Shares of Verrica Pharmaceuticals (NASDAQ:VRCA) skyrocketed on Friday thanks to positive late-stage clinical trial results. Specifically, Verrica — along with its development and commercialization partner Torii Pharmaceutical — reported positive top-line results from its Phase 3 trial of TO-208 for the treatment of molluscum contagiosum in Japan. Subsequently, VRCA stock popped dramatically higher on the lucrative implications.
According to the official press release, the researchers conducted the trial for TO-208 (referred to as VP-102 and marketed as YCANTH in the U.S.) in Japan. Further, it was a double-blind, randomized and parallel-group comparison study to evaluate the efficacy and safety of TO-208 compared to placebo. The framework involved one application every 21 days for up to four applications in patients with molluscum.
Notably, the top-line results demonstrated that the proportion of subjects achieving complete clearance of all treatable molluscum legions following the completion of the study was indeed statistically significant versus against placebo. Most importantly, patients tolerated the TO-208 therapeutic well.
“We are obviously excited by the positive results from this confirmatory Phase 3 trial for TO-208 for the treatment of molluscum in Japan, which underscores the consistent safety and efficacy of VP-102 and [Food and Drug Administration]-approved YCANTH,” stated in part Verrica CEO Ted White.
In March 2021, Verrica and Torii signed an exclusive licensing agreement for the development and commercialization of VP-102 in Japan.
Huge Upside Opportunity Bolstered VRCA Stock
Moving forward, Torii intends to submit a manufacturing and marketing application for the product in Japan, per the press release. Combined with the results of the aforementioned Phase 3 trial and other ongoing studies, Torii may enjoy greater success probabilities. At the same time, the credibility boost for Verrica should benefit VRCA stock.
One of the core catalysts that dramatically lifted sentiment for Verrica is its potential first-mover advantage. While molluscum contagiosum is a fairly common and highly contagious viral skin infection, few competitors specialize in the field. For example, Straits Research notes only four top players in the therapeutic market. Verrica lands on top and is the only U.S. publicly traded player.
Another catalyst for VRCA stock — which initially gained 75% earlier Friday before paring down the net return — centers on the total addressable market. Per Straits, the global molluscum treatment market is worth over $2 billion. Of that, the U.S. grabs the highest share, around 55% of the total market.
Even better for VRCA stock, the sector could expand at a compound annual growth rate (CAGR) of 10.3% from 2023 to 2031. Adding to this narrative, the market capitalization of Verrica at the time of writing only comes in at $242.3 million. Thus, the potential to establish a foothold in the treatment sector bodes very well for the pharma specialist.
Why It Matters
Interestingly, analysts were decisively bullish on VRCA stock, with four experts in November declaring shares a unanimous strong buy. Moreover, the average price target stands at $12.25. Even with today’s swing higher, VRCA tracks for a nearly 132% lift.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
