Arcutis Biotherapeutics, Inc.

Good day and welcome to articles by therapeutics twenty twenty four first quarter financial results conference call at this time. Our participants on a listen only mode after the speaker's presentation, there'll be a question and answer session to ask a question during the session. You'll need to press star one one on your telephone. You then hear an automated message advising your hand is raised to draw your question. Please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the call over to Lata Berivan, Vice President, Finance and Investor Relations. Please go ahead.

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

Thanks, Lata, and thank you all for joining us today. You all know the other executives on the call, but I'm really excited today to welcome David Topper, our new Chief Financial Officer. While David is new to his executive position here at Arcutus, he's been an advisor to us for more than four years. I expect many of you are already familiar with David and his exceptional experience and track record in the financial and biopharma worlds, and we could not be more pleased that he's decided to join us at this exciting time at Arcutus. As David joins us, I would also like to express my and the entire organization's thanks and gratitude to John Smither for his incredible service to Arcutis over the past five years. He served as our first CFO, guiding us through a successful initial public offering and has brought an incredible depth and breadth of both financial acumen and dermatology experience from his 25-plus year career in the pharmaceutical industry. His contribution to the success of Arcutis at a critical time cannot be overstated. and we wish him well in his future endeavors and family time. So with that, let me turn to slide five of the deck. We sustained our strong performance since our last earnings call, and I remain delighted with the Arcutus team and our execution during this quarter. And I'm thrilled about the momentum we are building towards a successful 2024. Once again, we saw strong growth during the quarter in our expanding Zareve portfolio as healthcare providers and their patients see how Zareve Cream and now Zareve Foam address real needs in the treatment of psoriasis and seborrheic dermatitis, respectively. Solid growth in prescriptions for both the cream and the foam, coupled with additional gross to net improvements during the quarter, drove strong revenue growth in the first quarter, both versus Q4 and year over year, with net revenues of $21.6 million, 70% of which was for the cream and 30% for the foam, which is still very early in the stages of launch. We've now generated more than 255,000 prescriptions for the cream and the foam combined from over 12,500 unique prescribers to date as our product delivers positive clinical experiences for HCPs and their patients. Our progress in improving GTN this past quarter resulting in a blended GTN in the low 60s across both products for the first quarter is particularly noteworthy given the typical copay resets every product experiences in Q1 each year in addition to the fact that we launched a new product during the quarter. Todd will provide some more color about how we achieved this remarkable accomplishment in just a few minutes. We also continue to successfully execute against our clinical and regulatory milestones, about which Patrick will go into more detail. Most important is the upcoming FDA PDUFA target date of July 7th for our SNDA for atopic dermatitis. We also continue to progress our pipeline programs in particular ARQ234 for AD and ARQ255 for alopecia areata. In February, we completed a secondary offering that raised 172 million gross proceeds, which, along with net product revenues and our existing balance sheet, puts us in a very strong financial position to sustain our investments in the ongoing launches in plaque psoriasis and seb derm, as well as the potential atopic dermatitis launch later this year while advancing our pipeline. Also in February, we entered into a licensing agreement with Sato Pharmaceutical Company, which grants Sato an exclusive license for topical reform lasts for Japan. Our QDIS received upfront payments of $28 million in the quarter, $25 million from Japan, with potential additional Japan milestones up to $40 million, as well as low double-digit to mid-teen double-digit percentage royalties. We also received $3 million from Huadong for our China partnership. Moving on to slide six, as we've mentioned on prior calls, a major reason why we're so excited for this year is that we are in the midst of a very significant expansion in the opportunity for topical reflumilast, which we expect will translate into substantial acceleration of our revenue trajectory. From the initial approval for psoriasis, the total addressable market for Xareeb could grow tenfold from the end of 2023 to over 15 million patients in the United States. I would add that we are feeling increasingly bullish about our ability to begin gaining Medicare and Medicaid coverage this year, and we are making steady progress on a partnership in primary care. As our results this quarter reaffirm, we have the right commercial team in place for success, and we have an excellent plan to execute against these opportunities. With that, let me turn it over to Todd to provide some further commentary around Zareef Cream and foam launches in psoriasis and seb derm.