Arcutis Biotherapeutics, Inc. Common Stock 2025 Q4 Earnings Call

Good afternoon, everyone, and thank you for joining us today to review our fourth quarter and full year 2025 financial results and business update. Slides for today's call are available on the investors section of the Arcutis website. Joining me on the call today are Frank Watanabe, President and CEO of Arcutis, Todd Edwards, Chief Commercial Officer, Patrick Burnett, Chief Medical Officer, and John Smither, Chief Financial Officer. I'd like to 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 it over to Frank to begin today's call.

Thanks, Brian, and thanks to everyone for joining us today. I want to start out today's call by reviewing some key highlights and achievements from 2025, a year that was characterized by tremendous growth and progress for Arcutis as we pursue our mission of serving individuals living with chronic inflammatory skin conditions. We'll then transition to Todd for a commercial update, and then Patrick for an R&D update, and Latha for a review of our financial results. In 2025, we made significant strides to solidify Arcutis' position as one of the industry's foremost leaders in delivering meaningful innovation in medical dermatology. Throughout the year, we saw robust net product sales revenue growth, steady prescription growth, and a strong market share growth across all of our approved indications and formulations of ZORYVE or topical rifamycin.

We are incredibly humbled by the increasing number of healthcare practitioners and patients who are placing their trust in ZORYVE as an innovative, safe, and effective treatment option for chronic inflammatory skin conditions, an important and welcome alternative to topical steroids. In 2025, we saw explosive revenue growth for ZORYVE, strengthening its position as the number one branded non-steroidal topical treatment across all of our approved indications: psoriasis, seborrheic dermatitis, and atopic dermatitis. There hasn't previously been a drug for chronic inflammatory conditions with the profile or the reach of ZORYVE, an advanced targeted topical that can be used safely and effectively for any duration, anywhere on the body, across multiple indications and age groups.

This unique profile of ZORYVE, and at a moment in time when there's increasing calls by both providers and patients for innovative, safe alternatives to topical steroids, has really fueled ZORYVE's robust commercial growth and success. In 2025, net product revenues grew to $372 million, representing a 123% year-on-year increase versus 2024. This revenue growth was driven by year-on-year doubling in total prescription volume and has further cemented our leadership position in the branded non-steroidal topical segment, where we now hold roughly 45% and a growing share of prescription volume across our approved indications.

ZORYVE's commercial growth in 2025 was bolstered by FDA approvals of ZORYVE foam 0.3% for patients with psoriasis of the scalp and body 12 years of age and older, as well as the approval of ZORYVE Cream 0.05 for the treatment of atopic dermatitis in children's ages 2 to 5 years of age. These approvals, which mark our fifth and sixth ZORYVE approvals respectively, demonstrate our commitment to ensuring that we can bring the benefits of ZORYVE to as broad a group of patients with psoriasis, sebderm, and AD as possible. The approval of ZORYVE Foam's expanded indication offered an important new option for individuals who struggle with psoriasis of the scalp and other sensitive areas.

These patients now have a formulation that can be used anywhere on their body, affording them a new level of convenience to manage their chronic skin condition. We're particularly proud of the approval of ZORYVE Cream 0.05% in young children with AD, given the frequent early onset of this disease and the meaningful number of patients in this age group. For far too long, there has been a significant unmet need, and we are proud now to be in a position to address it with ZORYVE. In 2025, we also submitted an sNDA for ZORYVE Cream 0.3% for psoriasis in children ages two to five, with a target action date of June 29th, excuse me, of this year.

If approved, this will mark another critical step in serving the unmet needs of this pediatric demographic and their parents and caregivers. On the clinical development front, in 2025, we completed enrollment in the phase 2 INTEGUMENT-INFANT trial, evaluating ZORYVE Cream 0.05 in infants ages 3 to 24 months with atopic dermatitis, and earlier this month, we were delighted to report positive top-line results from that study, which Patrick will review later on call. We're now preparing to submit this data to the FDA for a further label expansion. This is another important milestone as we work diligently to ensure that we can serve this youngest and most vulnerable population, who have nearly no FDA-approved treatment options.

In 2025, we also initiated phase II proof-of-concept studies with ZORYVE Foam 0.3% in vitiligo and hidradenitis suppurativa, or HS, marking an important step as we explore potential new indications that would enable us to expand the benefits of ZORYVE to additional individuals in need of effective treatment options, and further maximize the pipeline in a molecule opportunity that ZORYVE represents. Last year, we submitted an IND application for ARQ-234, our novel biologic with best-in-class potential, to address a large unmet need in atopic dermatitis as we look to expand our pipeline and extend our mission to deliver meaningful innovation to patients with chronic inflammatory skin conditions. In short, we have had a tremendous year of progress, and we are confident that these accomplishments have set the stage for a successful 2026 and well beyond.

None of this, of course, would be possible without the incredible talent, hard work, and persistence of the Arcutis team. I'd like to take a moment to acknowledge and thank each and every one of our team members for their deep and continued dedication to our company's mission, and above all, to the patients that we serve. Moving to slide 6, to frame the rest of today's discussion, I'd like to recap the 3-pillar corporate strategy that we introduced a few months ago to describe how we will sustain both near and long-term growth for Arcutis. We have already made progress across all 3 of these pillars. On the growth front, I just mentioned the compelling data from the INTEGUMENT-INFANT trial and our plans to pursue a label expansion based on that data.

As you'll hear more from Todd in just a minute, we've recently announced an expansion of our dermatology specialty sales force to drive further ZORYVE growth, as well as our decision to take over promotion of ZORYVE to primary care physicians and pediatricians. In terms of the expand pillar, as Patrick will expound on shortly, we continue to progress our Phase 2 POCs in HS and vitiligo, and look forward to sharing data from these trials later this year or early next, and we are evaluating additional POC studies for other diseases. Finally, we look forward to enrolling the first patients in the Phase 1 study of ARQ-234 shortly, and eventually sharing data from that study with the investment community. These concrete steps in realizing our strategy are evidence of our dedicated and disciplined strategic approach to ensuring Arcutis is well-positioned for both the near and long-term success.

Before turning the call over to Todd and Latha to review our fourth quarter results in more detail, I want to give an update on some key points about the revenue guidance that we gave during our Investor Day in November of last year. First, we are raising our 2026 full year net product revenue guidance range from originally the $455 million-$470 million, to now $480 million-$495 million, to reflect both the strong momentum for ZORYVE as demonstrated by our fourth quarter results, and also the investments that we continue to make in the franchise that the team will detail further today. We will evaluate our revenue guidance throughout the year and may update that when appropriate.

Not only did we achieve positive cash flow in Q4 as promised, we are reaffirming that we will maintain positive cash flow on a quarterly basis throughout 2026, even as we continue to increase our investment in ZORYVE's growth and our pipeline. With that, I'll hand the call over to Todd for a Q4 commercial update.

Thank you, Frank. Good afternoon, everyone. Turning to slide 8, as Frank noted, the strong momentum of ZORYVE's growth continued in the final quarter of 2025, where we generated sustained revenue growth driven by the increased adoption of ZORYVE across our approved indications. In the fourth quarter, net product revenues were $127.5 million. This reflects 84% year-over-year growth and 29% sequential growth from the third quarter of 2025. This sequential revenue growth was primarily fueled by sustained increases in prescription volume of 19%. This reflects the increasing confidence clinicians and patients have in ZORYVE as a trusted treatment across a broad spectrum of inflammatory diseases.