Arcutis Biotherapeutics(ARQT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, the company reported revenues of $71 million, with$ 69 million from the ZORYVE franchise, reflecting a strong sequential revenue growth [9][10] - For the full year 2024, total revenues reached $197 million, with ZORYVE product sales of$ 167 million, marking a 471% year-over-year growth [10][57] - The company expects gross-to-net percentages to remain in the 50s, despite some quarterly fluctuations [10][32] Business Line Data and Key Metrics Changes - The ZORYVE franchise saw significant growth, with product sales of $167 million for the year, driven by prescription growth across its portfolio [10][21] - Prescription volume for ZORYVE reached a record high of 16,000 weekly scripts in Q4, representing a 334% year-over-year increase [24][25] - The company launched ZORYVE foam for seborrheic dermatitis and ZORYVE foam 0.15% cream for atopic dermatitis, expanding its product offerings [8][10] Market Data and Key Metrics Changes - The company has secured broad access to approximately 4.5 million commercially insured patients treated by dermatologists and is making progress in gaining Medicare and Medicaid coverage [13][31] - The dermatology market treats over 8 million patients across approved indications, with a significant opportunity to convert patients from topical steroids to ZORYVE [12][42] Company Strategy and Development Direction - The company aims to drive a shift away from topical steroids, focusing on expanding the ZORYVE portfolio and increasing prescriber base beyond dermatology [6][8] - Upcoming PDUFA dates for new indications, including scalp and body psoriasis, are expected to enhance ZORYVE's market presence [8][45] - The company is committed to maintaining strong commercial coverage and expanding its reach into primary care and pediatrics [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong foundation established for ZORYVE and the potential for continued growth in 2025 and beyond [7][11] - The management highlighted the importance of educating physicians on the benefits of ZORYVE and the ongoing shift in clinical practice away from steroids [14][48] - The company anticipates reaching cash flow break-even in 2026, which will enhance operational flexibility [62][66] Other Important Information - The company announced a partnership with Odell Beckham Jr. to increase patient awareness of seborrheic dermatitis and promote ZORYVE foam [39][40] - The company has a strong cash position with$ 228.6 million in cash and marketable securities as of December 31, 2024 [61][62] Q&A Session Summary Question: Clarification on Q4 results delta - Management clarified that the delta between preannounced and actual Q4 results was primarily due to conservative estimates and adjustments for product return reserves [72][73] Question: Confidence in IP protection - Management expressed confidence in the strength of the IP portfolio and the ability to maintain exclusivity for ZORYVE, while also preparing to defend its rights [74] Question: Impact of sales force expansion - The sales force expansion in June significantly enhanced the company's share of voice among dermatologists, contributing to increased prescription growth [83] Question: Refills and tube consumption estimates - Management reported encouraging refill rates of around 40% for ZORYVE cream and foam, with expectations of similar rates for atopic dermatitis as the product matures [91] Question: Medicare and Medicaid coverage - Approximately 1 in 2 Medicaid beneficiaries now have access to ZORYVE, with ongoing negotiations to improve Medicare coverage [102][103] Question: Profitability priorities - While achieving cash break-even is important, the primary focus remains on investing in the growth of ZORYVE and driving revenue growth [105][109]