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Verrica Pharmaceuticals (VRCA)
NASDAQ:VRCA
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Verrica Pharmaceuticals
(NASDAQ:VRCA)
37Underperform
Positive Factors
Commercial Strategy
Management is implementing a new commercial strategy focusing on key territories with high molluscum prevalence and strong insurance coverage.
Inventory Management
Encouragingly, management highlighted inventory stabilization in Q4, ahead of expectations, with demand driven sales beginning in Q1.
Product Demand
There appears to be increasing demand in Q4, with 8,654 applicators dispensed (+12% Q/Q) vs. 7,706 in Q3.
Negative Factors
Financial Concerns
There remains a significant overhang for financing operations and debt pay-down.
Liquidity Challenges
The Neutral rating is maintained due to concerns about precarious liquidity in a challenging market, pending more clarity on Verrica's strategy to achieve breakeven.
Revenue Uncertainty
It's unclear if the higher volume of dispensed applicator units will result in 4Q24 sales since the company reported negative net product revenues for 3Q.
Verrica Pharmaceuticals (VRCA) vs. S&P 500 (SPY)
Market Cap
$44.42M
Dividend YieldN/A
Average Volume (3M)551.32K
Price to Earnings (P/E)―
Beta (1Y)0.39
Revenue Growth47.66%
EPS Growth-5.04%
CountryUS
Employees71
SectorHealthcare
Sector Strength69
IndustryBiotechnology
Share Statistics
EPS (TTM)-1.54
Shares Outstanding91,779,990
10 Day Avg. Volume562,087
30 Day Avg. Volume551,323
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)6.77
Price to Cash Flow (P/CF)-0.80
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$3.50Price Target Upside629.17% Upside
Rating ConsensusHold
Number of Analyst Covering4
Verrica Pharmaceuticals Business Overview & Revenue Model
Company DescriptionVerrica Pharmaceuticals Inc. is a dermatology therapeutics company focused on developing and commercializing treatments for skin diseases. The company primarily operates in the biopharmaceutical sector, with a core emphasis on innovative therapies for dermatological conditions. Verrica's lead product candidate, VP-102, is a topical therapy intended for the treatment of molluscum contagiosum, a common skin disease in children. The company is dedicated to addressing unmet needs in dermatology and advancing its pipeline of product candidates.
How the Company Makes MoneyVerrica Pharmaceuticals generates revenue primarily through the development and commercialization of dermatology therapeutics. The company's revenue model is centered on obtaining regulatory approval and commercializing its lead product candidate, VP-102. Revenue streams may include sales of VP-102 upon approval, potential partnerships with other pharmaceutical companies, and licensing agreements. Additionally, Verrica may seek to expand its revenue base through the development of other pipeline products and entering into strategic collaborations that can provide upfront payments, milestone payments, and royalties from partners.
Verrica Pharmaceuticals Financial Statement Overview
Summary
Verrica Pharmaceuticals is experiencing significant financial challenges characterized by persistent losses, declining revenues, and negative equity. The company is highly leveraged with negative cash flows, posing substantial risks to its financial health. Urgent strategic financial and operational adjustments are necessary to stabilize and improve performance.Income Statement
Verrica Pharmaceuticals shows a declining revenue trend over recent years, with total revenue dropping from $12 million in 2021 to $7.57 million in 2024. The company has been consistently operating at a loss, with a negative EBIT and net profit margin, which are concerning for long-term profitability. Despite a slight increase in revenue from 2023 to 2024, the overall trend reveals financial instability and high operational expenses relative to revenue.28
Negative
Balance Sheet
The balance sheet reveals significant financial instability, with a negative stockholders' equity in 2024, indicating that liabilities exceed assets. The debt-to-equity ratio is undefined due to negative equity, signaling high leverage and potential solvency issues. The equity ratio is also negative, further highlighting financial distress and the risk of insolvency.22
Negative
Cash Flow
Verrica Pharmaceuticals faces persistent negative operating and free cash flows, with operating cash flow deteriorating significantly from 2023 to 2024. The free cash flow to net income ratio is unfavorable, indicating insufficient cash generation to cover losses. Although financing cash flows have been positive, they are primarily used to cover operational deficits rather than growth investments.34
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.57M | 5.12M | 9.03M | 12.00M | 0.00 | Gross Profit |
| 5.71M | 4.38M | 8.31M | 11.53M | -229.00K | EBIT |
| -65.92M | -65.76M | -21.30M | -30.91M | -40.18M | EBITDA |
| -65.90M | -62.20M | -21.60M | -30.31M | -39.43M | Net Income Common Stockholders |
| -76.58M | -67.00M | -27.68M | -38.90M | -45.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 46.33M | 69.55M | 34.27M | 70.35M | 65.47M | Total Assets |
| 54.13M | 81.60M | 44.72M | 80.13M | 74.15M | Total Debt |
| 45.94M | 45.51M | 1.53M | 43.41M | 35.31M | Net Debt |
| -390.00K | -24.04M | -32.75M | 27.66M | 24.63M | Total Liabilities |
| 63.99M | 61.83M | 4.69M | 47.52M | 41.17M | Stockholders Equity |
| -9.86M | 19.76M | 40.03M | 32.60M | 32.99M |
| Cash Flow | Free Cash Flow | |||
| -60.95M | -38.94M | -18.95M | -28.46M | -31.68M | Operating Cash Flow |
| -60.93M | -38.58M | -18.65M | -27.58M | -30.21M | Investing Cash Flow |
| -19.00K | -362.00K | 54.04M | -998.00K | -3.58M | Financing Cash Flow |
| 37.73M | 74.21M | -16.87M | 33.65M | 35.23M |
Verrica Pharmaceuticals Technical Analysis
Negative
0.48
Price Trends
0.60
Negative
0.71
Negative
2.12
Negative
Market Momentum
-0.06
Positive
29.38
Positive
11.98
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRCA, the sentiment is Negative. The current price of 0.48 is below the 20-day moving average (MA) of 0.51, below the 50-day MA of 0.60, and below the 200-day MA of 2.12, indicating a bearish trend. The MACD of -0.06 indicates Positive momentum. The RSI at 29.38 is Positive, neither overbought nor oversold. The STOCH value of 11.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VRCA.
