Arcutis Biotherapeutics, Inc.

After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising you your hand is raised. Please be advised that today's conference is being recorded. I will now hand the call over to Lata Viraband, Vice President of Finance and Corporate Controller. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us today to review our fourth quarter and full year 2024 financial results and business update. Slides for today's call are available on the investor 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 would like to remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and certainties, 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.

Thank you, Lata, and thank you to everyone for joining us today. Before we get started, I want to highlight three key themes that we're going to focus on throughout the call today. First of all, we had very strong execution throughout 2024. Second, we believe we are nicely set up to continue growing Zareve in 2025 and beyond. And third, the key to our success going forward is gonna be driving the shift away from topical steroids. So with that, let me turn to slide five of the deck. Closing out a very strong fourth quarter and full year for 2024, we are optimistic about the strong foundation we have established for the entire Zareve portfolio and for continued growth of our franchise this coming year and beyond. I want to take this moment to thank the entire Arcutis team for their hard work and exceptional execution in 2024. We are building a leading top gold brand, one that we believe will outperform historical predicates based on its remarkable efficacy and safety, rapid onset, unique formulation, and the ease of use for both clinicians and patients. This past year, we launched Zerive Foam for seborrheic dermatitis, and Xaree Foam 0.15% cream for atopic dermatitis, and also broaden patient access across indications. In 2025, we'll further expand Xaree's approved indications, continue to expand our prescriber base beyond dermatology, further penetrate the government payer segment, and focus on taking market share from topical steroids. We're especially excited about our May 22nd PDUFA date for an expected indication in scalp and body psoriasis, which will provide another opportunity for doctors to prescribe Zareve foam to meet a substantial unmet medical need. We continued our strong sequential revenue growth. For the quarter, we had revenues of $71 million, with 69 million of that coming from the Zareve franchise. This includes a non-recurring adjustment of $4 million that David will address in detail later. On an annual basis, we had total revenues of $197 million, with three product sales of 167 million, 471% growth year over year, and we are just scratching the surface of this very large and attractive market. We expect substantial continued momentum in 2025, and Todd will provide further detail on how we view revenue and script growth trends evolving throughout 2025. Blending growth to NETs have reached steady state in the 50s, although we expect to see some quarterly fluctuations related to patient deductibles particularly in the first quarter, as is typical for nearly every product. Regardless, we expect gross-to-nets to remain in the 50s, and Todd will provide some additional color on what we expect for gross-to-nets as the brand matures. Looking towards 2025, we believe we are well-positioned to achieve further strong revenue growth. Our psoriasis and sebderm indications continue to grow. We're still very much in new launch mode for atopic dermatitis, and we expect to add further indications and label expansions in the coming year, providing us with significant growth opportunities ahead. Turning to slide six, I want to emphasize the sizable growth opportunity we have in our target markets. We've shared this slide with you before, but we've now updated this slide to include the opportunity in AD patients ages two to five based on our supplemental NDA with an anticipated PDUFA sometime in Q4 of 2025. Dermatologists treat well over 8 million patients across our approved indications, and we've already secured broad access to the roughly 4.5 million commercially insured patients treated by DERMS. We're now making great progress in gaining Medicare and Medicaid coverage, which is expanding Zareve usage into the almost 4 million dermatologists treated patients with government insurance. Furthermore, our COA commercial partnership permits us to simultaneously pursue the more than 8.5 million patients being treated outside of the dermatology office for these indications. This includes primary care physicians and pediatricians for whom Zareve represents an ideal, easy-to-use topical anti-inflammatory agent. Within each of these large segments outlined on the slide, the vast majority of patients are currently treated with topical steroids, but clinicians are starting to shift away from these products, although we're only in the very early stages of this transition in medical practice. And Patrick's going to talk More about the shift away from steroids in just a few minutes. Moving to slide seven, we are confident in our ability to sustain our growth because of four significant tailwinds that are going to propel Xareve forward in the years to come. Let's dig into those tailwinds a little bit further. First, we continue to educate physicians on our three approved indications while continuing to expand the Xareve product label. As mentioned, we have an expected approval in scalp and body psoriasis in May, as well as anticipated expanded indications for pediatric patients in both atopic dermatitis and eventually psoriasis. These expanded pediatric indications are especially important for our commercial partner, COA, and reinforce ERIEV as a first-line topical agent to a broad prescriber base that now encompasses primary care physicians and pediatricians. Second, with our commercial coverage established, we are now engaging with government payers across both Medicare and Medicaid which encompass approximately 3.7 million incremental patients in dermatology offices and many more in primary care and pediatrics. We have been rapidly gaining wins in Medicaid, with Zareve already available for one in two Medicaid patients, and Todd will provide some more color on that front. Third, our partners at COA are now promoting Zareve to high-potential primary care doctors and pediatricians, and we expect them to gain growing traction as 2025 progresses. We look forward to meaningful contribution from this co-promote beginning this year and growing from there. And finally, with our broad product offerings, comprehensive patient access, and differentiated product profile for both doctors and patients, our QDIS is now well positioned to take meaningful market share from the 16 million topical steroid prescriptions written by dermatologists for our approved indication each year. There has been growing momentum in that direction, and Todd and Patrick will delve into this further. Taken together, this immense market size coupled with the excellent efficacy and safety of Zareef and its ease of use and access make us highly optimistic regarding our future prospects and committed to grow Zareef to its peak sales potential. With that, let me turn it over to Todd to provide some further commentary around our launch progress, reimbursement, and the outlook for 2025.