Verrica Amends Torii Pact: $8M Upfront, $10M Approval Milestone, Royalties Added

Rhea-AI Filing Summary

Verrica Pharmaceuticals Inc. (VRCA) filed an 8-K to disclose a Second Amendment to its March 2021 Collaboration and License Agreement with Torii Pharmaceutical Co., Ltd.

• Up-front cash: Torii will pay Verrica an $8.0 million milestone tied to the ongoing global Phase 3 trial of YCANTH (VP-102) for common warts.
• Cost-sharing: The parties will continue to split trial expenses 50/50. Torii will advance the first $40.0 million of out-of-pocket costs; Verrica will subsequently reimburse Torii for half. If expenses exceed $40 million, Verrica will fund the overage (up to a stated cap) and Torii will reimburse 50% of that excess.
• Additional milestone: Torii agreed to a separate $10.0 million cash payment upon Japanese approval of YCANTH for molluscum contagiosum—paid in cash rather than as a trial-cost offset.
• Manufacturing rights: A technology-transfer program will allow Torii to manufacture the product. Until partial transfer is complete, Torii will buy commercial supply from Verrica at transfer pricing; thereafter Verrica will receive quarterly royalties in the high-single- to low-double-digit range.
• All other material terms of the original agreement remain unchanged.

The amendment improves Verrica’s near-term liquidity via non-dilutive funding, caps some development risk, and may accelerate commercial scale-up in Japan. A press release announcing the amendment (Exhibit 99.1) was issued on July 1, 2025.

Positive

• $8 million immediate milestone payment strengthens short-term liquidity.
• Torii funds the first $40 million of Phase 3 trial costs, reducing cash burn.
• Additional $10 million cash milestone upon Japanese approval of YCANTH.
• High-single- to low-double-digit royalty stream established for future Japanese sales.
• Technology transfer accelerates regional manufacturing and commercialization.

Negative

• Verrica must reimburse 50% of Torii’s trial expenditures, impacting future cash outflows.
• Company is responsible for trial costs above $40 million (subject to cap), exposing it to budget overruns.
• Dependence on regulatory success in Japan introduces timing and approval risk.

Insights

Pharmaceutical Industry Analyst

TL;DR: $18 million in new cash plus cost sharing and future royalties materially strengthen VRCA’s funding and Japan strategy.

The amended Torii deal injects an immediate $8 million and establishes a clear $10 million regulatory milestone, giving Verrica $18 million of non-dilutive capital tied to YCANTH’s clinical and regulatory progress. Torii’s advancement of the first $40 million of Phase 3 expenses substantially eases VRCA’s cash burn and signals Torii’s confidence in the asset. Importantly, moving the Japan approval payment from a cost offset to direct cash improves VRCA’s liquidity profile when the product nears commercialization. The technology-transfer framework should speed regional manufacturing readiness and generate high-single- to low-double-digit royalties—potentially attractive margin accretion once Japanese sales commence. While Verrica must still reimburse 50% of trial costs and cover any overage beyond $40 million, the agreement limits capital risk and avoids equity dilution. Overall impact: positive for balance-sheet flexibility and partner validation.

Corporate Finance Analyst

TL;DR: Amendment provides non-dilutive funding and structured cost sharing; modest repayment obligations keep leverage contained.

Near-term cash of $8 million and a future $10 million milestone augment VRCA’s runway without tapping equity markets—a welcome outcome given small-cap biotech valuations. The front-loaded $40 million funding commitment from Torii transfers working-capital burden away from VRCA, smoothing cash flows during the expensive Phase 3 period. Repayment is limited to 50% of Torii’s outlay, effectively creating an interest-free advance that halves VRCA’s trial exposure. Excess-cost language introduces some risk, but a ‘specified maximum’ safeguards against open-ended liabilities. Post-technology-transfer royalty tiers convert Japanese sales into recurring, margin-friendly revenue. On balance, the structure improves liquidity and reduces dilution risk, warranting a positive impact assessment.

8-K Event Classification

3 items: 1.01, 7.01, 9.01

3 items

Item 1.01 Entry into a Material Definitive Agreement Business

The company signed a significant contract such as a merger agreement, credit facility, or major partnership.

