Q1 2025 Arcutis Biotherapeutics Inc Earnings Call

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Unknown Executive: In the first quarter, we reported revenues of $63.8 million, representing nearly a doubling of revenues year over year, excluding the non-recurring reduction in reserves for product returns of $4.1 million as reported in Q4 of 2024. As is typical for any retail pharmaceutical product, revenues were down compared to the fourth quarter due to the typical first quarter deductible resets and insurance It's really quite remarkable that despite those typical headwinds, our sales were nearly flat, with only a 2% decline versus the prior quarter, which is very unusual compared to other branded topicals, or frankly, nearly every other product on the market, where substantial drops Q4 and Q1 are typical.

In the first quarter, we reported revenues of $63 8 million, representing nearly a doubling of revenues year over year, excluding the nonrecurring reduction in reserves for product returns of $4 1 million as reported in Q4 of 2024.

As is typical for any retail pharmaceutical product revenues were down compared to the fourth quarter due to the typical first quarter deductible resets and insurance changes.

It's really quite remarkable that despite those typical headwinds our sales were nearly flat with only a 2% decline versus the prior quarter, which is very unusual compared to other branded topical or frankly, nearly every other product on the market where substantial drops Q4 Q1 are typical.

Unknown Executive: Impressively, we deliver prescription demand growth of 10% compared to Q4, despite the typical pull forward of demand into Q4 as patients filled prescriptions early in anticipation of their copay Blended growth synapse have remained relatively steady as expected, with some minor anticipated quarterly fluctuations related to the reset of patient deductibles and plan changes.

Impressively, we delivered prescription demand growth of 10% compared to Q4. Despite the typical pull forward of demand into Q4 as patients filled prescriptions early in anticipation of their co pay resets.

Blended gross to nets have remained relatively steady as expected with some minor anticipated quarterly fluctuations related to the reset of patient deductibles and plan changes and as Q1 progressed, we saw <unk> quickly trend back down towards steady state.

Unknown Executive: And as Q1 progressed, we saw our GTNs quickly trend back down towards steady state. The vast majority of patients with psoriasis, AD, and sebderm are currently treated with topical steroids, so there is an immense opportunity for future growth of Zareb across our indications. And as Patrick and Todd will discuss more in just a few minutes, during Q1, we saw clear and growing momentum in that shift.

Speaker Change: The vast majority of patients with psoriasis and <unk> are currently treated with topical steroids. So there is an immense opportunity for future growth as we have across our indications and as Patrick and Tod will discuss more in just a few minutes. During Q1, we saw a clear and growing momentum in that shift.

Unknown Executive: We expect to further expand Zaree's approved indications in 2025, beginning with the anticipated May 22nd approval of Zaree foam for scalp and body thrice.

Speaker Change: We expect to further expand <unk> approved indications in 2025, beginning with the anticipated may 22nd approval of <unk> for scalp and body psoriasis.

Unknown Executive: We are also eagerly anticipating another approval for Zareb cream, this time a 0.05% concentration for atopic dermatitis in children ages two to five with an expected approval in October.

Speaker Change: We are also eagerly anticipating another approval for <unk> cream. This time, a 0.05% concentration for atopic dermatitis.

Speaker Change: Children Ages, two to five with an expected approval an approval in October.

Unknown Executive: Finally, we announced in April that at the request of Patagas, we had agreed to a joint stipulation to stay the ongoing patent litigation with them over their topical reform last ANDA. We agreed to this because it extends the 30-month stay we are entitled to under Hatch-Waxman for as long as the Patagas-requested stay in the case remains in place, and it also allows us to delay or even avoid the cost of litigation and the distraction. Let me be clear, we are not and have not previously been in any settlement discussions with Patty. We have not wavered in our confidence in the strength and breadth of our patent portfolio that reflects the innovations we have generated since our company's inception.

Speaker Change: Finally.

Speaker Change: We announced in April that at the request of Patti, Yes, we had agreed to a joint stipulation to stay the ongoing patent litigation with them over their topical reform last and we.

Speaker Change: We agreed to this because it extends to 30 months stay we are entitled to under Hatch Waxman for as long as the pattern gets requested stay in the case remains in place and it also allows us to delay or even avoid the cost of litigation and the distraction of litigation.

Speaker Change: Let me be clear, we are not and have not previously been in any settlement discussions with patios.

Speaker Change: We have not wavered in our confidence in the strength and breadth of our patent portfolio that reflects the innovations we have generated since our company's inception.

Unknown Executive: We are confident in our legal position against Patagas. If and when the day is lifted, we will continue to fight against Patagas's attempts to circumvent our legally issued patents on our psoriasis cream.

We are confident in our legal position against patios.

Speaker Change: If and when the stay is lifted we will continue to fight against Pat I guess as attempts to circumvent our legally issued patents on our psoriasis cream.

Unknown Executive: Now turning to slide six, touching again on the immensity of our target market of 17 million patients. The size of this opportunity coupled with Zuri's unique and compelling value proposition provides us with strong conviction in our ability to continue to grow our product portfolio beyond what has historically been typical with other topical brands. Patrick, Todd, and I were out visiting clinicians all last week, and the feedback we heard from them on Zarif's performance is outstanding, only adding to our confidence in Zarif's future potential. As we've shared in the past, half of the treated patients in our targeted indications are treated in the derm setting, and the other half are being treated outside of the dermatology office, primarily by primary care physicians and pediatricians.

Speaker Change: Now turning to slide six touching again on the immensity of our target market of 17 million patients.

Speaker Change: As of this opportunity coupled with <unk> unique and compelling value proposition provides us with strong conviction in our ability to continue to grow our product portfolio beyond what has historically been typical with other topical brands.

Speaker Change: Patrick Todd and I were out visiting clinicians all last week and the feedback we heard from them on <unk> performance is outstanding only adding to our confidence in <unk> future potential.

Speaker Change: As we've shared in the past half of the treated patients and our targeted indications are treated in the derm setting and the other half are being treated outside of the dermatology office, primarily by primary care physicians and pediatricians.

Unknown Executive: Our launches thus far, along with our upcoming launches, if approved, continuously expanding coverage and the COA commercial partnership enabled us to access the entire 17 million patient opportunity, another unique feature in the branded topical space. But as shown on the chart on the right, 94% of topical prescriptions written for our target patients are still for topical steroids, topical calcineurin inhibitors, antifungals and vitamin D analog. Our long-term growth relies on shifting this use to Zareve as the go-to topical treatment. Encouragingly, we are seeing growing evidence that dermatology clinicians are starting to shift away from these products.

Speaker Change: Our launches thus far along with our upcoming launches if approved continuously expanding coverage in the commercial partnership enabled us to access the entire 17 million patient opportunity another unique fixture in the branded topical space.

Speaker Change: As shown on the chart on the right 94% of topical prescriptions written for our target patients are still for topical steroids topical <unk> inhibitors, antifungals and vitamin D. Analogs are long term growth relies on shifting this used to thrive as we go to topical treatment encouragingly.

Speaker Change: Encouragingly, we are seeing growing evidence that dermatology clinicians are starting to shift away from these products and is the leading branded nonsteroidal <unk> is in the.

Unknown Executive: And as the leading branded non-steroidal, Zareeb is positioned to be the primary beneficiary of that shift.

Speaker Change: Positioned to be the primary beneficiary of that shift.

Unknown Executive: Todd and Patrick will delve deeper into the evidence we are seeing of this growing shift, and Todd will go into further detail on how we view revenue and script growth trends evolving throughout 2020.

Speaker Change: John and Patrick will delve deeper into the evidence we're seeing of this growing shift and Todd will go into further detail on how we view revenue and script growth trend evolving throughout 2025.

Unknown Executive: Arcutis as a company has had the good fortune to be presented with a rare opportunity, combining an immense market with a strong and well recognized brand, which can create significant value for all of our stakeholders. Our team recognizes the uniqueness of our compelling position and remains highly focused on growing Zareef to its peak sales potential.

Speaker Change: Our <unk> as a company has had the good fortune to be presented with a rare opportunity combining an immense market with a strong and well recognized brand, which can create significant value for all of our stakeholders.

Speaker Change: Our team recognizes the uniqueness of our compelling position and remains highly focused on growing <unk> to its peak sales potential.

Todd Watanabe: With that, let me turn it over to Todd to provide some more color on where we are in our launch and how we will continue to execute on our vision. Thank you, Frank. In Q1, once again, we deliver strong sales results, leveraging the strength of our product portfolio, and are pleased by the continued positive response to Zareeb from HCPs and patients, and excited by the growth opportunities ahead of us. On slide 8, this quarter, we achieved $68.3 million in net product revenue for Zarif, reflecting a 196% growth year-over-year. Importantly, we saw strong sequential volume growth, and our blended gross-to-net remained in the 50% range, even with the typical temporary reversion in gross-to-net compared to Q4 2024.

Speaker Change: With that let me turn it over to Todd to provide some more color on where we are in a launch and how we will continue to execute on our vision.

Todd: Thank you Frank and Q1 once again, we delivered strong sales results leveraging the strength of our product portfolio and are pleased by the continued positive response to read from Hcp's and patients and excited by the growth opportunities ahead of us.

On slide eight this quarter, we achieved $68 3 million net product revenue for <unk>, reflecting a 196% growth year over year.

Todd: Importantly, we saw strong sequential volume growth in our blended gross to net remained in the 50% range, even with the typical temporary reversion and gross to net compared to Q4 2024.

Todd Watanabe: All commercial stage companies face challenges in the first quarter due to deductible resets, changes in patient insurance plans, and prescription refills pulled forward into December. Zarif is not exempt from these challenges and we did see some impact on Q1 revenue, but we are delighted that these had minimal impact on our Q1 performance with only a slight decline in net sales compared to Q4. We are particularly pleased that despite these customary headwinds, Zerith unit demand grew 10% quarter over quarter. Encouragingly, prescription trends in Q2 point to sustained growth continuing from Q1 and foretell solid performance for the remainder of the year with expected volume and revenue growth throughout 2025.

Todd: All commercial stage companies face challenges in the first quarter due to deductible resets changes in patient insurance plans and prescription refills pulled forward into December.

Todd: As a REIT is not exempt from these challenges and we did see some impact on Q1 revenue.

Todd: But we are delighted that these had minimal impact on our Q1 performance with only a slight decline in net sales compared to Q4.

Todd: We are particularly pleased that despite these customary headwinds.

Todd: Unit demand grew 10% quarter over quarter.

Todd: Currently your prescription trends in Q2 point to sustained growth continuing from Q1 and foretell solid performance for the remainder of the year with expected volume and revenue growth throughout 2025.

