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Today, ladies and gentlemen, and welcome to the Verrica Pharmaceuticals First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. 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, 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 an 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, 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 you'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 YcanthRx, our non-dispensing pharmacy, in the fourth quarter of 2025. YcanthRx 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. YcanthRx is still in the early stage of rollout, it 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 for the common wart program. As we announced in February, we also brought onboard 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 Authorisation 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 multi-billion-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 U.S. 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. 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 Mohs 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 of the 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 31st, 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. 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 YCANTH label into common warts would open in a new addressable patient population for which there are currently remains no FDA-approved therapies.

We believe each of these two opportunities represents 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?

Thank you. If you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star and one to ask a question. We'll take our first question from Stacy Ku with TD Cowen. Please go ahead. Your line is open.

Hey there. Thanks so much for taking our questions. Congratulations on the enrollment progress for your common warts program, and also on the quarter for YCANTH. First, consensus for the year seems to about be around the mid $20 million 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. 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 improve fulfillment around that timeframe? 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.

To just help us understand what you're seeing in terms of the additional step-wise 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. 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? Thanks so much.

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, you know, we're very excited about the progress we're making. You know, we saw, you know, a good ending to the Q1, you know, solid performance so far, you know, in April. We're excited about the prospects of the year. You know, it's premature to give guidance at this point, so we're gonna leave that, you know, number alone. What we're seeing right now, it gives us confidence on, you know, the growth that we're seeing and the performance over the course of the year.

With regards to seasonality, depending on, you know, where you look and who you ask, you know, there's all kinds of comments on when the seasonality would be. 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. A lot of it also comes down to the execution on the commercial side and the general, you know, adoption of YCANTH that we're starting to see. I'll let Chris comment a little more on your questions regarding the sales force and the sales focus, you know, in a moment.

One of those tools that's certainly gonna help, and we're starting to see some adoption, is the YcanthRx in our hub to help support, you know, the routing of scripts and importantly, fulfillment of scripts, facilitating it for the clinicians and the, 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 VP-315.

Thank you, Stacy, for the question. You know, as Jayson mentioned in the opening, I joined in March, and I've been very pleased with what I've found in the organization, but there are areas for optimization. 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. I think you're seeing in the momentum that we're building, slight tweaks to our deployment and our execution are yielding some momentum. I remain cautiously optimistic on that.

Again, we're totally reevaluating our, current targeting, to optimize that reach and frequency, which again gives us the opportunity to optimize 85% that we're already deployed against.

Thanks, Chris. 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. nodular and superficial, and to target similar populations that 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 neoadjuvant approach for complex and difficult-to-treat tumors. 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. You know, to round that out, you know, one of the feedback that we've generally seen from, you know, patients we've, you know, 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 their first line of therapy, to try and see if they can reduce the size or perhaps completely eliminate the lesion. That bodes well both for them as well as if, you know, proceeds down to Mohs or other procedures where that lesion is smaller and that certain procedure would be simpler, in terms of complication, potential scarring, you know, side effects, etc.

Super helpful. Thank you as always.

Thanks, Stacy.

Thank you. We will move next with Dennis Ding with Jefferies. Please go ahead.

Hello, this is Georgia Bank on the line for Dennis Ding. Thank you for taking our questions. Congratulations on the quarter. I guess another question on the VP-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? 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? A follow-up on the YcanthRx pharmacy model and how it's performing today and what proportion of scripts are routed through that pharmacy. What are you seeing in terms of differences in prescription to, you know, treatment conversions or reimbursement success rates and so on?

It's Noah here. I think in terms of the abscopal effect and the overall implications for 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. 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. We believe that this data, while early and exploratory, is extremely encouraging. In terms of validating that data, we plan, as we've mentioned, two 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 YcanthRx. The YcanthRx 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, you know, 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. So far, you know, we've been improving the program throughout the quarter since the launch, and it's been going well. We're not gonna comment right now on sort of percentage of our total business that's running through that.

