Q1 2024 Arcutis Biotherapeutics Inc Earnings Call

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Speaker Change: Good day, and welcome to Arctic Hughes Biotherapeutics, 'twenty 'twenty four first quarter financial results conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone you didn't hear an automated message of buys in your hand.

Operator: Good day, and welcome to Ardicuse Biotherapeutics' 2024 First Quarter Financial Results Conference. At this time, all participants are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: This race to withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the call over to lots of their then Vice President Finance and Investor Relations. Please go ahead.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to Latha Vairavan, Vice President, Finance and Investor Relations. Please go ahead. Thank you. Good afternoon, everyone.

Speaker Change: Thank you good afternoon, everyone and thank you for joining us today to review, our first quarter 2024 financial results and business update slides.

Latha Vairavan: And thank you for joining us today to review our first quarter 2024 financial results and business updates. Slides for today's call are available on the Investors section of the Arcutis website. On the call today are Frank Watanabe, President and CEO, Patrick Burnett, Chief Medical Officer, Todd Edwards, Chief Commercial Officer, and David Topper, Chief Financial Officer. I'd remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and uncertainties, and our actual results may differ. We encourage you to review all of the company's filings with the Securities and Exchange Commission, including descriptions of our business and risk factors. With that, let me hand the call over to Frank. Thanks, Latha.

Speaker Change: Slides for today's call are available on the investors section of the Arcadis website on the call today are Frank Watanabe, President and CEO, Patrick Burnett, Chief Medical Officer, Todd Edwards, Chief Commercial Officer, and David <unk>, Chief Financial Officer, I'd remind everyone that we will be making forward.

Frank Watanabe: Looking statements. During this call. These statements are subject to certain risks and uncertainties and our actual results may differ we encourage you to review all the Companys filings with the Securities and Exchange Commission, including descriptions of our business and risk factors with that let me hand, the call over to Frank.

Frank: Thanks, a lot and thank you all for joining us today.

Frank Watanabe: And thank you all for joining us today. You all know the other executives on the call, but I'm really excited today to welcome David Topper, our new Chief Financial Officer. Well, David is new to his executive position here at Arcutis, but he's been an advisor to us for more than four years.

David <unk>: You all know the other executives on the call, but I'm really excited today to welcome David <unk>, our new Chief Financial Officer.

David <unk>: David is new to his executive position here at computers. He has been an adviser to us for more than four years I expect many of you are already familiar with David and his exceptional experience and track record in the financial in Biopharma World and we could not be more pleased that he has decided to join us at this exciting time in our cheetos.

Frank Watanabe: I expect many of you are already familiar with David and his exceptional experience and track record in the financial and biopharma worlds. And we could not be more pleased that he's decided to join us at this exciting time at Arcutis. As David joins us, I would also like to express my and the entire organization's thanks and gratitude to John Smither for his incredible service to Arcutis over the past five years. He served as our first CFO, guiding us through a successful initial public offering, and has brought an incredible depth and breadth of both financial acumen and dermatology experience from his 25-plus-year career in the pharmaceutical industry. His contribution to the success of Arcutis at a critical time cannot be overstated, and we wish him well in his future endeavors and family. So with that, let me turn to slide five of the deck.

John W. Smither: As David joins US I would also like to express my and the entire organization, Thanks, and gratitude to John Smith for his incredible service start curious over the past five years.

John W. Smither: Serve as our first CFO guiding us through a successful initial public offering and has brought an incredible depth and breadth of both financial acumen and dermatology experience from his 25 plus year career in the pharmaceutical industry.

John W. Smither: His contribution to the success of our QTS at a critical time cannot be overstated, and we wish him well in his future endeavors and family time.

John W. Smither: So with that let me turn to slide five of the deck.

Frank Watanabe: We sustained our strong performance since our last earnings call, and I remain delighted with the Arcutis team and our execution during this quarter. And I'm thrilled about the momentum we are building towards a successful 2024. Once again, we saw strong growth during the quarter in our expanding Zareef portfolio as healthcare providers and their patients saw how Zareef Cream and now Zareef Foam address real needs in the treatment of psoriasis and seborrheic dermatitis, respectively.

John W. Smither: Sustained our strong performance since our last earnings call and I remain delighted with the <unk> team and our execution during this quarter and I am thrilled about the momentum we are building towards a successful 2024.

unknown: Once again, we saw strong growth during the quarter and our expanding portfolio as health care providers and their patients see how is the reef cream and now as the reform address real needs in the treatment of psoriasis and fabric dermatitis, respectively.

unknown: Solid growth in prescriptions for both the cream and the film coupled with additional gross to net improvements during the quarter drove strong revenue growth in the first quarter, both versus Q4 and year over year.

Frank Watanabe: Solid growth in prescriptions for both the cream and the foam, coupled with additional growth to net improvements during the quarter, drove strong revenue growth in the first quarter, both versus Q4 and year over year, with net revenues of $21.6 million, 70% of which was for the cream and 30% for the foam, which is still very early in the stages of launch. We've now generated more than 255,000 prescriptions for the cream and the foam combined from over 12,500 unique prescribers to date, as our product delivers. Positive clinic experiences for HCPs and their patients

unknown: With net revenues of $21 6 million, 70% of which was for the cream and 30% for the film which is still very early in the stages of launch.

We've now generated more than 255000 prescriptions for the cream and the phone combined from over 12500 unique prescribers to date as our product delivers.

unknown: Positive clinical experiences for HCP and their patients.

Frank Watanabe: Our progress in improving GTN this past quarter, resulting in a blended GTN in the low 60s across both products for the first quarter, is particularly noteworthy given the typical copay resets every product experiences in Q1 each year, in addition to the fact that we launched a new product during the quarter. Todd will provide some more color about how we achieved this remarkable accomplishment in just a few minutes. We also continue to successfully execute against our clinical and regulatory milestones, about which Patrick will go into more detail.

Speaker Change: Our progress in improving GPM this past quarter, resulting in a blended GTS in the low sixty's across both products for the first quarter is particularly noteworthy given the typical co pay resets every product experiences in Q1 each year. In addition to the fact that we launched a new product during the quarter.

Todd Edwards: Todd will provide some more color about how we achieved this remarkable accomplishment in just a few minutes.

Patrick E. Burnett: We also continue to successfully execute against our clinical and regulatory milestones about which Patrick will go into more detail. Most important is the upcoming FDA produce a target date of July seven for <unk> for atopic dermatitis.

Frank Watanabe: Most important is the upcoming FDA PDUFA target date of July 7 for our FNDA for atopic dermatitis. We also continue to progress our pipeline programs, in particular ARQ 234 for AD and ARQ 255 for alopecia areata. In February, we completed a secondary offering that raised $172 million in gross proceeds, which, along with net product revenues and our existing balance sheet, puts us in a very strong financial position to sustain our investments in the ongoing launches of Plaxirisis and Sabderm, as well as the potential atopic dermatitis launch later this year, while advancing our pipeline.

Patrick: We also continued to progress our pipeline programs in particular, <unk> 34 for <unk> and our Q2 dollars 55 for alopecia Areata.

Patrick: In February we completed a secondary offering that raised $172 million gross proceeds, which along with net product revenues in our existing balance sheet puts us in a very strong financial position to sustain our investments and the ongoing launches in plaque psoriasis in <unk> as well as the potential atopic dermatitis launch later this year while <unk>.

Speaker Change: <unk> our pipeline.

Frank Watanabe: Also in February, we entered into a licensing agreement with Sato Pharmaceutical Company, which grants Sato an exclusive license for topical reformulation for Japan, received upfront payments of $28 million in the quarter, $25 million from Japan with potential additional Japanese milestones of up to $40 million as well as low double-digit to mid-teen double-digit percentage royalties. We also received $3 million from Huadong for our China partner.

Speaker Change: Also in February we entered into a licensing agreement with Sato Pharmaceutical company, which grant <unk> exclusive license for capital reform last for Japan.

Speaker Change: <unk> received upfront payments of $28 million in the quarter $25 million from Japan with potential additional Japan milestones up to $40 million as well as low double digit to mid teen double digit percentage royalties. We also received $3 million from quite on for our China partnership.

Speaker Change: Moving on slide six as we've mentioned on prior calls a major reason why we're so excited for this year is that we are in the midst of a very significant expansion in the opportunity for top <unk>, which we expect will translate into substantial acceleration of our revenue trajectory.

Frank Watanabe: Moving on to slide six. As we've mentioned on prior calls, a major reason why we're so excited for this year is that we are in the midst of a very significant expansion in the opportunity for topical reform, which we expect will translate into a substantial acceleration of our revenue trajectory. Since initial approval for psoriasis, the total addressable market for Zareeb could grow tenfold from the end of 2023 to over 15 million patients in the United States.

Company Representative: From the initial approval for psoriasis, the total addressable market for <unk> could grow tenfold from the end of 2023 to over 15 million patients in the United States.

Frank Watanabe: I would add that we are feeling increasingly bullish about our ability to begin gaining Medicare and Medicaid coverage this year, and we are making steady progress on a partnership in primary care. As our results this quarter reaffirm, we have the right commercial team in place for success, and we have an excellent plan to execute against these opportunities. With that, let me turn it over to Todd to provide some further commentary on Zareef Cream and foam launches in psoriasis and seb derm. Thank you, Frank. I'm extremely enthusiastic about the expansion of our commercial portfolio, HCP, and patient response to both three products and the advanced opportunities that lie ahead. Moving to slide eight.

Speaker Change: I would add that we are feeling increasingly bullish about our ability to begin gaining Medicare and Medicaid coverage. This year and we are making steady progress on a partnership in primary care.

Speaker Change: As our results this quarter reaffirm we have the right commercial team in place for success and we have an excellent plan to execute against these opportunities.

Todd: With that let me turn it over to Todd to provide some further commentary around <unk> cream and fund launches in psoriasis and sector.

Todd: Thank you Frank I'm extremely enthusiastic about the expansion of our commercial portfolio HCP and patient response to bolster <unk> products and the advanced opportunities that lie ahead moving to slide eight.

Todd Edwards: The Zareef psoriasis TRF performance has continued to show strength, and these results demonstrate that we could push the trajectory for psoriasis. These efforts also lay a solid foundation for the brand and the building of a portfolio. Annual insurance changes and deductible recess typically create a dip in prescription trends in the first week of the year.

Todd: Is there any psoriasis tiered performance has continued to show strength.

Todd: These results demonstrate that we can push the trajectory in psoriasis.

Frank: His efforts also lay a solid foundation for the brand and the building of our portfolio.

Speaker Change: Annual insurance changes and deductible resets typically create a dip in prescription trends in the first week of the year as you can see it's your ex trend has rebounded from that.

Todd Edwards: As you can see, the TRX trend has rebounded from that. Further, it is notable that many patients push refills at the end of the year in anticipation of insurance disruption. So to see the growth in Q1 of 8% over Q4 and 120% growth compared to the first quarter of 2023 highlights an encouraging trend line for Zarif Koreans. I'm now on slide nine.

Speaker Change: Further it is notable that many patients push refills at the end of the year in anticipation of insurance disruption so to see the growth in Q1 up 8% over Q4.

Speaker Change: 20% growth compared to first quarter of 2023 highlights an encouraging trend line towards the refrain.

Speaker Change: Im now on slide nine.

Todd Edwards: We continue to hear of a growing preference for Zareef relative to other non-sterile competitors. The Value Proposition of the Retreat resonates with prescribers that aim to resolve plaques that can affect many different parts of the body. Hard-to-treat areas like elbows and knees but also sensitive areas like the face, groin, and underarms. The elements of efficacy, speed of response, the tolerability profile, and the preservation of the skin barrier are becoming well recognized by dermatologists as differentiating factors. Moving to slide 10.

Speaker Change: We continue to hear of a growing preference further relative to other non sterile competitors.

Speaker Change: The value propositions retraining resonates with prescribers and aim to resolve cracks that can affect many different parts of the body.

Speaker Change: Hard to treat areas like elbows and knees, but also the sensitive areas like the face borrowing and under arms.

ROE: Elements of efficacy speed of response, the Tolerability profile and the preservation of the skin barrier are becoming ROE recognized by dermatologist is differentiating factors.

Speaker Change: Moving to slide 10.

Todd Edwards: As a reminder, Zareeb Foam was approved for seb derm patients in mid-December 2023, with a commercial launch in late January 2024. The Zareeb Seb Derm launch is off to a phenomenal start with over 46,000 TRXs in less than three months. In the beginning, we anticipated a large host of patients eagerly awaiting the phone, who quickly received a prescription after approval. As we have pointed out before, SEP DERM has been a space with a large unmet need without any innovation in the past 20 years. We anticipate that the growth trajectory of the phone will likely moderate in the future.

Speaker Change: As a reminder, <unk> was approved for scepter and patients in mid December 2023.

Speaker Change: With our commercial launch in late January 2024.

Speaker Change: <unk> launch is off to a phenomenal start with over with over 46000, <unk> and west in three months.

Speaker Change: In the beginning we anticipated a large bolus of patients either waiting the phone who.

Speaker Change: So quickly received a prescription after approval as we have pointed out before sector has been a space with a large unmet need without any innovation in the past 20 years we.

Speaker Change: We anticipate the trajectory of the phone will likely moderate in the future.

Todd Edwards: But with continued growth, we expect this growth trend to be well aligned to the large subderm market, with over 4.4 million prescription-treated patients in the U.S. Derm Office and no other competitive treatment option. On the right side of this slide, you can see the products that patients starting on foam are switched from. As expected, 80% are from topical steroids and antifungals, and there is a small portion of patients being switched from Zareep cream to foam. Moving on to slide 11.

Speaker Change: But with continued growth we expect this growth trend to be well aligned to the large sector market with over $4 4 million prescription treated patients in the U S term office and no other competitive treatment options.

Speaker Change: On the right side of this slide you can see the products that patients starting on foam are switched from.

Speaker Change: As expected, 80% are from topical steroids with Antifungals and there was a small portion of patients being switched from Missouri prime to phone.

Speaker Change: Moving onto slide 11.

Todd Edwards: As we have shared previously, the dermatology prescriber base for PSO and subderm is well aligned. Serif cream has already been used by most subscribers we target. And so far, 40% of Zuri Cream riders have also used the foam after only three months.

Speaker Change: As we've shared previously the dermatology prescriber base with DSO and <unk> are well aligned.

Speaker Change: <unk> has already been used by most prescribers we target.

Speaker Change: And so far 40% is the re cream riders have also written the phone after only three months.

Todd Edwards: This highlights the potential for growth as we continue to convert existing cream writers to also writing foam, and for Foam, it further opens new interest in Zerif cream for targets who have not previously prescribed the cream. Now on slide 12.

Speaker Change: This highlights the potential for growth as we continue to convert existing cream riders to also writing phone.

DSO: And for foam further opens new interest in <unk> for targets were not previously prescribed the cream.

DSO: Now on slide 12.

Patrick E. Burnett: Conditioner feedback about Zerifoam has been extremely positive. These quotes from actual community dermatologists are typical of the comments we continue to hear about the unmet need for patients whose only option for decades has been steroids and antifungals. Likewise, the happiness of the patient when they experience relief in a more efficient and convenient manner. And for the dermatology practices, a smooth coverage experience that enables ongoing use. Moving to slide 13.

Speaker Change: Clinician feedback about the reform has been extremely positive.

Clinician: His quotes from actual community dermatologists are typical of the comments, we continue to hear about the unmet need for patients, whose only option for decades have been steroids antifungals.

Clinician: Requires the happiness of the patient when they experienced relief and a more efficient and convenient manner.

Clinician: And for the dermatology practices, a smooth coverage experience that enables ongoing usage.

Clinician: Moving to slide 13.

Patrick E. Burnett: We were able to obtain coverage for Zerifone from all three large PVMs very quickly. We're now working to secure the downstream plan. We expect film coverage to quickly catch up to that scene with the cream. When we look at the percent of prescriptions being covered by insurers, we see an encouraging trend in Zuri Cream, with roughly three out of four Rx's are now covered by insurance. And for foam, slightly more than half a script is already covered by insurance.

Speaker Change: We were able to obtain coverage for us a refund from all three large pbms very quickly.

Speaker Change: Now working to secure the downstream plans.

Speaker Change: We expect foam card reached quickly catch up to that seen with the cream.

unknown: We look at the percent of prescriptions being covered by insurers, we see an encouraging trend in <unk> with roughly three out of four are xs are now covered by insurance.

Speaker Change: And for film slightly more than half of scripts are already covered by insurance. This is very positive considering we're so early in the launch.

