Good day, and welcome to the Arcutis Biotherapeutics ZORYVE foam Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentations, there'll be a question- and- answer session. To ask a question at that time, please press star one one on your telephone. As a reminder, today's call is being recorded. I will now turn the conference over to your host, Ms. Latha Vairavan, Arcutis Investor Relations. Please go ahead.
Thank you, Valerie. Good afternoon, everyone, and thank you for joining us today to discuss the launch of ZORYVE topical foam for seborrheic dermatitis. Slides for today's call are available on the investor section of our website. On the call today, we have Frank Watanabe, President and CEO; Patrick Burnett, Chief Medical Officer; Todd Edwards, Chief Commercial Officer; John Smither, Chief Financial Officer; and our special guest, Dr. Melinda Gooderham, Medical Director at the SKiN Centre for Dermatology. I would like to remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and uncertainties, and our actual results may differ. We encourage you to review all the filings with the Securities and Exchange Commission, including descriptions of our business and risk factors. With that, let me hand the call over to Frank. Frank?
Thanks, Latha, and thank everyone for joining us today for this very exciting call that has been literally years in the making. We're delighted to share that the launch of ZORYVE foam for seborrheic dermatitis is now officially underway. ZORYVE foam for seborrheic dermatitis is our second product approval in 18 months and is another very important step in our mission to building a leading innovation-driven dermatology company. We are really delighted with the label that we received from the FDA and are incredibly excited about the opportunity to provide an important option for patients ages 9 and up living with seborrheic dermatitis.
The launch of ZORYVE foam, along with the continued expansion in insurance coverage for both the cream and the foam, and potential additional indications, could drive up to a 10-fold expansion in the next 12 months in the patient opportunity for topical roflumilast versus our initial commercial opportunity in plaque psoriasis. We believe that ZORYVE foam is very well positioned for success, and we will share a lot more details today about our readiness on today's call. With that, and to get us started, I'm going to hand things over to Patrick. Patrick?
Hey, thank you, Frank. So I'm going to talk a little bit about our label and the data that supported the approval. We're just going to go a little bit out of order because I know this is a condition that's new to some on the call, but I'm really excited that we have Dr. Melinda Gooderham with us today. So I want her to share her perspective on seborrheic dermatitis patients in general, as well as her perspective as an investigator in our SebDerm clinical trials. So data first, and then we'll come back and go into depth on the patient experience and the disease next with Dr. Melinda Gooderham. So turning to slide six, we know that seborrheic dermatitis, like many inflammatory diseases of the skin, has a skin barrier defect, and these patients are very sensitive to stinging and burning. So formulation is really important.
Today, we're launching our foam formulation, and it's a great fit for patients with seborrheic dermatitis as the first approved indication because we have a very favorable local tolerability profile, similar to what we've seen with the cream formulation, and it can be used anywhere that the disease appears. This has always been a big challenge for managing patients with seborrheic dermatitis. This is a disease that often presents on the face, on the scalp, but also in skin folds, and the foam formulation is the right option for all these locations. This is a steroid-free, once-daily foam. It's appropriate for use on all hair and skin types and not limited in duration. There's a lot to unpack there.
First, depending on gender and ethnicity, people don't all care for the hair in the same way, and it's rare for a product to be a good fit across all hair and skin types. One example of this is medicated shampoos. It's a relatively small group of people who shampoo their hair each day, so this is very limiting for some patients. However, ZORYVE foam, as a once-daily leave-in treatment that isn't greasy, really can be used across all hair and skin types. Second, it's not limited by duration. So we studied the product use out to 52 weeks, and Dr. Gooderham is going to talk a little bit about some of the limitations of existing therapies.
But I think this kind of chronic treatment of disease, even though we're not showing our long-term treatment data here today, chronic treatment is a really important aspect for choosing therapies for patients with Sebderm because of the chronicity of the condition. So moving on to slide seven, some comments on the labeling that we received from the FDA, and talking about some comments from the labeling we received from the FDA. Sometimes what's important is what doesn't appear in your label, and for us, disease severity is a very good example of this. You can see our indication statement that it was approved for the treatment of seborrheic dermatitis in adult and pediatric patients nine years of age and older. Importantly, we didn't have any limitation on disease severity, body part, area, or duration of use.
We studied moderate to severe patients in our clinical trials, but the approval covered mild, moderate, and severe patients. The approval down to the age of nine fits really well with patients with seborrheic dermatitis because this is a disease that often has its onset around the time of puberty. So we intentionally studied down to the age of nine so that we could capture this really important aspect of pediatric patients and have a broad label that really covers the disease wherever it appears, in patients, right from the beginning, right from our initial approval. Importantly, we have the itch improvement data included in the label, and I'm going to talk a little bit of that as I now turn to the disease, and some of our clinical data on slide eight.
