Executive Summary

Q4 2024 total revenue was $71.4M, with net product revenue of $69.4M (+55% q/q; +413% y/y), including a non‑recurring $4.1M reduction in product return reserves; underlying product revenue was ~$65.3M excluding the adjustment .
Net loss narrowed to ($10.8M), or ($0.09) per share, versus ($66.3M), or ($0.72) a year ago; cash and marketable securities totaled $228.6M at year‑end; net Q4 operating cash burn was ~$0.7M .
Management reiterated blended gross‑to‑net in the “50s” (seasonally higher in Q1), and remains “comfortable” with 2025 revenue consensus of ~$280–$285M; cash flow break‑even targeted in 2026, aided by a $100M debt prepayment in Oct 2024 that reduces 2025 interest expense .
Strategic catalysts: PDUFA May 22, 2025 for ZORYVE foam in scalp/body psoriasis; sNDA filed for ZORYVE cream 0.05% in ages 2–5 with anticipated Q4 2025 action; Medicaid coverage now ~1 in 2 beneficiaries; launch of OBJ awareness initiative in seb derm .

What Went Well and What Went Wrong

What Went Well

Strong top-line momentum: net product revenue grew 55% q/q to $69.4M (46% excluding the $4.1M non‑recurring item), driving total revenue of $71.4M; y/y growth 413% .
Access and GTN: blended gross‑to‑net reached steady state in the “50s,” supported by commercial and expanding government coverage; Medicaid access now covers ~1 in 2 beneficiaries, with no step edit in CA Medi‑Cal and favorable positioning in FL relative to Vtama .
Demand KPIs: ZORYVE weekly scripts reached ~16,000 in Q4 (+44% q/q; +334% y/y), with refill rates ~40% (psoriasis cream) and ~38% (foam); brand unaided awareness improved across indications .
Balance sheet de‑risking: $100M term‑loan prepayment to cut 2025 interest expense; year‑end cash/marketable securities of $228.6M and minimal Q4 operating cash burn (~$0.7M) .
Management confidence: “we are well positioned to achieve further strong revenue growth” and “line of sight to break‑even in 2026”; comfortable with 2025 revenue consensus .

What Went Wrong

Quality of revenue: Q4 included a non‑recurring $4.1M benefit from lower product return reserves; CFO emphasized excluding this item for forward calculations ($65.3M underlying product rev) .
Profitability still negative: Q4 net loss of ($10.8M) and SG&A of $57.6M remain elevated to support launches; management guided to higher SG&A in 2025 with incremental marketing and launch activities .
Q1 seasonality and coverage timing: GTN expected at the high end of the “50s” in Q1 due to deductible resets; Medicare Part D progress slowed by IRA operational impacts, pushing some access milestones into 2025 .
Legal overhang: upcoming Markman (claim construction) hearing in April 2025 in ongoing IP litigation creates uncertainty; management asserted confidence in IP strength but cannot provide details .

Financial Results

Consolidated P&L (Oldest → Newest)

Metric (USD)	Q4 2023	Q3 2024	Q4 2024
Total Revenues	$13.526M	$44.755M	$71.360M
Product Revenue, net	$13.526M	$44.755M	$69.360M
Other Revenue	$0	$0	$2.000M
Cost of Sales	$2.246M	$5.503M	$6.905M
R&D Expense	$23.775M	$19.501M	$14.480M
SG&A Expense	$48.674M	$58.817M	$57.607M
Net Loss	($66.284M)	($41.537M)	($10.788M)
Net Loss per Share	($0.72)	($0.33)	($0.09)

Notes: Q4 2024 product revenue includes a non‑recurring $4.1M reserve reduction; excluding this, product revenue ≈$65.3M .

