Hi, good morning. Welcome to the Jefferies Healthcare Conference. My name is Dennis Ding, Biotech and Spec Pharma Research Analyst here at Jefferies. I have the great pleasure of having Verrica Pharmaceuticals here with us. We have CEO, Jayson Rieger, and also CFO, John Kirby. Welcome. Thank you. Good morning. Before we go into Q&A, we'd love to hand it off to you, Jayson, in terms of just giving us an update in terms of what has happened so far, some of the progress you guys have made over the last 12 months, and then we'll go from there. Thank you. We appreciate you having us here today and for everyone here in the audience listening to this conversation. We're really excited about Verrica and what we've done over the last 12 months and what's to come in the future as we're establishing the foundation for our commercial asset, YCANTH, approved for molluscum contagiosum in pediatric and adult populations two and up. It's commercialized now. It's also recently been approved in Japan for commercialization and launch by our partner, Torii, who's also now Shionogi. We're very excited about what's happened on that commercial side, as we've morphed the commercial strategy to make it easier access for the clinicians and their patients. We streamlined that process by making the product available via the pharmacy, where pharmacists are delivering it via white glove delivery to the clinicians. They write it, the insurance is handled by the pharmacy, and it's delivered right to the doctor's office where a patient can go get treated. Often, as few as two treatments, we're seeing clinical satisfaction for the patient and the clinician for treatment of the children predominantly with molluscum. Often, that disease can take 12 months or longer to clear, and we're seeing that happen in as few as one or two treatments spaced three weeks apart. It really takes the burden off the parent, off the child, off the clinician, and really makes that easier, and we're very excited about that opportunity as well as the progress we've made in our pipeline, and I'm sure we'll talk more about that here. Yeah. Maybe give us a background in terms of molluscum, for those who are unfamiliar with it. Sure. Molluscum contagiosum is a pox-like virus. Think about chickenpox, but instead of lasting a week or two, it could last 12 months or longer on average. The interesting difference between molluscum and chickenpox is it incubates for two to three weeks under the skin. It's very contagious. You can transfer it from siblings, from clothing, from shared objects. Parents always struggle with their children having this disease, and the persistent lesions that could exist, and importantly, lead to scratching, scarring, or social challenges with the disease persisting. YCANTH offers a very convenient opportunity for the clinicians to treat the disease and the patients to remove that burden as quickly as possible. Okay. Before YCANTH and your competitor were approved, what was the standard of care in this population, and what was the problem that you guys were trying to solve? The standard of care historically was do nothing. It was a disease that would self-resolve, and parents would be told, "Go home, it'll go away." Often that's frustrating for a parent when the go home and it'll go away on its own is a year or longer. That's two seasons at the pool, two seasons at the beach, one or two Christmases, et cetera, that could be there for family photos and other things. That was the goal of what can we do to help. There were tons of homeopathic and other things you could see online, but often they're correlated with the clearance but not causative. The last thing you tried is what you associated with clearance of disease. People would say, "Use apple cider vinegar and duct tape." That's not really medicine per se, but it would work because you stimulated your immune system and caused a lot of irritation and tore the skin. YCANTH is a much more gentle, FDA-approved, GMP-quality product with clinical data to support how to use it, how to apply it, how to treat and manage the patient, and I think that's really a big difference. Now that there is a product, we can slowly educate pediatricians, dermatologists, primary care clinicians, that there's a product that's safe and efficacious with clinical data to support treatment of the disease and help these children. Okay. most recently on Q1, you guys reported a little over $4 million in revenue. Yes. You mentioned that initially, when you guys got approved and launched, there were some headwinds, and you guys made improvements to that business model, that selling model. Yes over the last six to 12 months. Now as you think about 2026 and the rest of the year, you sound sort of cautiously optimistic. Maybe talk a little bit about that optimism and what you're seeing on the ground and some of the leading indicators that's driving that optimism. Sure. Over the last year, we've spent a lot of time investing in the relationships with our clinicians, the dermatologists, the pediatricians, the thought leaders, and really understanding what makes it easiest for them to treat their patients. We