RBC Capital Slashes Verrica's Price Target After Third Rejection - What's Next?

  • Verrica Pharmaceuticals Inc VRCA was slapped with a third FDA rejection for YCANTH (VP-102) as general contract manufacturing organization challenges continue to plague the approval.
  • RBC Capital Markets has downgraded the stock to Sector Perform from Outperform and lowered the price target from $16 to $4.
  • The analysts note that the issues fall outside of the VP-102's purview. But as per a follow-up call with management, these recurrent offenses highlight the challenges at play with a manufacturing facility that continues to obstruct regulatory approval. 
  • VRCA is working with the FDA and Sterling to resolve the deficiency and potentially identify a new manufacturing partner for the resubmission.
  • RBC writes that VRCA plans to file a Type A meeting request by the end of the week and is working with Sterling to present multiple options to FDA to resolve deficiencies expeditiously.
  • Concurrently, the management is exploring alternative suppliers of VP-102's bulk solution and has identified one non-sterile facility with transfer underway.
  • As per the analysts, the management hinted at January 2023 for resubmission with a 6-month review period as a conservative estimate regarding the timeline. 
  • Price Action: VRCA shares are up 63% at $2.06 during the market session on the last check Wednesday.
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