Balance Sheet & Cash Flow Highlights

Metric	Q4 2023	Q4 2024
Cash & Cash Equivalents	$88.398M	$71.335M
Marketable Securities	$183.463M	$156.620M
Cash, Cash Equivalents, Restricted, Marketable	$272.8M	$228.6M
Long‑term Debt, net	$201.799M	$107.203M
Net Cash Used in Operating Activities (Q4)	N/A	$0.7M

KPIs and Operating Metrics

KPI	Q3 2024	Q4 2024	Commentary
Weekly Scripts (rolling)	~11,000	~16,000	+44% q/q; +334% y/y
Blended Gross‑to‑Net	Low 50s	Low 50s; steady state	Seasonally higher in Q1
Refill Rates	N/A	~40% PsO cream; ~38% foam	AD refills still early
Medicaid Coverage	~4 in 10 Americans (by state coverage)	~1 in 2 Medicaid beneficiaries	CA first‑line (no step edit)

Q4 2024 vs. Preannouncement

Metric	Preannounced (Jan)	Actual Q4 2024	Notes
Net Product Revenue	~$63M (unaudited)	$69.360M	Includes $4.1M non‑recurring adjustment
Net Product Revenue ex‑adjustment	N/A	~$65.3M	CFO: exclude for forward models

Q4 2024 vs. Street Estimates

Metric	Consensus (S&P Global)	Actual	Surprise
Revenue	Unavailable at time of analysis	$71.360M	N/A
EPS	Unavailable at time of analysis	($0.09)	N/A

S&P Global consensus data were unavailable due to API limits at the time of retrieval.

Guidance Changes

Metric	Period	Previous Guidance/Commentary	Current Guidance/Commentary	Change
Revenue outlook	FY 2025	N/A	“Comfortable” with ~$280–$285M consensus; emphasize intra‑year seasonality in Q1	New color (endorsed consensus)
Gross‑to‑Net	2025	Low 50s (approaching steady state)	Steady state in the “50s”; Q1 at higher end due to deductibles	Maintained with seasonal nuance
Cash Flow	2026	Break‑even target 2026 (prior commentary)	Reiterated break‑even in 2026	Maintained
SG&A	2025	Q4 to be roughly in line with Q3 (ex‑Kowa commission)	SG&A to increase in 2025 to support launches and marketing	Raised
Interest Expense	2025	N/A	Lower in 2025 due to $100M debt prepayment	Improved
Regulatory	2025	Foam scalp/body psoriasis PDUFA May 22, 2025	Unchanged; still May 22, 2025	Maintained
Regulatory (AD ages 2–5)	2025	sNDA planned for early 2025	sNDA submitted Dec 16, 2024; anticipated Q4 2025 action if accepted	Progressed

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Shift away from topical steroids	Highlighted opportunity; ZORYVE profile for chronic use	Positioning ZORYVE as #1 branded topical new Rx; steroid conversion key	Growing clinician push to reduce steroid reliance; strong ZORYVE fit	Strengthening
Payer access & GTN	GTN improved to high 50s; PBM coverage strong	Blended GTN low 50s; Medicaid wins in 7 states	GTN steady in 50s; Medicaid ~1 in 2 beneficiaries; Medicare Part D progressing (IRA delays)	Improving; Part D slower
Kowa co‑promote (PCP/Peds)	Announced (late July); meaningful 2025 contribution expected	Began mid‑Sept; 2024 immaterial; meaningful in 2025	2024 minimal; 2025 contribution expected; SG&A includes commissions	Building
Demand scripts & refills	Scripts near 10k weekly; refill ~38–40% emerging	~11k weekly scripts	~16k weekly; refills ~40% PsO cream/~38% foam	Accelerating
Regulatory catalysts	Foam sNDA filed; AD 2–5 sNDA planned; ARQ‑255 H1’25	Foam sNDA accepted; PDUFA May 2025	PDUFA May 22, 2025; AD 2–5 sNDA submitted; IND for ARQ‑234 in 2025	On track
Consumer marketing	Limited DTC; TV evaluated due to economics	N/A	OBJ partnership for seb derm awareness; low double‑digit millions spend	Expanding
Capital/Leverage	Debt amended; option to prepay/redraw	$100M prepay in Oct; interest down	Interest lower in 2025; cash break‑even in 2026; no equity raise expected	Improving
Legal/IP	N/A	N/A	Markman hearing in Apr 2025; confident in IP	New risk disclosure

Management Commentary

“We continued our strong sequential revenue growth… revenues of $71M, with $69M from the ZORYVE franchise… Blended gross‑to‑nets have reached steady state in the 50s…” – CEO Frank Watanabe .
“We have now secured Medicaid coverage in states that represent approximately 1 in 2 Medicaid beneficiaries… gross‑to‑net will be in the 50s throughout 2025.” – CCO Todd Edwards .
“Excluding [the] nonrecurring adjustment, we had net product revenues of $65.3 million for the fourth quarter… we believe that we will reach cash break-even in 2026.” – CFO David Topper .
“We anticipate the indication [for foam] to be inclusive of all psoriasis, but then also specifically calling out scalp…” – CMO Patrick Burnett .

