Verrica Pharmaceuticals at Needham Conference: Strategic Restructuring and Growth

On Tuesday, April 8, 2025, Verrica Pharmaceuticals (NASDAQ: VRCA) presented at the 24th Annual Needham Virtual Healthcare Conference, outlining its strategic restructuring and growth plans. CEO Jason Rieger emphasized significant cost reductions and a shift in commercial strategy, while also noting the company's optimistic outlook due to its strong pipeline and partnerships.

Key Takeaways

• Verrica Pharmaceuticals has reduced expenses by 50% and secured $42 million in financing.
• The company is relaunching its molluscum contagiosum treatment, Lycanth, with a new distribution model.
• Potential expansion into common warts and promising basal cell carcinoma program are in focus.
• A partnership with Torii Pharmaceutical could lead to an $8 million milestone.
• The company maintains a positive outlook, focusing on operational excellence and patient access.

Financial Results

• The restructuring led to a 50% reduction in business expenses.
• Verrica raised $42 million in November to extend its cash runway into next year.
• The company reported a $46.3 million cash balance at the end of last year.
• Additional potential funding includes $25 million from warrant exercises and $8 million from a Torii Pharmaceutical milestone.

Operational Updates

• The commercial team was reduced from 85 to a target of 35-40, increasing productivity per representative.
• Verrica shifted its commercial model to include a 60/40 split between "buy and bill" and specialty pharmacy routes.
• A just-in-time ordering system was implemented to streamline distribution.
• Progress has been made in securing medical and pharmacy benefit coverage, including Medicaid plans.
• The company aims to cap patients' out-of-pocket co-pay at $25.

Future Outlook

• Regulatory approval for the common warts program in Japan is expected this year in partnership with Torii Pharmaceutical.
• Initiating the common warts study could result in an $8 million milestone payment.
• A meeting with the FDA is planned to discuss a Phase 3 program for basal cell carcinoma.

Q&A Highlights

• Tariffs are not a major concern due to sufficient raw material supplies and a US-centric manufacturing program.
• A closer correlation between dispensed units and sales is expected due to normalized inventory levels.
• Efforts to limit the supply of compounded quintaridine products have been successful.
• Lycanth shows consistent quarter-over-quarter growth in dispensed units.
• Management is focused on achieving operational excellence.

Readers are encouraged to refer to the full transcript for a more detailed insight into Verrica Pharmaceuticals' strategies and future plans.

Full transcript - 24th Annual Needham Virtual Healthcare Conference:

Serge Belanger, Health Care Analyst, Needham and Company: Hi. Good afternoon. I'm Serge Belanger, one of the health care analysts at Needham and Company. Wanna welcome you to day two of our twenty fourth annual health care conference. And for next fireside chat, we're happy to have, Verica Pharmaceuticals with us.

The company's president and CEO, Jason Rieger, will, will be speaking with us and giving us an overview of the company. Before we get going, just wanna highlight to those listening in that you do have the option to submit questions via the the portal that you're you're watching on. We'll be taking those as they come in. So maybe before we start to questions, Jason, I'll ask you to just give, an overview of the company for for those who aren't familiar with Verica and and your product.

Jason Rieger, President and CEO, Verica Pharmaceuticals: Sure. Very much. Thank you, Suraj, for letting us be here and look forward to the conversation. Name is Jason Rieger, CEO and president of Verica Pharmaceuticals. Verica Pharmaceuticals is a dermatology focused company where we provide treatments in office administered products for clinicians to treat their patients.

We have an FDA approved product in Lycanth for the treatment of molluscum contagiosum. That is a childhood, predominant childhood, you know, skin disorder where the children have small bumps on their skin. These can often last up to thirteen months for resolution and for which there were no other commercially available FDA approved products. So this product was launched about a year or so ago, a little over a year now, and was a little bit of a struggled launch. And my team and I have come in late last year and restructured the business, and we're working on, you know, a relaunch of the product to really address the unmet need and the and the six million prevalence of molluscum across the country in The US alone.

We also have a robust pipeline of programs, including a program in common warts with our Japanese partner, Torii Pharmaceutical, as well as a late stage development program for basal cell carcinoma, which I'm sure we'll speak about today.

