Hi, good morning. My name is Serge Bélanger. I'm one of the healthcare analysts at Needham. Want to welcome everybody to Needham's 25th Annual Healthcare Conference. For our next fireside chat session this morning, we have Arcutis Biotherapeutics with us. From the company, we have the CEO, Frank Watanabe, the company's CFO, Latha Vairavan, and Head of Investor Relations, Brian Schoelkopf. Thanks for joining us this morning.
Hi, Serge.
Maybe I'll kick it over.
Hello
I'll turn it over to Frank or Latha or Brian to give us an overview of the company, and then we'll move on to some Q&A.
Sure. Yeah. For those of you who aren't familiar, Arcutis Biotherapeutics is a 10-year-old dermatology biotech. We focus on the treatment of inflammatory skin conditions. We currently have four approved products on the market, all marketed under the name ZORYVE. We've got a cream that's approved for the treatment of plaque psoriasis. We have two different creams that are approved for the treatment of atopic dermatitis or eczema. We have a foam that is approved for the treatment of both psoriasis and seborrheic dermatitis. We also have another pipeline asset. It's a novel biologic for atopic dermatitis that we just started phase I trials on. We continue to look at potential new uses for ZORYVE as well, beyond their currently approved indications, and we can go in a little more detail with that a little bit later.
I think importantly, we started generating positive cash flows in the fourth quarter. We expect to continue to generate positive cash flow going forward, even with the continued investments that we're making both in our existing business to grow that business as well as the pipeline, both new indications for ZORYVE as well as I mentioned, our novel biologic.
Great. Maybe let's start with ZORYVE commercialization. I think it's been very successful. We've been covering the company since, I think, the start of the commercialization of ZORYVE, and obviously the valuation of Arcutis was very different at that point. I think there was a lot of concerns about a branded topical derm product. Like I said, I think it's been very successful. What do you think has been the secret sauce to changing the narrative around branded topical derm products?
Sure. I think that the challenge really in the topical space has not been the lack of patients or the lack of unmet needs. It's been the lack of innovation, right? When we were approved in plaque psoriasis, and right about the same time, there was another product approved in plaque psoriasis. There hadn't been a novel topical approved in decades in plaque psoriasis. The same thing was true in seborrheic dermatitis. It had been several decades before a new product had come along. In the atopic dermatitis space, there had been one a number of years ago that really didn't meet the needs of clinicians and patients. There is another competitor in that space that launched shortly before us. You now have three advanced topical therapies on the market, which really address unmet needs in the treatment of these inflammatory skin conditions.
I think we believe that ZORYVE is the best of those three, and I would say our 50% market share reflects the fact that patients and clinicians agree with us that ZORYVE is the best option. These are really dramatically different. Heretofore, doctors were forced to either use topical steroids, which were effective, but are only safe for short-term use, and these are all chronic conditions. That doesn't match up well together. The non-steroidals weren't terribly effective and were associated with a lot of side effects like burning and stinging. Doctors and patients were constantly having to juggle this complicated trade-off between what was effective and what was safe. With the advanced topical therapies and with ZORYVE in particular, they now have a topical that is pretty much as effective as a topical steroid, but is also safe for chronic use.
It's safe for use anywhere in the body. In the case of ZORYVE, it's safe for any amount of use, any body surface area. They don't have to make this trade-off anymore between efficacy and safety and tolerability, and that's really changing the paradigm for how you manage inflammatory skin conditions. I think it's also probably important for investors to realize that although we've made immense progress in the treatment of psoriasis and atopic dermatitis with biologics, we have, I think, 13 biologics now for psoriasis, and four for atopic dermatitis. A very small percentage of patients are actually on those therapies. Somewhere in the range of 10% of psoriasis patients. Another 15% are on oral therapies like Otezla or Sotyktu or now ICOTYDE. And in the atopic dermatitis space, there's more penetration of biologics, but less penetration of orals, right?