Patrick E. Burnett: This is very positive considering we are so early in the launch. I would add that we expect the contribution to revenue growth coming from further growth to net improvements will likely moderate in coming quarters as we inch closer to our expected steady state growth to net in the 50s. Going forward, most revenue growth will likely come from prescription demand growth in psoriasis, seb derm, and, if approved, atopic dermatitis. As Frank mentioned earlier, we were quite pleased that we were able to improve our gross net in Q1. Unlike what is typically seen due to copay resets and insurance changes.

Speaker Change: I would add that we expect the contribution to revenue growth coming from further gross to net improvements will likely moderate in coming quarters as we inch closer to our expected steady state gross to net in the fifties.

Speaker Change: Going forward, most revenue growth will likely come from prescription demand growth in psoriasis, <unk> and if approved atopic dermatitis as.

Frank: As Frank mentioned earlier, we were quite pleased that we were able to improve our gross to net in Q1.

unknown: Unlike what is typically seen due to co pay resets and insurance change.

Patrick E. Burnett: As a part of our continued effort to optimize product access, we have implemented a program at our contracted pharmacy partners to support our commercially insured patients for whom our product is not covered by their insurance. With the new program, we are now directly providing these pharmacies with a unit for each not covered unit of pharmacy dispenses. This unburdens the high expense of not covered units, resulting in an improvement in our growth to net, enabling and ensuring that patients have seamless access to our product. Now on slide 14.

Frank: As a part of our continued effort to optimize product access we have implemented a program at our contracted pharmacy partners to support our commercially insured patients for whom our product is not covered by their insurance.

Speaker Change: With the new program, we are now directly providing these pharmacies with a unit for each not covered unit a pharmacy dispenses.

Speaker Change: This unburdened the high expense of not covered units, resulting in improvement in our gross to net and enables and ensures that patients have seamless access to our products.

Speaker Change: Now on slide 14 with.

Patrick E. Burnett: With the strong phone launch and approaching the anticipated approval for mild to moderate atopic dermatitis, we are creating a portfolio of Xerif options for dermatologists that will sustain the brand growth. The benefits of the Zaree portfolio products, which will address three different dermatological diseases where the current standard of care is topical steroids, are unprecedented and create simplicity for the dermatology prescriber in patient management. The common clinical attributes that are agreed across all indications will make prescribing simpler, and when paired with the common market access, the copay card, and an efficient and predictable fulfillment pathway, further simplify dermatology practice operations as well. We are well on our way to becoming the preferred topical brand in dermatology. I am turning it over to you, Patrick. Thank you, Todd. I'm now on slide 16.

Dermatologist: With the strong phone launch and approaching an anticipated approval in mild to moderate atopic dermatitis, we are creating a portfolio of options for dermatologists that will sustain the brand growth.

Speaker Change: The benefits of <unk> portfolio of products that will address three different dermatology diseases with a current standard of care is topical steroids is unprecedented and creates simplicity for the dermatology prescriber and patient management.

Speaker Change: The common clinical attributes of <unk> across all indications will make prescribing simpler and when paired with the common market access co pay card.

Speaker Change: Patient and predictable fulfillment pathway further simplifies dermatology practice operations as well.

Speaker Change: We are well on our way to becoming the preferred topical brand in dermatology.

Patrick: Turning it over to you Patrick.

Patrick: Thank you Todd I'm now on slide 16, I'm extremely proud of the team's performance in delivering on the promise of topical room left to the dermatology community and the clinic and hitting all of our timelines with regard to regulatory milestones.

Patrick E. Burnett: I'm extremely proud of the team's performance in delivering on the promise of topical rifumelast to the dermatology community in the clinic and hitting all of our timelines with regard to regulatory milestones. HCP excitement around Zareve cream for atopic dermatitis continues to grow as we release more data and based on their own clinical experience with Zareve and psoriasis and seb derm. They find Zareve's product profile to be well suited to what they and their atopic dermatitis patients are looking for. Our PDUFA for mild to moderate AD down to the age of six is coming up quickly on July 7.

Patrick: Excitement around the <unk> cream for atopic dermatitis continues to grow as it relates more data and based on their own clinical experience with <unk> in psoriasis and sub derm refineries product profile to be well suited to Wednesday, and their atopic dermatitis patients are looking for a producer for mild to moderate.

Speaker Change: Down to the age of six is coming up quickly on July seven.

Speaker Change: Moving onto the approval of foam for sub derm here again, we're looking for some great. Some great feedback from dermatology providers unprecedented efficacy with a once a day film and our market is the biggest psoriasis with no innovation in decades, and no branded competition, Todd Frank and I were recently out meeting with community dermatologists and their feedback on as a refund for theirs.

David J. Topper: Moving on to the approval of foam for SebDerm, here again, we're looking at some great feedback from dermatology providers. Unprecedented efficacy with a once-a-day foam in a market as big as psoriasis, with no innovation in decades and no branded complications. Todd, Frank, and I were recently out meeting with community dermatologists, and their feedback on Zerif foam for their SebDerm patients was very strong.

Speaker Change: Burn patients is very strong.

David J. Topper: We're also looking, already looking to expand the indications for xerifome, expecting to file another FNDA with the FDA for scalp and body psoriasis in the third quarter of 2024. Looking now at some of the integument P data that we presented at the AAD meeting in March. As a reminder, this trial was conducted in mild to moderate AD patients ages 2 to 5 years old. Here we're showing a side-by-side comparison of EZ75, so that's the proportion of subjects whose AD improved by 75% compared to baseline, and WINRS success, that's the worst-ditch numeric rating scale, which is an improvement of at least four points on the worst-ditch numeric rating scale.

Todd Edwards: We're also looking already looking to expand the indications for <unk> expecting to file another NDA with the FDA and scalp and body psoriasis in the third quarter of 2024.

Todd Edwards: Looking now on slide 17 at some of the integument Peed data that we presented at the AAD meeting in March as a reminder, this trial was conducted in mild to moderate patients ages two to five years old here, we're showing a side by side comparison of EZ 75. So that is the proportion of subjects, who have <unk> improved by 75% compared to baseline.

Speaker Change: <unk> and Wi NRM success, that's the worst itch numeric rating scale, which is an improvement of at least four points on the worst itch numeric rating scale in both of these endpoints. We can see a rapid response already at week, one with 19% of patients, reaching EZ 75, and that number doubling by week four when we're coming in just under 40% of pay.

David J. Topper: In both of these endpoints, we can see a rapid response already at week one, with 19% of patients reaching EZ75, and that number doubling by week four when we're coming in at just under 40% of patients, with a 75% improvement. On the right side, we have WINRS with a similar pattern of response for the itch, that's the major symptom reported in AD patients and a significant driver of impact on quality

Wi NRM: <unk> with a 75% improvement on the right side, we have Wi interacts with a similar pattern of response for the edge. That's the major symptom reported in <unk> patients and a significant driver of impact on quality of life with Wi <unk> response, we jumped up to 15% responders that we've won over quarter responding at week two.

David J. Topper: With WINRS response, we jump out to 15% responders at week one, over a quarter responding at week two, and then continue to increase through week four at 35%. Turning to slide 18, I want to highlight the consistency of our data across different age groups, with our integument P data for 2 to 5 year olds on the left, and the pooled data from ages 6 and above in integument 1 and integument 2 on the right.

Speaker Change: And then continued to increase through week four at 35%.

Speaker Change: Turning to slide 18, I want to highlight the consistency of our data across the different age groups with our integument peds data and two to five year old on the left in the pool data from ages, six and above and then taking it one and taking the queue on the right and.

David J. Topper: And all of these studies, in just four weeks, we're getting about 40% of subjects to an easy 75 and just shy of 35% of patients demonstrating a clinically meaningful improvement, Very consistent across the different age groups and showing that both the signs and symptoms of AD improve quickly. These data, paired with our Antegument OLE data that we presented previously, round out the profile of Zarib where patients respond quickly and then continue to improve over time with long-term treatment when we extend treatment out to 52 weeks in our Antegument OLE trial.

Speaker Change: And all of these studies in just four weeks, we're getting about 40% of subjects to an easy 75, and just shy of 35% of patients demonstrating a clinically meaningful improvement in niche very consistent across the different age group and showing that both the signs and symptoms of <unk> improved.

Speaker Change: Improved quickly these data paired with our integument OLED data, we presented previously round out the profile of <unk>, where patients respond quickly and then continue to improve over time with long term treatment. When we extend treatment up to 52 weeks in our <unk> trial.

David J. Topper: On slide 19, now, I want to touch briefly on some new data in seborrheic dermatitis coming out of a collaborative research project with Emma Gutmann and Benji Unger at Mount Sinai in New York. The team at Mount Sinai was able to use a non-invasive tape-stripping technique to do gene expression profiling of patients with seb derm to provide us with the first real look at the top of the physiology of this This study firmly establishes seb derm as a unique disease distinct from psoriasis and atopic dermatitis, which is driven primarily by Th1 and Th17, and Th22 inflammation. Although it has a skin barrier defect, the specific alterations are clearly distinct from atopic dermatitis. And indeed, seb derm does not show any of the Th2 dysregulation that's the hallmark of atopic dermatitis.

Speaker Change: On slide 19, now I wanted to touch briefly on some new data in February at dermatitis coming out of a collaborative research project with Emma Gutman and Benji Unger at Mount Sinai in New York the team at Mount Sinai was able to use a noninvasive Cape stripping technique to do gene expression profiling of patients with <unk> to provide us with the first real.

Speaker Change: At the pathophysiology of this disease. This study firmly firmly establishes <unk> as a unique disease distinct from psoriasis and atopic dermatitis, which is driven primarily by th, one and th 17 th 22 inflammation.

Speaker Change: Skin barrier defect.

Speaker Change: Specific alterations are clearly distinct from atopic dermatitis, and indeed <unk> did not show any of the teach to Dysregulation that is the hallmark of atopic dermatitis I'm really proud of the art units contribution to this effort and I think it highlights.

David J. Topper: I'm really proud of Archutis' contribution to this effort, and I think it highlights the scientific benefits to the field when a new therapeutic option is developed for an indication. This is similar to how the IL-17 and IL-23 dependency of psoriasis was defined by new therapeutics, and similarly for IL-4 and Th13 in atopic dermatitis. I think these new data also paint a very clear picture of why Zeriv, as a highly potent PD-4 inhibitor formulated in a skin-friendly formulation, is so well suited for the treatment of seb derm. We know that many of the pathways identified here are modulated by PD-4.

Speaker Change: The benefits to the field when new therapeutic option as developed for an indication. This is similar to how the IL 17, IL 23 dependency of psoriasis was defined by new therapeutics and similarly for IL four and 13 in atopic dermatitis I think these new data also paint a very clear picture on why <unk> is a highly potent <unk> inhibitor.

Speaker Change: <unk> and its skin friendly formulation and so well suited for the treatment of <unk>, we know that many of the pathways identified here are modulators by PD four with that I'll pass it over to David.

David J. Topper: With that, I'll pass it over to David. Thanks, Patrick. First, I want to say how thrilled I am to be at Arcutis and working with this team. It's certainly an exciting quarter to be joining the company. I'm on slide 21.

David: Thanks, Patrick first wanted to say, how thrilled I am to be at <unk> and working with this team.

David: It's certainly an exciting quarter to be joining the company.

David: I'm on slide 21, as you have heard by now we achieved $21 6 million in net product revenues for <unk> for the first quarter of 2024, reflecting a 59% growth over Q4.

David J. Topper: As you've heard by now, we achieved $21.6 million in net product revenues for Zareed for the first quarter of 2024, reflecting a 59% growth over Q4. This was driven by substantial growth in net percentage improvement down to the low 60s, the team's success in pulling through covered prescriptions, and our processing of non-covered scripts through our preferred pharmacy. We also saw healthy prescription growth. For the remainder of 2024, we expect continued prescription growth and some further growth to net improvement for both cream and foam. On slide 22, you can see the strong financial performance in the first quarter. Again, net revenues for the first quarter were $21.6 million, up 675% from Q1 of 23, and 59% from the previous quarter.

Patrick: This was driven by substantial gross to net percentage improvement down to the low sixties. The team's success in pulling through cover prescriptions and our processing of non covered scripts through our preferred pharmacies. We also saw a healthy prescription growth in the quarter.

Patrick: For the remainder of 2024, we expect continued prescription growth and some further gross to net improvement for both cream and phone.

Patrick: On Slide 22, you can see the strong financial performance in the first quarter again net revenues for the first quarter of $21 6 million up 675% from Q1 of 'twenty, three and 59% from the previous quarter R&D.

David J. Topper: R&D expenses for the first quarter were $23.8 million, which is down significantly from Q1 2023 due to continued decreases in the development cost of topical roughly in the last but flat as Q4 2023 due to slightly elevated one-time costs for Arcutis 234 as we continue to advance it to IND. Recall that R&D includes our research, operations, and medical affairs. SG&A expenses were $54.8 million for the first quarter, higher both sequentially and versus the same period last year. As we continue to invest in both our current and future launches, I'd like to emphasize that the team has made concerted efforts to make appropriate adjustments to our operating expense profile and to be good stewards of the capital that our investors have entrusted us with.

Speaker Change: R&D expenses for the first quarter were $23 8 million, which is down significantly from Q1 2023 due to continued decreases in the development cost of topical roughly in the left but flat as Q4 2023 due to a slightly elevated one time costs were <unk> 234, as we continued to advance it to IMD.

Speaker Change: Recall that R&D includes our research operations and medical Affairs expenses.

Speaker Change: SG&A expenses were $54 8 million for the first quarter higher both sequentially and versus the same period last year as we continue to invest in both our current and future launches.

I: I'd like to emphasize that the team have made concerted efforts to make appropriate adjustments to our operating expense profile and to be good stewards of the capital that our investors have entrusted us with as we transitioned from a pre commercial company to a commercial stage business with additional assets in development. We are endeavoring to ensure that we invest appropriately in both of them.

David J. Topper: As we transition from a pre-commercial company to a commercial stage business with additional assets and development, we are endeavoring to ensure that we invest appropriately in both our current and future launches to avoid any risk of disrupting the trajectory our products are demonstrating. On our final slide, 23, on the balance sheet, we had total cash and marketable securities of $404 million at the end of the quarter.

Speaker Change: Current and future launches to avoid any risk of disrupting the trajectory of our products are demonstrating.

Speaker Change: On our final final slide 23 on the balance sheet, we had total cash and marketable securities of $404 million at the end of the quarter as I mentioned on the previous slide we believe our current capital together with product revenues enable us to continue operating the business and invest sufficient capital in commercial launches.

David J. Topper: As I mentioned on the previous slide, we believe our current capital, together with product revenues, enable us to continue operating the business and invest sufficient capital in the commercial launch. As Frank mentioned, in addition to the equity raise in February, we executed an outlices deal in Japan, which brought in additional non-dilutive capital of $25 million. The combined money raise enabled us to successfully address the capital requirement covenant with our lenders.

Frank: As Frank mentioned in addition to the equity raise in February.

Frank: Executed an out license deal in Japan, which brought in additional non dilutive capital of $25 million. The combined money raise enabled us to successfully address the capital requirement covenant with our lender.

Frank: We also received a $3 million milestone payment from our Chinese partner, while dawn based on their progress in China with that I'll hand, it back to Frank for some closing remarks, and then we'll open it up for Q&A.

David J. Topper: We also received a $3 million milestone payment from our Chinese partner, Wadong, based on their progress in China. With that, I'll hand it back to Frank for some closing remarks, and then we'll open it up for Q&A. Thanks, David.

Frank: Thanks, David.

Frank Watanabe: Our intent and vision are to make a positive and meaningful impact on the lives of people afflicted with chronic dermatologic conditions. With Zareve now launched in two indications and potentially adding the Atopic Dermatitis launch later this year, we are proud to be helping millions of medical dermatology patients, allowing us to create additional shareholder value. We are confident that Q1 2024 lays the foundation for our sustained growth for the rest of 2024 and beyond.

Frank: And Ted and vision are to make a positive and meaningful impact on the lives of people afflicted with chronic dermatologic diseases with.

Speaker Change: <unk> now launched in two indications and potentially adding the topic dermatitis launch later this year, we are proud to be helping millions of medical dermatology patients, allowing us to create additional shareholder value.

Speaker Change: We are confident that Q1 2024, it lays the foundation for our sustained growth for the rest of 2024 and beyond and with that we'll open it up for Q&A.

Frank Watanabe: And with that, we'll open it up for Q&A. And thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 again.

Speaker Change: And thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby will be compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster and one moment for our first question. And our first question comes from Serge Belanger from Needham. Your line is now open.

Bob: And one moment, Bob first question.

Bob: And our first question comes from Serge Belanger from Needham. Your line is now open.

Serge D. Belanger: Good afternoon, and congratulations on the progress and a solid quarter. First one, I guess for Todd, regarding the expansion of Medicaid and Medicare coverage, maybe if you could just give us an update on where you expect to be by the end of the year or beginning 2025. And then secondly, Frank, you previously talked about The Relatively Low Risk of Label Approval for AD in July. Then maybe just talk about the label you're expecting.

