Verrica Pharmaceuticals Inc. (VRCA) Earnings Call Transcript & Summary

Greetings, and welcome to the Verrica Pharmaceuticals FDA Conference Call. [Operator Instructions] As reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Fraunces, with LifeSci Advisor s. Thank you. You may begin.

Good morning, everyone, and thank you for joining us on this morning's call to discuss Verrica's approval of YCANTH for the treatment of molluscum contagiosum as well as the announcement this morning that Verrica has entered into a nonbinding term sheet for a debt facility for up to $125 million. Joining me on today's call are Ted White, President and CEO of Verrica Pharmaceuticals, Joe Bonaccorso, Verrica's Chief Commercial Officer; Dr. Gary Goldenberg, Verrica's Chief Medical Officer; Terry Kohler, Chief Financial Officer; and Chris Hayes, Verrica's Chief Legal Officer. As a reminder, during today's call, management will make forward-looking statements. These statements may include expectations related to commercialization of YCANTH, including the launch of YCANTH and the timing thereof, the potential entry of the companies into a debt facility by the end of this week, the proposed terms of the debt facility, potential borrowings pursuant to the debt facility, the company's ability to fund operations into the first quarter of 2025, Verrica's clinical development programs and product candidates as well as overall business strategy and planned operations. These forward-looking statements are based on the company's current expectations and involve inherent risks and uncertainties. And based on those risks and uncertainties, Verrica's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements. Please see Slide 2 of the slide deck for today's call as well as Verrica's SEC filings for important risk factors. Verrica cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in expectations. I'll now turn the call over to Verrica's President and CEO, Ted White.

