Q4 2022 Arcutis Biotherapeutics Inc Earnings Call
Speaker 1: The con-
Speaker 1: Thank.
Speaker 2: Ladies and gentlemen, thank you for standing by, and welcome to our QTS Biotherapeutics Inc. 4th Quarter 2022 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speakers' presentation, there will be a question and answer session.
Speaker 2: To ask a question during the session, you will need to press star 1 1 on your telephone. You will then need an automatic message advising your hand it's raised.
Speaker 2: Please note that today's conference is being recorded. I will now hand a conference over to your speaker host, Eric Mackenzie, Head of Investor Relations. Please go ahead.
Speaker 3: Thank you, Olivia. Good afternoon, everyone, and thank you for joining our QSIS 4th quarter and full year 2022 earnings call.
Speaker 3: Slides are available on the investors section of our website. On today's call we have Frank Watanabe, President and CEO , Scott Burrows, Chief Financial Officer, Ken Locke, Chief Commercial Officer, and Patrick Burnett, Chief Medical Officer.
Speaker 3: During this call, I remind everyone that we will be making forward-looking statements. These statements are subject to certain risks and uncertainties and our actual results may differ materially. We encourage you to review the information disclosed in our latest SEC filings. With that, I'll hand the call to Frank.
Speaker 3: Thanks, Eric. So I'm on slide five in the deck, which is on our website if you folks haven't downloaded yet. So, you know, 2022 was really a year of exceptional execution for our CUTUS and really set us up for great success in 2023 and beyond. Just to recap, we had that four successful phase three trials read out.
Speaker 3: When on time approval for the reef and we raised over $300 million to secure a strong balance sheet to support our continuing commercialization and advancing of our pipeline and we continue to progress in building our pipeline. On slide 6.
Speaker 3: We're making steady progress towards our vision of building one of Biotechnology's leading dermatology companies. Some of the highlights from Q4 and other recent developments. With Zareve, we've got an innovative product that's really well positioned for long-term success with clinically meaningful benefits over alternative treatments.
Speaker 3: We are seeing very encouraging script growth as physicians gain positive real world experience with the reef and we are also having great success in obtaining broad high quality access. We are delighted today to announce that we have received coverage from the second of the three large major national PBMs.
Speaker 3: effective tomorrow. And Ken's going to comment a little bit more about the access situation, but we're really happy with our rapid progress in obtaining broad high quality coverage for us to read.
Speaker 3: We also continue to advance additional indications for topical reform last capitalizing on what is really turning into a unique pipeline in a product. We had the positive readouts from Entanglement 1 and 2 in atopic dermatitis. Very excited about the clinical profile in AD and the approvals of the product in a large and rapidly growing market.
Speaker 3: We also just recently submitted the NDA for topical reform last foam and seborrheic dermatitis. And that sets us up for a potential approval late this year or very early part of 2024. And we've also already submitted a supplemental NDA for Zarif and Plaxeriasis down to the age of two, which will further read on the safety profile of Zarif and Plaxeriasis.
Speaker 3: the only topical treatment for alopecia areata.
Speaker 3: And finally, not only what we accomplish matters, but how we accomplish it matters to us as well. And so we're very proud that we issued our first ESG report in the fourth quarter, highlighting the progress that we're making on these important topics.
Speaker 3: If you move on to slide number seven, just a reminder of our broad and deep medical dermatology pipeline and the progress that we've made recently since the last call on three programs in particular, I'd call your attention to the three red arrows highlighting some of our recent progress in advancing the pipeline with the NDA and Ceb derm.
Speaker 3: the initiation of Phase 1B for AR Q2 55, and the acquisition of and progress on AR Q2 34.
Speaker 3: Turning to slide number eight, there really are four keys to our strategy for the long-term success of Zareve. One is positioning Zareve to replace a significant percentage of topical steroids, which we're going to spend some time talking about today. And finally, providing a positive clinical experience for doctors and patients when they use Zareve.
Speaker 3: Third is obtaining broad high quality coverage and lastly is ensuring profitable growth through a rapid stabilization of our growth and net.