So starting on the left, on slide eight, Investigator Global Assessment, that was our primary endpoint. So here we're showing that 80% of patients achieved IGA success at week eight. And you can see that already at week two, we had 43% of patients reaching IGA success. So IGA, IGA success means that patients came in at a moderate or severe, and here we're using an Investigator Global Assessment that goes from zero to four. So it's a five-point scale. Patients came in at moderate, severe, and they needed to get to clear or almost clear, which is a 0 or 1 on that scale, to be considered a responder. As I mentioned, we got 80% of patients there at week eight and already over 40% of patients just after two weeks of treatment.
So we saw a really early onset of efficacy in this study. But the number that I think for me as a, as a dermatologist myself, really was impactful, was on the right, which is looking at an achieved IGA of clear. So this is an IGA of zero, and the guidance that we give to investigators for that is the patients can have no evidence of disease on their skin. So these are patients who came in at moderate to severe, so that's at the far right of the scale, and, and we got over half the patients by eight weeks to an IGA of zero, meaning that there, that the investigator couldn't find any evidence of seborrheic dermatitis any longer.
Already by week four, we had a third of patients already reaching IGA of clear or IGA of zero, and 16% of patients even after just two weeks. So this is something that I really was kind of blown away when we saw these data. They really exceeded our expectations. Now, most importantly, we're talking there about what are the signs or manifestations of the disease on the patient. If we turn towards the symptom that really drives impact on quality of life and the burden of disease, for seborrheic dermatitis, that's itch. And so moving to slide nine and talking about the itch response, and again, this was labeled. We got this into our label, which I think is really important. And we used a metric called the Worst Itch Numeric Rating Scale. That's the WI-NRS.
And in order to be considered a responder here, patients had to have, on a scale of 0- 10, they had to come in with at least a four, and then had to have an improvement of four points compared to baseline to be considered a responder. So we're really only looking at patients who have the most amount of significant itch, and then looking for an improvement of four or greater. And this is the, the kind of way that the FDA likes to have it done in order to support labeling, and that's why we were so pleased to have this, again, appear in our label. We have itch response also in our psoriasis label.
And what you can see on slide nine is that over 60% of patients, almost 63% of patients, reached a WI-NRS level of response. And already at week two, about a third of patients reached that high level of response. And so what this tells us is that not only are we improving the erythema, the redness, the scaling, which are really disruptive for patients, because those can be observed by other people, the itching, which drives a lot of the scratching of the scalp, and can lead to hair breakage, is also something that is improving quite quickly. And that's what drives patients to realize that they're getting a benefit, and it can improve compliance over time.
So if we turn to slide 10, here we have an example of some patients' response over our clinical trials. We have at the left, their baseline, and again, IGA is Investigator Global Assessment. So a three is a moderate patient, and a four is a severe patient at baseline. And an IGA of one is a patient who got to almost clear, still considered a responder, and an IGA of zero is one of these patients who have no evidence of seborrheic dermatitis on their body any longer. So starting with the patient along the top, this is a young girl, school age, I think she's nine years old. And you can see at baseline, she has thick, adherent plaques of scale on her scalp.
For me, you know, really thinking about the impact of this child going into the classroom, trying to just do her schoolwork, trying to get through the school day with this on her scalp, really drives an understanding of just how burdensome this can be for patients. Now, already at week two, she's improved to an IGA of two, and then by week eight, she's at an IGA of one. And I love showing a patient with an IGA of one, which is an almost clear, because what you can see is that there's very little disease left, because patients with an IGA of one can have just a few papules, a little bit of scaling. It's a very, very high bar to have IGA success.
So even a patient like this, because she was a responder, but she didn't get to completely clear, but this is obviously a completely life-changing event for this school-age girl. Now, looking at the patient down below, we have an African American woman who comes in with an IGA of three. So this is a patient with moderate. But what I like about this photo is that it shows hypopigmentation, which is a very common commonly associated pigmentary change that comes when patients have inflammation of their skin, and they have a lot of baseline pigmentation. So it disrupts the ability of that pigment to kind of find its way to the normal location. And then this adds to the burden of disease in this patient population.
What really surprised me when we saw these photos coming out of the clinical trial is I anticipated this was something that would take months in order to, to kind of get corrected. It's not actually captured within the Investigator Global Assessment, but this patient and many others in the trial showed that even by week two, we're starting to see a lessening of that change in pigmentary abnormality, and by week eight, she's really already established her normal pigment pattern, you know, and also has no evidence of the disease. And so that was something we were really excited to see. That's something, unless you till you see the photos, you just have no idea how patients are responding.
We did hear feedback from our investigators about that they were seeing this in the trial, and I think that's gonna really play well when we get the product out into physician hands now. Turning to slide 11, a little bit about the tolerability and safety. What we can see are low and balanced adverse events rates between ZORYVE and vehicle. And most importantly, if you look at those who discontinued the study drug due to an adverse event, and I always like to highlight this because this is, you know, these are patients who can just walk into the investigator's office one day and say, "You know what?
