Max Homa shares his journey with seborrheic dermatitis to encourage others to take control of their symptomsZORYVE® (roflumilast) foam 0.3% is a once-daily, steroid-free, leave-in topical foam uniquely formulated to treat the itching, redness, and flaking of seborrheic dermatitis anywhere it appears, including hair-bearing areas10 million Americans live with seborrheic dermatitis, a chronic inflammatory skin disease that occurs most often on areas with oil-producing glands, including the face and scalp WEST ...

Max Homa shares his journey with seborrheic dermatitis to encourage others to take control of their symptomsZORYVE® (roflumilast) foam 0.3% is a once-daily, steroid-free, leave-in topical foam uniquely formulated to treat the itching, redness, and flaking of seborrheic dermatitis anywhere it appears, including hair-bearing areas10 million Americans live with seborrheic dermatitis, a chronic inflammatory skin disease that occurs most often on areas with oil-producing glands, including the face and scalp WEST ...

Group 1 - The article highlights the expertise of a stock analyst with over 20 years of experience in quantitative research, financial modeling, and risk management, focusing on equity valuation and market trends [1] - The analyst has a background as a former Vice President at Barclays, leading teams in model validation, stress testing, and regulatory finance, which contributes to a deep understanding of both fundamental and technical analysis [1] - The research approach combines rigorous risk management with a long-term perspective on value creation, emphasizing macroeconomic trends, corporate earnings, and financial statement analysis [1]

Core Viewpoint - The market anticipates Arcutis Biotherapeutics, Inc. (ARQT) will report a year-over-year increase in earnings and revenues for the quarter ended December 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus EPS estimate for Arcutis is $0.03 per share, reflecting a year-over-year increase of +133.3% [3]. - Expected revenues are $115.71 million, which is a 62.2% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4]. - The Most Accurate Estimate for Arcutis is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -160.00%, suggesting a bearish outlook from analysts [12]. Earnings Surprise History - In the last reported quarter, Arcutis was expected to post a loss of $0.1 per share but instead reported earnings of $0.06, resulting in a surprise of +160.00% [13]. - Over the last four quarters, Arcutis has beaten consensus EPS estimates four times [14]. Investment Considerations - Despite the potential for an earnings beat, the combination of a negative Earnings ESP and a Zacks Rank of 4 indicates that Arcutis may not be a compelling candidate for an earnings surprise [12][17]. - Investors are advised to consider other factors beyond earnings results when making investment decisions regarding Arcutis [15][17].

Summary of Arcutis Biotherapeutics Conference Call Company Overview - **Company**: Arcutis Biotherapeutics (NasdaqGS:ARQT) - **Focus**: Development and commercialization of dermatological products, particularly ZORYVE for treating skin conditions such as psoriasis and atopic dermatitis Key Points Commercial Strategy and Growth - Arcutis aims to grow the ZORYVE franchise through three main pillars: expanding ZORYVE, building out the pipeline, and life cycle management initiatives [2][3] - ZORYVE was launched in 2022, targeting psoriasis, atopic dermatitis, and seborrheic dermatitis, with ongoing efforts to enhance its market presence [2] - The company has achieved cash flow break-even starting in Q4 2025 and expects to maintain this status throughout 2026 [3] Market Potential and Sales Forecast - Peak sales for ZORYVE are projected between $2.6 billion and $3.5 billion, with $300 million to $500 million expected from life cycle management expansions [23][25] - The company currently holds a 3% market share in the dermatology space, with aspirations to capture 15%-20% of the market share [25][26] Pediatric Market Opportunity - ZORYVE is approved for use in children aged 2 and above for atopic dermatitis, with ongoing studies to expand its use to younger patients [14][15] - Approximately 1 million patients aged 3 to 24 months are currently treated for atopic dermatitis, representing a significant market opportunity [15] Shift in Treatment Paradigms - There is a growing trend among dermatologists to reduce reliance on topical corticosteroids, with ZORYVE positioned as a viable alternative [4][7] - The American Academy of Dermatology is updating guidelines to reflect this shift, particularly for atopic dermatitis in young children [11][13] New Indications and Research - Arcutis is exploring new indications for ZORYVE, including vitiligo and hidradenitis suppurativa, based on positive off-label use reports from healthcare providers [35][38] - Initial studies for these new indications are planned for Q4 2026 and Q1 2027, respectively [41] Development of ARQ-234 - ARQ-234, a CD200R agonist, is being developed to modulate immune responses without causing immune suppression, potentially offering a more durable treatment option for various inflammatory diseases [52][53] - The company is considering expanding its focus beyond dermatology to adjacent areas such as asthma and rheumatological conditions [68][69] Investment in Commercialization - Arcutis plans to invest in its commercial operations, including adding 30 sales representatives to enhance outreach and prescription growth [28][78] - Marketing initiatives, including influencer partnerships, are also in place to boost product visibility and sales [79] Additional Insights - The company is committed to a methodical approach in expanding its market presence and exploring new therapeutic areas, ensuring that any new asset aligns with its strategic goals [69][70] - The development team has demonstrated efficiency in managing multiple indications simultaneously, which is a competitive advantage in the fast-paced biotech landscape [76]