Speaker 3: And you turn to slide nine. I wanna spend just a couple minutes talking about the first of these four elements of our strategy, the important, and I think it's really important for investors to understand that the key to realizing the Zareve's real potential is the conversion of a significant percentage of topical steroids over to Zareve. To give you some context, there are about 12 million prescriptions a year for topical steroids. That's something like a quarter million
Speaker 3: and move away from topical steroids. The second is that the jury needs to provide a product profile that satisfies the needs of prescribed patients. And the third one is it needs to be as easy to write the reviews as it is for that next topical steroid.
Speaker 3: That all sounds great, but is that possible? If you go to the next slide, to slide 10, we're showing here several different markets where you had a stable, mature, and generic market and then an introduction of a new class of drugs. What you can see in each one of these instances is that there's a very significant conversion over time as well as some significant market growth action.
Speaker 3: the guard market with conversion of H2s to PPI, and then most recently the conversion of the oral migraine market from triptans over to the oral CGRPs, which is still very early days, but you can see a very rapid conversion trend even in that market. As you go to slide 11, as you look across all these markets, and we were showing also the antidepressant market and the conversion of TCA to SSRI, what you can see is over time there is a very dramatic shift to the new class.
Speaker 3: the true opportunity for Zareve.
Speaker 3: So if you move on to slide 11, sorry, I'm on slide 12. So I want to take just a moment and have Patrick comment on the first of these three elements around what we're hearing from the dermatology community about the need to shift away from topical steroids. Patrick? Sure.
Speaker 3: As Frank mentioned, one key to moving dermatologists from topical steroids to newer nonsteroidal alternatives is the recognition within the specialty that a change is needed. Recall last year at our investor day held during the AAD, we noted a change in the field regarding the surging interest in topical nonsteroidal treatments.
Speaker 3: This has continued to build, fueled by multiple approvals, including Xareef, across both psoriasis and atopic dermatitis. The Derm community, with KOL bleeding from the front, is educating that steroids were fine when there were no other acceptable options, but this has changed with the introduction of the new novel non-steroidals. They've noted the changing standard of care and raised questions about the clinical appropriateness of using topical steroids to manage these conditions chronically in the current environment.
Speaker 3: Another aspect is patient expectations. This is something we're hearing from the podium, but I'm also hearing it frequently from doctors, talking to doctors out in the field. Many patients are challenging doctors when they're presented with a prescription for topical steroids. Finally, we know that there's a movement to update treatment guidelines to reflect the new nonsteroidal treatment options, and this is a favorable change as well. So taken together, we hear leading dermatologists and key opinion leaders saying from the podium that it's now become hard to justify.
Speaker 3: You can see our Zareev launch continues to build with steady and sustainable weekly prescription growth for our first full quarter of launch. And we've continued to build in the first quarter of 2023 here through the typical noise and chopinist related to insurance and deductible resets and a multitude of holiday shortened weeks.
Speaker 3: We've now attained well over 20,000 prescriptions launched today with plenty of headroom for continued growth as Frank mentioned and our confidence continues to grow every week that we're providing the best topical treatment solution to plaxoriasis patients. Now as it relates to a core element of driving the conversion from steroids, the Zareed profile continues to satisfy the needs of prescribers and patients with exceptional feedback.
Speaker 3: to see that a new product is worthy enough to truly become a viable replacement to topical corticosteroids through repeated and robust trial. And we continue to be confident that Zareev can deliver on that promise. Remembering that prior attempts to replace their royal agents have disappointed for one reason or another, including lack of sufficient efficacy, tolerability concerns, or both.
Speaker 3: Moving on to slide 15, our physician intent to prescribe continues to be very strong. This is data from our recent physician ATU fielded a few months into launch reflecting prescriber intent and prior behavior contrasted to expected behavior across patient severities and psoriasis. Ourayan
Speaker 3: The REV intended use is expected to increase two to three fold across patient severity types in the next six months All coming at the expense of decreased utilization of the mid and high potency steroids that are associated with psoriasis treatment This is exactly what we want to see and emblematic of the march toward realizing our full potential The willingness and intent to move away from the topical therapy
Speaker 3: therapies are being switched from to Zareed and a view into the types of patients adopting therapy.