I no longer want to be included in this." And if they say it was because they had an adverse event, which is, you know, with many, many drugs, it's a common reason for patients to discontinue, that is reported directly into the database. And those are numbers that appear on a slide like this. We've always had very low discontinuation rates due to an adverse event, and for me, that informs us on the very good safety and tolerability profile that we have, especially with a topical, where a little bit of stinging and burning will drive a patient to discontinue. Interestingly, we're at 0.7% for ZORYVE, and vehicle itself is sitting at 2%.
So we actually did better than vehicle, and that probably relates to the fact that some of the patients had untreated seborrheic dermatitis, which caused them to discontinue in the vehicle arm. So moving on to my last slide, which is about the most common adverse events. And here we're reporting greater than 1% in any group, whether that's vehicle or ZORYVE. And then they're listed out by the most common overall percentage. And what we see is the most commonly reported adverse event with COVID-19. That was just based on when these studies were conducted, and that was balanced between active and vehicle. Similarly, urinary tract infection and nasopharyngitis were both well-balanced.
It's not until we get down to nausea, which is a really most common adverse event at only 1.6%, that we can really kind of trace back to the PDE4 mechanism of action. And importantly, all of those cases were mild, and we didn't have discontinuation due to any nausea in the trial. I will highlight here, application site pain is not an issue associated with ZORYVE, with actually appearing in about 2% of vehicle. And this is, this is again, because application site here is where patients have active seborrheic dermatitis, and they can get pain, stinging, and burning associated with the disease state. So not treating the disease state can lead to that being reported. So I just wanna end my portion, and I'm very pleased to introduce Dr. Melinda Gooderham.
She's sitting with me here. We're actually at the Maui Derm Medical Congress, so it's a really auspicious time for us to be launching the product because, this is really the very heavy, meeting time period for dermatology. So we seem to have one about every week. And already we were just out at the conference, just a couple hours ago, and the word is getting around this, that we've launched this foam. People have been very excited about it, and I know there's a lot of pent-up interest in it. So I'm also pleased to be able to be sitting here with Dr. Melinda Gooderham. She's Medical Director at the SKiN Centre for Dermatology and a principal investigator for SKiN Research Centre.
She's also an assistant professor of dermatology at Queen's University, a fellow of the Royal College of Physicians and Surgeons of Canada, Vice President of the Dermatology Association of Ontario. Not only does she run a very busy clinical practice in Peterborough, Canada, but she has also been integrally involved with our ZORYVE clinical program, including both the cream and foam, and has just been a great partner and investigator for us in our clinical trials. So Melinda.
Thank you very much, Patrick. Oh, one other special thing about today is the publication in the Journal of the American Academy of Dermatology for ZORYVE foam and seborrheic dermatitis. So one other thing to note for today, but I'm really pleased to be here to talk about seborrheic dermatitis, give an overview, because I'm finally, you know, happy to see this finally getting the attention that it deserves. Seborrheic dermatitis, although it has historically been classified as a form of eczema, we know that's not the case. It's its own entity. There is some current research going on to help define the pathophysiology. We do see seborrheic dermatitis in some patients with eczema. We do see it in patients with psoriasis, but I see it more so in patients without eczema or psoriasis.
So clearly, its own distinct disease that's finally getting the attention that it deserves. You probably, just based on numbers, everyone on this call knows somebody with seborrheic dermatitis. It's that common, and it presents with itchy red patches, but the scaling helps us differentiate it from these other conditions because the scaling is greasy, flaky. You can see from some of the photos on slide number 14, along with some of the pictures that you showed, this greasy scaling that makes it so uncomfortable for the patients. We see specific areas of the body that are covered, usually the oil-producing areas where we see more sebaceous glands. So the scalp, sort of that central face.
You can see on, again, on slide 14, a couple of illustrations there, some more severe disease around the nose and the eyebrows, between the eyebrows, but also it's on the upper chest. You can see the upper back and the groin. That's another place that people don't always talk about seborrheic dermatitis, but very uncomfortable, uncomfortable for people, especially if you're itchy in the groin and you're in public and you don't know what to do, and you want to give a good scratch. So having a new treatment to help those patients is going to be very welcomed. The itch being the number one impact on the quality of life, in addition to the visibility in some areas. And patients will say to me all the time: "I don't know why this won't go away. I'm a very clean person.
I wash regularly. I don't know why this keeps coming back." So, moving on to slide 15, you can see the current standard of care is kind of all over the place. It's one of those situations where the more treatments you see for something means the less likely it is that the treatment actually helps the condition in everyone. So looking here at ketoconazole, you know, being the most commonly used, we see it, as you mentioned, in the medicated shampoos as well as some topical creams. But we have a whole range of topical steroids, and that's where I see one of the bigger problems, is that what you can use on your face and what you can use on your scalp are completely different things. So for the face, we're gonna use a milder steroid and a lighter cream.
But on the scalp, we use something stronger, such as clobetasol. It's usually in a solution format. And, you know, I back 20 years when I graduated from residency, and I got some compounding recipe from one of my, one of my teachers, and I'm still kind of using that, because nothing new has come along since, you know, I graduated in 2004. So compounding steroids with ketoconazole or other antifungals really does make it confusing for patients. They've got the solution for their scalp, the cream for their face, the milder cream for the groin, and that really leads to, you know, lack of adherence or compliance with, with the medication. So also pharmacists telling the patient, "Oh, this is a steroid.