invested in that time and energy. We also invested in our co-pay support program, where when a clinician writes to the pharmacy, they're not getting that call back from the parent, "Hey, it's too expensive. I can't get access. It's not covered." We make sure if that clinician wants to treat that patient with YCANTH, in any way possible, we try and make that possible for them to build those relationships and help those children get treated. As part of that, we transitioned our business from a predominantly buy and bill model where the clinicians would buy the product and do the insurance themselves, to also making it available in the pharmacy because it reduces burden and cost for the clinician and the time on their end to make that happen, and pharmacies are good at it. That seems to work a lot better for the business and the patients and the clinicians. Lastly, what we saw going that effort in transitioning our commercial team, repositioning the way that works and the personnel around the table all started it seems to be coming together this year. We started off a little slow in January with the weather. We are an HCP-administered product. Even if it's a nurse or a mid-level or a clinician doing the application, after all the weather we all experienced on the East Coast and offices canceling visits because doctors couldn't get to work either, they prioritized rescheduling the more severe diseases. Now, we started to see an uptick in recovery in the February and March timeframe. In our last Q1 results, we talked about that we saw that momentum continuing into April. We're cautiously optimistic based on that early momentum of this year, and we hope that can continue. We're working every day to make that happen. What about May? We're not saying anything about May yet, but thanks for trying. No, I would say there's publicly available data anyone can go look at in terms of the script volume, et cetera. I always caution it doesn't represent our entire business because a large part of our distribution model is not reported or captured through that. People are looking at that to sort of monitor general trends, and so people can monitor that and look for themselves on that front. Yeah. If you look at some of the prescription data, the third-party prescription data, it was relatively slow last year, but then over the last three, four, five months, you do see that big uptick. Yes. Right? Thank you for noticing. Yeah. Having said that, we do publish a weekly- Yes. Note about that. I totally appreciate what you're saying about these third-party platforms and some of the noise in there, but if we look at the monthly data, and then we add up the scripts, directionally is the data true to what you guys are seeing? Because you have 100% visibility on the product being dispensed. What I would say is, I think looking at a data set that's consistently reporting in the same type of way will give you an indication of general trends. I want to be cautious about commenting more broadly than that, but I think if you're looking at a consistent data set, it will give you some signs of things, and it sounds like you're optimistic. Yeah. We'll go with that. Okay. All right. Maybe talk a little bit about the feedback from physicians who have used it. Is this a product that they're excited about? Are they reaching for it first when they think about molluscum? What's kind of been the feedback? I would say that now that we've solved or simplified the access to the product for the clinicians, they're reaching for it more often because they know how to reach for it, and our inbound interest is increasing. It's not only our outbound reps calling on new clinicians or existing clinicians, it's the inbound interest via social media or reference from a former colleague that says, "Hey, I'm treating molluscum. I tried YCANTH, you should try it." That kind of stuff. We see those inbound leads as well. Those things continue to ramp and we see more of those, that gives us more confidence that we're overcoming the original challenges, and we're starting to get more adoption and more convenience for the product. We also announced in our Q1 release that we'd exceeded 100,000 dispensed applicator units since launch. That is a milestone that gives people start getting more comfortable. It's a childhood disease. People tend to be more cautious with new therapies for children. As you start seeing adverse event profiles and efficacy consistent or in some cases better than you saw in the clinical studies, people get more comfortable. You get beyond the early adopters, and you get sort of starting to get mass expansion. We're trying to focus both on new writers but also expanded use by existing writers and expansion within the same practice. Often we might have an early adopter of one clinician in a practice of a dozen or more practitioners, and then as they get more comfortable, others in the office will start to use or try the product. I think that's really exciting about the growth of potential. How many prescribers have used YCANTH so far, and how has that number evolved over the last 12 months? We've not disclosed that