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Arcutis Biotherapeutics, Inc. (ARQT)·Q1 2025 Earnings Summary

Executive Summary

  • Net product revenue was $63.8M (+196% YoY), with total revenues $65.8M; EPS was -$0.20. Revenue was down 8% QoQ due to typical Q1 deductibles and insurance changes, excluding the non-recurring $4.1M product return reserve reduction in Q4; management highlighted unit demand growth of 10% QoQ and steady gross-to-net in the 50s .
  • Versus S&P Global consensus, Q1 revenue modestly beat ($65.8M actual vs $62.5M estimate*) and EPS essentially matched (-$0.20 actual vs -$0.21 estimate*)—a clean print with no major surprises; Q4 2024 also exceeded consensus revenue ($71.4M actual vs $60.5M estimate*) and EPS (-$0.09 actual vs -$0.26 estimate*) *.
  • Demand and coverage momentum: ZORYVE reached ~17k weekly scripts (4-week avg), captured 41% share of branded non-steroidal segment, ~80% of prescriptions reimbursed, and expanded Medicaid coverage to ~53% of state lives .
  • Catalysts: PDUFA for ZORYVE foam in scalp/body psoriasis on May 22, 2025 and sNDA for ZORYVE cream 0.05% in ages 2–5 with October 13, 2025 PDUFA; patent litigation with Padagis stayed, extending 30-month Hatch-Waxman stay .

What Went Well and What Went Wrong

  • What Went Well

    • Strong demand: unit demand grew 10% QoQ despite typical Q1 headwinds and near-flat sales (-2% excluding Q4’s non-recurring reserve reduction); “our sales were nearly flat, with only a 2% decline versus the prior quarter… prescription demand growth of 10%” .
    • Coverage and market shift: ~80% reimbursement steady state and growing Medicaid (53% of state lives), with ZORYVE capturing 41% share of branded non-steroidal segment; “ZORYVE is now covered… 80% reimbursed… 53% of state Medicaid lives… 41% share of segment” .
    • Pipeline/regulatory momentum: May 22 PDUFA for foam scalp/body psoriasis and Oct 13 PDUFA for cream 0.05% (ages 2–5); “highly optimistic about an on-time approval” .

  • What Went Wrong

    • Seasonality gross-to-net impact: Q1 gross-to-net temporarily higher due to deductible resets and insurance plan changes, compressing revenue despite demand growth .
    • Cost of sales step-up: $8.8M cost of sales vs $3.3M YoY, driven by catch-up amortization for a $10M AstraZeneca sales milestone and higher product revenues .
    • Elevated SG&A: $64.0M (+17% YoY) with management guiding Q2 SG&A higher for launch spend, normalizing in H2 2025 .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Revenues ($USD)$49.6M $71.4M $65.8M
Net Product Revenue ($USD)$21.6M $69.4M $63.8M
Other Revenue ($USD)$28.0M $2.0M $2.0M
Cost of Sales ($USD)$3.3M $6.9M $8.8M
Net Loss ($USD)$(35.4)M $(10.8)M $(25.1)M
Diluted EPS ($USD)$(0.32) $(0.09) $(0.20)

Segment/Product Breakdown (Q1 2025)

ProductQ1 2025 Revenue ($USD)
ZORYVE cream 0.3% (psoriasis)$23.4M
ZORYVE foam 0.3% (seborrheic dermatitis)$30.2M
ZORYVE cream 0.15% (atopic dermatitis)$10.2M
Other revenue (Huadong milestone)$2.0M

Key KPIs

KPIQ1 2024Q4 2024Q1 2025
Weekly scripts (4-week avg)—~16,000 ~17,000
Branded non-steroidal segment share (ZORYVE)——41% (most recent week)
Reimbursed prescriptions (% of total)—80% steady state ~80% steady state
Medicaid coverage (% of state lives)—~50% ~53%
QoQ demand growth—+44% Rx growth +10% demand

Estimates vs Actuals (S&P Global)

MetricQ1 2024 Estimate*Q1 2024 ActualQ4 2024 Estimate*Q4 2024 ActualQ1 2025 Estimate*Q1 2025 Actual
Revenue ($USD)$15.1M*$49.6M $60.5M*$71.4M $62.5M*$65.8M
EPS ($USD)$(0.73)*$(0.32) $(0.26)*$(0.09) $(0.21)*$(0.20)