90% or more of the patients who have these diseases and who are getting treated are on a topical. Whether they're on a biologic or not, they're also on a topical. This is an immense market. There were 25 million prescriptions written last year for topical therapies for one of these three inflammatory skin conditions. We're very early in the process of converting the topical steroid market over to advanced topical therapies like ZORYVE.
Has there been a change in approach from payers, because I know that was a concern for topical products as payers were often pushing back? Maybe it was because it wasn't efficacious, or maybe the number of biologics has kind of changed the approach also for topical products?
Yeah. No, I think that, at least in the case of ZORYVE, we found that we have been very successful in getting access to the product. Somewhere around 85% of commercial patients have access to ZORYVE, and nearly all of that is through a single-step edit. We have over half of Medicaid lives also have access to ZORYVE through a single-step or better, and there are some cases in Medicaid where there's no step edit. We've started picking up Medicare coverage as well. We announced in January that we had now obtained coverage for about 1/3 of all Medicare recipients for ZORYVE as well.
It varies depending on the product, but we had strategically priced ZORYVE at the very outset in a way to optimize the coverage for the product, and that's really paid off for us in our ability to gain coverage and, I think really importantly for investors, to get paid for prescriptions, right? Investors, I think, look at prescriptions, but what you really care about is paid prescriptions. Not only do you not make money on an uncovered script, you actually lose money on an uncovered script. We're very focused on that, very happy about the fact that over 80% of all prescriptions for ZORYVE are paid. That's what's allowed us to get our gross to net down in the 50%s and keep it down in the 50%s, which is about as good as anyone does anymore in the branded market across all therapeutic areas.
Okay. Let's talk about potential growth expectations for 2026. You had a really strong Q4 that you reported, I think it's a couple of months ago now.
Yep. Yeah.
I think that led to the first bump in your 2026 guidance. Maybe let's start by reviewing performance in 2025 and how that sets you up for what we should expect for 2026.
Yeah, sure. Latha, do you want to talk a little bit about 2025 and 2026?
Yeah, absolutely. As you know, Serge, we just put out our earnings at $127.5 million of product revenues for Q4, and that was almost 85% year-over-year growth on our net sales. We gave guidance at the end of October for the first time for 2026. That was, as you know, probably early in the game. Usually companies wait to do that. Coupled with our Investor Day and as we set up our strategy to grow and expand ZORYVE and build our pipeline, it felt like the right time to give the preview into 2026. With the exceptional performance that we had in Q4, we increased that guidance to $480 million-$495 million for product revenue in 2026 based on a few things. One, the trajectory that we saw in Q4, plus the investments that we're making.
As we've said, we're going to be cash flow positive, and we started that in Q4 of 2025. Really, it's intentional and deliberate to take that cash flow and leverage and invest it back in ROI-accretive and positive investments for the business. The first of a few that we announced early in January was to expand our sales force. We've announced promotional tactics that we're working on, one with golf, or Max Homa, and that we are going to start a structured PCP sales force and grow that over time, not to the extent that we'd stand up a full PCP sales force, but enough to target those clinicians prescribing ZORYVE. Taking those investments into account also allowed us to take up our guide at the Q4 earnings call.
Got it. And before we move on to individual growth drivers for this year, maybe let's just talk about the expected seasonality or cadence quarter -by -quarter for 2026.
Yeah.
Should we expect a step down in Q1? I guess that we've heard a lot of talks this week about winter storm impact. Does that make this Q1 worse than other years?
Well, I think in terms of volume, right, at this point in the game, everyone can see the volume.
Yeah. Absolutely.
I think this was slightly atypical maybe on the quarter, right? Certainly the impact of the winter storm was pretty profound, I think, for really all brands. You saw it across the board. I think that was particularly because the storm hit the Southeast that just isn't used to snow. It's challenging in dermatology because, Serge, as you know, dermatologists are booked six months out, right? If they miss a week of work, it's probably going to be six months before that patient gets in to see the doctor. That definitely has been a drag, I think, for all brands across dermatology. We always expect to see a dip from Q4 to Q1. Patients pull prescriptions into the fourth quarter, especially December, because they know their co-pays are going to reset January 1, excuse me. I admit I do that myself, right?