number. I think we've left it at the DAU level for now. Part of that is because of the way we distribute the product, if we had a buy and bill customer that buys the product, it could be multiple clinicians within an office that use it. We sort of track that, and at some point, we may share that data when there's a way to share it where you're going to compare apples to apples, because my experience is I'll give you a number, and then you'll extrapolate it and continue to track it, and we want to make sure the data set's consistent. That's why we established this distributor applicator unit model so people would know transparently what are we shipping out and what's getting pulled through and try and correlate those two. Okay. I guess, can you comment at all around is there an upwards trend in terms of prescribers? There's certainly more writers now than when we started. Yeah. There's no question about that. About three months ago. I think we're continuing to see new writers to adopt. Our goal is besides new writers, which is critically important for long-term growth, it's continued writer and expanded writing by the same clinician. We're looking for trends in both of those. Okay. I think you probably have some of that underlying the business across for the growth that you're seeing. Okay. Have you commented on average how many times a single prescriber used YCANTH? Can you stratify it by people who've prescribed it a lot versus those who have not and kind of analyze that data and see what are some of the factors that are driving increased depth of usage? As we announced earlier this year, we brought in a new Chief of Commercial, and he's been looking at that very carefully to try and understand better where is the growth opportunity, both on targeting for our sales force as well as our existing customer base. There's going to be data on both those sides. Also, if you see a trend in a clinician who wrote a lot and then writes less, what happens? I think that's all part of the data we monitor very carefully, and we've not disclosed it publicly, but we are certainly tracking that internally very carefully as we think about the way to grow the business. At what point would you consider disclosing that to the public, as that would help investors get more confident around the trajectory? What I would say is last year, we transitioned a lot of activities in the field force, the commercial leadership, the strategy, distribution, et cetera. We're only entering really our second year now of data and commercialization for this current team. As we get through this year and we sort of understand better how we're predicting internally in our models and our metrics, I think that'll give us a better comfort as to when we might be able to do that. We want to have confidence that our prediction models and what our anticipations are more accurate, and then we'll share that. We don't want to share information that we're not confident on in terms of the way you would extrapolate. Right now, our focus is every day is execution, execution, and I think we're going to hopefully continue to see that play out in the data. Okay. Remind me, around your commercial sales force, how big is it and have there been any changes? I suppose, how many doctors are they focused on, their target prescriber base? Our sales force is now in the low to mid-40s range. We've announced that we're probably likely to expand that to about 50 range this year. The call points, I think we focus on volume but also quality. We'd rather spend that extra time in that office training, educating, facilitating, and supporting that office. There could be multiple practitioners in that office. We want to do that because as we think about our business model, molluscum is a solid foundation business with significant potential. You and your colleagues all have meaningful multi-hundred million dollar potential addressable market from molluscum alone in the U.S. We also have a Common Warts Program that I'm sure we'll talk about in a minute. Those relationships will be the same general clinicians, same applicators, same access to the product. As we invest in those relationships and make sure there's confidence in the product, the delivery, and the execution, that's what's really important in the long run for the larger growth of the business. Can you comment a little bit about the competitor in the market, and just what is your view on their product? Be nice, but- I'm always nice. Just how are you framing your messaging to doctors, given that there is another competitor out there that's pushing their product, they have their own message, and I'm just curious what the dynamic is there? The most well-entrenched competitor in this market is the historical mindset of there's nothing we can do for this disease, and educating a change in now there's something you can do. Collectively, we are both in the smaller early innings of adoption across both companies, but now there's shared voice between their sales force, our sales force. You're going to be approaching 100 or more representatives. You've got multiple conferences, educational programs, KOL