Arcutis at H.C. Wainwright: Strategic Growth and Pipeline Development

On Wednesday, 10 September 2025, Arcutis Biotherapeutics (NASDAQ:ARQT) presented at the H.C. Wainwright 27th Annual Global Investment Conference, offering insights into its strategic plans and financial performance. The discussion, led by CFO Latha Vairavan, highlighted robust sales growth and future opportunities, despite anticipated seasonal challenges. The company’s focus on expanding market reach and advancing its pipeline was evident.

Key Takeaways

• Arcutis reported a 28% increase in Q2 net sales compared to Q1.
• The launch of ZORYVE 0.3% foam for psoriasis in July contributed to a 14% quarter-over-quarter growth.
• A significant PDUFA decision for ZORYVE 0.05% cream is expected to impact Q4 positively.
• Arcutis aims for cash flow positivity by 2026, focusing on lifecycle management and pipeline advancement.
• The company holds over 80% commercial access coverage across its indications.

Financial Results

• Q2 net sales rose by 28% from Q1, driven by the successful launch of ZORYVE 0.3% foam.
• Despite expected Q3 seasonality, a 14% growth in prescriptions was achieved.
• Q4 is anticipated to be impactful due to weather-related skin conditions and insurance deductible resets.
• The company targets cash flow positivity by 2026, supported by lifecycle management and pipeline asset development.

Operational Updates

• ZORYVE 0.3% foam for scalp and body psoriasis was launched in July.
• A PDUFA decision for ZORYVE 0.05% cream for young children is awaited in August.
• The company is conducting an infant study for atopic dermatitis, with results expected in 2026.
• Arcutis has achieved over 80% commercial access coverage for its therapies.

Future Outlook

• Arcutis plans to deepen prescriber coverage and position ZORYVE as a foundational dermatology therapy.
• The company is shifting prescriptions from topical corticosteroids to ZORYVE.
• Lifecycle management opportunities are being explored in hidradenitis suppurativa and vitiligo.
• Arcutis is focusing on business development with validated dermatology inflammation targets at phase two.

Q&A Highlights

• ZORYVE is positioned to replace steroids as a primary treatment, with a 40% share in the non-steroidal market.
• Payers support the shift from biologics due to cost benefits.
• The company remains committed to responsible pricing across all indications.

Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - H.C. Wainwright 27th Annual Global Investment Conference:

Doug Tsao, Senior Analyst, HC Wainwright: Okay, welcome everybody. I’m Doug Tsao, Senior Analyst at HC Wainwright. We are thrilled to have Arcutis Biotherapeutics with us for the first time at our conference, represented by the company’s CFO, Latha Vairavan. Maybe as a starting point, you know, Arcutis is a commercial company and one that’s enjoyed great success so far. You reported strong sales growth in Q2, with net sales up 28% versus the first quarter. You did note there was some expected seasonality coming into the third quarter. Maybe just sort of help provide investors with a framework both for the third quarter as well as the rest of 2025, considering both the momentum that you’ve experienced, right? Further label addition, additions to the label and indications, as well as some of these seasonal dynamics.

Latha Vairavan, CFO, Arcutis Biotherapeutics: Thank you for having me, Doug. Let me start with the comment that we made about seasonality in Q2. There is always seasonality in Q3 due to the weather. Patients see alleviation in their symptoms because of the weather. At the same time, physicians and patients also go on vacation, so there are less visits to the doctor. There is expected seasonality. We expected there to be growth, but not as much growth as Q1 and Q2, and we expected absolute growth in net sales. The scripts to date we’ve seen is we’ve seen quarter over quarter growth of about 14% despite the seasonality. Part of that attributes to the second part of your question related to the launches. We got approval for scalp and body psoriasis, where you use the foam, the 0.3% foam in June and launched that in July.

