Verrica Pharmaceuticals Inc.'s positive phase III data from its pivotal Cantharidin Application in Molluscum Patients-1 (CAMP-1) and CAMP-2 trials with lead candidate VP-102 at the American Academy of Dermatology meeting in Washington, followed encouraging top-line results made known in early January and put the firm in position to submit an NDA in the second half of this year.

"We're building a franchise around VP-102," CEO Ted White told BioWorld. A phase II trial with the same drug against common warts is expected to read out in June. The West Chester, Pa.-based firm will start a phase II test in external genital warts in April. Further back is VT-103, with a higher concentration of the same active ingredient against harder-to-treat plantar warts.

Topical VP-102 is a solution of 0.7 percent cantharidin, a substance derived from the blister beetle Cantharis vesicatoria. An inhibitor of protein phosphatases 1 and 2A, VP-102 is being used by Verrica to treat molluscum contagiosum (molluscum), a highly contagious viral skin infection that affects about 6 million people in the U.S., mainly children.

Molluscum is caused by a pox virus that produces multiple raised flesh-colored papules, or skin lesions, typically turning up as 10 to 30 lesions and sometimes more than 100. If approved, VP-102 would be the first treatment cleared by the FDA for the condition. The two randomized, double-blind, multicenter, placebo-controlled trials evaluated the efficacy of dermal application of VP-102 compared to placebo, enrolling a total of 528 subjects 2 and older with molluscum at 31 centers in the U.S. Subjects were treated once every 21 days for up to four applications. Complete clearance of molluscum lesions was evaluated by assessment of the number of lesions at study visits over 12 weeks.

Results from CAMP-1 and CAMP-2 showed 46 percent and 54 percent of subjects treated with VP-102, respectively, achieved complete clearance of all treatable molluscum lesions at the end of the trials (day 84) vs. 18 percent and 13 percent of subjects in the placebo groups (p<0.0001). By day 84, VP-102-treated subjects had a 69 percent and 83 percent mean reduction in the number of molluscum lesions, a pre-specified endpoint, in CAMP-1 and CAMP-2, respectively, compared to a 20 percent increase and a 19 percent reduction for subjects on placebo.

VP-102 was well-tolerated in both trials, with no serious adverse events (SAEs) reported. The most frequently reported AEs were application site reactions: well-known, reversible side effects related to cantharidin's mechanism of action. No treatment-related SAEs turned up in CAMP-1 or CAMP-2.

Cantharidin against molluscum and warts bears a long history. From the 1950s, it was considered the gold standard, but in 1962 the FDA insisted that all vendors provide studies to prove cantharidin worked. "At that time, for whatever reason, no manufacturer was willing to spend the money to do the efficacy studies," White said, and cantharidin has been hard to get ever since. Only about five compounding pharmacies in the U.S. are GMP-certified to dispense the drug, "and they can't do it at scale," he said. Some doctors import cantharidin illegally from Canada, where it's considered a natural product. But the drug is given using a wooden stick, "a very antiquated way of applying medication and, because this is a blistering agent, you have to be careful that you don't drip the solution on normal skin."

Enter the applicator devised by Verrica, which also dodges the precision problem as well as another cantharidin hurdle, insofar as VP-102 is not packaged in ether but in acetone, making it simpler to put on as well as more stable, White said. "We're able to close the glass ampule. If you try to seal a glass ampule inside of an applicator with ether, it would blow."

About a million patients are diagnosed each year with molluscum, which typically strikes between the ages of 2 and 14, though adults can be afflicted and were included in Verrica's trials. Lesions last on average 13 months, he said, but "in some cases, they can be unresolved for two to three years."

