WEST CHESTER, PA - Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) announced changes to its board of directors and a temporary non-compliance with Nasdaq's listing rules following the resignation of board member Craig Ballaron. The company, which specializes in pharmaceutical preparations, disclosed the updates in a recent SEC filing.
On Monday, Craig Ballaron stepped down from Verrica's board and all board committees, effective immediately. His departure has left the company without a majority of independent directors on its board, which is a requirement for continued listing on the Nasdaq exchange.
Following Ballaron's resignation, Diem Nguyen was appointed to the board's Audit Committee on Sunday. The company promptly notified Nasdaq of these events on Tuesday, which has led to Verrica temporarily not meeting the Nasdaq Listing Rule 5605(b)(1). This rule mandates that a majority of the board consist of Independent Directors as defined by Nasdaq Listing Rule 5605(a)(2).
In response, Nasdaq has granted Verrica a cure period to regain compliance. The company must meet the independence requirement by the earlier of its next annual stockholders meeting or October 2, 2025, or, if the annual meeting is held before March 31, 2025, then compliance must be demonstrated no later than March 31, 2025.
In other recent news, Verrica Pharmaceuticals has undergone significant operational changes. Following a series of leadership exits and sales cuts, the company's stock was downgraded from Buy to Hold by Needham. The firm pointed to the reduction in Verrica's sales force and the departure of key executives as potential barriers to the company's growth. In response to these challenges, Verrica has implemented a strategic restructuring plan, reducing operational costs by about 50% and decreasing sales territories from 80 to 35.
Verrica also reported a workforce reduction of 47 employees, expected to result in approximately $1.0 million in total expenses. Additionally, the company's Chief Financial Officer, Terence Kohler, announced his resignation, and two agreements were formalized with former Chief Commercial Officer, Joe Bonaccorso.
For the second quarter of 2024, Verrica showed strong growth with net product revenue reaching $4.9 million, primarily driven by increased demand for YCANTH. Total revenues for the quarter stood at $5.2 million, despite a GAAP net loss of $17.2 million.
RBC (TSX:RY) Capital revised its outlook on Verrica, reducing the stock's price target to $13 from $14, while maintaining an Outperform rating. Lastly, Verrica reported positive preliminary open-label phase II data from VP-315 for the treatment of basal cell carcinoma, with complete clearance in 51% of treated lesions. Further insights into VP-315's clinical profile are anticipated to be revealed in the first quarter of 2025.
InvestingPro Insights
As Verrica Pharmaceuticals navigates its board restructuring and Nasdaq compliance challenges, InvestingPro data provides additional context on the company's financial health. Despite analysts anticipating sales growth in the current year, with revenue growing by 61.61% in the last twelve months to $13.91 million, Verrica faces significant financial hurdles. The company's market capitalization stands at $55.47 million, reflecting recent stock price declines.
InvestingPro Tips highlight that Verrica is quickly burning through cash and suffers from weak gross profit margins, which aligns with the reported gross profit margin of -60.48%. This financial strain may add pressure as the company works to address its board composition. Additionally, analysts do not anticipate the company will be profitable this year, a factor that could influence investor sentiment during this transitional period.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Verrica Pharmaceuticals, providing deeper insights into the company's financial position and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.