You see a demand pull forward into Q4, and that means a drop in demand typically in Q1 versus Q4. You also have the top-line impact of co-pay resets, which means that all of the companies are paying more on their patient co-pay cards in January and February, and that impacts also the revenue picture that we see. I think we have been pleased in looking at the demand that while there was a slight let-off in demand in Q1 for ZORYVE, it was much less than what we see for really almost every other topical in the marketplace, including not only the branded, but even some of the generic topicals. We'll report our top-line revenue number in the not-too-distant future. There will be some impact on gross-to-nets. We do expect our gross-to-net to stay in the 50%s in Q1.
Yeah.
We would expect, like last year, that will rapidly trend down towards the lower end of the 50%s as the year progresses. We exited last year with a really strong gross-to-net, and we expect to get back to a similar place this year.
Okay. That gross to net is now stable because the payer coverage has reached kind of a steady state on both the commercial and Medicare side?
Well, Medicare.
Mm
We're continuing to work on, right? I mentioned before, we only have about 1/3 of Medicare lives now, so we're working on getting those other 2/3. The Medicare Part D plans normally only change their formularies in January, so we've got a while to go yet. We'll be working on them for that January. They sometimes will pull forward coverage, but I wouldn't expect it, right? I think we should be expecting to pick up additional coverage starting January 1 of next year. Commercial is very stable. Medicaid, we continue to pick up individual states as well, so we would expect to expand Medicaid coverage. We are not seeing the kind of pressure on rebates that some of our competitors have reported. I think that that's partially reflective, again, of the difference in the pricing of the different products that I mentioned earlier.
ZORYVE is the lowest-priced of all the branded topicals. That wasn't necessarily by choice. We just put the price where we thought the price ought to be. I think that some of our competitors chose a price that was probably too high. They're apparently getting squeezed by the payers quite a bit.
Okay. You talked about a slight sales force expansion, separate from your efforts on the primary care physicians and pediatric. Maybe just remind us where the sales force currently stands in terms of number of sales reps.
Yeah.
Where you're going, and what that allows you to do.
Sure
In terms of extra targeting.
Sure. We exited last year with 130 sales reps in dermatology, which is a good size dermatology sales force. We recognized that we had optimized our call frequency on the highest potential dermatologists. We hadn't quite optimized our frequency on the mid-tier of dermatologists, and we saw that there was an opportunity to generate some additional revenue from that group of doctors. We're talking like deciles five-seven. We announced at the end of the year, I guess it was in February, that we would be expanding the sales force by 30 reps, going up to 160 reps. That will allow us to now optimize our reach and frequency in the mid-tier of doctors as well. As Latha mentioned, we do expect that that's going to help us to sustain growth as we go into 2026.
As you mentioned, we also announced in February that we were, actually, I think that was in January, that we were taking over our promotion in primary care. We had signed a deal a couple of years ago, when we were less financially sound, to work with a partner in primary care. We're now at a place where we can do that ourselves, and so we agreed with the partner to part ways, and we're now building a primary care organization, and we'll be sharing more details with Wall Street as that progresses as well.
Okay. On that primary care and pediatrician effort, how much headway had Kowa been able to do in the last year or so? Were they actually generating some sales that were contributing to the top line?
Yes. We had told you all that we would start to break it out when it became material.
Yeah.
They were generating some sales. It really wasn't material, right, on $375 million in sales. There was certainly a contribution. We think there's immense potential there. We've always known that it was going to be a longer selling cycle. In primary care, the doctors are much more distracted. They're harder to see. They're treating everything from asthma to herpes zoster, right?
Yeah.