Serge D. Belanger: Good afternoon, and congrats on the progress on the solid quarter.

Serge D. Belanger: First one I guess for Todd.

Todd: Regarding the expansion in Medicaid and Medicare coverage, maybe you can just give us an update on where you expect to be.

Todd: By the end of the year, starting 2025 and.

Todd: And then secondly.

Todd: Frank you previously talked about the.

Frank: The relatively low risk of the label approval for <unk>.

Frank: In July so maybe just talk about the label Youre expecting.

Serge D. Belanger: If it will include some of the itch data and be broad enough to cover mild, moderate, and severe disease. Sure, Todd, you want to take that? And then maybe Patrick, actually, you're probably best positioned to answer the question around the label. Yeah, fantastic, Frank.

Frank: So it will include some of the data.

Frank: The broad enough to cover the more moderate.

Frank: Severe disease. Thanks.

Frank: Sure Todd you want to take that and then maybe Patrick actually you are probably best positioned to answer the question around the label.

Todd Edwards: And first, I'll touch on Medicaid. So we continue to make good progress with Medicaid. And I'll give you an example.

Patrick: Yes fantastic Frank.

Patrick: First I'll touch on Medicaid. So we continue to make good progress with Medicaid and I'll give you. An example, it's very recent.

Patrick: Just recently, we picked up coverage at Florida State Medicaid and not only did we pick up.

Patrick: Coverage, there, but relative to the.

Patrick: The step edits have been in place for <unk> reform.

Speaker Change: A single step edit for.

Speaker Change: Cream to a steroid and preserve foam a single step edit through either or a steroid or antifungals and so we see this as a very positive movement as we continue to garner excess of Medicaid.

Todd Edwards: It's very recent. Just recently, we picked up coverage through Florida State Medicaid. And not only did we pick up the coverage there, but relative to the step edits that have been in place for Zareef Cream and Zareef Foam, a single step edit for Zareef Cream through a steroid, and for Zareef Foam, a single step edit through either a steroid or antifungals. And so we see this as a very positive movement as we continue to garner access to And we will continue to be able to do that as we roll through the back half of 2024.

Speaker Change: And we continue to be able to do that as we roll through the back half of 2024.

Patrick E. Burnett: Relative specifically to Medicare Part D, we continue to have positive discussions with the Part D PBMs and expect that we will pick up some of those Part D plans in the back half of 2024. And, in addition to that, likely some other coverage in Part D that would likely be effective on January 1st, 2025. So we are making good progress on both fronts of Medicaid and Medicare. Yeah, and I can take the question about the label. You know, obviously, we're in the middle of a review by the FDA for our atopic dermatitis data for ages five, or sorry, ages six and above.

Pbms: Relative specifically to Medicare part D. We continue to have positive discussions with the part D. Pbms.

Speaker Change: And expect that we will pick up.

Speaker Change: Some of those part D plans in the back half of 2024.

Speaker Change: And in addition to that likely some other coverage in part D that would likely be effective.

Speaker Change: January one 2025, so we are making good progress on both fronts of Medicaid and Medicare.

Speaker Change: Yes, and I can take the question about the label obviously, we're in the middle of a review by the FDA for our atopic dermatitis data for ages, five, especially ages six and above.

Patrick E. Burnett: But what I can say is that this is an expansion of our existing cream label, obviously, at a different concentration that will be added to that. So, you know, our expectation with regard to what will be included is kind of, you know, similar to what our clinical trials were conducted on. And I think that if you look at the psoriasis 0.3% cream label, that'll give you a pretty good idea of where we expect to land on atopic dermatitis.

FDA: But what I can say is that this is an expansion of our existing cream label, obviously at a different comp range that there'll be added to that to that cleanly to clean label. So our expectation with regard to what will be included is kind of similar to what our clinical trials were conducted in.

Patrick E. Burnett: And notably, you asked about the itch; the itch data were included in that cream data. I think there's an understanding, you know, within the last couple years of the importance of being able to communicate these kind of symptom data like itch. And so they've been included in our earlier label and in some others as well.

Speaker Change: And I think that if you look at the psoriasis <unk>, 3% cream label.

Speaker Change: That will give you a pretty good idea of where we expect to land in atopic dermatitis had notable you asked about edge. The edge data were included in that to clean data I think there is an understanding within the last couple of years of the importance of being able to communicate these kind of symptom data like itch and so they've been <unk>.

Speaker Change: In our in our earlier label and in some others as well so I think thats a good.

Patrick E. Burnett: So I think that's a good direction for the FDA to be taking with topicals. So yeah, we're looking forward to, you know, getting the new for coming up here in July and, you know, being able to speak with you at that point about what exactly our label will include. Thank you. And thank you. And one moment for our next question, and our next question comes from Seamus Fernandez from Guggenheim Securities. Your line is now open.

Speaker Change: <unk> for the FDA to be taking with topical so yes, we're looking forward to getting the <unk> coming up here in July and.

Speaker Change: Being able to speak with you at that point about what exactly our level of claim.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: And thank you.

Speaker Change: And one moment our next question.

Speaker Change: And our next question comes from Seamus Fernandez from Guggenheim Securities. Your line is now open.

Seamus Christopher Fernandez: Oh, great. Thanks for the questions and congrats on the quarterly results. I wanted to ask a couple of questions here. First, Todd, you know, great execution with the foam and, you know, moving forward from gross to net and having that really be seamless. When we think about the atopic dermatitis opportunity, can you help us understand how you expect that market to evolve, just given the growing comfort that physicians already have with Opsalura and where you see, you know, Zerive Cream really standing out in the A.D. space specifically?

Seamus Christopher Fernandez: Great. Thanks for the questions and congrats on the quarterly results.

Seamus Christopher Fernandez: Wanted to ask a couple of questions here, So first Todd.

Seamus Christopher Fernandez: Great execution with the phone.

Seamus Christopher Fernandez: And moving forward.

Todd: The gross to net and having that really be seamless.

Todd: When we think about the atopic dermatitis opportunity can you help us understand how you expect that market to evolve just given the growing comfort that physicians already have without so lora and where you see.

Speaker Change: <unk> cream really standing out in.

Seamus Christopher Fernandez: The second question is, you know, Frank, I think we've talked about where the gross to net may be able to go sort of towards the end of this year and then hopefully maybe a steady state gross to net at some point. Just hoping you could remind us where you see those numbers headed over time as the growth of the asset improves. And, you know, maybe you can also help us understand in context where you see pricing headed in that regard.

Speaker Change: In the ADC space specifically.

Seamus Christopher Fernandez: The second question is Frank I think we've talked about where the gross to net.

Speaker Change: It may be able to go sort of towards the end of this year and then hopefully.

Frank: Maybe a steady state gross to net.

Frank: At some point, just hoping you could remind us where you see those numbers headed to over time as the growth of the asset improves.

Frank: Maybe you can also help us understand the context, where you see pricing.

Speaker Change: In that regard obviously other folks can go very aggressive on price.

Seamus Christopher Fernandez: Obviously, other folks can go very aggressive on price, but you've, you know, price hikes; you've taken a different strategy as it relates to, you know, sort of remaining comfortably within the, you know, subspecialty tier. So, just interested to know how to think about price increases and then gross to net over time. Thanks.

Speaker Change: Price hikes, you've taken a different strategy as it relates to sort of remaining comfortably within the.

Speaker Change: Subspecialty tier.

Todd: So just interested to know how to think about price increases and then gross to net over time. Thanks sure. Todd do you want to take the first question around Eddie I'll take the first question on <unk>.

Todd Edwards: Sure. Todd, do you want to take the first question on A.D.? Yeah, I'll take the first question on A.D., and I firmly believe that we have a significant opportunity in atopic dermatitis. First, relative to access, I do anticipate that, like Zerifoam, the PBMs and payers will treat Zerif cream in atopic dermatitis as a line extension, which will enable us to garner quick access and quick improvements in our gross to net for atopic dermatitis.

Todd: I firmly believe that we have a significant opportunity in atopic dermatitis first.

Todd: Relative to access.

Todd: I do anticipate that like Missouri foam.

Todd: The pbms and payers with treats <unk>.

Todd: <unk> cream in atopic dermatitis or the line extension.

Missouri foam: It will enable us to garner quick access and quick improvements in our gross to net for atopic dermatitis. Furthermore, when you look across the <unk> portfolio. The feedback we receive from <unk> reform relative to its uniquely formulated vehicle, which likewise will.

Todd Edwards: Furthermore, when you look across the Zerif portfolio, the feedback we receive from Zerif cream and Zerifoam relative to its uniquely formulated vehicle, which likewise will translate into atopic dermatitis as well as the tolerability of the asset. Furthermore, you know, if our label is similar to that of Zerif cream and psoriasis and Zerifoam after approval, it's likely we'll have no limitations of use on location, body surface area, duration, or concomitant use with immunosuppressive agents, which will be a strategic advantage for us within the market.

Speaker Change: Translate into atopic dermatitis as well as Tolerability.

Speaker Change: The asset. Furthermore.

Speaker Change: If our label is similar to that of.

Orion: Repayments Orion system reform.

Speaker Change: After approval.

Orion: We will have no limitations of use on location body surface area duration or concomitant use with immunosuppressants, which will be a strategic advantage for us within the market. In addition to that being a once a day.

Todd Edwards: In addition to that, being a once-a-day topical will likewise resonate with patients. And then I will say one big strategic lever that we'll have with the addition and approval of atopic dermatitis is this portfolio approach that we're having, because you think of three products that are distinctly formulated across three significant dermatology conditions that dermatologists treat every day throughout the day. And by having three formulations, the simplicity of prescribing, and ability to swiftly explain the treatment to their patients.

Speaker Change: Topical.

Speaker Change: Likewise resonate with patients and then I will say one big strategic lever that we'll have with the addition of an approval of atopic dermatitis. As this portfolio approach that we are having because you think three products that are distinct we formulated across three significant dermatology conditions.

Speaker Change: <unk>.

Speaker Change: Dermatologists are treating every day throughout the day and by having three formulations, the simplicity of prescribing and ability to.

Dermatologist: We explained the treatment to their patients and they are on the backend of very predictable fulfillment process across those three products I think will really give us an advantage in the market. So I think it's a great opportunity for us and I look forward to the <unk> date, and the eventual launch in atopic dermatitis.

Todd Edwards: And then on the back end, a very predictable fulfillment process across those three products, which I think will really give us an advantage in the market. So I think it's a great opportunity for us. And I look forward to that PDUFA date and the eventual launch of ApocaDermatitis. Thanks, Todd. Yeah, so Seamus, thanks for your question around gross to net as well. So let me break this down a little bit.

Frank Watanabe: In terms of gross to net evolution, we continue to feel very good that we are going to get to a steady state, you know, in the 50s. And I think the fact that we were able to get down to the low 60s during Q1, in spite of the annual resets and in spite of the fact that we launched a new drug, really speaks to our ability to get gross to net down.

Speaker Change: Thanks Todd.

Speaker Change: Thanks for your question around gross to nets as well so let me let me.

Speaker Change: This down a little bit in terms of gross to net evolution.

Speaker Change: We continue to feel very good that we are going to get to a steady state in the fifties.

Todd: And I think the fact that we were able to get down to the low <unk>. During Q1 in spite of the annual resets and in spite of the fact that we launched a new drug.

Speaker Change: I think really speaks to our ability to get gross to nets down and I think it also speaks to the value of our overall pricing strategy.

Frank Watanabe: And I think it also speaks to the value of our overall pricing strategy; we would expect that we'll get to steady state on the psoriasis cream by, you know, probably by the end of this year. And, you know, we're getting very close already, right?

Speaker Change: We would expect that we will get to steady state on the psoriasis cream by probably by the end of this year.

Speaker Change: We're getting very close to already right.

Speaker Change: The phone is probably going to be a little bit lagging behind that just because it's a new product and we have to get downstream insurance coverage, but.

Frank Watanabe: The foam is probably going to be a little bit lagging behind that just because it's a new product, and we have to get downstream insurance coverage, but, As Todd mentioned already, we're already over 50% covered prescriptions for the foam. And so we think that the foam will catch up with the 0.3 cream very quickly. And then we'll have to go through the same sort of evolution when we launch atopic dermatitis. But again, I think, you know, what we were able to achieve with the foam getting to over 50% coverage very quickly and not having really a meaningful negative impact on gross net with the foam launch, I think you would expect to see something very similar with atopic dermatitis. Again, payers view these as line extensions that are covered by the existing contracts.

Todd: Todd mentioned already we're already over 50% covered prescriptions for the foam and so we think that form will catch up with the three claim very quickly and then we will have to go through the same sort of evolution when we launch atopic dermatitis, but again I think.

Todd: What we've been able to achieve with our phone getting to over 50% coverage very quickly and not having really a meaningful negative impact on gross net with the phone launch I think you would expect to see something very similar with atopic dermatitis again payers view. This these as line extension that are covered by the existing contracts into that.

Frank Watanabe: And so that really facilitates and speeds up, frankly, our ability to get coverage. You know, in terms of where price is headed, you know, we priced our product differentially from other branded topicals when we launched, and that really got back primarily to a question of Medicare and Medicaid access, and we were delighted with the recent Florida win that Todd just mentioned. I think that that's, you know, another proof point that our pricing and access strategy is working, and we expect to have more proof throughout the year as we garner access through Medicaid and, you know, fully Medicare, as Todd mentioned, by the end of the year.

Speaker Change #100: That really facilitates and speeds up frankly, our ability to get coverage.

Todd: In terms of where prices headed.

Todd: We did price differentially than other branded topical when we launched and that really got back primarily to a question of Medicare and Medicaid access in.

Speaker Change: We are delighted with the recent Florida win that Todd just mentioned I think that Thats.

Speaker Change: Another proof point that our pricing and access strategy is working and we expect to have more proof throughout the year as we garner access through Medicaid and Medicare as Tad mentioned by the end of the year in terms of our ability to price hike.

Frank Watanabe: In terms of our ability to price hike, you know, frankly, the contracts these days with all the PBMs limit any company's ability to price hike. You know, there are price protection clauses in there, and we don't think that we are disadvantaged versus the other companies in that respect.

Speaker Change: Thankfully.

Speaker Change #101: The contracts these days with all the pbms limits any companys ability to price hike.

Speaker Change #101: There are price protection clauses in there and we don't think that we are disadvantaged versus the other companies.

Speaker Change #101: In that respect the only thing that we do need to be mindful of is that Medicare Medicaid specialty threshold, which all of the other branded topicals are well above and we are actively trying to keep it below.

Frank Watanabe: The only thing that we do need to be mindful of is the Medicare and Medicaid specialty threshold, which all the other branded topicals are well above, and we are actively trying to keep below. And, you know, we have headroom there, so, you know, I would anticipate that in the future, there may be some price increases. We do have that ability, but I don't think that we're really impaired in our ability to take price increases, you know, in line with inflation any more than any other company is, as long as we stay under that CMS threshold. Great

Speaker Change #101: And we have headroom there so I would anticipate that in the future. There may be some price increases we do have that ability, but I don't think that we're really impaired in our ability to take price increases in line with inflation any more than any other company is as long as we stay under that that CMS threshold.

Speaker Change #105: Great and then maybe just one follow up.

Seamus Christopher Fernandez: And then maybe just as one follow-up, as you think about the rapid uptake that we saw with regard to Febderm, how should we be thinking about atopic dermatitis? It seems like with the product on the market, there won't necessarily be that same level of pent-up demand. But perhaps this feels a little bit more like the sort of psoriasis uptake curve. Although again, when a lot of free drugs were given away on the psoriasis curve, those were also accelerated to some degree, although that's not the path that Arcutis took. So just trying to get a better sense of how to think about the trajectory of the uptake curve for cream as atopic derm comes on. Yeah, yeah, sure. I think it's a great question, too, Seamus.

Speaker Change #107: You think about that.

Speaker Change #103: Rapid uptake that we saw with regard to.

Speaker Change #101: <unk>.

Speaker Change #102: How should we be thinking about atopic dermatitis, it seems like with product on market that won't necessarily be that same level of pent up demand.

Speaker Change #102: But perhaps this feels a little bit more like the.

Speaker Change #102: Psoriasis uptake curve, although again when a lot of free drug with giving away on the psoriasis curves. Those were also accelerated to some degree although that's not the path that.

Speaker Change #102: That are curious Doug so just trying to get a better sense of how to think about the trajectory of the uptake curve for <unk>.

Speaker Change #102: Clean.

Speaker Change #104: Atopic Derm comes on Yeah, Yeah sure I think it's a great question to Seamus.