The adoption is growing and It is proving to be a useful option for prescribers who are looking to use it.

Understood. Thank you.

Thank you. We will move next with Serge Belanger with Needham & Company. Please go ahead. Your line is open.

Hi, good afternoon. Thanks for taking the questions. 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. 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? Thanks.

Serge, thanks for the question. It's Chris Chapman. You know, I think the variation certainly that you see between Q4 and Q1. You know, Q4 historically is the most valuable month for manufacturers. You know, most of the patients have cleared their deductibles and people are refilling their prescriptions. Q1, you do have the deductible reset. I think we saw a little bit of that. As I mentioned in my prior comments, you know, I'm really encouraged at the momentum that we saw coming out of Q1 into the first month of Q2. There are a couple of reasons, and they all relate to the questions that have been asked here. One is YcanthRx, 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, you know, new to Verrica, is the opportunity to do some basic optimization on reach and frequency on your targets. I think those three areas. Again, I would anticipate you're continue to gonna see a synergistic effect of share of voice in the marketplace as well as those additional, you know, commercial levers that we're pulling. Expect to see, you know, more guidance as we get into Q3 and Q4. Right now, as I mentioned, cautiously optimistic, but impressed with the early results that we see.

Thanks, Chris. As I said, you know, Serge, to follow up, you know, what we've seen is this is a market dominated by, you know, a watch and wait mentality. Now that we have a viable option for treatment, and we believe, you know, YCANTH really addresses the unmet need by, you know, one to two 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. Awareness of the disease and that there's therapies out there, you know, bodes well for our program.

Thank you.

Thank you. We will move next with Ram Selvaraju with H.C. Wainwright. Please go ahead.

Thanks so much for taking our questions. 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? 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? Thank you.

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. 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.

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?

Yeah. I can speak to that. We're seeing what you would expect to see, that the dermatologists dominate the early adoption. You see that across classes. You also see it across competitors in this space. 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. You know, clearly, those are the two largest segments. 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.

Thank you.

Thank you. We will move next with Kemp Dolliver with Brookline Capital Markets. Please go ahead.

Great. Thank you. What do you see as the gating factors behind demand now? You know, if you look back over the history of the launch, you know, there was reimbursement, there was compounded product in a lot of offices and on the market. You know, 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?

I don't know if I would, if I would call access resolved. Certainly, we've achieved a steady state and a target access. Now we have the need to pull it through, you know, into the children accounts of the PBM. There are still geographic opportunities for us to pull it through. I think the real gating factor is what you kind of hear a theme in my answers here. It's appropriate targeting and segmentation. You know, of course, we need to get that early adoption, and we need to get trial. As you get into the pediatric segment, as Jayson mentioned, you know, the biggest competitor is watchful waiting. It's not that molluscum is not seen. It's with the prior lack of approved FDA-approved medications, it wasn't treated.

Now the gating factor to us is to drive trial. YCANTH works, and when we see physicians trial it, they rewrite it. For us, it's continuing to grow those prescribers concentrically out from the early adopters, from those deciles 10s, nines, eights, getting down into those lower decile physicians, which will take us in more into that pediatric segment. That becomes the real unique opportunity here in the next three to four quarters.

Yeah. Kemp, to add to that. Oh, go ahead, please.

I was just gonna say, 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, what do you mean by that?

Age. I'm sorry, age.

Oh, interesting.

In medical schools, they used to teach them not to worry about it when you look at the senior physicians because there were no options.

Yeah, not necessarily, I will tell you this, where we do see some differential is your physician extenders, those on the front lines in the trenches, your nurse practitioners, your PAs. They are very very open to treating. I guess in a way, you know, you might be able to extrapolate that to age. I think that's more of a relevant dynamic or the nurse extenders, or physician extenders. Yeah, I really don't see it as age. I will say, you know, dermatology as a whole is very familiar with cantharidin. Primary care, less 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, the opportunity remains as we expand out into pediatricians.