Serge Belanger, Health Care Analyst, Needham and Company: Great. Maybe before we jump to questions, you know, one one of the topic du jour is tariffs. So I know pharmaceutical products have been exempted so far, but I think most people believe that's temporary. Just curious if they were if we were to see pharmaceutical tariffs, obviously, I don't know what they would look like, but what could kind of be the exposure for for Verica and for Wycanth?

Jason Rieger, President and CEO, Verica Pharmaceuticals: So, I think we're very fortunate while we do have some raw material that was sourced from a from Japan, China. We do have adequate supplies that should, you know, sustain, you know, beyond this administration and into the future. And I would say that most of us pry trying to prognosticate longer than that, you know, is way too long in the future. So I think we're very confident in our supply chain and minimal interruptions, if any, based on tariffs. Okay.

I would say that's not that's not one of the things that keeps me up at night, but I'm I'm pleased that we built our industry and our and our program on a a US centric manufacturing program.

Serge Belanger, Health Care Analyst, Needham and Company: Yeah. That sounds like a a lot of beetle material if you can outlast the administration.

Jason Rieger, President and CEO, Verica Pharmaceuticals: It go it goes a long way.

Serge Belanger, Health Care Analyst, Needham and Company: I'm sure. Like you mentioned in your opening, comments, company underwent a pretty significant restructuring and, at the management level as well as the operational level. Maybe just highlight where you are and, if there's still some changes that need to be done right now.

Jason Rieger, President and CEO, Verica Pharmaceuticals: So I I think we reevaluated the business, you know, in an entrepreneurial operator centric way. And what we realized was, you know, the prior the prior team had had a, you know, lofty goals and and lofty plan. And, unfortunately, there were circumstances that didn't allow that to occur. So like any, you know, prudent business, we evaluated the resources we had. We restructured the business and cut about 50% of the expenses of the business and did that, you know, just prior to raising capital, a $42,000,000 financing in November of last year, to give us the capital, you know, for a in a non GAAP, you know, accounting perspective cash runway into next year.

So we have made significant changes throughout the executive team. We have a new CEO, a new CFO, a head of commercial, brought in a new chief operating officer in a position that hadn't existed in quite some time, and even recently, brought in a new another chief medical officer. Know, our former chief medical officer was a practicing dermatologist as well, and so he still remains aligned with the company in providing, you know, advice, guidance, and strategy and consulting support, while our new new develop our new chief medical officer is also has more experience in day to day pharma development activities, but in entrepreneurial way. So we're bringing in, you know, an additional thought leader who can help us with our development stage programs and common warts, basal cell carcinoma, etcetera, as well as sort of the medical affairs focus of the business for supporting our commercial team.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. And what is the the state of the the commercial team right now in terms of sales reps and the the territories you can cover?

Jason Rieger, President and CEO, Verica Pharmaceuticals: So we we had about 85 people in in the commercial organization and reduced that down to, you know, low to mid thirties, you know, at the time of the restructuring. We've since then had a few people come and go as, you know, is often the case in a commercial organization. Ultimately, I think we'll settle out in the 35 to 40 range, but we're gonna bring those that staff either upsize or or as appropriate when the the territory is warranted. So right now, we're focusing on territories where we have excellent coverage and demand for the product. We're expanding our demand, you know, in determining where territory should be based on using use of white space and inside sales teams.

And when that demand starts to surface or we have inbound interest from those territories either through conferences, engagement with our KOLs, or other various advertising means, we'll then bring in the appropriate sales teams to help. Yeah. But it's I'm very proud of the sales teams we have now. Our team has significantly increased the productivity per rep, compared to where we were, you know, just, you know, six months ago. And that team is really starting to understand the best way to engage with health care providers, whether it be, you know, primarily dermatologists, but also other health care providers, you know, pediatricians, general practitioners, primary care, etcetera, who see and want to treat molesco patients.

Serge Belanger, Health Care Analyst, Needham and Company: Do you able to report early signs of a a turnaround in the recent '4 q earnings? Maybe just describe where you've been able to see some success, and what was it driven by?

Jason Rieger, President and CEO, Verica Pharmaceuticals: Yeah. Yeah. So it's it's very, very exciting. You know, we started in November, you know, right around the election, you know, as a as a great time to start in a as a new CEO, raised capital before Thanksgiving, and then had a few short weeks before people really start taking the holiday season and into last year.

