ARQT — Arcutis Biotherapeutics, Inc.

Summary of Arcutis Biotherapeutics Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Product Revenues: $105.4 million, a 65% increase year-over-year from Q1 2025.
• Gross to Net Rate: Remained stable in the 50s, improved compared to Q1 2025 due to better payer contracting.
• Cost of Sales: $9.8 million, up from $8.8 million in Q1 2025.
• R&D Expenses: Increased to $30.6 million from $17.5 million, largely due to a $10 million milestone payment for the ARQ-234 trial.
• SG&A Expenses: $74.1 million, up 16% from $64 million in Q1 2025, reflecting ongoing investments in commercialization.
• Cash Position: $224.3 million in cash and marketable securities, with positive cash flow of $2.2 million from operating activities.

2. Strategic Updates and Business Highlights

• Growth Strategy: Arcutis is focused on the "grow, expand, build" framework, emphasizing the growth of ZORYVE in existing indications, expansion into new indications, and building an innovative pipeline.
• ZORYVE Developments: Submitted a supplemental NDA for ZORYVE cream for infants aged 3 to 24 months with atopic dermatitis and completed enrollment in a trial for scalp and body psoriasis in children aged 2 to 11.
• Sales Force Expansion: Completed expansion of the dermatology sales force and initiated the build-out of a primary care and pediatric sales team.
• Direct-to-Consumer Campaign: Launched a patient awareness campaign featuring public figures to enhance engagement and awareness of ZORYVE.

3. Forward Guidance and Outlook

• Revenue Guidance: Maintained full-year revenue guidance of $480 million to $495 million for 2026.
• Sales Growth Expectations: Anticipates quarter-over-quarter growth in net sales driven by increasing patient demand and improvements in gross to net rates.
• Long-term Growth: Investments made in 2026 are expected to lay the groundwork for ZORYVE's growth inflection in 2027 and beyond.

4. Bad News, Challenges, or Points of Concern

• Seasonality Impact: Experienced typical first-quarter seasonality, compounded by severe weather events, leading to a more significant sequential decline in revenues compared to Q4 2025.
• Market Dynamics: Prescription volumes for topical therapies, including ZORYVE, faced declines due to broader market challenges, although ZORYVE outperformed competitors.
• Competitive Landscape: The need to differentiate ZORYVE in a competitive market with existing topical corticosteroids and other non-steroidal therapies remains a challenge.

5. Notable Q&A Insights

• Gross to Net Improvement: The improvement was attributed to better formulary status and lower co-pays for patients, leading to a more favorable pricing environment.
• Sales Projections: Q2 sales are expected to exceed Q1, with early data showing a 13% growth in prescriptions compared to Q1.
• Medicaid and Medicare Coverage: Progress is expected in Medicaid coverage in 2026, while Medicare coverage may take longer, likely not before 2027.
• Primary Care Strategy: The new primary care and pediatric sales team will focus on high-volume prescribers to drive adoption of ZORYVE.
• Efficacy Benchmarks: For ongoing trials in vitiligo and hidradenitis suppurativa, the company is looking for rapid response rates to ensure compliance and fit within treatment paradigms.

Overall, Arcutis is positioned for continued growth with ZORYVE, despite facing typical seasonal challenges and competitive pressures in the dermatology market. The company remains focused on expanding its product offerings and enhancing market penetration through strategic investments and sales force expansions.