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Arcutis Biotherapeutics (ARQT)
NASDAQ:ARQT
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Arcutis Biotherapeutics
(NASDAQ:ARQT)
57Neutral
Positive Factors
Patent Litigation
The agreement of joint stipulation between the company and Padagis to the ongoing patent litigation is viewed as a win for Arcutis and should provide confidence about the company's runway of exclusivity.
Sales Growth
ARQT is coming off a transformational 2024 and is anticipated to continue its sales growth momentum into 2025.
Negative Factors
Market Competition
Key risks include commercial success is not assured since dermatology remains a highly competitive segment, and product concentration risk since Zoryve is the company's only commercial asset.
Prescription Performance
Prescriptions for the Zoryve franchise were down likely due to tough comps and a general softness in the I&I category.
Arcutis Biotherapeutics (ARQT) vs. S&P 500 (SPY)
Market Cap
$1.73B
Dividend YieldN/A
Average Volume (3M)2.69M
Price to Earnings (P/E)―
Beta (1Y)1.80
Revenue Growth229.74%
EPS Growth70.23%
CountryUS
Employees342
SectorHealthcare
Sector Strength74
IndustryBiotechnology
Share Statistics
EPS (TTM)-1.16
Shares Outstanding118,638,240
10 Day Avg. Volume2,740,602
30 Day Avg. Volume2,690,580
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)10.27
Price to Cash Flow (P/CF)-674.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.00Price Target Upside41.37% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Arcutis Biotherapeutics Business Overview & Revenue Model
Company DescriptionArcutis Biotherapeutics, Inc., a biopharmaceutical company, focuses on developing and commercializing treatments for dermatological diseases. Its lead product candidate is ARQ-151, a topical roflumilast cream that has completed Phase III clinical trials for the treatment of plaque psoriasis and atopic dermatitis. The company is also developing ARQ-154, a topical foam formulation of roflumilast for the treatment of seborrheic dermatitis and scalp psoriasis; ARQ-252, a selective topical janus kinase type 1 inhibitor for hand eczema and vitiligo; and ARQ-255, a topical formulation of ARQ-252 designed to reach deeper into the skin in order to treat alopecia areata. The company was formerly known as Arcutis, Inc. and changed its name to Arcutis Biotherapeutics, Inc. in October 2019. Arcutis Biotherapeutics, Inc. was incorporated in 2016 and is headquartered in Westlake Village, California.
How the Company Makes MoneyArcutis Biotherapeutics makes money primarily through the research, development, and commercialization of its dermatological therapies. The company's revenue model is centered around the successful approval and market launch of its proprietary drugs. Key revenue streams include product sales, licensing agreements, and potential collaborations with other biopharmaceutical companies for co-development or distribution. Significant factors contributing to its earnings involve strategic partnerships with pharmaceutical companies that can aid in expanding market reach and accelerating product availability. Additionally, Arcutis may secure funding through investor capital to support its research and development activities.