Frank Watanabe: I think that it would not be realistic to expect to see an uptake comparable to febderm for atopic dermatitis. As you mentioned, it's been 20 years since there's been any innovation in febderm. And as Todd mentioned, we think that there was a pretty good-sized pool of sort of ready patients just waiting for xerifoam to be approved. And that really drove that very rapid uptake that we saw right out of the gate. So I wouldn't expect that kind of growth with AD right out of the gate.

Speaker Change #110: I think that it would not be realistic to expect to see something.

Speaker Change #109: Uptake comparable scepter for atopic dermatitis as you mentioned, it's been 20 years since there's been any innovation in <unk>.

Speaker Change #108: And as Todd mentioned, we thought that there was a pretty good size pool of sort of ready patients just waiting for <unk> to be approved and that really drove that very rapid uptake that we saw right out of the gate.

Speaker Change #106: So I wouldn't expect that kind of growth with <unk> right out of the gate.

Frank Watanabe: On the other hand, you know, I think compared to the psoriasis launch, AD could outperform psoriasis for a number of reasons. You know, one of them I think Todd alluded to, which is that when we launched Zareve and psoriasis, nobody really knew Zareve, and they didn't really know Arcutis all that well. By the time we launch it in atopic dermatitis, pretty much all of the dermatologists will have used the cream, and a high percentage will have used the foam.

Speaker Change #106: On the other hand, I think compared to the psoriasis launch I think that <unk> could outperform psoriasis for a number of reasons.

Todd: One of them I think Todd alluded to which is.

Todd: When we launched <unk> in psoriasis, nobody really news or even they didn't really know are cute itself had well by the time, we launch in atopic dermatitis pretty much all of the dermatologist will have used the cream and a high percentage of both used to fall. So we're going to be launching with that positive tailwind of experience with the efficacy of <unk> safety and Tolerability of <unk> and.

Frank Watanabe: So we're going to be launching with that positive tailwind of experience with the efficacy of Zareve, the safety and tolerability of Zareve, and also, as Todd mentioned, the ease of the process for getting patients fulfilled. So I think that will aid the uptake in atopic dermatitis. It's a much more competitive market, so I wouldn't expect to have a large warehouse of patients just waiting when we launch an atopic dermatitis product. So, you know, I think the uptake is probably going to fall somewhere in between the last two launches. Good.

Todd: Also as Todd mentioned that the ease of the process for getting patients fulfilled so I think that will aid the.

Todd: Take in atopic dermatitis is a much more competitive market. So I wouldn't expect to have a large warehouse of patients just waiting.

Speaker Change #113: When we launched atopic dermatitis. So yes, I think the uptake is probably going to fall somewhere in between the last two largest.

Speaker Change #111: Great. Thanks, so much.

Speaker Change #112: And thank you.

Speaker Change #112: And one moment our next question.

Seamus Christopher Fernandez: Thanks so much, and thanks. And one moment for our next question. And our next question comes from Vikram Purohit from Morgan Stanley. Your line is now open. Hi, good afternoon.

Speaker Change #115: And our next question comes from Vikram Bureau hit from Morgan Stanley. Your line is now open.

Vikram Purohit: Hi, good afternoon, thanks for taking our questions. So we had two one on <unk> and then one on the potential <unk> launch.

Vikram Purohit: Thanks for taking our questions. We had two, one on SebDerm and then one on the potential AD launch. So for SebDerm, understanding that it's still pretty early in the launch trajectory, what is your current sense on duration and the annual number of cancer products a customer, or a patient, rather, might work through over the course of a year? And then for AD, you previously mentioned entering a partnership to access the primary care setting. So I just wanted to see how those discussions were going.

Speaker Change #117: <unk> understanding that it's still pretty early in the launch trajectory. What is your current sense on duration and the annual number of Kansas product a customer a patient rather might work through over the course of a year and then for <unk> you.

Speaker Change #120: You've previously mentioned entering a partnership Texas the primary care setting.

Speaker Change #116: Wanted to see how those discussions are going what you currently see is the timeline to establishing a partnership and what you would see is the I guess the ideal economics in terms of collaboration here. Thank you.

Frank Watanabe: What you currently see as the timeline to establishing a partnership and what you would see as the, I guess, the ideal economic model, I'm sure. So around duration and consumption, I think it's very early still to be able to assess that, you know, we are seeing some results come through, you know, I don't actually have the latest numbers. Todd may have that, but we are seeing some, but you know, it's not a significant driver of growth just given how early we are in the launch. You know, atopic, excuse me, seborrheic dermatitis covers less body surface area than psoriasis or atopic dermatitis. So it may be that patients consume fewer cans throughout the year.

Speaker Change #118: Sure so around duration and consumption I think it's very early still.

Speaker Change #116: To be able to assess that.

Vikram Purohit: We are seeing some results come through.

Speaker Change #119: I don't actually have the latest numbers Todd may have that but we are seeing some.

Speaker Change #119: But it's not a significant driver of growth just given how early we are in the launch in atopic excuse me February dermatitis.

Vikram Purohit: Less body surface area than psoriasis or atopic dermatitis. So it may be that that patient's consume fewer cans throughout the year I think what we've previously stated was that we thought that that was probably something like one to two cans a year for <unk>.

Frank Watanabe: I think what we've previously stated was that we thought that it was probably something like one to two cans a year for sebderm. We don't have anything at this point to revise that guidance. And so, you know, I would say that we would expect it to be something similar to that until we learn otherwise, and we'll update you guys if we do get information on that. In terms of the atopic dermatitis partnership, you know, what we've been saying all along is that we would like to have that done sometime around the launch.

Vikram Purohit: We don't have anything at this point to revise that guidance and so I would say that we would expect it to be.

Vikram Purohit: Something similar to that until we we learned otherwise and we'll update you guys. If we do get information on that.

Vikram Purohit: In terms of the atopic dermatitis.

Vikram Purohit: Partnership.

Vikram Purohit: What we've been saying all along is that we would like to have that done sometime around the launch I don't think we need to have it done by the launch necessarily because you really have to win with the dermatologist first the PCP as we'll be looking to the <unk>.

Frank Watanabe: I don't think we need to have it done by the launch necessarily, because you really have to win with the dermatologist first. The PCPs will be looking to the derms for an example. And so I don't think it's critical necessarily to be in primary care right at the launch. But I think it's very likely that we'll have that deal done. We will still have a deal done this year. We're feeling very good about how the discussions have been going with potential partners. And then, in terms of economics, you know, it'll really come down to the negotiation with the potential partner.

Vikram Purohit: For an example, and so I don't think its critical necessarily be in primary care.

Vikram Purohit: Right at the launch, but I think it's very likely that we'll have that deal done.

Vikram Purohit: We will have a deal done still this year.

Vikram Purohit: Feeling very good about how the discussion has been going with potential partners.

Vikram Purohit: And then in terms of economics, you know it will really come down to that.

Vikram Purohit: The negotiation with the potential partner they will have obviously a considerable expense just given how large primary care sales forces are.

Frank Watanabe: You know, they will obviously have a considerable expense just given how large primary care sales forces are. But we've obviously invested a lot into the product. We do have a preference for some sort of revenue sharing arrangement rather than a fee for service because I think that that aligns the interests of the two partners, which is aligned with the interests of shareholders. Right. As opposed to a fee-for-service where, you know, maybe you get what you pay for.

Vikram Purohit: We've obviously invested a lot into the product.

Vikram Purohit: Do.

Vikram Purohit: Have a preference for some sort of a revenue sharing arrangement rather than a fee for service.

Vikram Purohit: Because I think that that aligns the interests of the two partners, which is aligned with the interest of shareholders right as opposed to fee for service, where maybe you get what you pay for it.

Tyler Martin Van Buren: But, you know, we'll we'll have to negotiate that with whoever ends up being the final choice of a partner, and then we'll let investors know what the economics are around the deal. Okay, and thank you. And one moment for our next question. And our next question comes from Tyler Van Buren from TD Cowan. Your line is now open. Hey guys. Good afternoon. Regarding the primary care partnership, is that something that you would like to happen soon? And what would it look like?

Vikram Purohit: But but.

Vikram Purohit: Right.

Vikram Purohit: We will have to negotiate that with whoever ends up being the final choice of partner and then we will let investors know what the what the economics are around the deal.

Speaker Change #122: Understood. Thank you.

Speaker Change #121: And thank you.

Speaker Change #124: And one moment our next question.

Speaker Change #127: And our next question comes from Tyler Van Buren from TD Cowen. Your line is now open.

Speaker Change #130: Hey, guys. Good afternoon regarding the primary care partnership is that something that you would like to happen soon.

Speaker Change #128: And what would it look like and how many additional patients do you believe you could reach via the strategy.

Frank Watanabe: And how many additional patients do you believe you could reach via this strategy? Sure. First of all, how's the presidential campaign going?

Speaker Change #124: Sure.

Speaker Change #125: First of all.

Speaker Change #126: The presidential campaign going.

Speaker Change #126: Yeah.

Frank Watanabe: So around, for those of you who weren't at their conference, that was an inside joke. On peace and partnership, as I just said to Vikram, I think we'd like to have this done sometime around the launch, which is probably going to be in the August time frame. I feel very confident about our ability to get it done before the end of the year. So that's kind of, I would put it like that as a bookend.

Speaker Change #126: So.

Speaker Change #126: Because as you weren't at their conference that was an inside joke.

Speaker Change #123: On the Pizza and partnership as I, just said to Vikram.

Speaker Change #123: Wed like to have this done sometime around the launch which is probably going to be in the August timeframe.

Speaker Change #123: I feel very confident about our ability to get it done before the end of the year. So that's kind of I would put it as bookends.

Speaker Change #123: Yes.

Frank Watanabe: You know, in terms of the opportunity size, about 50% of atopic dermatitis and about 50% of seborrheic dermatitis patients are treated outside of dermatology. They're not all in primary care or pediatrics, but a very large percentage of those patients are sitting in a PCP or a pediatrician's office, both subderm and AD. More pediatricians for AD, more PCPs for subderm, just because the ages of onset of the disease. So, you know, we're looking for a partner that has good coverage primarily of the PTP and the pediatric specialties. If they had coverage for allergies, that would probably be a benefit, although that's a very small community.

Speaker Change #123: In terms of the opportunity size about 50% of atopic dermatitis and about 50% of a separate dermatitis patients are treated outside of dermatology, they're not all in primary care or pediatrics, but a very large percentage of those patients are sitting in the PCP or Pediatrician's office both February.

Speaker Change #123: More pediatricians for more PCP four for <unk>, just because the ages.

Speaker Change #123: The onset of the disease.

Speaker Change #123: So we're looking for a partner that has good coverage primarily of the PTP.

Speaker Change #123: The pediatric.

Speaker Change #123: Specialties.

Speaker Change #123: If they had coverage in allergy that would probably be also a benefit although that's a very small community, but it's a pretty sizable additional opportunity by tapping into primary care pediatrics, just because thats, where the patients are sitting.

Speaker Change #123: Yeah.

Speaker Change #132: And thank you.

Speaker Change #138: And one moment our next question.

Speaker Change #129: And our next question comes from <unk> <unk> from Mizuho. Your line is now open.

Frank Watanabe: But it's a pretty sizable additional opportunity by tapping into primary care and pediatrics just because that's where the patient is, and thank you. And one moment for our next question. And our next question comes from Uy Ear from Mizuhu. Your line is now open. Hey guys, congrats on the quarter.

Speaker Change #134: Hey, guys. Congrats on the quarter. My first question is I think.

Uy Sieng Ear: Yeah, my first question is, I think, you know, you said you're expecting GrowthNet to reach steady state towards the end of the year, but you're going to, I guess, have Medicaid and, or more Medicare, coming online towards the end of the year as well. Just are you kind of saying that, you know, Medicare and Medicaid will not have an impact on GrowthNet in 2025? Or like, how should we sort of think about the interplay between Medicare and Medicaid in terms of GrowthNet?

Speaker Change #136: You said, you're expecting gross can add to reach steady state towards the end of the year, but.

Speaker Change #136: You're going to I guess have Medicaid and or more Medicare.

Speaker Change #136: Coming online towards the end of the year as well.

Speaker Change #140: You're kind of saying that.

Speaker Change #123: Yeah.

Speaker Change #131: Medicare and Medicaid will not have an impact on gross to net.

Speaker Change #131: In 2025.

Speaker Change #135: Or like how should we sort of think about the.

Speaker Change #131: At the end of play with Medicare and Medicaid in terms of gross to net and secondly.

Uy Sieng Ear: And secondly, could you perhaps elaborate on your new program, your distribution programs, where I think you said that for every unit, the specialty pharmacists get one unit for uncovered patients. I wasn't quite sure.

Speaker Change #133: Could you.

Speaker Change #141: Perhaps elaborate on your new program your distribution programs, where I think you said that you.

Speaker Change #133: For every unit the specialty pharmacy get one unit for uncovered patients.

Speaker Change #142: I didn't quite understand it thanks sure yeah. Okay. Good good to hear from you I'll answer your first one and then Tom I'll ask you to talk about them.

Frank Watanabe: Thanks. Sure. Yeah.

Speaker Change #133: The.

Tom: The pharmacies.

Frank Watanabe: Good to hear from you. I'll answer your first question, and then Todd, I'll ask you to talk about the Yes, so I did say that I think we will get to our steady state or around our steady state this year on the psoriasis book of business. And yes, that does factor in Medicare and Medicaid coverage. You know, a couple things to keep in mind. One is that Medicare is a less important contributor to the psoriasis business than it is to sebderm and AD just because the demographics of the patient population are quite a bit smaller.

Tom: So I did say that we think we will get to.

Tom: Our steady state or around our steady state gross to net this year on the <unk> book of business and yes that does factor in Medicare and Medicaid coverage, a couple things to keep in mind. One is Medicare Medicaid is a less important contributor to the <unk> business than it is <unk> just because of the demographics of the patient population that's quite a bit small.

Tom: But secondly, as we've said previously.

Frank Watanabe: But secondly, as we've said previously, with our pricing and access strategy, we don't anticipate having to give outsized rebates for Medicare and Medicaid coverage. And I think when you look at it all in, the Medicare and Medicaid book of business is probably going to be similarly profitable to the commercial book of business. So we don't see, we don't expect that to have a, you know, really meaningful negative impact on our gross net.

Tom: With our pricing and access strategy, we don't anticipate having to give outsized rebates.

Speaker Change #139: For Medicare and Medicaid coverage.

Speaker Change #139: And I think when you look at it all in the.

Speaker Change #139: Medicare and Medicaid book of business is probably going to be similarly profitable.

Speaker Change #139: Two two.

Speaker Change #139: To the commercial book of business. So we don't see we don't expect that to have really meaningful negative impact on our gross to nets.

Todd Edwards: Todd, do you wanna maybe talk about the pharmacy? Yeah, fantastic; I will. And just to mention, relative to improving our growth to net, we took what I'll call a multi-pronged approach. And the program that I'll talk about here in just a minute was only one lever that we pulled to improve our growth to net. But specifically, to that program, if you think about it, prior to implementing the current program, when a commercially insured non-covered Zariqa prescription was dispensed by the pharmacy.

Speaker Change #143: Todd do you want to maybe talk about the pharmacies.

Tom: Yes.

Todd: Fantastic I will in just mentioned.

Todd: Relative to improving our gross to net we took a what I'll call a multi pronged approach and the program that I'll talk about here in just a minute.

Todd: It was only one lever that we pulled two to improve our gross to net the specifically to that program do you think about it.

Todd: Prior to implementing the current program.

Todd: When a commercially insured non covered prescription was dispensed by the pharmacy.

Todd Edwards: What happened is that the prescription was processed, and then the cost of that unit was charged to our co-pay. Then, under the new current program, When a non-covered prescription is dispensed by a contracted pharmacy, then Arcutis directly provides the pharmacy with a unit for every unit they use from their inventory to fill that non-covered script versus charging it to the copay, which unburdens the impact of copay cards and non-coverage scripts on our gross net.

Todd: What happened is that prescription was process and then the cost of that unit was charged to our co pay card.

Todd: Then under the new current program.

Todd: On a non covered prescription is dispensed by a contract that pharmacy. Then are cued is directly provides the pharmacy with a unit for every unit they use from their inventory to fill that non covered scripts versus charging it to the copay card, which burdens.

Todd: Impact.

Todd: Co pay card and non coverage strips on our gross to net.

Todd: Okay. Thanks.

Todd Edwards: Okay, thank you, and thank you. And I'm showing no further questions. I would now like to turn the call back to Frank for closing. Okay. Well, I'll be very brief as well. I really appreciate everyone calling in for the call today and the great questions we've had, and we look forward to talking to you all in about another quarter. Thanks a lot.

Speaker Change #145: And thank you.