Only use it for two to four weeks, then you must stop." The patients often come in, you know, saying, "Oh, you know, my doctor gave me a cream, but I can't use it long- term, so I guess I have to live with this." And that's not the case. And we can see now with new innovative treatments that we're able to offer our patients other options, which is great. The other thing from being an investigator in the trial is the foam format, which is so welcomed by patients. Patients love a foam. They can use it on their scalp, they can use it on their face, in the groin, so it really makes it more simple for them. They have one product that they can use in all of their areas.
It's effective, and as you mentioned earlier, there's no end date. The pharmacist isn't gonna tell them, "You can't use this past four weeks." They're gonna be able to use it as long as they need it, and this is a chronic condition that will need ongoing care. So to always bring it back to the patient, moving on to slide 16, there was a Harris Poll done in 2022 on 300 patients. And you can see really how this common condition can have such an impact on patients' lives. You can see that three-quarters of patients felt it contributed to their anxiety. You know, this is on their face, you know, in business meetings, it's their got their itchy scalp, they've got an itchy groin, so it really can lead to anxiety.
Almost all patients, 91%, felt it negatively impacted their social life, their social interactions, as they're being very self-conscious, knowing that this rash is so visible. Almost half of patients have missed work at some point because of the seborrheic dermatitis symptoms. You can see on this pretty robust data set here that there is a very significant impact on patients. As I sort of started out by saying, I'm so happy to see that this condition is really starting to get the attention that it deserves.
Okay, thanks, Melinda. All right, with that, we'll turn it over to Todd Edwards to talk about our commercial execution.
Yeah, good afternoon, everyone, and thank you, Dr. Gooderham. We appreciate your comments and insights. As our prior speakers have indicated, this is a very exciting time for patients, their healthcare providers, and the company. The enthusiasm we have seen for this foam launch is very encouraging, and I will talk about that in a moment. Approximately four months into the job here, I am impressed with what we are seeing in the ongoing psoriasis launch. While we are in the midst of completing our year-end close and reporting, what I can share with you is that we expect strong top-line revenue growth Q4 over Q3, and good gross- to- net improvement Q4 over Q3. Now, let's discuss the ZORYVE Foam launch starting on slide 18.
Through surveys and direct patient feedback, we have learned that many seborrheic dermatitis patients are dissatisfied with their current treatment options, treatment options that are cumbersome and inconvenient. There's been no innovation or new branded products in this space in over two decades, leaving patients frustrated, managing complex and onerous treatment regimens. Patients are eager for new options, leading to a significant pent-up demand, making the dynamics favorable for rapid adoption of ZORYVE Foam. Turning to slide 19, ZORYVE Foam offers a unique value proposition and the potential to be a new standard of care in seb derm. A once-a-day monotherapy treatment delivered in a novel foam, supported by a study that reflects the reality of BSA and facial involvement for seb derm, and a label unconstrained by severity, duration, or location.
This product is different than anything else that dermatologists and patients have ever seen for this disease, and as such, has the potential to swiftly become the new standard of care for managing seb derm. On slide 20, I want to highlight the significant overlap in PSO and seb derm targets. Approximately 98% of seb derm call plan targets overlap with our current psoriasis targets. Therefore, our field team has established relationships with the dermatologists at psoriasis targets. To engage these dermatologists, since the psoriasis launch, they have built relationships with their staff and have had ample opportunity to educate them on our product access and support programs, such as our co-pay card and formulary information for the commercial PBMs and payers.
There is tremendous synergy here, since the co-pay card will be the same for ZORYVE Cream and ZORYVE Foam, as well as payer access and processes. Furthermore, dermatologists have first-hand positive clinical experience with ZORYVE Cream in psoriasis. This means we can leverage all the engagement and positive experiences we have had with our target dermatologists and our product to make a swift impact, driving rapid uptake of ZORYVE Foam. Turning to slide 21. Since our SebDerm approval, we have been very pleased with the early demand signals. This is not surprising, given just how many SebDerm patients are in the clinic every month, close to 75 on average.
Dermatologists tell us that as soon as they met with their SebDerm patients after approval, they were eager to offer ZORYVE Foam as a new treatment option, something they haven't been able to do for these patients, and as a result, we are aware that there are many prescriptions for patients pending in pharmacies, and we have received substantial orders from pharmacies awaiting fulfillment. This is exciting news for the launch, as today, shipments are en route. Many of these pharmacies are within our contracted network and are well familiar with our co-pay program and how to process ZORYVE prescriptions. Now on slide 22. As discussed in our approval call, we have secured access with the three national PBMs, who recognize ZORYVE Foam as a line extension of the ZORYVE Cream existing contracts.