Todd Watanabe: On slide 9, you can see that the Zarene prescription volume has reached another record high at 17,000 weekly scripts on a rolling four-week average basis. In 2024, growth inflections were driven by the launches of Zerifoam for seborrheic dermatitis and Zerifream 0.15% for atopic dermatitis. Looking towards 2025, later this month, we anticipate the addition of a psoriasis body and scalp indication for the foam formulation pending approval. We expect this additional indication will reinforce our strong growth trend, although we would not anticipate the same magnitude of growth acceleration as with the SEV DERM line. Furthermore, we anticipate another labral expansion in October, adding atopic dermatitis in ages two to five, which should be an additional catalyst for growth.

Todd: On slide nine you can see the three prescription volume has reached another record high at 17000 scripts on a rolling four week average basis.

Todd: In 2024 gross inflections were driven by the launches of the reform for several dermatitis.

Todd: <unk>, 0.15% for atopic dermatitis.

Todd: Looking towards 2025 later this month, we anticipate the addition of a psoriasis body and scalp indication for the phone formulation pending approval.

Todd: We expect this additional indication will reinforce our strong growth trend, although we would not anticipate the same magnitude of growth acceleration as with the <unk> launch.

Todd: Furthermore, we anticipate another label expansion in October, adding atopic dermatitis and ages two to five which should be an additional catalyst for growth.

Todd Watanabe: As expected, prescription volume declined from December to January due to the expected pull forward of refills into December. However, Zuri quickly rebounded within weeks, recovering from the early dip and delivering growth across the entire portfolio. We expect this positive trend to continue as we gain share in the large topical steroid market. On slide 10, we highlighted our strong and robust insurance coverage. On the left, you'll see that we've achieved a remarkable position in terms of insurance reimbursement, with approximately 80% of totals and re-prescriptions being reimbursed, a steady state and optimal level across the Since our last update, we've further broadened payer access for atopic dermatitis, which is now largely in line with psoriasis and seb derm coverage.

Todd: As expected prescription volume decline from December to January due to the expected pull forward of refills into December.

Todd: However, sorry quickly rebounded within weeks recovering from the early do and delivering growth across the entire portfolio.

Todd: We expect this positive trend to continue as we gained share in the large topical steroid market.

Todd: On slide 10, we highlighted our strong and robust insurance coverage on the left you'll see that we've achieved a remarkable position in terms of insurance reimbursement with approximately 80% of total <unk> prescriptions being reimbursed.

Todd: <unk> state and optimal level across the portfolio.

Todd: Since our last update we have further broadened payer access for atopic dermatitis, which is now largely in line with psoriasis in <unk> coverage and we expect to see further improvement in gross to net for this indication.

Todd Watanabe: And we expect to see further improvement in grossinette for this indication. In addition, we have secured expanded Medicaid coverage and established a strong presence. Sareev is now covered with a single step through a steroid, or better, for 53% of state Medicaid lives. And we've seen strong quarter-over-quarter unit growth in this channel. The other point I want to highlight on this slide is that the profitability of our Zareeb franchise continues to improve. driven by the high rate of reimbursed prescriptions across the portfolio. This positions us well for the future as we continue to grow prescription volume in 2025 and beyond.

Todd: In addition, we secured expanded Medicaid coverage and established a strong presence <unk> is now covered with a single step through a steroid or better for 53% of state Medicaid lives and we've seen strong quarter over quarter unit growth in this channel.

Todd: The other point I want to highlight on this slide is that the profitability of our franchise continues to improve.

Todd: Driven by the high rate reimbursed prescriptions across the portfolio.

Todd: This positions us well for the future as we continue to grow prescription volume in 2025 and beyond and we expect revenue to scale proportionately with Roche.

Todd Watanabe: And we expect revenue to scale proportionately with that growth. Our commercial partner COA continues to make steady progress within the targeted primary care pediatric segment. As expected, the primary care selling cycle requires more frequent engagements to build familiarity given that many providers have limited exposure to topical non-steroid treatments and historically default to steroid use. Physician feedback has been encouraging as education efforts increase, highlighting Zareeb's unique profile as a safe, effective nostril option that can be used anywhere on the body for any duration with exceptional tolerability. Importantly, with recent changes to the prescription process, the ease and reliability of prescription fulfillment will be a key differentiator with both physicians and staff.

Todd: Yes.

Todd: Our commercial partner <unk> continues to make steady progress within the targeted primary care in pediatric segments.

Todd: As expected the primary care semi cycle requires more frequent engagements to build familiarity given that many providers have limited exposure to topical non steroid treatments and historically default the steroid use.

Todd: Physician feedback has been encouraging as education efforts increase highlighting <unk> unique profile as a safe effective nostril option that can be used anywhere in the body for any duration with exceptional tolerability.

Todd: Importantly, with recent changes to the prescription process, the ease and reliability of prescription fulfillment will be a key differentiator with both physicians and staff.

Todd Watanabe: We remain confident in COA's ability to expand adoption of primary care. And we're already seeing positive indicators from early prescriber uptake and encouraging signal for growth in this large and relatively untapped segment. On slide 12, I'd like to draw your attention to the left side of the slide. We are on a mission to convert steroid prescriptions to Zarede and to expand the overall branded topical market. As you can see, the immense topical stairway market has declined by 200 basis points over the past year. with that share being captured by Branded Topicals, led by Zareeb. This is an early but meaningful sign of our success.

Todd: We remain confident in <unk> ability to expand adoption of primary care.

Todd: And we're already seeing positive indicators from early prescriber uptake and encourage you signaled for growth in this large and relatively untapped segment.

Todd: On slide 12, I'd like to draw your attention to the left side of the slide.

Todd: We are on a mission to convert steroid prescriptions to read and to expand the overall branded topical market.

Todd: As you can see the immense topical steroid market has declined by 200 basis points over the past year.

Todd: With that share being captured by branded topical led by sorry.

Todd: This is an early but meaningful sign of our success and Patrick will delve into the drivers behind this in a moment.

Patrick Burnett: And Patrick will delve into the drivers behind this in a moment. Keep in mind, granted topicals still represent only a small portion of the overall market. which highlights the immense opportunity ahead for Zareeb as clinicians continue to transition from steroids to non-steroidal treatments, a trend we expect to accelerate. I'm excited to share tangible evidence of our momentum. Sariv has continued to expand its leadership as the number one branded non-steroidal topical . and the most recent week is recaptured a 41% share of that segment. On the right side of the slide, you'll see how Zareef is consistently gaining share, further validating our growth trajectory.

Todd: Keep in mind branded topical still represent only a small portion of the overall market, which highlights the immense opportunity ahead for us your read as clinicians continue to transition from steroids to non steroid treatments a trend we expect to accelerate.

Patrick Todd: I am excited to share tangible evidence of our momentum.

Patrick Todd: <unk> has continued to expand its leadership as the number one branded non steroidal topical.

Patrick Todd: And in the most recent week is recaptured a 41% share of that segment on.

Patrick Todd: On the right side of the slide you'll see how is the reef is consistently gaining share.

Patrick Todd: You're validating our growth trajectory.

Patrick Burnett: On slide 13, as we've emphasized over the past several quarters, Zarif is uniquely positioned in the topical arena with multiple formulations to treat three major inflammatory skin conditions. And a fourth indication for phone scalp and body psoriasis is pending with a PDUFA date set for May 22. Serif stands out for its rapid, reliable relief, its ability to be applied anywhere on the body, used for any duration, and its exceptional tolerability. It offers a simple one steady regimen with predictable patient access through consistent reimbursement and copay support. This growing portfolio effect allows dermatologists to take a personalized, multifaceted approach to managing complex skin conditions, making Zareed their go-to treatment solution across indications.

Patrick Todd: On slide 13, as we have emphasized over the past several quarters <unk> is uniquely positioned in the topical arena with multiple formulations to treat three major inflammatory skin conditions.

Patrick Todd: And a fourth indication for phone Scott Van body psoriasis is pending with the <unk> date set for May 22nd.

Patrick Todd: So really stands out for its rapid reliable relief its ability to be applied anywhere in the body used for any duration.

Patrick Todd: And it's exceptional tolerability.

Patrick Todd: It offers a simple once daily regimen with predictable patient access through consistent reimbursement and co pay support.

Patrick Todd: This growing portfolio effect allows dermatologists to take a personalized multifaceted approach to managing conflicts conditions, making to read their go to treatment solution across indications.

Patrick Burnett: On slide 14, I'd like to delve into a recent analysis we conducted on prescribing behavior among clinicians. Unsurprisingly, we found that clinicians who prescribe Zareeb across multiple indications write significantly more prescriptions overall. But what is remarkable is the evidence of the portfolio effect that I mentioned previously. As these health care providers recognize the values that we bring to patients, they're able to expand this use across a broader portion of their practice. For example, clinicians treating only one indication average three prescriptions per prescriber, while those prescribing for all three indications average 31 prescriptions per prescriber, a tenfold increase.

Patrick Todd: On slide 14, I'd like to delve into a recent analysis, we conducted on prescribing behavior among clinicians.

Patrick Todd: Unsurprisingly, we found that clinicians, who prescribes <unk> across multiple indications right significantly more prescriptions overall.

Patrick Todd: But what is remarkable is the evidence of the portfolio effect that I've mentioned previously as.

Patrick Todd: As these health care providers recognize the values that we bring to patients through April to expand its use across a broader portion of their practice.

Patrick Todd: For example finishes treating only one indication averaged three prescriptions per prescriber.

Patrick Todd: While those prescribing for all three indications averaged 31 prescriptions per prescriber, a 10 fold increase.

Patrick Burnett: We expect this amplification to increase further with the potential approval of our foam formulation for body and scalp psoriasis.

Patrick Todd: We expect this amplification to increase further with the potential approval of our foam formulation for <unk> scop psoriasis with.

Patrick Burnett: With that, I'll now turn it over to Patrick for an R&D update. Thank you, Todd. I'm on slide 16. We're now approaching several key milestones in 2025. And first, we have the FDA PDUFA target action date for xerifoam for plaque psoriasis of the scalp and body, down to the age of 12 on May 22, 2025. And we're highly optimistic about an on-time approval. Second, we have an anticipated approval in October for Zareve cream 0.05%, a dose specifically developed for the treatment of mild to moderate AD in two to five-year-olds. We also continue to generate the necessary additional data that should ultimately support expanding the psoriasis indication down to the age of two as well.

Patrick Todd: With that I'll now turn it over to Patrick for an R&D update.

