Verrica Pharmaceuticals Inc Stock

Thank you. Good afternoon, ladies and gentlemen. Welcome to the Verica Pharmaceuticals second quarter 2026 corporate update conference call. At this time, all participants are in a listen-only mode. After the speakers prepared remarks, there will be a question and answer session. To register to ask a question at any time, please press star 1 on your If you would like to remove yourself from the queue, please press star 2. As a reminder, this conference is being recorded. I would now like to turn the call over to our host, Mr.

Kevin Gardner of LifeSci Advisors. Please go ahead, sir. Thank you, Operator.

Hello, everyone, and welcome to Verica Pharmaceuticals' second quarter, 2026 Corporate Update Conference Call. With me on the line this evening are Jason Rieger, President and Chief Executive Officer, Noah Rosenberg, Chief Medical Officer, John Kirby, Interim Chief Financial Officer, David Zawitz, Chief Operating Officer, and Chris Chapman, Chief Commercial Officer. As a reminder during today's call, management will make forward-looking statements. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties. Verica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements. Please see Verica's SEC filings for important risk factors. Erica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in expectations.

In addition, during today's call, management will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures compared to their closest GAAP equivalents. The earnings released at the company issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the investor relations section of Verica's website. I'll now turn the call over to Verica's President and CEO, Jason Rieger.

Thank you, Kevin. Good evening, everyone, and thank you for joining us for our second quarter 2026 corporate update call. made major progress at Verica during the quarter and in the week since. It's certainly an exciting time at Verica. Today we will cover the quarterly results first, but I also want to spend some time discussing the non-dilutive financing we announced today, as well as our partnership for YCAMP in Israel. I'll speak more on each of those in a few minutes. During the quarter, we more than doubled the percent unit growth of YCAMP from the previous quarter, demonstrating both strong market demand for YCAMP and continued improvements in execution from our commercial team. This momentum reinforces our view that a significant unmet need remains in the treatment of molluscum and Y-CANTH is well positioned to become the standard of care. While we focus on growing the Why Can't business, we are also advancing our product pipeline and are making meaningful progress with each asset.

In June, we and our partner, Torrey Pharmaceutical, a subsidiary of Shinogi, dosed the first patients in the second pivotal Phase 3 trial, also known as COVID. and the recruitment in the first pivotal trial, COVE-2, remains on schedule, with expected top-line data in mid-2027 based on our current projections. also continues to advance planning activities for our Phase III-ready oncology asset, BP315, for the treatment of basal cell carcinoma. And we presented encouraging new Phase II data at the Society for Investigative Dermatology annual meeting in May. In the week since the quarter ended, we also announced a distribution agreement that will allow our new partner, Madomi Pharma, to bring Y-CANs to Moleskine patients in Israel. And perhaps most importantly, today we announced new non-dilutive financing from our largest investor, Paul Manning, which we believe will extend our cash runway into 2028 based on our current operating plan. I'll now provide a detailed update on our YCAMP business. second quarter, total revenue was $5.9 million, including USYCAMP's net product revenue of $5.1 million, an increase of 18.7% over the first quarter, and an additional $0.8 million of licensed collaboration revenue associated with our partnership with Torrey. Dispensed applicator units for WICANTS increased to 19,626 in the second quarter, up more than 28% from the first quarter, which grew over 12% from the fourth quarter of 2025. This accelerating unit growth reflects momentum in prescriber adoption of WICANTS and the impact of our retargeting and segmentation of the molluscum prescriber base.

Even with this quarterly growth, we believe we are just scratching the surface of the patient universe afflicted by molluscum in the United States. In this quarter, we observed particularly strong growth in demand from commercially insured patients who depend on our copay assistance program for their access to Y camp, while we also began emerging from deductible season. Our priority continues to be for all eligible patients to have access to Y-CAMP, as we believe that prescribers value consistency in being able to treat their patients with as few access hurdles as possible. Just as we initiated our prescriber retargeting strategy during the quarter, we have been hard at work evaluating and enhancing our patient access programs. A good example is a recent change we implemented in July, providing refills at $0 copay for eligible commercially insured patients. This further reduces the financial burden. burden for caregivers and also allows the prescriber to focus on the best treatment course for their patient if additional applicators are required. Alongside our momentum of Y-CAMP in the U.S., we would also like to acknowledge our partner, Tori, for its continued growth of Y-CAMP in Japan following its launch earlier this year.

As we reminder, we currently supply Y-CAMP applicators to Tori for the Japanese market, and we receive a transfer price, a portion of which offsets Verica's share of the clinical costs for the Global Common Warts Program. We also continue to pursue opportunities to launch YCAMP outside the United States and Japan. Just a few weeks ago, we announced an exclusive distribution, marketing, and supply agreement with Madomi Pharma to commercialize Y-CAN for the treatment of molluscum in Israel. MEDOMI has a strong track record of bringing innovative new therapies to patient populations with limited available treatments, and we look forward to working with them to establish Y-CAMP as their new standard of care for Maleska. Madomi will now prepare a regulatory submission for approval in Israel. For commercial sales, we will receive 60% of net selling price of Y-Camp sold by Madomi. That is in addition to up to $8.2 million in regulatory and commercial milestone payments.

Turning to our pipeline, we made meaningful progress in our global Phase III program studying Y-CANTS as a potential treatment for common warts during the second quarter. As a critical part of our WICAN strategy, we remain focused on the opportunity to expand the label to include common warts, which impacts approximately 22 million people in the U.S. alone, more than three times the size of the molluscum patient population. are no FDA-approved therapies for common warts today, and since about half of the patients who seek treatment are children, we believe our field force that is already selling Y-cancer molluscum to pediatricians, dermatologists, and pediatric dermatologists will be well-positioned to detail the product to these prescribers diagnosing common warts. As a reminder, Torrey is funding the first $40 million of the cost of the global Phase III program, representing approximately 90% of the current trial budget, with the two companies splitting overall program costs on a 50-50 basis. Verica's portion is expected to be paid out of future net transfer payments for commercial supply, payments relating to sales and regulatory milestones, and royalties arising from sales of YCAMP in Japan. In June, we announced that the first U.S. patient was dosed in COVE-3, our second pivotal trial in the CommonWorks program, and our development partner, Tori, also announced dosing of the first Japanese patient in this trial as well. We continue to enroll patients in the first pivotal study, COVE-2, and the long-term follow-up study, COVE-4. All studies are recruiting well, and we will provide further updates as each trial achieves full enrollment.

As a reminder, Verica maintains ownership of the global rights to Y-CAMP for all indications in all all territories outside of Japan and Israel, including common warts. upon our current projections, we now expect to present top-line data from the program in mid-2027. Turning to VP315 in basal cell carcinoma, we presented new phase 2 data at the Society for Investigative Dermatology annual meeting in May, which shared details about a potential abscopal effect of VP315 that we are studying. Among nine subjects, there were 14 untreated non-target basal cell lesions that showed an overall 67% reduction in size, with three of those untreated lesions achieving complete histological clearance. effect on untreated lesions is in addition to the meaningful reductions we've seen in the treated primary lesions themselves. We continue to believe in the potential for VP315 to change the paradigm for treatment of basal cell carcinoma, and we continue to prepare for a Phase III program, including CRO selection and manufacturing of Phase III clinical supplies, based upon our favorable FDA feedback on the design of the registration program. program. As a reminder, Verica retains full global commercial rights to VP315 for non-metastatic skin cancers, including basal cell and squamous cell carcinoma. We believe these two indications each represent a significant commercial opportunity, and we continue to actively prepare for the Phase III program. Before turning the call over to John to review our financial performance, I would like to briefly touch on our announcement from earlier today of a new non-dilutive financing provided by an entity controlled by Paul Manning, Verica's largest shareholder and our chairman.

This facility provides Verica with up to $27.5 million. half million dollars of capital and supports the continued growth of Y-CAMP, as well as our ongoing phase three program studying Y-CAMP, the treatment of common warts. Under the terms of the facility, Verica may borrow up to $12.5 million immediately, with an additional $15 million becoming available upon Verica's achievement of certain revenue, growth, and other operational milestones, and our goal is to achieve those before the end of 2026. Importantly, this facility provides the potential for no scheduled payments of interest or principal until maturity in December of 2030. This flexibility will allow Verica to maximize deployment of its cash resources on advancing its business and pipeline. I would like to thank Paul Manning for his continued support of Erica and for his confidence in our team to execute on our commercial and development initiatives. With this strategic and financial support from our largest shareholder, we will work to grow our existing YCAMS business from Moleskine to achieve the extraordinary potential of YCAMS to become the first FDA-approved therapy for the treatment of common warts and continue to prepare for the Phase III VP315 program for the next three years. which could change the paradigm for basal cell carcinoma. I'll now turn the call over to our Interim Chief Financial Officer, John Kirby, to review our second quarter financials.

Thanks, Jason. I'll now take a few minutes to summarize our financial results for the second quarter ended June 30, 2026. Total revenue for the second quarter of 2026 was $5.9 million, consisting of $5.1 million of U.S. net Y-CANF revenue. and $0.8 million of license and collaboration revenue associated with our Tory partnership, compared to $12.7 million of total revenue for the second quarter of 2025, which consisted of $4.5 million of U.S. net YCAMP revenue, and $8.2 million of license and collaboration revenue. As you will recall, in the second quarter of 2025, the company earned a one-time milestone of $8 million. Net Y-CAMP revenue in the second quarter of 2026 reflects shipments to our distribution partners offset by standard gross to net adjustments, including actual or anticipated product returns, off-invoice discounts, distribution fees, rebates, and co-exports. assistance program expenses. Gross product margins for the second quarter of 2026 were approximately 91.5% compared to gross product margins of approximately 92.5% in the second quarter of 2025. Cost of product revenue for the second quarter of 2026 was was $0.4 million versus $0.3 million in the second quarter of 2025. Research and development expenses of $6 million in the second quarter of 2026 compared to $1.8 million in the second quarter of 2025.

Excluding the impact of stock-based compensation, the increase was due to the increased costs related to the Common Works program. Selling general and administrative expenses of $10.3 million in the second quarter of 2026 compared to $8.9 million in the second quarter of 2025. Excluding the impact of stock-based compensation, the increase was primarily due to increased commercial spend related to the expansion of our sales force. An agreement in principle was reached to settle legal proceedings related to a class action brought against the company in 2022. And as a result, expense of $1.7 million was recognized in the second quarter of 2026. This expense represents the cost of the company's business. net impact of the settlement after insurance recovery. Gap net loss was $13.2 million, or 62 cents per share, for the second quarter of 2026, compared to gap net income of $0.2 million, or 2 cents per share, for the second quarter of 2025.

On a non-GAAP basis, which excludes stock-based compensation, non-cash interest expense, legal settlement, net of insurance recovery, and change in fair value of embedded derivatives, the second quarter of 2026 net loss was $10.2 million, or 48 cents per share, compared to non-GAAP. gap net income of $1.2 million, or 12 cents per share for the second quarter of 2025. And finally, as of June 30th, 2026, Verka had cash of $11.2 million. Assuming the full $27.5 million will be available to the company under the credit facility announced today, we believe our cash runway could extend into 2028. I'll now turn the call back over to Jason for closing remarks. Thanks, John.

Again, I would like to recognize the strong growth of Y-CAMP driven by our commercial team this quarter, which provides the strongest evidence thus far that Y-CAMP is fast becoming the new standard of care for the treatment of molluscum. Many have begun to appreciate the significant commercial opportunity for YCAMP expanding into common wards, a large and underserved indication, and we are excited to finish the Global Phase III program and present top-line data next year. Equally exciting is our VP315 program for basal cell carcinoma. a disease that also impacts millions of patients in the U.S. alone, with few treatment alternatives besides surgery. The Phase II data generated to date demonstrates the potential impact for patients by this oncolytic peptide-based approach, which is further supported by the recently presented abscopal effects observed. We are well positioned for growth, having two large programs, each with multi-billion dollar potential in our pipeline. We also remain committed to execute on our opportunities for global expansion for YCAMP, and we are pursuing additional partnerships around the world to complement our relationship with Tori in Japan and Madomi in Israel. a recent credit facility providing the runway to grow YCAMP and complete our common warts development program, we are positioned to create value for our shareholders and help our patients receive the treatments they need. With that, we would be happy to answer your questions.

