Group 1 - The article discusses Stephen's background as a Registered Nurse (RN) and an MBA, highlighting his unique approach to analyzing healthcare and tech stocks through the "Dizzy Framework" [1] - The "Dizzy Framework" is designed to mitigate common behavioral errors in investing, such as reacting to market noise or adhering too rigidly to prior beliefs [1] - The framework emphasizes the importance of quality and timing of information, promoting a patient and disciplined investment strategy that translates complex scientific and market dynamics into actionable investment theses [1] Group 2 - Influences on Stephen's investment analysis include concepts from "Superforecasting" and "Fooled by Randomness," which inform his probabilistic approach to market predictions [1]

WESTLAKE VILLAGE, Calif., Aug. 19, 2025 (GLOBE NEWSWIRE) -- Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT), a commercial-stage biopharmaceutical company focused on developing meaningful innovations in immuno-dermatology, today announced that Arcutis management will participate in three upcoming investor conferences. Details for the company’s participation are as follows: Citi’s 2025 Biopharma Back to School Conference, September 2-3, 2025 Fireside Chat Date: Wednesday, September 3, 2025 Fireside Chat Time: 9: ...

Core Viewpoint - Arcutis Biotherapeutics, Inc. (ARQT) shows potential for significant upside, with a mean price target of $22.63 indicating a 44.8% increase from the current price of $15.63 [1] Price Targets - The average price target consists of eight estimates ranging from a low of $18.00 to a high of $29.00, with a standard deviation of $3.25, suggesting variability in analyst predictions [2] - The lowest estimate indicates a 15.2% increase, while the highest suggests an 85.5% upside [2] Analyst Sentiment - Analysts are optimistic about ARQT's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which historically correlates with stock price movements [4][11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 21.2%, with three estimates moving higher and no negative revisions [12] Zacks Rank - ARQT holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Caution on Price Targets - While price targets are a common metric, they should be approached with skepticism as they may not accurately predict stock price movements [3][10] - Analysts often set optimistic price targets influenced by business relationships, which can lead to inflated estimates [8]

Company Overview - Arcutis Biotherapeutics, Inc. (ARQT) is part of the Medical group, which consists of 979 companies and is currently ranked 8 in the Zacks Sector Rank [2] - The company is categorized under the Medical - Biomedical and Genetics industry, which includes 489 stocks and is ranked 147 in the Zacks Industry Rank [6] Performance Metrics - Year-to-date, Arcutis Biotherapeutics has gained approximately 6%, while the average return for Medical companies is -7.4%, indicating that ARQT is outperforming its peers [4] - The Zacks Consensus Estimate for ARQT's full-year earnings has increased by 25.7% over the past quarter, reflecting improved analyst sentiment and a stronger earnings outlook [4] Zacks Rank - Arcutis Biotherapeutics currently holds a Zacks Rank of 2 (Buy), which emphasizes its potential for improving earnings outlooks [3] - In comparison, another Medical stock, Tenet Healthcare (THC), has a Zacks Rank of 1 (Strong Buy) and has returned 31.2% year-to-date [5]

Company Performance - Arcutis Biotherapeutics reported a quarterly loss of $0.13 per share, better than the Zacks Consensus Estimate of a loss of $0.18, and an improvement from a loss of $0.42 per share a year ago, representing an earnings surprise of +27.78% [1] - The company posted revenues of $81.5 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 12.32%, compared to year-ago revenues of $30.86 million [2] - Over the last four quarters, Arcutis has exceeded consensus EPS estimates four times and topped consensus revenue estimates four times as well [2] Stock Outlook - The immediate price movement of Arcutis Biotherapeutics shares, which have increased about 10% since the beginning of the year, will depend on management's commentary during the earnings call [3] - The current consensus EPS estimate for the upcoming quarter is -$0.13 on revenues of $82.92 million, and for