This will translate into an increased volume of covered prescriptions, importantly, in the early launch period, resulting in a favorable impact on gross-to-net . We continue to work with the PBM-affiliated downstream health plans, getting them on board and covering ZORYVE Foam. Finally, I want to inform you that the key EMR platforms list ZORYVE Foam as an available electronic prescription. In summary, on slide 23, we are confident that we have the ingredients in place for a successful launch. Relationships are already well established with the dermatologists. Our field team is well trained on the value proposition of ZORYVE Foam and are ready to promote and educate. Contracted pharmacies are ready to dispense, with orders already in place, and awareness of the co-pay card and processes that go with the product will enable rapid uptake.
Access with the PBMs to ensure patients can get the drug as a covered prescription will have a positive impact on gross-to-net . And finally, shipments of the new ZORYVE Foam are en route to pharmacies. And I will now hand the call back over to Frank.
Thanks, Todd, and, I'm incredibly excited to have Todd leading our commercial effort on this launch. You know, once again, today's launch of ZORYVE Foam for SebDerm marks the second product approval and commercial launch in less than 18 months for Arcutis, and I think it really is a great further demonstration of our continued strength execution across our organization. Just briefly, on slide 25, you know, as we've discussed before, we have the potential to expand our total patient opportunity about 10-fold in the next 12 months as we, you know, now have the SebDerm commercial opportunity, a hopeful approval in atopic dermatitis this summer. We continue to work on expansion of coverage into Medicare and Medicaid, and we also continue to work on a potential partnership that would allow us to access the primary care and pediatrics market.
So very, very large expansion in the opportunity for ZORYVE just in the next 12 months. Excuse me, turning to slide 26, you know, we talked about this at our last call as well, that, you know, 2024 is really going to be a transformational year for us. You know, with ZORYVE Cream and now ZORYVE Foam in the early stages of the commercial launch, and then the July seventh PDUFA date for roflumilast cream, we've got a lot of very exciting catalysts coming up, and we're very excited about the coming year.
You know, in October, we completed a secondary offering that raised about $100 million, putting us in a strong financial position to support our continued investment in the plaque psoriasis launch, as well as for the launches of SebDerm and potentially atopic dermatitis, while continuing to develop our pipeline. Launching drugs, you know, obviously requires—to do it properly—requires substantial investments in staff and promotional investments, and having multiple launches in a short period of time magnifies those resource demands. At the same time, we recognize the importance of being good stewards of the investor capital that's been entrusted to us.
Thus, we have undertaken significant expense management initiatives to decrease our cash burn and lengthen our cash runway, focused primarily on R&D activities and non-customer-facing staff across the organization. And that's allowed us to reduce our projected spend by approximately $50 million over the next couple of years. We'll provide some further color around OpEx during our 2023 end-of-year earnings call late next month. But with these reductions, we have the adequate capital to fully invest in the psoriasis and SebDerm and potentially atopic dermatitis launches. Todd laid out for you the commercial opportunity for ZORYVE and our plan to execute against that opportunity, and that is our primary focus.
Successful execution, combined with the expense at, actions we announced today, our current cash position, and some near-term business development milestones, could reduce or even eliminate our need for additional capital, although, of course, we'll remain opportunistic to ensure we can carry out our strategy and ensure, the success of our launches.
...We're incredibly excited to bring meaningful innovations to the millions of people suffering from psoriasis and now seborrheic dermatitis , and we're looking forward to helping millions more with the expected approval in atopic dermatitis, all of which will allow us to create shareholder value and make our mission of addressing unmet needs and the lack of innovation in medical dermatology a reality. So with that, we'll open up the call for Q&A.
Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star one one on your touchtone telephone. Again, to ask a question, please press star one one. One moment, please, for our first question. Our first question comes from the line of Uy Ear of Mizuho. Your line is open.
Hey, guys, thanks for taking my question. So I guess first question for the KOL. Dr. Gooderham, you know, you indicated that currently there's about, you know, patients have about six prescriptions on hand. How do you sort of see the ZORYVE cream fit into this treatment paradigm? Do you expect most of these prescriptions to go away or, and, and ZORYVE, I'm sorry, ZORYVE foam, replacing these prescriptions, these additional, you know, these prescriptions and it'll be sort of like a one-stop shop for the foam formulation? And I guess the second question is, you know, you guys indicated there will be about $50 million in savings. Is that off of 2023, or is that off of your internal estimate for 2024? Thanks.
Yeah. So, Dr. Gooderham, would you like to take the first question about standard of care, and then maybe, John, you could address the OpEx question?
Sure can.
Oh, okay, great. Yeah, so the number of prescriptions that people are getting now, I think, can all be replaced with one product. So yeah, I look forward to being able to tell my patients, "This is the one thing. You can use it everywhere. There's no, you know, stop date to using it," and we would get rid of all of the other inconvenient, messy treatments that they have. And I know from when I did the clinical trial, patients were so excited to have that option.
Okay. Thanks.
Hi, Uy, it's John Smither. With respect to your question, think about it as against our internal forecast, and it's over 2024 and 2025, and we'll be providing more insights, excuse me, into our spend at our earnings call, as Frank mentioned.