Kemp, to follow up.

Thank you.

Two more points to address with some of your comments. You know, we've spent the last year working on distribution and access and availability of the product for clinicians who want to treat. We just announced, you know, in our release, which we crossed over 100,000 applicator that have been dispensed since launch. You know, one of the things, you know, 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. That gives the later adopters and those who like to watch and take their time, you know, data to see that the safety profile, you know, is consistent with what we saw in the clinical studies. The efficacy is being consistent with what we've seen.

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

Thank you.

Thank you. We will move next with Dev Prasad with Lucid Capital Markets. Please go ahead.

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

Thanks for the question. 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. I think we're gonna continue. We have to drive both. Of course, when you do have a competitor come out, those earliest adopters are gonna 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 eight, to make sure that we, you know, we have that secure as we continue to expand, you know, into the rest of the market.

With regards to Europe, you know, 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. We need to go through the process, you know, for example, securing, you know, pediatric investigation waivers, rapporteur assignment, etc. We're going through that process now. As indicated, previously, you know, Verrica has retained global rights to YCANTH outside the United States, except for Japan, which is, you know, controlled by Torii. We have those rights, and, you know, we'll continue to explore that, you know, for a European partner to support both the commercialization process to address some of the earlier questions as well.

Great. Thank you.

Yep.

Thank you. 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. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. 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 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 III 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 have strengthened our financial position. In addition to the $18 million in non-dilutive 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 two 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 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 healthcare providers that their patients will be able to afford treatment with YCANTH. This broad access to YCANTH has impacted gross to net estimates over the past year. In the fourth quarter of 2025, we grew YCANTH's 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's revenue grew over 130% relative to 2024.

I am pleased to report that for the fourth consecutive quarter, YCANTH's inventories remain at normalized levels with YCANTH's applicator units shipped to distributors continuing to closely track underlying dispensed applicator unit demand. In Q4, YCANTH's 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's 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 51,196 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's 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 expanded coverage and have achieved coverage wins in 2025 and 2026. Furthermore, as we previously announced, during the fourth quarter, we launched YcanthRx, our new non-dispensing pharmacy that gives prescribers a single place to write all YCANTH prescriptions. In addition to existing paths to access YCANTH, with YcanthRx 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 towards a 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 EU, 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 that 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 repay 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 timelines and milestones for the common wart 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 SITC 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. Additional data regarding the histologic assessment in 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 three 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 could be demonstrated in pivotal phase III testing, we believe VP-315 has the potential to emerge as a non-surgical immunotherapy for 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 two phase III studies of approximately 100 subjects each in placebo-controlled studies with a 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 continue preparation activities for the phase III clinical program for VP-315, while we also explore non-dilutive 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, 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 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 decreased 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 non-sales 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 of 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 one for ten shares of our common stock.

As a result, every 10 shares of our issued and outstanding common stock were automatically combined into one share. The 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, non-cash 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, non-cash 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. 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 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 warts 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?

Thank you. If you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star and one to ask a question. We'll take our first question from Stacy Ku with TD Cowen. Please go ahead. Your line is open.

Hey, thanks so much for taking our questions and congrats on the progress. 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. Our second question is gonna 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. Of course, when it comes to sales force, maybe talk about the additions in 2026. When would you expect that to be reflected in sales? Finally, the question we have is on consensus for 2026.

We do appreciate your comments in Q1. If you're able to provide any high-level thoughts on we're seeing $30 million for 2026, we'd appreciate your views there. Thank you so much.

Thanks, Stacy. Appreciate the questions. I'll start first, you know, with the YcanthRx and I'll hand it over to Chris. You know, we're starting to see some uptake and traction in that, you know, program and have been gradually rolling it out, you know, the non-dispensing pharmacy option to our new prescribers, and we're seeing some early growth. Importantly, our goal is to give this as an option for prescribers over time, and it's an important option for them, you know, particularly as volume grows, to make it, you know, as easy a process as possible. I'll hand this over to Chris to comment on the initiatives that he's working on and, you know, the plans around the sales force.

