Welcome to the H.C. Wainwright Global Investment Conference. I'll keep this brief. It's my pleasure to introduce Verrica Pharmaceuticals. And from Verrica Pharmaceuticals, we have Jayson Rieger, the CEO. Jayson, the floor is yours.
Thank you very much, and thank you, organizer of H.C. Wainwright, for allowing us to present today and tell the story about what we're doing at Verrica Pharmaceuticals. So Verrica Pharmaceuticals is a commercial-stage dermatology company with two late-stage development assets addressing large unmet medical needs in the area of dermatology. I joined the company as CEO about nine or ten months ago, but started very early when the company was founded as an investor and operator assisting the entrepreneur co-founder of the business to develop this asset as he saw a real need for addressing molluscum and common warts in children and adults. I helped him through the early stage of development through phase III clinical trials, where I stepped aside and let them bring on a new management team to finish phase III and commercially launch the program.
About a year ago, I was asked to come back and join the company and help reframe the way we are running the business, the commercial strategy, and the execution and the operation of the pipeline. Very excited to share the results of those last nine or ten months of very hard work by the team in advancing this program. YCANTH is our commercial-stage asset for molluscum contagiosum, indicated for children and adults age two and up. It is a topical-administered product and currently available through distribution via a variety of channels. We have shown, over the course of the last nine months, sequential quarter-over-quarter growth in dispensed applicator units, showing an uptick in both the penetration and utilization of the product. The product has a permanent J- Code, NCE designation, and Orange Book listing. Importantly, we partnered this asset with Torii Pharmaceutical in Japan.
They conducted their own phase III trial for molluscum contagiosum, filed for approval with PMDA last year, and could receive that approval as early as the end of this year. In conjunction with that collaboration, we are working together to initiate a program in common warts. We will run that as a global phase III program to expand the label of the product. And importantly, they gave us an $8 million milestone last month for that work, and we are eligible to receive a $10 million cash milestone upon the approval of molluscum in Japan. There's IP protection on YCANTH for the treatment of molluscum and other indications that extends out from 2034 to 2041. It's exciting to have a pipeline and a product program.
And so, as I indicated, we are going to launch a phase 3 global program with Torii Pharmaceuticals for the expansion of YCANTH for the treatment of common warts. This is almost $22 million in addressable population, as opposed to molluscum, which is already very large at $6 million prevalence in the United States alone. This program in common warts is very exciting for Verrica because we've structured our relationship with Torii Pharmaceuticals, where the phase 3 program will be fully funded in cash by them at the onset. They will fund up to $40 million for that program, which should cover 90+% of the entire development program. And we will split those costs 50/50 and ultimately paying back some of our portion of that program via royalties and milestones due to them in Japan.
Meanwhile, Verrica still retains the rights to the global asset for YCANTH everywhere except for Japan. Based on our current timelines, we expect to dose that first patient by the end of this year. We're also very excited about our basal cell program in basal cell carcinoma with VP-315. This program has completed phase two. We've held FDA end of phase two meeting and are in the process of designing and finalizing our phase III program. We'll be providing an update on all the data in that program later this year at a major scientific conference. We are very excited about both common warts and VP-315 as they address multi-billion dollar opportunities for the company. What is molluscum contagiosum? It looks like the picture here seen on the screen. It's caused by a poxvirus primarily affecting children.
It's very, very contagious, leading to secondary infections that can be more complicated, including adverse events like cellulitis. If left untreated, it can often lead to persistence for 13 months on average or up to five years. It's one of those diseases that historically there was not robust treatment for. So pediatricians would advise watch and wait. As a parent, watching and waiting for something that looks like this on your child's skin for a year or longer is not desirable. Oftentimes, they would try and seek some type of treatment at dermatology, but that is very difficult to both get an appointment as well as there was not a lot of viable opportunities to treat them that didn't lead to either scarring or pain for the child.
As with acne and other skin conditions, bumps like this do lead to social anxiety and challenges and quality of life impacts for the children. The disease is transmitted skin-to-skin contact as well as on toys and clothing. It can take up to several weeks for a new lesion to show up. So if you scratch it, it would show up a few weeks later. So that's why the disease persists for so long. Typically, children would have 10 to 30 lesions. Some can have up to 100 or more. And YCANTH has been tested and treated in children on all areas of the body from age two to up. So what is a solution that we've developed for treatment of molluscum contagiosum? It's YCANTH, the only HCP-administered FDA-approved treatment for molluscum. It's designed for very targeted administration. The active ingredient is cantharidin.
