Verrica Pharmaceuticals (VRCA) closed 4.7% higher on Tuesday, August 10, after the company reported second-quarter 2021 results.
During the quarter, Verrica was focused on commercial preparations for the impending launch of Ycanth, which would treat molluscum (a viral skin infection). Verrica made several key hires in order to beef up its sales team during the quarter. These representatives will pitch to a select group of dermatologists and pediatricians who are expected to constitute 80-85% of the addressable market opportunity for molluscum. (See Verrica stock charts on TipRanks)
Unfortunately for Verrica, a request was made by the FDA for more information on the company’s training program and distribution model. This resulted in the extension of the Ycanth NDA (new drug application) review period from June 23 to September 23 of this year.
A Q4 launch for Ycanth is now the target, and Verrica is hopeful the drug can have other uses — particularly for external genital warts and common warts — after the drug receives FDA approval for the treatment of molluscum.
Needham analyst Serge Belanger evaluated the earnings results, outlook, and fundamentals of Verrica and made a few key observations.
As the company is on track to launch Ycanth early in the fourth quarter of 2021, Belanger expects operating expenses to significantly increase around that time. The cash balance of $90 million at the end of the second quarter is likely to be used to bear the launch expenses and provide an “operational runway” into the first quarter of 2022.
With this, Belanger maintained a Buy rating on Verrica with a price target of $22, suggesting a 98.9% upside potential.
Wall Street’s Take
Consensus among analysts for Verrica is a Strong Buy based on four Buys. The average Verrica price target of $21 implies 89.9% upside potential to current levels over the next 12 months.
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