Speaker 3: Zarif is currently playing a broad role and at the left you can see that the majority are almost two-thirds of switches to Zarif are from a topical corticosteroid or steroid combination product as expected as well as an increasing amount from other branded therapies as you can see in the chart as well as replacing older inferior non-steroidal agents such as calcineurin, calcineurin inhibitors and vitamin D analogs.
Speaker 3: As with any switching behavior, dissatisfaction with the clinical profile for reasons of efficacy, safety, or tolerability remain the key driver of therapeutic switch. It's becoming increasingly apparent from our physician and patient feedback that this is driving this period over period. Now touching on the third condition that Frank mentioned regarding what's needed to satisfy As you can see, the
Speaker 3: position hassle including step edits and prior authorizations. And we're pleased to bring you progress along the lines of our stated goal of broad and high quality access. Now at the onset we said that these things including high quality coverage, faster formulary adoption, preservation of long-term growth and optimization for our volume of franchise value are important.
Speaker 3: Remember that this is the first of four launches for reflimalax and that our decisions are being made with the lens of enabling strong access across that portfolio of launches, product presentations and patient types. We've now secured formulary coverage, not just a contract, but coverage at our second of the three large national PBMs effective market.
Speaker 3: Moving to slide 18, taking a deeper dive into the current non-steroidal topical product coverage and at the time of this call based on our sources, this chart depicts the high quality differentiated access that compares favorably on both time to coverage relative to launch date and quality in terms of step, edit and prior authorizations versus recently launched products. Importantly, this for us represents two of the three major...
Speaker 3: In conclusion on slide 20, I spoke to our investor last year on the three core pillars to commercial success, anchored by the unparalleled product profile as the foundation. In terms of driving prescriber awareness and use, we're on the path with over 4000 unique writers since launch and an aided awareness rate well over 90% for Zareve as per our survey fielded in November . In terms of patient engagement and driving patient positive experience.
Speaker 3: We already spoke to the testimony of a daily on the overwhelmingly positive experience that was raised. But in addition, we've been continuing to think about how to appropriately accelerate patient engagement in terms of awareness, consideration, and request. Especially now, as access is coming more fully online, and we want to drive into that.
Speaker 3: Now we currently have a very active digital social media and DTC campaign in place, but we are vigorously evaluating whether and when a highly focused connected TV campaign could make sense for Zarif. And like any other business, repeat business is the greatest sign of customer satisfaction, and our refills continue to escalate which is a validation of that positive experience. Lastly, broad high quality access is coming into focus as discussed.
Speaker 3: With coverage secured at two of the three major PBMs in just six months post product availability, remember that the benchmarks are just 12 to 18 months to secure a broad commercial coverage typically. Importantly, the quality of one-step, no prior authorization formulary coverage of our most recent announcement is highly aligned.
Speaker 3: with our goals of obtaining as much prior authorization free access as possible to speed the flow of conversion of legacy products to Zareve and making it very easy to fit into the flow of prescribers today. I'll hand it over now to Patrick for an R&D update.
Speaker 3: Thanks, Ken. Starting on slide 21, within the psoriasis community, excitement continues to grow for Zareve. I want to start with some compelling data that we presented at the winter clinical meeting in January , which was very well received by physicians and KOLs. These are data from our 52-week open-label psoriasis study showing durable efficacy with patients maintaining clear or almost clear, that's an IJ of zero or one.
Speaker 3: for a medium duration of about 10 months. Also worth noting is that 57 percent of patients achieved an IgA of 01 at any point in this two-week trial. I'm really excited about these data. They've been very easy to interpret for docs and are particularly important to build momentum as patients are coming back to physicians offices with positive experience.
Speaker 3: and it gives them a clear picture of what to expect as they continue with their treatment. On slide 22 now, physician feedback on AD, the data has been very positive. What continues to jump out is the speed of onset in our trials across both psoriasis and atopic dermatitis, which gives an early indication that the drug is working in the disease, and of course the ever-important safety and tolerability profile, which has been consistent across all of our...
Speaker 3: from integument one and integument two on slide 22. We showed statistical significance at week one with clear separation already from vehicle. Then at week two, about 30% of patients achieved a 75% clearance already. And this continued to increase to over 40% at week four, which was the end of treatment.
