Verrica Pharmaceuticals(US:VRCA)2023-11-09 14:57Financial Data and Key Metrics Changes - YCANTH revenues were $2.8 million in Q3 2023, driven by the initial order from FFF Enterprises [31] - Net loss on a GAAP basis was $24.8 million, or $0.54 per share, compared to net income of $83,000, or $0.00 per share in Q3 2022 [36] - Non-GAAP net loss was $14.8 million, or $0.32 per share, compared to a non-GAAP net gain of $2.9 million, or $0.07 per share in the same period in 2022 [37] - Cash and cash equivalents as of September 30, 2023, were $84.3 million, sufficient to fund operations into Q1 2025 [38] Business Line Data and Key Metrics Changes - The launch of YCANTH has resulted in significant initial sales, with net product revenues of $2.8 million in Q3 2023 [31] - Collaboration revenues of $125,000 were recognized related to a clinical supply agreement with Torrey Pharmaceuticals [31] - Research and development expenses increased to $6.5 million in Q3 2023 from $2.8 million in the same period in 2022, primarily due to increased clinical costs for VP-315 [34] - Selling, general and administrative expenses were $20 million in Q3 2023, up from $3.9 million in Q3 2022, driven by the launch of YCANTH [35] Market Data and Key Metrics Changes - Over 112 million lives are covered under commercial and managed Medicaid plans, with expectations to grow to approximately 140 million in six months [25][26] - The company has gained formulary acceptance at over a dozen key institutions, including major children's hospitals [27] - The distribution model includes a buy-and-bill basis and a white bag service, with an expected shift towards buy-and-bill as a J-code is anticipated in January 2024 [12][29] Company Strategy and Development Direction - The company is focused on the commercialization of YCANTH and the advancement of VP-315 for basal cell carcinoma [14][40] - Efforts are ongoing to clear the market of unapproved cantharidin products, with actions taken against retailers and compounding pharmacies [20][22] - The company plans to utilize KOLs and white papers to enhance awareness and acceptance of YCANTH among clinicians [51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for YCANTH, noting high awareness and positive reception from healthcare providers [39] - The company anticipates continued growth in demand for YCANTH throughout Q4 2023 and into 2024 [39] - Management is closely aligned with the FDA to address unapproved products and ensure compliance with regulations [40] Other Important Information - The company has a favorable balance sheet, enabling it to support the YCANTH launch and ongoing clinical programs [14] - A C-code has been issued for YCANTH, which is a precursor to the expected J-code [58] Q&A Session Summary Question: Early experience with establishing infrastructure in hospitals - Management noted that many institutions are eager to move away from compounding, which has facilitated quicker adoption of YCANTH [44] Question: Update on cantharidin timing - There are about three or four 503B pharmacies compounding cantharidin, with efforts to clear the market expected to gain traction in 8 to 10 months [46] Question: Average number of treatments trending - It is too early to establish a definitive number for treatments as the company is still monitoring refill patterns [48] Question: Coverage expectations and White Bag service - Coverage is expected to reach a steady state by early Q1 2024, with a current mix of 80% specialty pharmacy to 20% buy-and-bill [53] Question: SG&A costs outlook - SG&A costs are expected to increase as the commercial team is fully onboarded and active in the field [56]