And we ended up showing quarter over quarter growth, you know, in q four versus q three, which was, you know, a testament to the team really working hard rolling up their sleeves. Just yesterday, we actually released additional insight into our q one uptake of of our product, and we showed, you know, a significant quarter over quarter growth in dispensed units as well. And dispensed units are are units that come from our distributor and go out to our customers, whether it be the clinicians, whether it be the hospitals, whether it be the independent pharmacies that are also working to sell the product directly clinicians through that channel as well. And I think as we've thought through the business and and understood what the customers need, I. The clinicians and how their practice treats patients, we've tried to adapt our commercial and distribution model and our sales model to meet that goal.

And so one of the big changes we brought in as opposed to the business, which began as a buy and bill model predominantly, which is where the clinician would buy the product and then treat the patient and and get reimbursed directly. We've introduced a specialty pharmacy route where instead of them having to buy the product and carry it in the office, patient come in. They would knee they would be diagnosed with molescum. They would write the prescription. It would go to either a local independent regional, specialty pharmacy or one of our more national specialty pharmacies.

They would handle the insurance, the copay adjudication, and ship the product directly to the doctor's office, and the patient would come back, you know, later that week or the following week depending on scheduling for that treatment and for any additional treatment cycles that needed.

Serge Belanger, Health Care Analyst, Needham and Company: Yeah. Maybe if you can just describe molluscum, the market opportunity.

Jason Rieger, President and CEO, Verica Pharmaceuticals: You know, molluscum contagiosum is a pox based virus, you know, typically found in children. Unlike chicken pox, which can resolve, you know, in order of, you know, days to weeks, the median time frame for resolution can be as long as thirteen months and sometimes longer. The interesting reason why it persists that way is if you scratch the lesions or the the small pustules, they can incubate on your skin and often take two to three weeks to show up again. So as you think about a childhood scratch a child scratching, you know, their arms, their legs, and spreading it throughout their body, you can end up with it persisting for quite some time. Our our product, you know, sort of does two things.

It destroys the lesions directly by forming a very small, blister, and then that also results in stimulation of your immune system to recognize and help clear clear the virus.

Serge Belanger, Health Care Analyst, Needham and Company: And treats molluscum? Is it largely a a derm focused indication or pediatric because it affects children?

Jason Rieger, President and CEO, Verica Pharmaceuticals: So historically, it was treated predominantly by the dermatologist, oftentimes by a compounded product or a variety of other unapproved unofficially approved products and mechanisms. Some of those mechanisms had side effects, you know, or painful for the child. For example, liquid nitrogen, which is, like, freezing it off. That that does work For young children, that tends to be more painful, can lead to scarring or discoloration. But as most of the diagnoses, I think, believe, are historically made by a pediatrician.

So, you know, parent wakes up, they see their child has these bumps or this what looks like a rash or something else on their skin. You know, the fastest person they can get into is a pediatrician who often have same day visits available, and the pediatricians would diagnose it. Unfortunately, there was not an FDA approved product for the pediatrician to use, so they had sort of two options for advising the patient. You know, one, wait watch and wait, see if it goes away on its own. You know, oftentimes, it could be months to a year, or to refer to a dermatologist.

Sometimes they could get a dermatologist. Sometimes it would take, you know, a longer period of time to get in. So what now what Verica is able to do is make the product both available to the pediatrician if they wanna treat. Otherwise, they can refer to the dermatologist who now have access to the product as well. And so there's a tag team effort to sort of combat molluscum between primary care, pediatric, and the the dermatologists.

And we're finding many of our dermatologists, you know, especially the pediatric dermatologists, are often also amenable to educating the community and educating the pediatricians and other clinicians, you know, in their community on how to treat molluscum because they are so busy. So they're certainly the front line for us, but we've seen an expansion of our business, you know, into that pediatric community of pediatricians who can use the product.

Serge Belanger, Health Care Analyst, Needham and Company: And is this largely a buy and bill product? Or I know the bill management the prior management team had, what they call it, the white coat service where there was, kind of a specialty distribution within certain centers.

