ARQT

Arcutis has executed a textbook commercial ramp on its ZORYVE (roflumilast) PDE4 franchise. FY2025 revenue of $376M is up 91.3% YoY off a $197M base, and the loss profile has collapsed from a $140M net loss in FY2024 to just -$16.1M in FY2025 — a 88.5% improvement that puts the company on the doorstep of GAAP profitability. Operating margin moved from deeply negative to -3.3%, and operating cash flow is essentially at break-even at -$5.6M (vs. -$112M run-rates in prior years). With R&D held flat at $77.1M while revenue nearly doubled, operating leverage is unmistakable and the MD&A backs it up: a widening label footprint (psoriasis down to age 6, foam for seb derm and scalp/body psoriasis, cream 0.15% and 0.05% for atopic dermatitis 2-5yo, Canada launches) is doing the heavy lifting.

The pipeline of near-term label expansions reads like a catalyst calendar. The sNDA for ZORYVE cream 0.3% in plaque psoriasis down to age 2 has a PDUFA date of June 29, 2026 — within days of today's date. February 2026 INTEGUMENT-INFANT topline was positive, with a Q2 2026 sNDA filing planned to push atopic dermatitis indication down to infants as young as 3 months. Canada is mirroring the U.S. expansion. The Padagis ANDA generic challenge is meaningfully de-risked: the case is stayed as of April 2025, and the 30-month stay (originally Aug 14, 2026) is extended day-for-day during the stay, pushing potential generic entry materially further out.