Speaker 3: Keep in mind, steroids work quickly, so these data are exactly what physicians want to see. This gets back to the point about driving physician interest in uptake once this product is approved in atopic dermatitis. Turning to slide 23, itch is a critical element for patients. It's the most important early indicator for AD patients for them to know.
Speaker 3: characterized the early onset of action of this drug within the itch of atopic dermatitis.
Speaker 3: On slide 24, I want to touch briefly on safety because safety and tolerability are so critical for this disease, which has a substantial proportion of pediatric patients. This table shows rates for the adverse events in either of our two phase III trials that had a 2% or greater incidence in any arm. Not looking to go into any detail here, these are just data that we have shown previously. Just key takeaway is that to highlight the favorable safety profile, which is consistent with our other programs,
Speaker 3: Finally turning to slide 25. I have some of our accomplishments and upcoming milestones. You can see significant sustained long-term growth potential with additional approvals, label expansions, both within the U.S. and outside as well. I'm very excited to highlight our step-derm NDA submission earlier this month, this month which puts us...
Speaker 3: with a potential approval in late 2023 for the seb derm foam formulation. Here physician excitement is palpable for the foam formulation. We're hearing a lot about it when we're talking to germs out in the field, but largely this is being underappreciated we think by Wall Street. Coming back around to our most near-term milestone, we have the action date with Health Canada at the end of April for psoriasis. Then next we have a lot going on in atopic dermatitis in the second half of 2023, with the submission of our SNDA for ages six and above.
Speaker 3: in AD, as well as top-line data readout for the Entangement PEED Study. Again, very excited about the rafumilast cream clinical profile in AD, which I shared with you today, especially the rapid onset of action, and we see this as a significant opportunity for Zarif in this large and growing market. Q4 is the anticipated approval date for the SNDA and psoriasis in children down to BH-
Speaker 3: slide deck, net product revenues were $3 million for our first full quarter of launch driven by Zoriv steady growth in unit demand. Our gross to net discount rate improved modestly in the quarter and continues to be meaningfully better than other recent branded topical launches at similar time points. We are heading ahead to the first quarter of 2023.
Speaker 3: We are very pleased with the continued steady week over week growth that we can all see in the weekly script data and today's new payer formulary coverage announcement bodes well for further volume growth. We do expect first quarter revenues to be impacted by the typical higher co-pay program cost that most commercial products experience in the first quarter of every year, leading to temporary erosion in the Q1 gross net discount rate. In this dynamic, first quarter net sales may not be meaningfully higher than the fourth quarter.
Speaker 3: as our continued demand growth is offset by the higher gross to net. We believe that this is just early launch noise. As I just mentioned, we have been growing scripts nicely and beyond Q1, we expect the additional formula recovery we announced today, combined with the earlier Express Scripts announcement, to drive continued volume growth as well as improve growth to net.
Speaker 3: We continue to believe that we will achieve a steady state gross net around 50% and potentially sooner than is typical. This will translate into more meaningful revenue realization through the balance of the year and into future years.
Speaker 3: Turning to the fourth quarter P&L on slide 28, research and development expenses were $34 million in the quarter. The decrease year-over-year is primarily due to lower clinical development costs for our topical or reformal last programs. We expect R&D to take up slightly in Q1 versus Q4.
Speaker 3: and then be relatively stable for the balance of 2023. Test G&A expenses were $37 million for the quarter, increasing largely due to higher commercialization expenses for the Zarif launch.
Speaker 3: We expect some sequential growth in SG&A as we continue to invest in the psoriasis launch and prepare for our potential launches in seborrheic dermatitis and atopic dermatitis. Net loss was $72 million for the quarter, flat to Q4 2021. Turning to our final slide on page 29. We expect some sequential growth in SG&A as we continue to invest in the psoriasis launch and prepare for our potential launches in seborrheic dermatitis and atopic dermatitis.
Speaker 3: We provide the key balance sheet and cash low items. As a result of the financing's frank mentioned, our balance sheet remains strong, would cash for approximately $410 million as of December 31st. Our capital allocation priorities remain very targeted in 2023. Prioritizing, of course, there's a re-wrench and flexorizes.