Jason Rieger, President and CEO, Verica Pharmaceuticals: So sure. So I would say buy and bill is was the predominant distribution model early in the launch, you know, and we're now shifting probably in the, you know, $60.40 plus or minus $40.60 range depending on, you know, the the month and and what's going on in our distribution between that and the specialty pharmacy route. You know, that is white glove delivery, so the drug is available and shipped directly to the clinician as it is an HCP administered product that is any medical professional in the doctor's office can apply the product, but it's not, you know, designed for the patient to administer at home.

Serge Belanger, Health Care Analyst, Needham and Company: Yeah. So it's white glove, not white coat? Yes. That that's close. I had the right colleague.

In terms of formulary coverage and access, is there still a lot of work to be done there?

Jason Rieger, President and CEO, Verica Pharmaceuticals: So, yeah, so the the company, you know, started with a medical benefit focused coverage plan, you know, and had great, you know, both both commercial coverage across the country. And as we started going down the pathway of the specialty pharmacy and the white glove delivery, that requires a pharmacy benefit, which is a distinct avenue of coverage. And the company has now worked very hard to get both medical and and, pharmacy benefit available across the country for commercial payers. But furthermore, the other interesting part about, you know, this treatment and being a pediatric disease predominantly is there's a large Medicaid population as well. And, you know, so we've also begun to engage and and have made significant traction in getting on, the state and and local Medicaid plans for those children to also have available access and coverage as well.

And that's you know, there's clearly a large number of children who, you know, benefit from that, and we wanna make sure that they're also able to access the product and the clinicians can also treat them.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. So so what is the process right now for somebody that gets, you know, diagnosed with molluscum? Do they they get diagnosed and have to come back a couple days later for to begin treatment, or you can begin right away? And

Jason Rieger, President and CEO, Verica Pharmaceuticals: So so it really depends on, you know, I would say it's on the doctor, the patient, and the insurance that patient has and the state they they live in. And one of the things that has evolved in our business and to why it's I think we're seeing a significant amount of growth is because, a, as clinicians get more experience with the payers in their area and the type of coverage, they can make of, you know, different decisions as to the best way to treat that patient, both from a risk of reimbursement and a time to reimbursement as well as a time to treatment. So our many of our buy and bill customers, you know, can treat that same day. There the prior author there's been a lot of comment historically on prior authorizations, and that has a sort of a bad ring to it in terms of how much hurt hurdle is that, how much difficult it is difficulty is it. For this product, it's predominantly confirmation of a molluscum diagnosis and, you know, age two and above.

So it's not necessarily step edits, you know, or other thing other step therapy because there really aren't a lot of other FDA approved products. So I think from that perspective, that gets done. And for clinicians, where that's the case, you know, they can step through that. Other places, they're not required. So as we work with our clinicians, we wanna make sure they don't have financial risk.

You know, they have the opportunity to treat their patients quickly and and get access to the product. It also reduces the risk to the patient, when they go through the specialty pharmacy because the insurance gets adjudicated, before the drug is shipped. The co pay is collected. We've worked hard to reduce the co pay to a maximum out of pocket of $25 for any patient, and each each prescription can be written for up to two applicators based on the number of lesions that the patient has. So I think that presents a cost effective opportunity for the patient and an easy access for the clinician, in the pediatric, you know, setting, getting a follow-up appointment, you know, a day or two later or that same day depending on, you know, timing of of access to the product and whether it's available to local pharmacy that can be couriered over or through the mail order.

So I think what we've done is try and make it as flexible as possible for the clinician and the parent so that they can, you know, get the treatment done as efficiently as possible.

Serge Belanger, Health Care Analyst, Needham and Company: And typically

Jason Rieger, President and CEO, Verica Pharmaceuticals: I'm sorry. Just let me add that. Yeah. The the big you know, there's always a big question of it has to be same day treatment immediate, and and that was always a concern that people try to focus on and solve for. And what we realized is that's also only for that first treatment.

So, typically, molluscum, you know, in our clinical studies, it took, you know, three to four you know, between two and four treatments to get completely clear depending on the number of lesions the patient had and their and their disease, their immune system, etcetera. So we ran our study with only up to four treatments. What we've seen is typically patients are getting two to three. Sometimes it takes more to clear them, and it's only that first visit where they would have to reschedule. The other visits are typically spread out, three weeks spread out, so there's ample time for the drug just to arrive as well.

So we're we're finding the inconvenience factors not nearly as, concerning as it once was feared to be and, you know, primarily focusing on making sure the insurance experience is favorable and that nobody ends up with a a bill that is a surprise.