We see the uplift in the foam due to the scalp and body psoriasis launch. That’s helping despite having the seasonality that we say that we’re seeing the volume growth. That’s been great. We’re expecting a PDUFA decision in August for atopic dermatitis, the 0.05% cream for children of ages two to five. That’ll help fuel momentum in Q4. Normally Q4 is one of our most impactful quarters. We have the most volume growth. The weather creates some of the skin inflammation. Patients go back to the doctor. Patients also want to exhaust their deductible and make sure that they get their refill before the end of the year, before the deductible is reset for the beginning of 2026.

Doug Tsao, Senior Analyst, HC Wainwright: As you noted, you did launch the foam, the 0.3% foam for scalp and body psoriasis, and that was in June. We now have sort of a couple of months of experience. Any early observations on how that launch is progressing? Obviously, many physicians already had experience with ZORYVE and were pretty familiar with the franchise. For, you know, is there, you know, I’d be curious the experience with your sort of already your established user base and the opportunity to expand. Has it helped expand the prescriber base further?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Our top decile derms are about 13,000 and we have good breadth of coverage. It is not to expand the derm prescriber base per se, but really to think of depth of coverage, between the doctors to prescribe more. First, the 0.3% foam is for both seborrheic dermatitis and scalp and body. It is difficult for us right now to parse out the sales between the two. We need more longitudinal data to be able to give you that color. We will, as we gather more scripts and data, be able to provide the source of the sales. We see that the cream, as you see, is doing—0.3% cream is doing well in psoriasis. You see a lift in the foam, the 0.3% foam for scalp and body.

Together, patients have an option to treat their psoriasis between the cream and the foam for both what’s in the body and what’s in the scalp and body. About 50% of individuals have hair involvement in their treatment. Together, I think we’ve presented a full portfolio of products to the derm. The intent is now for them to be able to write for any dermatoses and tap into the depth. We also showed a slide in our Q2 earnings that if a prescriber writes for one indication, it’s not a linear extrapolation when they write for two or three. When they write for the second one, it’s threefold. When they write for the third one, it’s like tenfold. Having more of the indications under our belt helps that trajectory.

Doug Tsao, Senior Analyst, HC Wainwright: I guess, you know, when you think about that curve, it’s obviously a mix of physicians, right? You know, meaning some who are probably even above that number, right? You know, in terms of the scripts and then some that are still at the lower end. I’m just curious, you know, if you have a sense of what it takes to sometimes get those docs who maybe are sort of starting to write more scripts as you have more indications and presentations available, but not necessarily fully embracing it in the same way that others are.

Latha Vairavan, CFO, Arcutis Biotherapeutics: That’s more best suited for our marketing team, but I’ll try to channel our Chief Commercial Officer. I would say there’s two parts. We’re a highly promotionally sensitive product. Our reps and their selling mechanism help with reminding derms to treat severe flares with steroids and to use ZORYVE as a foundational therapy and to think of it for all the dermatoses. Our great access, like we talked about with having commercial access with 80%+ coverage across the three indications, has been very helpful in fostering that discussion because there was maybe a perceived issue as to whether we have full access in commercial as we’ve started to add all the products and launches under our belt. Now with all the coverage, it’s been very easy to get physicians on board as well.

Doug Tsao, Senior Analyst, HC Wainwright: Maybe it’s just a follow-up to the scalp and body launch. I’m just curious if you have any data showing whether, to the extent that you’re seeing scripts, are they second scripts for a patient who might already be on the cream, but they had some hair involvement, and so now let’s give you the foam to help you? Is it sort of patients who were naive to ZORYVE are attracting, and is that because, you know, maybe they mostly had, you know, sort of, that’s where their disease most affected them and that’s the most appropriate?

Latha Vairavan, CFO, Arcutis Biotherapeutics: We don’t have that full data set yet as to whether if they’re getting a cream. It’s hard through our IQVIA data to track individual patients. We have heard from physicians that if a patient needed it for hard-to-treat areas, they will get the cream and for hair involvement, they will get the foam.