Frank: And I am showing no further questions I would now like to turn the call back to Frank for closing remarks.

Frank: Well I'll be very brief as well really appreciate everyone calling in for the call today and the great questions. We've had and we look forward to talking to you all in about another quarter. Thanks, a lot bye bye.

Frank Watanabe: Bye-bye. This concludes today's conference call. Thank you for participating. You may now. Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day and welcome to Ardicuse Biotherapeutics 2024 First Quarter Financial Results Conference. At this time, all participants are on a listen-only mode.

Speaker Change #144: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change #144: [music].

Speaker Change #144: Okay.

Speaker Change #144: Yes.

Frank: [music].

Todd: Okay.

Todd: Okay.

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Speaker Change #146: Good day and welcome to Arctic as Biotherapeutics 2024 first quarter financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone you then here an automated message advising your hand is raised.

After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change #147: So withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the call over to lots of their then Vice President Finance and Investor Relations. Please go ahead.

To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to Latha Vairavan, Vice President, Finance and Investor Relations. Please go ahead. Thank you. Good afternoon, everyone.

Speaker Change #146: Okay.

Speaker Change #148: Thank you good afternoon, everyone and thank you for joining us today to review, our first quarter 2024 financial results and business update.

And thank you for joining us today to review our first quarter 2024 financial results and business update. Slides for today's call are available on the Investors section of the Arcutis website. On the call today are Frank Watanabe, President and CEO, Patrick Burnett, Chief Medical Officer, Todd Edwards, Chief Commercial Officer, and David Topper, Chief Financial Officer. I'd remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and uncertainties, and our actual results may differ. We encourage you to review all of the company's filings with the Securities and Exchange Commission, including descriptions of our business and risk factors. With that, let me hand the call over to Frank. Thanks, Latha.

Speaker Change #149: For today's call are available on the investors section of the Arcadis website on the call today are Frank Watanabe, President and CEO, Patrick Burnett, Chief Medical Officer, Todd Edwards, Chief Commercial Officer, and David Topper, Chief Financial Officer, I'd remind everyone that we will be making forward.

Speaker Change #150: Looking statements. During this call. These statements are subject to certain risks and uncertainties and our actual results may differ we encourage you to review all the company's filings with the Securities and Exchange Commission, including descriptions of our business and risk factors.

Frank: Let me hand, the call over to Frank.

And thank you all for joining us today. You all know the other executives on the call, but I'm really excited today to welcome David Topper, our new Chief Financial Officer. Well, David is new to his executive position here at Arcutis, but he's been an advisor to us for more than four years.

Frank: Thanks, a lot and thank you all for joining us today.

David <unk>: You all know the other executives on the call, but I am really excited today to welcome David <unk>, our new Chief Financial Officer.

Frank: David is new to his executive position here at <unk>. He has been an adviser to us for more than four years I expect many of you are already familiar with David and his exceptional experience and track record in the financial in Biopharma World and we could not be more pleased that he has decided to join us at this exciting time at <unk>.

I expect many of you are already familiar with David and his exceptional experience and track record in the financial and biopharma worlds. And we could not be more pleased that he's decided to join us at this exciting time at Arcutis. As David joins us, I would also like to express my and the entire organization's thanks and gratitude to John Smither for his incredible service to Arcutis over the past five years. He served as our first CFO, guiding us through a successful initial public offering, and has brought an incredible depth and breadth of both financial acumen and dermatology experience from his 25-plus-year career in the pharmaceutical industry. His contribution to the success of Arcutis at a critical time cannot be overstated, and we wish him well in his future endeavors and family. So with that, let me turn to slide five of the deck.

Frank: As David joins US I would also like to express my and the entire organization.

John W. Smither: Some gratitude to John Smith for his incredible service to our curious over the past five years.

John W. Smither: He has served as our first CFO guiding us through a successful initial public offering and has brought an incredible depth and breadth of both financial acumen and dermatology experience from his 25 plus year career in the pharmaceutical industry.

John W. Smither: His contribution to the success of our crude is at a critical time cannot be overstated, and we wish him well in his future endeavors and family time.

Speaker Change #151: So with that let me turn to slide five of the deck we.

We sustained our strong performance since our last earnings call, and I remain delighted with the Arcutis team and our execution during this quarter. And I'm thrilled about the momentum we are building towards a successful 2024. Once again, we saw strong growth during the quarter in our expanding Zareef portfolio as healthcare providers and their patients saw how Zareef Cream and now Zareef Foam address real needs in the treatment of psoriasis and seborrheic dermatitis, respectively.

Speaker Change #151: We sustained our strong performance since our last earnings call and I remain delighted with the <unk> team and our execution during this quarter and I am thrilled about the momentum we are building towards a successful 2024.

Speaker Change #151: Once again, we saw strong growth during the quarter and our expanding jewelry portfolio as health care providers and their patients see how is the reef cream and now as the reform address real needs in the treatment of psoriasis and February dermatitis, respectively.

Speaker Change #151: Solid growth in prescriptions for both the cream and the film coupled with additional gross to net improvements during the quarter drove drove strong revenue growth in the first quarter, both versus Q4 and year over year with net revenues of $21 $6 million 70.

Solid growth in prescriptions for both the cream and the foam, coupled with additional growth to net improvements during the quarter, drove strong revenue growth in the first quarter, both versus Q4 and year over year, with net revenues of $21.6 million, 70% of which was for the cream and 30% for the foam, which is still very early in the stages of launch. We've now generated more than 255,000 prescriptions for the cream and the foam combined from over 12,500 unique prescribers to date, as our product delivers. Positive clinical experiences for healthcare professionals and their patients

Speaker Change #152: <unk> of which was for the cream and 30% for the film which is still very early in the stages of launch.

Speaker Change #153: We've now generated more than 255000 prescriptions for the cream and the phone combined from over 12500 unique prescribers to date as our product delivers positive clinical experiences for HCP and their patients.

Our progress in improving GTN this past quarter, resulting in a blended GTN in the low 60s across both products for the first quarter, is particularly noteworthy given the typical co-pay resets every product experiences in Q1 each year, in addition to the fact that we launched a new product during the quarter. Todd will provide some more color about how we achieved this remarkable accomplishment in just a few minutes. We also continue to successfully execute against our clinical and regulatory milestones, about which Patrick will go into more detail.

Our progress in improving GTA in this past quarter, resulting in a blended GTS in the low sixty's across both products for the first quarter is particularly noteworthy given the typical co pay resets every product experiences in Q1 each year. In addition to the fact that we launched a new product during the quarter.

Speaker Change #154: Todd will provide some more color about how we achieved this remarkable accomplishment in just a few minutes.

Speaker Change #154: We also continue to successfully execute against our clinical and regulatory milestones about which Patrick will go into more detail. Most important is the upcoming FDA produce a target date of July seven for <unk> for atopic dermatitis.

Most important is the upcoming FDA PDUFA target date of July 7 for our FNDA for atopic dermatitis. We also continue to progress our pipeline programs, in particular ARQ 234 for AD and ARQ 255 for alopecia areata. In February, we completed a secondary offering that raised $172 million in gross proceeds, which, along with net product revenues and our existing balance sheet, puts us in a very strong financial position to sustain our investments in the ongoing launches of Plaxirisis and Sabderm, as well as the potential atopic dermatitis launch later this year, while advancing our pipeline.

Speaker Change #155: We also continue to progress our pipeline programs in particular, <unk> 2344, and our Q2 dollars 55 for alopecia Areata.

Speaker Change #155: In February we completed a secondary offering that raised $172 million gross proceeds, which along with net product revenues in our existing balance sheet puts us in a very strong financial position to sustain our investments and the ongoing launches in plaque psoriasis in <unk> as well as the potential atopic dermatitis launch later this year while <unk>.

Speaker Change #155: Our pipeline.

Also in February, we entered into a licensing agreement with Sato Pharmaceutical Company, which grants Sato an exclusive license for topical reformulation in Japan. Arcutis received upfront payments of $28 million in the quarter, $25 million from Japan, with potential additional Japanese milestones of up to $40 million, as well as low double-digit to mid-teen double-digit percentage royalties. We also received $3 million from Huadong for our China partner.

Speaker Change #156: Also in February we entered into a licensing agreement with Sato Pharmaceutical company, which grant <unk> exclusive license for capital reform last for Japan.

Speaker Change #157: <unk> received upfront payments of $28 million in the quarter $25 million from Japan with potential additional Japan milestones up to $40 million as well as low double digit to mid teen double digit percentage royalties and we also received $3 million from quite on for our China partnership.

Speaker Change #157: Moving on to slide six as we've mentioned on prior calls a major reason why we're so excited for this year is that we are in the midst of a very significant expansion in the opportunity for top <unk>, which we expect will translate into substantial acceleration of our revenue trajectory.

Moving on to slide six. As we've mentioned on prior calls, a major reason why we're so excited for this year is that we are in the midst of a very significant expansion in the opportunity for topical reform, which we expect will translate into a substantial acceleration of our revenue trajectory. Since initial approval for psoriasis, the total addressable market for Zarib could grow tenfold from the end of 2023 to over 15 million patients in the United States.

Speaker Change #157: The initial approval for psoriasis, the total addressable market for <unk> could grow tenfold from the end of 2023 to over 15 million patients in the United States.

Speaker Change #158: I would add that we are feeling increasingly bullish about our ability to begin gaining Medicare and Medicaid coverage. This year and we are making steady progress on a partnership in primary care.

I would add that we are feeling increasingly bullish about our ability to begin gaining Medicare and Medicaid coverage this year, and we are making steady progress on a partnership in primary care. As our results this quarter reaffirm, we have the right commercial team in place for success, and we have an excellent plan to execute against these opportunities. With that, let me turn it over to Todd to provide some further commentary around Zarif cream and foam launches in psoriasis and seb derm. Thank you, Frank. I'm extremely enthusiastic about the expansion of our commercial portfolio, HCP, and patient response to both these three products and the immense opportunities that lie ahead. Moving to slide eight.

Speaker Change #159: As our results this quarter reaffirm we have the right commercial team in place for success and we have an excellent plan to execute against these opportunities.

Speaker Change #159: With that let me turn it over to Todd to provide some further commentary around <unk> cream and fund launches in psoriasis and sector.

Todd: Thank you Frank I'm extremely enthusiastic about the expansion of our commercial portfolio HCP and patient response to bolster <unk> products and the advanced opportunities that lie ahead moving to slide eight <unk> psoriasis tiered performance has continued to show strength and these results demonstrate that we can push the trajectory in <unk>.

The Xeres-Psoriasis-TRF performance is continuing to show strength, and these results demonstrate that we can push the trajectory in psoriasis. These efforts also lay a solid foundation for the brand and the building of a portfolio. Annual insurance changes and deductible recess typically create a dip in prescription trends in the first week of the year.

Todd: These efforts also lay a solid foundation and the brand and the building of our portfolio.

Todd: Annual insurance changes and deductible resets typically create a dip in prescription trends in the first week of the year as you can see it's eurex trend has rebounded from that.

As you can see, the TRX trend has rebounded from that. Further, it is notable that many patients push refills at the end of the year in anticipation of insurance disruption. So to see the growth in Q1 of 8% over Q4, 120% growth compared to the first quarter of 2023, highlights an encouraging trend line for Zareef Kareem. I'm now on slide nine.

Further it is notable that many patients push refills at the end of the year in anticipation of insurance disruption so to see the growth in Q1 up 8% over Q4 <unk>.

Speaker Change #160: 20% growth compared to first quarter of 2023 highlights an encouraging trend line Forbes the refrain.

We continue to hear of a growing preference for Zareve relative to other non-sterile competitors. The Value Proposition of the Retreat resonates with prescribers that aim to resolve plaques that can affect many different parts of the body. Hard-to-treat areas like elbows and knees but also sensitive areas like the face, groin, and underarms. The elements of efficacy, speed of response, the tolerability profile, and the preservation of the skin barrier are becoming well recognized by dermatologists as differentiating factors. Moving to slide 10.

Speaker Change #161: Now on slide nine.

Speaker Change #161: We continue to hear of a growing preference further relative to other non steroidal competitors.

Speaker Change #162: The value propositions retraining resonates with prescribers and aim to resolve cracks that can affect many different parts of the body.

Speaker Change #163: Hard to treat areas like elbows and knees, but also the sensitive areas like the face growing and under arms.

Speaker Change #163: Elements of efficacy speed of response, the Tolerability profile and the preservation of the skin barrier are becoming ROE recognized by dermatologist is differentiating factors.

Speaker Change #163: Moving to slide 10.

As a reminder, Zareeb Foam was approved for seb derm patients in mid-December 2023, with a commercial launch in late January 2024. The Zareeb seb derm launch is off to a phenomenal start with over 46,000 TRXs in less than three months. In the beginning, we anticipated a large pulse of patients either awaiting the phone, who quickly received a prescription after approval. As we have pointed out before, SEP DERM has been a space with a large unmet need without any innovation in the past 20 years.

Speaker Change #163: As a reminder, <unk> was approved for scepter and patients in mid December 2023.

Speaker Change #163: With our commercial launch in late January 2024.

Speaker Change #163: <unk> launch is off to a phenomenal start with over with over 46000 <unk> in less than three months.

Speaker Change #164: In the beginning we anticipated a large bolus of patients either waiting the phone who.

Speaker Change #164: So quickly received a prescription after approval as we have pointed out before sector has been a space with a large unmet need without any innovation in the past 20 years we.

We anticipate the growth trajectory of the film will likely moderate in the future, but with continued growth, we expect this growth trend to be well aligned to the large subderm market with over 4.4 million prescription-treated patients in the U.S. Derm Office and no other competitive treatment option. On the right side of this slide, you can see the products that patients starting on foam are switched from. As expected, 80% are topical steroids and antifungals, and there is a small portion of patients being switched from Zareb cream to foam. Moving on to slide 11.

Speaker Change #164: We anticipate that growth trajectory of the phone will likely moderate in the future.

Speaker Change #164: But with continued growth we expect this growth trend to be well aligned to the large sector market with over $4 4 million prescription treated patients in the U S term office and no other competitive treatment options.

Speaker Change #164: On the right side of this slide you can see the products that patients starting on foam are switched from.

Speaker Change #164: As expected, 80% are from topical steroids with anti bundles and there was a small portion of patients being switched from Missouri train two phone.

Speaker Change #164: Moving onto slide 11.

As we have shared previously, the dermatology prescriber base for PSO and subderm is well-aligned. Serif cream has already been used by most subscribers we target. And so far, 40% of Zuri Cream riders have also used the foam after only three months.

As we've shared previously the dermatology prescriber base with DSO and <unk> are well aligned.

Speaker Change #165: <unk> has already been used by most prescribers we target.

Speaker Change #168: And so far 40% is the re cream riders have also written the phone after only three months.

This highlights the potential for growth as we continue to convert existing cream riders to also using phones. And for Foam, it further opens new interest in Zerif cream for targets who have not previously prescribed the cream. Now on slide 12.

Speaker Change #166: This highlights the potential for growth as we continue to convert existing cream riders to also writing phone.

Speaker Change #167: And for foam further opens new interest in through cream for targets were not previously prescribed the cream.

Speaker Change #167: Now on slide 12.

Clinician feedback about the refilm has been extremely positive. These quotes from actual community dermatologists are typical of the comments we continue to hear about the unmet need for patients whose only option for decades has been steroids and antifungals. Likewise, the happiness of the patient when they experience relief in a more efficient and convenient manner. And for the dermatology practices, a smooth coverage experience that enables ongoing use. Moving to slide 13.

Speaker Change #167: Clinician feedback about the reform has been extremely positive.

Speaker Change #201: His quotes from actual community dermatologists are typical of the comments, we continue to hear about the unmet need for patients, whose only option for decades have been steroids and antifungals.

Speaker Change #169: Requires the happiness of the patient when they experienced relief and a more efficient and convenient manner.

Speaker Change #169: And for the dermatology practices, a smooth coverage experience that enables ongoing usage.

Speaker Change #170: Moving to slide 13.

We were able to obtain coverage for Zarephone from all three large PVMs very quickly. We're now working to secure the downstream plan. We expect foam cutlery to quickly catch up to that scene with the cream.

Speaker Change #171: We were able to obtain coverage for us a refund from all three large pbms very quickly.

Speaker Change #171: Now working to secure the downstream plans.

Speaker Change #172: We expect home coverage quickly catch up to that seen with the cream.

When we look at the percent of prescriptions being covered by insurers, we see an encouraging trend in Zuri Cream, with roughly three out of four Rx's are now covered by insurance. And for foam, slightly more than half of scripts are already covered by insurance. This is very positive considering we are so early in the launch.

Speaker Change #173: We look at the percent of prescriptions being covered by insurers, we see an encouraging trend in <unk> with roughly three out of four are xs are now covered by insurance.