Patrick Todd: Thank you Todd I am on Slide 16, we're now approaching several key milestones in 2025 and first we have the FDA <unk> target action date for <unk> film for plaque psoriasis is the scalp and body down to the age of 12 on May 22025, and we're highly optimistic about an on time approval there.

Patrick Todd: Sure.

Patrick Todd: Second we have an anticipated approval in October for <unk> cream, 0.05% dose specifically developed for the treatment of mild to moderate.

Patrick Todd: In two to five year olds, and we also continued to generate the necessary additional data that should ultimately support expanding the psoriasis indication down to the age of two as well.

Patrick Burnett: In our early stage pipeline, we look forward to the phase 1b readout for ARQ 255, our topical JAK and alopecia areata, around the middle of 2025. We expect to file the IND for ARQ234 or biologic CD200 receptor agonist for atopic dermatitis in the second half of 2024.

Patrick Todd: Our early stage pipeline, we look forward to the phase <unk> readout for <unk> $2 55, our topical JAK in alopecia area out to around the middle of 2025, we expect to file the IND.

Patrick Todd: The IND for <unk> hundred 34 are biologic CD 200 receptor agonist for atopic dermatitis in the second half of 2025.

Patrick Burnett: Now, moving on to slide 17, we've been talking to you for several quarters about the growing momentum among clinicians for a shift away from steroids toward non-steroidal topical agents that are safer for long-term use for these chronic conditions. And in Q1, there were a number of notable events that really prove out and highlight that. For example, in January, a panel of some of the leading dermatology experts in the U.S. published consensus guidelines on the use of topical steroids, as well as recommendations for the incorporation of advanced targeted topicals into the treatment. I would call your attention to that group's conclusions shown on the lower left of the Similarly, during Q1, a journal targeted to dermatology NPs and PAs published an extensive review on steroid safety concerns, and again, I would point you to the conclusions of that paper shown on the lower right.

Patrick Todd: Now moving on to slide 17, we have been talking to you for several quarters about the growing momentum among clinicians first shift away from steroids towards non steroidal topical agents that are safer for long term used for these chronic conditions and in Q1. There were a number of notable events that really prove out and highlight that trend for example.

Patrick Todd: In January a panel of some of the leading dermatology experts in the U S published consensus guidelines on the use of topical steroids as well as recommendations for the incorporation of advanced targeted topical into the treatment regimen.

Patrick Todd: I would call your attention to that group's conclusions shown on the lower left of the slide.

Patrick Todd: Similarly during Q1, a journal targeted to dermatology NPS <unk> published an extensive review on steroids safety concerns and again I would point you to the conclusions of that paper shown on the lower right.

Patrick Burnett: These are powerful calls to action from dermatology clinicians directed toward their dermatology colleagues. These are only two of several recent research reports and publications highlighting the risk and cumulative effect of steroids. Last month, new Canadian consensus guidelines for the topical treatment of atopic dermatitis were published, recommending that series be reserved for short-term use due to greater risk of adverse events, including skin atrophy, hypopigmentation, and other systemic diseases. And in March, the NIH published research that identified, for the first time, the pathophysiology of topical steroid withdrawal, also called TSW. This is a condition caused by long-term steroid use that leads to redness, itching, and scaling, which can be difficult to distinguish from the underlying skin disease that was originally being treated by this drug.

Patrick Todd: These are powerful calls to action from dermatology clinicians directed toward their dermatology colleagues.

Patrick Todd: And these are only two of several recent research reports and publications highlighting the risk and cumulative effect of steroids.

Patrick Todd: Last month, new Canadian consensus guidelines for the topical treatment of atopic dermatitis were published recommending that <unk> be reserved for short term use due to greater risk of adverse events, including skin atrophy hypopigmentation another systemic effects and in March the NIH published research that identified for the first time.

Patrick Todd: The physiology of topical steroid withdrawal also called <unk>.

This is a condition caused by long term steroid use that leads to redness, itching and scaling which can be difficult to distinguish from the underlying skin disease that was originally being treated by the steroid.

Patrick Burnett: As more evidence emerges for how the cessation of long-term topical steroid use can result in TSW, as well as criteria to help distinguish this condition from eczema, we expect more opportunities so the treatment of this condition will emerge as well.

Patrick Todd: As more evidence emerges for how the cessation of long term topical steroid use can result in tfw as well as criteria to help distinguish this condition from eczema, we expect more opportunities for the treatment of this condition will emerge as well.

Patrick Burnett: Now on slide 18, turning to our expected upcoming indication for scalp and body psoriasis, I wanted to share with you some impactful images of the benefits of our investigational Zerif foam in treating psoriasis of the scalp and body from our Erector clinical trial. In the top row, you can see a female patient with significant scalp and neck plaques that were initially rated a score of three or moderate on the Investigator Global Assessment or IGA. These lesions were then significantly improved after only two weeks of treatment, and the patient was subsequently rated as an IGA score of zero or clear by eight weeks.

Patrick Todd: Now on slide 18, turning to our expected upcoming indication for scalp and body psoriasis I wanted to share with you some impactful images and the benefits of our investigational <unk> foam and treating psoriasis are the scalp and body from our our rector clinical trial.

Patrick Todd: And the top row, you can see a female patient with significant scalp and neck plaques that were initially rated a score of three or moderate on the investigator global assessment or Iga scale. These.

Patrick Todd: These lesions were then significantly improved after only two weeks of treatment and the patient with subsequently rated as an Iga score of zero or clear by eight weeks.

Patrick Burnett: Similar efficacy can be seen in the bottom images of another patient with extensive body psoriasis with thick, brightly erythematous lesions on the back, who was likewise treated with Zarif foam and dramatically improved from a baseline of moderate psoriasis to also be clear, an IGA of zero by eight weeks. Now, this degree of improvement is quite remarkable. It highlights the strength of Zerif foam on both the scalp and the body. And when combined with its ease of use and broad patient access, makes Zerif highly compelling to healthcare providers. These results are highly representative of our phase three trial results, in which about two and three individuals achieved scalp IGA success and nearly half achieved body IGA success.

Patrick Todd: Similar efficacy can be seen in the bottom images of another patient with extensive body psoriasis with thick brightly erythematosus lesions on the back who was likewise <unk> foam and dramatically improved from a baseline of moderate psoriasis to also be clear and Iga of zero by eight weeks.

Patrick Todd: Now this degree of improvement is quite remarkable that highlights the strength of the reform on both the scalp and body and when combined with its ease of use and broad patient access makes three highly compelling to health care providers. These results are highly representative of our phase III trial results and which about two and three individuals achieve scalp Iga success and nearly <unk>.

Patrick Todd: Have achieved body Iga success.

Patrick Burnett: With that, I'll pass it over to the watch.

Walter: With that I'll pass it over to Walter.

Latha Vairavan: Thank you, Patrick. Before I begin, I want to thank David Topper for his guidance and mentorship over the past year, and especially during this transition. I'm honored to step into the CFO seat during a very exciting period of Arcutis' commercial growth. I'm on slide 20, showing financial results both year-over-year and quarter-over-quarter for the first quarter of 2025. We generated net product revenues in the quarter of approximately $63.8 million, which is up 196% from Q1 of 2024. Recall that Q4 2024 number included a non-recurring $4.1 million adjustment for reduction in reserves for product return. Last quarter, we noted that this number should be excluded from forward-looking calculations.

Speaker Change: Thank you Patrick before I begin I want to thank David for his guidance and Mentorship over the past year and especially during this transition I am honored to step into the CFO seat during a very exciting period of Arcadis as commercial growth.

Speaker Change: I'm on slide 20, showing financial results, both year over year and quarter over quarter for the first quarter of 2025, we generated net product revenues in the quarter of approximately $63 8 million, which is up 196% from Q1 of 2024.

Speaker Change: Recall that Q4 2024 number included a nonrecurring $4 1 million adjustment for a reduction in reserves for product returns.

Speaker Change: Last quarter, we noted that this number should be excluded from forward looking calculations without.

Latha Vairavan: Without this non-recurring revenue, net product revenue only declined by 2% quarter over quarter, reflecting the healthy state of our launch. I will remind you that in Q1 2024, we executed an out-licensed deal in Japan with Sato, which brought in $25 million of non-dilutive capital, and we also received $3 million milestone payment from our Chinese partner, Wadong. This quarter, we received another milestone payment from Wadong of $2 million. Cost of sales in the first quarter were $8.8 million, compared to $3.3 million in 2024, primarily due to catch-up amortization of the $10 million owed to AstraZeneca for reaching a sales milestone of $250 million of cumulative net sales.

Speaker Change: Without this nonrecurring revenue net product revenues only declined by 2% quarter over quarter, reflecting the healthy state of our launches.

Speaker Change: Ill remind you that in Q1 2024, we executed an out license deal in Japan, with Sato, which brought in $25 million of non dilutive capital and we also received $3 million milestone payment from our Chinese partner <unk> done this.

Speaker Change: This quarter, we received another milestone payment from <unk> of $2 million.

Speaker Change: Cost of sales in the first quarter were $8 8 million compared to $3 3 million in 2024.

Primarily due to catch up amortization of the $10 million owed to astrazeneca for reaching a sales milestone of $250 million of cumulative net sales.

Latha Vairavan: For the first quarter of 2025, our R&D expenses were $17.5 million, which is down 24% from $23.1 million in the first quarter of 2024, due to decreases in the development cost of topical reflomolast programs and approximately 21% compared to the fourth quarter of 2024. Recall that Q4'24 benefited from a one-time $3 million credit we received related to a closeout of our reflomolast study. SG&E expenses were $64 million for the first quarter of 2025 versus $54.8 million in the same period last year, up 17% as we invested in our commercial organization and our current and future launch SG&A expenses were also up approximately 11% as compared to the fourth quarter of 2024, primarily due to higher promotional spend for our current and upcoming Zuriyeb launch.

Speaker Change: For the first quarter of 2025, our R&D expenses were $17 5 million, which is down 24% from $23 1 million in the first quarter of 'twenty four due to decreases in the development cost of topical or a formalized programs and approximately 21% compared to the fourth quarter of <unk>.

Speaker Change: Four recall that Q4 'twenty four benefited from a one time $3 million credit we received related to a closeout of a formal <unk> study.

Speaker Change: SG&A expenses were $64 million for the first quarter of 2025 versus $54 8 million in the same period last year up 17% as we invested in our commercial organization and our current and future launches SG&A expenses were also up approximately 11% as compare.

Speaker Change: And to the fourth quarter of 2024, primarily due to higher promotional spend for our current and upcoming story of launches.