engagements on this is a disease that needs to be treated. At the end of the day, it'll be a clinician and patient-driven decision on terms of which product is right for that child for their circumstance, et cetera. We really believe in the attributes of YCANTH, both on the efficacy and safety and the convenience. I always say, my young children at home, do I want something else to do at bedtime? Dinner, bath, and chase my kid around trying to put a drug on them every day for a few months yet to get rid of a disease, or would I rather go to the doctor's office for a 10 or 15-minute visit twice and it's probably done? I think there will be people in both camps, but when we have those kind of informal surveys, a lot of folks say, "I don't want to be caregiver and medical professional and all that and burden my family. I'm willing to do that." We're trying to make that access available to do that. Likewise, our product, the clinician is compensated for their time. Rather than the you take it home, you're doing it yourself, you got to call back, I've got a complaint, I've got a problem, et cetera. The clinicians do that, especially pediatric and derms, but it's harder to get access. At least when they go into the office, they get compensated for their time. They treat the lesions. Importantly, clinicians know what molluscum are. Parents say, "Oh, is this a mole? Is it atopic dermatitis?" They don't know. Putting the wrong drug on the wrong lesions is not always beneficial. Ultimately, right now, we're happy that there's a competitor there. It adds voice, and we believe in the confidence that molluscum should be treated and that YCANTH is the gold standard potential for that as well. That's very diplomatic. Maybe remind us around the efficacy, because you did bring that up, right, with YCANTH. How is it better than the competitor? Also, just how it is administered. It feels like both products are very different, and you mentioned yours is very convenient. Just clarify that a little bit so everybody is aware. Sure. Absolutely. We have a proprietary drug device combination product where the drug is contained within a glass ampoule inside an applicator. You can think about a superglue applicator, very high precision tip, because less is more, and that's why we want the clinicians to use it. The smallest drop on the lesions is enough to cause the desired pharmacodynamic effect, eradicate the lesion, and stimulate the immune system to do that. The product is room temperature stable for up to two years. You can order it, patient can come back in three weeks later and get their second treatment when the pharmacy delivers to the clinician. That product is very different than cold chain storage that my competitor needs to typically go through. It's a much easier process to do. It takes about 10 or 15 minutes to make it happen. Okay. Maybe last question on YCANTH before we move on to the pipeline. Sure. You guys did $4.3 million in Q1, right? Yep. Should we be expecting sequential revenue growth through the year for YCANTH? I'm not going to comment on that. I think our goal in running this business is to continue to grow the business. Okay. We're going to work every day and execute on that, and we will see how this plays out. That's what we're working towards every day, and we shared our cautious early optimism with what we saw in April last month. Okay. Pipeline. Yes. You have the Common Warts Program that's in phase III, and then you also have the basal cell carcinoma program. Maybe we can start with the Common Warts Program. Just where are we on that? Common Warts Program, we're very excited about. We have our partner, Shionogi/Torii, that they launched in molluscum already, and we are running a global phase III program with them. Two trials, approximately 300 patients each. First trial is U.S only, second trial will be U.S and Japan to satisfy regulatory requirements in both countries. As we announced a few weeks ago, we achieved about 50% enrollment in our target number of patients for that study, the first study. The second one, we anticipate starting sometime mid this year. We reported Phase II data on that program. Historically, we published that data. We're about 50% lesion eradication of all the common warts in a patient, what was occurred within four treatments, and that about an 80% persistence of that outwards towards weeks after the treatment. Because common warts, the big challenge is both eradication and then recurrence, we're trying to address both of those in our study design. In terms of VP-315, VP-315 for BCC, we have recently published additional data on that program. It is a injectable for basal cell carcinoma. Our first phase II study studied lesions two centimeters and less. It's simple, two injections into the lesion day one and day two. Patients come back for observation week 12 to see what happened. In our clinical data, we saw about 50% of those patients were completely histologically cleared. At the end of the study, we actually excised the lesion and the area around it to make sure what happened. The remaining patients who were not 100% clear were about 2/3 smaller