the current fiscal year, it is -$0.55 on revenues of $312.81 million [7] Industry Context - The Medical - Biomedical and Genetics industry, to which Arcutis belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Arcutis's stock performance [5]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported net product revenues of $81.5 million, representing a 28% quarter-on-quarter growth and a 164% increase compared to Q2 2024 [6][43]. - The net loss for the quarter decreased by $36.4 million compared to the same period last year, indicating improved operating results [45]. - Cash and marketable securities stood at $191.1 million as of June 30, 2025, with a slight positive cash flow from operating activities of $325,000 [46]. Business Line Data and Key Metrics Changes - The XEREVE franchise saw strong sales growth, with TRx volume increasing for all products, driven by the adoption of XEREVE for treating inflammatory dermatoses [6][19]. - The volume of XEREVE prescriptions reached a record high of 16,000 weekly scripts, reflecting a year-over-year increase of 117% [19]. - The company anticipates steady sales growth driven by new indication launches and increased contributions from the primary care and pediatric channels [18]. Market Data and Key Metrics Changes - The branded non-steroidal volume grew by 40% year-over-year, while topical steroid volume remained flat, indicating a shift in prescriber preferences [20]. - Approximately 80% of all prescriptions for XEREVE are being reimbursed, contributing to revenue growth [25]. - The company is actively engaged in negotiations with Medicare Part D plans to expand access for patients [25]. Company Strategy and Development Direction - The company plans to leverage its development and commercialization capabilities to address unmet needs in immune-mediated dermatologic diseases [5]. - Future growth will be driven by effective lifecycle management of the XEREVE franchise and potential label expansions for pediatric atopic dermatitis [11][33]. - The company is committed to generating positive free cash flow and reaching cash flow breakeven by 2026 [12][43]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued growth of XEREVE, citing the ongoing conversion from topical steroids as a sustainable growth driver [10]. - The company acknowledged the potential challenges posed by seasonality affecting prescription topical products, anticipating a moderation in growth in Q3 before a return to robust growth in Q4 [18][21]. - Management emphasized a disciplined approach to capital allocation and a focus on data-driven decisions for pipeline management [12][43]. Other Important Information - The company received FDA approval for XEREVE foam 0.3% for the treatment of plaque psoriasis, which is expected to drive incremental demand [21]. - The decision to halt the development of ARQ255 was made following the Phase 1b trial results, reflecting a commitment to focus on high-potential programs [40]. Q&A Session Summary Question: Revenue progression from Q2 to Q3 - Management indicated that while sequential growth is expected in Q3, it will be slightly moderated due to seasonality, but they remain optimistic about sustained momentum [51][57]. Question: Opportunities beyond current indications - Management highlighted the broad applicability of XEREVE across various diseases and emphasized a rigorous approach to selecting new indications based on market size and clinical improvement [52][53]. Question: Early utilization of the national pharmacy and COA partnership - Management noted that early signals from the national pharmacy launch are positive, and efforts are ongoing to educate primary care physicians about ZAREVE [60][62]. Question: Gross to net dynamics and future script growth - Management confirmed that gross to net rates remain stable and expect script growth to be the main driver for sales for the remainder of 2025 [66][68]. Question: Pediatric opportunity in atopic dermatitis - Management expressed excitement about the upcoming approval for ZERIPREME for children aged two to five, highlighting the significant unmet need in this age group [82][84]. Question: Update on Patagus litigation - Management stated that the litigation stay remains in place, and periodic updates are being provided to the court, although the details are confidential [88][89].

