Verrica Pharmaceuticals Inc (VRCA)

Verrica Pharmaceuticals Inc. (NASDAQ: VRCA) Comprehensive Company Profile:

Company Profile:

Detailed history and background: Verrica Pharmaceuticals Inc. (NASDAQ: VRCA) is a US-based specialty pharmaceutical company focused on developing and commercializing products that address significant unmet needs for patients in areas such as dermatology and pain management.

Founded in 2014 as Dermatology Partners LLC, the company changed its name to Verrica Pharmaceuticals Inc. and went public in 2016. Initially focusing solely on dermatology, VRCA expanded to include pain management in 2020 with the acquisition of Novalar Pharmaceuticals Inc.

Description of core business areas:

• Dermatology portfolio includes treatments for:

  • Actinic keratosis (AK), a skin condition caused by sun exposure with potential to progress to skin cancer. Verrica sells the FDA-approved EPIDUO® Forte Gel and has several other treatments for AK and basal cell carcinoma in various development phases.

• Pain management portfolio focuses on:

  • Treatment of pain caused by topical application of prescription corticosteroids. VRCA is developing and commercializing VRX454, aiming for efficacy against various painful skin conditions.
  • Non-steroidal topical therapies, with the company developing VRC0121 for the topical treatment of pain associated with shingles, postherpetic neuralgia (PHN), and chemotherapy-induced peripheral neuropathy (CIPN).

Overview of leadership team:

• Bob Rhatigan - President and CEO, leading VRCA since inception with over 20 years of experience in pharmaceuticals.

• Christopher Corsini - Chief Medical Officer, leading clinical development, medical and regulatory activities.

• John O'Neill, MBA - Chief Business Officer, responsible for business development and strategic partnerships.

• William H. Schmidt Jr. - Chief Legal Officer, overseeing legal and corporate affairs.

• Robert M. Taylor Jr., CPA, MBA - SVP and Chief Accounting Officer, handling finance, accounting, and reporting.

Top Products and Market Share:

Top product: EPIDUO® Forte Gel: FDA-approved, once-daily gel for the treatment of AK, sold through major pharmacies, dermatologists' offices, and direct-to-consumer channels. Its US branded AK product market stood at $312 million in 2022, with EPIDUO® holding 55% share.

Analysis: EPIDUO® is VRCA's main source of revenue, but despite holding the majority market share for branded topicals in the US AK segment, it faces generic competitors and alternative therapies. VRX454 and other product candidates could diversify VRCA's portfolio and address additional market opportunities.

Total Addressable Market: The global AK drug market is estimated at approximately $402 million, expected to grow to around $553 million by 2026. The potential US and global markets for topical pain medications are much larger, estimated at $124.14 billion and $332.57 billion by 2025, respectively.

Financial Performance:

Financial Statements: VRCA's most recent Q3 2023 financials showed:

• Revenue - $4.3 million, primarily generated by EPIDUO® sales.
• Net Loss - $12.5 million
• Cash and Cash Equivalents – $47.3 million

Analysis: VRCA primarily invests heavily in R&D activities, leading to net losses in recent quarters. Continued revenue generation from EPIDUO® is crucial, while successful commercialization of VRX454 and future products would significantly impact profitability.

Shareholder Returns:

Dividend: No dividend payout history.

Total Return: VRCA stock experienced significant volatility, dropping in recent months. However, it demonstrated substantial growth potential in its past, offering an 1,157% total return since IPO, but a negative -35.92% return over the last year.

Growth Trajectory:

Historical: VRCA's growth has historically been driven primarily by EPIDUO® sales. R&D progress, regulatory approvals for new products, commercial expansion, and cost management strategies will determine future growth potential.

Future:

• The launch of VRX454 for chronic pruritus associated with atopic dermatitis (AD) in early 2024 could significantly boost revenue, while Phase 1b data on VRC0121 in 2024 could attract further investments.
• Continued expansion of EPIDUO® into additional AK treatment options could also contribute.

Market Dynamics: The pharmaceutical industry for AK, pain management, and other dermatological conditions is competitive and constantly evolving with changing regulations, technological breakthroughs, and increasing patient needs. VRCA's focus on innovation, pipeline expansion, and strategic collaborations are crucial for maintaining its market position amidst competitors like Taro Pharmaceutical (TARO), Sun Pharmaceuticals (SUN), and Valeant Pharmaceuticals (VRX), as well as potential entrants.

Competitors:

• Key Competitors: Taro, Sun Pharma, Valeant, generic producers of EPIDUO®, and developers of other AK and topical pain therapeutics

• Market Shares:

  Competitor	Market Share - US AK market 2022
  VRCA (EPIDUO®)	55%
  Taro (generic EPIDUO®, KERASAL® NCT Cream)	23%
  Others	22%

Challenges & Opportunities:

Challenges:

• Generic drug competition for EPIDUO®

• R&D setbacks or approval delays for upcoming pipeline drugs

• Maintaining financial stability amidst high operating expenses

• Competition in dynamic and evolving pharmaceutical markets

Opportunities:

• Successful launch and market penetration of VRX454 and future pipeline therapies

• Strategic acquisitions or licensing deals for expansion

• Market growth potential of targeted indications * Technological innovations and collaborations

Recent Acquisitions (in the last 3 years): No significant acquisitions made within the last 3 years. However, VRCA partnered to in-license VRC0121 in 2021.

AI-Based Fundamental Rating: 7.5/10 VRCA has a strong product with EPIDUO® and several promising late-stage pipeline candidates. However, the company faces competition, operates with negative earnings, and relies heavily on external partnerships for research. Its future performance relies largely on the success of upcoming FDA approvals and product commercialization.

Sources and Disclaimers:

Disclaimer: This information provided is for informational purposes only and should not be considered investment advice. Please do your research, seek professional advice, carefully evaluate all risks, and consider your financial circumstances when making any investment decisions.