SCHEDULE: Caligan Partners Takes 9.99% Stake in Verrica, Gains Board Seat

Caligan Partners LP and David Johnson have acquired a 9.99% beneficial ownership in Verrica Pharmaceuticals Inc. through a private placement, securing a board seat and expressing belief in the company's undervaluation.

Summary

• Caligan Partners LP and David Johnson acquired a 9.99% beneficial ownership in Verrica Pharmaceuticals Inc.
• The acquisition was made through a private placement on November 23, 2025, involving pre-funded warrants and Series C warrants.
• Total investment amounted to approximately $24,838,255.72.
• Caligan will appoint a designee as a Class I member of Verrica's Board of Directors and will also have a Board observer right.
• The pre-funded warrants allow purchase of 4,126,239 shares at $0.0001 per share and do not expire.
• The Series C warrants allow purchase of 1,031,559 shares at $6.315 per share, are immediately exercisable, and expire on the fifth anniversary of the closing.
• Verrica has agreed to file registration statements within 30 days of closing to register the shares for resale.
• The reporting persons believe Verrica's securities are undervalued and represent an attractive investment opportunity.

Sentiment

Score: 7

Explanation: The filing indicates a significant strategic investment by an institutional investor who believes the company is undervalued and is taking an active role in governance. This suggests a positive outlook from a sophisticated investor, despite the inherent risks of warrant-based investments and potential dilution.

Positives

• Significant institutional investment of approximately $24.8 million, indicating confidence in Verrica's prospects.
• Caligan Partners, an investment manager, explicitly states a belief that Verrica's securities are undervalued.
• Caligan will gain a Board seat and observer right, potentially bringing strategic oversight and shareholder advocacy to Verrica.
• The private placement includes pre-funded warrants with a nominal exercise price, providing long-term upside potential for the investor.
• Verrica will register the shares for resale, providing liquidity for the investors.

Negatives

• Potential for dilution for existing shareholders due to the issuance of new warrants and their future exercise.
• The 9.99% blocker on warrant exercise limits immediate full conversion, which could affect the investor's flexibility.

Risks

• The value of the investment is subject to Verrica's financial position, strategic direction, and overall market conditions.
• Future issuances by Verrica below the Series C warrant exercise price could adjust the warrant terms, potentially impacting their value.
• The ability to exercise warrants is subject to a 9.99% beneficial ownership blocker, limiting immediate full conversion.

Future Outlook

The Reporting Persons intend to review their investment in Verrica on a continuing basis and may seek to increase or decrease their position, or engage with management and the Board on strategic matters, based on various factors including the Issuer's financial position, market conditions, and other investment opportunities.

Management Comments

• The Reporting Persons believe the securities of the Issuer are undervalued and represent an attractive investment opportunity.
• The Reporting Persons have communicated, and may continue to communicate, with the Issuer's management and Board about a broad range of operational, management, corporate and strategic matters.

Industry Context

This filing indicates a significant institutional investor taking an active stake in a pharmaceutical company, a common strategy in the biotech sector where investors often seek to influence strategic direction or unlock value in companies with promising pipelines or undervalued assets. The acquisition of warrants is a typical financing mechanism for growth-stage biotech firms.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• NA

Related Party Transactions

• NA

Stakeholder Impact

• Shareholders: Potential for increased share price if Caligan's strategic involvement unlocks value; potential for dilution from warrant exercises; increased institutional oversight.
• Management/Board: New board member and observer will bring additional perspectives and potential pressure for strategic changes.
• Creditors: No direct impact mentioned, but a capital raise generally strengthens the balance sheet.

Next Steps

• Closing of the Private Placement expected on or about November 25, 2025.
• Verrica to appoint a Caligan designee as a Class I Board member promptly following the Closing.
• Verrica to file one or more registration statements within 30 days after the Closing to register shares for resale.
• Reporting Persons may continue to communicate with management and the Board on operational, management, corporate, and strategic matters.
• Reporting Persons may increase or decrease their position in Verrica's securities.

Key Dates

Recommendation

The entry of a significant institutional investor like Caligan Partners, taking a 9.99% stake and securing a board seat, suggests a belief in the company's long-term value and potential for strategic improvements. This could be a positive catalyst. However, the investment is primarily through warrants, and the full impact of Caligan's involvement and the company's future performance remains to be seen. A 'hold' recommendation allows investors to observe the execution of the new strategic direction and the impact of the new board member before making further investment decisions, while acknowledging the positive signal from this institutional backing.

Keywords

Verrica Pharmaceuticals, Caligan Partners, Schedule 13D, Private Placement, Warrants, Board Appointment, Shareholder Activism, Biotechnology Investment, Equity Investment, Corporate Governance