Thank you for the question. You know, 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, the diagnosis is made. Because as you all know, this is an enormous category, and our largest competition is watchful waiting. As those prescriptions are written, and we're seeing that, as you heard, the highest, a 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.

Stacy, to your last comment, you know, appreciate you know, inquiring about, you know, sales consensus in 2026. You know, at this point, we're not gonna provide guidance yet. We're just, you know, as we indicated in the release, the momentum we've seen over the last sort of five or six weeks, you know, gives us some optimism. It's still, you know- Early in the quarter. We'll report as data is generated.

Okay. Thought we'd try anyways. Thanks very much.

I know. I appreciate it.

Thank you. We will move next to Dennis Ding with Jefferies. Please go ahead, your line is open.

Hi, this is Georgia Bank on for Dennis Ding. Thanks for taking our questions. I was wondering what kind of partnerships might you be looking into around expansion into the EU and the type of commercial partnerships that most appealing to you as you think about that? Then I have a follow-up.

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

Got it. That's helpful. Thank you. Any comments around what you're seeing on the ground in terms of competitive dynamics with the competitor ZELSUVMI?

Sure. Like I said, you know, their being on the market, you know, helps validate the demand and need for treatments of molluscum. As Chris just alluded to at this point, the largest competitor by far is watchful waiting because patients, you know, 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, you know, in the market, I think that will impact the opportunity for patients, you know, to get therapies they need, for caregivers to provide it.

We're still very confident in the value proposition of YCANTH and what it brings to those clinicians as we see, you know, efficacy often, you know, when as early as one or two treatments, in short office visits where the caregivers, you know, 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.

Got it. Thank you.

Thank you. We will move next to Serge Belanger with Needham & Company. Please go ahead. Your line is open.

Great, thanks. Good morning, everyone. This is John on for Serge today. Thanks for taking our questions. 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 this size team. I would imagine it's still predominantly focusing in pediatricians over dermatologists, but if you could provide any color on that'd be great. Then second, on insurance coverage, you mentioned some wins in 2025 and 2026. Just curious whether these wins are on the commercial side or Medicaid. 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. Yes, to your assumption around the pediatricians, we will continue to expand into the pediatrician space. 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. Dermatology remains a key focus. Of course, pediatric dermatology is very important and expanding reach into the pediatric community. 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. You know, I think David will make a comment sort of on your question regarding coverage.

Good morning, this is Dave. On coverage, I would say the coverage wins described generally in the press release, you know, 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. You know, this is sort of generic, but we always do look for opportunities there that make sense for the company. We've had some enhancements but in both periods on both channels.

Great. Thanks for the color.

Thank you. We will move next with Kemp Dolliver with Brookline Capital Markets. Please go ahead. Your line is open.

Great. Thank you. With regard to the sequential decline in applicators in the quarter, was that geographically concentrated or was it a widespread decline?

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

Okay, great. That's very helpful. Secondly, with VP-315 in the phase III program, what's the estimated cost or, you know, 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, you know, to get bids, as we indicated in the release. You know, our activities now are on the pre-planning activities, you know, CMC supply to make sure we're ready to initiate that trial, you know, provided, you know, funding, et cetera, later this year. Importantly, you know, the goal is to run that program as efficiently as possible. We received, you know, very favorable feedback from the FDA with regards to the design of that program in terms of the number of patients, the placebo control, the duration, and that the long-term follow-up will be, you know, sort of post approval as a requirement.

As we're working with the CROs to sort of design out that program and get costs, you know, we'll share that. As it comes from a normal, you know, development stage program, particularly oncology, we expect it'll be far less than those typical programs cost.

