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, 2023

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 3, 2023, the registrant had 42,064,553 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

 

25

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

25

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

25

 

 

 

 

 

Item 1A.

 

Risk Factors

 

26

 

 

 

 

 

Item 6.

 

Exhibits

 

27

 

 

 

 

 

Signatures

 

29

 

 

 


 

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,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

84,308

 

 

$

34,273

 

Accounts receivable

 

 

3,946

 

 

 

 

Collaboration revenue receivable

 

 

 

 

 

388

 

Unbilled revenue

 

 

126

 

 

 

99

 

Inventory

 

 

279

 

 

 

 

Prepaid expenses and other current assets

 

 

3,066

 

 

 

4,355

 

Total current assets

 

 

91,725

 

 

 

39,115

 

Property and equipment, net

 

 

3,558

 

 

 

3,887

 

Operating lease right-of-use asset

 

 

1,339

 

 

 

1,443

 

Other non-current assets

 

 

526

 

 

 

276

 

Total assets

 

$

97,148

 

 

$

44,721

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,925

 

 

$

507

 

Accrued expenses and other current liabilities

 

 

9,102

 

 

 

2,655

 

Operating lease liability

 

 

316

 

 

 

297

 

Finance lease liability

 

 

31

 

 

 

 

Total current liabilities

 

 

11,374

 

 

 

3,459

 

Operating lease liability

 

 

989

 

 

 

1,229

 

Finance lease liability

 

 

81

 

 

 

 

Long term debt

 

 

42,401

 

 

 

 

Total liabilities

 

 

54,845

 

 

 

4,688

 

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, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 authorized;
42,169,697 shares issued and 42,064,553 shares outstanding as of September 30, 2023 and 41,199,197 shares issued and 41,094,053 shares outstanding as of December 31, 2022

 

 

4

 

 

 

4

 

Treasury stock, at cost, 105,144 shares as of September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

248,133

 

 

 

203,482

 

Accumulated deficit

 

 

(205,834

)

 

 

(163,453

)

Total stockholders’ equity

 

 

42,303

 

 

 

40,033

 

Total liabilities and stockholders’ equity

 

$

97,148

 

 

$

44,721

 

 

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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue, net

 

$

2,792

 

 

$

 

 

$

2,792

 

 

$

 

Collaboration revenue

 

 

125

 

 

 

8,319

 

 

 

344

 

 

 

8,964

 

Total revenue

 

 

2,917

 

 

 

8,319

 

 

 

3,136

 

 

 

8,964

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

20,054

 

 

 

3,925

 

 

 

30,310

 

 

 

14,216

 

Research and development

 

 

6,510

 

 

 

2,780

 

 

 

14,975

 

 

 

9,170

 

Cost of product revenue

 

 

145

 

 

 

 

 

 

145

 

 

 

 

Cost of collaboration revenue

 

 

125

 

 

 

166

 

 

 

329

 

 

 

663

 

Total operating expenses

 

 

26,834

 

 

 

6,871

 

 

 

45,759

 

 

 

24,049

 

(Loss) income from operations

 

 

(23,917

)

 

 

1,448

 

 

 

(42,623

)

 

 

(15,085

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

822

 

 

 

148

 

 

 

1,948

 

 

 

190

 

Interest expense

 

 

(1,657

)

 

 

(81

)

 

 

(1,657

)

 

 

(2,172

)

Loss on extinguishment of debt

 

 

 

 

 

(1,437

)

 

 

 

 

 

(1,437

)

Other (expense) income

 

 

(50

)

 

 

5

 

 

 

(49

)

 

 

(51

)

Total other (expense) income, net

 

 

(885

)

 

 

(1,365

)

 

 

242

 

 

 

(3,470

)

Net (loss) income

 

$

(24,802

)

 

$

83

 

 

$

(42,381

)

 

$

(18,555

)

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.54

)

 

$

0.00

 

 

$

(0.94

)

 

$

(0.58

)

Diluted

 

$

(0.54

)

 

$

0.00

 

 

$

(0.94

)

 

$

(0.58

)

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

46,073,932

 

 

 

40,304,923

 

 

 

45,015,900

 

 

 

31,827,844

 

Diluted

 

 

46,073,932

 

 

 

40,321,639

 

 

 

45,015,900

 

 

 

31,827,844

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(24,802

)

 

$

83

 

 

$

(42,381

)

 

$

(18,555

)

Other comprehensive gain:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities

 

 

 

 

 

35

 

 

 

 

 

 

 

Comprehensive (loss) income

 

$

(24,802

)

 

$

118

 

 

$

(42,381

)

 

$

(18,555

)

 

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

 

 

Loss

 

 

Equity

 

 January 1, 2023

 

 

41,199,197

 

 

$

4

 

 

$

203,482

 

 

 

$

(163,453

)

 

 

105,144

 

 

$

 

 

$

 

 

$

40,033

 

 Stock-based compensation

 

 

 

 

 

 

 

 

1,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,094

 

 Issuance of common stock and pre-funded warrants, for the purchase of common stock, net of issuance costs

 

 

750,000

 

 

 

 

 

 

30,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,301

 

 Exercise of stock options

 

 

8,000

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(6,589

)

 

 

 

 

 

 

 

 

 

 

 

(6,589

)

 March 31, 2023

 

 

41,957,197

 

 

 

4

 

 

 

234,884

 

 

 

 

(170,042

)

 

 

105,144

 

 

 

 

 

 

 

 

 

64,846

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,544

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(10,990

)

 

 

 

 

 

 

 

 

 

 

 

(10,990

)

June 30, 2023

 

 

41,957,197

 

 

 

4

 

 

 

236,428

 

 

 

 

(181,032

)

 

 

105,144

 

 

 

 

 

 

 

 

 

55,400

 

Stock-based compensation

 

 

 

 

 

 

 

 

9,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,663

 

Common stock warrants issued with debt

 

 

 

 

 

 

 

 

2,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,041

 

Vesting of restricted stock units

 

 

212,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

(24,802

)

 

 

 

 

 

 

 

 

 

 

 

(24,802

)

September 30, 2023

 

 

42,169,697

 

 

$

4

 

 

$

248,133

 

 

 

$

(205,834

)

 

 

105,144

 

 

$

 

 

$

 

 

$

42,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

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 Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(42,381

)

 

$

(18,555

)

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

 

 

 

 

 

 

Stock-based compensation

 

 

12,301

 

 

 

3,814

 

Amortization of premiums on marketable securities

 

 

 

 

 

97

 

Depreciation expense

 

 

399

 

 

 

323