It's a molecule that's been known through the compounding and other forms for decades. So there's decades of history of safety and efficacy and familiarity with the molecule, but it's often unreliable sources both in quality and consistency. The molecule is a slight vesicant, so the proportion of potential adverse events is related to concentration changes. So having a very well-controlled GMP-formulated consistent product is very, very important for the clinicians to know what they're treated and the expectations of the treatment modality. The product is designed as a single-use applicator. It contains a coloring agent, so it's very easy for the clinician or HCP to know where they put it. It also contains a bittering agent to deter any oral ingestion of the product by licking, as young children might do. But what really is important is the clinical data that supports YCANTH and its use for molluscum contagiosum.
The FDA held a very high standard for the conduct of our clinical studies. It was complete clearance, 100% of all lesions, both existing and new, over the course of a 12-week study. What's important is showing dramatic lesion reduction even after the first treatment, and what happens in this product is a small vesicant or a blister would form on any treated lesions. That forms within 24 hours and begins the destruction of that lesion right away, so as you can see from a clinician perspective, they know how to ensure compliance of the treatment. Physician applies the drug, the lesions are treated, and you see their expected pharmacologic response. One of the biggest challenges in dermatology is patient compliance with treatment. In this way, you can ensure that the patients are getting the treatment because the HCP is administering.
And as you can see here, within the first treatment, 30% of those lesions are reduced, both the existing and the new. So the net reduction of 30%. By the second treatment, it's up to 50%. And you're approaching complete clearance in many of these lesions, more than half the patients by the end of a fourth treatment cycle. And we've seen commercially since launch of this product that most patients are receiving on the average of one to two treatments. So the drug is performing at an even higher level in the field than it did in the clinical studies, which is not often what you'd observe for a product. I think it just sort of speaks to the testament of how good YCANTH can be and the opportunity it has to address these patients.
Importantly, the adverse events were limited to local skin reactions because it is a vesicant. The majority of adverse events were mild to moderate, and no serious adverse events were reported in the clinical studies. What is the commercial strategy for YCANTH? When we began the program, it was originally launched as a medical benefit primarily buy-and-bill product only with small limited pharmacy access via specialty pharmacies. Since taking on the role as CEO last year, we expanded a very large focus of that to both pediatricians and dermatologists as well as primary care and other practitioners who are the first people to address and see molluscum. Oftentimes, it's diagnosed by a pediatrician as a secondary diagnosis when the child is there for other healthcare initiatives, whether it's well-child visits or upper respiratory, et cetera.
So this allows the pediatrician to treat those patients rather than having to refer to the derm. The product now has a dual benefit of availability, both buy-and-bill and specialty pharmacy via white bag delivery to the clinician's office. We have very robust Medicaid and commercial insurance coverage. This is important as a large number of pediatricians see a large percentage of Medicaid patients. It also provides an incremental revenue opportunity for the pediatricians as well as the dermatologists. This is because they're performing a procedure by administering this product, and they can charge CPT code 17110 or 17111, which is an incremental revenue opportunity for the practice. And that can be done by both the clinician or any other medical practitioner in that office, depending on what state that's done in. There's about 225 million lives covered under our insurance programs.
So that really allows a robust access to patients all across the country. We've optimized the specialty pharmacy delivery so that clinicians can order from either a national chain or a local independent pharmacy that can courier or has relationships with those offices to make even more readily available the product for treating their patients. And Verrica has made a strong commitment to these patients to ensure affordability. And we have agreed to a $25 copay for up to two applicators for a patient. And the company will provide assistance to those patients that don't have enough coverage, either via deductible or whatnot, so they can get access to the program and cost is not a problem for access. Even more important for a product to treat pediatricians or pediatric patients is support by AAP for the treatment of molluscum.
