10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number: 001-38529

 

Verrica Pharmaceuticals Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

46-3137900

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

44 West Gay Street, Suite 400

West Chester, PA

19380

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (484) 453-3300

 

N/A

(Former address of principal executive offices)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value

 

VRCA

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 4, 2021, the registrant had 27,519,053 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

VERRICA PHARMACEUTICALS INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

1

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

 

23

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

23

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

24

 

 

 

 

 

Item 1A.

 

Risk Factors

 

24

 

 

 

 

 

Item 2.

 

Recent Sales of Unregistered Securities and Use of Proceeds

 

26

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

26

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

26

 

 

 

 

 

Item 5.

 

Other Information

 

26

 

 

 

 

 

Item 6.

 

Exhibits

 

26

 

 

 

 

 

Signatures

 

28

 

 

 


PART I. FINANCIAL INFORMATION

 

Item 1. Unaudited Condensed Financial Statements

VERRICA PHARMACEUTICALS INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,442

 

 

$

10,686

 

Marketable securities

 

 

59,053

 

 

 

54,784

 

Prepaid expenses and other assets

 

 

3,663

 

 

 

2,180

 

Total current assets

 

 

83,158

 

 

 

67,650

 

Property and equipment, net

 

 

3,668

 

 

 

3,102

 

Operating lease right-of-use asset

 

 

1,666

 

 

 

1,836

 

Other non-current assets

 

 

264

 

 

 

1,566

 

Total assets

 

$

88,756

 

 

$

74,154

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

904

 

 

$

348

 

Accrued expenses and other current liabilities

 

 

3,877

 

 

 

3,114

 

Operating lease liability

 

 

239

 

 

 

198

 

Financing lease liability

 

 

6

 

 

 

 

Deferred revenue

 

 

 

 

 

500

 

Short term debt

 

 

41,348

 

 

 

35,315

 

Total current liabilities

 

 

46,374

 

 

 

39,475

 

Operating lease liability

 

 

1,512

 

 

 

1,693

 

Financing lease liability

 

 

18

 

 

 

 

Total liabilities

 

 

47,904

 

 

 

41,168

 

Commitments and Contingencies (Note 10)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares
issued and outstanding as of September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 authorized;
27,624,197 shares issued and 27,519,053 shares outstanding as of September 30, 2021; 25,546,257 shares issued and 25,441,113 shares outstanding as of December 31, 2020

 

 

3

 

 

 

3

 

Treasury stock, at cost, 105,144 shares as of September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Additional paid-in capital

 

 

170,277

 

 

 

136,868

 

Accumulated deficit

 

 

(129,426

)

 

 

(103,886

)

Accumulated other comprehensive (loss) gain

 

 

(2

)

 

 

1

 

Total stockholders’ equity

 

 

40,852

 

 

 

32,986

 

Total liabilities and stockholders’ equity

 

$

88,756

 

 

$

74,154

 

 

The accompanying notes are an integral part of these condensed financial statements.

1


VERRICA PHARMACEUTICALS INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License revenue

 

$

 

 

$

 

 

$

12,000

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

3,763

 

 

 

4,988

 

 

 

12,572

 

 

 

13,401

 

General and administrative

 

 

8,005

 

 

 

4,649

 

 

 

21,866

 

 

 

14,747

 

Total operating expenses

 

 

11,768

 

 

 

9,637

 

 

 

34,438

 

 

 

28,148

 

Loss from operations

 

 

(11,768

)

 

 

(9,637

)

 

 

(22,438

)

 

 

(28,148

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

31

 

 

 

69

 

 

 

96

 

 

 

473

 

Interest expense

 

 

(1,092

)

 

 

(918

)

 

 

(3,198

)

 

 

(2,042

)

Total other expense

 

 

(1,061

)

 

 

(849

)

 

 

(3,102

)

 

 

(1,569

)

Net loss

 

$

(12,829

)

 

$

(10,486

)

 