Can I have a follow-up question? So, I, Patrick, I think you mentioned that, you know, this time period is sort of a heavy derm meetings time period. So, like, could you sort of, help us think about how many of these meetings are there and whether this would potentially impact the uptake, I guess, in the first, quarters or during these meetings? Thanks.
Yeah, thanks for the question, Uy. You know, there are some down periods for dermatology meetings, even though there is an absolutely massive number of derm meetings to kind of keep us on the road for a good portion of the year. I would say that this is really the one of the busiest times, because we've come out of the holidays. We had Winter Clinical just like it, you know, here in Hawaii, just a week ago, essentially. Now we have Maui Derm. We had a meeting in Aruba. And this really goes on until the American Academy of Dermatology meeting in March. So, you know, they're really too numerous to name, and it's every single week.
So this is really the perfect time to be getting people's attention. And just even this morning, being out there, our press release went out, and we were just kind of chatting with people and talking with them. And as you walk by, they literally see an Arcutis person, they're like: "When, you know, you guys got the approval, when can I write?" And it's a very easy question to answer right now. So I really do think that that has an impact on our ability to be able to kind of get this message out there. The other thing is that at every one of these, Dr. Gooderham is a much sought-after speaker, and you can see why she's such a sought-after speaker, you know, after her joining us today.
But, you know, when you're a speaker at one of these meetings, you need to have interesting things to be talking about. So a new approval and a product being available gives them something to talk about. So actually, you know, I was talking to another KOL who is going to be on the podium tomorrow, and she was very excited to learn that we had made this available because she's like: It gives me a new piece of news to be talking to people, you know, and not just kind of going over the same stuff that they might have heard two weeks ago at the last meeting. So I do think that the timing of this really plays favorably for us.
Okay, thank you.
Thank you. One moment, please. Our next question comes from the line of Tyler Van Buren of Cowen. Your line is open.
Hi, this is Tara, on for Tyler. I was wondering if you could provide some more clear expectations for what you think the initial launch trajectory will look like in the first 1, 2, or 3 quarters. You know, what should we expect throughout this year? If scripts will be reported by third party? Thanks.
Yeah. Todd, you want to take that one?
Yeah, absolutely. So the scripts will be reported by a third party. And, you know, I think looking at the trajectory of this product, I think it's a couple of things to keep top of mind is that...
... You know, this is a large potential market. There's 9.7 million patients with seborrheic dermatitis that are diagnosed. Of that, 6.9 million are treated with a prescription, and 4.4 million are diagnosed and treated with an RX in the derm setting. As mentioned earlier, there's been no advances in this. You know, we're starting from a position of strength with our formulary access. So I would, you know, think that there would be a robust uptake of this product and a very positive trajectory as we roll forward. Not gonna provide any specific guidance at this time, but I think that the situation is ripe with a product like this to have a nice positive uptake as a reform.
Yeah, and Tara, maybe I could just clarify. We expect that IQVIA will report the foam and the cream separately since they are separate NDCs.
Okay, great. Thank you all.
Thank you. One moment, please. Our next question comes on the line with Seamus Fernandez of Guggenheim. Your line is open.
Thanks very much. So, just wanted to follow up on that uptake question a little bit more. I think in the past, we've talked about the opportunity here, only in market asset, you know, and admittedly, now you've really got a great baseline for reimbursement for patients. So I just wanted to kind of clarify two things. One, I think in the past, and we've talked about this, a reasonable comp was the launch of ZORYVE Cream and psoriasis. But assuming, if we were to assume that that launch had actually been without a competitor. So basically, is it reasonable to look at the overall novel topical psoriasis market as a good comparison for the launch of ZORYVE Foam?
And then I'll just follow up with a question after that.
Thanks, Seamus. So, I'll make a comment and then, Todd may have some additional thoughts. But, you know, I look at—I think it's always difficult to predict the future. If, if I could do that, I probably wouldn't be doing this for a living. But, I do think that there are, you know, a number of, of positive tailwinds, one of them being the cream. You know, prior experience, as Todd mentioned. Secondly, the, the, the favorable access position that we're in. Third is the, the lack of competition. Fourth is the very high unmet need that Dr. Gooderham mentioned. So I think all of those things, in my mind, promote—point to, you know, very, very, high potential for ZORYVE Foam.
And, you know, like you, we'll be tracking it on a weekly basis over the next several months. But, you know, I would expect that we'll see very good uptake of the product right out of the gates. And, you know, I think Patrick mentioned before, you know, a lot of our customers are saying that, you know, they have a ready pool of patients that they'll be prescribing as soon as it's available, which will be this week.
Great. And then just to follow up-
Sorry, just-
Go ahead.
Todd, anything else you want to add on that?
Yeah, just one. In addition to your comments, Frank, I would mention that what I mentioned earlier in my comments is that, you know, just the demand for this product is exceptional, meaning that we're keenly aware that there are, you know, prescriptions already at the pharmacy waiting for fulfillment. And in addition to that, you know, we received significant orders from those pharmacies. So I think that's a very positive signal relative to this pent-up demand that these providers and patients have here.