Speaker 3: as well as preparations for the upcoming potential launches in separate dermatitis and atopic dermatitis. And finally, the continued advancement of our pipeline, specifically our topical jack program in Alopecia, Ariata, and our CD200R program in atopic dermatitis. This concludes the financial fleet. I'll now turn the call back to Frank to wrap up our prepared remarks.
Speaker 3: Okay, so I wanted to thank everyone for joining. I know we covered a lot of material in very short order. So at this point, we're going to transition to a Q and A. And so I'll turn it over to Eric. Olivia, we can open the line, please.
Speaker 2: Certainly ladies and gentlemen, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1 1 again. Please stand by while we compile the Q&A roster.
Speaker 2: And now first question coming from the line up, becomes Rogue, Paul Morgan's son Lee, Elena Sal from
Speaker 3: Good afternoon, thanks for taking our questions. So two from our side. So you provided some color about the profile of patients being prescribed Zareep, but I was wondering if you could speak about how they're receiving the treatment. From what you're seeing, has it mostly been monotherapy so far, or are they getting it in combination with other options? And then secondly...
Speaker 4: Pivoting to atopodermotitis, assuming approval in that indication for flumilast cream, how do you think Grostenet could trend in that indication and how would you compare and contrast the trend line for Grostenet there versus what you're seeing where those arise? Thanks. Hey, Rick. This is Ken. Thanks for the question. So as it relates to specifically patient types or mono-combination therapy, so from the source of business slides, you can see that primarily it seems as though the predecessor therapy is a single therapy. However, in the field, we also see lots of instances where…
Speaker 4: positions are doing what they normally do with topicals, which is adding them onto the back of a biologic. And while not specifically indicated for that use case, we're obviously not contraindicated for that either. So we're seeing a mix of that. Now remember, biologic and systemic use is only a fraction of the overall market. So, you know, anywhere between about 20%, 25% at most patients are on a systemic and that would represent the maximal combination use but monotherapy is largely the situation in which people come from topical corticosteroid.
Speaker 4: or alternative onto our product. So I would say we don't have the data to put in front of you quite yet in terms of the exact monotherapy combination or combination percentages but monotherapy would be to base on my knowledge the most common use case.
Speaker 4: I'm going to turn my AD grist to next. Now we expect the AD grist to come on with coverage. Thank you. Sorry, I thought that was a question for Scott. So sorry, the question regarding AD grist to net. So one of the things as we're negotiating...
Speaker 4: And you'll see is that we do expect with some payers, obviously synergistic relationships between current coverage for psoriasis and future indications. So while not consistent across every payer, within each agreement there are stipulations in which some cases.
Speaker 4: the access would transpose onto the next indication, but other instances would require new negotiations. Now that being said, one of the benefits of those coming downstream of psoriasis and having done the legwork going into this RISE's launch is that the familiarity and the clinical performance of the product are already understood. And so a lot of that time being spent socializing that with Peter is demonstrated.
Speaker 2: Thank you. One moment for our next question. And our next question coming from the line of CMS. Next question from's of Rebecca from Georgia Institute of Technology.
Speaker 3: the trajectory over the balance of this year is going to improve substantially quarter to quarter. Just wondering if there will also potentially from your perspective be a bit of a release in prescribing capacity as physicians really write scripts for Zarif.
Speaker 3: as the confidence improves that with each script written, they've got kind of a two-thirds chance of having a fully reimbursed prescription. Just wanted to get a general sense of that. And then incremental to that, just would love to know how you're thinking about the trajectory of the business.
Speaker 4: particularly with regard to separate dermatitis and how the new foam formulation is likely to slot into those coverage opportunities. Other shames, I think both of those are for me right? So, I'll start with the sort of confidence and that the two thirds or 60 percent shot which I like that thinking. So...
Speaker 4: to target those offices and make sure that they're aware of these updates. I think in the big picture you're absolutely right, which is as you're writing the more you write, the more you get, you know, kind of covered the confidence sort of builds upon itself and that's the intent. When we talked about the idea of sort of the faster and better coverage leading to ultimate conversion is one has to have...