$

(25,540

)

 

$

(29,717

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.47

)

 

$

(0.42

)

 

$

(0.95

)

 

$

(1.19

)

Weighted average common shares outstanding, basic and diluted

 

 

27,516,477

 

 

 

24,988,939

 

 

 

26,884,527

 

 

 

24,972,972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(12,829

)

 

$

(10,486

)

 

$

(25,540

)

 

$

(29,717

)

Other comprehensive gain:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(1

)

 

 

(26

)

 

 

(3

)

 

 

(14

)

Comprehensive loss

 

$

(12,830

)

 

$

(10,512

)

 

$

(25,543

)

 

$

(29,731

)

 

The accompanying notes are an integral part of these condensed financial statements.

2


VERRICA PHARMACEUTICALS INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Additional

 

 

Subscription

 

 

Accumulated

 

 

Treasury Stock

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares Issued

 

 

Amount

 

 

Paid-in Capital

 

 

Receivable

 

 

Deficit

 

 

Shares

 

 

Cost

 

 

Gain (Loss)

 

 

Equity

 

 January 1, 2021

 

 

25,546,257

 

 

$

3

 

 

$

136,868

 

 

$

 

 

$

(103,886

)

 

 

105,144

 

 

$

 

 

$

1

 

 

$

32,986

 

 Stock-based compensation

 

 

 

 

 

 

 

 

1,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,403

 

 Issuance of common stock, net of issuance costs

 

 

2,033,899

 

 

 

 

 

 

28,115

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,115

 

 Exercise of stock options

 

 

15,708

 

 

 

 

 

 

240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

240

 

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(936

)

 

 

 

 

 

 

 

 

 

 

 

(936

)

 Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 March 31, 2021

 

 

27,595,864

 

 

 

3

 

 

 

166,626

 

 

 

 

 

 

(104,822

)

 

 

105,144

 

 

 

 

 

 

3

 

 

 

61,810

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,848

 

Exercise of stock options

 

 

24,000

 

 

 

 

 

 

277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

277

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,775

)

 

 

 

 

 

 

 

 

 

 

 

(11,775

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

June 30, 2021

 

 

27,619,864

 

 

$

3

 

 

$

168,751

 

 

$

 

 

$

(116,597

)

 

 

105,144

 

 

$

 

 

$

(1

)

 

$

52,156

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,481

 

Exercise of stock options

 

 

4,333

 

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,829

)

 

 

 

 

 

 

 

 

 

 

 

(12,829

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

September 30, 2021

 

 

27,624,197

 

 

$

3

 

 

$

170,277

 

 

$

 

 

$

(129,426

)

 

 

105,144

 

 

$

 

 

$

(2

)

 

$

40,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 1, 2020

 

 

25,912,137

 

 

$

3

 

 

$

126,594

 

 

$

(410

)

 

$

(61,192

)

 

 

105,144

 

 

$

 

 

$

20

 

 

$

65,015

 

 Repayment of subscription receivable

 

 

 

 

 

 

 

 

 

 

 

410

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

410

 

Stock-based compensation

 

 

 

 

 

 

 

 

998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

998

 

Exercise of stock options

 

 

7,500

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,822

)

 

 

 

 

 

 

 

 

 

 

 

(9,822

)

March 31, 2020

 

 

25,919,637

 

 

 

3

 

 

 

127,599

 

 

 

 

 

 

(71,014

)

 

 

105,144

 

 

 

 

 

 

20

 

 

 

56,608

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,252

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,409

)

 

 

 

 

 

 

 

 

 

 

 

(9,409

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

12

 

June 30, 2020

 

 

25,919,637

 

 

$

3

 

 

$

128,851

 

 

$

 

 

$

(80,423

)

 

 

105,144

 

 

$

 

 

$

32

 

 

$

48,463

 

Subscription receivable

 

 

51,049

 

 

 

 

 

 

446

 

 

 

(446

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,231

 

Unrealized gain on marketable securities