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Verrica Pharmaceuticals (VRCA)
:VRCA

Verrica Pharmaceuticals (VRCA) AI Stock Analysis

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Verrica Pharmaceuticals

(NASDAQ:VRCA)

Rating:54Neutral
Price Target:
$1.00
▲(21.95%Upside)
Verrica Pharmaceuticals' overall score is primarily impacted by its financial instability and high leverage. However, positive corporate events and strong technical indicators offer some optimism for potential recovery, albeit with significant risks.
Positive Factors
Financial Performance
VRCA received an immediate $8MM capital inflow due to the advancement of a milestone related to Ycanth's phase 3 program for common warts.
Product Demand
Growing demand and the expected discontinuation of compounded cantharidin in 2024 should drive demand-based sales increase in 2025.
Sales Growth
YCANTH reflects accelerating volume growth, up 16.7% over the previous quarter, which is impressive given the company's recent restructuring and reduced commercial footprint.
Negative Factors
Financial Concerns
There remains a significant financial overhang and short runway to fund operations.
Liquidity Issues
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.
Market Challenges
Potential impacts of tariffs are a concern for the company, which could affect its financial performance.

Verrica Pharmaceuticals (VRCA) vs. SPDR S&P 500 ETF (SPY)

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 healthcare and pharmaceutical sectors, offering innovative solutions to address unmet medical needs in dermatology. Verrica's core product is VP-102, a proprietary topical therapy aimed at treating molluscum contagiosum, a common and highly contagious skin condition.
How the Company Makes MoneyVerrica Pharmaceuticals makes money through the development and commercialization of dermatological treatments, with a focus on its lead product candidate, VP-102. The company's revenue model relies on the successful approval and market launch of VP-102, as well as potential licensing agreements and partnerships with other pharmaceutical entities. Verrica aims to generate revenue by selling its products directly to healthcare providers or through partnerships with distributors. Additionally, the company may leverage strategic collaborations to expand its market reach and enhance its product offerings.

Verrica Pharmaceuticals Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q4-2024)
|
% Change Since: 49.09%|
Next Earnings Date:Aug 12, 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.
Q4-2024 Updates
Positive Updates
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.
Negative Updates
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 Financial Statement Overview

Summary
Verrica Pharmaceuticals faces significant financial challenges with declining revenues, persistent losses, negative equity, and high leverage. These issues pose substantial risks to its financial health, necessitating urgent strategic adjustments.
Income Statement
28
Negative
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.
Balance Sheet
22
Negative
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.
Cash Flow
34
Negative
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue7.18M7.57M5.12M9.03M12.00M0.00
Gross Profit5.15M5.71M4.38M8.31M11.53M-229.00K
EBITDA-56.36M-65.90M-62.20M-21.60M-30.31M-39.43M
Net Income-65.99M-76.58M-67.00M-27.68M-38.90M-45.50M
Balance Sheet
Total Assets42.18M54.13M81.60M44.72M80.13M74.15M
Cash, Cash Equivalents and Short-Term Investments29.59M46.33M69.55M34.27M70.35M65.47M
Total Debt14.62M45.94M45.51M1.53M43.41M35.31M
Total Liabilities60.75M63.99M61.83M4.69M47.52M41.17M
Stockholders Equity-18.58M-9.86M19.76M40.03M32.60M32.99M
Cash Flow
Free Cash Flow-53.68M-60.95M-38.94M-18.95M-28.46M-31.68M
Operating Cash Flow-53.66M-60.93M-38.58M-18.65M-27.58M-30.21M
Investing Cash Flow-19.00K-19.00K-362.00K54.04M-998.00K-3.58M
Financing Cash Flow34.33M37.73M74.21M-16.87M33.65M35.23M