And so AD, and SebDerm, and psoriasis are probably not the top priorities for them all the time. But half of patients are sitting outside of dermatology, so there's an immense opportunity for us in the primary care and pediatric settings, especially as we continue to expand our label in pediatrics, right? We expect to get approval for psoriasis in two to five-year-olds in June. We're already approved down to age two in eczema. We announced at the AAD last month our three to 24-month data, and we also announced in eczema, and we announced that we'll be filing with the FDA this quarter for the approval down to age of three months. So especially with the pediatricians, I think ZORYVE is a very, very well-positioned product to be a meaningful part of their armamentarium.
Should we think where the initial effort will be towards pediatricians, given that there's such a significant exposure, given that you have approval of all these pediatric indications?
No. Certainly, it'll be an important part of that effort. Primary care is also important, especially when you consider SebDerm is an extremely common condition, and a lot of those patients don't ever make it to a dermatologist. I think we will find a lot of SebDerm patients in the primary care setting as well. There are adults with eczema too. Psoriasis patients, for the most part, make it to a dermatologist, so there are fewer of them floating around in primary care and pediatrics. SebD erm and AD are both very large opportunities in primary care and pediatrics.
Okay. Forget how many SKUs you have now.
We have four.
Oh,
okay.
Yeah. We have the cream for psoriasis, the foam for psoriasis and SebDerm, and then we have two different eczema presentations for little kids and adolescents and adults.
Yeah. With this next approval, you'll be up to seven or eight?
It'll be eight. Well, psoriasis will be our seventh approval, but it's the same SKU.
Yeah.
The three-24-month-olds would be.
Yeah
Our eighth approval. Again, it's not a new SKU. It's the low strength cream.
Okay. I'm only asking.
Yeah, eight approvals in less than four years.
That's quite the track record. I'm only asking to get an idea of when we think about growth, which are the indications that we should continue seeing growth from, or same thing with the SKUs.
Well, if you look at across the SKUs in the fourth quarter, all of the SKUs were growing at a very healthy rate. The 0.05 is the newest SKU, so it's growing at the fastest rate, but off of a very small base. Even the 0.3, which is our original presentation, the 0.3 cream, is growing at a very healthy rate, and we're very gratified to see that it's growing across the entire portfolio. As I mentioned earlier, we're in the very early stages of a massive conversion, right? Of those 25 million prescriptions written last year, 70% of those prescriptions were for a topical steroid.
Wow.
Right? 7% of those were for an advanced topical therapy. We're in the top of the first inning in this conversion from topical steroids over to the advanced topical therapies. With ZORYVE having a 50% share of the advanced topical therapy market, we're very well-positioned to benefit from that shift. That shift continues to gain momentum. We were at the AAD, the American Academy of Dermatology, about four weeks ago, I guess it was now, and there were a multitude of talks about steroid stewardship and the need to really start moving away from the over-reliance on topical steroids in dermatology.
Okay. How has the growth been recently in the seborrheic dermatitis? I remember when it first launched, that kind of really kicked off the growth for the ZORYVE franchise. Is that still kind of the headliner indication going forward?
It's a little more complicated than that.
Yeah
That product, that SKU, the foam, has two indications. We can't, at the moment, break out what's SebDerm and what's psoriasis. We will eventually get some of that data from IQVIA and be able to estimate what the split is, but right now it's a guess at best, what the split is between the two. Certainly before the scalp psoriasis or the psoriasis approval, the foam continued to grow at a very nice clip. Latha, what, it's about 55% of our total volume is the foam?
Yeah.
So.
A little over half.
It continues to be, yeah, a really big driver of growth for the brand. The foam is truly unique. There are no other foam non-steroidals, branded or non-branded. There are very few steroid foams anymore either. There had been in the past, but they're very difficult to get now. They're very expensive. It's an optimal treatment for treating disease on the scalp. There are a lot of patients who are choosing to treat on the body with the foam as well.
In terms of the competitive landscape, do you see other branded topicals as competitors? I know Vtama's been out there now for a few years. It changed hands. Sounds like it's going to change hands again.
Yeah.
There was a new PDE4 product that got approved, I think, a couple of months ago. Is that a potential competitor?
