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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 June 30, 2022

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 August 5 2022, the registrant had 41,094,053 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

 

14

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

 

21

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

22

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

22

 

 

 

 

 

Item 1A.

 

Risk Factors

 

22

 

 

 

 

 

Item 6.

 

Exhibits

 

24

 

 

 

 

 

Signatures

 

26

 

 

 


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)

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,430

 

 

$

15,752

 

Marketable securities

 

 

8,968

 

 

 

54,602

 

Restricted cash

 

 

40,000

 

 

 

 

Unbilled receivable

 

 

218

 

 

 

 

Prepaid expenses and other assets

 

 

2,725

 

 

 

3,974

 

Total current assets

 

 

57,341

 

 

 

74,328

 

Property and equipment, net

 

 

4,044

 

 

 

3,894

 

Operating lease right-of-use asset

 

 

1,582

 

 

 

1,608

 

Other non-current assets

 

 

469

 

 

 

295

 

Total assets

 

$

63,436

 

 

$

80,125

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

714

 

 

$

845

 

Accrued expenses and other current liabilities

 

 

2,414

 

 

 

3,266

 

Operating lease liability

 

 

283

 

 

 

245

 

Financing lease liability

 

 

7

 

 

 

6

 

Debt, net

 

 

42,293

 

 

 

41,693

 

Total current liabilities

 

 

45,711

 

 

 

46,055

 

Operating lease liability

 

 

1,379

 

 

 

1,449

 

Financing lease liability

 

 

13

 

 

 

16

 

Total liabilities

 

 

47,103

 

 

 

47,520

 

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 June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 authorized; 27,624,197 shares
issued and
27,519,053 shares outstanding as of June 30, 2022 and December 31, 2021

 

 

3

 

 

 

3

 

Treasury stock, at cost, 105,144 shares as of June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

173,998

 

 

 

171,597

 

Accumulated deficit

 

 

(157,604

)

 

 

(138,966

)

Accumulated other comprehensive loss

 

 

(64

)

 

 

(29

)

Total stockholders’ equity

 

 

16,333

 

 

 

32,605

 

Total liabilities and stockholders’ equity

 

$

63,436

 

 

$

80,125

 

 

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 June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License revenue

 

$

214

 

 

$

 

 

$

645

 

 

$

12,000

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,162

 

 

 

3,447

 

 

 

6,885

 

 

 

8,809

 

General and administrative

 

 

5,173

 

 

 

7,284

 

 

 

10,291

 

 

 

13,861

 

Total operating expenses

 

 

9,335

 

 

 

10,731

 

 

 

17,176

 

 

 

22,670

 

Loss from operations

 

 

(9,121

)

 

 

(10,731

)

 

 

(16,531

)

 

 

(10,670

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

20

 

 

 

33

 

 

 

42

 

 

 

65

 

Interest expense

 

 

(1,066

)

 

 

(1,077

)

 

 

(2,094

)

 

 

(2,106

)

Other expense

 

 

(1

)

 

 

 

 

 

(55

)

 

 

 

Total other expense

 

 

(1,047

)

 

 

(1,044

)

 

 

(2,107

)

 

 

(2,041

)

Net loss

 

$

(10,168

)

 

$

(11,775

)

 

$

(18,638

)

 

$

(12,711

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.37

)

 

$

(0.43

)

 

$

(0.68

)

 

$

(0.46

)

Weighted average common shares outstanding, basic and diluted

 

 

27,519,053

 

 

 

27,513,665

 

 

 

27,519,053

 

 

 

27,697,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(10,168

)

 

$

(11,775

)

 

$

(18,638

)

 

$

(12,711

)

Other comprehensive gain:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(2

)

 

 

(4

)

 

 

(35

)

 

 

(2

)

Comprehensive loss

 

$

(10,170

)

 

$

(11,779

)

 

$

(18,673

)

 

$

(12,713

)

 

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, 2022

 

 

27,624,197

 

 

$

3

 

 

$

171,597

 

 

$

 

 

$

(138,966

)

 

 

105,144

 

 

$

 

 

$

(29

)

 

$

32,605

 

 Stock-based compensation

 

 

 

 

 

 

 

 

1,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,316

 

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,470

)

 

 

 

 

 

 

 

 

 

 

 

(8,470

)

 Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33

)

 

 

(33

)

 March 31, 2022

 

 

27,624,197

 

 

 

3

 

 

 

172,913

 

 

 

 

 

 

(147,436

)

 

 

105,144

 

 

 

 

 

 

(62

)

 

 

25,418

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,085

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,168

)

 

 

 

 

 

 

 

 

 

 

 

(10,168

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

June 30, 2022

 

 

27,624,197

 

 

$

3

 

 

$

173,998

 

 

$

 

 

$

(157,604

)

 

 

105,144

 

 

$

 

 

$

(64

)

 

$

16,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 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 gain 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 loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

June 30, 2021

 

 

27,619,864

 

 

$

3

 

 

$

168,751

 

 

$

 

 

$

(116,597

)

 

 

105,144

 

 

$

 

 

$

(1

)

 

$

52,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

3


VERRICA PHARMACEUTICALS INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

For the Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(18,638

)

 

$

(12,711

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

2,401

 

 

 

3,251

 

Amortization of premiums (discounts) on marketable securities

 

 

76

 

 

 

(25

)

Depreciation expense

 

 

196

 

 

 

48

 

Non cash interest expense

 

 

626

 

 

 

729

 

Reduction in operating lease right-of-use asset