Verrica Pharmaceuticals Technical Analysis

Technical Analysis Sentiment
Positive
Last Price0.82
Price Trends
50DMA
0.58
Positive
100DMA
0.57
Positive
200DMA
0.80
Positive
Market Momentum
MACD
0.05
Negative
RSI
68.11
Neutral
STOCH
87.79
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRCA, the sentiment is Positive. The current price of 0.82 is above the 20-day moving average (MA) of 0.64, above the 50-day MA of 0.58, and above the 200-day MA of 0.80, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 68.11 is Neutral, neither overbought nor oversold. The STOCH value of 87.79 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (49)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
54
Neutral
$79.72M-1546.58%-19.45%31.22%
50
Neutral
$58.05M-119.22%25.51%
49
Neutral
AU$2.52B3.19-57.47%2.78%36.73%13.67%
46
Neutral
$50.31M-290.21%-100.00%44.28%
40
Underperform
$62.34M-32.66%21.33%
38
Underperform
$62.57M-679.15%-56.88%-57.57%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VRCA
Verrica Pharmaceuticals
0.82
-7.66
-90.33%
PDSB
PDS Biotechnology
1.32
-2.56
-65.98%
STRO
Sutro Biopharma
0.79
-3.17
-80.05%
PMVP
PMV Pharmaceuticals
1.29
-0.27
-17.31%
GANX
Gain Therapeutics
1.77
0.41
30.15%

Verrica Pharmaceuticals Corporate Events

Product-Related AnnouncementsBusiness Operations and Strategy
Verrica Pharmaceuticals Amends Collaboration for YCANTH Trial
Positive
Jul 1, 2025

On June 27, 2025, Verrica Pharmaceuticals amended its collaboration with Torii Pharmaceutical to initiate a global Phase 3 clinical trial for YCANTH® to treat common warts. Torii will provide an $8 million milestone payment and fund the first $40 million of the trial costs. The amendment also includes a $10 million payment if YCANTH is approved for molluscum contagiosum in Japan. This strategic move aims to expand YCANTH’s market presence and strengthen Verrica’s financial position, with the first patient dosing expected in the fourth quarter of 2025.

The most recent analyst rating on (VRCA) stock is a Buy with a $12.00 price target. To see the full list of analyst forecasts on Verrica Pharmaceuticals stock, see the VRCA Stock Forecast page.

Private Placements and FinancingBusiness Operations and StrategyFinancial Disclosures
Verrica Pharmaceuticals Amends Credit Agreement with OrbiMed
Positive
Jun 12, 2025

On June 10, 2025, Verrica Pharmaceuticals Inc. entered into a sixth amendment and waiver to its Credit Agreement with OrbiMed Royalty & Credit Opportunities IV, LP and other lenders. The amendment includes a waiver of certain covenants related to financial statement qualifications for the quarters ending June 30, 2025, and September 30, 2025, as well as the year ending December 31, 2025. This move allows Verrica Pharmaceuticals to avoid a ‘going concern’ qualification, potentially stabilizing its financial outlook and reassuring stakeholders about its operational continuity.

The most recent analyst rating on (VRCA) stock is a Buy with a $12.00 price target. To see the full list of analyst forecasts on Verrica Pharmaceuticals stock, see the VRCA Stock Forecast page.

Executive/Board ChangesShareholder MeetingsStock Split
Verrica Pharmaceuticals Holds Annual Stockholders Meeting
Positive
Jun 5, 2025

On June 5, 2025, Verrica Pharmaceuticals held its annual stockholders meeting where four proposals were considered. All three director nominees were elected, executive compensation was approved, KPMG LLP’s appointment as the accounting firm was ratified, and a potential reverse stock split was authorized, reflecting strong shareholder support for the company’s strategic decisions.

The most recent analyst rating on (VRCA) stock is a Buy with a $5.00 price target. To see the full list of analyst forecasts on Verrica Pharmaceuticals stock, see the VRCA Stock Forecast page.

Executive/Board Changes
Verrica Pharmaceuticals Announces Resignation of Chief Legal Officer
Neutral
Apr 25, 2025

On April 22, 2025, Verrica Pharmaceuticals announced the resignation of Christopher G. Hayes from his roles as Chief Legal Officer, Chief Compliance Officer, and Corporate Secretary, effective April 30, 2025. In connection with his resignation, the company entered into a Release Agreement with Hayes, offering him a continuation of his base salary and health coverage for up to 12 months, highlighting the company’s commitment to ensuring a smooth transition.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 08, 2025