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Verrica Pharmaceuticals (VRCA)
NASDAQ:VRCA

Verrica Pharmaceuticals (VRCA) AI Stock Analysis

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Verrica Pharmaceuticals

(NASDAQ:VRCA)

Rating:53Neutral
Price Target:
$0.50
▼(-18.03%Downside)
Verrica Pharmaceuticals' overall stock score is primarily impacted by its challenging financial performance, including persistent losses and high leverage. Positive developments from the earnings call and strong shareholder support offer some optimism, but valuation concerns and technical analysis suggest limited immediate upside potential.
Positive Factors
Market Strategy
Management's new commercial strategy, focusing on territories with high molluscum prevalence and strong insurance coverage, is expected to boost Ycanth's market presence.
Product Demand
The discontinuation of compounded cantharidin and Ycanth's effectiveness for painless lesion removal are driving increased demand.
Product Sales
Ycanth sales reached $3.4MM, marking a significant milestone after a company restructuring, with increased demand and improved inventory levels.
Negative Factors
Financial Concerns
A significant financial overhang and short runway to fund operations pose risks to the company's stability.
Liquidity Challenges
Concerns about precarious liquidity in a challenging market continue, pending more clarity on Verrica's strategy to achieve breakeven.
Tariff Concerns
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., a dermatology therapeutics company, develops and commercializes treatments for people with skin diseases in the United States. The company's lead product candidate includes VP-102 for the treatment of molluscum contagiosum; that has completed Phase II clinical trial for the treatment of external genital warts; and which is in Phase II clinical trial for treating common warts. It is also developing cantharidin-based product candidate, VP-103 for treating plantar warts. The company has a license and collaboration agreement with Torii Pharmaceutical Co., Ltd. for the development and commercialization of its product candidates for the treatment of molluscum contagiosum and common warts in Japan, including VP-102; and a license agreement with Lytix Biopharma AS to develop and commercialize LTX-315 for dermatological oncology indications. Verrica Pharmaceuticals Inc. was incorporated in 2013 and is headquartered in West Chester, Pennsylvania.
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 Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q4-2024)
|
% Change Since: 10.91%|
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, and negative stockholders' equity. The company is highly leveraged with negative cash flows, indicating substantial financial risk.
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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
7.18M7.57M5.12M9.03M12.00M0.00
Gross Profit
5.15M5.71M4.38M8.31M11.53M-229.00K
EBIT
-55.45M-65.92M-65.76M-21.30M-30.91M-40.18M
EBITDA
-56.36M-65.90M-62.20M-21.60M-30.31M-39.43M
Net Income Common Stockholders
-65.99M-76.58M-67.00M-27.68M-38.90M-45.50M
Balance SheetCash, Cash Equivalents and Short-Term Investments
59.95M46.33M69.55M34.27M70.35M65.47M
Total Assets
68.64M54.13M81.60M44.72M80.13M74.15M
Total Debt
1.45M45.94M45.51M1.53M43.41M35.31M
Net Debt
-58.50M-390.00K-24.04M-32.75M27.66M24.63M
Total Liabilities
3.79M63.99M61.83M4.69M47.52M41.17M
Stockholders Equity
64.85M-9.86M19.76M40.03M32.60M32.99M
Cash FlowFree 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 Flow
34.33M37.73M74.21M-16.87M33.65M35.23M

Verrica Pharmaceuticals Technical Analysis

Technical Analysis Sentiment
Positive
Last Price0.61
Price Trends
50DMA
0.51
Positive
100DMA
0.58
Positive
200DMA
0.97
Negative
Market Momentum
MACD
0.02
Positive
RSI
58.02
Neutral
STOCH
68.74
Neutral
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 0.61 is above the 20-day moving average (MA) of 0.57, above the 50-day MA of 0.51, and below the 200-day MA of 0.97, indicating a neutral trend. The MACD of 0.02 indicates Positive momentum. The RSI at 58.02 is Neutral, neither overbought nor oversold. The STOCH value of 68.74 is Neutral, 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 3 New Risks
1.
We may not be able to generate sufficient cash to service our indebtedness or borrow additional funds pursuant to our Loan Facility. Q4, 2023
2.
If we are unable to successfully develop, receive regulatory approval for and commercialize any product candidates, or experience significant delays in doing so, our business will be harmed. Q4, 2023
3.
We have obtained regulatory approval for YCANTH for the treatment of molluscum contagiosum; however, YCANTH for the treatment of molluscum contagiosum and any future product candidates that are approved will remain subject to ongoing regulatory oversight. Q4, 2023

Verrica Pharmaceuticals Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
54
Neutral
$5.31B3.29-45.39%2.79%16.77%-0.07%
53
Neutral
$56.57M-1546.58%-19.45%31.22%
51
Neutral
$53.17M-59.49%21.15%46.44%
50
Neutral
$77.25M-119.22%25.51%
46
Neutral
$57.50M-290.21%-100.00%44.28%
43
Neutral
$71.62M-679.15%-56.88%-57.57%
40
Underperform
$50.39M-32.66%21.33%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VRCA
Verrica Pharmaceuticals
0.61
-7.95
-92.87%
PDSB
PDS Biotechnology
1.69
-1.13
-40.07%
STRO
Sutro Biopharma
0.85
-3.00
-77.92%
PMVP
PMV Pharmaceuticals
0.97
-0.73
-42.94%
KRON
Kronos Bio
0.87
-0.08
-8.42%
GANX
Gain Therapeutics
1.92
-0.17
-8.13%

Verrica Pharmaceuticals Corporate Events

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.

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.