Company: VRCA
Filing Date: 2025-03-11
Form Type: 10-K
Source: 0000950170-25-037172
Chunk: 224

Company: Verrica Pharmaceuticals Inc.
Filing Date: 2025-03-11
Form: 10-K
Item: Item 7
Chunk 224
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    2,580

    (635
    )

    Other unallocated expenses

    4,285

    5,702

    (1,417
    )

    Research and development expense
     
    $
    11,840

    $
    20,295

    $
    (8,455
    )

Loss on Disposal of Assets

For the year ended December 31, 2024 and 2023, we recognized a $0.1 million and $2.5 million loss on disposal of assets. The impairment loss incurred during the period ended December 31, 2023 was related to disposal of the assembly and packaging line due to the high cost to upgrade the line as a result of changes in product assembly.

Interest Income

Interest income was $1.4 million and $2.7 million for the years ended December 31, 2024 and 2023, respectively. The decrease of $1.3 million was primarily due to lower cash balance and lower interest rates. 

Interest Expense

Interest expense of $9.4 million and $4.0 million for the years ended December 31, 2024 and 2023, respectively, consisted of interest expense pursuant to the OrbiMed Credit Agreement entered into on July 26, 2023. 

83

Change in Fair Value of Derivative Liability

The Company's OrbiMed Credit Agreement contains a bifurcated settlement feature classified as a derivative liability which is remeasured each accounting period. For the year ended and as of December 31, 2023, the settlement feature was deemed to have no value. The fair value of the embedded derivative is valued at $2.6 million as of December 31, 2024, as a result of the acceleration of principal payments, repayment fee, and exit fee. 

Results of Operations for Years Ended December 31, 2023 and 2022

For a discussion and analysis of changes in financial condition and results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024. 

Liquidity and Capital Resources

Overview

Since our inception, we have incurred net losses and negative cash flows from our operations. We have financed our operations since inception primarily through