Operator?.

Thank you very much, Dr. Rieger. Ladies and gentlemen, at this time, if you do have any questions or comments, please press star 1 at this time. If you would like to remove yourself from the queue, you can do so by pressing star 2. We'll go first this afternoon to Stacy Koo of TCow.

Hey, good afternoon, everyone. Thanks so much for taking your questions. Nice to see the credit facility giving you some runway to get you if I can't and potentially I'd come and warn. So we have a couple questions. First, Just help us think about or give some contextualize, maybe contextualize how we should be thinking about the why can't prescription trends this summer. would you be expecting the same study inflection or growth trajectory that you've been seeing in the next few months? But in the last few months, as we look forward, That's the first question. The second is really what areas the team is focused as they think about maximizing adoption. Is it the clinician base, tweaking access, broadening sales force? Just help us understand what will drive that continued growth. And then third, if you're willing to comment, where do you think net pricing could stabilize in the long term? What are you learning about the different use scenarios for YCAN frequencies? use, the pricing that we're seeing in the pharmacy.

Thank you so much.

Thanks, Stacey. Appreciate the questions. And I'll respond a little bit and then I'll ask Chris to add as well. We're seeing momentum in the prescriptions. I think you've seen that with the quarter over quarter growth of over 28%. And we're seeing, you know, increased adoption penetration. But I'll let Chris comment on that. sort of the specifics of what he's seeing day to day and how we'll continue to support that growth now into the future.

Yes, Stacey, thanks for the question and good to talk to you again. Again, in the last quarterly call, I had mentioned a real deep dive. It's always nice to be new to an organization and take a fresh look at the targeted segmentation and our deployment. I think what you're seeing reflected in this quarterly performance is a refocus of the field force on the most productive physicians in terms of those who are both prescribing but also seeing this patient population. In terms of your question about what do we expect for this quarter? Of course, when you get into the summer months, you are impacted by vacations, lifestyle things, that impact all therapeutic areas. So I certainly would expect continued growth, but I do want to be realistic, we will be impacted by the seasonal aspects that impact everybody. I'm very pleased, very pleased with the performance that we've had with the redirection of the And I think some of the key growth drivers, as I mentioned, number one, the retargeting and segmentation, which I believe is now spot on and right where we need to be.

The second are some of the things that we've done to enable the fulfillment process, both for physician but also affordability for the patients. Jason mentioned the ability to help patients. who are commercially insured with refills, should the physician choose and the patient needs additional treatments. And that's had a very nice impact as well in getting patients to their goals. So I think all of that combined together, I would expect another, strong quarter for us taking into account the seasonal effects that everybody's going to be affected by. And that pricing? Well, we're not going to comment on gross to net, but as I mentioned with the fresh set of eyes, it's nice to come in and reevaluate the market access strategy as well as the patient and physician fulfillment strategy. So we are spending some time taking a close look at that.

Super helpful. Thank you so much. Thank you. We go next now to Dennis Ding with Jefferies.

Hi, thank you so much for taking our questions and congratulations on the quarter. This is Georgia Bank on the line for Denny's. Maybe you can just provide some color around recruiting for the code studies and remaining on track for that 2027 top line data and any additional detail on the enrollment progress and timelines there.

Sure. Thanks, George. This is Jason. And I'll let Jo add comments if I leave anything out. As we reported previously, we really were getting good momentum in the COAF-Truth trial, and that momentum has continued into this quarter. We've seen a solid start to COAF-3. we indicated that we wanted to see how that progressed as we activate both sites in japan with tori as well as the united states we're seeing your enrollment in both those trials progressing and you importantly your patients rolling into our long-term follow-up study co4 to gather your long-term safety data as well As we indicated, your BOCUS trial started, the primary endpoints, you know, all have been disclosed, et cetera. And we're currently targeting enrollment stays on track to have data to report on that program by mid-next year.

Got it. Okay, that's very helpful. And I just had one follow-up, if that's okay. Around the distribution agreement, and launch in Israel. Can you just remind us of the size of the opportunity there and when you'd expect the launch to begin?.

So, two things. One, obviously the population is a little smaller than the United States, but what we've begun to learn as we have conversations with potential partners around the world is that is prevalent across all socioeconomic, gender, and other demographics at a relatively consistent percentage according to the demographic data that's available. And the way we structure our relationship there is we'll provide drugs, but we will receive 60% of the net revenue. that's earned there. So we're positioned to really participate in the upside success as penetration for YCAMP grows traction there, but also they have the potential to add in common works should those trials read out positively. So again, just like we're trying to position here in the United States, have access to YCAMP potentially multiple indications as we go forward. Additionally, we've structured the relationship with milestones in excess of $8 million based on commercial and regulatory achievements. So we're hoping, I can't comment specifically on the partnership discussion. What I can say is we continue to invest in our VP350 program, our readiness for phase three, and pretty expansion of YCAM to new markets around the world.

And we're hopeful this is the first of others in the future.

Got it. Thank you. Thank you. We'll go next now to Ram Silvaraju with H.C. Wainwright.

Thanks so much for taking our questions. Firstly, I was wondering in the context of the additional non-dilutive capital availability, if you could just provide us with some additional granularity on how you expect broader R&D planning to shape up over the course of 2027 and into 2020. 28, particularly as this pertains to whatever you ultimately elect to do in basal cell carcinoma with ruxotematide over the course of that period, and also if you could give us a sense of how you expect R&D quarterly expenses to modulate over the course of the coming quarters as cove 2 and cove 3 advance and ultimately yield top line data. And then secondly, I was just wondering if you could refresh our recollection regarding the specific terms of the credit facility in terms of both the coupon and the seniority in the capital stack. Thank you.

Sure. I'll make the initial comments on the R&D and the budget activities. John will add some color and if that's what's connected, additional color to your credit facility. In terms of the R&D planning, it's actually pretty interesting the way we've structured the business. As you may recall, the common work trial with our relationship with Tory, they're providing the first $40 million of funding, which we expect to cover about 90% of the budget for that trial. So as you would think about as we progress towards top line data next year, there'll be a minimal impact on our cash burn from that program relative to the cost of the entire study. And Jonathan sort of comment how we're accruing accounting for that in our financials to reflect sort of the expenses that are being incurred. 15 program as we've indicated previously that we continue to invest in that program the initial cost to get to and through the rest of this year into next year to prepare for that study related to cro costs and manufacturing are in the budget that we've prepared and are actually pursuing that for next year. John, I have some color for you on the way we're counting for common ones.

Yes, I think Jason brought up the most important point, Rahm, and thanks for your question, which is, So, if you look at our financial statements, you'll see on the balance sheet, the associated prepayment asset side and the liability side. But most importantly on the cash flow, you see, for instance, here today we had $4.2 So, you know, I think broadly the way I would think about it would be that, you know, we've $40 million and that will occur over the course of the next year. So you will see our R&D expense ramp up, but you also see that non-cash number on the cash flow ramp up. Hopefully that's helpful to you.

Hi, this is David Valle. Just to give you a brief answer on your question on the credit facility. So the coupon is SOFR plus eight, with a four and a half percent floor on the SOFR rate. There are two step down milestones, those are describing the test. to be the 10Q that we're selling. There is a 1% prepayment fee for certain prepayments, but otherwise there's no warrants issued or any other fees. facility. There is a 16% IRR catch-up payment on repayment of the full facility. So the way we sort prices is a bit, just jumping forward to the end of getting to a 16% IRR for the lender. The facility has a delayed draw option, so it gives us flexibility as to when we need the capital and when we start incurring that return towards the lender.

It's contemplated to have no scheduled P&I payments during the life of the loans, which again allows us to use the proceeds from the facility for our business, to grow our WACAN business and to cover the cost that we have to get to the company. As far as your question on seniority, the facility is secure. It's a senior position. It has substantially all the grants as you would expect for a credit facility. And just to clarify on the delayed draw feature, Is there an obligation to draw a minimum amount?.

Is there a deadline by which you would need to have drawn the full amount if that is your intent? And at this juncture, you know, is it your intent to ultimately, given the cost of capital here, draw down on the entirety of the facility during the drawdown period?.

There's no minimum bite or there's no bite size of each individual lung, but there's no requirement to draw any amount of facility. It's going to be drawn as necessary.

I'll let John comment as to the expected use of the facility. Yes, I think we will obviously, given the cost of this money, so to speak, in terms of interest and the overall IRR, we will be selective and strategic and only draw as much as we need when we need it. We're going to be able to use effectively all of the cash that we draw from the facility when we choose to draw it because the liquidity covenant that's present in the facility is very manageable to us, allows us to use our receivables from our distributor creditors our partners and distributors as the base for the liquidity. So it is a very flexible facility, very helpful from the lender in this case.

Thank you very much.

Hi, thank you for taking our question and congrats on the progress and the credit facility. Couple of questions. One is, so we see unit growth continues to outpace net product revenue growth. should we think about revenue conversion from a dispensed applicator over the next few quarter. And the second one, Common Word Program. What level of efficacy would you consider clinically meaningful to change the treatment behavior?.

in common law. Thank you. Sure. I'll let Chris sort of generally comment on the unit growth versus revenue growth number. And then, Noah, I'll let you add some color, please, on sort of the clinically meaningful nature of common wards and what would be impactful if there really isn't anything approved that treats the best disease. Yes. Thanks, Chris.

to the question and as I as I just mentioned you know we fully expect to see yield to continue to accrete over time. While our efforts were focused last quarter on making some modifications to our targeting and segmentation and deployment of our field force, and evidenced by the growth that we've seen, we've now turned our focus to optimizing and both driving volume and creating yield over time. So that would be a fair expectation. as we continue to invest in the company, grow the company, and expand this market.

Hey guys, just quickly just repeating that question. I'm sorry the connection wasn't so great.

The question was on expectations of what would be clinically meaningful for outcomes for the common war trial.

Yes, so I think that if you look at the phase two data and you look at the cohort one and cohort two, you can get a pretty good idea of how the drug will perform. We haven't disclosed our pairing assumptions, but I'll say that You know, we believe if we land somewhere around those results, we should be improving pretty good shape. Keep in mind in this particular study in the two pivotals, we also have a placebo arm or a vehicle arm as well, and we've accounted for that in the powering of the study. But I think the most important piece is that there is no approved current treatment for common warts. And so I think that, you know, getting an effective treatment similar to what we saw in Phase 2 at that magnitude would clearly be an important advent. I'll just say this, that the— The recruitment efforts are going really well. There's a lot of excitement on the PI front. as observed by the numbers of patients that they're bringing in.

So there's quite an appetite for an approved treatment.

Great. Thank you. Thank you. And just one final reminder, ladies and gentlemen, any further questions today, please press star 1. We will pause for just one moment. And Dr. Wigger, it appears we have no further questions today, so I'd like to turn things back to you for any closing comments.

Thank you. First, I'd like to thank everyone for joining the call this evening. We look forward to continuing to provide updates on our progress in the second half of 2026. Have a nice evening.

Thank you, Dr. Rieger. Again, ladies and gentlemen, this will conclude the Verica Pharmaceuticals second quarter 2026 corporate update call. Again, thanks so much for joining us, everyone. We wish you all a great day. Goodbye.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good day, ladies and gentlemen, and welcome to the Verrica Pharmaceuticals First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I will now turn the call over to our host, Kevin Gardner of LifeSci Advisors. You may begin your conference.

Thank you, operator. Hello, everyone, and welcome to Verrica Pharmaceuticals first quarter 2026 corporate update conference call. With me on the line this evening are Jayson Rieger, President and Chief Executive Officer; Noah Rosenberg, Chief Medical Officer; John Kirby, Interim Chief Financial Officer; David Zawitz, Chief Operating Officer; and Chris Chapman, Chief Commercial Officer.

As a reminder, during today's call, management will make forward-looking statements. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties. Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements. Please see Verrica's SEC filings for important risk factors. Verrica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations.