Historically, patients were referred to dermatologists because there was no real program available. In 2024, AAP, the Red Book, sort of the Bible for the pediatricians, reported that the most support exists for cryotherapy, curettage, and cantharidin, and of course, cantharidin is the active ingredient in YCANTH and is the only FDA one that's approved. For young children, cryotherapy or curettage, cutting those lesions off is very painful and traumatic for those children, so this is a real important aspect to the endorsement of YCANTH as a treatment for molluscum, so what can we do as a follow-on to YCANTH for molluscum contagiosum? It's the use of it in common warts that I alluded to earlier.
We've already completed a phase II program in common warts with significant efficacy seen in our phase II study, upwards of 51% of the patients seeing complete resolution of their warts and a very robust persistence of that following out to day 147. As you may be aware, common warts is a very persistent and recurrent disease. And there have been no FDA-approved products in common warts. 22 million patients are affected each year. And we are very excited about our partnership with Torii that provides both funding for this program and the ability to create a global registration. And we retain the rights to this asset globally outside of Japan. The trial, as I alluded to earlier, should start the end of this year.
And the adverse event profile for our phase II study was very similar to our molluscum program, expected local skin reactions due to the mechanism of action of the drug. Lastly, I want to spend a few minutes on our late-stage pipeline program in basal cell carcinoma, VP-315. Basal cell carcinoma is the most common skin cancer, affecting almost 3.6 million patients diagnosed each year with increasing incidence rates worldwide. Importantly, many patients who have one basal cell will often come back and see a second or third one later in their life with 35% chance of developing another lesion within three years and nearly 50% within five years. These patients tend to get surgical fatigue. They get tired of being cut or having these lesions removed surgically.
And so we developed VP-315 as an approach to treat those types of basal cell carcinomas, even for the routine patients, not just the advanced or non-resectable ones. In our phase two study, we saw nearly 51% of patients had complete histological clearance following two or three treatments of the drug. The drug is administered as an intralesional injection. It takes about 15 minutes. And it's often either done for two consecutive days or three consecutive days. And our clinical data actually supports moving forward with a two-treatment regimen. The data from that shows both the 51% complete clearance, but importantly, for those lesions that did not clear, 71% reduction in size. That has a profound impact on both surgical scar, complications, and potential healing down the road. Overall, we saw about an 86% reduction in tumor size across the entire study.
Even more important, we saw a 97% objective response rate. That was a calculated result at the end of the study and showed nearly every patient in the study responded favorably in terms of reduction in their lesion size to the study. In cancer, that's often not seen to that level. Our next stage for this program is to present at a major scientific conference later this year. We have additional genomic data, immunohistochemical data, as well as additional analyses that we'll share at that time, along with an update on our phase 3 development program, both timing, cost, logistics, and the results of our end of phase II meeting with the FDA. Here's the detailed breakout of the study. The phase II study was designed in multiple cohorts to evaluate both dose and regimen.
And we settled on cohort four, which is the two-dose regimen for treatment of these patients. And we saw a 53% reduction in complete histological clearance in those patients. Importantly, we saw no treatment-related events. Expected cutaneous reactions were seen. And most of the treatment-related events were mild to moderate. As you would expect, you're injecting into the lesion and you're destroying that lesion. The drug has a dual mechanism of action, both in destruction of the lesion and stimulating the immune system to recognize the antigens of your unique basal cell. So your immune system can then further help in the treatment and eradication of the disease. So in summary, Verrica is a very unique company as a small biotech company with both a commercial stage asset that has expansion opportunities into further indications of common warts.
We have a very strong collaboration with Torii Pharmaceutical, our Japanese partner, for the commercialization of YCANTH in Japan. And they've also provided significant financial support for the development of YCANTH for common warts, expanding our treatment population by an additional potential 22 million patients. Importantly, they're funding that program. And we really enjoy that collaboration and could expect to see an approval for YCANTH for molluscum in Japan by the end of this year. Since taking over the last 10 months, the team has done a tremendous job of focusing on cost, cost management, and execution. We've transitioned to expand access to the product to patients via specialty pharmacy as well as buy-and-bill. We've made significant operating efficiencies and are seeing the growth of those efforts in compound and quarterly growth over the last three reported quarters.
We raised capital late last year to fund the operations and continue to operate efficiently going forward. With that, I'll take a pause. Appreciate your attention and happy to answer any questions. Thank you.