Thanks, John. Good morning, and thank you all for joining us on this momentous and transformational day for our company. As announced Friday, after the close, the FDA approved YCANTH, formally referred to as VP-102, for the treatment of molluscum contagiosum or molluscum. The YCANTH approval represents years of extraordinary work and commitment across a broad group of stakeholders, including our dedicated employees, outside advisers, the dermatology community and most importantly, the patients who participated in our clinical studies. As the first ever FDA-approved product aimed at addressing the 6 million patients in the U.S. who suffer from highly contagious viral skin infection, I could not be prouder of this historic achievement, and I would like to personally thank everyone who contributed to this approval. The purpose of today's call is to provide a high-level overview of YCANTH and this unique opportunity to address the unmet medical need of molluscum. I'll then turn the call over to Dr. Gary Goldenberg, who will review the pool data from our two Phase III clinical trials, which provided the basis for YCANTH's approval. Following Gary's remarks, Joe Bonaccorso will discuss the commercial opportunity in molluscum and Verrica sales and marketing strategy. We will then open up the call to take questions. Let me first begin by providing an overview of our commercial strategy. Verrica is a dermatology therapeutics company developing medications for skin diseases requiring medical intervention with a keen focus on clinician-administered therapies that address high unmet needs within medical dermatology. The success of our YCANTH program clearly exemplifies this strategic approach. With approximately 6 million people in the U.S. affected with molluscum and no previous FDA group therapies, YCANTH is squarely aimed at providing a meaningful clinical benefit for this large and underserved patient population. Through our pivotal Phase III trials, YCANTH was proven to be safe, well tolerated and highly effective treatment for molluscum. Later in the call, we will review the full data from these two studies. Equally important is our emphasis on developing products under a medical benefit that must be administered by health care professionals in an office or clinic setting. Based on extensive interviews that we've conducted with a broad group of payers that included national, regional and local plans, we expect that approximately 80% of YCANTH claims will be covered under a medical benefit as opposed to a pharmacy benefit which is dispensed in the retail setting. Later, we will discuss the numerous potential advantages for therapies that are recognized as medical benefit compared to a pharmacy benefit. As Joe will discuss later, products under a medical benefit are more efficient in review time and reimbursement. Through this dual focus of addressing an unmet need through health care professional administration, which we have further enhanced through our innovative distribution model, we believe our product development and commercialization strategy will generate significant value for our shareholders. As shown on our pipeline slide, molluscum is the first of three indications where we believe YCANTH can show a compelling medical benefit. Described as VP-102 in our development stage programs, we also plan to continue to progress YCANTH for the treatment of common warts, a condition that affects approximately 22 million people in the U.S. alone as well as external genital warts. Both of these programs have been cleared to go into Phase III trials by the FDA, and the timing of those trials continues to be evaluated. Although not the subject for today's call, we are also excited about our oncolytic peptide, LTX-315, which is currently being evaluated in a Phase II trial for the treatment phase of cell carcinoma. And we anticipate sharing more data from this program sometime in early 2024. We believe that YCANTH has the opportunity to fundamentally change the game in medical dermatology. As the first and only FDA-approved product to treat molluscum, YCANTH should enjoy an enormous competitive advantage immediately in the dermatology and pediatric markets. Based on its unique and attractive attributes, which I'll describe in just a few moments, we expect to maintain this advantage over an extended period of time. While strong product attributes are obviously important, Verrica's innovative Buy-and-Build inventory distribution model will also be a major factor in YCANTH success. By utilizing cloud technology, physicians will pay for their inventory YCANTH only after claim has been adjudicated and the patient agrees to treatment. This model eliminates any upfront cost of the dermatology practice that would otherwise be incurred for acquiring YCANTH. In addition to eliminating upfront cash outdate to the practice, we anticipate a significant revenue opportunity for the physician through continued reimbursement under CPT codes 11710 and 17111. Typically, physicians can realize a margin on a product somewhere between 6% to 10% of the average sales price, depending upon the provider's contract with the health plan. In addition, a clinician-administered in-office procedure will typically fall under a medical benefit with a signed permanent J code. So in addition to the obvious treatment benefits for YCANTH, we also anticipate that our distribution model will play a major role in driving demand for YCANTH. Before further discussing the market opportunity for YCANTH, I'd like to provide some background on molluscum. Molluscum is caused by the infection of the pox virus that primarily affects children with highest incidents occurring in children 2 to 14 years of age. To a lesser degree, adults could also be infected and were included in our clinical trials. The molluscum disease is highly contagious and if left untreated, its lesions can persist on average for 13 months, and in some cases, the lesions can remain up to 5 years. As any parent can imagine, especially with the younger children, the presence of these lesions unfortunately can lead to anxiety and social difficulties, which can eventually impact both the child and their parents quality of life. In addition, although not widely understood or explored, cutaneous viral infections, such as molluscum, are also known to trigger the onset of atopic dermatitis, which is recognized comorbidity associated with this condition. Transmission of molluscum virus occurs through skin-to-skin contact as well as through the sharing of contaminated objects such as clothing, toys, sports equipment and tablets. While a typical case will usually involve anywhere from 10 to 30 distinct lesions, more severe cases can evolve over 100-plus lesions. Molluscum manifests a small raise in usually white paint or flesh-colored lesions with a small depression at the centre. The lesions can be found anywhere in the body, including the face, the neck, arms, abdomen and genital area alone or in groups but are rarely found on the palms or the soles. Complications from molluscum includes skin irritation, inflammation and secondary bacterial infections such as cellulitis. Follicular and papillary conjunctivitis can also develop from lesions located on the high lists. Molluscum also has been shown exacerbated symptoms and cause flares of eczema or atopic dermatitis. Current destructive treatments for molluscum such as cryotherapy, curettage and laser surgery are not FDA approved and have significant limitations. Use of these unapproved technologies is limited for molluscum due to the unproven effectiveness, pain, lack of availability, safety concerns and of course, every parent's major concern scaring. Other off-label treatments such as topical and off-label drugs as well as natural remedies are unproven and have limited efficacy and are also associated with side effects. In fact, FDA's June 1, 2023, consumer update has warned patients and providers not to use any products to treat molluscum unless they are FDA approved. YCANTH is now the first and only FDA-approved product to treat molluscum on the market. The opportunity for YCANTH to address the high unmet medical need in molluscum is significant. As I mentioned earlier, U.S. prevalence is approximately 6 million annually with 1 million diagnosed each year. They are the high prevalence of molluscum among children, where approximately 5% to 11% of children under 16 years old are affected. With the availability of YCANTH, we fully expect the diagnosis of molluscum to increase over time. Now I'd like to discuss the specifics of YCANTH. The active ingredient in YCANTH is 0.7% topical solution of cantharidin. Cantharidin is a [indiscernible] that causes a blister to form on top of the molluscum lesion. This blister lets the lesion of the skin and after a few days when the blisters dry, the lesion will come off. Importantly, cantharidin at this concentration does not penetrate beneath the epidermis, deserving the basal layer so that no scaring occurs. Cantharidin is well known by health care providers and have been used historically to treat multiple skin conditions. Our product development strategy for YCANTH focused on developing single-use applicator to reduce cross contamination and facilitate the application of cantharidin topical solution with a consistent, stable concentration. As shown on the right side of the slide, a small opening at the tip of the applicator dispenses the solution and allows for precise targeted administration to the lesion. As previously discussed, the procedure must be performed by a trained health care provider. Because YCANTH is formulated as GMP-controlled, shelf stable, consistent topical formation, no cold chain storage requirements are necessary. To improve the product's overall safety, we've also formulated solution with a thinner agent, which helps serve as a deterrent against oral ingestion. And finally, YCANTH contains a visualization agent that enables health care providers to identify which lesions have been treated. I'd now like to turn the call over to Dr. Gary Goldenberg, who in addition to being our Chief Medical Officer, is a prominent key opinion leader and practicing dermatology in New York City. Gary will review the design of our Phase III trials and pool data from both studies. Gary?