Item 7.01 Regulation FD Disclosure Disclosure

Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, and exhibit attachments filed with this report.

Understanding 8-K Material Events →

false 0001660334 0001660334 2025-06-27 2025-06-27

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 27, 2025

Verrica Pharmaceuticals Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		001-38529		46-3137900
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

44 West Gay Street, Suite 400 West Chester, PA		19380
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (484) 453-3300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock		VRCA		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

On June 27, 2025 (the “Amendment Effective Date”), Verrica Pharmaceuticals Inc. (the “Company”) entered into the second amendment (the “Second Amendment”) to the Collaboration and License Agreement (the “Collaboration and License Agreement”) dated March 17, 2021 and previously amended on May 14, 2024, by and between the Company and Torii Pharmaceutical Co., Ltd. (“Torii” and together with the Company, the “Parties”).

Pursuant to the Second Amendment, Torii will provide a milestone payment of $8.0 million in connection with the global Phase 3 clinical trial of YCANTH (VP-102) for the treatment of common warts (the “Trial”). The Parties will continue to equally split the cost of the Trial, with Torii paying the first $40.0 million of out-of-pocket costs when due, and the Company repaying Torii half of such costs. To the extent that the cost of the Trial exceeds $40.0 million, the Company will pay such excess costs, up to a specified maximum amount, and Torii will repay the Company half of such costs. In addition, Torii has agreed to pay the Company a $10.0 million milestone payment if YCANTH is approved for molluscum contagiosum in Japan in cash, rather than as an offset to trial costs as originally contemplated under the Collaboration and License Agreement.

Promptly after the Second Amendment Effective Date, the Parties shall begin a technology transfer to Torii in accordance with a mutually agreed transfer plan to enable Torii to manufacture the Product (as defined in the Collaboration and License Agreement). Prior to the establishment of a partial technology transfer, Torii will make transfer price payments to the Company for commercial supply of the Product in a substantially similar manner to the existing terms of the Collaboration and License Agreement. After transfer of a portion of the manufacturing process to Torii, Torii shall make quarterly royalty payments to the Company at a rate ranging from the high single digits to the low double digits. Except as set forth in the Second Amendment, the remaining material terms of the Collaboration and License Agreement remained unchanged.

The foregoing is a summary description of certain terms of the Second Amendment, is not complete and is qualified in its entirety by reference to the text of the Second Amendment, which the Company expects to file as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 30, 2025.

Item 7.01 Regulation FD Disclosure.

On July 1, 2025, the Company issued a press release announcing the Second Amendment. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

In accordance with General Instruction B.2. of Form 8-K, the information in this Item 7.01, and Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any of the Registrant’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof, regardless of any incorporation language in such a filing, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number		Exhibit Description
99.1		Press Release of Verrica Pharmaceuticals Inc., dated July 1, 2025
104		Cover Page Interactive Data File (formatted as inline XBRL).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

						Verrica Pharmaceuticals Inc.
Date: July 1, 2025						/s/ John J. Kirby
						John J. Kirby
						Interim Chief Financial Officer

FAQ

What did Verrica Pharmaceuticals (VRCA) announce in the June 27, 2025 8-K?

VRCA disclosed a Second Amendment to its Torii collaboration adding $18 million in milestones, revised cost sharing, and new royalty terms.

How much upfront cash will Verrica receive from Torii under the amendment?

Torii will pay Verrica an $8.0 million milestone tied to the global Phase 3 trial of YCANTH.

Who pays for the Phase 3 common-warts trial of YCANTH?

Torii advances the first $40 million of out-of-pocket costs; Verrica reimburses half. Costs beyond $40 million are funded by Verrica (up to a cap) and 50% reimbursed by Torii.

What milestone is linked to Japanese approval of YCANTH for molluscum contagiosum?

Torii will pay Verrica a $10.0 million cash milestone upon approval in Japan.

Will Verrica earn royalties from Torii sales in Japan?

Yes, after partial technology transfer, Torii will pay Verrica quarterly royalties ranging from high-single- to low-double-digit percentages.

Does the amendment change other terms of the 2021 collaboration?

No, all other material provisions remain unchanged.