or a little greater. On average, about 80%-85% reduction in lesion volume for all these patients for BCC. Why is that important? If you're going in for surgery and you have to get something cut out, if you have to cut it out and it's much smaller, clearly scar will be better, surgical procedure will be better, healing time will be better. Importantly in this product, it's also we've observed and reported abscopal effect because the mechanism is dual purpose. It destroys the lesion, but also stimulates your immune system to identify the antigens of your basal cell and seek it out. As you think about immunotherapy, we've all talked about that in oncology for a long time, most immunotherapies target patients with advanced disease, often on chemotherapy, where they've had a suppressed immune system. In this case, in BCC, most of those patients tend to be immunocompetent. They have robust immune system. Our drug seems to down-regulate the immunosuppression that exists in the basal cell and allow your immune system to identify and react to it in a robust way and in a safe way. We saw excellent efficacy and safety in our phase II data, and we've had alignment with the FDA. We've met with them, have a clear path for what phase III will look like, which is two trials, about 100 patients each against placebo. The primary endpoint will be week 12 of complete clearance with all the long-term follow-up to be a post-approval commitment. Maybe just taking it back to Common Warts for a second, I think it's important to note that Torii is funding the first $40 million for that trial, which represents 90% of the total estimated study budget. It's on their dime, so to speak, out of the gate, and we expect that that'll be primarily repaid through future milestones and royalties in future periods. Okay. For the Common Warts Program, when do you expect phase III to read out? We haven't announced that yet. At this point, we want to get the second study started, and then when we see the momentum and sort of recruitment rate on that, we'll give an update on that program as well. Okay. Just for reference, the primary endpoint is day 147, or day 84 for the primary readout of clearance and then day 147 for follow-up for those patients to observe if there's any recurrence in the lesions. Okay. In terms of data disclosure, once the phase III is done and you get all the endpoints and you get the follow-up, you would have to disclose that data. Absolutely. You would not wait for both, right? We would absolutely disclose it. I would say it depends on the timing of whether the second trial catches up in a meaningful way. There will be adequate time in between to sort of share one versus both. I think it'll be sort of we'll see as it gets closer. When did you guys start the phase III, the first one? The phase III, we had the first patient enrolled at the end of last year. Okay. It began, we'll call it January 1 or end of December. Okay. Within six months, you got 50% enrollment. Correct. Usually the enrollment curve kind of accelerates towards the back half, so maybe. Have you guided to completing enrollment by the end of the year? We have not. I was going to say, we got about halfway done the first half of the year. Yeah. Let's keep the pressure on my clinical team. Okay. I'll remind them that you said it should get easier, not harder. Yeah. Okay, assuming maybe second half you guys. Yeah finish enrollment, the primary endpoint is day four. Day 84 day 84. Yeah. With the additional data collection, because you're not going to unblind it until you have the rest of the data. Okay to see if you have recurrence at day 147. Okay, you need day 84 and then 170. 147. 147. 147. Five months Five months. Right. Once you get the last patient in by, let's say, end of the year, five months endpoint, you could get to mid 2027. Should that kind of be like what we. That's a reasonable back of the envelope kind of approach to assume for things to think about. Yeah. Okay. What do you consider to be a positive data set in that phase III? Is it just hitting statistical significance, or is there some sort of threshold on efficacy that you need to meet for it to be clinically meaningful? The primary endpoint is statistical significance. Obviously, if we can achieve levels close to what we saw in phase II, that would clearly generate a lot of excitement. We'll see if we can do that, but we hit about 50% complete clearance with just four treatments in our phase II study. This is patients that have one or more warts. That threshold is if you had four warts, are all four gone within day 84 versus only one of them. We're going to monitor for each wart, but I think that's the goal is to do that. That's really important as we think about the immune engagement that could occur, as well as the destruction of the lesion with this therapy. It's placebo-controlled. It's placebo-controlled, correct. Okay. We've made an estimate on a power assumption for what the placebo would be, and we obviously have some data on our product for phase II. Importantly, like John just alluded to, Torii committing that kind of capital is a sort of conviction they