Verrica seeks $86M IPO to take on compounded dermatology drug

Verrica Pharmaceuticals has filed to raise $86 million from public investors. The planned IPO will give Verrica the money it needs to take a treatment for viral skin infection molluscum through phase 3 and onto the market.

West Chester, Pennsylvania-based Verrica’s lead candidate is VP-102, a drug-device combination. The candidate consists of cantharidin—a drug already supplied by compounding pharmacies for the treatment of molluscum—and a device for applying the topical solution to warts. Verrica recently moved the candidate into two, 250-person phase 3 clinical trials.

The goal is to show the product is better than placebo at clearing the lesions of patients with molluscum, pick up an FDA approval, and corner a market currently fought over by compounded cantharidin and interventions including cryotherapy, curettage and laser surgery.

Successful execution of the strategy would likely see Verrica sell its product for a significantly higher price than is charged by compounding pharmacies. To justify the need for its product, Verrica points to the potential for compounded cantharidin to vary in purity and be manufactured outside of GMP environments. 

Verrica has also paired its formulation to an applicator to enable more precise delivery than what is possible with the cotton-tipped swabs used by dermatologists today. And it has incorporated an agent that shows which lesions have been treated with cantharidin. 

These features will come into play if Verrica wins approval and has to persuade payers and doctors to switch to the product, a task it plans to manage itself using a 50- to 60-person sales team. For now though, Verrica just has to show its candidate is safe and more effective than placebo.

Top-line data from the two phase 3 trials are due in the first half of next year. If the trials show VP-102 is better than placebo at clearing lesions after 84 days of treatment, Verrica plans to file for FDA approval before the end of 2019. The history of cantharidin use in the treatment of molluscum gives Verrica cause for confidence as it heads toward the readout. 

Verrica also has data from two small, uncontrolled phase 2 trials, one of which is ongoing. As of the last data cutoff, the trial that featured Verrica’s applicator reported an 84-day complete clearance rate of 63%. That compares favorably to the performance of the placebo arms of phase 3 trials of imiquimod, which chalked up clearance rates of 26% and 28% after 126 days.

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