Latha Vairavan: Our SG&A spend in Q2 will be higher than Q1, associated with the scalp and body psoriasis launch, and then normalize in the second half of the year. We expect a stable level to carry into 2026. This expense stabilization combined with the tremendous growth potential of our Zuri portfolio gives us continued confidence that we can reach cash breakeven in 2026.

Speaker Change: Our SG&A spend in Q2 will be higher than Q1 associated with the scalp and body psoriasis launch and then normalize in the second half of the year, we expect a stable level to carry into 2026. This expense stabilization combined with the tremendous growth potential of our <unk> portfolio gives us continued conference content.

Speaker Change: So we can reach cash breakeven in 2026.

Latha Vairavan: I want to take a moment to comment on the impact of tariffs on our business. We are a global operation with sales in the United States and Canada. All of our intellectual property for Zareeb is domiciled in the United States. We currently manufacture the majority of our product in the US and our API is sourced from Spain. We have also started manufacturing at a facility in Canada to mitigate any supply chain risk. As we have previously mentioned, our cost of sales is pharma-like, and if a tariff were applied to our entire unit cost, it would be immaterial, estimated to be less than a one percentage point impact on our cost of The impact of tariffs on Arcutis will likely be no greater than on any other pharma company and substantially less than many, so we do not anticipate that it will be a significant issue for Arcutis, particularly compared to our peers with extensive non-U.S.

Speaker Change: I wanted to take a moment to comment on the impact of tariffs on our business.

Speaker Change: We are a global operation with sales in the United States and Canada all of our intellectual property for <unk> is domiciled in the United States. We currently manufacture the majority of our product in the U S and our API is sourced from Spain, we.

Speaker Change: We have also started manufacturing facility in Canada to mitigate any supply chain risk as we have previously mentioned our cost of sales is pharma like and if a tariff applied to our entire unit cost it would be immaterial.

Speaker Change: Estimated to be less than a one percentage point impact on our cost of sale.

Speaker Change: The impact of tariffs on our Q this will likely be no greater than on any other pharma company and substantially less than many so we do not anticipate that it'll be significant issue for our children, particularly compared to our peers with extensive non U S manufacturing networks and or a significant portion of their intellectual property.

Latha Vairavan: manufacturing networks and or a significant portion of their intellectual property held overseas. I am now on slide 21. You can see we had cash and marketable securities of $198.7 million on our balance sheet as of March 31, 2025, which translates to a cash burn from operations in the quarter of approximately $30 million. Q4-24 had several one-time anomalies that benefited our cash burn for the quarter, but we're back to a more typical use of cash. Q1 burn was still lower than that of Q3-24, and we expect our quarterly cash burn to continue trending downward as our revenues grow and we approach cash flow break-even sometime in 2026.

Speaker Change: <unk> held overseas.

Speaker Change: I am now on Slide 21, you can see we had cash and marketable securities of $198 7 million on our balance sheet as of March 31, 2025, which translates to a cash burn from operations in the quarter of approximately $30 million.

Speaker Change: Q4, 'twenty four had several one time anomalies that benefited our cash burn for the quarter were back to a more typical use of cash Q1 burn was still lower than that of Q3 24, and we expect our quarterly cash burn to continue trending downward as our revenues grow and we approach cash flow breakeven.

Speaker Change: Sometime in 2026, we.

Latha Vairavan: We have total debt of $107.6 million and have the option to redraw $100 million in whole or in part at our discretion through the middle of 2026, providing us with significantly enhanced flexibility. The success of our Zuri portfolio and the economies of scale we're generating will permit us to invest in the business for continued growth and long term durability.

Speaker Change: We had total debt of $107 6 million and have the option to re draw $100 million in whole or in part at our discretion through the middle of 'twenty, six providing us with significantly enhanced flexibility.

Speaker Change: The success of our is the right portfolio and the economies of scale, we're generating will permit us to invest in the business for continued growth and long term durability with that I will hand, it back to Frank for some closing comments.

Frank Watanabe: With that, I will hand it back to Frank for some closing comments. Thanks, Latha. I will finish up where I began. Arcutis continues to execute exceptionally well, driving growth of Zareeb and advancing our pipe We are confident in our ability to sustain our growth throughout 2025 and beyond, considering all of the opportunities ahead of us. We're seeing tangible evidence of an accelerating shift from topical steroids to newer non-steroidals. And we are delighted with our progress in protecting our intellectual property. Our growing revenues coupled with the strength of our balance sheet puts us in a strong position to continue investing for the future and we remain optimistic about achieving cash break even in 2020.

Thanks, a lot.

Frank: We'll finish up where I began our curious continues to execute exceptionally well driving growth of <unk> in advance of our pipeline.

Frank: We are confident in our ability to sustain our growth throughout 2025 and beyond considering all of the opportunities ahead of us.

Frank: We're seeing tangible evidence of an accelerating shift from topical steroids to newer non struggles and we are delighted with our progress and protect our intellectual property.

Frank: Our growing revenues, coupled with the strength of our balance sheet puts us in a strong position to continue investing for the future and we remain optimistic about achieving cash breakeven in 2026 and with that we'll open up the call for Q&A.

Unknown Executive: And with that, we'll open up the call for Q&A. Thank you. If you wish to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced.

Frank: Thank you.

Frank: If you wish to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Unknown Executive: To withdraw your question, please press star 1, 1 again.

Speaker Change: Joe Your question. Please press star one one again.

Unknown Executive: We will take our first question. The first question comes from the line of Vikram Purohit from Morgan Stanley. Please go ahead, your line is open. Hi, good afternoon. Thanks for taking our questions. We have two. So first, thinking about the cadence of the read performance throughout the rest of the year. Is there anything you'd point out on seasonality, cyclicality that we should keep in mind that could impact kind of quarter over quarter trends? And then secondly, for the alopecia areata readout expected in the middle of this year? What would you set in terms of expectations for what we can learn and what you hope to see for for the product profile?

Speaker Change: We will take our first question.

Speaker Change: The first question comes from the line of Vikram <unk> from Morgan Stanley. Please go ahead. Your line is open.

Speaker Change: Hi, good afternoon.

Speaker Change: Thanks for taking our questions we have to.

Speaker Change: So first thinking about the cadence of the.

Speaker Change: <unk> performance throughout the rest of the year.

Speaker Change: Is there anything you'd point out on seasonality cyclicality that we should keep in mind.

Speaker Change: That could impact kind of quarter over quarter trends and then secondly for the <unk> Reatta readout expected in the middle of this year.

Speaker Change: Would you said in terms of the expectations for what we can learn and what you hope to see for for the product profile. Thank you.

Vikram Purohit: Thank you. Yeah, hi Vikram, good to hear from you.

Speaker Change: Yes, Hi, Vikram good to hear from me Todd can you maybe address the cadence quarter over quarter and then Patrick.

Unknown Executive: Yeah, Todd, can you maybe address the cadence quarter recorder and then Patrick, if you could address the 255 readout? Yes, as we experienced last year over the summer months, we do expect a modest seasonal impact to our performance. However, I think what's very important to point out here is that, as mentioned, we'll be launching foam for scalp and body psoriasis. Not only that, we continue to see a positive impact about this portfolio effect that I mentioned earlier, which continues to provide us an opportunity to convert, you know what I'm saying, the steroid market, which is a significant opportunity for us, which will continue to drive revenue growth in 2025.

Speaker Change: You could address the 255 readout.

Speaker Change: Yes.

Speaker Change: As we experienced last year over the summer months, we do expect a modest.

Speaker Change: Seasonal impact to our performance however, I think.

Speaker Change: Important to point out here is that as mentioned, we'll be launching foam for scope and body psoriasis.

Speaker Change: Not only that we continue to see a positive impact about this portfolio effect that I mentioned earlier, which continues to provide us an opportunity to convert.

Speaker Change: I'm, saying the steroid market, which is a significant opportunity for us which will continue to drive revenue growth in 2025. So yes, we will see some seasonality, but we continue to be very positive relative to these that are value drivers that we provide in the market.

Todd Watanabe: So yes, we will see some seasonality, but we continue to be very positive relative to these other value drivers that we're providing the market.

Patrick Burnett: Okay, so picking up on the question, Vikram, for ARQ 255. So this is a phase 1B trial that we conducted, and it's primarily focused on evaluating safety, tolerability, and then pharmacodynamics. We also looked at the PK and had some biomarker work in addition to some kind of early responses that we were looking for, for clinical response for hair growth. So this is a three-month trial. The primary endpoint for most pivotal trials is six months. So what we're really focused on is just getting an early read on what might be able to be achieved with ARQ 255.

Speaker Change: Okay, so picking up on the question.

Speaker Change: For <unk> 255. So this is a phase <unk> trial that we conducted.

Speaker Change: And it's primarily focused on evaluating safety Tolerability and then pharmacodynamics.

Speaker Change: Also looked at the PK and had some biomarker work. In addition to some kind of early responses that we were looking for for clinical response for hair growth. So this is a three month trial. The primary endpoint for most pivotal trials as six months. So what we're really focused on is just getting.

Speaker Change: And early read on what can might be able to be achieved with air Q2 dollars 55, So really come forward to reading out data from this in the middle of 2025.

Unknown Executive: So we're really looking forward to reading out the data from this in the middle of 2025. Got it.

Speaker Change: Got it thank you.

Unknown Executive: Thank you.

Speaker Change: Thank you.

Seamus Fernandez: We will take our next question. Your next question comes from the line of Seamus Fernandez from Guggenheim Securities. Please go ahead. Your line is open. Oh, great. Thanks for the questions.

Speaker Change: We will take our next question.

Speaker Change: Next question comes from the line of seamless Fernandez from Guggenheim Securities. Please go ahead. Your line is open.

Speaker Change: Oh, great. Thanks for.

Speaker Change: Questions.

Unknown Executive: So, Todd, just wanted to get a sense for how the additional scalp psoriasis, you know, and body psoriasis opportunity can accelerate and expand the use of Zerubifoam. Obviously, that's kind of a standout product within the portfolio at this point and continues to be so, just trying to get a better understanding of how that can potentially expand utilization of the foam, you know, more broadly. And is it your view that it will cannibalize cream or expand the market and the overall penetration? And the second question is actually just, you know, help us understand where we are in the life cycle of Zerubifoam as it relates to potential impacts of seasonality, you know, whether or not we would see anything like that, given the mild to moderate, you know, treatment opportunity that you have in atopic dermatitis where, you know, sometimes in the summer months, we could see some seasonality, but it seems pretty early in the life cycle of Zerubifoam to see an impact there, but just wanted to get your thoughts.