Financial Performance - Q2 2025 net product revenue reached $81.5 million, a 164% increase compared to Q2 2024[28,39] - Net product revenues increased by 28% quarter-over-quarter from Q1 2025 to Q2 2025[39,73] - Net loss decreased by 70% from $(52.3) million in Q2 2024 to $(15.9) million in Q2 2025[73] - Cash, cash equivalents, and marketable securities totaled $191.1 million as of June 30, 2025[75] Product & Commercial Updates - ZORYVE portfolio achieved approximately 16,500 weekly total prescriptions on a rolling 4-week basis[40] - Total prescriptions growth was +13% from Q1 2025 to Q2 2025 and +117% compared to Q2 2024[41] - Over 80% of ZORYVE prescriptions are covered by insurance[49] - Launched ZORYVE foam 0.3% for plaque psoriasis of the scalp and body[28] Research & Development - Anticipated approval of ZORYVE cream 0.05% for atopic dermatitis ages 2-5 with target PDUFA October 2025[28,58] - Phase 2 trial initiated for ZORYVE cream 0.05% in ages 3-24 months for atopic dermatitis[58,62]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements, detailing financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $72,740 | $71,335 | | Marketable securities | $118,083 | $156,620 | | Total current assets | $332,778 | $335,820 | | Total assets | $352,433 | $348,889 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $103,936 | $81,013 | | Long-term debt, net | $107,049 | $107,203 | | Total liabilities | $213,459 | $191,348 | | Total stockholders' equity | $138,974 | $157,541 | | Total liabilities and stockholders' equity | $352,433 | $348,889 | - Total assets increased slightly to **$352.4 million** as of June 30, 2025, from **$348.9 million** at December 31, 2024. Total liabilities increased to **$213.5 million** from **$191.3 million**, while total stockholders' equity decreased to **$139.0 million** from **$157.5 million**[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $81,504 | $30,858 | $147,350 | $80,427 | | Total operating expenses | $96,115 | $80,935 | $186,490 | $162,126 | | Loss from operations | $(14,611) | $(50,077) | $(39,140) | $(81,699) | | Net loss | $(15,886) | $(52,332) | $(40,946) | $(87,714) | | Net loss per share, basic and diluted | $(0.13) | $(0.42) | $(0.32) | $(0.75) | - Total revenues significantly increased for both the three-month and six-month periods ended June 30, 2025, primarily driven by product revenue growth. Net loss decreased substantially, from **$(52.3) million** to **$(15.9) million** for the three months, and from **$(87.7) million** to **$(40.9) million** for the six months, reflecting improved operational performance[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) | (In thousands) | Balance—December 31, 2024 | Issuance of common stock upon the exercise of stock options | Issuance of common stock upon the vesting of restricted stock units | Stock-based compensation expense | Unrealized loss on marketable securities | Foreign currency translation adjustment | Net loss | Balance—June 30, 2025 | | :------------- | :------------------------ | :---------------------------------------- | :----------------------------------------------- | :------------------------------ | :------------------------------------- | :------------------------------------ | :------- | :-------------------- | | Common Stock | $12 | $0 | $0 | $0 | $0 | $0 | $0 | $12 | | Additional Paid-In Capital | $1,279,479 | $395 | $0 | $9,915 | $0 | $0 | $0 | $1,301,886 | | Accumulated Other Comprehensive Income (Loss) | $(7) | $0 | $0 | $0 | $(137) | $4 | $0 | $(35) | | Accumulated Deficit | $(1,121,943) | $0 | $0 | $0 | $0 | $0 | $(25,060) | $(1,162,889) | | Total Stockholders' Equity | $157,541 | $395 | $0 | $9,915 | $(137) | $4 | $(25,060) | $138,974 | - Total stockholders' equity decreased from **$157.5 million** at December 31, 2024, to **$139.0 million** at June 30, 2025, primarily due to a net loss of **$40.9 million**, partially offset by stock-based compensation expense and proceeds from stock option exercises and employee stock purchase plan[16](index=16&type=chunk)[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(30,056) | $(76,722) | | Net cash provided by (used in) investing activities | $29,173 | $(90,834) | | Net cash provided by financing activities | $1,775 | $163,219 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $1,096 | $(4,436) | | Cash, cash equivalents, and restricted cash at end of period | $73,048 | $84,887 | - Net cash used in operating activities significantly decreased from **$(76.7) million** in 2024 to **$(30.1) million** in 2025. Investing activities shifted from a net use of **$(90.8) million** in 2024 to a net provision of **$29.2 million** in 2025, driven by marketable securities maturities. Financing activities provided less cash in 2025 (**$1.8 million**) compared to 2024 (**$163.2 million**) due to a large public stock offering in the prior year[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Description of Business](index=9&type=section&id=1.