Thank you, Ted, and it's a pleasure to be here today to describe why we're so excited about YCANTH and its opportunity to address the unmet medical need in molluscum. YCANTH was studied in two randomized, double-blind, placebo-controlled Phase III trials in subjects 2 years of age or older. Subjects could be dosed with up to two applicators per visit and receive treatments every 3 weeks for up to four treatment visits. The primary endpoints for the percent of subjects with complete clearance of molluscum contagiosum at day 84 and safety and tolerability. The secondary endpoints were the percent of subjects with complete clearance at day 21, 42 and 63. Pool data from the Phase III trials formed the basis for the FDA's approval of YCANTH. The primary endpoint in each Phase III trial was the percentage of subjects with complete clearance of molluscum lesions at day 84 to treat study population. As shown in the chart to the left, the pool data clearly demonstrate the treatment with YCANTH resulted in a statistically significant higher percentage of complete clearance compared to vehicle. Complete clearance rate of molluscum lesions was 50% for YCANTH and only 15.6% for vehicle. Importantly, we also saw a pronounced and statistically significant separation between the YCANTH arm versus the vehicle at each time period of measurements, which strongly suggests that patients immediately and consistently benefited from treatment with YCANTH versus vehicle. As shown on the chart to the right, treatment with YCANTH consistently showed a statistically significant improvement in the mean percentage change in molluscum contagiosum lesion counts from baseline to day 84. The most pronounced difference occurred at day 84 where YCANTH had a 76% decrease in lesions compared to only negative 0.3% for the vehicle. Given the size of the patient population, we knew, of course, that YCANTH would need to maintain a clean, safety and tolerability profile. As shown in the chart, that's exactly what we saw. Discontinuation rates through the treatment-related adverse events in the YCANTH arm were only 2.3%. Together, the pool data from the trials convincingly show that YCANTH is probably a highly effective treatment for molluscum and has a strong safety and tolerability profile, all of which suggest that YCANTH is a therapy that can address the vast majority of molluscum patients. I'd now like to discuss the YCANTH label in more details. Overall, we are very pleased with the label, which from our perspective does not contain any unexpected information that would limit our commercialization strategy. The label states that YCANTH is indicated for the topical treatment of molluscum contagiosum in adult and pediatric patients 2 years of age and older. We were obviously pleased to see the label extend treatment across the widest age groups of patients, which reflects the patient demographics in the Phase III trials. With the ability to treat patients 2 years and older, Verrica has the opportunity to deliver YCANTH to the vast majority of patients with molluscum, including the millions of young children who are impacted by this condition each year. All of the information related to YCANTH's dosage and administration were issued as expected. Health care professionals should receive instructions and training prior to preparation and administration of YCANTH. The treatment is for topical use only and involves a single application directly to each lesion every 3 weeks as needed. No more than 2 applicators should be used during a single treatment session and YCANTH should be removed with soap and water 24 hours after treatment. YCANTH is described as a topical solution of 0.7% cantharidin. There are no listed contraindications in the label. With respect to warnings and precautions, the label notes toxicities associated with inappropriate administration of the product. We believe this poses minimal risk, given that only trained health care professionals will be responsible for applying YCANTH to the lesions. Local skin reactions and flammability are also mentioned in the section. Again, neither were unexpected. Please refer to the important safety information and linked to the full prescribing information for additional details. As with any pharmaceutical product, the most common adverse events are listed in the package insert. For YCANTH, these largely involve expected local skin reactions at the application site, which include the [indiscernible] pain, pruritus, scabbing, erythema, discoloration application, site dryness, edema and erosion. Local skin reactions at the application site were observed in 97% of subjects treated with YCANTH during both trials. YCANTH will not require a risk evaluation and mitigation strategy. Finally, it's also important to reemphasize that there are no restrictions on the number of treatment visits. Turning to Slide 15. These are the warnings and precautions from YCANTH's important safety information. I'd now like to turn the call over to Joe Bonaccorso, who will review Verrica's commercial strategy for YCANTH. Joe?