Todd just wanted to get a sense for how the additional scalp psoriasis.

Speaker Change: And body psoriasis opportunity.

Speaker Change: Can accelerate and expand the use of the reform.

Speaker Change: <unk>, that's kind of the standout product within the portfolio at this point and continues to be so just trying to get a better understanding of how that can potentially expand utilization of the thumb.

Speaker Change: More broadly.

Speaker Change: And is it your view that it will cannibalize cream or expand the market and the overall penetration and then the second question is actually just help us understand where we are in the lifecycle of <unk> as it relates to potential impacts of seasonality.

Speaker Change: Whether or not we would see anything like that given the mild to moderate.

Speaker Change: Treatment opportunity that you have in atopic dermatitis, where sometimes in the summer months, we could see some seasonality, but it seems pretty early in the lifecycle of a <unk> to see an impact there, but just wanted to get your thoughts. Thanks.

Todd Watanabe: Thanks. Yes, thank you for the question. So we don't anticipate any meaningful cannibalization of xerine cream 0.3%. And let me be a little bit more specific about that is that we expect broader and increased utilization of xerine for the psoriasis patient. And specifically, what I mean is that Zareeb offers something that no other competitor can offer relative to the differentiation that I think that both patients and providers will value, and that is that we're going to offer optionality and choice. Meaning that once a psoriasis patient is seen by the dermatologist, based upon where that psoriasis is located, as an example, if it's in a hair-bearing area, that that clinician will probably prefer to use the foam, given the unique formulation for hair-bearing areas, whether it be the scalp or for, such as genital psoriasis.

Speaker Change: Yes. Thank you for the question. So we don't anticipate any meaningful cannibalization of <unk>, 3%.

Speaker Change: And let me be a little bit more specific about that is that we expect broader and increased utilization of <unk> for the psoriasis patients.

Speaker Change: And specifically what I mean is that Missouri offer something that no. Other competitor can offer relative to the differentiation that I think that both patients and providers of value and that is that we're going to offer optionality and choice.

Speaker Change: Many of that once a psoriasis patient is seen by the dermatologist based upon where <unk> is located as an example, because it a hair bearing area that that position will probably prefer to use the phone given the unique formulation for her bearing areas, whether it be the scout or for such as genital psoriasis.

Speaker Change: Yes.

Todd Watanabe: If it's on the body, they may select to use the 0.3 cream psoriasis. But nonetheless, we expect, you know, broader, more significant utilization of Zareeb across the two products, given that unique value proposition that we will offer. I will point out, though, with psoriasis patients, the data suggests that 50% of those patients do have scalp involvement. So we do anticipate increased utilization of the foam for those patients with either scalp or hair involvement.

Speaker Change: Help is on the body they may slip to use.

Speaker Change: 0.3 cream psoriasis, but nonetheless, we expect broader more significant utilization of <unk> across the two products given that.

Speaker Change: <unk> unique value proposition that we will offer.

Speaker Change: I'll point out, though is psoriasis patients the data suggests that 50% of those patients do have scalp involvement. So we do anticipate increased utilization of the phone for those patients with the scope of her involvement.

Todd Watanabe: Moving to your second question relative to seasonality and atopic dermatitis. As mentioned earlier, we will expect some seasonality impact to the product. But nonetheless, you know, we continue to see strong growth of Zarib demand across atopic dermatitis and other aspects of the portfolio. But I think what's important to mention that I mentioned on my opening comments is this portfolio effect. We continue to see as more prescribers prescribed across the portfolio, they prescribe more of Zarib. And what's important about that is the provider has more experience as they write this product, which creates more efficiencies in their writing, more predictability, not only for the provider, but also for the staff where they can become more efficient and effective in processing those prescriptions.

Speaker Change: Moving to your second question relative to seasonality in atopic dermatitis.

Speaker Change: As mentioned earlier, we will expect some seasonality impact to the product, but nonetheless, we continue to see strong growth observe demand across atopic dermatitis and other aspects of the portfolio but.

Speaker Change: But I think what's important to mention that I mentioned on my opening comments is this portfolio effect.

Speaker Change: We continue to see as more prescribers prescribe across the portfolio a prescribed more <unk>.

Speaker Change: And what's important about that is the provider has more experience is it for as they write this product which creates more efficiencies in their writing more predictability not only for the provider, but also the staff, where they can become more efficient and effective and processing those prescriptions and I believe this portfolio of packs that would be comps.

Todd Watanabe: And I believe this portfolio effect that will be compounded by the Zarib foam launch for psoriasis will continue to drive strong growth demand growth over 2025.

Speaker Change: <unk> by the <unk> launch for psoriasis will continue to drive strong demand.

Speaker Change: Demand growth over 2025.

Frank Watanabe: Yeah, let me just maybe expound just a little bit more on on the first point, because, you know, we get this question a lot, right? I think it's very unlikely that patients will get switched from the cream to the foam once the foam is approved. Right. So that's that's cannibalization. Right. I think going forward, what we probably will see is is an increased use of the foam in new starts for psoriasis patients, keeping in mind that, as Todd mentioned, about half the patients with psoriasis have scalp involvement. But I think what's really more important is that none of the other.

Speaker Change: Yes, let me just maybe expand just a little bit more on on the first point because we get this question a lot right I think its very unlikely that patients will get switched from the cream to the foam once <unk> proved right. So that's that's cannibalization right.

Speaker Change: I think going forward, what we probably will see is an increased use of the foam in new starts for psoriasis patients keeping in mind that as Todd mentioned about half the patients.

Speaker Change: With psoriasis have scalp involvement, but I think what's really more important is that none of the other.

Frank Watanabe: non-steroidal options have a formulation that's suitable for treatment of the scalp. And it's quite challenging to treat scalp psoriasis even with steroids, A, because of safety concerns around proximity to the face and especially the eyes, and B, because there aren't a lot of good steroid formulations that are suitable for the scalp either. So, you know, if you're a clinician who's treating a large number of patients who have scalp involvement, Zoreave foam now being approved or soon to be approved for scalp psoriasis gives you a great new option and a great new reason to choose Zoreave over the other non-steroidals and over the topical steroids that you've historically been using.

Speaker Change: Non steroidal options have.

Speaker Change: Formulation thats suitable for treatment of the scalp.

Speaker Change: And it's quite challenging to treat.

Speaker Change: Scott <unk>, even with steroids, a because of safety concerns around proximity to the face and especially the eyes and b because there arent a lot of good steroid formulations that are suitable for the scalp either so if youre a clinician who's treating.

Speaker Change: A large number of patients who have scalp involvement zuhri foam now being approved or soon to be approved for scalp psoriasis gives you a great new option and a great reason to choose <unk> over the other non steroidal and over the topical steroids.

Speaker Change: <unk> been using so we really believe that this is going to be an important element of our continued ability to grow the franchise.

Unknown Executive: So we really believe that this is going to be an important element of our continued ability to grow the franchise. Thanks, guys.

Speaker Change: Thanks Scott.

Uy Ear: Thank you. We will take our next question. Your next question comes from the line of Uy Ear from Mizuho. Please go ahead, your line is open. Thanks. Yeah, thanks, guys, for taking our questions. And congrats on the solid quarter. So maybe first question, just help us understand, you know, the cadence of the growth in that as we go through the year. Understandably, at the first half of the year, I think, on the fourth quarter, you're expecting sort of maybe on the higher end of 50s. Should we expect that to decline towards the middle and then towards the low end as we approach the end of the year?

Scott Van: Thank you.

Speaker Change: We will take our next question.

Speaker Change: Your next question comes from the line of <unk> <unk> from Mizuho. Please go ahead. Your line is open.

Speaker Change: Thanks, Yes, thanks, guys for taking a question.

Speaker Change: And congrats on the solid quarter. So maybe first question just help us understand.

Speaker Change: The cadence of the gross to net as we go through the year.

Speaker Change: Understandably at the first half of the year I think on the fourth.

Speaker Change: Quarter.

We're expecting sort of maybe on the higher end of <unk>.

Speaker Change: <unk> should we expect that to decline towards the middle and then towards the low end as we approach the end of the year.

Unknown Executive: That's the first question. And the second question is, you know, one of your slides, I think it's slide 12, where you show. 4% growth in the topical branded products. and first quarter 2024 and then 6% this quarter. You know, given that, you know, like Ritama and Zareep Cream 0.3, and other products, Opsalur and stuff like that been in the market at least for the last four years. What is it that drove this significant market share? Thanks. Todd, you want to talk about the gross net trend? Yeah, I'll talk about the gross net trend. As mentioned in the opening comments, we did see some impact on gross net early in the first quarter due to the deductible resets, but since that time have seen improvements and are in a steady state of the 50%.

Speaker Change: That's the first question.

Speaker Change: And the second question is.

Speaker Change: One of your slides I think slide 12, where you show a 4% growth in the topical branded product.

Speaker Change: And first quarter of 2024, and then 6% in.

Speaker Change: This quarter.

Speaker Change: Given that likely comma and jewelry clean zero point.

Speaker Change: <unk> and other products ocular and stuff like that been in the market at least for the last four years.

Speaker Change: What is it that drove significant market share.

Speaker Change: Okay.

Speaker Change: Todd you want to.

Todd: Gross no trend, yes, I'll talk about the gross to that trend.

Speaker Change: As mentioned in the opening comments, we did see some.

Speaker Change: Impact on gross to net early in the first quarter due to the deductible resets, but since that time have.

Speaker Change: <unk> seen improvements in our in the steady state of the 50% we anticipate.

Unknown Executive: We anticipate to remain within the 50% gross net, although we will see improvements through the year as those deductible resets continue to decrease as you roll through the second, third, and fourth quarter of the year, and are confident we will remain in the 50% range for gross net. And then, you know, with regard to your question about the trend and conversion, you know, I think, first of all, it's important to remember that, you know, Opsalura has been out for about four years. Zerive for psoriasis is only been out for three. And Vitamla has been out for about three.

Speaker Change: Within the 50% gross in that although we will see improvements through the year as those deductible resets continue to decrease.

Speaker Change: As you roll through the second third and fourth quarter of the year and are confident we will remain in the 50% range for gross to net.

Speaker Change: And then with regard to your question about the trend in conversion.

Speaker Change: I think first of all it's important to remember that.

Speaker Change: <unk> has been out for about four years.

Speaker Change: <unk> for psoriasis is only amount for three.

Speaker Change: And <unk> been out for about three <unk> four <unk> only been out a year.