%20Organization%20and%20Description%20of%20Business) Arcutis is a commercial-stage biopharmaceutical company focused on dermatological diseases, with ZORYVE product approvals and capital raises - ZORYVE (roflumilast) cream 0.3% received FDA approval in July 2022 for plaque psoriasis (ages 12+, expanded to 6+ in Oct 2023) and Health Canada approval in April 2023[24](index=24&type=chunk) - ZORYVE (roflumilast) topical foam 0.3% received FDA approval in December 2023 for seborrheic dermatitis (ages 9+) and Health Canada approval in October 2024. It also received FDA approval for plaque psoriasis of the scalp and body (ages 12+) in May 2025[24](index=24&type=chunk) - ZORYVE (roflumilast) cream 0.15% received FDA approval in July 2024 for mild to moderate atopic dermatitis (ages 6+) and Health Canada approval in March 2025[24](index=24&type=chunk) - The company completed a public offering in February 2024, raising **$161.7 million** in net proceeds[27](index=27&type=chunk) - As of June 30, 2025, the company had an accumulated deficit of **$1,162.9 million** and cash, cash equivalents, restricted cash, and marketable securities of **$191.1 million**. Management believes existing capital resources are sufficient for at least 12 months[30](index=30&type=chunk)[31](index=31&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines significant accounting policies, including U.S. GAAP basis, consolidation, estimates, restricted cash, fair value, and new pronouncements - Financial statements are prepared in accordance with U.S. GAAP, reflecting all necessary recurring adjustments[32](index=32&type=chunk) - Restricted cash of **$0.3 million** (June 30, 2025) and **$0.6 million** (December 31, 2024) serves as collateral for a letter of credit related to office lease[35](index=35&type=chunk) - Fair value measurements are categorized into a three-tier hierarchy (Level 1, 2, 3) based on the observability of inputs[39](index=39&type=chunk) - The company is evaluating ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for fiscal years beginning after December 15, 2026, for its potential impact[42](index=42&type=chunk) [3. Revenues](index=13&type=section&id=3.%20Revenues) Revenue recognized under ASC 606, primarily from ZORYVE product sales, showing substantial growth, while other revenue decreased | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | ZORYVE cream 0.3% | $27,675 | $17,258 | $51,062 | $32,284 | | ZORYVE foam | $39,212 | $13,600 | $69,452 | $20,143 | | ZORYVE cream 0.15% | $14,617 | $0 | $24,836 | $0 | | Total product revenue, net | $81,504 | $30,858 | $145,350 | $52,427 | | Other revenue | $0 | $0 | $2,000 | $28,000 | | Total revenues | $81,504 | $30,858 | $147,350 | $80,427 | - Total product revenue, net, increased by **164%** to **$81.5 million** for the three months ended June 30, 2025, and by **177%** to **$145.4 million** for the six months ended June 30, 2025, compared to the same periods in 2024[44](index=44&type=chunk) - Other revenue for the six months ended June 30, 2025, was **$2.0 million**, significantly lower than **$28.0 million** in the prior year, which included a **$25.0 million** upfront payment from the Sato Agreement[44](index=44&type=chunk) [4. Fair Value Measurements](index=13&type=section&id=4.%20Fair%20Value%20Measurements) Details fair value measurements of financial instruments, primarily cash, cash equivalents, and marketable securities, categorized by hierarchy | (In thousands) | June 30, 2025 (Total) | December 31, 2024 (Total) | | :-------------------------- | :-------------------- | :------------------------ | | **Assets:** | | | | Money market funds | $72,740 | $71,335 | | Commercial Paper | $7,774 | $0 | | Certificates of deposit | $5,222 | $5,042 | | Corporate debt securities | $57,172 | $83,955 | | U.S. Treasury and agency securities | $47,915 | $67,623 | | Total assets | $190,823 | $227,955 | - The fair value of the embedded derivative instrument, a Level 3 measurement, was a liability of **$0.4 million** as of June 30, 2025, down from **$0.6 million** at December 31, 2024[54](index=54&type=chunk) - All marketable securities have a maturity of 18 months or less, and there were no significant unrealized loss positions as of June 30, 2025, and December 31, 2024[52](index=52&type=chunk) [5. Balance Sheet Components](index=15&type=section&id=5.