Speaker Change #174: And for film slightly more than half of scripts are already covered by insurance. This is very positive considering we're so early in the launch.

Speaker Change #175: I would add that we expect the contribution to revenue growth coming from further gross to net improvements will likely moderate in coming quarters as we inch closer to our expected steady state gross to net in the fifties.

I would add that we expect the contribution to revenue growth coming from further growth to net improvements will likely moderate in coming quarters as we inch closer to our expected steady state growth to net in the 50s. Going forward, most revenue growth will likely come from prescription demand growth in psoriasis, seb derm, and, if approved, atopic dermatitis. As Frank mentioned earlier, we were quite pleased that we were able to improve our gross net income in Q1.

Speaker Change #176: Going forward, most revenue growth will likely come prescription demand growth in psoriasis, <unk> and if approved atopic dermatitis as.

As Frank mentioned earlier, we were quite pleased that we were able to improve our gross to net in Q1.

Unlike what is typically seen due to copay resets and insurance changes, we have implemented a program at our contracted pharmacy partners to support our commercially insured patients for whom our product is not covered by their insurance. With the new program, we are now directly providing these pharmacies with a unit for each not covered unit of pharmacy dispensed. This unburdens the high expense of not covered units, resulting in an improvement in our gross to net, and enables and ensures that patients have seamless access to our product. Now on slide 14.

Speaker Change #176: Unlike what is typically seen due to co pay resets and insurance change.

Frank: As a part of our continued effort to optimize product access we have implemented a program at our contracted pharmacy partners to support our commercially insured patients for whom our product is not covered by their insurance.

Speaker Change #177: With the new program, we are now directly providing these pharmacies with a unit for each not covered unit a pharmacy dispenses.

Speaker Change #178: This unburdened as the high expense of not covered units, resulting in improvement in our gross to net and enables and ensures that patients have seamless access to our products.

Speaker Change #179: Now on slide 14 with.

With the strong phone launch and approaching the anticipated approval for mild to moderate atopic dermatitis, we are creating a portfolio of options for dermatologists that will sustain the brand growth. The benefits of the Zari Portfolio products, which will address three different dermatological diseases where the current standard of care is topical steroids, are unprecedented and create simplicity for the dermatology prescriber in patient management. The common clinical attributes of Zareeb across all indications will make prescribing simpler, and when paired with a common market access, a copay card, and an efficient and predictable fulfillment pathway, further simplify dermatology practice operations as well. We are well on our way to becoming the preferred topical brand in dermatology. I am turning it over to you, Patrick. Thank you, Todd. I'm now on slide 16.

Speaker Change #180: With the strong phone launch and approach and the anticipated approval and mild to moderate atopic dermatitis, we are creating a portfolio of options for dermatologists that will sustain the brand growth.

Speaker Change #181: The benefits of <unk> portfolio of products that will address three different dermatology diseases with a current standard of care is topical steroids is unprecedented and creates simplicity for the dermatology prescriber and patient management.

Speaker Change #182: The common clinical attributes of <unk> across all indications will make prescribing simpler and when paired with the common market access co pay card.

Patient and predictable fulfillment pathway further simplifies dermatology practice operations as well.

Speaker Change #183: We are well on our way to becoming the preferred topical brand in dermatology.

Speaker Change #183: Turning it over to you Patrick.

Patrick: Thank you Todd I'm now on slide 16, I'm extremely proud of the team's performance in delivering on the promise of topical room left to the dermatology community and the clinic and hitting all of our timelines with regard to regulatory milestones.

I'm extremely proud of the team's performance in delivering on the promise of topical risperimin to the dermatology community in the clinic and hitting all of our timelines with regard to regulatory milestones. HCP excitement around Zareve cream for atopic dermatitis continues to grow as we release more data and based on their own clinical experience with Zareve and psoriasis and seb derm. They find Zareve's product profile to be well suited to what they and their atopic dermatitis patients are looking for. Our PDUFA for mild to moderate AD down to the age of six is coming up quickly on July 7.

Patrick: Excitement around the <unk> cream for atopic dermatitis continues to grow as it relates more data and based on their own clinical experience with <unk> in psoriasis and scepter will find <unk> product profile to be well suited to Wednesday in atopic dermatitis patients are looking for a producer for mild to moderate.

Speaker Change #184: Down to the agents six is coming up quickly on July seven.

Speaker Change #185: Moving on to the approval of foam percent derm here again, we're looking for some great. Some great feedback from dermatology providers unprecedented efficacy with a once a day foam in our market is the biggest psoriasis with no innovation in decades, and no branded competition, Todd Frank and I were recently out meeting with community dermatologists and their feedback on jewelry and film for theirs.

Moving on to the approval of foam for SebDerm, here again, we're looking at some great feedback from dermatology providers. Unprecedented efficacy with a once-a-day foam in a market as big as psoriasis, with no innovation in decades and no branded competition. Todd, Frank, and I were recently out meeting with community dermatologists, and the feedback on Zerif foam for their SebDerm patients was very strong.

Speaker Change #186: Burn patients was very strong.

We're also already looking to expand the indications for xerifoam, expecting to file another FNBA with the FDA for scalp and body psoriasis in the third quarter of 2024. Looking now at some of the integument P data that we presented at the AAD meeting in March. As a reminder, this trial was conducted in mild to moderate AD patients ages 2 to 5 years old. Here we're showing a side-by-side comparison of EZ75, so that's the proportion of subjects whose AD improved by 75% compared to baseline, and WINRS success, that's the worst-ditch numeric rating scale, which is an improvement of at least four points on the worst-ditch numeric rating scale.

Todd Edwards: We're also looking already looking to expand the indications for <unk> expecting to file another S. NDA with the FDA and scalp and body psoriasis in the third quarter of 2024.

Todd Edwards: Looking now on slide 17 at some of the integument Peed data that we presented at the AAD meeting in March as a reminder, this trial was conducted in mild to moderate patients ages two to five years old here, we're showing a side by side comparison of EZ 75. So that is the proportion of subjects, who have <unk> improved by 75% compared to baseline.

Speaker Change #187: <unk> and Wi NRM success, that's the worst itch numeric rating scale, which is an improvement of at least four point on the worst itch numeric rating scale in both of these endpoints. We can see a rapid response already at week, one with 19% of patients, reaching EZ 75, and that number doubling by week four when we're coming in just under 40% of <unk>.

In both of these endpoints, we can see a rapid response already at week one, with 19% of patients reaching EZ75, and that number doubling by week four when we're coming in at just under 40% of patients, with a 75% improvement. On the right side, we have WINRS with a similar pattern of response for the itch, that's the major symptom reported in AD patients and a significant driver of impact on quality

Speaker Change #187: <unk> with a 75% improvement on the right side, we have Wi interacts with a similar pattern of response for the edge. That's the major symptom reported in <unk> patients and a significant driver of impact on quality of life with Wi <unk> response, we jumped up to 15% responders that we've won over quarter responding at week two.

With WINRS response, we jump out to 15% responders at week one, over a quarter responding at week two, and then continue to increase through week four at 35%. Turning to slide 18, I want to highlight the consistency of our data across different age groups, with our integument P data for 2 to 5 year olds on the left, and the pool data from ages 6 and above in integument 1 and integument 2 on the right.

Speaker Change #188: And then continuing to increase through week four at 35%.

Speaker Change #189: Turning to slide 18, I want to highlight the consistency of our data across different age groups with our integument peds data and two to five year old on the left in the pool data from ages, six and above and then taking it one when you're taking the queue on the right and.

And all of these studies, in just four weeks, we're getting about 40% of subjects to an easy 75 and just shy of 35% of patients demonstrating a clinically meaningful improvement, very consistent across the different age groups and showing that both the signs and symptoms of AD improve quickly. These data, paired with our Antegument OLE data that we presented previously, round out the profile of Zarib where patients respond quickly and then continue to improve over time with long-term treatment when we extend treatment out to 52 weeks in our Antegument OLE trial.

Speaker Change #190: And all of these studies in just four weeks, we're getting about 40% of subjects to an easy 75, and just shy of 35% of patients demonstrating a clinically meaningful improvement in niche very consistent across the different age group and showing that both the signs and symptoms of <unk>.

Speaker Change #191: Improved quickly these data paired with our integument OLED data, we presented previously round out the profile observe where patients respond quickly and then continue to improve over time with long term treatment. When we extend treatment up to 52 weeks in our <unk> trial.

On slide 19, now, I want to touch briefly on some new data in seborrheic dermatitis coming out of a collaborative research project with Emma Gutmann and Benji Unger at Mount Sinai in New York. The team at Mount Sinai was able to use a non-invasive tape stripping technique to do gene expression profiling of patients with seb derm to provide us with the first real look at the pathophysiology of this disease.

Speaker Change #191: On slide 19, now I wanted to touch briefly on some new data in February at dermatitis coming out in a collaborative research project with Emma Gutman and Benji Unger at Mount Sinai in New York the team at Mount Sinai was able to use a noninvasive take stripping technique to do gene expression profiling of patients with <unk> to Bryan to provide us with the first real.

Speaker Change #192: Look at the pathophysiology of this disease. This study firmly firmly establishes <unk> as a unique disease distinct from psoriasis and atopic dermatitis, which is driven primarily by th one and th 17 th 22 inflammation, although it has a skin barrier defect.

This study firmly establishes seb derm as a unique disease distinct from psoriasis and atopic dermatitis, which is driven primarily by Th1 and Th17, and Th22 inflammation. Although it has a skin barrier defect, the specific alterations are clearly distinct from atopic dermatitis. And indeed, seb derm does not show any of the Th2 dysregulation that's the hallmark of

Speaker Change #193: Specific alterations are clearly distinct from atopic dermatitis, and then <unk> did not show any of the <unk> II Dysregulation that is the hallmark of atopic dermatitis I'm really proud of the argument of contribution to this effort and I think it highlights the scientific benefits to the field when new therapeutic option as developed for an indication. This is similar to how the IL 17.

I'm really proud of Archutis' contribution to this effort, and I think it highlights the scientific benefits to the field when a new therapeutic option is developed for an indication. This is similar to how the IL-17 and IL-23 dependency of psoriasis was defined by new therapeutics, and similarly for IL-4 and Th13 in atopic dermatitis. I think these new data also paint a very clear picture of why Zarif, as a highly potent PD-4 inhibitor formulated in a skin-friendly formulation, is so well suited for the treatment of seb derm. We know that many of the pathways identified here are modulated by PD-4.

Speaker Change #194: The IL 23 dependency of psoriasis was defined by new therapeutics and similarly for IL four and 13 in atopic dermatitis I think these new data also paint a very clear picture on why is the reef is a highly potent PD four inhibitor formulated and its skin friendly formulation and so well suited for the treatment of <unk>, we know that many of the pathways identify.

Speaker Change #194: Here, our modulators by PD, four with that I'll pass it over to David.

With that, I'll pass it over to David. Thanks, Patrick. I first want to say how thrilled I am to be at Arcutis and working with this team. It's certainly an exciting quarter to be joining the company. I'm on slide 21.

David: Thanks, Patrick first wanted to say, how thrilled I am to be at <unk> <unk> been working with this team.

David: It's certainly an exciting quarter to be joining the company.

As you've heard by now, we achieved $21.6 million in net product revenues for Zareed for the first quarter of 2024, reflecting a 59% growth over Q4. This was driven by substantial growth in net percentage improvement down to the low 60s, the team's success in pulling through covered prescriptions, and our processing of non-covered scripts through our preferred pharmacy. We also saw healthy prescription growth. For the remainder of 2024, we expect continued prescription growth and some further growth to net improvement for both cream and foam. On slide 22, you can see the strong financial performance in the first quarter. Again, net revenues for the first quarter were $21.6 million, up 675% from Q1 of 23, and 59% from the previous quarter.

David: I'm on slide 21, as you have heard by now we achieved $21 6 million in net product revenues for <unk> for the first quarter of 2024, reflecting a 59% growth over Q4.

Patrick: This was driven by substantial gross to net percentage improvement down to the low sixties. The team's success in pulling through cover prescriptions and our processing of non covered scripts through our preferred pharmacies. We also saw a healthy prescription growth in the quarter for.

Speaker Change #195: For the remainder of 2024, we expect continued prescription growth and some further gross to net improvement for both cream and phone.

Speaker Change #196: On Slide 22, you can see the strong financial performance in the first quarter again net revenues for the first quarter of $21 6 million up 675% from Q1 of 'twenty, three and 59% from the previous quarter R&D.

R&D expenses for the first quarter were $23.8 million, which is down significantly from Q1 2023 due to continued decreases in the development cost of topical roughly in the last, but flat as Q4 2023, due to slightly elevated one-time costs for Arcutis 234, as we continue to advance it to IND. Recall that R&D includes our research, operations, and medical affairs. SG&A expenses were $54.8 million for the first quarter, higher both sequentially and versus the same period last year. As we continue to invest in both our current and future launches, I'd like to emphasize that the team has made concerted efforts to make appropriate adjustments to our operating expense profile and to be good stewards of the capital that our investors have entrusted us with.

Speaker Change #197: R&D expenses for the first quarter were $23 8 million, which is down significantly from Q1 2023 due to continued decreases in the development cost of topical roughly in the left but flat as Q4 2023 due to a slightly elevated one time costs were <unk> 234, as we continued to advance it to IMD.

Speaker Change #197: Recall that R&D includes our research operations and medical Affairs expenses.

Speaker Change #198: SG&A expenses were $54 8 million for the first quarter higher both sequentially and versus the same period last year as we continue to invest in both our current and future launches.

Speaker Change #199: I'd like to emphasize that the team have made concerted efforts to make appropriate adjustments to our operating expense profile and to be good stewards of the capital that our investors have entrusted us with as we transition from a pre commercial company to a commercial stage business with additional assets in development. We are endeavoring to ensure that we invest appropriately in both of them.

As we transition from a pre-commercial company to a commercial stage business with additional assets and development, we are endeavoring to ensure that we invest appropriately in both our current and future launches to avoid any risk of disrupting the trajectory our products are demonstrating. On our final slide, 23, on the balance sheet, we had total cash and marketable securities of $404 million at the end of the quarter.

Speaker Change #199: Current and future launches to avoid any risk of disrupting the trajectory of our products are demonstrating.

Speaker Change #200: On our final final slide 23 on the balance sheet, we had total cash and marketable securities of $404 million at the end of the quarter as I mentioned on the previous slide we believe our current capital together with product revenues enable us to continue operating the business and invest sufficient capital in commercial launches.

As I mentioned on the previous slide, we believe our current capital, together with product revenues, enable us to continue operating the business and invest sufficient capital in the commercial launch. As Frank mentioned, in addition to the equity raise in February, we executed an outlicensed deal in Japan, which brought in additional non-dilutive capital of $25 million. The combined money raise enabled us to successfully address the capital requirement covenant without lenders.

Speaker Change #200: As Frank mentioned in addition to the equity raise in February.

Frank: Executed an out license deal in Japan, which brought in additional non dilutive capital of $25 million. The combined money raise enabled us to successfully address the capital requirement covenant with our lender.

Frank: We also received a $3 million milestone payment from our Chinese partner, while dawn based on their progress in China with that I'll hand, it back to Frank for some closing remarks, and then we'll open it up for Q&A.

We also received a $3 million milestone payment from our Chinese partner, Huadong, based on their progress in China. With that, I'll hand it back to Frank for some closing remarks, and then we'll open it up for Q&A. Thanks, David. Our intent and vision are to make a positive and meaningful impact on the lives of people afflicted with chronic dermatological conditions. With Zareve now launched in two indications and potentially adding the Atopic Dermatitis launch later this year, we are proud to be helping millions of medical dermatology patients, allowing us to create additional shareholder value.

Frank: Thanks, David.

Speaker Change #202: And Ted and vision are to make a positive and meaningful impact on the lives of people afflicted with chronic dermatologic diseases with.

Speaker Change #203: <unk> now launched in two indications and potentially adding the topic dermatitis launch later this year, we are proud to be helping millions of medical dermatology patients, allowing us to create additional shareholder value.

We are confident that Q1 2024 lays the foundation for our sustained growth for the rest of 2024 and beyond. And with that, we'll open it up for Q&A. And thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

We are confident that Q1 2024, it lays the foundation for our sustained growth for the rest of 2024 and beyond and with that we'll open it up for Q&A.

Speaker Change #204: And thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Please stand by while we compile the Q&A. And one moment for our first question. And our first question comes from Serge Bellinger from Needham. Your line is now open.

Speaker Change #204: And one moment, Bob first question.

Speaker Change #204: And our first question comes from Serge Belanger from Needham. Your line is now open.