Speaker 4: of a tipping point that then one-third with respect to having just one on board previously and I would expect that should help in terms of really changing the habits that we see. And ultimately, when we do achieve our access goals of bringing on all three major payers, the messaging will be just that which is have confidence with this doctor in terms of writing and you're very likely to get it if your patient is commercially insured. Not to mention the fact that we do have a program as well.
Speaker 4: I think in addition to the two-thirds coverage, the other key piece to that is the lack of a prior authorization, right? Because if doctors are putting in prescriptions and they're getting kicked back from the pharmacies for additional paperwork, that's not as bad as a denial, but it certainly adds to the friction and and having obtained coverage now for two of the three big PBMs without a prior authorization I think will be another important facet of prescriber confidence. So then pivoting back to your question regarding Ceb.
Speaker 4: I think the second thing is that, as I mentioned to Vikram, we should assume that there will be some carryover or transposition of some of our coverage, so to speak, into, intercept our... However, just as we think about government pay and securing things like Medicare coverage,
Speaker 4: In general the rebate expectations are higher than that of commercial pay. So I'm not a hundred percent sure quite yet how that will play out. It's obviously going to be a mix in terms of overall gross and that's but you know the Price to pay so to speak with the government payers is typically higher than that of a commercial pay but however in some terms overall from a net perspective, I'm sorry from a total publishing standpoint, it's still
Speaker 4: majority commercial, but the percentage of government pay is about, you know, let's call it 45% versus what we see in something like a psoriasis, which is about a third. Okay, Livia, can we go to the next one?
Speaker 5: There's many ways to launch a drug and I know there's multiple ways to be successful in it, but can you talk about some of the differences from your perspective on how you're approaching this and you're giving very detailed, but maybe you could juxtapose that against your competitor because unfortunately on Wall Street, especially when we're nearly simultaneously launching products, you get compared in terms of the RX and...
Speaker 5: and the trajectory of your launch and their launch. But maybe you could bring out some of the subtle nuances to your approach and why we seem to be sticking with it and ultimately why we're going to be successful. And I'll say one thing before you answer. We have done a lot of doc checks, and I just need to say exactly mirroring what you're hearing, they definitely are giving us great feedback on the product. But with that, I'll let you answer that question. Thank you. Sure, Ken, I'll take a stab at that. So thanks for teeing that up. Obviously to the naked eye, I think the trajectories look very different.
Speaker 4: I think we've said in the past that we're comfortable with a steady progression that's focused on discipline financials. We aren't juicing, if you will, any of the of the prescriptions by putting out temporary offers or buy downs which then
Speaker 4: I think I read recently there was a comment about when the honeymoon period ends, right? So when companies start pulling back their introductory offers and so the reality set in. So we've generally refrained from kind of going out with offers that are too good to believe or too good to be true. Very typically those tend to be sustainable and then start morphing and then actually that only works in one direction which is to disappoint your customers and your patients. So we want to keep that sustained approach in a disciplined way. That's why you're seeing the trajectory.
Speaker 4: question a lot, hey you know are you going to see an inflection all of a sudden based on you know getting coverage? The short answer is no because with coverage you know it takes time obviously for those patients to work their way back into the offices. They're not all sort of waiting to rush in you know the second we get coverage. So I would anticipate the trajectory to kind of continue to grow and build steadily and importantly the type of access that we
Speaker 4: hopefully as easy as possible to position such that it's again as easy to or second nature to write our product. That's what I believe will continue our sustained growth. So those are some of the key differences I would say with respect to how we're doing things and we intend to sort of keep those offers that we have in the market. So steady, sustainable, predictable.
Speaker 4: I think these are very important for the credibility of both the company as well as the physician who ends up articulating this to a patient because coming back three weeks later and saying well I thought it was this and it's not that, that's something that I think generates a great deal of frustration in the offices and at the patient level that's not what we're doing.
Speaker 4: The only thing I would add is beyond the access piece that Ken talked about, we talked about the product profile and I think it's critical that early clinical experience with the product be consistent with what the doctor and the patient have been told. The efficacy needs to be consistent with the data and the tolerability and safety need to be consistent with the data. And I would say that what we have heard and I think what you and some of the analysts have also heard from your doctor, Ken.