%20Balance%20Sheet%20Components) Provides detailed breakdown of key balance sheet components, including inventories, prepaid expenses, and accrued liabilities | (In thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | **Inventories:** | | | | Raw materials | $6,724 | $4,300 | | Work in progress | $1,735 | $584 | | Finished goods | $7,865 | $9,642 | | Total inventories | $16,324 | $14,526 | | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | **Accrued Liabilities:** | | | | Accrued sales deductions | $63,560 | $38,430 | | Accrued compensation | $12,321 | $20,747 | | Clinical trial accruals | $74 | $0 | | Accrued expenses and other current liabilities | $11,899 | $7,616 | | Total accrued liabilities | $87,854 | $66,793 | - Prepaid expenses and other current assets decreased from **$19.7 million** to **$18.6 million**, with a notable decrease in prepaid clinical trial costs[58](index=58&type=chunk) [6. License Agreements](index=15&type=section&id=6.%20License%20Agreements) Details key license agreements with Sato, Huadong, and AstraZeneca, involving upfront payments, milestones, and royalties - Sato Agreement (Feb 2024): Granted exclusive license for roflumilast formulations in Japan. Received **$25.0 million** upfront payment in 2024, with potential for up to **$10.0 million** in regulatory milestones and **$30.0 million** in sales milestones, plus low double-digit to mid-teen double-digit percentage royalties on net sales[60](index=60&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) - Huadong Agreement (Aug 2023): Granted exclusive license for topical roflumilast in Greater China and Southeast Asia. Received **$27.0 million** net upfront payment in Sep 2023 and **$2.0 million** in milestone payments for the six months ended June 30, 2025. Potential for up to **$17.0 million** in development/regulatory milestones and **$40.3 million** in sales milestones, plus low double-digit to high-teen double-digit tiered royalties[67](index=67&type=chunk)[69](index=69&type=chunk)[72](index=72&type=chunk) - AstraZeneca Agreement (July 2018): Grants worldwide exclusive license for topical roflumilast. The company paid **$10.0 million** in the first half of 2025 upon achieving **$250.0 million** in worldwide net sales, recorded as an intangible asset adjustment. Royalty expense was **$4.4 million** for the six months ended June 30, 2025, and amortization expense was **$3.5 million**[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [7. Long-term debt](index=18&type=section&id=7.%20Long-term%20debt) Details the company's **$100.0 million** long-term debt with SLR Investment Corp., including prepayment, revised terms, and covenant compliance - Aggregate principal amount outstanding under the Loan Agreement was **$100.0 million** as of June 30, 2025[77](index=77&type=chunk) - A **$100.0 million** partial prepayment was made in October 2024, reducing the outstanding principal and incurring a **$1.0 million** prepayment penalty and a **$6.95 million** final fee[78](index=78&type=chunk) - The maturity date of the Loan Agreement is August 1, 2029, with an applicable per annum interest rate of **5.95%** plus the greater of **2.50%** or one-month SOFR (**10.27%** on June 30, 2025)[79](index=79&type=chunk)[80](index=80&type=chunk) - Interest expense for the six months ended June 30, 2025, was **$6.0 million**, down from **$15.0 million** in the prior year, due to the lower principal balance and interest rates[88](index=88&type=chunk) - The company was in compliance with all covenants under the Loan Agreement as of June 30, 2025[83](index=83&type=chunk) [8. Stock-Based Compensation](index=21&type=section&id=8.%20Stock-Based%20Compensation) Details stock-based compensation activities, including an Option Exchange program, stock options, and RSU activity - In January 2024, an Option Exchange program resulted in the cancellation of **5,059,129** eligible options for **2,129,594** Replacement RSU Awards, leading to an incremental expense of **$8.6 million** recognized over 1-3 years[92](index=92&type=chunk)[93](index=93&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total stock-based compensation expense | $10,489 | $12,523 | $20,267 | $22,553 | - As of June 30, 2025, total unrecognized compensation cost was **$32.3 million** for unvested options (weighted-average period of 2.8 years) and **$56.9 million** for RSUs (weighted-average period of 3.0 years)[99](index=99&type=chunk) [9. Net Loss Per Share](index=22&type=section&id=9.