, as you think about Phase III, where you expect the product to be positioned in the BCC treatment paradigm? What type of patient profile for BCC would opt for a product like this?

Jayson Rieger: Thank you, Stacy. I appreciate it. I think I made good notes on all of your questions. I'll do my b