And Seamus, did you have a follow-up question?
I did, yeah. So I just wanted to kind of also maybe level set the playing field on the gross-to-net comments. So the ability to have a positive gross-to-net , but we also have a first quarter situation coming up with high deductible impact. So I just wanted to maybe help us. If you could help us think about what gross-to-net , you know, pushes and pulls we should be thinking about versus what you'll report as gross-to-net , or at least what we'll calculate as gross-to-net from the, you know, from the fourth quarter, would be really helpful.
Yeah, Todd, you want to take that one, too?
Yeah, a few things to consider is that first, relative to the ZORYVE Foam launch and ZORYVE Foam being added to the ZORYVE Cream PBM contracts and line extension. As mentioned, that will provide us with the opportunity to drive covered prescriptions. Those covered prescriptions will have a positive impact on the gross-to-net , unlike in a more typical new product launch to market, where the PBMs put new-to-market blocks on your product. So we're in a very favorable position and a position of strength relative to access leading into this launch. As mentioned, we need to also consider that we are in the first quarter, so insurances, as far as deductibles, will be reset. Patients often change insurance companies first of the year, so they have a new deductible, new insurance.
We'll have to take into consideration those factors as we think about what we should consider as a gross-to-net for the first quarter.
Can you just update us on where couponing sits at this point? I assume it's across the overall franchise and the two formulations, but just in terms of couponing, to help the patients who are, you know, hit with uniquely high deductibles.
Yeah, we have our copay card, and with our copay card, we've made a few adjustments with our copay card that I want to mention. First is that for a covered prescription, it'll be a $0 copay for a covered prescription, and for a non-covered prescription, it'll be a $35 copay for prescriptions that are in our network. And for prescriptions outside of our contracted network, it'll be $50. So we're very committed to the patient and making certain that we eliminate out-of-pocket costs as a barrier to be able to access this medication.
Great. Thanks so much. Appreciate it.
Yeah, certainly.
Thank you. One moment, please. Our next question comes from the line of Stephen Sloan of Goldman Sachs. Your line is open.
Hi, this is Stephen on for Chris. Thanks for taking our questions. A couple for Dr. Gooderham. Can you speak about how frequently these seborrheic patients are coming into your clinic for their regular visits? And then how do you envision the rollout of ZORYVE foam in your own clinic? And then just one question for the Arcutis team. You mentioned demand from pharmacies and scripts kind of waiting at the pharmacies. How would you characterize this level of demand relative to the rollout of the ZORYVE cream? Thank you.
Sure. Melinda, would you like to address the and maybe I should just clarify. Dr. Gooderham actually practices in Canada, and we just recently filed the foam in Canada, so she does not have access, unfortunately, currently to the foam. But, you know, we would hope to have that approval, you know, maybe late this year or early next year and roll out in Canada about that same time.
Great. Okay, so the number of patients, I think, was the first part of the question. And so some patients are actually referred for seborrheic dermatitis because the prior treatments have failed. But we're also seeing patients who may be referred for a mole check or, you know, something wrong with their feet. And while you're talking to the patient, you can visibly see their seborrheic dermatitis, and it's usually something I bring up with them to discuss. So we're seeing this condition multiple times a day, whether they're referred for that reason or not. I would say probably five or six times a day, I would see it in my clinic, and I see about 50 patients a day.
Okay, sorry, and just on how frequently they're coming to the clinic?
Oh, once somebody's been diagnosed?
Yes.
Yeah. So then I would probably see them and follow up again in another four months, six months to see how things are going. But, yeah, there's a constant flow. It's not something that ebbs and flows. Their patients are constantly coming in, and then new patients are coming, and the other patients are returning for their follow-up visits.
Got it. Okay, thank you.
Then, Stephen, just with regard to your second question, you know, I think these are similarly sized markets, and as we talked earlier, you know, I think there are some favorable tailwinds behind the foam, but it's always difficult to predict exactly what you know, what the trajectory is gonna look like. I do think one of the other favorable dynamics is that I think Todd mentioned, you know, there hasn't been a new therapy in this space for seborrheic dermatitis, you know, in over two decades. So there are a lot of patients who have failed existing therapies and are frustrated and are looking for something new. And I think those patients are going to be very receptive to and very eager to try the foam.
You know, in the case of plaque psoriasis, there has been a steady drumbeat of development in the psoriasis space, especially on the systemic side. But, you know, there was another competitive nonsteroidal launch right about the same time as the cream. And I think that that certainly, you know, had some effect, as someone else alluded to earlier, just in terms of splitting the available patients, which we don't expect to see in this market.
Got it. Okay. Appreciate the color. Thank you.
Thank you. One moment, please. Our next question comes from the line of Vikram Purohit of Morgan Stanley. Your line is open.
Hi, everyone. This is Gospel on for Vikram. We have one question. How concerned are you about the potential for ZORYVE foam to cannibalize the use of ZORYVE cream in psoriasis? And what percentage of psoriasis patients currently on ZORYVE cream do you estimate would prefer the use of a foam product?