have towards the value of this program. We retain global rights outside of Japan. For the use of all that data in the U.S., as well as the rest of the world. For advancing common warts in addition to molluscum. The two phase IIIs, they are identical. Other than the Japanese patients in the. Yes phase II trial, and the subtleties associated with that. Okay. Maybe you guys get approved in back half of 2028 if the second phase III does catch up on enrollment or maybe in 2029. Once you get approved, have you thought about the positioning of your product and as well as pricing? It might be a little early, just curious what are some of your initial thoughts there? We've not had detailed conversations on pricing and what that might look like with the payers, et cetera. Importantly, it's the same product, it's the same configuration. It's just a much larger market to address and the same clinician. I think there could be a simplified adoption. It's not a new launch. It's not a brand new call points. There will be some overlap, or probably majority overlap with our existing HCPs, and I think that's the question we hear a lot is interest in that program, interest in participating in the clinical study, and interest in being able to use it for Common Warts. Okay. Your current HCP target, they're primarily pediatricians, or? Pediatricians, dermatologists, as well as primary care. Okay high decile targets in all those categories. Okay. You see a lot of early adopters will be the dermatologists with the pediatricians and primary care following. That tends to be the trend in adoption. Okay. Now that we are achieving some critical mass in dispensed applicator units and data set, I think that those doors open a little easier. Would you consider expanding your sales force further to support that launch? As we think about the way we're focusing on our sales force, they focus on a territory. As we've had both growth in the number of writers and the repeat writers in those areas, we've either split territories in the past because there's just more business than can be handled. We've added reps in white space where we didn't have a rep. We continue to think about territories based on execution of our field force, the opportunities that present themselves, and because there's going to be a meaningful overlap in the type of clinicians, we should get a lot of synergy in that front. I think from a commercialization perspective, that's very helpful. Likewise, because most of the dermatologists that could also be seeing these patients could be also available for VP-315 on basal cell. Would you consider partnering with somebody to co-commercialize in the U.S.? Right now, I understand that the market's really big. Guys have 50 reps. Especially as you think about going into common warts, it seems like a very big PCP-driven sort of market in my view. I'm just curious, have you thought about that? Is that something that you're thinking about over the next few years? I would say in general, our policy is not to talk about business development per se, but I think our goal is to make the drug as available as possible, whether it's within our control or with a partner in the U.S. or external. I think that's one of the goals we have for this program is to make it available because we believe these products bring a lot of value to clinicians and patients, and we want to make sure it's available as possible. The infrastructure we're building commercially, we believe will be able to really tackle this business in a meaningful way. Okay. Maybe remind us your cash position and runway. Excuse me. At the end of the first quarter, we had $20.6 million. We indicated in our disclosures that that would last us into the first quarter of 2027. Okay. So. What are the assumptions that underpin that runway? You guys are launching YCANTH, but you guys are also I appreciate that for R&D that the common warts program, Torii's paying for 90% of it, right? As you continue to burn cash, I'm just trying to think out loud in terms of how to back into the revenue assumptions that would get to Q1 of 2027. Can you comment a little bit on that? Sure, I can briefly comment. There's not an exponential increase expected in our cost base. To your point, for the cash to last that long, there would be some uplift in sales. Okay. You can back into it. Okay. With that situation, appreciating that it does get you to that point, does that impact your decision to find a partner just to inject some non-dilutive financing to kind of continue supporting the launch and the pipeline? I would say that we would explore all alternatives, and we're confident that we'll be sitting here talking to you next year. Right. In no particular order, we have access to the public markets. We're debt-free, given that we settled all of our debt. Yeah in the fourth quarter of last year. Certainly non-dilutive partnering activities could be explored. All right. Okay. Well, thank you guys so much. I think that's all the time that we have, and have a great conference. Really appreciate your time. Thank you so much. Thank you. Thank you everyone for listening. Thank you. Thank you.