Speaker 4: is that Zoree is matching up to those expectations in terms of both efficacy and tolerability. And we think that that's really building a solid foundation. You know from your many years and that feel, you know, when doctors are disappointed or patients are disappointed with their experience with a product that can very quickly turn the sentiment on a product and we've seen any number of examples of that in the past. So we think it's critical that the product is delivering on the promise and that's what we're hearing from our customers. Great, thanks so much. Thank you. And our next question coming from the line up. Gregg Reeser, what's your sealant is open? Yes, and you're both thanks, taking the questions and congrats on the progress. The conversion analog that you discussed are notable, not just for the uptake of the new differentiated class, but also for over.
Speaker 4: and is readily available may bring some of those patients back off of their couches and back into the dermatologist's office. I think the other thing is that topical steroids are very effective in treating plaque psoriasis but they can't really be used chronically safely and so there's a natural limit on consumption of topical steroids.
Speaker 4: on that as well. I think the other point I would make too is that outside of the riots, as we add these additional indications as well, those are further opportunities to grow the overall opportunity for non-surroidal.
Speaker 6: Can you have any additional thoughts or Patrick? No.
Speaker 6: additional thoughts or Patrick? No. Livia, can we?
Speaker 2: Move to the next question. Thanks, Greg. Our next question coming from the lineup. Louise Chen with cancer. Your line is open. Hi. Thank you for taking my questions here. So, first question I have for you is, how do you think the uptake for atopic dermatitis, if approved, will be compared to what you see for psoriasis and why? And then secondly, what do you think the read-through is from the adult psoriasis data – I'm sorry, the adult AD data to the pediatric AD data, how should we think about –
Speaker 4: As Ken mentioned, there could be some acceleration in access decisions for atopic dermatitis just based on psoriasis. The second one is we have the advantage that doctors are going to have a great deal of familiarity with topical reformalized when we get the approval in atopic dermatitis. I think that's particularly important because we know that when we launched the Zoriv, there was a certain degree of skepticism about topical PDE4s based on prior experience with the other topical PDE4 inhibitor.
Speaker 4: and it's taken doctors a little while to dispel some of those anxieties, none of that will be an obstacle to the adoption in atopic dermatitis. I think when you pull all those together, we certainly could see a faster initial uptake in atopic dermatitis. Ken, any other thoughts from your side?
Speaker 4: Patrick, can you maybe talk about the read through from integument one and two to integument PED and then ARQ234 and some of its advantages in the clinic? Potential advantages. So with regard to
Speaker 3: Yeah, with regard to the read through from enticumid 1 and take it to the enticumid peed trial, keep in mind that 1 and 2 enroll patients ages 6 and above and the enticumid peed trial ages 2 to 5. I think that reading out two successful phase 3 studies in a topic dermatitis.
Speaker 3: where we're not really seeing within our data or looking across others' data in a topic of hepatitis, a really significant difference in how patients are responding based on their age. And especially considering the fact that entanglement 1 and 2 included a lot of pediatric patients from the ages of 6 all the way up and including adolescents up to the age of 17. So we're seeing a very strong read through from entanglement 1 and 2 over to the pediatric trial that we're planning to read out in the second half of this year. With regard to 234, you know, we haven't released any timelines with regard to that program right now. We'll probably be in a place later this year to say a little bit more about them.
Speaker 3: But we do see, based off of just the mechanism of action of CD200R, as well as some of the clinical data that's out there, not with ours, but with another CD200R agonist, what we're seeing is that the potential ability of this pathway to have an extended effect on the immune system, not specifically by suppressing the immune system, but by adjusting the response of its targeting, specifically those pathways that may have been active.
Speaker 3: of C200 are that made it very interesting to us and we're looking forward to giving you more information about that program as we progressive internally.
Speaker 3: interesting to us and we're looking forward to giving more information about that program as we progressive internal. Thank you.
Speaker 2: Thank you. And as a reminder ladies and gentlemen, to ask a question, please press star 1-1 on your telephone. One moment for our next question. And our next question coming from the line of, Rohit Bhasin with Nehem and Company. Your line is open.
Speaker 5: Hi, this is Rohit on for Serge. Thanks for taking our questions. Can you talk about any particular trends you're seeing in terms of new Rx's versus refills? And then in terms of the op-x, I know you mentioned you expect SG&A to increase, but can you provide any additional color there? Thanks. Sure, Rohit. So I think you can...