Not really.
Okay. All right.
It's a twice-a-day ointment with, I think, data that is debatable.
Mm-hmm.
It's owned by a company that has no presence in the dermatology space. As far as we can tell, they don't even have a sales force. I think in the branded topical space, and you can see this in the market share, this is really down to a race between us and the folks over at Incyte, who, frankly, have a very good drug. Right? Opzelura is a very good drug. It does have some limitations versus ZORYVE. I think they continue to do very well. Doctors need choices, right? ZORYVE isn't going to be the right drug for every patient.
Again, when there are 10 x as many patients on topical steroids as there are on all of the branded nonsteroidals combined, that's where we're focused, and I think that's where our colleagues at Incyte are focused on, is driving this conversion from topical steroids and not beating each other black and blue.
Yeah, going back to the pediatric indications, if you can highlight just what segment of the overall market opportunity lies with these new approvals that you're expecting?
Sure. I'll go across the three indications, then really drill down into atopic dermatitis. Psoriasis is not all that common in kids. It typically is a disease that presents in adolescence or in teenage years. It can occur later in life as well. I don't think that the psoriasis pediatric indication will be, in and of itself, a big driver. I think the bigger benefit there is just the safety halo, and the confidence that when you do see a pediatric patient, you can use ZORYVE, right? Seborrheic dermatitis does occur, starting at puberty. It's really driven by the oil on our skin.
As all of us know, when you hit puberty, you start making a lot of it, and that's why the acne blows up, and SebDerm also starts to present then. There is some opportunity for us in adolescence in seborrheic dermatitis, but it gets more common as you get older. That population skews to the older end. Eczema, atopic dermatitis, is a totally different picture, right? The peak onset of atopic dermatitis is between the ages of one and five, and about half of all atopic dermatitis sufferers are under the age of 18. The pediatric market is massive for atopic dermatitis, specifically in that three-24-month segment that we're looking to file soon on, and we just announced data. There are only about 1 million patients in that segment, but there's almost nothing approved for them, for those little kids.
There's, I think, two steroids that are FDA approved for three to 24-month-olds, and then Eucrisa. Nobody uses Eucrisa, right? It's so intolerable that it has almost no market share. We think that's a very large opportunity for us, more out of market share than out of sheer size of the market, and as a really important development for patients and clinicians. The level of excitement coming out of that presentation at AAD was palpable. The pediatric dermatologists can't wait to get their hands on this drug. To have something that works this well and is this safe and well-tolerated for these very little kids is really important. I would also mention, we showed data at AAD.
You have to ask parents about itch because you can't ask the baby, but 40% of parents reported that their children's itch had improved within 10 minutes of the first application. Let that sink in for a minute. Your kid has this terrible disease. They're itching all over. They're bleeding all over their cribs. You put ZORYVE on and almost half of the patients had improved in 10 minutes. That's a remarkable result, and one that left a lot of doctors just blown away.
Are you going to need to have your sales effort, PCPs and pediatricians in place to be able to capture that opportunity, or the current sales force can tap into it already?
Again, a lot of the kids are seen in dermatology offices. About half the AD population is treated in dermatology, including kids. There's a small group of pediatric dermatologists, about 400 in the U.S. We're very heavily engaged with that group because we've had other pediatric indications already, including eczema down to the age of two. A lot of kids just see general derms as well who are already seeing ZORYVE. We'll be able to get after the pediatric opportunity, the infant opportunity in three to 24-month-olds with our existing sales force in dermatology, and then we'll be able to expand into pediatrics as we build out our primary care and pediatric team as well.
Okay. How active has the company been in terms of, I guess, digital marketing or even just advertising? I'm sure you can't do it with a PCP.