%20Net%20Loss%20Per%20Share) Outlines basic and diluted net loss per share calculation, excluding anti-dilutive potentially dilutive shares - Basic net loss per share is calculated by dividing net loss by weighted-average common shares outstanding, including pre-funded warrants[100](index=100&type=chunk) | Potentially Dilutive Shares (As of June 30,) | 2025 | 2024 | | :------------------------------------------ | :---------- | :---------- | | Stock options to purchase common stock | 6,922,441 | 5,872,080 | | RSUs subject to future vesting | 6,582,460 | 6,679,040 | | ESPP shares subject to future issuance | 22,479 | 29,722 | | Total | 13,527,380 | 12,580,842 | [10. Segment Reporting](index=23&type=section&id=10.%20Segment%20Reporting) The company operates as a single reportable segment focused on dermatological diseases, with consolidated financial evaluation - The company has one reportable segment: development and commercialization of treatments for dermatological diseases[103](index=103&type=chunk) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Total revenues | $81,504 | $30,858 | $147,350 | $80,427 | | Operating loss | $(14,611) | $(50,077) | $(39,140) | $(81,699) | | Segment and consolidated net loss | $(15,886) | $(52,332) | $(40,946) | $(87,714) | [Item 3. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%203.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of financial condition and operations, highlighting business developments, revenue, expenses, and liquidity [Overview](index=24&type=section&id=Overview) Arcutis is a commercial-stage biopharmaceutical company focused on dermatological diseases, with ZORYVE approvals and pipeline development - Arcutis is a commercial-stage biopharmaceutical company focused on developing and commercializing treatments for dermatological diseases with high unmet medical needs[106](index=106&type=chunk) - ZORYVE cream 0.3% is approved for plaque psoriasis (ages 6+), ZORYVE foam 0.3% for seborrheic dermatitis (ages 9+) and plaque psoriasis of the scalp and body (ages 12+), and ZORYVE cream 0.15% for mild to moderate atopic dermatitis (ages 6+)[107](index=107&type=chunk) - A supplemental new drug application (sNDA) for ZORYVE cream 0.05% for children 2 to 5 years of age with atopic dermatitis was submitted in December 2024, with a PDUFA target action date in October 2025[108](index=108&type=chunk) - The company initiated a Phase 2 study (INTEGUMENT-INFANT) for ZORYVE cream 0.05% in infants (3 months to <2 years) with atopic dermatitis in June 2025[108](index=108&type=chunk) - ARQ-234, a fusion protein for atopic dermatitis, is in preclinical stage, with an IND application submitted to the FDA in July 2025[111](index=111&type=chunk) - Net losses were **$40.9 million** and **$87.7 million** for the six months ended June 30, 2025 and 2024, respectively. Accumulated deficit was **$1,162.9 million** as of June 30, 2025[112](index=112&type=chunk) [Components of Our Results of Operations](index=26&type=section&id=Components%20of%20Our%20Results%20of%20Operations) Details components of financial results, including product and other revenue, cost of sales, R&D, SG&A, other income, and interest expense - Product revenue, net, includes sales of ZORYVE cream 0.3%, ZORYVE foam, and ZORYVE cream 0.15%, net of rebates, chargebacks, discounts, and other adjustments[117](index=117&type=chunk) - Other revenue primarily stems from the Sato and Huadong licensing agreements[118](index=118&type=chunk) - Cost of sales includes manufacturing, distribution, third-party royalties (e.g., AstraZeneca), and amortization of intangible assets related to ZORYVE[119](index=119&type=chunk) - Research and development expenses are expensed as incurred, covering nonclinical studies, clinical trials, manufacturing development, regulatory filings, and medical affairs. Direct external costs are allocated by program (topical roflumilast, topical JAK inhibitor, CD200R, early stage)[121](index=121&type=chunk) - Selling, general and administrative expenses include salaries, benefits, stock-based compensation, travel, sales and marketing costs for ZORYVE, legal costs for patent protection, and professional services[125](index=125&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Significant ZORYVE product revenue growth driven by demand and launches, increased operating expenses, decreased interest expense, and improved net loss [Comparison of the Three Months Ended June 30, 2025 and 