Speaker 4: kind of overall expectations for adherence to be in the neighborhood of three to four tubes. So it's a little bit tricky to see kind of the patients are continuously using because they're coming in at all different levels of severity and all different levels of body surface area. I will say though we are seeing positive trends with respect to some patients coming back for tubes three and four already. So certainly a good sign with respect to overall patient satisfaction and adherence.
Speaker 4: But the ratios, if you will, that you can kind of see them in the weeklies are pretty representative of what's happening. What I'm enthused about is that our NREX trends appear to be quite strong. And again, the TRX is the refills of our sporadic because it's not a number one to one. A patient might pick up a refill now for a prescription they got in August , for example. So a little bit trickier there. But the interactions are trans for us. I think you know, look good and the more awareness and...
confidence that the community builds additionally with the additional coverage, I would expect that to continue to grow. Yeah, and then the question on SG&A trajectory, I would say that we're still obviously quite early in the launch of psoriasis, so you can expect that to grow a little bit as we bring on new sales and marketing tactics over time. And then importantly, we just had our NDA accepted a couple weeks ago for seborrheic dermatitis, and so we want to make sure we're well prepared for that launch, so we'll be just being ahead of that launch that could come as really is.
you know, late this year or the next year. So we'll start in the launch there. Thank you. Thank you one moment please for our next question. And our next question coming from the line up. Are you with Ms. Hugu Bielani's open?
Hey guys, thanks for taking my question. I was wondering, I think you guys indicated that there's some 4,000 physicians that have already written prescriptions. Just curious to know how many physicians have your sales rep reached out to and...
Yeah, so that's the end. And I guess why, you know, what would it take for the rest of these physicians to write a prescription? And the second question I have is, could you help characterize the opportunity for flax arises in pediatrics, I guess? And would you need, would you launch this on your own or do you think you need a partner? Thanks. Sure, always. So let's first start with the...
those reasons obviously sometimes you know we need to to reach out to them you know several times in a row or they need to get some additional confidence for you know one with one direction or another whether clinically from a colleague by patient request or ultimately you know kind of seeing or reading about the product a little bit more but it takes several cycles in other words well one conversation is typically not enough to get a prescription so that's driving as hard as we can.
this opportunity? Is that what you're asking? So that opportunity remains to be, you know, it's pretty small actually in terms of absolute prevalence, sort of single digit percentage prevalence for that group. And so first and foremost, we wouldn't be looking to expand into pediatrics as a result of this particular opportunity. You know, what this confers for us is really.
of safety that it is a sort of absolute market opportunity. Where we would do that obviously for atopic dermatitis where the sort of the prevalence of that is significantly higher in pediatrics and we've spoken before about how we would do that which is largely through a partnership mechanism.
with a company that would have a footprint in pediatrics already. I don't know that we would expand our team that much because it's a very large footprint to get into primary care. I might just add with regard to the pediatric psoriasis topic, it is a small population but there are very, very few options for those patients, approved options for young children. Most products aren't even approved on the age of 12 which is what we're currently approved down to. One of the things that we've talked about in the past with the investment community was that our decision to study
sorry, Zarif, down to the age of two was actually at the behest of the FDA. You know, I think which was probably a reflection of their confidence in the safety of PD4 as a target. They really encouraged us to study this down to the age of two and we agreed because we felt that it was an important question to answer and important data for doctors to have, which is what led us to do it even though we knew it would not be a large source of business for us.
Okay. Thank you. Thank you. And I'm showing no further questions at this time. I would not like to send a call back over to Mr. Frank what's not before any closing remarks. Okay. So let me first off, I thank everyone on their cutest team. You know, 22 as I think you all have seen was an exceptional year. That didn't happen by chance. There was a huge amount of work done by what I think is just a phenomenal team of individuals and I'm delighted to be working with each and every one of them.
And secondly, I want to thank our investors for continuing to support us. And lastly, I want to thank all of you for joining in on the call today. So with that, we'll look forward to talking to you all in another three months. Ladies and gentlemen, that's our conference for today. Thank you for your participation. You may now disconnect. The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1.