In addition, during today's call, management will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures compared to their closest GAAP equivalents. The earnings release that the company issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of Verrica's website.

I'll now turn the call over to Verrica's President and CEO, Jayson Rieger.

Thank you, Kevin. Good evening, everyone, and thank you for joining us on our first quarter 2026 corporate update call. I am pleased to report that in the first quarter, we saw accelerating growth in market demand for YCANTH, setting new records for dispensed applicator units during the quarter and in the month of March. This growth continued after the end of the quarter as we observed further increased demand in April.

YCANTH also achieved another significant milestone in February as our partner, Torii Pharmaceutical, launched YCANTH in Japan for patients with molluscum following their regulatory approval last year. Our hope is that Japan is only the beginning of our global expansion efforts for YCANTH as we are actively working to expand the availability of YCANTH into new markets around the world.

While we grow the YCANTH business, we're also advancing our product portfolio. As you may recall, in January we announced that the first patient had been dosed in our global Phase III program for the treatment of common warts, which represents a critical milestone in our strategy to expand into new indications.

I'm proud to announce that we have achieved more than 50% of the currently targeted enrollment in the first Phase III trial, also known as COVE-2, and have begun enrolling patients in the long-term follow-up study, COVE-4 in this program. Our target is to initiate the second Phase III trial known as COVE-3 in this program by mid-2026.

We also continue to advance our Phase III-ready asset, VP-315, for the treatment of basal cell carcinoma as we've begun efforts to secure clinical supplies and select a CRO to support initiation of the Phase III program. VP-315 is garnering increasing attention within the dermatology community based on compelling proof-of-concept data from our Phase II program.

I'll now provide a detailed update on our YCANTH commercial business. In the first quarter of 2026, we reported total revenue of $5 million, including U.S. YCANTH product revenue of $4.3 million, which was up 25.4% over the first quarter of 2025. First quarter U.S. YCANTH dispensed applicator units increased to 15,302, growing 51.3% over the first quarter of 2025. On a sequential basis, U.S. YCANTH revenue and dispensed applicator units increased 15.3% and 12.1%, respectively, compared to the fourth quarter of 2025.

As noted in our last call in March, while demand for YCANTH in January was likely impacted by severe winter weather across the East Coast, demand accelerated sharply in February and continued into March, which saw the best monthly dispensed applicator unit total since the launch of YCANTH.

As we have now seen preliminary results for April, I am pleased to note that April dispensed applicator units also increased from March's then record level, and our team worked diligently every day to help more healthcare providers treat molluscum with what we believe to be is the best treatment available, YCANTH.

As we've noted in prior quarters, as we continue to prioritize the ease of access for healthcare providers and their patients, we continue to make substantial investments in our co-pay assistance program, which is impacted during the first few months of each year by the annual reset of insurance plan deductibles in January.

To ensure the broadest access to YCANTH for healthcare providers, we launched YCANTH Rx, our non-dispensing pharmacy in the fourth quarter of 2025. YCANTH Rx simplifies the process for both the healthcare provider and patient by performing an initial benefit investigation and then triaging to an in-network dispensing pharmacy based upon the patient's unique healthcare coverage. Although YCANTH Rx is still in the early stage of rollout is being well received and in our view, will help further drive demand and coverage for YCANTH.

We would again like to congratulate Torii Pharmaceutical, now a subsidiary of Shionogi, on their February commercial launch of YCANTH in Japan for patients with molluscum. This milestone reflects the culmination of significant efforts by many team members from both companies. The launch of YCANTH in Japan means that the commercial supply we provide to Torii has begun to offset Verrica's portion of the clinical costs of the common work program.

As we announced in February, we also brought on board Chris Chapman as our new Chief Commercial Officer in the first quarter. Chris and his team are already doing an outstanding job in optimizing our resources to maximize the productivity of the YCANTH commercial efforts.

Finally, as noted on our fourth quarter call, the Committee for Medicinal Products for Human Use of the European Medicines Agency provided positive feedback that supports the filing of a marketing authorization application for YCANTH as a treatment for molluscum.

With no further Phase III clinical trials required for product approval, we are actively progressing through the next steps for submission in the EU. The EU represents a substantial market opportunity for YCANTH, and we look forward to evaluating potential commercialization partnerships in this large and underserved region.

With respect to our pipeline, the common warts and basal cell carcinoma clinical programs continue to move ahead, representing what we believe can be multibillion-dollar opportunities. As I mentioned, in December of 2025, we dosed the first patient in the first Phase III trial, COVE-2, evaluating YCANTH for common warts, which continues to enroll patients.

The second Phase III trial in the common wart program, COVE-3, with sites in both the United States and Japan is targeted to be initiated by mid-2026. If the Phase III program is successful, YCANTH could become the first therapy ever approved in the United States and Japan to treat common warts, a condition that impacts over 22 million people in the U.S. alone.

As a reminder, Verrica and Torii will split the cost of the program 50-50 with Torii funding the first $40 million of trial costs, representing approximately 90% of the current trial budget. We expect to repay our portion by offsetting future transfer payments, milestones and royalties relating to YCANTH sales in Japan.

As a reminder, all of the efforts we are undertaking for the commercialization of YCANTH for molluscum lay the foundation for ultimate commercialization for the common warts indication, if approved, and there will be significant overlap in the clinicians treating both molluscum and common warts with the ability to access the same applicator through the same distribution channels.

With respect to VP-315 for basal cell carcinoma, our program continues to drive strong interest with clinicians and patients alike as potential alternative approach to the existing surgical and non-surgical options. In our Phase II study, treatment with VP-315 demonstrated a 97% objective response rate and an 86% reduction in overall tumor size with more than half of the treated lesions achieving complete histological resolution. We continue to share additional data from the ongoing analysis of the results from the Phase II at scientific conferences.

As reported last week, we will formally be presenting at the 2026 Society for Investigative Dermatology, or SID, at their annual meeting in Chicago later this week, and we'll be sharing additional data regarding the abscopal-like observations from the Phase II study.

With a strong scientific foundation from our Phase II results and regulatory engagement, we have also recently completed several market research activities to better understand how VP-315 would be received by various stakeholders. This work supports broad potential utilization and acceptance across general dermatologists, medical oncologists and most surgeons as well as office managers and payers.

We also conducted market research to evaluate the patient perspective, which indicated that a substantial majority of patients would elect to try VP-315 before other existing therapeutic options, regardless of whether they had previously been treated for skin cancer.

While the best outcome for patients is to completely eliminate the tumor, which we have observed in many patients in our Phase II study, overall tumor size was reduced on an average of by 86%, which we view as clinically meaningful. This highlights the potential for VP-315 to improve the patient experience by reducing the size and potential complexity of future procedures even where surgical excision is ultimately required.

In totality, this market research reinforces our conviction and enthusiasm for the potential of VP-315 to change the paradigm for treatment of basal cell carcinoma. We continue to actively assess a variety of funding opportunities for this program and have initiated clinical and CMC activities to proactively prepare for the commencement of the Phase III program.

As previously noted, Verrica has retained 100% global commercial rights to YCANTH for all approved and potential indications outside of Japan as well as full global rights to VP-315 for non-metastatic skin cancers, including basal cell and squamous cell carcinoma. These programs represent a robust opportunity for potential partnership to create shareholder value and optimize global access to patients that can benefit most from these medicines.

I'll now turn over the call to our Interim Chief Financial Officer, John Kirby, to review our first quarter 2026 financials.

Thanks, Jayson. I'll now take a few minutes to summarize our financial results for the first quarter ended March 31, 2026. Total revenue for the first quarter of 2026 was $5 million, consisting of $4.3 million of U.S. net YCANTH revenue and $0.7 million of license and collaboration revenue associated with our Torii partnership compared to $3.4 million of U.S. net YCANTH revenue and $17,000 of license and collaboration revenue in the first quarter of 2025.

Net YCANTH revenue in the first quarter of 2026 reflects shipments to our distribution partners, offset by standard gross to net adjustments, including actual or anticipated product returns, off-invoice discounts, distribution fees, rebates and co-pay assistance program expenses.

Gross product margins for the first quarter of 2026 were 87.3% compared to gross product margins of 87.6% for the prior year period. Cost of product revenue for the first quarter of 2026 was $0.5 million versus $0.4 million for the prior year period, consisting primarily of product costs related to the sale of YCANTH.

Research and development expenses of $3.9 million in the first quarter of 2026 increased by $1.5 million when excluding the impact of stock-based compensation compared to $2.3 million in the first quarter of 2025 due to increased spend on the common warts program.

Selling, general and administrative expenses of $10 million in the first quarter of 2026 increased by $1.3 million when excluding the impact of stock-based compensation compared to the expense of $8.8 million in the first quarter of 2025, driven primarily by increased commercial spend related to the expansion of our sales force.

GAAP net loss was $9.7 million or $0.45 per share for the first quarter of 2026 compared to a GAAP net loss of $9.7 million or $1.03 per share for the first quarter of 2025. On a non-GAAP basis, which excludes stock-based compensation, non-cash interest expense and change in fair value of embedded derivatives, the first quarter of 2026 net loss was $8.8 million or $0.41 per share compared to a net loss of $8.3 million or $0.88 per share for the first quarter of 2025. And finally, as of March 31, 2026, Verrica had aggregate cash of $20.6 million, which is expected to fund operations into the first quarter of 2027.

I'll now turn the call back over to Jayson for closing remarks.

Thanks, John. We are steadfastly advancing our efforts to establish YCANTH as the new standard of care for molluscum and are seeing traction with our strongest quarter in dispensed applicator units since launch. We are also positioning our company to fully capture the significant opportunities which lie ahead for our advanced stage pipeline if these programs successfully complete their development and are approved.

Based on our Phase II data, the feedback from the dermatology community and alignment with the FDA on the Phase III program design, we believe VP-315 truly has the potential to fundamentally change the treatment paradigm of basal cell carcinoma. In addition, the opportunity to expand YCANT's label into common warts would open a new addressable patient population for which there are currently remains no FDA-approved therapies.

We believe each of these 2 opportunities represent significant potential upside for our company and for our shareholders, and we are excited about the future for Verrica and the potential impacts for patients.

With that, we'd be happy to answer your questions. Operator?

[Operator Instructions] We'll take our first question from Stacy Ku with TD Cowen.

Congratulations on the enrollment progress for your common warts program and also on the quarter for YCANTH. First, consensus for the year seems to be around kind of the mid-$20 million kind of range. To the extent that you can comment, what are your views given what seems to be very encouraging growing demand in April? That's the first question.

And then second, I know this can be a little location specific, but are you expecting to see seasonality with molluscum this year? And what are you doing to ensure you can capture any type of increased rates in the summertime? Would you also assume the YCANTH prescription hub services to start driving adoption and improving fulfillment around that time frame? That's the second question.

The third is to get an update on the progress of expanding the sales force in regions that you're seeing good YCANTH adoption. So just help us understand what you're seeing in terms of the additional stepwise expansion and if we should expect any additional updates with the sales force. Just help us understand the progress when it comes to YCANTH adoption and also maybe potentially YCANTH access.

And then last, as you think about VP-315, just maybe help us understand, as you think about Phase III, where you expect the product to be positioned in the BCC treatment paradigm? What type of patient profile for BCC would opt for a product like this?

Thank you, Stacy. I appreciate it. I think I made good notes on all of your questions. I'll do my best, but I'm sure you'll correct me if I miss any. Starting with the consensus, we're very excited about the progress we're making. We saw a good ending to the Q1, solid performance so far in April, and we're excited about the prospects of the year. It's premature to give guidance at this point. So we're going to leave that number alone. But what we're seeing right now gives us confidence on the growth that we're seeing and the performance over the course of the year.

But with regards to seasonality, depending on where you look and who you ask, there's all kinds of comments on when the seasonality would be. But overall, I think there's general consensus to see growth as you enter the spring and summertime. And I think that's where we are right now and that could be contributing to some of the growth we're seeing, but a lot of it also comes down to the execution on the commercial side and the general adoption of YCANTH that we're starting to see. And I'll let Chris comment a little more on your questions regarding the sales force and the sales focus in a moment.

