Verrica Pharmaceuticals (VRCA 1.79%), a specialty dermatology company focused on skin disease treatments, released its earnings for the second quarter of fiscal 2025 on August 12, 2025. The quarter’s headline news was a large upside surprise in both profitability and revenue, with non-GAAP EPS of $0.25 and GAAP revenue of $12.7 million, both significantly exceeding analyst estimates. The company reported Non-GAAP earnings per share of $0.25, which was well above analyst estimates of a $0.90 loss (non-GAAP), and delivered GAAP revenue of $12.7 million -- Revenue (GAAP) of $12.7 million exceeded analyst estimates of $4.3 million by 197.7%. These results reflect strong commercial progress with YCANTH® (VP-102) and the impact of a major milestone payment from a strategic collaboration. The quarter also saw improved efficiency through ongoing expense control, leading to a substantially better bottom line (GAAP net income of $0.2 million vs. GAAP net loss of $17.2 million for Q2 2024).
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.25 | $(0.90) | $(3.11) | n.m. |
| Revenue (GAAP) | $12.7 million | $4.27 million | N/A | 143.8 % |
| Net Income (GAAP) | $0.2 million | $(17.2 million) | n.m. | |
| Selling, General and Administrative Expenses | $8.9 million | $16.5 million | (46.1 %) | |
| Research and Development Expenses | $1.8 million | $3.3 million | (44.2 %) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Verrica Pharmaceuticals specializes in developing and commercializing treatments for common dermatological conditions. Its lead product, YCANTH (VP-102), is approved for molluscum contagiosum, a skin disease affecting millions. The company's business model blends in-house development with external collaborations and licensing deals to expand its reach and accelerate pipeline growth.
The business has recently focused on the U.S. commercialization of YCANTH and developing new treatments like VP-315 for skin cancer. Success depends on driving YCANTH’s commercial uptake, progressing pipeline assets, and maintaining its product and patent exclusivities. Partnerships, such as a major collaboration with Torii Pharmaceutical in Japan, are critical for both non-dilutive funding and access to new markets.
Quarter in Detail: Major Developments and Results
The second quarter was defined by outperformance across key metrics, driven by several significant milestones. YCANTH generated $4.5 million in GAAP product revenue. This figure, while down slightly from the previous year due to one-off distributor stock-in effects then, now represents a more accurate view of demand. The company dispensed 13,434 YCANTH applicator units -- a 32.8% rise in dispensed applicator units compared to the previous quarter -- showing strong prescription momentum. Dispensed unit data offers a real-time indicator of drug adoption, with management highlighting this sequential unit growth as a positive sign for the commercial ramp.
Collaboration income surged, with license and milestone payments jumping to $8.2 million from just $0.3 million versus Q2 2024 (GAAP). Most of this was due to an $8.0 million milestone from Torii Pharmaceutical, related to the planned global Phase 3 trial of YCANTH for common warts, which was received in July 2025. Torii will cover most initial trial costs, highlighting the importance of partnerships for cash management and risk sharing. Additional milestones, like a $10 million payment tied to Japanese regulatory decisions, could provide further non-dilutive funding.
On the pipeline side, the company advanced development for VP-315, an oncolytic peptide-based injectable therapy aimed at basal cell carcinoma, the most common skin cancer. The company completed its end-of-Phase 2 meeting with the U.S. Food and Drug Administration, and signaled readiness to begin pivotal Phase 3 testing. Additional data submissions, including genetic and immune response results, are expected later in the year -- potentially shaping the roadmap for further clinical studies and future launches. Management continues to seek external partners to help progress the clinical pipeline while managing cash burn.
Expense management was a central theme for the quarter. Selling, general, and administrative expenses were $8.9 million for the quarter ended June 30, 2025, compared to $16.5 million in 2024, reflecting streamlined sales operations and reduced marketing and legal spending. Research and development expenses (GAAP) were $1.8 million for the quarter ended June 30, 2025, compared to $3.3 million in 2024, as the VP-315 trial wound down and medical affairs costs dropped. The company ended the quarter with $15.4 million in cash and cash equivalents, though management notes that ongoing clinical and commercial investment, combined with modest underlying commercial revenue, keeps a careful eye on liquidity.
Financial Outlook and Considerations
Verrica Pharmaceuticals did not provide specific financial guidance for upcoming quarters or the full year. Management expressed confidence in ongoing momentum, expected milestones, and future announcements for its development programs, but stopped short of quantifying future revenue or profit expectations.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