Frank Watanabe: Zerive for febderm has only been out a year. And AD has only been out for about six months, right. So we're still in very early stages of the process. I think also, if you go back to 2021, when when Opsalura was approved, the brand industrial market, as I recall, was around 1%. So, you know, you've seen a really dramatic growth in that market over the last four years, with the addition of new products, and as doctors adopt these products, more, and I think a 50% increase in a 12 month period is really pretty remarkable. And I think speaks to the acceleration of the trend that Patrick and Todd talked about.

Speaker Change: <unk> has only been out for about six months right. So we're still in very early stages of the process.

Speaker Change: I think also if you go back to 2021.

Speaker Change: When when <unk> was approved the branded <unk> market as I recall was around 1%.

Speaker Change: <unk> seen a really dramatic growth in that market over the last four years.

Speaker Change: With the addition of new products and as doctors adopt these products more and I think a 50% increase in a 12 month period is really pretty remarkable.

Speaker Change: And I think speaks to the acceleration of the trend that Patrick and Todd talked about.

Frank Watanabe: You know, clearly, we are working against a fairly ingrained habit, which is the use of topical steroids. But, you know, as Patrick mentioned, what we are increasingly hearing is clinicians telling each other that they really need to rethink their use of topical steroids and adopt these newer agents. And so we think that that trend will only continue as they have better options and new options like Zerifoam for for plaques psoriasis, and the expansion of our AD label down to the age of two. Is it just the new the addition of the new product that's accelerating this?

Speaker Change: Clearly we are.

Speaker Change: Working against a fairly ingrained habit, which is the use of topical steroids, but as Patrick mentioned, what we are increasingly hearing as clinicians telling each other that they really need to rethink their use of topical steroids and adopt these new agents and so we think that that trend will only continue as they have better options and new option.

Lakes refund for for plaque psoriasis and the expansion of our <unk> labeled under the age of two.

Speaker Change: Is it just the new the addition of the new product that's accelerating.

Speaker Change: Just.

Frank Watanabe: Is it a trend, or is it also... something else, I guess, you know, just wanted to get a better sense of why all of them, I guess we see this significant acceleration, when other non-topic has been on the market for quite a while, as well. I think you have to look at the clinical profile of those non-Seros, right, you know, the, the remember back when when the TCI is launched in 2020, sorry, in 2000, excuse me, you know, those, those two products rapidly ramped up to 600 million in annual sales on their fourth year on the market.

Speaker Change: Trend or.

Speaker Change: Is it also.

Speaker Change: Something else I guess I was just wanted to get a better sense.

Speaker Change: Why all of them I guess, we see the significant acceleration when.

Speaker Change: Other non topic has been on the market for quite a while as well.

Speaker Change: I think you have to look at the clinical profile of those non <unk> right.

Speaker Change: Remember back when the <unk> launched in 2020, sorry in 2000 excuse me.

Speaker Change: Those two products rapidly ramped up to $600 million in annual sales in their fourth year on the market and then they got the box warning.

Frank Watanabe: And then they got the box warning, which has, which has been and continues to be a major impediment to the use of, of TCIs, especially in children with atopic dermatitis. You know, those drugs also do have some local tolerability issues, and they're twice a day. And then, you know, you had Eucrisa come out in 2017, as I recall, clearly not an optimal non-Steroidal that has never been very successful, particularly because of the local tolerability, but also fairly limited efficacy and an ointment, and it's twice a day. So that wasn't a great option either. So it really wasn't until the emergence of Opsalura, and then Zerive, and Peniroff, that doctors had, you know, really reasonable non-Steroidal options that could compete with topical steroids.

Speaker Change: At which has which has been and continues to be a major impediment to the use of of Tcs, especially in children with atopic dermatitis.

Speaker Change: Those drugs also do have some local tolerability issues.

Speaker Change: And they're twice a day.

Speaker Change: And then you had you Chris will come out in 2017 as I recall clearly not an optimal nonsteroidal that has never been very successful, particularly because of the local tolerability, but also fairly limited efficacy and an ointment and it's twice a day so that wasn't a great option either so it really was.

Speaker Change: Until the emergence of <unk>, and then <unk> and <unk> that doctors had really reasonable non stordahl options that could compete with topical steroids and I think that's why you've seen this growth from as I said about 1% prior to the emergence of the newer advanced topical <unk>.

Frank Watanabe: And I think that's why you've seen this growth from, as I said, about 1% prior to the emergence of the newer advanced topical therapies to 7% in, you know, about four years. So really, I think it's all being driven by the clinical profile. And, you know, prior to the emergence of these new advanced topical therapies, you know, the only option that doctors really had that were good drugs were topical steroids. Those are the only things that really worked.

Speaker Change: PS two 7% in about four years.

Speaker Change: So really I think it's all being driven by the clinical profile and.

Speaker Change: Prior to the emergence of these new advanced topical therapies.

Speaker Change: The only option the doctors really had that were good drugs were public storage is the only thing has really worked.

Tyler Buren: Okay, thank you. Thank you. We will take our next question. And the question comes from the line of Tyler Van Buren from TD Cohen. Please go ahead. Your line is open. Great. Thanks for taking the questions. Can you guys please elaborate on the current split of patients, or sorry, patients being treated in the DERM office versus primary care? And I know you mentioned the 50-50 of the addressable patient population, but is that ultimately where you expect the split of patients to end up? And the second question is, as we think about the CAWA efforts, just maybe you could elaborate on some of the barriers to PCP prescribing that are employing to knock them down in order to contribute to revenues meaningfully this year?

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

Speaker Change: The question comes from the line of Todd a Devon from TD Cowen. Please go ahead. Your line is open.

Todd Devon: Great. Thanks for taking the questions can you guys. Please elaborate on the current split of patients resort patients being treated in the derm office versus primary care and I know you mentioned the 50 50 of the addressable patient population, but is that ultimately where you expect the split of patients to end up.

Speaker Change: And the second question is as we think about the kawa efforts.

Speaker Change: Maybe you could elaborate on some of the barriers to PCP prescribing that are different from terms and what tactics kawa at some point to knock them down in order to contribute to revenues meaningfully this year.

Frank Watanabe: Yeah, thanks, Tyler. Good to hear from you, too. So, you know, in terms of the split, the patients split about 50-50 across DERM and non-DERM settings, and the non-DERM settings are primarily primary care and pediatrics. You know, today, our business is overwhelmingly dermatology. Remember, our primary care and pediatric efforts are fairly nascent. And, you know, it's going to take a little time, and Todd will mention, go into more detail about that in just a minute. You know, I think it's hard to say where we ultimately land. I do think that primary care and pediatrics will, over time, become major contributors to growth for the franchise.

Speaker Change: Yes, thanks, good to hear from you too.

Speaker Change: So in terms of the split.

Speaker Change: The patient split about 50, 50 across derm and non Durham settings.

Speaker Change: And the non term settings are primarily primary care in pediatrics.

Speaker Change: Today, our business is overwhelmingly dermatology remember our primary care and pediatric efforts are fairly nascent.

Speaker Change: And I'm just going to take hold time titled mentioned go into more detail about that in just a minute.

Speaker Change: I think it's hard to say, where we ultimately land I do think that primary care in pediatrics will over time become major contributors to growth for the franchise.

Todd Watanabe: But, you know, I don't know that we'll get to a 50-50 split. You know, because there are any number of other dynamics, like paramics, that also could factor into it. But I do think it'll be an important contributor to growth over the long term.

Speaker Change: Yeah.

Speaker Change: I don't know that we will get to a 50 50 split.

Speaker Change: Because they are there any of that number of other dynamics like payer mix that also could factor into it but but I do think it'll be an important contributor to growth over the long term.

Todd Watanabe: And, Todd, do you want to talk a little bit about COA? Yeah, absolutely. Relative to COA, I mean, COA does continue to make steady progress to what I'll call the dynamics of the PCP selling cycle. And we do expect them to have a positive impact to our revenue in 2025. But like all new sales forces or new product launches, especially within primary care, it takes a high level of engagement and frequency with that primary care physician to initiate a trial of the product. So we're confident that COA will continue to progress and have that type of impact.

Speaker Change: Todd you want to talk a little bit about costs, yes, we relative to cohort I mean quarters continue to make steady progress to what I'll call. The dynamics of the PPS PCP selling cycle and we do expect them to have a positive impact to our revenue in 2025, but.

Speaker Change: Like all new sales forces or new product launches, especially within primary care. It takes a high level engagement and frequency with their primary care physician to initiate a trial of the product.

Speaker Change: So we're confident that we'll continue to progress and have that type of impact.

Todd Watanabe: But you think about within the primary care or feed market, there's been no promotion of non-steroidals. COA is the first to do it within these two market segments, and so it does take a little bit of extra time in that selling cycle to be able to educate not only the provider, but also to educate the staff relative to the process of fulfilling that prescription. But COA continues to engage there, create interest, and we are seeing positive signals as we move forward. Thank you.

Speaker Change: You think about within the primary care or Pete market Theres been no promotion of Nonsteroidal <unk>, who was the first to do it within these two.

Speaker Change: Market segments, and so it does take a little bit of extra time in that selling cycle to be able to educate not only the provider, but also to educate the staff relative to the process of fulfilling that prescription but.

Speaker Change: But core continues to engage there.

Speaker Change: Great interest and we are seeing positive signals as we move forward.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: Thank you.

Kambiz Yazdi: We will take our next question. Your next question comes from the line of Kambiz Yazdi from Jeffreys. Please go ahead. Your line is open. Hey, team. Thanks so much for the questions. A few on my end.

Speaker Change: We'll take our next question. Your next question comes from the line of Combi yesterday from Jefferies. Please go ahead. Your line is open.

Speaker Change: Hey, Tim Thanks, so much for the questions.

Speaker Change: A few on my end.

Unknown Executive: What are the next steps after the litigation stay? Or you do a joint status update at some point? and then separately maybe on ARQ 255, what are the key learnings from ARQ 252 and oral Thank you. Thank you.

Speaker Change: What are the next steps after litigation stay or you do a joint status update at some point.

Speaker Change: And then separately, maybe on Q2 505, or the key learnings from <unk> and <unk>.

Speaker Change: All right.

Myers: Myers <unk> had.

Unknown Executive: And then the third and last question, kind of what's the what's the white space in alopecia areata for a new topical treatment? Sure.

Speaker Change: And then.

Speaker Change: And last question kind of what's the what's the white space in alopecia Areata a brand new.

Speaker Change: On the call.

Speaker Change: Thank you.

Speaker Change: Sure.