But one of those tools that's certainly going to help, and we're starting to see some adoption, is the YCANTH Rx and our hub to help support the routing of scripts and importantly, fulfillment of scripts facilitating it for the clinicians and the patients to make that access as easy as possible.

I'll let Chris comment a few minutes on your question on the commercial side and then I'll round out the YCANTH on 315.

Thank you, Stacy, for the question. And as Jayson mentioned in the opening, I joined in March and I've been very pleased with what I found in the organization. But there are areas for optimization. Now you mentioned the field force. Currently, we are deployed and our territories do capture about 85% of the TAM. However, there are areas that we can optimize reach and frequency. And we are going through a kind of stem to stern reach and frequency exercise.

We will be staffing to about approximately 50 representatives. There are numerous markets that could use additional manpower. And I think you're seeing in the momentum that we're building, slight tweaks to our deployment and our execution are yielding some momentum. And I remain cautiously optimistic on that. But again, we're totally re-evaluating our current targeting to optimize that reach and frequency, which again gives us the opportunity to optimize the 85% that we're already deployed against.

Thanks, Chris. And I'll let Noah comment a little bit on your question on VP-315.

In terms of our Phase III program, our initial approach is to target patients with low-risk BCC, i.e., nodule and superficial and to target a similar population to what we saw in Phase II. Those would be primary tumors. I think broadly beyond Phase III, I think it's important to also recognize that we see this as potentially long-term a neoadjuvant approach for complex and difficult-to-treat tumors and very excited about the abscopal data, which has some implication potentially for patients who often present with multiple lesions at initial presentation.

Thanks, Noah. Thanks, Chris. To round that out, one of the feedback that we've generally seen from patients we've asked about their perspective on this treatment is those who are naive to ever having had treatment with basal cell or those who have had multiple basal cell experiences before seem to be very receptive towards the potential of VP-315 as a method to -- as their first line of therapy to try and see if they can reduce the size or perhaps completely eliminate the lesion. And that bodes well both for them as well as if proceeds down to lows or other procedures where that lesion is smaller and that surgical procedure would be simpler in terms of complication, potential scarring, side effects, et cetera.

We will move next with Dennis Ding with Jefferies.

This is Georgia Bank on the line for Dennis Ding. Congratulations on the quarter. I guess another question on the 315 program and on the SID data. I guess, showing reductions in untreated lesions consistent with the potential abscopal effect, how are you thinking about validating that signal going forward? And how should we think about the opportunity of that market where patients might have multiple lesions versus just a single? And what would that look like?

And then a follow-up on the YCANTH Rx pharmacy model and how it's performing today? And what proportion of scripts are routed through that pharmacy? And what are you seeing in terms of differences in prescription to treatment conversions or reimbursement success rates and so on?

So it's Noah here. I think in terms of the abscopal effect and the overall implications to the patient population, I think many patients present initially with multiple lesions. Often patients, especially those who've already had procedures, want a surgical alternative. So again, we see this as complementary to surgery. But in some cases, patients may not want that surgery. And in some cases, they've got more than one lesion. So we believe that this data, while early and exploratory, is extremely encouraging.

In terms of validating that data, we will -- we plan, as we've mentioned, 2 larger studies, 100 patients each in Phase III, and we'll be able to explore and look at larger populations and look at that abscopal effect. I think it's important to note that regardless of whether the patients were contralateral or they were nearby in terms of the lesions, we still saw effects broadly. And I think that was extremely encouraging, and we're very excited to embark on that data.

This is David Zawitz speaking on YCANTH Rx. The YCANTH Rx performance has been good in the early few months since we launched it. It's an option that we provide to the prescribers who are looking to write the product. It's not mandatory. They can choose to write it if they are looking for the additional help with benefits investigations and with potentially processing prior auths if they're required.

And so far, we've been improving the program throughout the quarter since the launch, and it's been going well. And we're not going to comment right now on sort of percentage of our total business that's running through that, but the adoption is growing, and it's going to be -- it is proving to be a useful option for prescribers who are looking to use it.

We will move next with Serge Belanger with Needham & Company.

First one, I guess, just on the 1Q performance. Just trying to understand the variability from quarter-to-quarter in your gross to nets to reconcile the difference between the applicator unit growth and sales number.

And then secondly, can you maybe just talk about the competitor molluscum product that's currently in the market, whether it's been a headwind for YCANTH or maybe it's -- there's been a tailwind due to the additional voice in the market promoting molluscum?

Serge, thanks for the question. It's Chris Chapman. And I think the variation certainly that you see between Q4 and Q1, Q4 historically is the most valuable month for manufacturers. Most of the patients have cleared their deductibles and people are refilling their prescriptions. Q1, you do have the deductible reset. So I think we saw a little bit of that.

But as I mentioned in my prior comments, I'm really encouraged at the momentum that we saw coming out of Q1 into the first month of Q2. And there are a couple of reasons, and they all relate to the questions that have been asked here. One is YCANTH Rx, which provides a useful option for those physicians who need some additional support. The other, as you mentioned, is having additional share of voice having a second competitor in the market driving recognition and choosing to treat molluscum is a huge opportunity that we certainly are taking advantage of.

The third, as I mentioned, being new to Verrica is the opportunity to do some basic optimization on reach and frequency on your targets. And so I think those 3 areas. But again, I would anticipate you're continuing going to see a synergistic effect of share of voice in the marketplace as well as those additional commercial levers that we're pulling. Expect to see more guidance as we get into Q3 and Q4. But right now, as I mentioned, cautiously optimistic but impressed with the early results that we see.

Thanks, Chris. And as I said, to follow up, what we've seen is this is a market dominated by a watch-and-wait mentality. And now that we have a viable option for treatment, and we believe YCANTH really addresses the unmet need by 1 to 2 treatments on average for most patients to get to a resolution that they're happy with in terms of their disease, we believe that will continue adoption and convert those from watching to actually getting treated. And awareness of the disease and that there's therapies out there bodes well for our program.

We will move next with Ram Selvaraju with H.C. Wainwright.

Just with respect to Europe, could you maybe elaborate on how you anticipate reference pricing to shake out as and when the product ultimately becomes eligible for market entry? And also, if you could give us a sense of post approval, what the country-by-country cadence might be? Which countries are most likely to be first in line for YCANTH introduction?

Thanks, Ram. I appreciate that. We're still in the early stages of our Europe planning and strategy works. We have ongoing activities with regards to understanding pricing and pricing options and what reimbursement might look like there. We've explored that in a number of countries, and we're going to share that information as it's right to do so.

In terms of countries, we're planning to have broad access across the EU. Obviously, there are some strategies on which countries may come first. In that, I would say we will probably be more consistent with traditional European rollouts, but we're going to evaluate that based on the feedback on a country-by-country basis and the addressable population as well as the pricing that may differentiate across those countries. But that work is ongoing in parallel to our work to complete the regulatory submission activities.

Can you also just briefly comment on any underlying emergent trends among both unique prescribers and repeat prescribers of YCANTH that you're seeing in the most recent data?

Yes. I can speak to that. And we're seeing what you would expect to see that the dermatologists dominate the early adoption. And you see that across classes. You also see it across competitors in this space. And as you would imagine, you're also seeing repeat prescribing in those earliest adopters. As we continue to expand that prescriber pool, you see more and more pediatricians coming in. So clearly, those are the 2 largest segments. But as you might imagine, dermatologists were the early adopters in molluscum in the selection to both diagnose and to treat and to retreat additional patients.

We will move next with Kemp Dolliver with Brookline Capital Markets.

Great. What do you see as the gating factors behind demand now? If you look back over the history of the launch, there was reimbursement. There was compounded product in a lot of offices on the market. How do you see -- what do you see as the key things you need to overcome at this stage, assuming that those -- the first couple of things I mentioned have been resolved?

Yes. I don't know if I would call access resolved. Certainly, we've achieved a steady state in a target access. Now we have the need to pull it through into the children accounts of the PBM. So there are still geographic opportunities for us to pull it through. But I think the real gating factor is what you kind of hear a theme in my answers here. It's appropriate targeting and segmentation.

Of course, we need to get that early adoption, and we need to get trial. But as you get into the pediatric segment, as Jayson mentioned, the biggest competitor is watchful waiting. And it's not that molluscum is not seen. It's with the prior lack of approved FDA-approved medications, it wasn't treated. And so now the gating factor to us is to drive trial. YCANTH works. And when we see physicians trial it, they rewrite it.

So for us, it's continuing to grow those prescribers concentrically out from the early adopters, from those deciles 10s, 9s, 8s, getting down into those lower decile physicians, which will take us in more into that pediatric segment. So that becomes the real unique opportunity here in the next 3 to 4 quarters.

And just to add to that -- go ahead, please.

I was just going to follow up on that last point. Have you looked at whether there's a correlation between seniority of physician and willingness to trial?

When you mean seniority, can you -- what do you mean by that?

Age. I'm talking age.

Interesting.

Medical tools they used to teach them not to worry about it when you look at the senior positions because there were no options, but...

Yes, not necessarily, but I will tell you this, where we do see some differential is your physician extenders, those on the front lines and the trenches, your nurse practitioners, your PAs, they are very, very open to treating. And so I guess, in a way, you might be able to extrapolate that to age. But I think that's more of a relevant dynamic are the nurse extenders or physician extenders.

But yes, I really don't see it as age. But I will say dermatology as a whole is very familiar with cantharidin primary care less so. So I think the trial that we've seen early is to be expected. The adoption that we're now seeing in dermatology is to be expected and the opportunity remains as we expand out into pediatricians.

And Kemp, to follow up, 2 more points to address some of your comments. We've spent the last year working on distribution and access and availability of the product for clinicians who want to treat. And in this quarter, we just announced in our release, which we crossed over 100,000 applicators that have been dispensed since launch.

One of the things, as Chris refers to the early adopters versus starting to expand beyond that, you start to get a critical amount of adoption and utilization outside post clinical trials, and that gives the later adopters and those who like to watch and take their time, data to see that the safety profile is consistent with what we saw in the clinical studies. The efficacy is being consistent with what we've seen.

And so both of those things really bode well for those next wave of adopters to start to come aboard. And we've worked very hard to make it the access to be easy with our co-pay support, our medical education and just awareness of the product for treatment of molluscum.

We will move next with Dev Prasad with Lucid Capital Markets.

Congrats on the progress. I have a couple. One, following up on the last one. I'm not sure if you answered it or not. But are you seeing YCANTH growth primarily from new prescriber entering this launch curve or from higher utilization from existing high-volume account? And second is what are the next gating step for EU submission and potential launch?

Thanks for the question. And we're really seeing both. Those prescribers who trialed early are continuing to prescribe, but we are seeing a much quicker acceleration as we get into that early majority segment of the physician cohort. So I think we're going to continue. We have to drive both.

Of course, when you do have a competitor come out, those earliest adopters are going to trial that brand, which is a good thing. But we are seeing continued growth in both segments, and we'll continue to focus on the highest deciles, 10 through 8, to make sure that we have that secure as we continue to expand into the rest of the market.

With regards to Europe, there's obviously a number of steps that you have to go through. We have received our initial scientific advice regarding the general scope of what a submission would look like for approval. Now we need to go through the process, for example, securing pediatric investigation waivers, repertoire assignment, et cetera.

And so we're going through that process now. And as indicated previously, Verrica has retained global rights to YCANTH outside the United States, except for Japan, which is controlled by Torii. But we have those rights and we'll continue to explore that for a European partner to support both the commercialization process to address some of the earlier questions as well.

And at this time, there are no further questions in queue. I will now turn the meeting back to CEO, Jayson Rieger, for closing comments.

Thank you, operator, and thank you, everyone, for your time and attention. I'd like to thank you for joining us this evening, and we look forward to providing more updates on our progress throughout 2026. Have a nice evening.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Verrica Pharmaceuticals Fourth Quarter and Year-End 2025 Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to our host, Kevin Gardner of LifeSci Advisors. You may begin your conference.