Serge Belanger, Health Care Analyst, Needham and Company: And are parents, mothers aware of this product and, asking doctors for it when upon a molluscum diagnosis, or it's typically just suggested by the the dermatologist or the pediatrician?

Jason Rieger, President and CEO, Verica Pharmaceuticals: I think it's a little bit of both now. We have received endorsement from the, AAP, the the Society for Pediatrics, you know, their red book, you know, as compared in being a destructive modality, you know, as a therapeutic for molluscum. So we're seeing more endorsement in that, you know, support of the treatment for molluscum with our active ingredient. There's some education going on for pediatric for pediatricians, you know, when they diagnose what they can treat. And then, obviously, parents look on the Internet.

And when they see a diagnosis, you know, they're becoming aware and and why can't, you know, shows up as a as a viable option for them to treat, molluscum as well. So we've seen inbound inquiries and requests, and sometimes that's when we get a phone call from a doctor who wants to be a prescriber, be trained on YCANT, and how to use it and learn how to get access. But then we do spend a fair amount of time marketing directly to the clinicians so they know it's available and how to access it, and we've gotten far more streamlined and efficient in our social media, our email campaigns, and our, you know, overall web based, you know, marketing in addition to our boots on the ground Salesforce. So we're leveraging both to gain awareness both at, you know, as well as at conferences. I think we we have a number of advocates who's do speaker programs and speak about it at national and local conferences.

Serge Belanger, Health Care Analyst, Needham and Company: Got it. And for those of us who, who have to try to model this product, the product sales, I think you said in the last quarterly update that the inventory levels are normalized. So, units and, sales would now be more directly correlated going forward.

Jason Rieger, President and CEO, Verica Pharmaceuticals: That is our expectation as well. I mean, obviously, there will be some, you know, slight, you know, shift one quarter over the next in terms of the ordering, but we've we've transitioned most of our primary distributors to be more more just in time ordering, so stocking up to what they need on a on a shorter time frame rather than on, you know, longer extended months or quarters. So they have they can do multiple orderings in a quarter based on what the demand pull through is and put and we can also then put the product where it needs to be. Otherwise, we end up with stranded product that doesn't get pulled through a distributor. So we're trying to keep the inventory centrally managed and then bring it to our distributors when they want it, and they want they need it for the demand they're seeing in the pull through.

And so that so I would expect over the you know, this first quarter should be pretty close, and then going forward, those numbers should match, you know, more closely relate to each other. Obviously, the the gross to net adjustment will sort of impact what the recognized revenue number will be. But in terms of the units being used to calculate that, they they should start to mirror each other pretty well.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. And in terms of seasonality, this is an indication that sees more diagnoses over the summer months. Is that

Jason Rieger, President and CEO, Verica Pharmaceuticals: I would say the spring and summer, you know, start to see ramp up. You know, winter is probably the slower in addition to sort of the reset of deductible season in January, February. So as we saw through this business running through the first quarter as our first real quarter operating as a new management team, We are very pleased to see our quarter over quarter growth and the uptick in demand that we that we showed in in our report yesterday, and we're excited to see sort of how this goes and how we can help the children who get diagnosed with molluscum as we enter the spring and people start, you know, being more outdoors and engaging in outdoor sports and things of that nature.

Serge Belanger, Health Care Analyst, Needham and Company: Yeah. In terms of, I know there was efforts by the former management team to kinda curb the supply of compounded Contardant product? Where where are those efforts currently? I guess that would be what something that could be a benefit for you in terms of tariffs.

Jason Rieger, President and CEO, Verica Pharmaceuticals: Yes.

Serge Belanger, Health Care Analyst, Needham and Company: Because I think a lot of supply was coming from outside the country, but just curious what you've been able to do so far.

Jason Rieger, President and CEO, Verica Pharmaceuticals: So I think the the prior team did a very, you know, solid job in addressing the the compounding nature. You know, they went after and got removed, you know, from some the major three forty b just or five zero three b distributors. And now we've got some of the smaller local, you know, compounders that still provide some product. But what we're hearing in our by our field force and in context with these doctors is supply is more difficult to get. So is it gone?