2024](index=29&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) | (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :------------- | :-------- | :-------- | :--------- | :--------- | | ZORYVE cream 0.3% | $27,675 | $17,258 | $10,417 | 60% | | ZORYVE foam | $39,212 | $13,600 | $25,612 | 188% | | ZORYVE cream 0.15% | $14,617 | $0 | $14,617 | * | | Total product revenue, net | $81,504 | $30,858 | $50,646 | 164% | - Cost of sales increased by **$4.0 million**, primarily due to greater ZORYVE cream and foam product sales[135](index=135&type=chunk) - Research and development expenses increased slightly by **$0.2 million** (**1%**) to **$19.5 million**[137](index=137&type=chunk) - Selling, general and administrative expenses increased by **$11.0 million** (**19%**) to **$69.2 million**, driven by commercialization efforts[138](index=138&type=chunk) - Interest expense decreased by **$4.5 million** due to a lower outstanding principal balance on long-term debt and lower interest rates[140](index=140&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=30&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) | (in thousands) | 2025 | 2024 | Change ($) | Change (%) | | :------------- | :--------- | :-------- | :--------- | :--------- | | ZORYVE cream 0.3% | $51,062 | $32,284 | $18,778 | 58% | | ZORYVE foam | $69,452 | $20,143 | $49,309 | 245% | | ZORYVE cream 0.15% | $24,836 | $0 | $24,836 | * | | Total product revenue, net | $145,350 | $52,427 | $92,923 | 177% | - Other revenue decreased from **$28.0 million** in 2024 to **$2.0 million** in 2025, primarily due to the **$25.0 million** upfront payment from the Sato Agreement in the prior year[145](index=145&type=chunk) - Cost of sales increased by **$9.6 million**, driven by higher product sales, increased amortization expense from AstraZeneca milestones, and greater royalties[146](index=146&type=chunk) - Research and development expenses decreased by **$5.4 million** (**13%**) to **$37.0 million**, mainly due to the completion of Phase 3 studies for roflumilast cream in atopic dermatitis and lower costs for early-stage programs[147](index=147&type=chunk) - Selling, general and administrative expenses increased by **$20.2 million** (**18%**) to **$133.2 million**, primarily due to higher compensation and sales and marketing expenses for ZORYVE commercialization[149](index=149&type=chunk) - Interest expense decreased by **$9.0 million** due to a lower outstanding principal balance on long-term debt and lower interest rates[151](index=151&type=chunk) [Liquidity, Capital Resources, and Requirements](index=32&type=section&id=Liquidity,%20Capital%20Resources,%20and%20Requirements) Discusses capital sources, including equity, debt, and product sales, with **$191.1 million** in liquidity and sufficient capital for 12 months - As of June 30, 2025, the company had **$191.1 million** in cash, cash equivalents, restricted cash, and marketable securities, and an accumulated deficit of **$1,162.9 million**[153](index=153&type=chunk) - The company believes its existing capital resources will be sufficient to meet projected operating requirements for at least 12 months from the financial statements' issuance date[154](index=154&type=chunk) - Future funding may be required through equity/debt financings, licensing agreements, or other sources if current capital is insufficient[155](index=155&type=chunk) - The Loan Agreement with SLR Investment Corp. had **$100.0 million** outstanding as of June 30, 2025, following a **$100.0 million** partial prepayment in October 2024[158](index=158&type=chunk)[159](index=159&type=chunk) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Cash used in operating activities | $(30,056) | $(76,722) | | Cash provided by (used in) investing activities | $29,173 | $(90,834) | | Cash provided by financing activities | $1,775 | $163,219 | - Net cash used in operating activities decreased significantly to **$30.1 million** in 2025 from **$76.7 million** in 2024, primarily due to a lower net loss and changes in operating assets and liabilities[168](index=168&type=chunk)[169](index=169&type=chunk) - Net cash provided by investing activities was **$29.2 million** in 2025, a shift from **$90.8 million** used in 2024, mainly due to proceeds from maturities of marketable securities[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2025 - Disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[178](index=178&type=chunk) - Management concluded that internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[179](index=179&type=chunk) - No material changes in internal control over financial reporting were identified during the