What happened

Shares of Verrica Pharmaceuticals (VRCA -1.76%), a clinical-stage biopharmaceutical company, are tumbling after the company disclosed a complete response letter for VP-102. Investors unhappy with the delay pushed the stock 23.4% lower this morning but the stock has recovered a little. As of 11:42 a.m. EDT on Tuesday, the stock was down 11.3% from yesterday's closing price.

So what 

Without any approved products to sell yet, Verrica Pharmaceuticals burned through $12.7 million in the second quarter alone. Investors were hoping sales of VP-102 would begin offsetting those losses. 

Investor looking at stocks on a computer with head in hands.

Image source: Getty Images.

Verrica is developing VP-102, an experimental formulation of cantharidin, to treat a contagious skin disease called molluscum contagiosum. Unfortunately, an estimated 6 million Americans with this disease will have to wait an unknown amount of time for treatment.

Instead of the approval investors were hoping for, the FDA sent Verrica Pharmaceuticals a CRL citing deficiencies at a facility managed by a contract manufacturer. According to the company, the issues cited were limited to general quality issues and not specific to the manufacturing of VP-102.

Now what

Also according to Verrica Pharmaceuticals, the contract manufacturer responsible expects a satisfactory resolution of the deficiencies within the next 30 business days. Unfortunately, getting FDA inspectors back to a manufacturing facility to sign off on improvements usually takes a lot longer.

Investors shouldn't expect a resubmission until early next year, but it could be much longer. Without many details from the FDA to work with, it's hard to know just how far back this CRL will set the VP-102 program.

Before the end of 2021, the company expects to submit another new drug application for LTX-315. This is an experimental cancer treatment that could be used to treat a variety of skin-related malignancies.