Thank you, Gary. Similar to Ted and Gary, I'd like to first say how excited I am about our announcement. We have a unique and special opportunity to bring this important new therapy to so many millions of patients who up until today had no FDA-approved therapy for molluscum, and I'm very excited to help lead this effort. As Gary discussed, YCANTH is safe and highly effective treatment for molluscum. On today's healthcare landscape, having a safe and effective therapy doesn't necessarily guarantee a strong initial market uptake. A strong product must also be paired with a strategic multipronged commercial strategy. We know that targeted health care professionals and direct-to-consumer advertising are important avenues of building product awareness. In the case of molluscum, we believe making targeted investments to build awareness in such a large patient population with no other approved therapy can have a significant impact and immediate return on investment. Simply put, we want to educate patients so that when approaching their health care provider about molluscum, they are already well aware of YCANTH as a potential treatment option. As KOL [indiscernible] YCANTH into their practice, we anticipate broader product utilization to follow amongst the high prescribing dermatology and pediatric practices. We have methodically built out a highly specialized sales team that targets both private practice and academic dermatologists, along with select pediatric practices. Finally, as Ted mentioned earlier, we believe our innovative Buy-and-Bill strategy will provide a key advantage to our commercial success. Our forward deployed inventory model removes the barrier of upfront product acquisition costs. This will ensure efficient delivery of YCANTH to physician practices and will be further supported by a range of reimbursement and related services, all of which will be supported by a dedicated field reimbursement team. Now let me touch on some critical milestones we have reached to prepare for our commercial launch of YCANTH. While we are still engaged in significant hiring activities, I can say that we have extended employment offers to approximately 90% of our sales organization. We anticipate to be fully staffed with 60 representatives joining our organization by August 7. We expect that these 60 representatives will be calling on over 9,000 health care providers, which should cover about 85% of the targets at the time of YCANTH is launched. 5 of these representatives will be dedicated to building relationships with institutional accounts, focusing on approximately 90 of the most valued health systems and IVS. Building and coding support will be provided by five field reimbursement. I'm also pleased to note that our YCANTH launch meeting is scheduled for the week of August 21, and full deployment into field will occur the week of August 28. The YCANTH brand awareness campaign will employ a multichannel strategy to support physicians and patients along their disease journey to treatment. Full media launch will align with commercial supply expected by September 2023. And additional resources to support YCANTH launch will be deployed throughout 2023. Additionally, the websites, YCANTH.com and YCANTHPro.com will serve as digital engagement hubs for all now approved marketing information. Importantly, physicians will have a choice of two distribution models to choose from in order to access YCANTH, the Buy-and-Bill model or the [indiscernible] Speciality model. For the Buy-and-Bill model, reimbursement will start under a temporary J code, which is expected to be replaced by assigned permanent J code by January 2024 and be published by April 2024. As Ted previously noted, we expect our physicians to select the use our Buy-and-Bill distribution model will typically realize a 6% to 10% margin on ASP, which would not be available utilizing a specialty pharmacy. Based on market research and live meetings, we expect YCANTH be predominantly covered under the medical benefit, consistent with the in-office administered therapy. Our market research, which included interviews with medical directors, pharmacy directors and IDN stakeholders representing more than 205 commercial and Medicaid lives under coverage, also suggests a favorable reimbursement landscape. Payers have indicated that being a medical benefit covered product, YCANTH is likely to have minimal utilization management contracts or rebates required for coverage. As noted earlier in the call, rebates and discounts have been particularly difficult issues facing many dermatology products being reimbursed over the years. As you can see on this slide, there are also multiple advantages of having a product covered under a medical benefit versus the pharmacy benefit. Compared to a pharmacy benefit, products covered under a medical benefit, typically have less restrictive coverage when administered in physician's office. Products under a medical benefit have a clinical review and medical policy is signed, and this takes place typically in less time than a pharmacy benefit product that requires a clinical review and a typically under dosed contract negotiations and rebates to ensure access. Following with respect to patient costs, prescription co-base can vary widely by plan for products that fall under a pharmacy benefit, whereas a patient obligation for a product under a medical benefit typically will average 20% of the co-insurance off the list price before the manufacturer co-pay applied. To summarize, we cannot be more pleased with the opportunity ahead of us for YCANTH. YCANTH represents a truly unique opportunity in dermatology to introduce the first therapy ever approved by the FDA to address a condition impacting millions of Americans each year. We have assembled an extraordinary sales, marketing and reimbursement teams to help achieve our goals, and I look forward to updating you on our progress. Ted, I'll hand it back to you.

