Arcutis Biotherapeutics’ (ARQT) breakthroughs in the medical dermatology field have the company posting notable performance. The company’s product launch of Zoryve helped to drive Q3 earnings beyond expectations and the stock price up a remarkable 360% year-to-date. The demand for the treatment in various forms has the company on a strong trajectory, suggesting investors can expect sustained upside growth.
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Growing Demand for ZORYVE
Arcutis Biotherapeutics is an early commercial-stage medical dermatology company dedicated to forwarding innovation that addresses the needs of people challenged with immune-mediated dermatological diseases and conditions. Its commitment to resolving enduring patient complications in dermatology has led to an expanding portfolio that leverages its unique dermatology development platform.
The company maintains a strong development pipeline aimed at treating various inflammatory dermatological issues such as scalp and body psoriasis, atopic dermatitis, seborrheic dermatitis, and alopecia areata.
The demand for ZORYVE cream, a phosphodiesterase-4 inhibitor formulated for plaque psoriasis and atopic dermatitis treatments, has significantly grown, with over 304,000 prescriptions filled since its launch. The cream’s expanding Medicaid coverage and the increase in prescriptions indicate high levels of patient and physician satisfaction with the product.
What Else Is in the Pipeline?
Additionally, FDA approval of ZORYVE cream for mild to moderate atopic dermatitis broadened the product’s reach. ZORYVE foam, another approved product aimed at addressing seborrheic dermatitis, continues gaining acceptance, with over 168,000 prescriptions filled since its launch.
Further, the company submitted a supplemental new drug application (NDA) for ZORYVE foam’s use in treating scalp and body psoriasis. This move comes after successful results from Phase 3 and Phase 2b trials. The company is also making strides with products ARQ-255 and ARQ-234. Arcutis recently concluded enrollment for a Phase 1b study on ARQ-255 for alopecia areata treatment. At the same time, progress on ARQ-234 is ongoing, and the plan is to submit an Investigational New Drug Application (IND) in 2025.
The company has obtained two new U.S. patents related to ZORYVE and submitted a supplemental New Drug Application (NDA) for ZORYVE, which is used for the topical treatment of mild to moderate atopic dermatitis in children aged 2 to 5.
A Significant Increase in Revenue
Arcutis presented its financial results for the third quarter of 2024, reporting a significant increase in revenue at $44.8 million. This marked a drastic jump from the $8.1 million reported in the same period in 2023, primarily fueled by high demand for ZORYVE cream, ZORYVE foam, and GTN improvements.
However, the cost of sales also increased to $5.5 million compared to $1.2 million the year prior. On a brighter note, R&D expenses decreased to $19.5 million from $26.2 million due to reduced clinical development costs. SG&A expenses escalated to $58.8 million primarily due to marketing and sales expenses related to ZORYVE product launches.
Net losses stood at $41.5 million, a slight improvement from a loss of $44.8 million year-over-year. GAAP EPS of -$0.33 surpassed expectations by $0.09. As of the quarter’s end, the company reported a cash position of $331.2 million.
Stock Shows Impressive Performance
The stock has been on an upward trend, climbing over 430% in the past year. It trades at the high end of its 52-week price range of $2.28 – $13.60 and shows ongoing positive price momentum as it trades above major moving averages. With a P/S ratio of 11.05x, it trades at a premium to the healthcare sector average of 3.68x.
Analysts covering the company have been bullish on ARQT stock. For instance, Needham analyst Serge Belanger recently reiterated a Buy rating on the stock with an $18.00 price target, noting the company’s impressive financial performance and strategic growth plans. He anticipates further growth due to the recent launch of a new cream variant and expanded coverage through Medicaid and Medicare.
Arcutis Biotherapeutics is rated a Strong Buy overall, based on the recent recommendations of four analysts. Their average price target for ARQT stock is $19.00, representing a potential upside of 27.86% from current levels.
Arcutis in Review
Arcutis has shown impressive strides in the medical dermatology sector, notably with its product Zoryve, which has helped boost Q3 earnings and significantly increased the company’s stock price this year. Growing demand for Zoryve cream and foam, approval for treating various dermatological conditions, a strong pipeline for product development, and its commitment to innovation have all contributed to the company’s strong growth trajectory. The stock shows ongoing positive price momentum, and with a healthy cash reserve and strategic growth plans, the ARQT outlook appears promising.