Arcutis Biotherapeutics Financial Statement Overview
Summary
Arcutis Biotherapeutics demonstrates strong revenue growth but struggles with profitability and cash flow sustainability. While leveraging has improved, the company faces significant challenges in achieving positive net income and free cash flow, which are crucial for long-term viability.Income Statement
Arcutis Biotherapeutics has shown significant revenue growth with a jump from $3.7M in 2022 to $196.5M in 2024, indicating strong top-line expansion. However, the company remains unprofitable with consistent negative net income and EBIT margins, which reflects challenges in achieving operational efficiency and profitability.45
Neutral
Balance Sheet
The balance sheet indicates a stable financial position with a debt-to-equity ratio decreasing from 0.97 in 2022 to 0.02 in 2024, showing reduced leverage. The equity ratio remains moderate, but the negative net income impacts return on equity, which continues to be negative, highlighting profitability concerns.55
Neutral
Cash Flow
The cash flow statement reveals negative operating cash flow, suggestive of operational challenges. While the company has improved free cash flow slightly from 2023 to 2024, it remains negative, indicating ongoing cash flow issues despite financing activities.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 196.54M | 59.61M | 3.69M | 0.00 | 0.00 | Gross Profit |
| 177.41M | 54.62M | 2.93M | -763.00K | -455.00K | EBIT |
| -128.40M | -241.10M | -301.63M | -206.53M | -136.65M | EBITDA |
| -109.63M | -227.43M | -294.55M | -205.59M | -135.22M | Net Income Common Stockholders |
| -140.04M | -262.14M | -321.29M | -205.90M | -135.68M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 227.96M | 271.86M | 409.59M | 387.06M | 284.44M | Total Assets |
| 348.89M | 341.37M | 449.27M | 408.15M | 298.27M | Total Debt |
| 3.38M | 205.92M | 202.54M | 77.56M | 4.96M | Net Debt |
| -67.95M | 117.52M | 148.90M | -18.89M | -60.12M | Total Liabilities |
| 191.35M | 252.70M | 239.69M | 110.47M | 27.65M | Stockholders Equity |
| 157.54M | 88.67M | 209.58M | 297.68M | 270.62M |
| Cash Flow | Free Cash Flow | |||
| -112.30M | -247.49M | -281.00M | -175.62M | -113.35M | Operating Cash Flow |
| -112.16M | -247.06M | -257.71M | -174.63M | -113.03M | Investing Cash Flow |
| 28.82M | 180.23M | -87.20M | -75.95M | -181.82M | Financing Cash Flow |
| 66.20M | 101.32M | 301.80M | 281.95M | 298.14M |
Arcutis Biotherapeutics Technical Analysis
Negative
13.44
Price Trends
14.22
Negative
13.63
Negative
11.67
Positive
Market Momentum
0.57
Positive
48.01
Neutral
16.82
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARQT, the sentiment is Negative. The current price of 13.44 is below the 20-day moving average (MA) of 15.68, below the 50-day MA of 14.22, and above the 200-day MA of 11.67, indicating a neutral trend. The MACD of 0.57 indicates Positive momentum. The RSI at 48.01 is Neutral, neither overbought nor oversold. The STOCH value of 16.82 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARQT.
Arcutis Biotherapeutics Risk Analysis
Arcutis Biotherapeutics disclosed 73 risk factors in its most recent earnings report. Arcutis Biotherapeutics reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arcutis Biotherapeutics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (48)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.67B | 11.55 | 25.84% | ― | 22.80% | 18.12% | |
59 Neutral | $1.31B | ― | -13.92% | ― | 24.19% | 10.51% | |
57 Neutral | $1.73B | ― | -113.76% | ― | 229.74% | 70.23% | |
48 Neutral | $1.74B | ― | -61.35% | ― | ― | ― | |
48 Neutral | $1.87B | ― | -61.89% | ― | 32.00% | -6.86% | |
48 Neutral | $6.36B | 1.28 | -45.04% | 2.64% | 19.24% | 1.69% | |
41 Neutral | $1.87B | ― | -37.40% | ― | -100.00% | -144.79% |
* Healthcare Sector Average
Performance Comparison
ARQT
Arcutis Biotherapeutics
13.44
1.56
13.13%
DNLI
Denali Therapeutics
12.50
-6.67
-34.79%
HRMY
Harmony Biosciences Holdings
28.99
-2.27
-7.26%
IMCR
Immunocore Holdings
25.82
-33.25
-56.29%
NAMS
NewAmsterdam Pharma Company
14.90
-5.03
-25.24%
RXRX
Recursion Pharmaceuticals
4.51
-4.41
-49.44%
Arcutis Biotherapeutics Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: 10.16% | Next Earnings Date: May 20, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a strong performance driven by significant revenue growth, successful product launches, and expanded Medicaid coverage. However, challenges such as Q1 revenue fluctuations, Medicare Part D negotiations, and minimal contribution from the Kowa partnership were noted. The sentiment is balanced with optimism for future growth.Highlights
Strong Revenue Growth
Arcutis reported $71 million in Q4 revenue with $69 million from the ZORYVE franchise, resulting in 471% year-over-year growth in ZORYVE product sales, reaching $167 million annually.
