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May 24 (Reuters) - The U.S. Food and Drug Administration (FDA) declined to approve Verrica Pharmaceuticals Inc's drug for the treatment of a viral skin disease known as molluscum contagiosum, the company said on Tuesday.

The disease is caused by a pox virus and leads to skin-toned to pink-colored lesions that can cause pain, inflammation, itching and bacterial infection. While the lesions usually go away within a year without scarring, some cases could take a lot more time.

There are currently no approved treatments in the United States for the condition.

The FDA denied approval for Verrica's drug VP-102 due to deficiencies identified at Sterling Pharmaceuticals Services, a contract manufacturer that produces Verrica's bulk solution drug product, during a general re-inspection, which resulted in an Official Action Indicated (OAI) status.

An OAI is the FDA's most serious category of violation, and regulatory experts say it could lead to a prohibition on the sale of drugs from a facility if not addressed.

Verrica said it had been told that internal policy is preventing the health regulator from "communicating the label and approving the NDA (New Drug Application)" when a contract manufacturer is placed on OAI status.

None of the issues identified by the FDA during its re-inspection were specific to the manufacturing of VP-102, Verrica said in its statement.

The health regulator had declined Verrica's marketing application for the drug last year, citing general quality issues at one of the company's third-party manufacturing facilities. (https://bit.ly/3lc4lAn)

(Reporting by Bhanvi Satija, Amruta Khandekar and Sneha Bhowmik; additional reporting by Juby Babu in Bengaluru; Editing by Subhranshu Sahu)