Surveyed payers like it

Others in the molluscum space include Morrisville, N.C.-based Novan Inc. with topical nitric oxide product candidate SB-206, which in December yielded phase II results that included the fourth cohort, SB-206 12 percent once-daily. Results showed a clear treatment effect on the complete clearance of all molluscum lesions at week 12 for that formulation. The safety and tolerability profiles for all treatment groups were favorable, with no SAEs. Preliminary top-line results from the first three cohorts, 4 percent, 8 percent and 12 percent twice-daily, were disclosed a month earlier. In all, Novan enrolled 256 patients: 190 given SB-206 and 66 given vehicle. The company said its planned end-of-phase II meeting this month will lay out a phase III development plan with the 12 percent version used as the active treatment arm. The company said it hopes to start that work during the first half of this year, with top-line results possible by the end of 2019 or early in 2020. Meanwhile, at the end of January, Novan said it was "continuing to pursue several active business development discussions around certain of its late-stage assets, including SB-206 for molluscum, and the broader dermatology platform."

White said Novan is "in the process of trying to raise money to conduct a phase III trial," and noted that Novan's – unlike Verrica's – will be a take-home product.

Others interested in molluscum include Leo Pharma Inc., of Madison, N.J., targeting a smaller, immunocompromised patient population, White said, and Veloce Biopharma Inc., of Ft. Lauderdale, Fla. "We don't know much about [Veloce]," he said. "They're a private company. On clinicaltrials.gov, they've announced that they completed a trial several months ago, but there have been no announcements, no noise."

Wainwright analyst Oren Livnat, in a report last month on Verrica, pointed out that "only painful and potentially scarring dermatologist interventions (e.g., cryotherapy or curettage) are effective [for molluscum], but not appealing in a pediatric setting, and off-label prescription options aren't effective or tolerable."

VP-102's formulation and pre-filled, single-use drug-device applicator "should have several advantages vs. compounded cantharidin," in his view, including: consistent concentration and stability; validated purity and GMP-compliant manufacturing; more efficient and precise administration via applicator and coloring agent; and a bittering agent to reduce the risk of highly toxic oral ingestion. (The coloring agent lets nurse practitioners and physicians' assistants applying the drug, who must often allow kids a break during the session, easily keep track of which lesions have been treated.)

"As important, commercially, VP-102 should be reimbursable at the average sales price plus a markup vs. physicians going out-of-pocket for compounded product," Livnat said. "We view FDA approval in the second half of 2020 as relatively low-risk given the highly statistically significant phase III data (conducted under an FDA special protocol assessment), and see the indication [as] ripe for promotion." He set a peak sales estimate at $400 million – a number that "assumes under 40 percent [of] procedure share and [an] under 15 percent share of total molluscum visits."

Verrica was founded in 2014 by Stanford University grad Matt Davidson who had a wart problem on his hands that would not yield to cryotherapy, curettage or salicylic acid, and who started working with cantharidin from Canada. The company, with 18 employees today, takes its name from Verruca vulgaris, the scientific term for the common wart.

White said the firm is "very active on the business development front," in search of more assets to build the portfolio, especially with pediatric new chemical entities that can be clinician-administered and will be readily reimbursed. The Verrica team boasts "a wealth of commercial experience," having launched more than 100 brands, and expects to establish a field force of about 50 sales reps for VP-102, along with a small institutional group of six to eight reps. At the end of the third quarter, the company had $97 million, enough to last through the commercial launch given the annual burn rate of about $5 million.

Approval of VP-102 is sought via the 505(b)(1) rather than the 505(b)(2) pathway, White said. "Payers look upon [the former] more favorably because you have no product to reference," and one preliminary round of research has been conducted with about 15 payers, based on positive findings in phase II trials. All "recognized that this is a high unmet need, that this is a contagious disease, and that there are no therapies," he said. "We started at price points of $100 and worked up in $100 increments. It wasn't until we got to that $500-600 range that payers decided to think about putting some type of restriction in. We'll do another round of pricing [research] in the second half of this year."

About 90 percent of those consulted said the drug would fall under a medical benefit not a pharmacy benefit, he said, which means quicker reimbursement.

Under its approval plan, Verrica should gain five and a half years of exclusivity, and the patent for the applicator will help in that regard. The company has asked for an expedited review, but White said he is "not so confident" about the FDA's agreement, even given the unmet need. Verrica went public last June, selling about 5.7 million shares at $15 each, including the full exercise of the underwriters' option to purchase 750,000 additional shares, for total gross proceeds of about $86.3 million. The company (NASDAQ:VRCA) closed Tuesday at $12.70, up 4 cents.