Verrica Pharmaceuticals Risk Analysis
Verrica Pharmaceuticals disclosed 65 risk factors in its most recent earnings report. Verrica Pharmaceuticals reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Verrica Pharmaceuticals Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
57 Neutral | $139.32M | ― | -72.60% | ― | -29.11% | -219.44% | |
51 Neutral | $598.67M | ― | -913.07% | ― | 31.76% | 24.85% | |
48 Neutral | $6.35B | 1.19 | -46.26% | 2.67% | 19.24% | 1.75% | |
44 Neutral | $23.65M | ― | -56.54% | ― | 18.16% | 86.65% | |
37 Underperform | $44.42M | ― | -1546.58% | ― | 47.66% | -5.04% | |
36 Underperform | $201.86K | ― | ― | -32.57% | -15.03% |
* Healthcare Sector Average
Performance Comparison
VRCA
Verrica Pharmaceuticals
0.48
-6.44
-93.06%
CUTRQ
Cutera
0.01
-2.20
-99.55%
VYNE
VYNE Therapeutics
1.56
-1.01
-39.30%
EOLS
Evolus
9.54
-2.35
-19.76%
DERM
Journey Medical Corp
6.03
2.01
50.00%
Verrica Pharmaceuticals Earnings Call Summary
Earnings Call Date: Mar 11, 2025 | % Change Since: -26.15% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant progress in Verrica Pharmaceuticals' financial position, YCANTH sales growth, and clinical pipeline advancements. However, challenges such as obsolete inventory costs, suboptimal revenue figures, and financial covenant concerns were also noted. Overall, the positive developments in fundraising, sales growth, and clinical progress were prominent.Highlights
Successful Fundraising and Improved Financial Position
Verrica Pharmaceuticals raised approximately $42 million in an equity follow-on offering in November 2024, strengthening their balance sheet and securing a waiver of going concern covenant from OrbiMed for the quarter and year ended December 31, 2024 and the first quarter of 2025.
Positive Growth in YCANTH Sales
YCANTH dispense applicator units increased by 12.3% in Q4 2024 compared to the prior quarter and by 44.8% compared to Q2 2024. The new commercialization strategy has led to increased productivity of sales representatives and a reduction in operating expenses by approximately 50%.
Progress in Clinical Pipeline
Advancement of YCANTH for common warts and the novel oncolytic peptide BP-315 for basal cell carcinoma, with minimal additional cash outlay. Positive preliminary results for BP-315 were presented, showing a calculated objective response rate of 97%.
Market Expansion and Product Accessibility
Introduction of a new single applicator configuration for YCANTH, which became commercially available to reduce acquisition costs for physicians and expand patient access. Enhanced distribution through specialty pharmacies.
Lowlights
Obsolete Inventory Costs
Cost of product revenue included $0.9 million in obsolete inventory costs, impacting the financial performance.
Suboptimal Revenue Figures
For the fourth quarter and full year of 2024, total revenues were $0.3 million and $7.6 million respectively, reflecting challenges in achieving higher revenue growth.
Debt and Financial Covenant Concerns
Verrica did not meet thresholds specified in the OrbiMed debt agreement as of December 31, 2024, which triggered the initiation of principal payments beginning in 2025.
Company Guidance
During the call, Verrica Pharmaceuticals provided guidance for their fiscal year 2024 and beyond, highlighting several key metrics and strategic developments. The company reported a sequential quarterly growth of 12.3% in YCANTH dispense applicator units, with 8,654 units in the fourth quarter of 2024, compared to 7,706 units in the previous quarter. This growth represents a 44.8% increase from the second quarter of 2024, which saw 5,975 units. Verrica also raised approximately $42 million in an equity follow-on offering in November and negotiated a waiver of a going concern covenant with OrbiMed. The company achieved a reduction in operating expenses by approximately 50% while maintaining prior sales levels and achieving positive growth. Looking forward, Verrica aims to advance its clinical pipeline, including a global Phase 3 trial for YCANTH in common warts, and continues to support partners in regulatory efforts in Japan. The company's financial position includes cash and cash equivalents of $46.3 million as of December 31, 2024, and they anticipate further growth and positive cash flow by the end of 2025.Verrica Pharmaceuticals Corporate Events
Executive/Board Changes
Verrica Pharmaceuticals Appoints Dr. Corcoran as Director
Neutral
Apr 2, 2025
On March 31, 2025, Verrica Pharmaceuticals Inc. appointed Dr. Gavin Corcoran as a Class I director, with his term expiring at the 2025 annual meeting of stockholders. Dr. Corcoran, who has extensive experience in the pharmaceutical industry, will receive stock options and an annual retainer as part of his compensation, aligning with the company’s policy for non-employee directors.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.