Thank you, operator. Hello, everyone, and welcome to Verrica Pharmaceuticals Fourth Quarter and Year-End 2025 Corporate Update Conference Call. With me on the line this morning are Jayson Rieger, President and Chief Executive Officer; Noah Rosenberg, Chief Medical Officer; John Kirby, Interim Chief Financial Officer; David Zawitz, Chief Operating Officer; and Chris Chapman, Chief Commercial Officer. As a reminder, during today's call, management will make forward-looking statements. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties. Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements. Please see Verrica's SEC filings for important risk factors. Verrica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations.

In addition, during today's call, management will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures compared to their closest GAAP equivalents. The earnings release that the company issued today includes GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of Verrica's website.

I'll now turn the call over to Verrica's President and CEO, Jayson Rieger.

Thank you, Kevin. Good morning, everyone, and thank you for joining us on our fourth quarter and year-end 2025 corporate update call. Based on achieving multiple commercial, clinical and financial initiatives, we believe 2025 will be remembered as the year Verrica was able to fundamentally transform its business, setting a solid foundation for the future and supporting the delivery of long-term value creation for its shareholders. We started 2025 by stabilizing our commercial organization, ultimately, more than doubling revenue from the core YCANTH business for molluscum while dramatically cutting costs from the previous year. We also realized very meaningful advances in our efforts to expand our product portfolio with progress towards a second product, VP-315 into a new indication for YCANTH, common warts, and into new markets, including Europe.

Now we are a completely different company than we were as we entered 2025, and I couldn't be more excited about the future that lies ahead. First and foremost, in 2025, we implemented a more optimized commercial strategy with the goal of establishing YCANTH as a new standard of care for the treatment of molluscum contagiosum. As a result, we were able to grow YCANTH revenue by more than 130% compared to 2024, while at the same time reducing our selling, general and administrative expenses by over 40% from the same period. These results reflect the hard work and dedication of our team, disciplined cost management and the progress we continue to make in building solid relationships with physicians, payers and our distribution partners. We also made important progress in our pipeline advancing both our common warts and basal cell carcinoma programs. We launched the global Phase III program study, for YCANTH for common warts, with our Japanese development partner, Torii Pharmaceutical after negotiating an amended collaboration and license agreement with them. Under this arrangement, we received $18 million of milestone payments in the third quarter of 2025 and Torii will remit the first $40 million of program costs representing approximately 90% of the current budget. We will offset future milestones and royalty payments owed to us towards our share of the 50-50 split.

We dosed the first patient in common warts program in December and look forward to initiating the second Phase II study in the U.S. and Japan with Torii over the coming months. We believe our oncolytic peptide asset, VP-315, represents one of the most promising opportunities in dermatology and we substantially reduced the cost and time of a Phase III program in basal cell carcinoma by aligning with the FDA on a streamlined design of study last year. We believe each of these advanced programs could represent significant value drivers for our company, and we are tremendously excited about these future potential products.

Importantly, we've strengthened our financial position. In addition to the $18 million in nondilutive funding from Torii, we executed a $50 million equity raise in November and the subsequent retirement of our outstanding debt. We also should note Torii's launch of YCANTH in Japan in February after receiving approval last year from PMDA Verrica continues to work closely with Torii, now part of Shionogi to support this commercial effort as we view Japan as the first of many additional countries where doctors will be able to treat their molluscum patients with YCANTH. Together, these achievements demonstrate the potential value of our assets, one growing commercial program with the opportunity for future global market expansion and tow Phase III development programs in large indications. These assets not only position us for a successful 2026, but also serve as the foundation for Verrica's long-term strategy.

I'll first provide an update on our YCANTH's commercial business and then review the progress of our clinical stage programs in common warts and basal cell carcinoma. I'll then turn the call over to John, who will review our fourth quarter and full year 2025 financial performance. First, with respect to commercial update on YCANTH for molluscum. As a reminder, we have made purposeful investments in our co-pay assistance program to provide comfort to health care providers that their patients will be able to afford treatment with YCANTH and this broad access to YCANTH has impacted gross to net estimates over the past year. In the fourth quarter of 2025, we grew YCANTH revenue to $3.7 million, up 3.2% from the third quarter, while we continue to maintain demand-driven purchases from our customers.

Over the entire year, net YCANTH revenue grew over 130% relative to 2024. I am pleased to report that for the fourth consecutive quarter, YCANTH inventories remain at normalized levels with YCANTH applicator units shipped to distributors continuing to closely track underlying dispensed applicator unit demand. In Q4, YCANTH dispensed applicator units grew to 13,654, a 58% increase from the fourth quarter of 2024. When comparing the fourth quarter to the third quarter of 2025, YCANTH dispensed applicator units decreased approximately 3%. In the first quarter of 2026, while January was likely impacted somewhat by significant winter weather across the East Coast, dispensed applicator units per selling day in February rebounded, reaching a record monthly high since launch. Overall, I've been very pleased by the significant traction driven by our commercial team so far in Q1.

For the full year 2025, YCANTH dispensed applicator units totaled 51,296 versus 25,773 units for 2024 representing growth of 99% on a year-over-year basis. Our strong annual growth reflects the full impact of our new commercial strategy. In addition to expanding YCANTH distribution through the pharmacy channel, we've continued to build strong relationships with dermatology, pediatric and primary care offices, enabling us to steadily build YCANTH brand awareness and drive repeat utilization in high-volume practices. At the same time, we continue to build some solid relationships with many larger practices and hospital systems. We believe this strategy will help drive long-term utilization for YCANTH as these foundational HCP relationships will already be established if we are successful in expanding the label for YCANTH to common warts.

In the fourth quarter, we continued to prioritize affordable access to YCANTH for patients. As such, we continue to pursue additional and expanding coverage and have achieved coverage wins in 2025 and 2026. Furthermore, as we previously announced, during the fourth quarter, we launched YCANTH Rx, our new nondispensing pharmacy that gives prescribers a single place to write all YCANTH prescriptions. In addition to existing paths to access YCANTH, with YCANTH Rx now in place, YCANTH prescriptions can be efficiently routed through dispensing pharmacy in our network, that is contracted with the patient's insurance plan. Collectively, as these efforts come together, we hope to observe a positive impact on gross to net throughout 2026.

Operationally, we made new additions to our commercial leadership and field teams in the fourth quarter and continued those efforts earlier this year, adding Chris Chapman to our team as our new Chief Commercial Officer. The gradual expansion of our sales force, which began in the second half of last year has also continued, and we still expect to reach a total of approximately 50 reps in 2026.

During 2025, we made significant progress in our efforts to bring YCANTH to the European Union. In October, we announced that the Committee for Medicinal Products for Human Use, CHMP, of the European Medicines Agency provided positive feedback that supports the filing of a marketing authorization application for YCANTH as a treatment for molluscum. More specifically, the CHMP concluded that based on convincing efficacy data from the well-controlled Phase III studies successfully conducted in both the U.S. and Japan, no further Phase III clinical studies would be needed to progress toward the filing for approval.

Europe represents a large potential opportunity for YCANTH with millions of molluscum patients and the feedback from CHMP provides us with added confidence to consider multiple strategic opportunities for realizing the full commercial potential of YCANTH in this large and underserved market. Our development teams continue to work through the required steps for submission in which may occur within the next 12 months and catalyze opportunities to secure commercialization partnerships in that region.

I'll now provide an update on our common warts and basal cell clinical programs. For common warts, we previously announced the dosing of the first patient during December of 2025 in the global Phase III trial evaluating YCANTH for common warts which represents an important clinical milestone for our label expansion strategy of YCANTH . As a reminder, we observed clinically meaningful activity for the primary endpoint of complete clearance in the Phase II COVE-1 study. If successful in Phase III studies, we believe YCANTH has the potential to become the first therapy ever approved in both the United States and Japan for the treatment of common warts, a condition that impacts over 22 million people in the U.S. alone.

As you will recall, we are running this Phase III program with our Japanese partner, Torii now part of Shionogi, with whom we will split the cost 50-50 with Torii funding the first $40 million of clinical trial costs representing approximately 90% of the current trial budget, and we will pay the portion out of our future milestones and royalties for YCANTH in Japan. Importantly, Verrica retains full commercial rights for all potential YCANTH indications outside of Japan. We believe securing an indication for common warts represents a substantial enhancement to the commercial and licensing opportunity for our company and we expect to provide a more granular update on key time lines and milestones for the common warts program later this year.

I will now provide an update on our basal cell carcinoma program. We continue to make progress advancing our novel oncolytic peptide VP-315, which is being developed for the treatment of basal cell carcinoma. As a reminder, last November, we presented new VP-315 data from our Phase II study at the Society for Immunotherapy of Cancer, 40th annual presentation, which showed that VP-315 induced a robust local immune response with both cell-mediated and humoral components effectively shifting the tumor microenvironment from an immunosuppressive to an antitumor state and additional data regarding the histologic assessment and non-injected lesions that suggests a potential abscopal like effect. These data help explain why VP-315 shrinks treated basal cell carcinomas in many patients as evidenced by a 97% objective response rate and an 86% reduction in overall tumor size.

Since that presentation, there has been a growing interest in this program across a broad audience. We believe this reflects the high response rates observed in the study and the potential for VP-315 to change the paradigm for basal cell particularly for patients wishing to avoid or reduce their surgical burden and recovery. Our enthusiasm is further supported by the suggested potential for less scarring and improved compliance versus other therapeutic options, such as surgery and topicals as either a primary or neoadjuvant treatment for superficial and nodular tumors. We've also continued to evaluate the abscopal response in 14 observed but not treated lesions in the Phase II study and are excited to report that 3 out of the 14 lesions had complete histological clearance, 21% of the total number of lesions and that there was a 67% overall reduction in tumor size across all 14 lesions.

If this overall product profile can be demonstrated in pivotal Phase III testing, we believe VP-315 has the potential to emerge as a nonsurgical immunotherapy the treatment of basal cell carcinoma and other skin cancers. As noted on our third quarter earnings call, Verrica has gained alignment with the FDA on an efficient Phase III study design for VP-315. This includes 2 Phase III studies of approximately 100 subjects each in placebo-controlled studies with the primary endpoint of complete clearance at week 14. Additional long-term follow-up studies will be deferred to post-approval commitments. We are actively assessing a variety of funding opportunities for this program and have initiated clinical and CMC activities to proactively prepare for the commencement of Phase III clinical trials. We expect to provide a more detailed plan on the program later this year.

Before turning the call over to John to review our financials, I would first like to briefly touch on the impact of our recent equity raise in the fourth quarter. On November 24, we announced a $50 million pipe, which enabled us to retire our outstanding debt while also extending our cash runway into 2027. I would like to thank our existing and new shareholders for their support which has enabled us to continue execution of our YCANTH commercialization strategy, support the global Phase III program for common warts and continued preparation activities for the Phase III clinical program for VP-315 while we also explore nondilutive development and commercialization opportunities for VP-315 globally as well as for YCANTH outside the United States and Japan.

I'll now turn the call over to our Interim Chief Financial Officer, John Kirby, to review our fourth quarter and full year 2025 financials.

Thanks, Jayson, and good morning, everyone. I'll now take a few minutes to summarize our financial results for the fourth quarter and year ended December 31 and 2025. For the fourth quarter of 2025, we reported total revenue of $5.1 million compared to total revenue of $0.3 million in the fourth quarter of 2024. Total revenue for the fourth quarter of 2025 primarily consists of net YCANTH revenue of $3.7 million and $1.4 million of Torii collaboration revenue compared to $0.3 million of net YCANTH revenue in the fourth quarter of 2024. Net YCANTH revenue reflects shipments to our distribution partners offset by standard gross to net adjustments, including actual or anticipated product returns, off-invoice discounts, distribution fees, rebates and co-pay assistance program costs. For the full year 2025, we reported total revenue of $35.6 million versus $7.6 million in the prior year, representing growth of 368% on a year-over-year basis.

