Arcutis Biotherapeutics, Inc. (ARQT) Q3 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to Arcutis Biotherapeutics Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Brian Schoelkopf, Head of Investor Relations. Please go ahead.

Thank you, Michelle. Good afternoon, everyone, and thank you for joining us today to review our third quarter 2026 financial results and business update. Slides for today's call are available on the Investors section of the Arcutis website. Joining me on the call today are Frank Watanabe, President and CEO of Arcutis; Rob Lisicki, Chief Commercial Officer; Patrick Burnett, Chief Medical Officer; and Latha Vairavan, Chief Financial Officer. 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 of the company's filings with the Securities and Exchange Commission, including descriptions of our business and risk factors. With that, I'll now turn the call over to Frank to begin today's call.

Thanks, Brian, and good afternoon, everybody. As always, we appreciate you joining us for our quarterly update call. It's hard to believe that we're now in the fourth and final quarter of 2026. As I start this afternoon, I'm going to start with a review of the business and our progress that we've made in our third quarter as we continue to execute against our grow, expand and build corporate strategy and to deliver on our mission to bring meaningful innovation to individuals living with chronic inflammatory skin diseases. I'll then take a couple of minutes to address a question that we've been getting a lot recently, namely our approach to the application of artificial intelligence at Arcutis. I'll then turn it over to Rob for a commercial update, then Patrick will provide an update on our R&D programs and initiatives, and we'll finish with a review of the quarter's financial results from Latha before we open it up to your questions. Now, I'm on Slide 5. It has been a year since we unveiled our 3-pillar: grow, expand and build strategy to sustain near- and long-term corporate growth. And in the third quarter, once again, we made notable progress across all 3 pillars. I'll start with the grow pillar, comprising activities that are designed to strengthen our core ZORYVE business across our 3 current indications, plaque psoriasis, atopic dermatitis and seborrheic dermatitis. In late September, we announced an incredibly exciting new partnership with World Champion gymnast Simone Biles to launch our Skin to Believe In awareness campaign. The goal of this ambitious multichannel campaign is to encourage the nearly 36 million Americans living with either eczema or seborrheic dermatitis to talk to their doctor about long-term steroid-free topical treatment options for their chronic skin diseases. Through the campaign, Simone will share her own experience of living with and managing her seborrheic dermatitis and eczema, including her experience using ZORYVE foam and cream. It's truly an honor for us to be partnering with Simone, one of the most recognized and well-respected athletes in the world. Simone has an authentic and trusted advocate of health and wellness issues, making her an extraordinarily powerful brand ambassador. By sharing her story about her challenges of living with these skin conditions, Simone will undoubtedly help empower others to take control of their skin health by speaking with their health care provider about advanced topical treatment options like ZORYVE. This awareness campaign is meaningful in its own right and is also synergistic with our other commercial initiatives such as virtual health and our primary care and pediatric sales force that we've been rolling out throughout the year. Collectively, these initiatives are designed to generate awareness of ZORYVE's differentiated therapeutic profile among both clinicians and patients and then enable efficient patient access to ZORYVE when it's identified as the appropriate therapeutic intervention. Across these initiatives, we're reinvesting the cash flow we're generating from ZORYVE back into the franchise to drive sustained growth and inflection in sales in 2027. Also under the growth pillar, we're really excited to announce the initiation of a new trial that will evaluate ZORYVE cream 0.3% for the treatment of moderate to severe atopic dermatitis. ZORYVE cream 0.15% is already embedded as an important treatment option for clinicians for the treatment of mild to moderate atopic dermatitis. And the intent of this trial, as Patrick will detail shortly, is to evaluate ZORYVE in these more severe patients who need similarly effective and well-tolerated treatment options for the management of their chronic inflammatory skin disease as less severe patients. We're also eagerly awaiting the February 2027 PDUFA date for ZORYVE cream 0.05% as a treatment for mild to moderate atopic dermatitis in infants aged 3 to 24 months, with launch preparations already underway. This expanded indication will be based on the strength of the data from our Phase II INTEGUMENT infant trial. We're excited by the potential to bring an effective nonsteroidal topical treatment safe to use anywhere in the body and for any duration of time to this infant patient population and their caregivers. There is very high clinician anticipation for this potential indication as they currently really struggle with inadequate options for treating this most vulnerable patient group. These clinical investments that we're making in our in-line ZORYVE business will further bolster the medium-term growth of the franchise as well investments we are making to explore potential indication expansions. So now turning to the expand pillar and our ongoing efforts to potentially broaden the application of ZORYVE to individuals with unmet needs across a range of additional inflammatory skin conditions as guided by the expansive body of compelling case reports with ZORYVE. As we've announced previously, we've now completed enrollment in our Phase II proof-of-concept trial of vitiligo. We remain on track to provide a readout from the vitiligo trial in the fourth quarter of this