NOVN: R&D Update for Molluscum

By John Vandermosten, CFA

NASDAQ:NOVN

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On July 14, 2020, Verrica Pharmaceutical (VRCA) announced that it had received a Complete Response Letter (CRL) from the FDA for its VP-102 (YCANTH) new drug application (NDA), which was submitted last September. Verrica had completed Phase III CAMP-1 and CAMP-2 pivotal trials which demonstrated safety and efficacy of the therapy; however, the FDA identified two broad deficiencies which led to the CRL. Verrica’s VP-102 is a competitor to Novan’s (NASDAQ:NOVN) NITRICIL, nitric oxide therapy, also targeting molluscum contagiosum. A CRL is sent from the FDA when the agency requires further details before approval. A CRL can take up to a year or more to resolve, delaying the start of commercialization. In this case, the CRL requested additional information regarding certain aspects of VP-102’s CMC for the drug/device combination as well as Human Factors validation. According to the press release, the FDA did not identify any clinical deficiencies. Verrica’s next step will be to review the items presented in the CRL, then request a Type A meeting to chart a pathway forward. In the meantime, Novan is preparing for its B-SIMPLE4 trial, anticipated to enroll the first patient in September 2020 and readout by mid-2021. The issuance of a CRL for VP-102 means that it and NITRICIL could be marketed within months of one another.

The inclusion of Human Factors in the CRL suggests that the FDA would like to see Verrica alter the therapy to better meet the needs of the end user. Verrica provided additional details on its recent conference call. VP-102 is a physician-administered, topical cantharidin applied using a single-use precision applicator. The FDA identified potential safety issues regarding improper applicator use and also noted that the glass ampoule that contains the cantharidin may be difficult to open. It appears that additional warnings and a tool to break the ampoule were discussed. Changes to the product design may require modifications and the company will discuss these details in the anticipated Type A meeting, which is normally granted within 30 days of a request.

Verrica’s YCANTH (VP-102) Product Design1

We recently initiated on Novan, which is expected to launch its Phase III trial for SB206 in molluscum contagiosum in September. We think that the CRL will slow down Verrica by about a year as they schedule their meeting, conduct the required studies (if necessary) and then prepare to resubmit. The issues brought up by the FDA for YCANTH are not hurdles for SB206 as they relate to the applicator and ampoule, which are not part of SB206’s delivery system. Novan’s SB206 consists of a silicone-based polymer and alcohol gel which are held separate until ready for use and applied by hand. We discuss the details of SB206 and Novan’s program in our initiation. While YCANTH is delayed, our best guess is that Verrica will still be able to resubmit their NDA prior to Novan’s submission. While two competitors in the same indication may initially seem to limit the market potential for each individual product, we think that the availability of YCANTH will have a neutral to positive effect on SB206 sales, assuming it is approved. First, Verrica’s product is already used by physicians, but it is in a different form sourced from compounding pharmacies. Second, marketing efforts for new treatments for molluscum will increase awareness potentially expanding the demand for the treatment.

The CRL for YCANTH has delayed anticipated timelines for Verrica’s efforts to market the product. This will limit the head start that was originally anticipated for Verrica and may allow Novan to play a larger role defining the marketing message, assuming SB206 is approved following the upcoming Phase III trial.

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1. Verrica Company Overview June 2020

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