Arcutis Biotherapeutics (NASDAQ: ARQT): Time to Have Skin in This Game!

08 Oct Arcutis Biotherapeutics (NASDAQ: ARQT): Time to Have Skin in This Game!

Arcutis Biotherapeutics, Inc. (NASDAQ: ARQT) is a commercial-stage company creating a portfolio of targeted therapies to treat immune-mediated dermatological diseases and conditions.  

Arcutis Biotherapeutics, Inc. (NASDAQ: ARQT)

Market Cap: $2.47B; Current Share Price: 20.57 USD

ZORYVE® – Time to Have Skin in This Game!  

The Company has been on our radar for a while. On October 6, 2025, the U.S. Food and Drug Administration (FDA) approved its supplemental New Drug Application (sNDA) for ZORYVE® (roflumilast) cream 0.05% intended for the treatment of mild to moderate atopic dermatitis in children aged 2 to 5.  

The approval of ZORYVE cream 0.05% will be a new topical therapy option that can address the unmet needs of over 1.8 million children aged 2 to 5 with atopic dermatitis (AD) in the United States. The application was backed by positive efficacy and safety data from the INTEGUMENT-PED Phase 3 trial, the INTEGUMENT-OLE long-term extension study as well as a Phase 1 pharmacokinetic study. 

ZORYVE (roflumilast) Cream is a next generation topical PDE4 inhibitor. The “PDE4” enzyme is an intracellular enzyme that aids the production of pro-inflammatory mediators and inhibits the production of anti-inflammatory mediators. The FDA has previously approved other PDE4 for the treatment of plaque psoriasis. The Company’s topical roflumilast cream is a highly potent, selective PDE4 inhibitor that comes in a once-daily formulation. 

This is not the company’s first rodeo. Roflumilast cream 0.3% is already approved by the FDA for the treatment of topical plaque psoriasis, including intertriginous areas, in patients 6 years of age and older. In addition, Roflumilast cream 0.15% (ZORYVE®) is approved by the FDA for the topical treatment of mild to moderate AD in patients 6 years of age and older. 

Image Source: Company  

With the latest approval, Arcutis has scored its sixth FDA approval for ZORYVE® (roflumilast) portfolio. The Company is focused on expanding its reimbursement with 3 National pharmacy benefit managers (PBMs) covering ZORYVE Portfolio. Most importantly, the Company anticipates a cash flow breakeven in 2026. 

Substantial Opportunity Ahead! 

Atopic Dermatitis, also known as eczema, is a skin condition characterized by persistent, itchy, and inflamed skin, dry scaly patches, pruritus, skin thickening, discoloration, and in some cases cracking and oozing of fluids. It is a chronic condition that is common in children but can develop at any age. Though non-contagious, it can seriously impact quality of life as individuals with atopic dermatitis can develop food allergies, hay fever, and asthma. 

The disease usually manifests before the age of 5; however, it can often flare up and clear up in cycles, well into the adult years. In some cases, Atopic dermatitis is caused by a variation in the gene that is responsible for the skin’s ability to provide protection against factors like bacteria, allergens, and other environmental factors. The presence of bacteria Staphylococcus aureus on the skin can also disrupt the skin’s barrier function and can trigger an immune system response that causes skin inflammation.  

Image Source: Allergyasthmanetwork 

In the U.S alone, over 9.6 million children suffer from atopic dermatitis according to a study by Allergy & Asthma Network. Of these 50 percent of the children go on to develop asthma and 30 percent develop anxiety/depression due to Atopic Dermatitis. 

According to a report by Grandview Research market for atopic dermatitis is expected to reach $9.9 billion by 2030 from $6.4 billion in 2024, growing at a CAGR of 7.5%. owing to factors such as high prevalence, high unmet needs, and therapeutic innovations including biologics and small-molecule inhibitors. 

Leveraging a Cutting-Edge Platform 

The Company is leveraging its extensive novel drug development platform that inculcates learning from other fields of medicine, like inflammation and immunology, to address unmet patient needs in dermatology. Arcutis is using its formulation expertise for dermatological indications to create a portfolio of novel treatments, including the first steroid-free topical PDE4 inhibitor, which has been approved for the treatment of plaque psoriasis, including intertriginous psoriasis. 

Image Source: Company 

Arcutis has launched products in the market as part of its ZORYVE® (roflumilast) family. The portfolio, consisting of ZORYVE cream and ZORYVE foam, includes a 0.3% cream for plaque psoriasis, a 0.15% cream for atopic dermatitis, and a 0.3% foam for scalp and body psoriasis. ZORYVE is a once-daily steroid-free topical that provides rapid, reliable itch relief.  

The Company’s pipeline has clinical programs evaluating PDE4 and CD200R agonists (ARQ-234) as a targeted treatment for conditions such as Atopic Dermatitis, Seborrheic Dermatitis, Scalp Psoriasis, Chronic Hand Eczema and Vitiligo among others.  

Arcutis boasts of a strong executive and management team, having 50+ FDA-approved products between them, including medical dermatology’s foremost topical drug formulator. 