Doug Tsao, Senior Analyst, HC Wainwright: There are patients who are getting both presentations?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Yes, they can.

Doug Tsao, Senior Analyst, HC Wainwright: Okay, you know, we do have an upcoming PDUFA decision for the cream, the 0.05%, in children. You know, how should we be thinking about the opportunity there and how ZORYVE fits into the sort of broader treatment landscape?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Children with atopic dermatitis at the age of two to five see both dermatologists and pediatricians. It’s a mix. It’s about 50-50. We’ve heard from clinicians, nurse practitioners, and pediatric derms that they are, as Frank would say, as he’s been on the road, eagerly waiting to be able to prescribe the ZORYVE Cream 0.05% for children with this disease state. The onset of this disease comes early, so early in the age. We have the ZORYVE Cream 0.15% for six and above. Now that having the two to five-year-old gives us the full coverage of being able to treat anyone with atopic dermatitis. We also have an infant study in place for three to 24-month-olds, which should be completing enrollment. We’ll read out data sometime in 2026.

Between our COA partnership to be able to target pediatricians and our derms to speak to pediatric derms, I think we have a good breadth and depth of coverage for the ZORYVE Cream 0.05%.

Doug Tsao, Senior Analyst, HC Wainwright: When you go into these sort of lower-age patients, how much does it expand the opportunity, especially for like in the atopic dermatitis?

Latha Vairavan, CFO, Arcutis Biotherapeutics: The atopic dermatitis, the key word expands as parents being decision makers are ready to walk away from steroids and don’t want to apply steroids to their children. It really focuses on the steroidal shift. The opportunities, we’ve said there are about 2 million patients within the age of two to five with atopic dermatitis. That is the available time to us for the ZORYVE Cream 0.05%.

Doug Tsao, Senior Analyst, HC Wainwright: Do you think that the 0.05 will have sort of a similar launch trajectory as some of the other, you know, sort of indication and presentation launches that you’ve done? You know, what are your sort of expectations or how should we think about that? I mean, you know, it’s hard for me to imagine. I can’t remember a company that sort of had so many sort of sequential launches in such a short amount of time. It’s sometimes hard externally to parse out what’s contributing and driving what.

Latha Vairavan, CFO, Arcutis Biotherapeutics: The different SKUs help you a little bit. That’s one way to look at it. I wouldn’t equate the 0.05% to match the 0.3% foam launch. That was almost a vertical trajectory, and there was a lot of pent-up demand and an unmet need in an area where there wasn’t available treatment. We think the 0.05%, like the remainder of our launches, will follow a similar trajectory to what AD followed. I would think of the 0.15% cream as a good analog.

Doug Tsao, Senior Analyst, HC Wainwright: Okay. You know, maybe stepping back, one of the sort of conversions from topical corticosteroids is maybe the central sort of focus of your sort of commercial strategy or one of them, right?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Yes.

Doug Tsao, Senior Analyst, HC Wainwright: In terms of maximizing the opportunity, maybe provide a perspective on how far you are in that. How do we think about, for those who already are heavy adopters of ZORYVE, are they really sort of limiting their use of TCS, or even for some of your high prescribers, is there room to go further?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Let’s break this up into two pieces. There were 16 million steroids prescriptions written in 2024 and 1 million prescriptions written for non-steroidal topicals. Based on that ratio, there’s room to go for the entire non-steroidal market to move away from steroids. We showed in our Q1 earnings call that the non-steroidal market had grown about 2 points year over year in 2024 versus 2023. That’s driven by the advent of all of the non-steroidal topicals that have entered the market. We have a 40% share in that space and we’re the leading prescribed topical. Piecing that, we’ve done well and made a dent in our space, a very big dent, and there’s room to go on what’s left on the 16 million topicals. The next piece is, I think the part of your question is, you know, how far is there to go?