Q&A Highlights

Revenue delta vs preannouncement: Q4 preannounced ~$63M; actual beat largely due to ~$4.1M reserve reduction; ~$1M related to Q4 proper; remainder conservative preannounce .
2025 outlook: Management “very comfortable” with ~$280–$285M full‑year consensus; cautioned Q1 GTN seasonality when distributing revenue across quarters .
Kowa contribution: 2024 immaterial; 2025 expected to be meaningful; commissions included in SG&A and paid only on generated scripts .
Medicare/Medicaid: Medicaid at ~1 in 2 beneficiaries with high‑quality access (e.g., CA no step edit); Medicare Part D progressing but IRA slowed PBM operations .
Foam in psoriasis: Expect broad indication inclusive of scalp; cannibalization of cream unlikely—growth expected for total ZORYVE psoriasis portfolio .
IP: Markman hearing set for April 2025; management confident in IP position, limited comment beyond public docket .

Estimates Context

Q4 2024: S&P Global consensus for revenue and EPS was unavailable at the time of this analysis due to data access limits; cannot compute beat/miss vs Street.
FY 2025: Management stated comfort with consensus revenue of ~$280–$285M and advised modeling seasonality with higher gross‑to‑net in Q1; implication is stable full‑year trajectory with intra‑quarter fluctuations .
Adjustments for models: Exclude the $4.1M non‑recurring reserve reversal from Q4 run‑rate; consider higher SG&A in 2025 for launches/marketing and lower interest expense post debt prepayment; maintain blended GTN in the 50s with Q1 at the high end .

Key Takeaways for Investors

Underlying demand is accelerating across the ZORYVE portfolio with scripts at ~16k weekly and refill rates approaching ~40%, supporting a strong 2025 setup despite Q1 seasonality .
Q4 revenue quality includes a non‑recurring $4.1M benefit; use ~$65.3M as a cleaner Q4 product revenue base for trend modeling .
Access remains a structural tailwind: commercial stable; Medicaid now ~50% beneficiary coverage with favorable policies; Medicare Part D expected to phase in through 2025 as IRA headwinds ease .
2025 catalyst path is clear: foam scalp/body psoriasis PDUFA on May 22, 2025 and potential AD label expansion to ages 2–5 in Q4 2025, which could broaden prescriber adoption and Kowa contribution .
Financial de‑risking: $100M debt prepayment reduces 2025 interest; mgmt targets cash break‑even in 2026 and does not anticipate equity financing for the existing business .
Competitive narrative: Physician sentiment is shifting away from chronic steroid use; ZORYVE’s efficacy, tolerability, and once‑daily convenience position it to take share across three major inflammatory dermatology indications .
Watch items: Q1 GTN/volume seasonality, SG&A increases for launch/marketing, Medicare Part D ramp timing, and April 2025 Markman hearing on IP .

Additional Relevant Press Releases (Q4 2024)

Dec 16, 2024: sNDA submitted for ZORYVE cream 0.05% for ages 2–5 in AD; pivotal data showed vIGA‑AD success 25.4% vs 10.7% vehicle at Week 4 and favorable tolerability; expected action in Q4 2025 if accepted .
Oct 18, 2024: Health Canada approval of ZORYVE foam for seborrheic dermatitis; U.S. foam sNDA for scalp/body psoriasis accepted with PDUFA May 22, 2025 .

Citations:

Q4 2024 8‑K press release and financials:
Q4 2024 earnings call transcript:
Q3 2024 8‑K and call:
Q2 2024 call:
Dec 16, 2024 sNDA press release:

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