three months ended June 30, 2025[180](index=180&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in patent litigation against Padagis regarding ZORYVE® 0.3% cream and Teva regarding European patents - Arcutis filed a lawsuit against Padagis in March 2024 for infringement of eleven patents related to ZORYVE® 0.3% cream, following Padagis's ANDA submission for a generic version[184](index=184&type=chunk) - The patent litigation with Padagis was stayed in April 2025 at Padagis's request, extending the 30-month FDA approval stay beyond August 14, 2026[185](index=185&type=chunk) - Teva Pharmaceutical Industries Ltd. filed oppositions against two of Arcutis's European patents (EP 3634380 B1 and EP 3684334 B1) related to topical roflumilast compositions[186](index=186&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, emphasizing potential adverse effects of changes in tax laws and regulations on business and financial performance - Changes in tax laws or regulations, including new income, sales, use, or other tax laws, could materially and adversely affect the company's business operations and financial performance[189](index=189&type=chunk) - The 'One Big Beautiful Bill Act,' signed on July 4, 2025, includes estimated **$1 trillion** cuts to Medicaid spending, which could result in lower revenue for life science companies[189](index=189&type=chunk) - The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (Pillar Two Model Rules) contemplates a global minimum tax rate of **15%**, which could impact the company, although a material impact is not currently expected[190](index=190&type=chunk)[191](index=191&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales of equity securities and no issuer purchases of equity securities during the period - No unregistered sales of equity securities occurred[192](index=192&type=chunk) - No issuer purchases of equity securities occurred[193](index=193&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Indicates no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred[194](index=194&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[195](index=195&type=chunk) [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) Discloses CEO and General Counsel entered Rule 10b5-1 trading plans in June 2025 for potential common stock sales - CEO Todd Franklin Watanabe entered into a Rule 10b5-1 trading plan on June 4, 2025, for potential sale of up to **135,000** shares between October 1, 2025, and September 30, 2026[196](index=196&type=chunk) - General Counsel Masaru Matsuda entered into a Rule 10b5-1 trading plan on June 6, 2025, for potential sale of up to **83,126** shares between September 4, 2025, and September 4, 2026[197](index=197&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents and certifications - Key exhibits include Restated Certificate of Incorporation, Restated Bylaws, Manufacturing Supply Agreements (with amendments), Severance & Change in Control Agreement, Amended and Restated Non-Employee Director Compensation Program, and certifications from principal executive and financial officers[199](index=199&type=chunk) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, and Label Linkbase Documents are included[199](index=199&type=chunk)[200](index=200&type=chunk)

Arcutis Announces Second Quarter 2025 Financial Results and Provides Business Update Westlake Village, CA, August 6, 2025 – Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT), a commercial-stage biopharmaceutical company focused on developing meaningful innovations in immuno-dermatology, today reported financial results for the quarter ended June 30, 2025, and provided a business update. "We continue to advance our strategy to become the leading medical dermatology company. This quarter, we generated strong net p ...

Core Insights - The article discusses Arcutis Biotherapeutics, Inc. (NASDAQ: ARQT) and its reliance on the drug Zoryve, which raises skepticism about the company's ability to generate shareholder returns [1]. Company Analysis - Arcutis Biotherapeutics has been previously rated as a Hold due to its dependence on Zoryve [1]. - The company is involved in the research and development of novel Cell & Gene Therapies (CGT) aimed at addressing various clinical needs [1]. Analyst Background - The analyst has over 20 years of experience in life sciences, focusing on biotechnology, pharmaceuticals, Medtech, and healthcare stocks [1]. - The analyst utilizes a strong background in biomedicine and bioengineering to evaluate the potential of new treatments and their impact on shareholder returns [1].