Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Arcutis Biotherapeutics Inc (ARQT, Financial) reported strong revenue growth in Q1 2024, with net revenues of $21.6 million, a 59% increase over the previous quarter.
- The company successfully launched ZORYVE foam for seborrheic dermatitis, achieving over 46,000 prescriptions in less than three months.
- Arcutis Biotherapeutics Inc (ARQT) has made significant progress in securing insurance coverage for its products, with ZORYVE cream now covered by insurance for approximately 75% of prescriptions.
- The company has strengthened its financial position through a secondary offering that raised $172 million and strategic licensing agreements in Japan and China, enhancing its capital to sustain investments.
- Arcutis Biotherapeutics Inc (ARQT) is poised for potential market expansion with the upcoming FDA PDUFA target date for its sNDA for atopic dermatitis, which could significantly increase the addressable market.
Negative Points
- Despite strong growth, Arcutis Biotherapeutics Inc (ARQT) faces challenges with the typical co-pay resets and insurance changes that can impact gross-to-net improvements.
- The company's R&D expenses remain high at $23.8 million for Q1 2024, reflecting ongoing investment in product development and clinical trials.
- Arcutis Biotherapeutics Inc (ARQT) is still early in the launch phase for ZORYVE foam, and the long-term market acceptance and performance are yet to be fully established.
- While the company has made progress in insurance coverage, securing comprehensive Medicare and Medicaid coverage remains a work in progress, which is crucial for broader market penetration.
- Arcutis Biotherapeutics Inc (ARQT) faces intense competition in the dermatology market, particularly in atopic dermatitis, where established products and new entrants continue to vie for market share.
Q & A Highlights
Q: Regarding the expansion in Medicaid and Medicare coverage, where do you expect to be by the end of the year or starting 2025?
A: L. Todd Edwards, Chief Commercial Officer, mentioned that Arcutis is making good progress with Medicaid, having recently secured coverage in Florida state Medicaid with favorable step edits for ZORYVE cream and foam. For Medicare Part D, discussions are ongoing, and coverage from some Part D plans is expected in the latter half of 2024, with further coverage likely starting January 1, 2025.
Q: Can you discuss the label you're expecting for the atopic dermatitis (AD) approval in July, particularly regarding the inclusion of Itch data?
A: Patrick Burnett, Chief Medical Officer, explained that the expectation is for the label to be an expansion of the existing cream label, similar to clinical trials. The Itch data, important for symptom communication, are expected to be included, reflecting recent FDA approaches to topical treatments.
Q: How do you expect the atopic dermatitis market to evolve, especially with physicians' growing comfort with Opzelura, and where does ZORYVE cream stand out?
A: L. Todd Edwards highlighted the strategic advantages of ZORYVE cream in AD, including anticipated quick access and improvements in gross-to-net due to its line extension status, unique formulation, and tolerability. The comprehensive portfolio approach across three major dermatologic conditions is expected to simplify prescribing and patient management.
Q: What are your expectations for the gross-to-net evolution, and how do you see pricing strategies developing?
A: David Topper, Chief Financial Officer, stated that gross-to-net is expected to stabilize in the 50s by the end of the year for the psoriasis cream, with the foam following closely. Pricing strategies have been designed to maintain access within Medicare and Medicaid thresholds, with potential for moderate price increases aligned with inflation.
Q: Can you provide insights into the potential atopic dermatitis launch trajectory compared to Seb Derm and psoriasis?
A: Patrick Burnett noted that while the AD launch won't likely see the rapid uptake of Seb Derm due to existing competition, it could outperform the psoriasis launch due to established familiarity with ZORYVE among dermatologists and streamlined patient fulfillment processes.
Q: What is the status and expected timeline for establishing a partnership to enter the primary care setting for AD?
A: Patrick Burnett indicated that discussions are progressing well, with a partnership likely to be finalized around the AD launch or by the end of the year. The preferred partnership model would involve revenue sharing to align interests and optimize outcomes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