No. You know, are we continuing to do efforts to reduce or minimize the supply? Of of course. But we're also trying to make sure that the patients are treated with high quality product. You know, it's you can't really compare an FDA approved GMP product, you know, that's got certifications, testing, stability, etcetera, to a compounded product, especially at the at the five zero three a's where, you know, there's not the kind of stability testing and formulation and robustness that exists.

And I think as the doctors are becoming more familiar and more aware of our product and that supply has diminished, I think that we're seeing a lot more inbound interest in addition to our outbound interest for our product for the use in in Molluscum.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. And one of the, potential label expansion for Wight Kant is coming warts. You do have a collaboration that's ongoing with your Japanese partner, Tori. Do you have any update on when that program is expected to get underway?

Jason Rieger, President and CEO, Verica Pharmaceuticals: Sure. So we're very, very excited about our collaboration with Tori. I mean, last year, late last year, they actually filed for their approval for regulatory approval in Japan, which, you know, hopefully should be on track for this year. They've not released their formal update on exactly when they expect it yet, but for a typical review cycle, that would be late this year. We also are entitled to a so what happened last you know, late last year was the Verica team negotiated with Tori to figure out a way to launch a global common work program rather than each company running their own, which, you know, allows for a far more synergistic effect for both capital deployment and time for completion of the study.

But as you would imagine, you're getting two regulatory bodies to agree on the design of a pivotal phase three program. It could take a little bit of time and back and forth. And when one body you do it serially, one body makes change, then you have to go back and get buy in, etcetera. And we're and I think the final throes of that exercise, then finalizing ultimate protocol and execution of the common war program. Upon, you know, initiating that study, you know, in in the first patient dose to sort of support registration of a Japanese regulatory approval, that would lead to an $8,000,000 milestone to the company.

So that would be cash paid to the company that would augment our balance sheet. And then Tory has agreed that we would share in the cost of the trial $50.50, but they would front Verica's portion of that of that capital and take that back out of future milestones and royalties that are due to due from the Japan license. Importantly to that, you know, it's a very unique circumstance for Verica. We also still retain the rights to all jurisdictions outside of Japan.

Serge Belanger, Health Care Analyst, Needham and Company: Got it.

Jason Rieger, President and CEO, Verica Pharmaceuticals: So it's a great opportunity for us to expand to a market that's about twenty million, you prevalence versus six million in in molluscum. Yeah. And all the work we're doing today for, you know, establishing relationships with the pediatricians, with the and with the dermatologists and primary care, and all the clinicians who can use YCANT, they're the same ones that also see common warts. And so they'll have familiarity with the product, and it would simply be a label expansion opportunity for them as well as, you know, we'll be able to have the same dialogues with the payers as well. So all the work we're doing now in the foundation of building this business, building the customer base and experience with the product will be supported as we get that label expansion, you know, should we get FDA approval and a successful phase three trial.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. So it's a phase three trial here. Obviously, we can't give timelines in until it gets going, but I would imagine the the endpoint is is warts clearance at sixty days or so.

Jason Rieger, President and CEO, Verica Pharmaceuticals: Yes. It'll be similar to our our phase two studies, you know, with the primary endpoint, you know, around twelve weeks and then some follow-up for recurrence. One of the things with warts you really wanna make sure is how often do they recur. You know, they can clearly come back and forth. So it's you know, what is the robustness of the therapy, and how long does that, clearance persist?

As long you also the FDA also typically wants a long term follow-up to make sure if they recurred, you know, how many did you retreat, and what does that look like. So as soon as we get that finalized, we'll we'll disclose sort of what that protocol design is and an anticipated completion date.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. Now I see this is an indication that it's treated by derms, PCPs, basically everybody and anybody?

Jason Rieger, President and CEO, Verica Pharmaceuticals: Correct. So I I think, you know, that that's why as we've thought about our commercialization efforts and engaging with all the HCPs that can treat molluscum, there'll be a substantial overlap with the common work you know, treat treaters. And so those relationships and existing pro will will exist already. Whether they like specialty pharmacy, whether they like buy and bill, you know, it should be the same type of process and learning experience. It's the same applicator and the same concentration.

So it's the same exact product that would be used for either indication. It's just so it's interchangeable. So they did buy and bill. Once it's on label, they could use it for either.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. And and when physicians were using compounded products out of jars, of quintaridine, Was it mostly to treat common warts?