The first strategy for us was to make a presence for ZORYVE, launch ZORYVE, give it the brand identity with all the indications. The next phase is to get physicians to think through, anytime they think of the dermatoses, ZORYVE is a treatment and think of steroids for severe flares and the foundational ongoing treatment to be with ZORYVE. That’s a process that we have to take away a 30-year habit and that’s an ease and a habit of ease that they’re used to doing. Those that are believers have done that and then we’re working through the second set of physicians who need to become the believers.

The next piece is the paradigm has shifted, I think, in the last, maybe I’ll say three to six months, with a lot of, and I wish Patrick was here to talk about, at all of the medical conventions and conferences, the podium, everyone has gotten to speak about the impact of steroids, what it does to your longer-term health or diabetes or reproductive impact or to your skin in general. That, and, recently there was the Society of Dermatological Physician Assistants who also came out talking about the impact of steroids. There is an overhaul in the area about steroids that didn’t exist probably last year that’s helping lift the tide on making that shift.

Doug Tsao, Senior Analyst, HC Wainwright: I’m just curious from your perspective, from the other part, would be sort of reimbursement, right? How far do you think it’s realistic that payers are willing to sort of let a product like ZORYVE, you know, sort of take over in the place of steroids, which, you know, many are very cheap?

Latha Vairavan, CFO, Arcutis Biotherapeutics: I think the payers have been on board, that we’ve proven by the coverage we have and the contracts we have in place with the large PBMs. They’ll also see that, on top of shifting out of steroids, it’s also an adjuvant or you can also shift from biologics or systemic use. That’s cost-beneficial to the payers as well.

Doug Tsao, Senior Analyst, HC Wainwright: I think maybe shifting gears a little bit, you recently outlined your plans for sort of lifecycle management beyond the currently approved indications, including the phase two studies in hidradenitis suppurativa (HS) and vitiligo. Can you maybe talk a little bit more both about those individual studies as well as your broader approach in lifecycle management?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Okay. We outlined in the call that there are about 40+ case studies where patients have used, and not physicians have used, ZORYVE. As we’ve said, we don’t promote, but derms do use our product off-label. When they’ve used ZORYVE in these various disease states, they’ve found results. Those 40+ case studies have led us to believe to target the key ones. The ones we’ve chosen for now are hidradenitis suppurativa (HS) and vitiligo. We have a collaborative study to do proof of concept to decide whether we want to pursue them in a registrational phase three study. We’ll take into account the result of the collaborative study, the commercial viability, and then decide which asset, which indication, we move forward in a registrational stage. That’s the early stages of the lifecycle management we’re in.

Because ZORYVE is safe, tolerable, and proven out, and being very successful, the model is to think about such a pipeline of product where else we can use ZORYVE. We’re thinking through all those targets. That’s where we’ve started. We’ll give a lot more detail and color in an upcoming investor day. We said we’ll have one in Q4.

Doug Tsao, Senior Analyst, HC Wainwright: I guess I’m just curious, some of the case studies that you sort of cited were in fairly rare indications. Do you think about the opportunity to develop even more, because you’ve already done a lot, right, presentations, as well as potentially strengths that might afford you an opportunity to sort of set more pricing that’s more appropriate for rare disease, which is just different than when you’re thinking about indications like psoriasis and atopic dermatitis.

Latha Vairavan, CFO, Arcutis Biotherapeutics: The foundation of Arcutis and ZORYVE has been to have responsible pricing. That’s how we started the WAC for the first 0.3% cream ZORYVE. If it is ZORYVE, the intent is not to shift the price for the rare disease. It is to treat the unmet need of patients and dermatoses. If ZORYVE can afford and be able to advance in all those indications and we can present the commercial opportunity, I don’t see us doing it by calling out specific indications with different WACs. We have uniform pricing and the intent is to stay that way.

Doug Tsao, Senior Analyst, HC Wainwright: One of the other things that I think Frank talked a little bit about more on the Q2 call was like sort of business development, right?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Yes.

