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, 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 November 2, 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

 

13

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

 

21

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

21

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

21

 

 

 

 

 

Item 1A.

 

Risk Factors

 

21

 

 

 

 

 

Item 6.

 

Exhibits

 

23

 

 

 

 

 

Signatures

 

25

 

 

 


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,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

32,473

 

 

$

15,752

 

Marketable securities

 

 

6,981

 

 

 

54,602

 

Unbilled receivable

 

 

419

 

 

 

 

Prepaid expenses and other assets

 

 

3,522

 

 

 

3,974

 

Total current assets

 

 

43,395

 

 

 

74,328

 

Property and equipment, net

 

 

4,018

 

 

 

3,894

 

Operating lease right-of-use asset

 

 

1,513

 

 

 

1,608

 

Other non-current assets

 

 

221

 

 

 

295

 

Total assets

 

$

49,147

 

 

$

80,125

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

137

 

 

$

845

 

Accrued expenses and other current liabilities

 

 

2,650

 

 

 

3,266

 

Operating lease liability

 

 

291

 

 

 

245

 

Financing lease liability

 

 

 

 

 

6

 

Debt, net

 

 

 

 

 

41,693

 

Total current liabilities

 

 

3,078

 

 

 

46,055

 

Operating lease liability

 

 

1,304

 

 

 

1,449

 

Financing lease liability

 

 

 

 

 

16

 

Total liabilities

 

 

4,382

 

 

 

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 September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 authorized; 41,199,197 shares issued
     and
41,094,053 shares outstanding as of September 30, 2022; 27,624,197                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 shares issued and 27,519,053 outstanding as of December 31, 2021

 

 

4

 

 

 

3

 

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

 

 

 

 

 

 

Additional paid-in capital

 

 

202,311

 

 

 

171,597

 

Accumulated deficit

 

 

(157,521

)

 

 

(138,966

)

Accumulated other comprehensive loss

 

 

(29

)

 

 

(29

)

Total stockholders’ equity

 

 

44,765

 

 

 

32,605

 

Total liabilities and stockholders’ equity

 

$

49,147

 

 

$

80,125

 

 

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

1


VERRICA PHARMACEUTICALS INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License revenue

 

$

8,319

 

 

$

 

 

$

8,964

 

 

$

12,000

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,946

 

 

 

3,763

 

 

 

9,833

 

 

 

12,572

 

General and administrative

 

 

3,925

 

 

 

8,005

 

 

 

14,216

 

 

 

21,866

 

Total operating expenses

 

 

6,871

 

 

 

11,768

 

 

 

24,049

 

 

 

34,438

 

Income (loss) from operations

 

 

1,448

 

 

 

(11,768

)

 

 

(15,085

)

 

 

(22,438

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

148

 

 

 

31

 

 

 

190

 

 

 

96

 

Interest expense

 

 

(81

)

 

 

(1,092

)

 

 

(2,172

)

 

 

(3,198

)

Loss on extinguishment of debt

 

 

(1,437

)

 

 

 

 

 

(1,437

)

 

 

 

Other income (expense)

 

 

5

 

 

 

 

 

 

(51

)

 

 

 

Total other expense

 

 

(1,365

)

 

 

(1,061

)

 

 

(3,470

)

 

 

(3,102

)

Net income (loss)

 

$

83

 

 

$

(12,829

)

 

$

(18,555

)

 

$

(25,540

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.00

 

 

$

(0.47

)

 

$

(0.58

)

 

$

(0.95

)

Diluted

 

$

0.00

 

 

$

(0.47

)

 

$

(0.58

)

 

$

(0.95

)

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,304,923

 

 

 

27,516,477

 

 

 

31,827,844

 

 

 

26,884,527

 

Diluted

 

 

44,656,172

 

 

 

27,516,477

 

 

 

31,827,844

 

 

 

26,884,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

83

 

 

$

(12,829

)

 

$

(18,555

)

 

$

(25,540

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

35

 

 

 

(1

)

 

 

 

 

 

(3

)

Comprehensive income (loss)

 

$

118

 

 

$

(12,830

)

 

$

(18,555

)

 

$

(25,543

)

 

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

 

 

 

Accumulated

 

 

Treasury Stock

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares Issued

 

 

Amount

 

 

Paid-in Capital

 

 

 

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

 

 Stock-based compensation

 

 

 

 

 

 

 

 

1,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,413

 

 Issuance of common stock, net of issuance costs

 

 

13,575,000

 

 

 

1

 

 

 

26,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,901

 

 Net income

 

 

 

 

 

 

 

 

 

 

 

 

83

 

 

 

 

 

 

 

 

 

 

 

 

83

 

 Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35

 

 

 

35

 

 September 30 ,2022

 

 

41,199,197

 

 

$

4

 

 

$

202,311

 

 

 

$

(157,521

)

 

 

105,144

 

 

$

-

 

 

$

(29

)

 

$

44,765

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 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