Unknown Executive: So let me address the IP question. And Patrick, maybe you could talk about 255. And, and LP Shariata. So, with regard to, to the patent litigation, you know, the stay is in indefinite stay. You know, the The reason that Patagas requested the stay is not something I could discuss, that's something you need to discuss with them. But, you know, I think that it is not unreasonable for one to conclude that they must have had some problem with their development or with the FDA, right? They filed in February of 2024 with the FDA, their ANDA, under the GDUFA guidelines, which are the same as PDUFA, they should have received a conditional approval in November of 2024.

Speaker Change: Let me address the IP question and Patrick maybe you could talk about $2 55.

Patrick Todd: And alopecia Areata so.

Speaker Change: With regard to two.

Speaker Change: The patent litigation.

Speaker Change: The stay is indefinite stay.

Okay.

Speaker Change: <unk>.

Speaker Change: The reason that Pat I guess requested a stay is not something I could discuss is something that we would need to discuss with them.

Speaker Change: Got it.

Speaker Change: I think that it is not unreasonable for one to conclude that they must have had some problem with their.

Speaker Change: Their development or with the FDA. They filed in February of 2024 with the FDA there Ana.

Speaker Change: Under the <unk> guidelines, which are the same as <unk>. They should have received a conditional approval in November of 24 to the best of our knowledge they did not receive that.

Frank Watanabe: To the best of our knowledge, they did not receive that. So, you know, I can't, I don't know what the issue is, but clearly they've had some issue. The quarterly updates that we are providing jointly to the court really are just to update the court on the status of the dispute, let's say, between the two companies. They are also required to share with us their FDA correspondence so that we can see, you know, if that program is moving forward and when. And at such a time as we feel that it's necessary to move forward with litigation again, we have that option.

Speaker Change: So.

Speaker Change: I cant I don't know what the issue is but clearly they've had some issue.

Speaker Change: The quarterly updates that we are providing jointly to the court.

Speaker Change: Really are just to update the court on the status of <unk>.

Speaker Change: The dispute, let's say between the two companies. They are also required to share with us their FDA correspondence so that we can see.

Speaker Change: If that program is moving forward and win.

Speaker Change: And at such a time as we feel that it's necessary to move forward with litigation again, we have that option. We also will benefit from the remainder of our 30 month hatch Waxman stay should.

Frank Watanabe: We also will benefit from the remainder of our 30-month Hatch-Waxman stay should the litigation restart.

Speaker Change: Should the litigation restart.

Frank Watanabe: But, you know, honestly, I don't know whether the litigation will ever progress, whether the program will ever progress. You really have to talk about that with Pat, I guess.

Speaker Change: But honestly I don't know, whether the litigation will ever progress whether the program will ever progress you really have to talk about that with Pat again.

Patrick Burnett: And then, Patrick, do you want to address the questions around 255 and LP Shariata? Yeah, absolutely. So, I think most importantly, it's important to note that ARQ 255 is a completely unrelated formulation to ARQ 252. So, the, you know, we have the challenge of being able to get sufficient drug with 252 into the skin. With 255, this is not a, this is not a solution. The drug's not dissolved. It's actually a suspension of the JAK inhibitor. And it's designed to be able to deliver the drug down the hair follicle and to overcome, I would say, what has been the biggest challenge for any topical approach for LP Shariata, which is just the depth of the hair follicle, which is where the relevant inflammation is, which is where the target is for this treatment.

Speaker Change: And then Patrick do you want to address the questions around the 255 in alopecia Areata, yes, absolutely. So I think most importantly, it's important to note that our Q2 hundred 55 is a completely unrelated formulation to <unk> Q2 dollars 52, so that.

Speaker Change: We had the challenge of being able to.

Speaker Change: Get sufficient drug with $2 five two into the skin.

Speaker Change: With 255. This is not a this is not a.

Speaker Change: Solution, the drug's not dissolved its actually a suspension of the JAK inhibitor.

Speaker Change: And it's designed to be able to deliver the drug down the hair follicle.

Speaker Change: Overcome I would say what has been the biggest challenge for any topical approach for alopecia Areata, which is just the depth of the hair follicle, which is where the relevant information is which is where the target is for this treatment.

Patrick Burnett: And so, we took a unique approach with that. Now, with regard to the oral, we know that the oral actually works in LP Shariata. It's a very potent JAK inhibitor. So, that's important. And the key issue is just to overcome getting the drug to where it needs to go.

Speaker Change: So we took a unique approach with them now with regard to the oral we know that the oral actually works in alopecia Areata, it's very potent JAK inhibitor. So that's important and the key issue is just to overcome getting the drug to where it needs to go with regard to the second part of your question in the white space in Alopecia Areata.

Patrick Burnett: With regard to the second part of your question and the white space in LP Shariata, you know, we know that the, you know, oral systemic administration of JAK inhibitors for patients with extensive alopecia areata can be a treatment option. And many patients have benefited from that. I think the white space is really in several different places for that patient journey. One of them would be patients leading up to where they get to their 50% scalp involvement that would make them a candidate for systemic treatment. And many patients, even when they get there, aren't very keen on being long-term on the JAK inhibitor and being, because many of these patients are younger and may not be wanting to go onto a systemic immune suppressant for a long period of time.

Speaker Change: We know that the <unk>.

Speaker Change: <unk> systemic administration of JAK inhibitors.

Speaker Change: For patients with extensive alopecia areata can be a treatment option.

Speaker Change: And many patients have benefited from that I think the white space is really in several different places for that patient journey, one of them would be patients leading up to where they get to their 50% Scott.

Speaker Change: Scalp involvement that would make them a candidate for systemic treatment.

Speaker Change: Many patients even when they get there arent very keen on being long term on the JAK inhibitor.

Speaker Change: And being because many of these patients are younger it may not be.

Speaker Change: Wanting to go onto a systemic immune suppression for a long period of time and then the other one is once a patient may have had a good benefit from being on the JAK inhibitor, what's the long term potential for managing that patient you would you would at some point want to think about withdrawing.

Patrick Burnett: And then the other one is once a patient may have had a good benefit from being on a JAK inhibitor, what's the long-term potential for managing that patient? You would, at some point, want to think about withdrawing that immune suppression and seeing if the disease has resolved kind of while the patient was on treatment. That would be another opportunity for being able to have a topical option. So I think there are many different places where a topical would be appropriate for use, even in an environment where we have systemic JAK inhibitors. Thank you so much.

Speaker Change: That immune suppression and seeing if the disease is resolved while the patient was on treatment that would be another opportunity for being able to have a topical options. I think there are many different places where topical would be appropriate for us even in an environment, where we have a systemic JAK inhibitors that work.

Speaker Change: Thank you so much.

Unknown Executive: Thank you. We will take our next question. Your next question comes from the line of Serge Belanger from Needham. Please go ahead. Your line is open. Good afternoon. A couple for Frank and Todd. Going back to the OneCue performance, it looks like you were able to avoid the usual seasonality or not see the typical seasonality. Just curious if that was a function of strong growth that allowed you to avoid it or there was something more specific in terms of a better reauthorization process that minimized the seasonality. And then secondly, I think on slide 10, you highlighted that 80% of ZORI and franchise prescriptions are currently covered by insurance.

Speaker Change: Thank you.

Speaker Change: We will take our next question.

Speaker Change: Your next question comes from the line of Serge Belanger from Needham. Please go ahead. Your line is open.

Serge Belanger: Hi, good afternoon.

Speaker Change: A couple for Frank and Todd.

Serge Belanger: Going back to the.

Speaker Change: <unk> performance it looks like you were able to.

Speaker Change: Void, the usual seasonality or not see the typical seasonality.

Speaker Change: Just curious if that was a function of strong growth that allowed you to.

Speaker Change: Avoid it or there was something more specific in terms of.

Speaker Change: A better read on.

Speaker Change: Horizon is in process.

Speaker Change: Minimize the seasonality and then secondly, I think on slide 10.

Speaker Change: You highlighted that 80% of.

Speaker Change: Saar and franchise prescriptions are currently covered by insurance.

Serge Belanger: I'm curious if we should expect some additional improvements on that number over time. Yeah, Todd, you want to take this? Yeah. Relative to Q1, let me just take a step back. Specifically, first, let me address the revenue, as mentioned in the opening comments. You know, we did see some impact on our gross net early in the quarter. And of course, that was due to the patient's change in insurance, as well as the deductible resets that did reoccur during that time. But nonetheless, we were able to swiftly improve on our gross net in Q1 to where we, you know, make sure that we stayed within the steady state of the 50%, which is very encouraging and will, you know, be a positive signal as we roll forward into the year.

Speaker Change: Curious if we should expect some additional improvements on that number over time.

Speaker Change: Yes.

Yes, Todd do you want to take those yes relative to Q.

Speaker Change: Q1.

Speaker Change: Let me just take a step back and specifically my first let me address the revenue as mentioned in the opening comments, we did see some impact on our gross to net early in the quarter and of course that was due to the patients changing insurance as well as be deductible resets that typically occur during that time, but nonetheless.

Speaker Change: Yes.

Speaker Change: We're able to switch.

Speaker Change: Swiftly improve on our gross to net in Q1 to where we make sure that we stay within the steady state of the 50%, which is very encouraging and we will.

Speaker Change: It would be a positive signal as we roll forward into the year.

Todd Watanabe: Relative to demand, as mentioned earlier, we had 10% quarter over quarter growth, Q1 versus Q4. I think there's a direct correlation relative to the momentum that we have built with this franchise. When you think about, you know, Zareve's differentiation relative to other options within the market, being able to offer three unique Zareve products for three unique skin inflammatory diseases really makes Zareve a one stop solution for both the provider and the patient. And I think that portfolio effect continues to resonate with both providers and patients. And we expect that only to be amplified once we get the foam scalp and body launch.

Speaker Change: Relative to demand as mentioned earlier, we had 10% quarter over quarter growth from Q1 versus Q4.

Speaker Change: I think there is a direct correlation relative to the momentum that we have built with this franchise.

Speaker Change: When you think about it.

Speaker Change: It reads differentiation relative to other options within the market being able to offer three unique zuhri products for three unique scanned inflammatory diseases really makes us a range of a one stop solution for both the provider and the patient and I think that portfolio effect.

Speaker Change: <unk> to resonate with both providers and patients.

Speaker Change: We expect that only to be amplified once we get the foam scalp and body launch.

Todd Watanabe: And we'll continue that momentum as you roll through 2025. You want to address the coverage rate? Yeah. Relative to the coverage rate, we mentioned that, you know, we're kind of in an optimal steady state relative to 80 percent covered or reimbursed prescriptions. We anticipate that we will, you know, say relative to the improvement, we'll stay within that 80 percent range. We have very good coverage of Zareve across all three products now, which is leading to those reimbursed rates that we see, which I think was a contributor relative to maintaining a positive growth net during Q1.