Good afternoon and congratulations on the progress and a solid quarter. First one, I guess for Todd, regarding the expansion of Medicaid and Medicare coverage, maybe if you could just give us an update on where you expect to be by the end of the year or beginning 2025. And then secondly, Frank, as you previously talked about.

Good afternoon, and congrats on the progress on the solid quarter.

Serge D. Belanger: First one I guess for Todd.

Serge D. Belanger: Regarding the expansion in Medicaid and Medicare coverage, maybe you can just give us an update on where you expect to be.

Serge D. Belanger: By the end of the year, starting 2025 and.

Serge D. Belanger: And then secondly.

Serge D. Belanger: Frank you previously talked about the.

The relatively low risk of label approval for AD in July. Then maybe just talk about the label you're expecting. If it will include some of the itch data and be broad enough to cover mild, moderate, and severe disease. Sure, Todd, you want to take that, and then maybe Patrick, actually, you're probably best positioned to answer the question around the label. Yeah, fantastic, Frank.

Speaker Change #205: The relatively low risk of the label approval for <unk>.

Frank: In July so maybe just talk about the label Youre expecting.

Frank: So it will include some of the data.

Frank: Be broad enough to cover the more moderate.

Speaker Change #206: If youre disease. Thanks.

Speaker Change #206: Sure Todd you want to take that and then maybe Patrick actually you are probably best positioned to answer the question around the label.

And first, I'll touch on Medicaid. So we continue to make good progress with Medicaid. And I'll give you an example. It's very recent.

Frank: Yes fantastic Frank.

Speaker Change #207: First I'll touch on Medicaid. So we continue to make good progress with Medicaid and I'll give you. An example, it's very recent.

Patrick: Just recently, we picked up coverage at Florida State Medicaid and not only did we pick up the coverage there but relative to.

Speaker Change #208: The step edits have been in place for <unk> reform.

Speaker Change #209: A single step edit for <unk> cream.

Speaker Change #209: Cream to a steroid and preserve foam a single step edit through either or a steroid or antifungals and so we see this as a very positive movement as we continue to garner excess of Medicaid.

Just recently, we picked up coverage at Florida State Medicaid. And not only did we pick up the coverage there, but relative to the step edits that have been in place for Zareef Cream and Zareef Foam, a single step edit for Zareef Cream through a steroid, and for Zareef Foam, a single step edit through either a steroid or antifungals. And so we see this as a very positive movement as we continue to gain access to Medicaid.

And we continue to be able to do that as we roll through the back half of 2024. Relative specifically to Medicare Part D, we continue to have positive discussions with the Part D PBMs and expect that we will pick up some of those Part D plans in the back half of 2024. And, in addition to that, likely some other coverage in Part D that would likely be effective on January 1st, 2025.

Speaker Change #210: And we continue to be able to do that as we roll through the back half of 2024.

Speaker Change #211: Relative specifically to Medicare part D. We continue to have positive discussions with the part D. Pbms.

Speaker Change #212: And expect that we will pick up.

Speaker Change #212: Some of those part D plans in the back half of 2024.

Speaker Change #212: And in addition to that likely some other coverage in part D that would likely be effective.

So we are making good progress on both fronts of Medicaid and Medicare. Yeah, and I can take the question about the label. You know, obviously, we're in the middle of a review by the FDA for our atopic dermatitis data for ages five, or sorry, ages six and above. But what I can say is that this is an expansion of our existing cream label, obviously at a different concentration that will be added to that.

Speaker Change #212: January one 2025, so we're making good progress on both fronts of Medicaid and Medicare.

Speaker Change #213: Yes, and I can take the question about the label obviously, we're in the middle of a review by the FDA for our atopic dermatitis data for ages, five, especially ages six and above.

So, you know, our expectation with regard to what will be included is kind of, you know, similar to what our clinical trials were conducted in. And I think that if you look at the psoriasis 0.3% cream label, that'll give you a pretty good idea of where we expect to land in atopic dermatitis. And notably, you asked about the itch; the itch data were included in that cream data. I think there's an understanding, you know, within the last couple years of the importance of being able to communicate these kind of symptom data like itch. And so they've been included in our earlier label and in some others as well.

Speaker Change #214: But what I can say is that this is an expansion of our existing cream label, obviously at a different comp range that there'll be added to that to that cleanly to clean label. So our expectation with regard to what will be included is kind of similar to what our clinical trials were conducted in.

Speaker Change #215: And I think that if you look at the psoriasis <unk>, 3% clean label.

Speaker Change #216: That will give you a pretty good idea of where we expect to land in atopic dermatitis had notably you asked about edge. The edge data were included in that to cream data I think there is an understanding within the last couple of years of the importance of being able to communicate these kind of symptom data like itch and so they've been <unk>.

Speaker Change #216: In our in our.

So I think that's a good direction for the FDA to be taking with topicals. So yeah, we're looking forward to, you know, getting the new foot coming up here in July and, you know, being able to speak with you at that point about what exactly our label will include. Thank you.

Speaker Change #217: Earlier label and in some others as well so I think thats a good.

Speaker Change #217: Direction for the FDA to be taking with topical. So yes, we're looking forward to getting the <unk> are coming up here in July and.

Speaker Change #217: Being able to speak with you at that point about what exactly are level in Clinton.

Speaker Change #218: Okay. Thank you.

Yeah.

And thank you. And one moment for our next question. And our next question comes from Seamus Fernandez from Guggenheim Securities. Your line is now open.

Speaker Change #219: And thank you.

Speaker Change #220: And one moment our next question.

Speaker Change #220: And our next question comes from Seamus Fernandez from Guggenheim Securities. Your line is now open.

Oh, great. Thanks for the questions and congrats on the quarterly results. Wanted to ask a couple of questions here. First, Todd, you know, great execution with the foam and, you know, moving forward from gross to net and having that really be seamless.

Speaker Change #221: Great. Thanks for the questions and congrats on the.

Speaker Change #222: Quarterly results.

Seamus Christopher Fernandez: Wanted to ask a couple of questions here, So first Todd.

Speaker Change #223: Great execution with the phone.

Speaker Change #223: And moving forward.

Speaker Change #224: The <unk>.

Speaker Change #225: Gross to net and having that really be seamless.

When we think about the atopic dermatitis opportunity, can you help us understand how you expect that market to evolve, just given the growing comfort that physicians already have with Opsalura and where you see, you know, Zerive Cream really standing out in the A.D. space specifically? The second question is, you know, Frank, I think we've talked about where the gross to net may be able to go sort of towards the end of this year and then, hopefully, maybe a steady state gross to net at some point.

Speaker Change #226: When we think about the atopic dermatitis opportunity can you help us understand how you expect that market to evolve just given the growing comfort that physicians already have without so lora and where you see.

Speaker Change #227: <unk> cream really standing out in.

Speaker Change #227: In the ADC space specifically.

Speaker Change #228: The second question is Frank I think we've talked about where the gross to net.

Speaker Change #229: It may be able to go sort of towards the end of this year and then hopefully.

Speaker Change #230: Maybe a steady state gross to net.

Speaker Change #231: At some point, just hoping you could remind us where you see those numbers headed to over time as the growth of the asset improves.

Just hoping you could remind us where you see those numbers headed over time as the growth of the asset improves. And, you know, maybe you can also help us understand in context where you see pricing headed in that regard. Obviously, other folks can go very aggressive on price, but you've, you know, price hikes; you've taken a different strategy as it relates to, you know, sort of remaining comfortably within the, you know, subspecialty tier. So, just interested to know how to think about price increases and then gross to net over time. Thanks.

Speaker Change #231: Maybe you can also help us understand the context, where you see pricing.

Speaker Change #232: In that regard obviously other folks can go very aggressive on price.

Speaker Change #233: Price hikes, you've taken a different strategy as it relates to sort of remaining comfortably within the.

Speaker Change #233: Subspecialty tier.

Speaker Change #233: So just interested to know how to think about price increases and then gross to net over time sure. Todd do you want to take the first question around Eddie I'll take the first question on <unk>.

Sure. Todd, do you want to take the first question on A.D.? Yeah, I'll take the first question on A.D., and I firmly believe that we have a significant opportunity in atopic dermatitis. First, relative to access, I do anticipate that, like Zerifoam, the PBMs and payers will treat Zerif cream in atopic dermatitis as a line extension, which will enable us to garner quick access and quick improvements in our gross to net for atopic dermatitis.

Speaker Change #234: I firmly believe that we have a significant opportunity in atopic dermatitis first.

Speaker Change #235: Relative to access.

Speaker Change #236: I do anticipate that like Missouri foam.

Speaker Change #237: The pbms and payers will treat.

Speaker Change #238: <unk> cream in atopic dermatitis with a line extension, which will enable us to garner quick access and quick improvements in our gross to net for atopic dermatitis. Furthermore, when you look across the <unk> portfolio. The feedback we receive from <unk> reform relative to <unk>.

Furthermore, when you look across the Zerif portfolio, the feedback we receive from Zerif cream and Zerifoam relative to its uniquely formulated vehicle, which likewise will translate into atopic dermatitis as well as the tolerability of the asset. Furthermore, you know, if our label is similar to that of Zerif cream and psoriasis and Zerifoam after approval, it's likely we'll have no limitations of use on location, body surface area, duration, or concomitant use with immunosuppressed patients, which will be a strategic advantage for us within the market.

Speaker Change #238: Be formulated vehicle, which likewise.

Speaker Change #239: Translate into atopic dermatitis as well as Tolerability.

Speaker Change #239: The asset. Furthermore.

Speaker Change #240: If our label is similar to that of.

Speaker Change #241: As repayments Orion system reform.

Speaker Change #241: After approval.

Likely we will have no limitations of use on location body surface area duration or concomitant use with immunosuppressants, which will be a strategic advantage for us within the market. In addition to that being a once a day.

In addition to that, being a once-a-day topical will likewise resonate with patients. And then I will say one big strategic lever that we'll have with the addition and approval of atopic dermatitis is this portfolio approach that we're having, because you think of three products that are distinctly formulated across three significant dermatology conditions that dermatologists treat every day throughout the day. And by having three formulations, the simplicity of prescribing and ability to swiftly explain the treatment to their patients.

Speaker Change #241: Topical.

Speaker Change #241: Likewise resonate with patients and then I will say one big strategic lever that we'll have with the addition of an approval of atopic dermatitis. As this portfolio approach that we are having because you think three products that are distinct we formulated across three significant dermatology conditions that.

Speaker Change #242: Dermatologists are treating every day throughout the day and by having three formulations, the simplicity of prescribing and ability to.

Speaker Change #243: Swiftly explained the treatment to their patients and then on the back end of very predictable fulfillment process across those three products I think will really give us an advantage in the market. So I think it's a great opportunity for us and look forward to the <unk> date and the eventual launch in atopic dermatitis.

And on the back end, a very predictable fulfillment process across those three products, which I think will really give us an advantage in the market. So I think it's a great opportunity for us. And I look forward to that PDUFA date and the eventual launch at a popular time. Thanks, Todd.

Yeah, so Seamus, thanks for your question around gross to net as well. So, let me break this down a little bit. In terms of gross to net evolution, you know, we continue to feel very good that we are going to get to a steady state in the 50s. And I think the fact that we were able to get down to the low 60s during Q1, in spite of the annual resets, and in spite of the fact that we launched a new drug, really speaks to our ability to get gross to net down.

Speaker Change #244: Thanks, Todd So Seamus thanks for your question around gross to nets as well So let me let me.

Speaker Change #245: This down a little bit in terms of gross to evolution.

Speaker Change #246: We continue to feel very good that we are going to get to a steady state in the fifties.

Todd: And I think the fact that we were able to get down to the low <unk>. During Q1 in spite of the annual resets and in spite of the fact that we launched a new drugs.

Speaker Change #247: I think really speaks to our ability to get gross to nets down and I think it also speaks to the the.

And I think it also speaks to the value of our overall pricing strategy; we would expect that we'll get to steady state on the psoriasis cream by, you know, probably by the end of this year. And, you know, we're getting very close already, right?

Speaker Change #248: The value of our overall pricing strategy, we would expect that we'll get to steady state on the psoriasis cream by probably by the end of this year.

The foam is probably going to be a little bit lagging behind that just because it's a new product, and we have to get downstream insurance coverage, but, As Todd mentioned already, we're already over 50% covered prescriptions for the foam. And so we think that the foam will catch up with the 0.3 cream very quickly. And then we'll have to go through the same sort of evolution when we launch atopic dermatitis. But again, I think, you know, what we were able to achieve with the foam getting to over 50% coverage very quickly and not having really a meaningful negative impact on gross net with the foam launch, I think you would expect to see something very similar with atopic dermatitis. Again, payers view these as line extensions that are covered by the existing contracts.

And we're getting very close to already right.

Speaker Change #248: The phone is probably going to be a little bit lagging behind that just because it's a new product and we have to get downstream insurance coverage, but.

Speaker Change #248: Todd mentioned already we're already over 50% covered prescriptions for the fall and so we think that form will catch up with the three claim very quickly and then we'll have to go through the same sort of evolution when we launch atopic dermatitis, but again I think.

Speaker Change #248: What we've been able to achieve with our phone getting to over 50% coverage very quickly and not having really a meaningful negative impact on gross net with the phone launch I think you would expect to see something very similar with atopic dermatitis again, Paris view this.

Todd: His line extension that are covered by the existing contracts and so that really facilitates and speeds up frankly, our ability to get coverage.

And so that really facilitates and speeds up, frankly, our ability to get coverage. You know, in terms of where price is headed, we did price differentially than other branded topicals when we launched, and that really got back primarily to a question of Medicare and Medicaid access, and we were delighted with the recent Florida win that Todd just mentioned. I think that that's, you know, another proof point that our pricing and access strategy is working, and we expect to have more proof throughout the year as we garner access through Medicaid and, you know, hopefully Medicare, as Todd mentioned, by the end of the year.

Todd: In terms of where prices headed.

Speaker Change #249: We did price differentially than other branded topical when we launched and that really got back primarily to a question of Medicare and Medicaid access and we're delighted with the recent Florida win that Todd just mentioned I think that thats.

Speaker Change #249: Another proof point that our pricing and access strategy is working and we expect to have more proof throughout the year as we garner access through Medicaid and Medicare as Tad mentioned by the end of the year in terms of our ability to price hike.

In terms of our ability to price hike, you know, frankly, the contracts these days with all the PBMs limit any company's ability to price hike. You know, there are price protection clauses in there, and we don't think that we are disadvantaged versus the other companies in that respect. The only thing that we do need to be mindful of is the Medicare and Medicaid specialty threshold, which all the other branded topicals are well above, and we are actively trying to keep below. And, you know, we have headroom there, so, you know, I would anticipate that in the future, there may be some price increases.

Speaker Change #249: Frankly.

Speaker Change #250: The contracts these days with all the pbms limits any company's ability to price hike.

Speaker Change #251: There are price protection clauses in there and we don't take that we are disadvantaged versus the other companies.

Tad: In that respect the only thing that we do need to be mindful of is that Medicare Medicaid specialty threshold, which all of the other branded topicals are well above and we are actively trying to keep it below.

Speaker Change #253: And we have headroom there so I would anticipate that in the future. There may be some price increases we do have that ability, but I don't think that we're really impaired in our ability to take price increases in line with inflation.

We do have that ability, but I don't think that we're really impaired in our ability to take price increases, you know, in line with inflation any more than any other company as long as we stay under that CMS threshold. Great. And then maybe just as one follow-up, as you think about the rapid uptake that we saw with regard to Febderm, how should we be thinking about atopic dermatitis?

Speaker Change #253: Any more than any other company is as long as we stay under that that CMS thresholds.

Speaker Change #254: Great and then maybe just one follow up.

Speaker Change #255: You think about that.

Speaker Change #256: Rapid uptake that we saw with regard to.

Speaker Change #256: <unk>.

Speaker Change #257: How should we be thinking about atopic dermatitis, it seems like with product on market that won't necessarily be that same level of pent up demand.

It seems like with the product on the market, there won't necessarily be that same level of pent-up demand. But perhaps this feels a little bit more like the sort of psoriasis uptake curve. Although again, when a lot of free drugs were given away on the psoriasis curve, those were also accelerated to some degree, although that's not the path that Arcutis took. So just trying to get a better sense of how to think about the trajectory of the uptake curve for cream as atopic derm comes on. Yeah, yeah, sure. I think it's a great question, too, Seamus.

Speaker Change #257: But perhaps this feels a little bit more like the.

Speaker Change #257: Psoriasis uptake curve, although again when a lot of free drug with giving away on the psoriasis curves. Those were also accelerated to some degree although that's not the path that.

Speaker Change #257: That are curious Doug so just trying to get a better sense of how to think about the trajectory of the uptake curve for <unk>.

Speaker Change #257: <unk>.