Total revenue for 2025 and consists primarily of net YCANTH revenue of $15.3 million and $20.3 million of Torii milestone and collaboration revenue versus net YCANTH revenue of $6.6 million and $1 million of Torii milestone and collaboration revenue in the prior year. Gross product margins for the full year 2025 were 85.7% compared to gross product margins of 71.8% for the prior year. Cost of product revenue for the full year 2025 was $2.2 million versus $1.9 million for the prior year which included $0.9 million of obsolete inventory costs. Gross product margins for the fourth quarter of 2025 were 81.9%. In the fourth quarter of 2024, cost of product revenue exceeded revenue due to nominal sales and the write-off of obsolete inventory. Cost of product revenue for the fourth quarter of 2025 was $0.7 million versus $0.6 million for the fourth quarter of 2024.

Research and development expenses of $2.5 million in the fourth quarter of 2025 increased by $1.5 million, excluding the impact of stock-based compensation. The increase was primarily attributable to costs associated with the Phase III program for common warts and compensation. For the full year 2025, research and development expenses were $8.9 million, which decreased by $2.1 million over the prior year period when excluding the impact of stock-based compensation, the decrease was primarily attributable to decreased clinical costs for VP-315. Selling, general and administrative expenses of $8.1 million in the fourth quarter of 2025 decreased compared to the fourth quarter of 2024 by $1.8 million. excluding the impact of stock-based compensation, driven primarily by the implementation of our more focused commercial strategy for YCANTH.

For the full year 2025, selling, general and administrative expenses of $35.2 million decrease compared to the prior year by $20.6 million, excluding the impact of stock-based compensation, driven primarily by the implementation of our more focused commercial strategy for YCANTH, including decreases in compensation benefits and travel due to the reduced sales force of $6.9 million decreased commercial costs of $6.6 million, decreased compensation of $2.7 million related to the termination of nonsales employees, decreased travel and fleet costs of $2 million and decreased legal and administrative costs of $2.3 million.

During the fourth quarter, we made a payment of $35 million to fully settle all outstanding obligations under our credit agreement with OrbiMed which represented a savings of approximately $7 million from the amount owed on the date of settlement in November 2025. As a result of the settlement of this debt in accordance with GAAP, we recognized a loss on extinguishment debt of $1.5 million as well as a gain of $1.8 million related to the remeasurement of our derivative liability, which no longer exists. Before discussing net loss per share, I will note that on July 24, 2025, we effected a reverse stock split at a ratio of 1 for 10 shares of our common stock. As a result, every 10 shares of our issued and outstanding common stock were automatically combined into 1 share. 2025 and 2024, per share amounts, I will note reflect the impact of the reverse stock split. GAAP net loss was $8.1 million or $0.57 per share for the fourth quarter of 2025 compared to GAAP net loss of $16.2 million or $2.41 per share for the fourth quarter of 2024.

On a non-GAAP basis, which excludes stock-based compensation, noncash interest expense, change in fair value of embedded derivatives and loss on extinguishment of debt, the fourth quarter of 2025 net loss was $7.2 million or $0.51 per share compared to a net loss of $12.2 million or $1.81 per share for the fourth quarter of 2024. GAAP net loss was $17.9 million or $1.68 per share for the full year 2025 compared to a GAAP net loss of $76.6 million or $14.78 per share for the full year 2024. On a non-GAAP basis, which excludes stock-based compensation, noncash interest expense, change in fair value of embedded derivatives and loss on extinguishment of debt, the full year 2025 net loss was $13.2 million or $1.24 per share compared to a net loss of $64.6 million or $12.47 per share for the full year 2024.

And finally, as of December 31, 2025, Verrica had aggregate cash and cash equivalents of $30.1 million, which is expected to fund operations into 2027. As Jayson mentioned earlier, we received a total of $18 million in cash milestone payments from Torii during 2025 and completed a $50 million private placement in November of 2025. I'll now turn the call back over to Jayson for closing remarks.

Thanks, John. Over the last 12 months, Verrica's new leadership team has implemented a series of swift and necessary changes to ensure our pathway to sustainable growth. Our team has responded extremely well to these changes and through their steadfast execution, the results have laid the foundation for a bright future. We are working on establishing YCANTH as the new standard of care for molluscum. Executing on our label expansion opportunity with the dosing of the first patient in the Phase III common wart program and are preparing for a Phase III ready program in basal cell carcinoma. We've also extended our cash runway into 2027 and eliminated all outstanding debt. We are growing our core business and advancing our pipeline with a streamlined, more efficient operating structure and we are ready to create a new future for Verrica and our patients. With that, we will be happy to take any questions. Operator?

[Operator Instructions] We'll take our first question from Stacy Ku with TD Cowen.

Congrats on the progress. So the first question is to Chris, if you're there to put you on the spot. Curious what initiatives you have in mind to broaden the YCANTH launch? And then my second question is going to be on the YCANTH Rx patient hub services that you initiated in Q4. Are you able to go into more details, what kind of improvements you're seeing in real time. Just help us understand how important that access is there.

And then, of course, when it comes to Salesforce, maybe talk about the additions in '26, when would you expect that to be reflected in sales. And then finally, the question we have is on consensus for '26. We do appreciate your comments in Q1. So if you're able to provide any high-level thoughts on we're seeing $30 million for '26. I would appreciate your views there. Thank you so much.

Thanks, Stacy. I appreciate the questions. I'll start first with the YCANTH Rx and I'll hand it over to Chris. We're starting to see some uptake in traction in that program. and have been gradually rolling it out, the nondispensing pharmacy option to our new prescribers, and we're seeing some early growth. And importantly, our goal is to give this as an option for prescribers over time. And it's an important option for them, particularly as volume grows to make it easier process as possible. And then I'll hand this over to Chris to comment on the initiatives that he's working on and the plans around the sales force.

Thank you for the question. And as always, when you come into a new organization that's going through a transformation, and the team has done a tremendous job up until this point we're looking to simplify patient acquisition, physician acquisition of the product as we achieve some of our access milestones. What's important now is to ensure that as the prescription is written a diagnosis is made, because as you all know, this is an enormous category. And our largest competition is watchful waiting. And so as those prescriptions are written and we're seeing that, as you heard the highest -- series of highest days, you have a tremendous opportunity to simplify and to make the acquisition of the product easiest. As Jayson mentioned, the field force has been optimized. And as we start to plug in that easier path to the prescription, we expect to see to continue the transformation throughout this year.

And Stacy to your last comment, I appreciate you inquiring about sales consensus in 2026. At this point, we're not going to provide guidance yet. We're just -- as indicated in the release, the momentum we've seen over the last sort of 5 or 6 weeks gives us some optimism. But it's still early in the quarter. So we'll report as data is generated.

We will move next to Dennis Ding with Jefferies.

This is Georgia Bank on for Dennis Ding I was wondering what kind of partnerships might you be looking into around expansion into the EU? And the type of commercial partnerships that moved appealing to you as you think about that? And then I have a follow-up.

Sure. In general, we don't comment on the nature of our business development activities. What we can generally say is molluscum is a type of disease that affects children around the world. And given the clinical and safety profile of the product, there continues to be interest. And we're looking for partners who can help bring this product to the patients and need and provide access to the caregivers who treat them. And so we're continuing to explore these options on what they might look like. As we indicated last year, we have a very clear path towards registration in Europe, and we're continuing to advance those activities. And as develops warrant and can be disclosed, we will provide those updates to you and others.

Got it. That's helpful. And then any comments around what you're seeing on the ground in terms of competitive dynamics with the competitor Zelsuvmi?

Sure. Like I said, -- this is -- they're being on the market helps validate the demand and need for treatments of molluscum. And as Chris just alluded to, at this point, the largest competitor by far is watchful waiting because patients didn't really have a lot of therapeutic options and their caregivers didn't have options to provide them. I think now with more voice in the market, I think that will impact the opportunity for patients to get therapies they need for caregivers to provide it. And we're still very confident in the value proposition of YCANTH and what it brings to those clinicians as we see efficacy often when as early as 1 or 2 treatments in short office visits where the caregivers are under the control of the clinicians and the clinicians can ensure adequate proper and safe treatment of the patients to resolve their disease as quickly as possible.

We will move next to Serge Belanger with Needham & Company.

This is John on for Serge today. First, just a quick follow-up to the previous question on the sales force optimization. Just curious how much of the TAM or how many molluscum prescribers you plan to target with the size team. And I would imagine it's still predominantly focusing in pediatricians over dermatologists. But if you could provide any color on that, that would be great. And then second, on insurance coverage, you mentioned some wins in '25 and '26. Just curious whether these wins are on the commercial side or and/or Medicaid and if you could provide any additional color on where YCANTH coverage stands in both of those segments, that would be great.

Thanks for the question. And yes, to your assumption around the pediatricians, we will continue to expand into the pediatrician space, but a caveat on the dermatology, we will continue to refine our targeting of the dermatology specialty. The velocity in dermatology is significantly higher in terms of early adoption and expansion of the category. So dermatology remains a key focus. Of course, pediatric dermatology is very important and expanding reach into the pediatric community. So with our field force now optimized. One of the key things that I'll do coming in is revisit all of our targeting and segmentation to ensure we're calling on the right physician mix.

As Jayson mentioned, having a competitor in the market is very favorable to both manufacturers to the physicians and to the caregivers and patients. It's important these patients are not being treated currently. They are in the office. We're getting the diagnosis. We have to make sure we're getting the prescription, the innovation in their hands. So more to come on the targeting, but dermatology, the take-home point here is absolutely a key pillar in the growth of YCANTH and pediatricians are that expansion and that fuel that will continue to grow the category.

Excellent. And Dave will make a comment sort of on the -- your question regarding coverage.

This is Dave. So yes, on coverage, I would say the coverage wins described generally in the press release. It's both Medicaid and commercial enhancements during that period of time. Of course, we're always looking for opportunities to expand coverage to cover any patients who would benefit from YCANTH . So it's sort of generic what we always do look for opportunities there that makes sense for the company. We've had some enhancements in both periods on both channels.

We will move next with Kemp Dolliver with Brookline Capital Markets.

Right. With regard to the sequential decline in applicators in the quarter. Was that geographically concentrated? Or was it a widespread decline?

I think that in general, we saw some -- we had some replacements of some of our field force, so we had some gaps that were being backfilled. Those reps started in Q4, and that's I think what we're seeing is part of the attribution to the growth we alluded to in February. Those reps stayed in the ground running and be up to speed.

Great. That's very helpful. Secondly, with VP-315 in the Phase III program, what's the estimated cost or how much outside capital would you like to bring in to commence that program?

That's an interesting question. We've not disclosed the full development program and timing for that as of yet. We're still working to get bids. As we indicated in the release our activities now are on the preplanning activities, CMC supply to make sure we're ready to initiate that trial, provided funding, et cetera, later this year. And -- but importantly, the goal is to run that program as efficiently as possible. We received very favorable feedback from the FDA with regards to the design of that program in terms of the number of patients the placebo control duration and that the long-term follow-up will be sort of post approval as a requirement. And so as we are working with the CROs to sort of design out that program and get cost, we'll share that. But as it comes from a normal development stage program, particularly oncology, we expect it will be far less than those typical programs cause.

Great. And then one last question. There is a handful of essentially private equity-backed dermatology chains in various regions of the country. And early in the launch, there have been some attempts to penetrate them and possibly get some larger contracts in place. Have you revisited that market segment at all or plan to?

So I would say that there are certainly a lot of those chains one of the hallmarks they have as well they do aggregate on operations and some efficiencies on the back end aspects of the business, they do allow the clinicians to make the best medical choice for treatment of their patients in a broad setting. And we've worked very hard to make YCANTH accessible to those clinicians, whether it's through buy and bill through a specialty pharmacy or any other avenue that works for them. And we do see writers in many of those private equity-backed systems currently, and we continue to expand our relationships with them.

Our next question comes from Dev Prasad with Lucid Capital Markets.

I have a couple. One on YCANTH you mentioned February was the record month for dispensing applicator per selling day. Can you help us think about the seasonality curve for YCANTH. And how should we model the quarterly cadence through 2026. And second is on common warts program. Can you walk us through the enrollment time line for the 2 Phase IIIs, when should we expect top line data? And is there going to be staggered between U.S., Japan versus the global studies?