Speaker Change: And we'll continue that momentum as you roll through 2025.

Speaker Change: Yes.

You want to address the yes, the coverage rate, yes, the coverage rate we mentioned that.

Speaker Change: We're kind of an optimal steady state relative to 80% covered or reimbursed prescriptions.

Speaker Change: We anticipate that we will see relatively improvement will stay within that 80% range.

Speaker Change: Have very good coverage of <unk> across all three products now.

Speaker Change: Which is leading to those reimbursed rates that we see which I think was a contributor relative to maintain.

Speaker Change: Maintaining a positive gross to net during Q1, so we expect minimal change that will stay within that steady state of 80% covered reimbursed prescriptions.

Todd Watanabe: So we expect minimal change that will stay within that steady state of 80 percent covered reimbursed prescriptions.

Frank Watanabe: And let me just touch a little bit on the demand point, too. You know, again, I think some investors maybe aren't used to this dynamic, but, you know, Q4 is typically very strong as patients pull forward demand before the deductible resets. We certainly saw that if you look at slide nine in our deck, there is a very clear demand spike in Q4. And many brands experience actually a decline in demand than in Q1 because the patients aren't filling scripts in January that they filled in December. Right. So the fact that we were able to grow quarter over quarter in spite of that demand pull forward, I think is really pretty notable.

Speaker Change: And let me just touch a little bit on the demand point to again I think some investors maybe arent arent used to this dynamic but.

Speaker Change: Q4 is typically very strong as patient pull forward demand before the deductible resets.

Speaker Change: We certainly saw that if you look at slide nine in our deck. There is a very clear demand spike in Q4.

Speaker Change: And many brands experience actually a decline in demand than in Q1, because the patients arent filling scripts in January that they filled in December right. So.

Speaker Change: So the fact that we were able to grow quarter over quarter. In spite of that demand pull forward I think it's really pretty notable and if you look at many of the other branded topical they have been largely flat in the quarter compared to Q4, whereas we've been able to deliver yet.

Todd Watanabe: And if you look at many of the other brand of topicals, they have been largely flat in the quarter compared to Q4, whereas we've been able to to deliver yet another strong quarter of demand growth in Q1. I think that that bodes well for us going forward as well. And if I could mention one other dynamic, if you think about what Frank mentioned relative to the pull forward of the refills into December, we look at that demand increase that we had in Q1, those are MBRXs. That means they're new to brand RXs. And so we're driving new growth of new prescriptions in January, which is going to lead to incremental refills, I'm saying in Q2, Q3, and Q4 this year.

Speaker Change: Yet another strong quarter of demand growth in Q1, I think that bodes well for us going forward as well.

Speaker Change: And if I can mentioned weather dynamic if you think about what Frank mentioned relative to the pull forward of the refills into December.

Speaker Change: You look at that demand increase that we had in Q1 those are <unk> that means our new to brand Rx is and so we're driving new growth of new prescriptions in January which is going to lead to incremental refills I am saying in Q2, Q3 and Q4. This year. So once again, a very positive signal relative to the health of the business.

Todd Watanabe: So once again, a very positive signal relative to the health of the business. Thank you. We will take our final question. Your final question comes from the line of Douglas Tsao from HC Wainwright, please go ahead, your line is open. Hi, good evening. Thanks for taking the questions. I'm just curious, as we look ahead to the approval for the phone into scalp and body thrive, I'm just curious, because, you know, when we first saw the phone get approved to market, we saw a very rapid adoption. We've obviously seen, as you've added additional indications, some incremental growth, but perhaps less dramatically.

Speaker Change: Ms.

Speaker Change: Thank you.

Thank you.

Speaker Change: We will take our final question.

Speaker Change: Final question comes from the line of Douglas Tsao from H C. Wainwright. Please go ahead. Your line is open.

Douglas Tsao: Hi, good evening, thanks for taking my questions.

Douglas Tsao: Just curious as we look ahead to the <unk>.

Speaker Change: Provable for.

Speaker Change: The palm into scalp and body thrive. So I'm just curious because when we first off the phone and get approved to market. We saw a very rapid adoption. We've obviously seen as you've added additional indications.

Speaker Change: Incremental growth, but perhaps less dramatically.

Douglas Tsao: You know, what is your expectation and how should we think about the trajectory from the addition of that indication, you know, fairly soon?

Speaker Change: What is your expectation and how should we think about that trajectory.

Speaker Change: The addition of that indication.

Speaker Change: Fairly Shannon.

Frank Watanabe: Yeah, so Doug, that's a really an important question. The launch of the foam and seborrheic dermatitis was a very, very unique unicorn kind of situation, one that I have never experienced in three decades in the business. I don't think Todd has either. You know, that was a disease that where there had been no innovation in over two decades, very large population, very high level of dissatisfaction with existing therapies. And I can tell you from, I know for a fact that I spoke with a number of clinicians early last year, who had literally hundreds of patients lined up waiting to go on the foam.

Speaker Change: Yeah, So Doug.

Speaker Change: An important question.

Speaker Change: The launch of the foam in February dermatitis.

Speaker Change: It was a very very unique.

Speaker Change: Unicorn kind of situation one that I have never experienced in three decades in the business and I don't think Todd has either.

Speaker Change: That was a disease that where there had been no innovation in over two decades.

Speaker Change: Very large population very high level of dissatisfaction with.

Speaker Change: Existing therapies.

Speaker Change: And I can tell you from.

Speaker Change: I know for a fact that I spoke with a number of clinicians early last year, who had literally hundreds of patients lined up waiting to go on the phone. So the minute we got approved.

Frank Watanabe: So the minute we got approved, there was a vertiginous uptake of the foam, you know, the likes of which I've never seen before. And certainly, we actually honestly hadn't expected when we launched it, not that pace. I don't think that scalp is of that same degree of unmet need. There are options, you know, you can use biologics, which are, you know, some of them are very, very good. You know, the scalp is one area that maybe doesn't respond as well, but it does respond. There are steroid options for use on the hair. So, you know, you don't have this complete absence of good options, I think, in scalp, although Zareve is a very, very competitive option.

Speaker Change: There was a vertiginous uptake of the form.

Speaker Change: The likes of which I have never seen before.

Speaker Change: And certainly we actually honestly hadn't expected when we launched it at that.

Speaker Change: That pace.

I don't think Thats scalp is of that same.

Speaker Change: Degree of unmet need there are options.

Speaker Change: You can use biologics, which are some of them are very very good.

Speaker Change: The scalpel is one area that maybe doesn't respond as well, but it does respond there are steroid options for use on the hair.

Speaker Change: So you don't have this complete absence of good options I think in scalp.

Speaker Change: Those <unk> is a very very competitive option. So I wouldn't expect to see that sort of.

Frank Watanabe: So I wouldn't expect to see that sort of almost vertical trajectory in scalp psoriasis. And, you know, I think that there probably are some doctors who are using the foam already, although I don't think that's probably widespread, you know, because they need to code it as seb derm to get it reimbursed. So I think what we're likely to see is the scalp indication allowing us to continue our growth trajectory. You know, if you go again, back to slide nine, right? How do we continue to grow that franchise at a fairly continuous rate? I think foam is going to be an important contributor to that, as will be AD in two to fives.

Speaker Change: Almost vertical trajectory in scalp psoriasis.

Speaker Change: I think that there probably are some doctors who are using the home already although I don't think thats probably widespread.

Speaker Change: They need to coded as <unk> to get it reimbursed. So I think what we're likely to see is.

Speaker Change: The scalp indication, allowing us to continue our growth trajectory.

Speaker Change: If you if you go back to slide nine rate, how do we continue to grow that franchise and a fairly continuous rate I think.

Speaker Change: <unk> is going to be an important contributor to that as will be 82 to five but.

Unknown Executive: But I wouldn't expect, you know, to see a sudden spike in our demand after the approval.

Speaker Change: But I wouldn't expect to see a sudden spike in our demand after the after the approval.

Frank Watanabe: And if I can, which is to follow up, I mean, how much education and how much promotional sensitivity do you expect to see with the scalp and body indication with the vom? Well, I mean, all of these diseases are highly promotionally sensitive. And and, you know, I think that the scalp data, as Patrick showed you in the photographs and also the IGA success data, that the data is very, very compelling. So it will be important for our reps to get out and educate clinicians on the effectiveness of Zareve and the safety and tolerability of Zareve in scalp psoriasis, which, you know, there has not been any promotion, no educational efforts to date.

Speaker Change: And if I can just a follow up I mean, how much education and how much promotional sensitivity do you expect to see with the scalp and body indication with the phone.

Speaker Change: Well I mean, all of these diseases are highly promotional sensitive.

And I.

Patrick Todd: I think the scalp data as Patrick showed you in.

Patrick Todd: In the photographs and also the Iga success data. The data is very very compelling. So it will be important for our reps to get out and educate clinicians on the effectiveness of <unk> safety and Tolerability observed.

Patrick Todd: In scalp psoriasis, which there has not been any promotional educational efforts.

Patrick Todd: To date, so I think that there will be.

Unknown Executive: So I think that there will be, you know, some, you know, there will be incremental upside from the scalp indication as we get and start promoting this data. And also because it will help streamline the reimbursement process for using the foam in scalp psoriasis as well. Todd, I don't know if you have any other additional thoughts you want to add. I covered it very. Okay, great. Thank you very much. That's helpful. Thank you.

Patrick Todd: There will be incremental upside.

Patrick Todd: The scalp indication as we get in and start promoting this data and also because it will help streamline the reimbursement process.

Patrick Todd: For using the foam in scalp psoriasis as well and I don't know if you have any other additional thoughts you want to think that you covered it very well.

Patrick Todd: Okay, great. Thank you very much that's helpful.

Patrick Todd: Thank you. This concludes today's question and answer session I will now hand back for closing remarks.

Unknown Executive: This concludes today's question and answer session. I'll now hand back for closing remarks. Well, I'll just once again, thank everyone for calling in. I know it's a very, very busy time of the year with quarterly earnings. So we appreciate you guys making the time and appreciate all the great questions. And we look forward to talking to you all next quarter. Thanks.

Speaker Change: Well I'll just once again, thank everyone for calling in I know, it's a very very busy time of the year with quarterly earnings. So we appreciate you guys, making the time and appreciate all the great questions and we look forward to talking to you all next quarter. Thanks.

Unknown Executive: This concludes today's conference call. Thank you for participating. You may now disconnect.

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

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