Jason Rieger, President and CEO, Verica Pharmaceuticals: There was a there was a mixture of both. You know, some molluscum, you know, some common warts. A lot of the formulations for treat you know, by in the compounded world would also have other additives. Yeah. Concern, you know, particularly for treating common if you were treating the the a common wart and a molluscum with the same bottle, you you did have a risk because common warts could sometimes take a different concentration or a different, you know, product, and it was less predictable.

So they really didn't know how much to put on. With Wycanth, you know, the way we designed it to be a consistent formulation, it's stable and the concentration is well known, and it's stable shelf life for two years. You know when you're treating day one or day, you know, day one year or day two years, you know what to expect, and that really helps the clinician sort of guide the patient to manage both the efficacy, you know, and and safety of the product. And so we're that's one of the things we're really excited about what YCANT brings to the market is more that predictability that really helps the condition to to treat the patients versus I like to call it the art of treat using compounded product where you you look at the bottle, make a judgment on how thick it is, how old it is, you know, and how concentrated it might be, and then decide how much to put on, you know, where to put it on, and when to help the patient wash it off. That introduces a lot of risk that either you're going to leave it on too long, leave it on too short.

You'll get minimal efficacy, you know, extra efficacy, but increased safety profile risk, etcetera. So there's a lot of those things that make it more difficult, that's why I think we'll ultimately expand, you know, to the derms, but also to other health care professionals because that predictability, you know, even for the clinician who sees it less frequently, is is a better option than having a jar that you don't really know what you're treating with.

Serge Belanger, Health Care Analyst, Needham and Company: Yeah. And then you also have a a basal cell carcinoma program. You reported data back in phase two data back in was it August or September?

Jason Rieger, President and CEO, Verica Pharmaceuticals: Correct.

Serge Belanger, Health Care Analyst, Needham and Company: There was other things going on, so I don't I don't think it got the full attention of of investors. So maybe just give us a a quick overview of of what that program is and where you are in the development stage.

Jason Rieger, President and CEO, Verica Pharmaceuticals: Excellent. Yeah. So happy to we're very excited about that program. It's an oncolytic peptide. So in in the world today of, you know, chemotherapeutic and other agents, you hear about viruses, you hear about gene therapies and cell therapies.

This is an oncolytic peptide but has a lot of the hallmarks of those same mechanism action. So this product is an in office administered product. You know, it's stable in an authorized form. Doctor simply takes the bile out, you know, resuspends it, and injects into the tumor. For the basal cell, you know, we're we in our initial studies, we treated tumors, you know, of two centimeters or lower.

You inject the treatment. It takes about fifteen minutes or so for the procedure to inject, and the drug has two mechanisms of action. One, it actually destroys the lesion upon injection, so you get apoptosis and necrosis of that lesion. But two, it also does it in a way that stimulates your immune system to recognize the your own cancer and the these special antigens that are hallmarks of of your cancer. So unlike other immuno immune therapies that require a targeted therapy or targeted marker on those tumor cells, this uses your own body's, you know, tumor to create an immune response to that so you can ideally seek out and kill those tumor cells both in the injection lesion that you'd treated or perhaps other lesions down the road that either were untreated or have not even surfaced.

So the the data was this program was originally developed by a company in Norway called Lytex Biopharma, and they spent, you know, a decade understanding the science, you know, behind the program and really got some robust early development stage program data. But they're looking at developing it for other types of metastatic tumors, etcetera, or people who failed, you know, pembro or other programs in a neoadjuvant setting. So what we've done is licensed for nonmetastatic, you know, lesions, you know, basal cell carcinoma, squamous cell carcinoma, etcetera, and ran a phase two study to design, you know, what does the treatment regimen look like? What does the dose look like? And, like you said, we we were it was a challenging time when the data was released based on some of the commercial execution.

And so this study the program really got overlooked, but I've spent spending some time talking to investors and other parties about the program. And we did we did report over fifty percent of the lesions that were treated had complete histological clearance with two or three injections. And of those lesions that did not, you know, get completely clear, they were on average more than two thirds smaller. And when you think about going for surgery, if the lesion is two thirds smaller, the potential for scar, the potential for complications, and the size of excision, and the degree of healing is much simpler if if the lesion is much smaller. And then we also supplement that data in q four with a calculated objective response rate, and that is the combination of all patients that either the tumor was thirty percent, you know, reduced in size or more or completely clear and didn't get worse.