Sure. So in terms of February, historically and sort of seasonality-wise, Q1 is a slower quarter, particularly for office treatments, et cetera, as people's deductible season gets reset. And so the investments we made last year in our marketing, our field force, our sales trials, et cetera, as well as our team, seem to be playing out. And so we were seeing -- we saw that growth in February. We wanted to share that with you all, so you understand that we're seeing that observation. And we're early in the launch. So I think there's potential for growth. And we're very excited about it, particularly in a shortened month. February is one of the shortest number of selling days in the year. There is still some seasonality of weather and access based on especially East Coast and Midwest on snow et cetera, but we saw access and demand to YCANTH, and we'll see what continues to trend over this year, but we're certainly excited about that.

With regards to common warts, I'll just take a brief comment. We started the first trial. We're working very hard, and Noah and his team are working very hard to execute on enrollment for that trial. When we initiate the second trial COVE-3, we will sort of provide an update but as that trial is in collaboration with our partner, Torii, we want to share in that announcement with them. And so when that happens, we will do that. Our goal would be, as those trials are enrolling to try and get them to complete as quickly and as simultaneously as possible, and we'll evaluate what that looks like, depending on the long-term follow-up requirements and the number of patients and the cadence of those in Japan versus the U.S., there may be a slight stagger in the registrational filing with the regulators. That will be sort of to be determined at the end. But both companies will rely on the core bit of data from both those trials for the regulatory submissions.

We will move next to Ram Selvaraju with H.C. Wainwright.

I just wanted to ask about the comparison of the common warts opportunity to the molluscum opportunity. And if you could perhaps characterize the overall size of this commercial opportunity in the United States as well as any noteworthy differences in prescriber base that you anticipate as you move common warts downfield. And secondly, I was wondering if you could perhaps comment in the context of the potential applicability of the product to the treatment of basal cell carcinoma. If specifically within that context, there may be potential for utilization of the product in patients who would otherwise be considered candidates for most surgery.

Thanks, Ram. Appreciate the question. So in terms of the market size for common warts versus molluscum, the prevalence data is estimated for molluscum of about 6 million patients in the United States, common warts is estimated to be 20 million or more. And so just that alone is about 3x the market. Based on what we've seen currently is since launch of most patients receiving about 2 applicators for the treatment of the molluscum. We expect common warts may also require perhaps 1 or 2 more applicators that will be determined based on the efficacy results we see in Phase III. Common warts tend to be more persistent and difficult to clear. And that's why based on the data we disclosed in our Phase II study, we saw about 50% of the common warts were cleared at the end of 4 treatments. And that we saw some maintenance of that clearance and persistence of that in a small period of follow-up, we were going to extend that period in our Phase III trial.

In terms of the prescriber base, that's a really interesting question. It's something we're very excited about. It's why you're seeing the investment we're making in our commercial team, our commercial leadership and the investment in engaging with and with our prescribers, including our core group of dermatologists and expanding that and pediatricians as we expect the same product presentation for YCANTH will be both for common warts and molluscum, should common warts get approved by the FDA and expand the label. That's important as that core base of prescribers see typically both types of patients. they'll have familiarity with the access to the drug, how to use the drug, the workflow in their offices, et cetera. And so we work to make that as seamless as possible and expect that could be more expedited launch process given the established base and the expansion of the label should come to work added to it.

With regards to our basal cell carcinoma program, that program is, our goal is to change the way or the way those lesions are treated. Historically, it has been most surgery for a predominant use for some types of superficial lesions. There are topicals. There are a number of therapies out there, but they all have limitations in terms of patient compliance and the impact of that on efficacy, on convenience or number of treatments or cost or particularly surgery, surgical complications, surgical fatigue or in patients that are simply just not eligible or from their health or other reasons for surgery. As we've done our engagement with a number of clinicians, whether it's dermatologists who do Mo or dermatologists who don't, but still see a number of patients but are the primary diagnoser of the basal cell we see potential uptake in both of those groups.

The Mo surgeons recognize that the complexity of any procedure they have to do if we can dramatically reduce the size of the lesion, as we've indicated, we see greater than 80% reduction in overall lesion size and about 50% of our patients just in our Phase II study, saw complete histological clearance of 100%. In addition to the abscopal data we just reported on and expanded on in this release that we're seeing lesions that were not treated and that are distal from the treated lesions also starting to shrink during the same course of the 12 weeks to these patients are followed.

So I think this really presents an opportunity for better outcomes for the most surgeons as the lesion is smaller, the surgery will be simpler and or may not maybe avoided completely. So the product can be used both neoadjuvantly or as the primary therapeutic option for a wide range of patients, and we're continuing to expand our market research, and we'll share further updates on that going forward. But we're excited about this opportunity to modernize and change the way people can treat basal cell and particularly in a way that's pharmacologic and not surgical.

And at this time, there are no further questions in queue. I will now turn the meeting back to CEO, Jayson Rieger.

Thank you, operator. I'd like to thank all of you for joining us this morning, and we look forward to providing updates on our programs in 2026. Have a nice day.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Verrica Pharmaceuticals' Third Quarter 2025 Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I will now turn the call over to our host, Kevin Gardner of Lifesci Advisors. You may begin your conference.

Thank you, operator. Hello, everyone, and welcome to Verrica Pharmaceuticals Third Quarter 2025 Corporate Update Conference Call. With me on the line this morning are Jayson Rieger, President and Chief Executive Officer; Noah Rosenberg, Chief Medical Officer; John Kirby, Interim Chief Financial Officer; and David Zawitz, Chief Operating Officer.

As a reminder, during today's call, management will make forward-looking statements. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties. Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements. Please see Verrica's SEC filings for important risk factors. Verrica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations.

In addition, during today's call, management will discuss certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures compared to their closest GAAP equivalents. The earnings release that the company issued Friday includes GAAP to non-GAAP reconciliations for these measures and is also available on the Investor Relations section of Verrica's website.

I'll now turn the call over to Verrica's President and CEO, Jayson Rieger.

Thank you, Kevin, and good morning, everyone. Thank you for joining us for our third quarter 2025 corporate update call.

In the third quarter, Verrica achieved multiple commercial, corporate, scientific and regulatory milestones, providing a strong foundation for future growth in YCANTH as well as significant upside potential for our late-stage pipeline. Throughout the past year, we've advanced our clinical programs in two of the highest unmet needs in dermatology for future development. We are excited to embark on the first of these programs our global Phase III clinical program of YCANTH or VP-102 in common warts. This is with our Japanese development partner, Torii Pharmaceutical and is expected starting -- to be starting later this year with first patients targeted for dosing in December.

Also, as I'll discuss in more detail later on in this call, we've received clear and positive feedback from the FDA about the Phase III development program for our oncology asset, VP-315, for basal cell carcinoma, the most common form of skin cancer. Even while advancing these two programs to Phase III readiness, we've reduced our spending by about half in the past year, while more than doubling dispensed units of our commercial product, YCANTH for molluscum contagiosum. I couldn't be more proud of our team's simultaneous achievement of these goals, and we are excited to see what's ahead for Verrica in 2025 and beyond.

In the third quarter, we continue to see growth in the adoption of YCANTH by health care providers in the U.S., with quarter-over-quarter growth in dispensed applicator units of about 5%, compared to last year, dispensed applicator units increased to 37,642 for the 9 months ended September 30, 2025, a 120% increase over that same month in 2024. This year-over-year growth reflects the progress of our commercial strategy to expand distribution through the pharmacy channel and the concerted effort to expand beyond dermatology into pediatric and primary care offices. While the incremental growth in pull-through was softer in Q3 versus the prior quarter, we powered through seasonality and competitive headwinds to help providers treat more patients with what we view to be is the best-in-class therapy for molluscum.

The growth and adoption of YCANTH for molluscum serves as the foundation for our strategy of establishing YCANTH as a valuable tool for treating multiple types of skin lesions as the same clinicians familiar with YCANTH will also be those who treat common warts if that is approved as an expanded indication. Through our amended agreement with Torii, we have received $18 million in cash milestones payments in 2025, of which $10 million was received in the third quarter upon the approval of YCANTH for molluscum in Japan. Torii continues to be an outstanding and highly collaborative partner to Verrica, and this additional non-dilutive capital has helped our cash position and supported our YCANTH activities in the United States.

The financial arrangement for the global Phase III program in common warts, where by Verrica and Torii split the cost of the program with the first $40 million funded by Torii has unlocked the development of this key indication with first patient dosed in the United States expected by the end of the year.

It's also important to note that Verrica retains exclusive global rights to YCANTH outside of Japan. The recent approval of YCANTH in Japan for molluscum is the first of what we hope to and expect will be multiple approvals across the major pharmaceutical markets, including the European Union.

We recently received a significant regulatory milestone towards YCANTH approval for molluscum in the EU. Feedback from the European Medicines Agency on October 20 indicated that no further Phase III clinical studies would be needed to proceed with the filing of a Marketing Authorization Application for YCANTH as a treatment for molluscum, and we anticipate the filing could occur as early as the fourth quarter of 2026. The feedback was based on compelling efficacy from the well-controlled Phase III studies successfully conducted in both the United States and Japan. Europe represents a large and underserved market for patients who at present have no approved therapy for the treatment of molluscum as well as a large commercial expansion opportunity for Verrica.

While we've been optimizing our cost structure and building the foundation for YCANTH as a best-in-class therapy for molluscum in common warts, our clinical teams have been developing VP-315, or ruxotemitide, our novel oncolytic peptide immunotherapy as one of the most exciting late-stage assets in oncology.

We recently announced new data from our Phase II study evaluating VP-315 for basal cell carcinoma at the Society of Immunotherapy of Cancer, or SITC, at their 40th Annual Meeting. The presentation revealed supportive immunologic mechanistic data that helps explain why VP-315 shrinks treated basal cell carcinomas in many patients as evidenced by a 97% objective response rate and an 86% reduction in overall tumor size.

We also observed a potential abscopal-like effect in non-treated lesions, which strongly suggests immune system engagement. We are also excited to announce that we reached alignment with the FDA on an efficient Phase III study design. We couldn't be more excited about VP-315 and its prospects to potentially become standard of care for the most common form of skin cancer.

We believe the tremendous promise of these pipeline assets may present robust partnering opportunities to advance these programs through development and commercialization as well as bring in meaningful non-dilutive capital. and we are currently exploring these opportunities wherever they present themselves.

I'd like to provide a more detailed update now on our commercial activities for YCANTH. During the third quarter, YCANTH dispensed applicator unit reached a total of 14,093, which represents approximately 5% sequential growth over the prior quarter. Not surprisingly, we experienced some seasonality in August. As in-office treatment, times of the year where there are generally fewer visits for doctors, largely driven, we believe, by scheduled vacations by both providers and patients and fewer sick child visits will have an impact on our volumes. I believe the seasonality did modestly impact our volumes in August. But as we enter the back-to-school season in September, we saw a return to the previous levels of pull-through which is consistent with the expected product utilization patterns for this indication and patient population. We also saw that momentum continue into the beginning of the fourth quarter.

Turning to reimbursement. As noted on our last conference call, the substantial investments we have made in our commercial copay assistance program continues to give providers a consistent path for treating their patients with YCANTH. As a reminder, our copay assistance program allows all eligible patients with commercial insurance to pay just $25 per YCANTH treatment for up to two applicators, which provides physicians with comfort knowing that their patients will find affordable access to YCANTH.

As previously indicated, our commitment to patient affordability and ease of access to YCANTH for health care providers had an incremental impact on our gross to net and by extension, revenue for the quarter. We view this investment as the best way to get YCANTH in the hands of providers to use as their frontline treatment for molluscum and to minimize concern for clinicians whether the prescription will be filled for their patients.

One new development on the commercial front that we are excited to share is YCANTH Rx. Our new non-dispensing pharmacy that we expect to launch in the fourth quarter of 2025. YCANTH Rx will give prescribers a single place to write all YCANTH prescriptions and will assist with benefits investigations, processing any prior authorizations and enrollment in our copay program. Prescriptions written to YCANTH Rx will then be routed to a dispensing pharmacy in our pharmacy network that is contracted with the patient's insurance plan.

We believe YCANTH Rx can improve speed to therapy for patients by navigating the prior authorization process with fewer delays. Prescribers will also enjoy this simplified, seamless experience that will reduce the paperwork burden on their offices and let them spend more time doing what they do best, treating patients.