Thanks very much, Joe. As you can see, we are incredibly excited to introduce the first and only FDA group therapy for the treatment of molluscum. Through rigorous, well-controlled clinical studies, we've clearly demonstrated how YCANTH can significantly improve treatment outcomes for patients with molluscum. We believe that YCANTH is poised to become the new standard of care for millions of patients who can track this disease. We've assembled a world-class sales and marketing organization that is primed to bring YCANTH to the dermatology and pediatric practices throughout the United States. Despite our previous challenges, YCANTH's approval demonstrates the favorable execution of our product development strategy, a strategy that we believe will lead to significant value creation for our shareholders. And finally, along with announcing the approval of YCANTH, we also announced in our press release this morning that Verrica has entered into a non-binding term sheet for a debt facility for up to $125 million to further support the launch of YCANTH for the treatment of molluscum. The debt facility is expected to close later this week and provides for a $50 million upfront payment. When combined with the $60 million in cash and cash equivalents we had on hand at the end of Q1 2023, the upfront payment will provide Verrica sufficient funds to support all operations, including launch sales and marketing expenditures, and it will extend Verrica's cash runway into 2025. In addition, the company would have access to an additional $75 million in non-diluted capital, subject to various milestones, which if funded, could fund operations until the company is cash flow positive. With that, now we'll be happy to take questions. And I'll turn it over to the operator.

[Operator Instructions] Our first question comes from the line of Gregory Renza with RBC Capital Markets.

I extend my sincere congratulations on the approval, a monumental day for Verrica and for patients.

Thank you, Greg.

Ted, maybe just a few for me. I just wanted to just circle back you to the list price and maybe just walk us through the process of disclosing that. One information, are you converging on in order to disclose the list price and if you're, in fact, then during that, how much you think about it, some of the additional assumptions that the debt that we should consider when flowing that through our model? And a few more questions, but I'll start with that one.

Okay. Great. I'll turn that over to Terry Kohler, our CFO.

So at this time, we're not -- we have not approved a final price for YCANTH, but we will be looking to do that in the short term. So we don't have any final information to share with you today.

Okay. Okay. It certainly makes sense. And maybe just coming to the patient and the physician journey, just some of the assumptions that what you think will be best practice as far as number of treatments as far as number of applications, certainly, helpful to hear how it was echoed in the clinical trials. And certainly, those words from Gary, but just curious on what that flow could look like, number of visits and whatnot. And then my last question, guys, just as it pertains to the additional indications with genital warts and the like, as you're evaluating your step forward, there's certainly some nice white space. But what inputs are you considering based on the launch and the physician feedback in order to evaluate how you're going to view those Phase IIIs and moving forward with the additional opportunities?