Yeah. We don't do the big splashy direct-to-consumer TV like AbbVie or Amgen or some of the other companies. It just doesn't financially make sense for a topical product at the price point that we are. We have a lot of direct-to-consumer activities, digital engagements, Facebook, Instagram, Twitter, online search, those sorts of things. Latha mentioned that we just recently signed a partnership with Max Homa, the PGA golfer. He's a ZORYVE believer. He's a huge fan, and he's been doing a lot of talk about his experience with ZORYVE. We also started a partnership late last year, middle last year, I guess, with Tori Spelling and her daughter, both of whom have atopic dermatitis, and her daughter Stella also has seborrheic dermatitis. They're also both ZORYVE users, and they've been out talking publicly about their experience with their disease and with ZORYVE.
Tori was on Drew Barrymore just a few weeks ago talking about ZORYVE and her experiences and the trauma that her daughter went through because of her eczema and her seborrheic dermatitis. I think public awareness of ZORYVE as an option for their diseases is constantly growing, and we're able to do that without spending a couple $100 million a year on television ads.
Okay. Let's talk about your plans to expand the label beyond the eight approvals that you've gotten already. I think you talked about two initial indications, vitiligo and hidradenitis suppurativa.
Yep.
HS. I guess what gave you the confidence that.
Sure. Yeah. I think the primary driver for that was dermatologists use drugs off-label. That is just part of their practice, right? When they got a hold of ZORYVE, they started using ZORYVE on all kinds of other things. "Well, if it works in psoriasis, does it work here? Does it work there?" We now have a bibliography, I think, of 45 different diseases that dermatologists have published reports on ZORYVE working in. That can be individual cases, sometimes it's case series, but that's an extensive list. There was actually an article that came out, I think, late last year on this concept of PDE4-responsive dermatoses, looking at all of the dermatoses that respond to PDE4 inhibition with our drug or the other FDA-approved PDE4 inhibitors.
Vitiligo and HS were particularly interesting to us, given the strength of the case reports, the case series that came out. I think the vitiligo series came out late last year, and the HS series came out at the beginning of this year. They were really impressive results from very well-respected dermatologists, and they really caused us to stop and look and think, okay, is this another opportunity? Those are two diseases as well that I think investors probably appreciate. There's a very large opportunity and a high unmet need in both of those. We've launched phase II proof of concept trials. We've said that we'll read out the vitiligo trial before the end of this year.
Yep
And also make a decision about whether we're going to progress to phase three or not. And then we would report out, we actually have two ongoing trials in HS at the moment, and we'll report those out in the first quarter of next year. And again, we'll indicate whether we plan to move into phase three or not. I would expect that we'll probably start a couple more of these.
Sure
Sort of proof-of-concept studies looking at other diseases. We haven't decided which ones yet. We have a long list to choose from, and so we want to be thoughtful about our capital expenditure. We do think there's a very large opportunity here, right? It's a very safe, very well-tolerated drug. It's very efficacious. If we can pick up some additional indications, it's just another great opportunity for us to continue to grow the top line and create shareholder value.
Okay. In terms of thinking of phase III development for these indications, is that something Arcutis would likely take on themselves? I know you've reached the profitability threshold. I'm not sure what a phase III trial expense or investment would do to that, but I guess, what are your plans at this point?
Yeah. We absolutely would do these ourselves and I'm going to ask Latha to sort of provide some additional color around how we think about our management of our capital expenditures.
Yeah, I think the key is the 2026 is embedded on the growth of ZORYVE and building the cash coffer, as I'd like to say, and we're being very thoughtful of where we spend it for ROI positive and accretive investments, of which some of them Frank highlighted in the proof of concept studies. By the time we make that go, no-go decision at the end of the year, early 2027, and the trajectory that we believe ZORYVE is on, we'll have enough leverage to invest those and go at them ourselves.
Right.
The intention is not to continue to stay at that edge of breakeven, but we'll see significant operating leverage in 2027 to be able to invest in those and then think about how we continue to build our pipeline and, further beyond that, think about how we return that back to shareholders. We're not here to build the bank balance for the sake of it, but really to invest and inflect the growth and potential of ZORYVE. We have reaffirmed our peak sales at the Investor Day, and we believe we're on that track to hit that peak sales by making those right investments for you to see that inflection in the demand.