Expansion of ZORYVE Indications
ZORYVE foam was launched for seborrheic dermatitis and ZORYVE cream for atopic dermatitis. Upcoming PDUFA date in May 2025 for scalp and body psoriasis further broadens potential patient base.
Strong Prescription Volume Growth
ZORYVE prescription volume reached a new high with 16,000 weekly scripts in Q4, reflecting a 44% increase from the previous quarter and 334% growth year-over-year.
Success in Medicaid Coverage
Arcutis secured Medicaid coverage in states representing approximately 1 in 2 Medicaid beneficiaries, enhancing access to ZORYVE.
Notable Partnership
Arcutis partnered with Odell Beckham Jr. to increase awareness of seborrheic dermatitis and ZORYVE foam, generating over 1.5 billion media impressions within the first week.
Lowlights
Q1 Gross-to-Net Fluctuations
Expected typical Q1 gross-to-net impact due to deductible resets and insurance plan changes, which may affect net product revenue.
Challenges with Medicare Part D
Negotiations with Medicare Part D are delayed due to the implementation of the Inflation Reduction Act, affecting the timeline for improved access.
Minimal Contribution from Kowa Partnership in 2024
The partnership with Kowa, focused on primary care and pediatricians, did not significantly contribute to revenue growth in 2024, with meaningful contributions expected in 2025.
Potential IP Challenges
Upcoming claim construction hearing in ongoing IP lawsuits, creating uncertainty about the protection of ZORYVE's intellectual property.
Company Guidance
During the Arcutis Biotherapeutics 2024 Fourth Quarter and Full Year Financial Results Conference Call, the company outlined several key performance metrics and strategic goals for the upcoming year. The company reported $71 million in quarterly revenues, with $69 million derived from the ZORYVE franchise, including a $4 million nonrecurring adjustment. For the full year, revenues totaled $197 million, marking a significant 471% growth year-over-year in ZORYVE product sales. Looking forward to 2025, Arcutis plans to expand ZORYVE's indications, particularly with the anticipated PDUFA for scalp and body psoriasis slated for May 22, 2025. The company also emphasized the shift from topical steroids to non-steroidal options and aims to penetrate the government payer segment, with Medicaid coverage now reaching approximately half of the beneficiaries. Arcutis is focusing on leveraging its commercial partnership with Kowa to expand prescriber base beyond dermatology and noted a strong execution in securing insurance coverage, with gross-to-net ratios expected to remain steady in the 50s throughout 2025. The company projects continued revenue growth and aims to achieve cash break-even by 2026.Arcutis Biotherapeutics Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Arcutis Biotherapeutics Appoints New Chief Financial Officer
Positive
Apr 10, 2025
On April 10, 2025, Arcutis Biotherapeutics announced the appointment of Latha Vairavan as the new Chief Financial Officer, succeeding David Topper, who is retiring. This transition is part of a planned succession, with Vairavan bringing over 20 years of experience in finance and accounting within the biotech industry. Her appointment is expected to continue strengthening Arcutis’ financial operations and support its growth in the immuno-dermatology market. The company has also outlined the terms of Vairavan’s compensation and severance package, highlighting her pivotal role in the company’s future strategic direction.
Spark’s Take on ARQT Stock
According to Spark, TipRanks’ AI Analyst, ARQT is a Neutral.
Arcutis Biotherapeutics’ overall score is driven by significant revenue growth and positive technical momentum, indicating market optimism. However, ongoing profitability and cash flow challenges, combined with a negative valuation metric, temper the overall outlook. The balanced sentiment from the earnings call suggests potential for future growth, but also highlights operational challenges and uncertainties in Medicare negotiations.
To see Spark’s full report on ARQT stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.