Would prefer to use the foam, did you ask, Gospel?
Yes.
Okay. So Todd, maybe can you address the first question, then Patrick or, or Melinda, if you have thoughts about sort of patient preference for foam, you know, maybe you could comment on that as well.
Yeah, certainly. I would say that relative to any type of cannibalization of ZORYVE cream, I mean, we would expect some amount of normal erosion. We look at our internal data, it points towards like low single impact, 4%-5% of our total Rx's. So I think we should—we can, we should expect some, but once again, it'll be in the low single digits.
... Patrick?
Yeah, thanks, Todd. So yeah, I think that there is a patient group out there who definitely does have a preference for foam. Oftentimes, it will be patients who have psoriasis, and maybe they also have involvement of their scalp. And then they're looking for a simplification of their treatment regimen. There's no doubt about it, and that was one of the driving reasons why it is that we ran an entire phase III program in scalp psoriasis with the foam. And in that program, we actually had co-primary endpoints looking at the body response as well as the scalp response. And so we know that patients on the foam formulation do just as well as they did on the cream, and the dose is the same, and actually, the formulations are almost identical.
We just changed the lipid amount, and we added some propellant. So, you know, that is going to be the next indication that we're going for with the foam, and our attention is now, you know, fully turned towards getting that submitted so that we can get an approval for scalp psoriasis. But I, you know, I do think that, you know, the treatment of severe seborrheic dermatitis , and the fact that there is so much, you know, that hasn't really been available to these patients in the last 20 years. And I think the fact that the way that Dr. Gooderham explained it, where, you know, when you have someone who's on 6 prescriptions, it probably means that nothing that they're getting is really doing the job for them.
Then they kind of just give up, and they show up in your clinic, a couple of years later with a mole, and you're like, "But you have seb derm." It's like, "Yeah, yeah, I tried all the stuff that's out there, but nothing's really working." And that's when you say: Well, we have something new for that. So, you know, we're gonna get the foam out there for scalp psoriasis as quickly as we can. But I do think that severe seborrheic dermatitis is a really great first indication for the foam and a great place to start for this unique product.
I guess the only other thing I would just add is that, you know, we get this question periodically from investors, and I'm not really sure that you guys should care all that much about it. The foam and the cream have similar cost structures, and so, you know, to the extent there is cannibalization, it's not like it's gonna have a material impact on the company. But I do expect that, you know, insurance companies are probably not going to view the two as interchangeable, right? You have two different formulations, two different NDCs for two different indications. So while Todd mentioned the contract is covering both, they're probably gonna be administered differently by the insurance companies or separately by the insurance companies, I should say.
you know, we also will be doing things on our side with the co-pay card and other programs to try and mitigate, you know, potential cannibalization. But I just don't think that it's a material business impact in spite of the frequency that we get questions around that.
Thank you.
Thank you. One moment, please. Our next question comes from the line of Serge Belanger of Needham. Your line is open.
Hi, good afternoon. First question for Dr. Gooderham. You mentioned, your seb derm patients have up to six products. Some of them are maintenance, some of them are used for flare-ups. Just curious, what kind of role you expect for ZORYVE foam, maintenance, or maybe a product that would be solely used for flare-ups? And then secondly, for Todd, maybe just give us your updated thoughts on a collaboration to address the PCP call points. Is this something we could expect before the AD approval or, yeah, that's the question. Thanks.
Yeah, Melinda, if you want to address that question, then, Todd, I, I can take the PCP question for you.
Yep, sounds great.
Great. Okay, so the question being, it's going to be used for flare versus maintenance, because I, as I mentioned earlier, I think it will replace all of the other six products that they used to use. And then, as mentioned earlier, it's approved for all severity. So perhaps a patient with milder disease may only require it for flare-ups, but usually those severe patients have chronic involvement and would need that ongoing for, for maintenance use. So I, I see a role depending on ... It's such a heterogeneous, population of patients. It's also, what's nice about it is that it's something for everyone.
Then, Serge, with regard to your question, yeah, we're actively in discussions with potential partners around a primary care partnership. You know, what we have, I think, communicated previously and continue to believe is that the timing for that optimally would be around the atopic dermatitis launch, not necessarily prior to or right after launch, because you know, the primary care community will look to the dermatology community for guidance. And so we'll really need to launch in AD first in dermatology, and then primary care will follow. You know, if we get the deal done before then, that's fine. I think that's a very positive thing. But you know, it's really around that atopic dermatitis approval. So you know, second half of this year that we'd be looking to ideally conclude that agreement.
Great. Thanks.
Thank you. There are no further questions at this time. Let's turn the call back over to CEO, Frank Watanabe.
Thank you. Well, we really appreciate you all making the time to, to call in for the call today. As you can tell, I think we are very excited, as is Dr. Gooderham and, and the rest of the dermatology community, to have ZORYVE foam out and available now. And we look forward to providing you guys updates on our progress, on the launch in the near future. So thanks again for calling in, and we look forward to talking to you all very soon. Bye-bye.
Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.