Speaker Change #258: Atopic Derm comes on Yeah, Yeah sure I think it's a great question to Seamus.

I think that it would not be realistic to expect to see an uptake comparable to febderm for atopic dermatitis. As you mentioned, it's been 20 years since there's been any innovation in febderm. And as Todd mentioned, we think that there was a pretty good-sized pool of sort of ready patients just waiting for xerifoam to be approved. And that really drove that very rapid uptake that we saw right out of the gate. So I wouldn't expect that kind of growth with AD right out of the gate.

Speaker Change #259: I think that it would not be realistic to expect to see something.

Seamus Christopher Fernandez: Uptake comparable scepter for atopic dermatitis as you mentioned, it's been 20 years since there's been any innovation in <unk>.

Speaker Change #260: And as Todd mentioned, we thought that there was a pretty good size pool of sort of ready patients just waiting for <unk> to be approved and that really drove that very rapid uptake that we saw right out of the gate.

Speaker Change #261: So I wouldn't expect that kind of growth with <unk> right out of the gate.

On the other hand, you know, I think compared to the psoriasis launch, AD could outperform psoriasis for a number of reasons. You know, one of them I think Todd alluded to, which is that when we launched Zareve and psoriasis, nobody really knew Zareve, and they didn't really know Arcutis all that well. By the time we launch it in atopic dermatitis, pretty much all of the dermatologists will have used the cream, and a high percentage will have used the foam.

Speaker Change #261: On the other hand, I think compared to the psoriasis launch I think that <unk> could outperform psoriasis for a number of reasons.

One of them I think Todd alluded to which is.

Speaker Change #262: When we launched <unk> in psoriasis, nobody really news or even they didn't really know are cute itself had well by the time, we launch in atopic dermatitis pretty much all of the dermatologist will have used the cream and a high percentage of both used to follow so we're going to be launching with that positive tailwind of experience with the efficacy of <unk> safety and tolerability of the <unk>.

So we're going to be launching with that positive tailwind of experience with the efficacy of Zareve, the safety and tolerability of Zareve, and also, as Todd mentioned, the ease of the process for getting patients filled. So I think that will aid the uptake in atopic dermatitis.

Speaker Change #262: And also as Todd mentioned that the ease of the process for getting patients fulfilled. So I think that will aid the uptake in atopic dermatitis is a much more competitive market. So I wouldn't expect to have a large warehouse of patients just waiting.

It's a much more competitive market, so I wouldn't expect to have a large warehouse of patients just waiting when we launch an atopic dermatitis. So, yeah, I think the uptake is probably going to fall somewhere in between the last two launches. Great, thanks so much.

Speaker Change #264: When we launch in atopic dermatitis. So yes, I think the uptake is probably going to fall somewhere in between the last two largest.

Speaker Change #263: Great. Thanks, so much.

Speaker Change #265: And thank you.

And thank you. And one moment for our next question. And our next question comes from Vikram Purohit from Morgan Stanley. Your line is now. Hi, good afternoon.

Speaker Change #266: And one moment our next question.

Speaker Change #267: And our next question comes from Vikram Bureau hit from Morgan Stanley. Your line is now open.

Speaker Change #268: Hi, good afternoon, thanks for taking our questions. So we had two one on <unk> and then one on the potential <unk> launch so for sub derm understanding that it's still pretty early in the launch trajectory. What is your current sense on duration and the annual number of Kansas product a customer a patient rather might work through over there.

Thanks for taking our questions. We had two, one on subderm and then one on the potential AD launch. So for subderm, understanding that it's still pretty early in the launch trajectory, what is your current sense on duration and the annual number of cancer products a customer or patient might work through over the course of a year? And then for AD, you previously mentioned entering a partnership to access the primary care setting. So I just wanted to see how those discussions were going.

Speaker Change #269: A year and then for <unk> you.

Speaker Change #270: You've previously mentioned entering a partnership to access to primary care setting. So I just wanted to see how those discussions are going what you. Currently see is the timeline to establishing a partnership and what you would see is the I guess the idea of economics in terms of collaboration here. Thank you.

What you currently see as the timeline to establishing a partnership and what you would see as the, I guess, the ideal economic model, I'm sure. So around duration and consumption, I think it's very early still to be able to assess that, you know, we are seeing some refills come through, you know, I don't actually have the latest numbers. Todd may have that, but we are seeing some, but, you know, it's not a significant driver of growth just given how early we are in the launch. You know, atopic, excuse me, seborrheic dermatitis covers less body surface area than psoriasis or atopic dermatitis.

Speaker Change #271: Sure so around duration and consumption I think it's very early still.

To be able to assess that.

Speaker Change #272: We are seeing some results come through.

Speaker Change #272: Yes.

Speaker Change #273: I don't actually have the latest numbers Todd may have that but we are seeing some.

Speaker Change #274: But it's not a significant driver of growth just given how early we are in the launch in atopic excuse me February dermatitis.

Speaker Change #275: Less body surface area than psoriasis or atopic dermatitis. So it may be that that patient's consume fewer cans throughout the year I think what we've previously stated was that we thought that that was probably something like one to two cans a year for <unk>.

So it may be that patients consume fewer cans throughout the year. I think what we've previously stated was that we thought that it was probably something like one to two cans a year for sebderm. We don't have anything at this point to revise that guidance. And so, you know, I would say that we would expect it to be something similar to that until we learn otherwise, and we'll update you guys if we do get some information on that.

Speaker Change #276: We don't have anything at this point to revise that guidance and so I would say that we would expect it to be.

Speaker Change #277: Something similar to that until we we learned otherwise and we'll update you guys. If we do get information on that.

In terms of the Atopic Dermatitis Partnership, you know, what we've been saying all along is that we would like to have that done sometime around the launch. I don't think we need to have it done by the launch, necessarily, because you really have to win with the dermatologist first. The PCPs will be looking to the derms for an example.

Speaker Change #277: In terms of the atopic dermatitis.

Speaker Change #277: Partnership.

What we've been saying all along is that we would like to have that done sometime around the launch I don't think we need to have it done by the launch necessarily because you really have to win with the dermatologist first the pcp's, we'll be looking to the <unk>.

Speaker Change #278: For an example, and so I don't think its critical necessarily be in primary care.

And so I don't think it's critical necessarily to be in primary care right at the launch. But I think it's very likely that we'll have that deal done. We will still have a deal done this year. We're feeling very good about how the discussions have been going with potential partners. And then in terms of economics, you know, it'll really come down to the negotiation with the potential partner. You know, they will obviously have a considerable expense just given how large primary care sales forces are.

Speaker Change #278: Right at the launch, but I think it's very likely that we'll have that deal done.

Speaker Change #278: We will have a deal done still this year.

Speaker Change #279: Feeling very good about how the discussion has been going with potential partners.

Speaker Change #279: And then in terms of economics, you know it will really come down to that.

Speaker Change #279: The negotiation with the potential partner they will have obviously a considerable expense just given how large primary care sales forces are.

But we've obviously invested a lot into the product. We do have a preference for some sort of revenue sharing arrangement rather than a fee-for-service model, because I think that that aligns the interests of the two partners, which is aligned with the interests of shareholders. Right. As opposed to a fee-for-service model, where, you know, maybe you get what you pay for.

Speaker Change #279: We've obviously invested a lot into the product.

Speaker Change #279: We do.

Speaker Change #280: Have a preference for some sort of a revenue sharing arrangement rather than a fee for service.

Speaker Change #280: Because I think that that aligns the interests of the two partners, which is aligned with the interest of shareholders right as opposed to a fee for service, where maybe you get what you pay for.

But, you know, we'll we'll have to negotiate that with whoever ends up being the final choice of a partner, and then we'll let investors know what the economics are around the deal. Okay, and thank you. And one moment for our next question. And our next question comes from Tyler Van Buren from TD Cowan. Your line is now open. Hey guys, good afternoon. Regarding the primary care partnership, is that something that you would like to happen soon? And what would it look like?

Speaker Change #280: But.

Speaker Change #280: Right.

Speaker Change #281: We will have to negotiate that with whoever ends up being the final choice of a partner and then we will let investors know what that what the economics are around the deal.

Understood. Thank you.

Speaker Change #282: And thank you.

Speaker Change #283: And one moment our next question.

Speaker Change #284: And our next question comes from Tyler Van Buren from TD Cowen. Your line is now open.

Speaker Change #285: Hey, guys. Good afternoon regarding the primary care partnership is that something that you would like to happen soon.

Speaker Change #286: And what would it look like and how many additional patients do you believe you could reach via the strategy.

And how many additional patients do you believe you could reach via this strategy? Sure. First of all, how's the presidential campaign going?

Speaker Change #286: Sure.

Speaker Change #288: First of all.

Speaker Change #287: The presidential campaign going.

Speaker Change #287: Yeah.

So around, for those of you who weren't at their conference, that was an inside joke. On the peacekeeping partnership, as I just said to Vikram, I think we'd like to have this done sometime around the launch, which is probably going to be in the August timeframe. I feel very confident about our ability to get it done before the end of the year. So that's kind of, I would put it like that.

Speaker Change #287: So.

Speaker Change #287: So that would be or at their conference that was an inside joke.

Speaker Change #287: On the Pizza and partnership as I, just said to Vikram.

Speaker Change #289: Wed like to have this done sometime around the launch which is probably going to be in the August timeframe.

Speaker Change #290: I feel very confident about our ability to get it done before the end of the year. So that's kind of I would put it as bookends.

Speaker Change #290: Yes.

You know, in terms of the opportunity size, you know, about 50% of atopic dermatitis and about 50% of seborrheic dermatitis patients are treated outside of dermatology. They're not all in primary care or pediatrics, but a very large percentage of those patients are sitting in a PCP or pediatrician's office, both sebderm and AD, more pediatricians for AD, more PCP for sebderm just because the ages of onset of the, So, you know, we're looking for a partner that has good coverage, primarily of the PPP and the pediatric specialties, you know, if they had coverage in allergy, that would probably be also a benefit, although that's a very small community, but it's a pretty sizable additional opportunity by tapping into primary care and pediatrics, just because that's where the patient, and thank you. And one moment for our next question. And our next question comes from Uy Ear from Mizzou. Your line is now open. Hey guys, congrats on the quarter.

Speaker Change #291: In terms of the opportunity size about 50% of atopic dermatitis and about 50% of a separate dermatitis patients are treated outside of dermatology, they're not all in primary care or pediatrics, but a very large percentage of those patients are sitting in the PCP or Pediatrician's office both February.

Speaker Change #292: More pediatricians for more PCP four for <unk>, just because the ages.

Speaker Change #292: Onset of the disease.

Speaker Change #293: So we're looking for a partner that has good coverage primarily of the PTP.

Speaker Change #296: The pediatric.

Speaker Change #293: Specialties if.

Speaker Change #294: They had coverage in allergy that would probably be also a benefit although that's a very small community, but it's a pretty sizable additional opportunity by tapping into primary care pediatrics, just because thats, where the patients are sitting.

Speaker Change #293: Yes.

Speaker Change #295: And thank you.

And one moment our next question.

Speaker Change #297: And our next question comes from <unk> <unk> from Mizuho. Your line is now open.

Speaker Change #298: Hey, guys congrats on the quarter.

Yeah, my first question is, I think, you know, you said you're expecting Growth. Net to reach steady state towards the end of the year. But you're going to, I guess, have Medicaid and, or more Medicare, coming online towards the end of the year as well. Just are you kind of saying that, you know, Medicare and Medicaid will not have an impact on Growth. Net in 2025?

Speaker Change #299: My first question is I think.

Speaker Change #300: You said, you're expecting gross can add to reach steady state towards the end of the year, but.

Speaker Change #301: You're going to I guess have Medicaid and or more Medicare I guess.

Speaker Change #301: Coming online towards the end of the year as well, just you're kind of saying that.

Speaker Change #301: Yeah.

Medicare and Medicaid will not have an impact on gross to net.

Speaker Change #301: In 2025.

Or like, how should we sort of think about the interplay with Medicare and Medicaid in terms of growth? And secondly, could you perhaps elaborate on your new program, your distribution programs, where I think you said that for every unit, the specialty pharmas get one unit for an uncovered patient? I didn't quite understand it.

Speaker Change #302: Like how should we sort of think about.

Speaker Change #302: At the end of play with Medicare and Medicaid in terms of gross to net and secondly.

Speaker Change #303: Could you.

Speaker Change #304: Perhaps elaborate on your new program your distribution programs, where I think you said that you.

Speaker Change #305: For every unit the specialty pharmacy get one unit for uncovered patients.

Thanks. Sure. Yeah. Good to hear from you. I'll ask you for your first one, and then Todd, I'll ask you to talk about them, the, the.

Speaker Change #306: I didn't quite understand it. Thanks sure yes, okay. Good good to hear from you I'll answer your first one and then Tom I'll ask you to talk about them.

Speaker Change #306: The.

Speaker Change #307: The pharmacies.

Yeah, so I did say that we think we will get to our steady state or around our steady state for us to net this year on the psoriasis book of business. And yes, that does factor in Medicare and Medicaid coverage. You know, a couple things to keep in mind.

Speaker Change #308: So I did say that we think we will get to.

Tom: Our steady state or around our steady state gross to net this year on the <unk> book of business and yes that does factor in Medicare and Medicaid coverage, a couple things to keep in mind, one is Medicare and Medicaid is a less important contributor to the <unk> business than it is sub dermal <unk> just because of the demographics of the patient population is quite a bit small.

One is Medicare and Medicaid are a less important contributor to the psoriasis business than it is to the sebderm and AD business just because the demographics of the patient population are quite a bit smaller. But secondly, as we've said previously, with our pricing and access strategy, we don't anticipate having to give outsized rebates for Medicare and Medicaid coverage. And I think when you look at it all in, the Medicare and Medicaid book of business is probably going to be similarly profitable to the commercial book of business. So we don't expect that to have a really meaningful negative impact on our growth net.

Tom: But secondly, as we've said previously.

Tom: With our pricing and access strategy, we don't anticipate having to give outsized rebates.

Tom: For Medicare and Medicaid coverage.

Speaker Change #309: And I think when you look at it all in the.

Speaker Change #310: Medicare and Medicaid book of business is probably going to be similarly profitable.

Speaker Change #310: Two two.

Speaker Change #311: To the commercial book of business. So we don't see we don't expect that to have really meaningful negative impact on our gross to nets.

Todd, do you wanna maybe talk about the pharmacy? Yeah, fantastic; I will. And just to mention, relative to improving our gross to net, we took a what I'll call a multi-pronged approach. And the program that I'll talk about here in just a minute was only one lever that we pulled to improve our gross to net. But specifically to that program, if you think about it, prior to implementing the current program, when a commercially insured non-covered Zariqa prescription was dispensed by the pharmacy.

Speaker Change #311: Todd do you want to maybe talk about the pharmacies.

Speaker Change #311: Yes.

Speaker Change #312: Fantastic I will in just mentioned.

Todd: Relative to improving our gross to net we took a what I'll call a multi pronged approach and the program that I'll talk about here in just a minute.

Todd: It was only one lever that we pulled two to improve our gross to net the specifically to that program. If you think about it.

Todd: Prior to implementing the current program.

Todd: When a commercially insured non covered prescription was dispensed by the pharmacy.

What happened is that the prescription was processed, and then the cost of that unit was charged to our co-pay. Then, under the current program, when a non-covered prescription is dispensed by a contracted pharmacy, then Arcutis directly provides the pharmacy with a unit for every unit they use from their inventory to fill that non-covered script versus charging it to the copay, which unburdens the impact of the copay card and non-coverage scripts on our gross net.

Speaker Change #313: What happened is that prescription was process and then the cost of that unit was charged to our co pay card.

Then under the new current program.

Speaker Change #314: Non covered prescription is dispensed by a contract that pharmacy. Then are cued is directly provides the pharmacy with a unit for every unit they use from their inventory to fill that non covered scripts versus charge it to the copay card, which burdens.

Impact.

Speaker Change #314: Co pay card and non coverage strips on our gross to net.

Speaker Change #315: Okay. Thanks.

Speaker Change #316: And thank you.

Speaker Change #316: And I am showing no further questions I would now like to turn the call back to Frank for closing remarks.

Okay, thank you, and thank you, and I'm showing no further questions. I would now like to turn the call back to Frank for closing. Okay, well, I'll be very brief as well. I really appreciate everyone calling in for the call today and the great questions we've had, and we look forward to talking to you all in about another quarter. Thanks a lot. Bye-bye. This concludes today's conference call. Thank you

Frank: Well I'll be very brief as well really appreciate everyone calling in for the call today and the great questions. We've had and we look forward to talking to you all in about another quarter. Thanks, a lot bye bye.

Speaker Change #317: This concludes today's conference call. Thank you for participating you may now disconnect.