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross-to-net (portfolio)FY 2025“Steady state in the 50s; Q1 higher end due to deductibles” “Remain in 50% range; Q1 higher then trend back to steady state” Maintained
SG&AQ2 2025“Increase in 2025 for launches and sales force” “Q2 SG&A higher for scalp/body psoriasis launch; then normalize in H2; carry stable into 2026” Raised near-term; normalize later
Cash breakevenFY 2026“Line of sight to cash break-even in 2026” “Cash breakeven in 2026 remains target” Maintained
Tariffs impactOngoingNot previously quantified“Immateral, <1 pp impact on cost of sales if applied to entire unit cost” New disclosure
Product catalysts2025PDUFA May 22 (foam); sNDA AD ages 2–5 in Q4 2025 PDUFA May 22 (foam); Oct 13 PDUFA (cream 0.05% ages 2–5) Date specified/confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Steroid-to-non-steroidal shiftEmphasis on converting from large steroid market; coverage improving Clear momentum; branded topicals up; ZORYVE #1 branded non-steroidal; 41% segment share Accelerating
Coverage/Access (PBM/Medicaid)Coverage strong; Medicaid ~1 in 2 beneficiaries; Medicare Part D discussions ongoing ~80% reimbursed steady state; Medicaid ~53% of state lives; continued expansion Improving
Seasonality/Gross-to-netQ1 gross-to-net higher due to deductibles; steady state low-50s Same message; GTN quickly trending back to steady state mid-50s; EPS/revenue resilient Stable, well-managed
Kowa PCP/Peds partnershipRamp began in Sept; minimal 2024 contribution expected Early positive indicators; continued PCP education; contribution expected in 2025 Building
RegulatoryFoam scalp/body psoriasis PDUFA May 22; cream 0.05% for AD kids anticipated Q4 2025 Foam PDUFA May 22; cream 0.05% Oct 13 PDUFA; optimism on approvals Near-term catalysts
IP/LitigationMarkman hearing scheduled; confidence in IP strength Padagis litigation stayed; 30-month stay extended; no settlement discussions De-risked timing/cost
Tariffs/MacroNot highlightedTariffs impact immaterial (<1 pp); manufacturing diversification US/Canada; API from Spain Low risk
R&D (ARQ-255, ARQ-234)ARQ-255 Phase 1b readout 1H25; ARQ-234 IND in 2025 ARQ-255 readout mid-2025; ARQ-234 IND 2H25 On track

Management Commentary

  • “Our sales were nearly flat, with only a 2% decline versus the prior quarter… Impressively, we delivered prescription demand growth of 10% compared to Q4” — Frank Watanabe, CEO .
  • “We’ve achieved approximately 80% reimbursed prescriptions… Medicaid coverage now ~53% of state lives… ZORYVE captured a 41% share of branded non-steroidals” — Todd Edwards, CCO .
  • “We are highly optimistic about an on-time approval” (ZORYVE foam scalp/body psoriasis, May 22) — Patrick Burnett, CMO .
  • “Tariff impact would be immaterial, estimated to be less than a 1 percentage point impact on cost of sales” — Latha Vairavan, CFO .
  • “We are confident in our legal position… litigation against Padagis was stayed… extends our 30-month stay” — Frank Watanabe .

Q&A Highlights

  • Seasonality and cadence: Expect modest summer seasonality but portfolio and new indications should offset; gross-to-net in 50% range trending back after Q1 resets .
  • Foam cannibalization: Management does not expect meaningful cannibalization of cream; foam expands utilization especially with scalp involvement (~50–80% of psoriasis patients have scalp involvement) .
  • PCP/Peds expansion: Kowa driving education and process reliability; early uptake signals are positive; contribution expected to build through 2025 .
  • Litigation clarity: Padagis stay extends Hatch-Waxman timing; quarterly status updates; company confident in IP—no settlement discussions .
  • ARQ-255 readout expectations: Phase 1b focused on safety, tolerability, PD/PK, early efficacy in 3-month window; white space for topical therapy in earlier-stage AA and maintenance after systemic JAKs .

Estimates Context

  • Q1 2025 beat/match: Revenue beat ($65.8M actual vs $62.5M estimate*), EPS matched (-$0.20 actual vs -$0.21 estimate*). Magnitude modest, consistent with management framing of a seasonally impacted but resilient quarter *.
  • Prior quarter beat: Q4 2024 beat on both revenue ($71.4M actual vs $60.5M estimate*) and EPS (-$0.09 actual vs -$0.26 estimate*), aided by strong demand and a non-recurring reserve reduction *.
  • Implications: Consensus for FY25 was noted as “comfortable” on Q4 call; quarterly distribution should reflect Q1 GTN headwinds, with growth resuming through the year .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • ZORYVE demand strength and coverage breadth underpin continued growth; the franchise is pulling share from steroids and leading branded non-steroidals—supporting sustained revenue momentum in 2025 .
  • Q1 printed a clean, seasonally affected quarter with demand up 10% QoQ and revenue near-flat sequentially excluding Q4’s non-recurring adjustment; execution mitigates typical Q1 pressure .
  • Near-term catalysts (May 22 foam scalp/body psoriasis, Oct 13 cream 0.05% ages 2–5) should expand the addressable market and enhance the “portfolio effect” across prescribers .
  • SG&A will step up in Q2 for the launch then normalize in H2; cash breakeven targeted in 2026, supported by scale and improving productivity—watch quarterly cash burn trend .
  • IP posture de-risked near-term with Padagis litigation stay and extended exclusivity timing; management reiterated confidence in patent strength .
  • PCP/Peds channel is an upside lever via Kowa; early signals are promising but ramp is iterative—monitor contribution disclosures in subsequent quarters .
  • Trading lens: The May PDUFA and segment share gains are likely stock catalysts; reported resilience to tariffs and strong coverage limits macro downside risk .