Verrica Pharmaceuticals Inc. Stock Compensation Disclosure

Note 8—Stock-Based Compensation

In June 2018, the Board adopted and approved the 2018 Equity Incentive Plan (the “2018 Plan”), which amended and restated the Company’s prior 2013 Equity Incentive Plan (the “2013 Plan”) and became effective in connection with the IPO. Prior to the effectiveness of the 2018 Plan, the 2013 Plan provided for the grant of share-based awards to employees, directors and consultants of the Company. As a result of the effectiveness of the 2018 Plan, no further grants may be made under the 2013 Plan.

The 2018 Plan provides for the grant of incentive stock options to employees, and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards and other forms of stock awards to employees, including officers, consultants and directors. The 2018 Plan also provides for the grant of performance-based cash awards to employees, including officers, consultants and directors. The Company initially reserved 3,738,199 shares of common stock for issuance under the 2018 Plan, which is the sum of (1) 2,198,198 new shares, plus (2) the number of shares reserved for issuance under the 2013 Plan at the time the 2018 Plan became effective, plus (3) any shares subject to outstanding stock options or other stock awards that would have otherwise returned to the 2013 Plan (such as upon the expiration or termination of a stock award prior to exercise). The number of shares of common stock reserved for issuance under the 2018 Plan will automatically increase on January 1 each year, for a period of ten years, from January 1, 2019 through January 1, 2028, by 4% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board. As of December 31, 2024, 6,106,265 shares were available for grant under the 2018 Plan.

In November 2024, the Board adopted and approved the 2024 Inducement Plan which initially reserved 2,000,000 shares for issuance. The Plan allows for the granting of Awards, for certain individuals to enter into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Marketplace Rules, (ii) incentives for Eligible Employees to exert maximum efforts for the success of the Company and any Affiliate and (iii) a means by which Eligible Employees may benefit from increases in value of the Common Stock. On December 4, 2024, the Board approved an amendment to the 2024 Inducement Plan to increase the number of shares of Common Stock reserved for issuance pursuant to Awards from 2,000,000 shares of common stock to 4,500,000 shares of Common Stock. As of December 31, 2024, 1,550,000 shares were available for grant under the Inducement Plan.

Stock Options

The Company’s employee and non-employee stock options generally vest as follows: 25% after 12 months of continuous services and the remaining 75% on a ratable basis over a 36-month period from 12 months after the grant date. Stock options granted during the year ended December 31, 2024 have a maximum contractual term of 10 years.

The stock options are subject to time vesting requirements through 2028, are nontransferable, and have term expiration dates set to expire through 2034. Retention stock option grants were granted in October 2024 with a vesting period of 50% after the grant date and 50% one year after the grant date.

The aggregate intrinsic value in the above table is calculated as the difference between fair market value of the Company’s common stock price and, as of December 31, 2024, the exercise price of the stock options. The weighted average grant date fair value per share for the employee and non-employee stock options granted during the years ended December 31, 2024 and 2023 was $2.86 and $5.07, respectively. As of December 31, 2024, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted was $7.5 million, which the Company expects to recognize over a weighted-average period of 2.6 years.

Restricted Stock Units

In November 2019 and August 2020, the Company granted 300,000 and 250,000 restricted stock units ("RSU"), respectively, to its executive officers of which 125,000 were forfeited. Half of the remaining RSUs vested upon receipt of regulatory approval of YCANTH (VP-102) for the treatment of molluscum on July 21, 2023 (the “Approval Date”) and the other half vested on July 21, 2024 subject to the holders’ continuous service through such date.

In March 2023, the Company granted 698,000 RSUs, half of which vested upon the first commercial sale of YCANTH (VP-102) on August 24, 2023 and half of which vested on August 24, 2024.

Compensation expense related to RSUs of $1.6 million was recognized in the Company’s statements of operations for the year ended December 31, 2024 related to the fair market value at the date of grant recognized over the period expected to vest. As of December 31, 2024, the remaining unrecognized compensation expense related to

the RSUs was $0.4 million, which the Company expects to recognize over a weighted average service period of 1.5 years now that vesting of these awards is probable.