Yep. Makes sense. Data from the initial HS and vitiligo trials are still on track for late 2026 or early 2027?
Yeah.
Yes
2026 for vitiligo and early.
Vitiligo
2027 for HS.
Okay. I think we only have a few minutes left. May we cover the other AD program that just got into the clinic?
Sure. Yeah.
CD200.
Yeah. ARQ-234 is a novel fusion protein that binds to and agonizes one of the immune checkpoints in the body, called CD200R. There was another company that was pursuing this target and showed some very, I think, compelling data in atopic dermatitis by agonizing the target. Investors can think of this as sort of the opposite of a PD-1 inhibitor, right? KEYTRUDA is a checkpoint inhibitor, an immune checkpoint inhibitor. This is an immune checkpoint agonist.
Okay.
You're not inhibiting it, you're turning it on, right, because the immune checkpoints regulate the immune system, and when you agonize the checkpoints, you can put the immune system from an activated state back down into its sort of nascent surveillance state, so to speak. We think this is potentially a very compelling and highly differentiated way of treating atopic dermatitis. The world doesn't need 15 IL-4/13s, right? We need different ways of treating atopic dermatitis that maybe treat patients that don't respond well to 4/13 or maybe we're able to achieve a different dosing paradigm, which is one of the things that we're very interested in about CD200. The data would suggest that you can treat patients for a period and then stop, and they persist in remission for a long period of time. We think this could be a really novel and unusual asset.
I think with all of the headwinds that the OX40s are facing, I'm not sure that those are ever going to see the light of day. CD200 would be the next target sort of coming along after 4/13 then.
Okay. It entered the clinic.
Yeah. We started phase I.
Yep
Earlier this year. The traditional SAD/MAD, so we don't know how long that's going to last because it depends on how many doses we're able to study, right? You want phase Is to last longer because it means you can push the dose higher. We will run a small proof of concept as part of this study as well. We'll keep you and the Street updated as the timeline sort of become more clear to us.
At this point, is this IV administered or sub Q?
No, it's sub Q.
Sub Q.
Okay.
Yeah, yeah.
Makes sense. I got to ask about business development. I think I know the answer given what Latha said about the investment into label expansion, but I guess your overall thoughts on.
Yeah, look, I think we have the luxury that business development is a nice-to-have, not a must-have. Right?
Yeah.
Would I love to have some more assets in the pipeline? Absolutely. But I don't have to do anything, which puts me in the enviable position of not having to make a dumb decision, right ? People who get desperate in business development can burn a lot of shareholder money really fast. We're always looking for new assets. We have a great development organization. And I think as time goes on, we're going to have the resources to build out the pipeline. But we're being very thoughtful and very methodical as we evaluate opportunities. I think in the 10 years that we've existed, we've looked at probably 300 assets and we've bought two. So it's a very high bar. But that doesn't mean that we're not always looking for a diamond somewhere in the rough, like ARQ- 234 was. And if we find something, we'll absolutely go for it.
All right. I'll let you guys wrap up. Is there anything that you feel is misunderstood or underappreciated from investors or analysts about the company?
I guess I would just reiterate, and we've said this before, but we have said that we continue to believe that ZORYVE is probably a $2.5 billion-$3.5 billion drug. People kind of roll their eyes or they don't quite believe that. You do the math. We'll do $0.5 billion this year with about a 3.5% market share, right? If we get to a 15% market share, we're a $2.5 billion Drug. That is not a high lift in my view, given how our drug compares to topical steroids and other nonsteroidals out there in terms of efficacy and tolerability. I think Wall Street continues to underestimate the true potential of this molecule. I think that we will prove over time just how big this drug is going to be.
All right. Well, thank you all for spending time with us this morning. Appreciate it.
Always a pleasure.
We look forward to see how ZORYVE continues growing.
Thanks, Serge.
Thanks, Serge.
All right. Thank you.