Verrica Pharmaceuticals Inc. (NASDAQ: VRCA) stock has plummeted 56% after the company confirmed that it has received a Complete Response Letter (CRL) regarding its New Drug Application (NDA) for VP-102 for the cure of molluscum contagiosum (molluscum). The FDA rejected Verrica's NDA due to problems discovered during a general reinspection of Sterling Pharmaceuticals Services, the contract manufacturing organization (CMO) that produces the bulk solution medication product.

The NDA was based on positive results from two identical Phase 3 randomized, double-blind, multicenter clinical trials (CAMP-1 and CAMP-2) that compared the safety and efficacy of VP-102 to placebo in a total of 500 molluscum patients aged two years and older.

On May 20, 2022, Sterling notified Verrica that it had been placed on OAI status. The FDA undertook a week-long reinspection of the CMO in February 2022, which resulted in Sterling's OAI designation. Sterling was designated as VAI by the Agency on November 17, 2021, and the reinspection took place about 90 days later. The VAI classification, Verrica knew, did not signal that a reinspection was necessary.

Other issues were not discovered by the CRL. Furthermore, none of the problems discovered by the FDA during the reinspection were related to the production of VP-102. The Division also told Verrica that its evaluation of Verrica's NDA and product label was complete, that there were no unanswered questions on the NDA review, and that the VP-102 label was ready to be disseminated.

Verrica is collaborating with Sterling and its regulatory and quality advisors to help Sterling present numerous solutions to the Agency that will allow Sterling to quickly address the majority of the problems that led to the OAI classification and the CRL. Verrica is also working with another CMO to provide an alternative supply of VP-102 bulk solution.