Image Source: Company  

Building Meaningful Collaborations 

The Company has entered into a licensing agreement with AstraZeneca for exclusive worldwide rights to all topical dermatological uses of roflumilast, including the exclusive rights to commercialization. Arcutis paid AstraZeneca a $10.0 million milestone payment in Q1,2025 in lieu of development and commercialization of roflumilast. 

Arcutis has also entered into a License Agreement with Jiangsu Hengrui Medicine Co., Ltd. of China (Hengrui) for an exclusive license to the active pharmaceutical ingredient in ARQ-252, a potent and highly selective inhibitor of janus kinase type 1 (JAK1) intended to be developed for the treatment of hand eczema and other inflammatory dermatoses. Under the agreement Arcutis has the exclusive right to commercialize any resulting products in United States, Canada, Europe, and Japan. 

Solid Growth and Strong Financials 

As per its Q2,2025 financial results, the Company reported the net product revenue for ZORYVE® (roflumilast) as $81.5 million, a 164% increase compared to Q2 of 2024, and a 28% increase compared to Q1 of 2025, owing to a growth in demand. 

ZORYVE surpassed 1 million prescriptions dispensed as per Frank Watanabe, president and chief executive officer. Additionally, U.S. demand for ZORYVE cream 0.3% in plaque psoriasis has been steadily increasing, with over 439,000 prescriptions filled since launch. ZORYVE cream 0.15% in atopic dermatitis is also witnessing a steady momentum with over 99,000 prescriptions filled since launch.  

In May 2025, Arcutis received FDA approval for its Supplemental NDA for ZORYVE foam for scalp and body psoriasis in adult and adolescents 12 years of age and older and commenced sales in June 2025. 

As of June 30, 2025, the Company’s cash, cash equivalents, restricted cash, and marketable securities were reported to be $191.1 million as against $228.6 million as of December 31, 2024. The Company also paid $10.0 million cash milestone payment to AstraZeneca for reaching a sales milestone of $250 million. 

Leaning Heavily on “ZORYVE” 

The Company has decided to halt the development of ARQ-255, a penetrating topical formulation of ivarmacitinib for the treatment of alopecia areata. The decision was based on the evaluation of results from the Phase 1b trial. The Company has deprioritized the program as the results did not meet the Company’s threshold for advancement. Clinical trials are fraught with risk and uncertainty; any setback or regulatory delays could negatively impact the Company. 

Despite its product launches and recent progress, Arcutis is likely to face some challenge in the future as its portfolio is heavily reliant on ZORYVE. This could have a serious impact on its revenues in case there is slowdown in adoption. Hurdles to reimbursement due to changes in medical coverage or introduction of better alternatives by competitors may also have an impact on its revenue. 

The dermatology and topical treatments market is highly competitive and saturated with already existing competitors. Moreover, new precision therapies and biologics are under development from well-established pharmaceutical firms as well as new entrants. This would have an impact on its plans to expand into newer indications.  

Ensuring that patients receive favorable reimbursement rates, while navigating the challenges posed by changing dynamics in reimbursement may prove challenging for Arcutis.  

Time to Scratch the Itch! 

The approval of ZORYVE cream 0.05% represents the sixth FDA approval for the ZORYVE portfolio in just over three years. 

The drug is supported by strong data from the pivotal phase 3 INTEGUMENT-PED trial. ZORYVE cream 0.05% rapidly improved the severity and extent of eczema (atopic dermatitis) signs and symptoms, with approximately 40% of children achieving a 75% improvement from baseline as measured by EASI, and more than one-third (35%) achieving a clinically meaningful improvement in itch intensity, both in only four weeks. Other benefits reported include limiting cumulative topical steroid exposure. The drug also demonstrated a favorable safety and tolerability profile. 

Arcutis has already been successful in obtaining FDA approval for ZORYVE in other indications without any adverse issues. The drug addresses a very high unmet need for steroid-free option for children with atopic dermatitis.  

The approval would help expand the eligible U.S population for ZORYVE in the under-6 pediatric segment, an age group that is marked by high prevalence of Atopic Dermatitis. ZORYVE is likely to follow its premium pricing strategy with the price expected to be around $1,000 for a 60g tube. Since it is a non-steroidal alternative with favorable safety/tolerability, it is well poised to be adopted and receive payor coverage. 

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Reference:

https://www.arcutis.com/arcutis-submits-supplemental-new-drug-application-for-zoryve-roflumilast-cream-0-3-to-expand-indication-for-treatment-of-plaque-psoriasis-in-children-ages-2-to-5/ 

https://www.arcutis.com/meaningful-innovation/ 

https://www.arcutis.com/arcutis-announces-second-quarter-2025-financial-results-and-provides-business-update/ 

https://www.mayoclinic.org/diseases-conditions/atopic-dermatitis-eczema/symptoms-causes/syc-20353273 

https://allergyasthmanetwork.org/what-is-eczema/eczema-statistics/ 

https://www.grandviewresearch.com/horizon/outlook/atopic-dermatitis-drugs-market/united-states 

https://www.arcutis.com/arcutis-announces-second-quarter-2025-financial-results-and-provides-business-update/ 

https://investors.arcutis.com/static-files/6e116321-f53c-4f92-8883-62dac79cb8ce 

https://www.drugpatentwatch.com/p/drug-price/drugname/ZORYVE