Thanks, Greg. I'll turn the first part of the question over to Gary Goldenberg with regards to the patient journey and how many applications.

Thanks, Ted. So if you look at our trial, subjects were able to get treated up to four times every 3 weeks with up to two applicators per treatment visit. And the reason the study was designed this way is that, that kind of mirrors the normal patient journey, whereas the patients come in for a treatment and then they come back every, call it, 2 to 4 weeks for an additional treatment on label every 3 weeks. If you look at our results, complete clearance was 50% of the end of the four treatment visits, which means that some patients had clearance with that number and some patients required a few more -- would require a few more treatments. And I think because the package insert does not limit the number of treatment visits, the YCANTH will be able to be utilized by HCPs, the way they would normally treat a patient. Whereas they would treat the patient until they had complete clearance of all their molluscum lesions.

Thanks, Gary. And Greg, with regards to the additional indications, as mentioned earlier, we have approval from the FDA to go into Phase III trials for both common warts as well as external genital warts. I would say that we think it's important that we have at least one human papillomavirus indication, but a couple of things. So first, it's imperative that we get off to a strong launch with YCANTH. So again, you won't see us do anything with these trials for at least 6 months so that the organization is highly focused on the launch and the update. And then we'll look at the second half of 2024 to engage one of those studies. Obviously, common warts, I've always said is the holy grail in dermatology. There's no FDA-approved therapies, 22 million prevalence. And listen, we also know that the dermatologists like to prescribe things off-label, and we know cantharidin is utilized for other skin types of skin leases off-label. So we have to monitor that as well. So again, to be determined, but nothing will happen until the back half of 2024.

Our next question comes from the line of Stacy Ku with TD Cowen.

Huge congratulations on the approval. Very exciting news. So we have a few. In the beginning of your prepared remarks, I just want to clarify, which stated that YCANTH should eventually assume 80% medical benefit versus pharmacy benefit. So can you just speak to what you expect the split might be earlier in the launch, maybe the remainder of 2023 and early 2024? So does the timing of gaining more clarity into reimbursement? That's our first question. And then the second question is regarding the incidence population of about 1 million, how should we be thinking about the current percentage of patients that are being treated by kind of your sales for reach right now? Do these tend to be more severe cases? So any additional details around that initial patient target would be appreciated? And then finally, as we look forward, what kind of metrics do you expect you might provide for us as we're kind of tracking the YCANTH launch? Any additional details would be appreciated?

Thank you, Stacy, for those questions. I'm going to turn those over to Joe Bonaccorso, our Chief Commercial Officer.

Regarding your question around reimbursement, our market access team has been doing clinical presentations prelaunch, and we will be doing post launch now official clinical presentations with the clients. We expect our ramp to be over the next 6 months to capture somewhere in the neighborhood of, I'd say, approximately 100 million to 140 million lives within the first 6 months. Again, as we shared earlier today, we expect that largely to be covered under the medical benefit, and we'll continue to build out our coverage. Regarding key metrics, we will be training health care professionals prior to the use of YCANTH. We'll be tracking new prescribers as well as active prescribers as we move forward. And of course, as having a dual distribution model, we'll track the new prescriber flow through our specialty pharmacy model and Buy-and-Build as we are creating new accounts, we will be tracking that as well.

And then regarding the incident population of 1 million and one of the targets that your sales force might be able to reach, just to get a sense of the number of molluscum patients right now.

Yes. Right now, we're staffed to capture about 85% in the market, so which is a -- that's a robust number. We'll have 50 office based sales representatives, five in the institutional setting and then another five on select pediatric group practices. We're comfortable with that. Each representative will be carrying about -- on average about 150 targets to drive the launch.

Our next question comes from the line of Serge Belanger with Needham & Company.