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

I would say that there are certainly a lot of those chains. You know, one of the hallmarks they have is while they do aggregate on operations and some efficiencies on, you know, the back-end, you know, aspects of business, they do allow the clinicians to make the best medical choice for treatment of their patients on a broad setting. 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. We do see writers in many of those private equity-backed, you know, systems currently, and we continue to expand our relationships with them.

Great. Thank you.

Yep.

Thank you. Our next question comes from Dev Prasad with Laidlaw Capital Markets. Please go ahead. Your line is open.

Hi. Thank you for taking our question. 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? The second is on common warts program. Can you walk us through the enrollment timeline for the two phase IIIs? When should we expect top-line data, and is there going to be stagger between U.S., Japan versus the global studies? Thank you.

Sure. In terms of February, you know, historically and sort of seasonality-wise, you know, Q1, you know, is a slower, you know, quarter, you know, particularly for office treatments, et cetera, as people's, you know, deductible season gets reset. The investments we made last year in our marketing, our field force, our sales styles, et cetera, as well as our team, seem to be playing, you know, out. We saw that growth in February. We wanted to share that with you all so you understand that we're seeing that observation. 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. You know, February is one of the shortest number of selling days in the year.

You know, there is still some seasonality of weather and access based on, you know, especially East Coast and Midwest on snow, et cetera. We saw access and demand to YCANTH, and, you know, we'll see what continues to trend over this year. We're certainly excited about that. With regards to common warts, you know, I'll just make a brief comment. We started the first trial. We're very, you know, 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, you know, sort of provide an update. As that trial is in collaboration with our partner, Torii, we want to, you know, share in that, you know, announcement with them. 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, you know, 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'll be sort of TBD determined at the end. Both companies will rely on the core bit of data from both those trials for the regulatory submissions.

Great. Thank you.

Yep.

Thank you. We will move next to Raghuram Selvaraju with H.C. Wainwright. Please go ahead. Your line is open.

Thanks so much for taking our questions. 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. 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 a potential for utilization of the product in patients who would otherwise be considered candidates for Mohs surgery. Thank you.

Sure. Thanks, Raghuram. Appreciate the question. In terms of the market size for common warts versus molluscum, you know, the prevalence data is estimated for molluscum of about 6 million, you know, patients in the United States. You know, common warts is estimated to be 20 million or more. Just that alone is about three times the market. Based on what we've seen currently is since launch of most patients, you're receiving about two applicators for the treatment of the molluscum. We expect common warts may also require perhaps one or two more applicators. That'll be determined based on the efficacy results we see in phase III. You know, common warts tend to be more persistent and difficult to clear. That's why, based on the data we disclosed in our phase II study.

You know, we saw about 50% of the common warts were cleared at the end of four treatments, and that we saw some maintenance of that clearance, you know, and persistence of that, you know, after 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 and 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 our prescribers, including, you know, 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. You know, 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. We've worked to make that as seamless as possible and expect that could be a more expedited launch process given the established base and the expansion of the label should common warts be added to it. With regards to our basal cell carcinoma program, that program is. Our goal is to change the way those lesions are treated. Historically, it has been Mohs surgery for predominant use for some types of superficial lesions. There are topicals.

You know, there are a number of therapies out there, but they all have limitations in terms of patient compliance, you know, and the impact of that on efficacy, on convenience or number of treatments or costs, or particularly, you know, 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 Mohs or dermatologists who don't, but still see a number of patients that are the primary diagnostician of the basal cell, we see potential uptick in both of those groups.

The Mohs surgeons recognize that the complexity of any procedure they have to do, you know, if we can dramatically reduce the size of the lesion, as we've indicated, we see, you know, greater than 80% reduction in overall lesion size. 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 those patients are followed. I think this really presents an opportunity for better outcomes for the Mohs surgeons, as if the lesion's smaller, the surgery will be simpler and or may not be avoided completely.

The product could be used both neoadjuvantly or as the primary therapeutic option for a wide range of patients. We'll continue to expand our market research and we'll share further updates on that going forward. 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.

Thank you.

Yes.

Thank you. 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.