Fund Performance - Baron Health Care Fund rose 13.10% in Q4 compared to 11.92% for the Russell 3000 Health Care Index and 2.40% for the Russell 3000 Index [1] - The Fund returned 10.28% for the full year, while the indexes gained 14.56% and 17.15% respectively [1] - Strong stock selection in biotechnology contributed to the Fund's relative gains in the quarter [1] Investment Strategy - The Fund seeks to invest in businesses with secular growth opportunities, a sustainable competitive edge, and strong management [1] - The firm believes healthcare is a strong sector in the U.S. economy, offering attractive investment opportunities with positive momentum heading into 2026 [1] Company Highlight: Arcutis Biotherapeutics, Inc. - Arcutis Biotherapeutics, Inc. is a new addition to the portfolio, focusing on treatments for dermatological diseases [2] - As of February 5, 2026, Arcutis stock closed at $26.07 per share, with a one-month return of -7.62% and a twelve-month increase of 124.55% [2] - Arcutis has a market capitalization of $3.193 billion [2] Product Overview: Zoryve - Zoryve cream and foam are used for treating autoimmune dermatologic conditions, showing similar efficacy to steroids but with fewer side effects [3] - 80% of patients with commercial insurance now have access to Zoryve, which targets 30 million patients in the U.S. [3] - Assuming moderate adoption, peak sales could exceed $3 billion, with Arcutis already free cash flow positive and expected to see meaningful operating leverage [3]

Company Overview - Arcutis Biotherapeutics specializes in developing topical therapies for chronic skin conditions, focusing on psoriasis and atopic dermatitis [1][5] - The company generates revenue through proprietary dermatology treatments, primarily targeting prescription-based therapies for chronic inflammatory skin disorders [8] Recent Developments - Tejara Capital sold its entire holding of 520,503 shares in Arcutis Biotherapeutics, resulting in a decrease of $9.81 million in value [2][3] - This sale reduced Tejara Capital's position in Arcutis from 5.1% of assets under management (AUM) to zero [3] Financial Performance - As of February 4, shares of Arcutis Biotherapeutics were priced at $26.08, reflecting a 99.1% increase over the past year, significantly outperforming the S&P 500's 14% gain [3] - The company reported net product revenue of $99.2 million in the third quarter, more than doubling year over year, with management projecting full-year 2026 net product sales of approximately $455 million to $470 million [9] Market Position - Arcutis Biotherapeutics has transitioned into a revenue-scale phase, where sustained prescription growth and operational efficiency are critical for future returns [10] - The company’s lead products include roflumilast cream for plaque psoriasis and atopic dermatitis, with a focus on expanding its market presence [8]

Core Insights - Arcutis Biotherapeutics Inc. announced positive topline results from its phase 2 study of ZORYVE cream 0.05% for treating atopic dermatitis in infants aged 3 months to less than 24 months [1] Group 1: Study Results - The phase 2 study, named INTEGUMENT-INFANT, involved 101 infants, with 58% of participants achieving a 75% improvement in the Eczema Area and Severity Index (EASI-75) at Week 4 [2] - ZORYVE cream 0.05% was well tolerated, showing a safety profile consistent with previous studies, and no new safety signals were identified during the 4-week treatment period [2] Group 2: Regulatory and Market Information - The company plans to file a supplemental New Drug Application (sNDA) to extend the use of ZORYVE cream 0.05% to the target age group in Q2 2026 [4] - As of January 30, 2026, Arcutis Biotherapeutics Inc. shares closed at $25.37, reflecting a decrease of 1.40% [4]

Core Insights - Arcutis Biotherapeutics announced positive topline results from the INTEGUMENT-INFANT Phase 2 study for ZORYVE® (roflumilast) cream 0.05% in infants with atopic dermatitis, showing a well-tolerated safety profile and significant efficacy [1][2][4] Study Results - The INTEGUMENT-INFANT study involved 101 infants aged 3 months to less than 24 months, demonstrating that 58% of participants achieved a 75% improvement in the Eczema Area and Severity Index (EASI-75) at Week 4 [6] - Adverse events were low in incidence, primarily mild to moderate, with diarrhea, nasopharyngitis, upper respiratory tract infection, and vomiting being the most common [2][4] Product Information - ZORYVE cream is a topical phosphodiesterase 4 (PDE4) inhibitor, indicated for the treatment of mild to moderate atopic dermatitis in pediatric patients aged 2 to 5 years [8][11] - The company plans to submit a supplemental New Drug Application (sNDA) for ZORYVE cream 0.05% for infants in Q2 2026 [6] Industry Context - Atopic dermatitis affects approximately 9.6 million children in the U.S., with symptoms often developing within the first year of life [5][6] - The disease can significantly impact the quality of life for both children and their families, leading to sleep disruption and emotional strain [7]

Core Viewpoint - Arcutis Biotherapeutics has mutually agreed with Kowa Pharmaceuticals America to terminate their promotion agreement for ZORYVE, with plans to take over sales and promotion responsibilities in pediatric and primary care settings [1] Group 1: Agreement Termination - The promotion agreement between Arcutis and Kowa Pharmaceuticals was terminated on January 23, 2026 [1] - The agreement involved the sales and promotion of ZORYVE to primary care physicians and pediatricians in the United States [1] Group 2: Future Plans - Following the termination, Arcutis will assume responsibility for the sales and promotion of ZORYVE in the pediatric and primary care settings [1] - The company is finalizing its promotional plans for these clinicians and will provide updates during the Q4 earnings call on February 25, 2026 [1] Group 3: Salesforce Expansion - This initiative is separate from the targeted expansion of Arcutis's dermatology salesforce, which will continue to focus on dermatology clinicians and increasing ZORYVE prescriptions in dermatology practices [1]