I'm also pleased to note that recent expansion of our sales force, which will continue into the next year. Our total sales force has risen to 45 sales reps this quarter, and we plan on increasing it to 50 in 2026.

For the third consecutive quarter, YCANTH inventory remained at normalized levels with YCANTH applicator units shipped to distributors continuing to closely track underlying market demand of dispensed applicator units.

I will now provide an update on our pipeline programs. Regarding our common warts program, as I mentioned earlier, we remain on track to enroll our first patient in the Phase III program in the U.S. in the fourth quarter. We provide updates on estimated timing of completion of the program and estimated availability of top line data as those items become clearer in the future.

Moving to our novel oncolytic peptide, VP-315, which is being developed for basal cell carcinoma. As we have previously discussed, BCC is one of the most common skin cancer indications with over 3.6 million cases per year, representing a potential multibillion-dollar opportunity. As I mentioned, last week, we presented an oral presentation and a poster on VP-315 at the SITC 40th Annual Meeting. The new data presented at SITC underscores VP-315 potential to redefine how basal cell carcinoma is treated.

We are particularly encouraged by the immunologic profile we're seeing with VP-315, which supports our view that this local short-term therapy not only destroys tumors directly but also stimulates a potent local immune response. The histological assessment in non-injected lesions suggests a potential abscopal-like effect. These data help explain the mechanism for the clinical safety and efficacy data previously reported and support the development of VP-315 as a potential non-surgical immunotherapy option for patients with BCC and further reinforces our confidence in VP-315's ability to address significant unmet need in dermatologic oncology.

As this data release has prompted significant inquiries into the VP-315 program and the nature of our Phase III development plan, we are also pleased to share feedback with respect to our end of Phase II meeting with the FDA and our plans to advance the asset. In the meeting, the FDA confirmed alignment with our plans for the Phase III program to encompass two placebo-controlled Phase III studies with approximately 100 subjects each and a primary endpoint of complete clearance as assessed at week 14. Based on the FDA feedback, we expect these studies will be adequate to support an NDA filing with long-term follow-up studies to be conducted as post-approval commitment. We are extremely pleased with this collaborative and thoughtful discussion with the FDA, which provides us with an efficient path to making VP-315 available for patients with BCC.

We are continuing our preparatory activities for the BCC program and are exploring new funding opportunities, which may include strategic non-dilutive partnerships for both the development as well as post-approval commercialization. As we finalize our preparation for Phase III with CROs and clinical site investigators, we will provide additional details on costs, timing and other key aspects of this exciting oncology program.

As we approach the new year, we believe our company remains well positioned to realize strong organic growth as YCANTH continues to establish itself as the leading therapy for the treatment of molluscum. We are also excited about the value creation surrounding YCANTH's potential label expansion into common warts, the potential for expansion of YCANTH for molluscum around the world and the nearly universal positive feedback we are receiving for VP-315 for basal cell carcinoma.

I'll now turn the call over to our Interim Chief Financial Officer, John Kirby.

Thanks, Jayson. I'll now take a few minutes to summarize our financial results for the quarter ended September 30, 2025. For the third quarter of 2025, we reported total revenue of $14.3 million compared to total negative revenue of $1.8 million in the third quarter of 2024. Total revenue for the third quarter of 2025 primarily consisted of $10.7 million of Torii milestone and collaboration revenue and net YCANTH revenue of $3.6 million, compared to $84,000 in collaboration revenue from Torii and negative $1.9 million of net YCANTH revenue in the third quarter of 2024.

Net YCANTH revenue in the third quarter of 2025 reflects shipments to our distribution partners, offset by standard gross to net adjustments, including actual or anticipated product returns, off-invoice discounts, distribution fees, rebates and copay assistant program expenses. Recall that in the third quarter of 2024, negative net YCANTH revenue was due to an increase in our returns reserve for estimated returns from certain distributors and no revenues from ex-factory sales. This year, as Jayson mentioned earlier, net YCANTH revenue represents orders from our distribution partners to meet demand from their customers.

Gross product margins for the third quarter of 2025 were 79.1% and cost of product revenue was $0.8 million, including $0.4 million of obsolete inventory costs. Research and development expenses of $2.2 million in the third quarter of 2025, increased by $0.1 million when excluding the impact of stock-based compensation, which is in line with the third quarter of 2024.

Selling, general and administrative expenses of $9.4 million in the third quarter of 2025 decrease compared to the third quarter of 2024 by $5.8 million, excluding the impact of stock-based compensation, driven primarily by the implementation of our more focused commercial strategy for YCANTH, including decreases in compensation, benefits and travel due to reduced sales force of $3.5 million, decreased commercial costs of $1.2 million and decreased marketing and sponsorship costs of $0.8 million.

Before I discuss net income and net loss per share, I will note that on July 24, we effected a reverse stock split at a ratio of 1 for 10 shares of our common stock. As a result, every 10 shares of our issued and outstanding common stock were automatically combined into 1 share. The 2025 and 2024 per share amounts I will note reflect the impact of the reverse stock split.

GAAP net loss was $0.2 million or $0.03 per share for the third quarter of 2025, compared to a GAAP net loss of $22.9 million or $4.88 per share for the third quarter of 2024. On a non-GAAP basis, which excludes stock-based compensation, non-cash interest expense and change in fair value of embedded derivatives, the third quarter of 2025 net income was $1.2 million or $0.13 per share, compared to a net loss of $20.2 million or $4.30 per share for the third quarter of 2024.

And finally, as of September 30, 2025, Verrica had aggregate cash and cash equivalents of $21.1 million. As Jayson mentioned earlier, we received a total of $18 million in cash milestone payments from Torii during 2025. In consideration of the $10 million minimum liquidity covenant in our debt facility, on a GAAP basis, our cash balance as of September 30, 2025, funds operations into the late fourth quarter.

We will continue to apply discretion in our uses of cash and explore opportunities to further bolster the strength of our balance sheet while still advancing our commercial and clinical development efforts.

I'll now turn the call back over to Jayson for closing remarks.

Thanks, John. Since my appointment as CEO, just over 1 year ago, I'm incredibly proud to report that Verrica has plotted a course to build a foundation in our commercial stage asset, YCANTH and further advance our pipeline of potential products for two of the largest unmet needs in dermatology. The Verrica team is always focused on delivering best-in-class therapies, and I can say that with confidence that we are fully executing on this strategy, and doing so utilizing a highly efficient operating model that prioritizes growth while prudently allocating capital resources to the growth. We will enter 2026 with significant accomplishments across all facets of our business in 2025 that I believe will lay the foundation for continued growth and success.

With that, we'd be happy to take any questions. Operator?

[Operator Instructions] We'll take our first question from Stacy Ku with TD Cowen.

And great to hear about the stepwise sales for expansion in YCANTH patient hub. But first, can you further speak to the YCANTH demand that you're seeing in Q4. And then second, maybe go into more detail on the competitive headwinds. What kind of detailing are you seeing? And what has been the prescriber feedback on Zelsuvmi and maybe the efficacy that you're seeing when it comes to the competitor.

Sure. Thanks, Stacy. Nice to talk to you again. In terms of Q4, as we indicated earlier, the momentum we saw rounding up September, we've seen continue into this quarter.

In terms of the competitive landscape, we continue to view the largest competitor to the treatment of molluscum as being watch and wait, and converting doctor behavior from simply watch and wait or referral to actual treatment. The Zelsuvmi launch is, in our view, a positive for the marketplace as there's now shared voice talking about the need to treat and the ability to treat molluscum, and we're still excited about the prospects of YCANTH as being a best-in-class option for those patients with most patients seeing their disease addressed in as few as one to two treatment.

Our next question comes from Dennis Ding with Jefferies.

I have two. Number one, just on the recent sales force expansion, I'm just curious when you expect productivity to fully ramp? And is 2026 sort of the right way to think about it? And then number two, on EU, I appreciate the guidance around filing in Q4 '26, but that's still in 12 months despite no additional clinical trials, et cetera, required. So just curious, why do you need the 12 months? And is that a situation where you could find a partner first before filing?

Sure. No problem. So in regards to your first question, sales productivity, yes, it typically takes a few months for any rep to be up to speed. So we would expect that many of our reps that we've hired recently to be hitting the ground running and being quite productive in the early part of next year.

In terms of the EU, there are some mechanical things that relate to filing in the EU that require sequential steps in time. One of those, in particular, is around securing the pediatric waiver, even though our drug is already been completed in pediatric patients, we have to go through the process of securing that waiver in the EU, and that adds a few months to the beginning of the time line. We're doing everything we can to expedite the process, but there are a number of sequential steps in Europe that require you to go through step 1 before you go to step 2, and we're continuing to do all those things actually right now.

And also in terms of your question about partnership. In terms of that general run rate, that would provide us to fund a commercial plan ourselves or work with a partner and give us sort of that time line to prepare for commercial launch. So we don't believe it's going to adversely impact the time line to commercial.

We will move next with Serge Belanger with Needham & Company.

This is John on for Serge today. So first on YCANTH Rx, I guess it's kind of getting ramped up in the next month or so. Curious what some of your feedback has been from KOLs that you've spoken to that kind of led you to instilling this mechanism and how it could start -- could kind of kick start further dispensed applicator growth moving forward? And then back on the expansion of the sales force, just curious if this -- the goal here is kind of an expansion in the breadth of your current call points or more so an increase in depth in prescribing from your current prescribers?

Sure. Thanks. So we're very excited about the YCANTH Rx. The feedback has been, in general, we've worked very hard over the past year to continue to simplify the process for clinicians and their patients. And we believe a single point of referral for writing these prescriptions to a non-dispensing pharmacy will make that continue to be easier for the clinicians. And make it easier for their patients. So there'll be one stop shop that has familiarity with the commercial payers, the contracts, the insurance for the patients and also to facilitate expeditious ways to get that fulfilled for the patients. And the general feedback we've seen so far is it's been very positive. But it's still at early stages, and we'll continue to explore and share details as that rolls out.

In terms of the breadth and call point, I would say it's still a bit of both. The -- we're seeing greater demand. And given that we're expanding into both the pediatric primary care, in addition to our core business in dermatology, this allows our reps to spend more time calling on the existing customers, but also to expand in some of their call points and high-value opportunities in the commercial space.

What we see, as I mentioned earlier, in terms of the largest competitor being doing nothing or watch and wait, this means there's lots of clinician targets out there for which there is no deciling of data, and we just need to engage with them through conferences, through trade shows and through social media and marketing efforts as well as simply knocking on the doors in the old-fashioned way. So we're excited about that opportunity. There's plenty of targets for our reps, and I think that we'll start to see that traction going into this year.

[Operator Instructions] We'll move next with Brian Kemp with Brookline Capital Markets.

Can you hear me all right?

A little bit.

Okay. A couple of questions for me, how should we think about seasonality impact in Q4 sales? And another one is on YCANTH Rx. Do we have any benchmark from a similar pharmacy model and a similar kind of indication? And what kind of KPI will you be tracking to measure on YCANTH Rx success in the first 6 to 12 months?

Can you please repeat the first part of the first question. It was static, I didn't hear it.

All right. So my first question was, how should we think about seasonality impact in Q4 sales?

Okay. No problem. So in terms of Q4, we would expect some of the traditional slowdown you could see in November, December based on vacations and holiday times and sort of the calendar in general. But we expect that, that momentum will continue into the first part of next year for prescriptions, especially as we believe that molluscum is often a secondary diagnosis for patients. And as we get into cold and flu season, we expect there'll be more doctor visits and could be more diagnosis of molluscum going forward.

In terms of the NDP, at this point, we're not giving any expectations or metrics at the moment, but you would expect that we would follow all the core metrics of time to fill, the number of scripts that are fulfilled, et cetera. And as we get more data on that, we'll continue to evolve and monitor that process. But those are the expectations of a typical NDP.

And this will conclude our Q&A session. I will now turn the call back to CEO, Jayson Rieger.

Thank you, operator. I'd like to thank all of you for joining us this morning, and we look forward to providing updates on our progress in 2026. Have a nice day.

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.