And that was ninety seven percent. And for those who've covered a lot of oncology programs, there's not a lot of products that can say they had ninety seven percent impact, you know, for the patients treated and the lesions treated with their product. So we're very excited about the robustness and the ability of this product to really work across patients, And it does was reported with, you know, very, know, very favorable safety profile with no serious adverse events, you know, you know, reported in the study. So we're planning to meet with the FDA, you know, this quarter and, you know, have report back to the market on the design of what a phase three program would look like. Additionally, we'll be able to report some additional genomic and immunohistochemistry data from the completed study to understand more about the mechanism of action and the potential robustness of of the therapy.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. And I think we have a few minutes left. If you can just highlight financials in terms of cash balance, runway, and all that fun stuff.

Jason Rieger, President and CEO, Verica Pharmaceuticals: Yeah. So we reported we had $46,300,000 at at the end of the, end of last year in the bank. We'd cut our burn, and so we'll report sort of the update on through q one of sort of where that was, but we did make a material impact in cutting their burn and recognizing those savings, you know, in q four. From a non GAAP perspective, I think we'd have adequate cash to get us into next year, but there are some covenants in our in our debt, you know, that require going, you know, going concern language, etcetera, as well as minimum cash balances. So depending on how we work with our lenders, you know, we may it may or may not, you know, allow us to say we have a cash balance within, like, under gap to get into next year that, you know, right now, it it would end in q three, but we're working to solve that problem under a number of circumstances.

We also can't under GAAP account for potential $25,000,000 in exercise of warrants, that are outstanding part of less financing. I can't count the $8,000,000 milestone inventory, and I can only count but so much of our projected revenue growth, from additional sales of of Lycanth. So we we like to say that's we have a lot of flexibility, a lot of dynamic nature in the financials here, but we're working very hard every day to manage our costs and to, increase our our cash runway.

Serge Belanger, Health Care Analyst, Needham and Company: Okay. Maybe just to wrap up, you know, company hit the reset button late last year. So at this point here, where do you see as the most as the most underappreciated part or aspect of the Verica story, and what should, investors keep their eyes on for 2025?

Jason Rieger, President and CEO, Verica Pharmaceuticals: I would say that you've got a team that their goal is to execute, execute, execute. I mean, it's operational excellence in the business, operational excellence in treatment of our and and handling of our customers and making sure they get what they need to allow for our product to treat their patients. And so we we focused on that as the mindset, and I think every day about what is the journey of the patient, what is the journey of the product, and what is the journey of the reimbursement payment, you know, for the product. It takes all three of those things to be lined up to execute and and have a viable product. And now we're seeing the results of fruits of our labor, you know, making those things happen.

We feel like we have, you know, a great investor base. We have a great partner with our Japanese partner, Intori Pharmaceutical, that allows us to have a fully funded phase three common war program to expand our market beyond molluscum, which in and of itself has very large potential to be, you know, a profitable product for us and sustain our cash operating business. And then we have a basal cell program pipeline in our pipeline as well. So for small cap companies, often, you know, they require lots of capital. They require you know, they're early in development but no commercial product.

We feel like we're in a unique spot as a commercially executing pro company who's, you know, now finally turned the corner on our execution, and we're seeing the growth that we'd always hoped to see. And we hope to continue to deliver to investors, shareholders, and our customers the execution of our business and, you know, availability of our products. So we're very excited, like minded people on the team, trying to get it done every day, and very much alignment across the organization from the sales team to the commercial team to the operators in the business, whether it's finance, regulatory development. Everyone's rolling in the same direction. I think that's really nice to see, and I'm very, very proud of the team for for doing so.

Serge Belanger, Health Care Analyst, Needham and Company: Right. We'll have to end it here. So thanks for joining us, Stephanie and Jason. We appreciate it, and it's great learning more about, Verica and the changes that have been done.

Jason Rieger, President and CEO, Verica Pharmaceuticals: Really appreciate the time and effort. And like I said, always like to continue to be available to, share feedback and answer questions. So thanks very much, and have a great day.

Serge Belanger, Health Care Analyst, Needham and Company: You too.

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