Doug Tsao, Senior Analyst, HC Wainwright: External innovation. Are there certain stages of assets that you’re interested in, and what types of things best fit your portfolio?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Obviously, we’re not a development company, so sort of validated targets fit our portfolio. Step one. Step two, it’s in the dermatology inflammation space. We are probably not leaning towards a topical because ZORYVE is a great topical as it is, so probably not, but not ruling it out. Definitely not a phase three and beyond if it was outside of the, being the CFO, outside the cost quantum that we think is viable and not competing with sort of big pharma or large cap to go get an asset. As Frank says, we’re very selective and it’s not a must-do. It’s a nice-to-have and we’re very stringent on all the parameters and looking for the right asset to fit into what our R&D and operations teams can advance.

They have a great capability, as you’ve noticed with all the phase threes that we’ve advanced in the commercial execution that we’ve had.

Doug Tsao, Senior Analyst, HC Wainwright: Is there any thought, not in the near term, just given how much work the salesforce already has, to potentially at some point think about bringing in another commercial asset to have that second product in the bag, so to speak?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Never say never. It depends on that it fits into the bag and that we can get synergies out of it, then we would think it through. That hasn’t been top of mind. It’s been more in the development and advancement stage.

Doug Tsao, Senior Analyst, HC Wainwright: Right now, just to go back, when you think about development stage assets, it sounds like phase two would be kind of the sweet spot for what you’re thinking about?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Yeah, that’s a fair representation.

Doug Tsao, Senior Analyst, HC Wainwright: Okay, you know, you’ve talked about being cash flow break even next year. You know, how do you, once you achieve that milestone, which is something that is somewhat rare in biotech, you know, how do you then think about sort of your allocation of capital, and is it the plan to sort of get there and stay there?

Latha Vairavan, CFO, Arcutis Biotherapeutics: We will be cash flow positive in 2026. The plan is to get there and stay there. The cash flow positivity contemplates advancing the lifecycle management for ZORYVE, advancing our pipeline asset of 234. The foundation of our balance sheet is ZORYVE and ZORYVE’s trajectory. The intent of the capital allocation strategy first is to foster ZORYVE’s growth, to stay cash flow positive, and to finance the projects that we just talked about with LCM. In the near term, it is to generate the capital to continue to advance ZORYVE. In the longer term, we can discuss returning that cash to shareholders in the appropriate manner.

Doug Tsao, Senior Analyst, HC Wainwright: Where does business development fall into that priority, and how do you think about that?

Latha Vairavan, CFO, Arcutis Biotherapeutics: Like we’ve said, we don’t need to come to the capital market and status quo, and we expect to be cash flow positive in 2026. We’re very clear in that the business development is a, we would have to think through the right capital allocation strategy and bring in capital depending on the quantum to finance the BD.

Doug Tsao, Senior Analyst, HC Wainwright: Okay. When you talk about, you would potentially come to the capital markets for the right opportunity, from a business development standpoint?

Latha Vairavan, CFO, Arcutis Biotherapeutics: We would seek capital for the BD depending on what source that is.

Doug Tsao, Senior Analyst, HC Wainwright: Okay. Fair enough. I think we’re out of time. Latha, thank you so much.

Latha Vairavan, CFO, Arcutis Biotherapeutics: Thank you for having me.

Doug Tsao, Senior Analyst, HC Wainwright: We look forward to hearing from you with the three Q earnings. It sounds like an R&D day is upcoming as well.

Latha Vairavan, CFO, Arcutis Biotherapeutics: That’s right.

Doug Tsao, Senior Analyst, HC Wainwright: An investor meeting.

Latha Vairavan, CFO, Arcutis Biotherapeutics: Investor day is upcoming.

Doug Tsao, Senior Analyst, HC Wainwright: Investor day.

Latha Vairavan, CFO, Arcutis Biotherapeutics: All right.

Doug Tsao, Senior Analyst, HC Wainwright: Thank you so much.

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