And congratulations to Ted and the rest of the team. It's been a long journey to get here. So I'm sure you're all happy. So a couple of questions. First one to help us refine or modeling for this opportunity, the label doesn't limit the number of treatments. So just curious what kind of number of treatments do you expect for patients? And then since this is a medical benefit and expect to see less rebating and discounting than the pharmacy benefit, just curious what kind of rebating discounting we should expect? And then I have a follow-up.

Thank you, Serge. Let me -- let's take the last part of that question first. I'll turn that over to Joe.

Yes. So Serge, typically, there's really that much contracting and rebating that goes on the wall in the medical benefit. Typically, that just goes through a clinical review, a medical policy gets assigned. And then we -- it goes to the beneficiaries co-insurance for reimbursement for patient obligation rather. There's really not a large degree of contracting rebate. We really don't anticipate that to be the case for YCANTH as well.

And Serge, on the number of visits, again, as Gary mentioned, it's typically anywhere from 3 to 4 treatments. And Gary, I don't know if there's anything else you want to add to that.

Thanks, Serge, I think the number of visits for an average patient is probably somewhere between 3 and 5 visits. So I think we expect it to be somewhere in that vicinity.

Okay. And lastly cantharidin is available via compounding pharmacies. Just curious what are the steps here that you and the FDA will take to enforce the, I guess, stopping the supply of this product now that we have an approved cantharidin product in YCANTH?

Yes. Serge,, I'm going to turn that over to Chris Hayes, who's our Chief Legal Officer.

First, we've had a while or two to work on this and now that we approved, we're happy to work on restricting compounded cantharidin. Our first step will be to enforce our rights with the FDA. And by doing that, we plan to follow a citizen's petition to have cantharidin excluded from the bulks list and Category 1, that would effectively prohibit compounders from putting any cantharidin on the market. We would go to the FDA and say that now there is an FDA-approved product in the market, there is no longer a clinical need to have cantharidin compounded by any outsourcing facilities and we ask them to remove cantharidin from that Category 1 list. Our legal basis for that is from the foreign litigation, where with vasopressin, a similar proceeding was used. So we're very confident that, that will work. We also would go to the FDA and ask for an import alert, where we would request that the FDA sent out an announcement prohibiting imports to come in from outside the United States with respect to cantharidin. After going to the FDA, we would roll out some other steps with regard to engaging with the state pharmacy boards with respect to 503-A facilities. We would enlist the insistence of CMS with respect to having the Medicaid and Medicare directors, let their states know that it's not allowed to use cantharidin with an FDA-approved product in the market. And then finally, we'll deal directly with the compounders themselves, sending them see in the letters.

[Operator Instructions] Our next question comes from the line of Kemp Dolliver with Brookline Capital Markets.

So what are the assumptions now underlying your cash runway guidance because you're now going to have revenue in addition to expense to incorporate in your thinking?

Sure. Let me hand it over to Terry.

Thanks, Kemp. So the runway assumes obviously that we launched the project, as we said today, field force will be in the market, August 28, and that assumes the cash flow in hand today and the $50 million upfront from the proposed debt facility. So [indiscernible].

Fair enough. And as you think about your normalized business, what kind of working capital assumptions do you have with regard to inventory, likely receivables, likely payables?

Yes, payables is sort of, as you would expect, it tends to be around 30 to 45 days. From an inventory perspective, we're going to always have on hand, call it, 4 to 6 months of applicators. So that's kind of how we're modeling that. And from a receivables perspective, we have terms with our [indiscernible] in about 60 days.

Great. And going back to the price discussion, what are the steps you're thinking through before you finalize the price?

We still -- we had internal discussions to have to finalize that. I don't expect it to be something that will not occur, call, within the next week or 2. So we'll be looking at that.

Okay. So just to be sure I heard that correctly. We're looking at a couple of weeks. So some time in August?

Yes.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. White for his final comments.

Thank you, operator. Well, look, it's been a long journey, and we are absolutely thrilled to get YCANTH over the finish line. And we believe YCANTH is poised to become the new standard of care for the millions of patients who could track molluscum. And finally, this morning's announcement, we now have sufficient funds to support all operations, including the long sales and marketing expenditures that will take us well into 2025. And we are really looking forward to bringing this product to the market. Thank you all for your participation this morning.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.