year as well as the decision on whether we will advance the program based on those data. And we continue to enroll the hidradenitis super teva or HS, Phase II proof-of-concept trials, and we anticipate a similar readout for the HS program late in the first quarter of 2027. We're also very excited about a new trial that we're just beginning that will evaluate the use of ZORYVE to treat the debilitating skin rashes that affect up to half of all patients treated with life-saving checkpoint inhibitor therapies like KEYTRUDA and Opdivo. Ironically, these skin rashes are an indication of treatment effect, but they also frequently lead patients to reduce or even discontinue their treatment. So a treatment option with a favorable safety and efficacy profile for these common side effects would be very well received. And we continue to evaluate other potential indications and expect to announce additional Phase II POC studies in the coming quarters. The breadth and ambition of our clinical pursuits with ZORYVE continue to be unrivaled in the branded non-steroidal topical segment. They are enabled by ZORYVE's differentiated therapeutic profile and the distinct and pleiotropic mechanism of action. And while we're advancing them against the backdrop of increasing awareness of the harmful side effects of extended or inappropriate use of corticosteroids and a growing movement to shift the standard of care to advanced non-steroidal topical treatment. Put simply, we believe we are at the right time in the right place with the right drug. And finally, turning to the build pillar and our efforts to deepen our innovative pipeline beyond ZORYVE, where we continue to make progress on the Phase Ia/Ib trial of ARQ-234, our novel biologic targeting CD200R as a potential treatment for moderate to severe atopic dermatitis. Additionally, as we've highlighted on previous calls, we anticipate that external innovation will play a key role in our pipeline expansion efforts. And to that end, we continue to actively evaluate a range of external assets. There's a great deal of emerging scientific and therapeutic innovation across the dermatology and adjacent I&I landscape and potential opportunities for impact are far-reaching and very exciting. Finally, as Latha will describe, we had another strong quarter financially. This sustained level of performance across our core ZORYVE business and the cash flow it is generating is enabling us to continue to invest in innovation, securing the foundation for the long-term success of Arcutis. On our Q2 call, you'll recall that we increased our full year 2026 net revenue guidance by $45 million at the midpoint to between $525 million and $540 million, taking into consideration our strategic portfolio of investments and the continued strength of our core business. With visibility into the remainder of the year and the strength of our Q3 results, today, we are further increasing that guidance range to between $535 million and $545 million. Before detailing our results for the quarter, I'd like to spend a moment answering a question that we've been increasingly receiving, and I'm on Slide 6 now, namely our approach to adopting AI at Arcutis. It's clear to everyone that artificial intelligence is having and will continue to have a meaningful impact on biotech as with nearly every other sector of business. But as I've remarked previously, when all you have is a hammer, everything looks like a nail. And we believe there is a risk that many companies will overinvest in AI programs that yield little or no tangible benefit to their customers and shareholders. At Arcutis, we are taking a measured and intentional approach to leveraging the power of AI in our business. We see the potential, but remain very thoughtful about when we use it and also how we protect our data, an essential issue in a knowledge-intensive business like biotech. Our disciplined approach begins by evaluating when and where AI can be an accelerator to our business. One key question has to be whether AI offers distinct advantages over other traditional approaches. And where AI makes sense, we look to pursue those projects with the greatest impact on our highest priority business objectives. And every AI project needs to have measurable value with the potential for a high return on investment. Lastly and critically, we scrutinize every potential AI project to ensure we can protect our proprietary data and information. Using this disciplined approach, we have already identified more than 30 discrete use cases for AI across our business, some of which have already been deployed and many more that are in the production phase. For example, we've recently equipped our field sales team with an industry-leading AI-enabled set of tools that help them harness all of the information at our disposal to better analyze their business, prioritize which clinicians to call on, what clinical data might be most relevant for the clinicians they interact with and how best to present ZORYVE materials. These efforts are already having a positive impact and becoming an important component of our reps toolkit. Rob and Patrick and I were out in the field last week with our team, and we were impressed at how our team is rapidly leveraging these new tools to enhance their effectiveness. We're also partnering with companies deploying AI-enabled prescription workflow platforms to streamline the post-prescription process for medical offices as we've previously detailed, and that facilitates a more seamless and efficient process for patients to receive their ZORYVE prescriptions once written. Recently, our medical affairs team and our IT group partnered to utilize AI to analyze more than 30 million FDA safety reports and over 1,000 FDA product labels to better highlight the need for a revision of topical steroid labeling. This research led to an important publication in a peer-reviewed journal, which is helping to lay the foundation for regulatory action on topical steroids. And the final example is our finance team's use of multiple AI-enabled tools to improve efficiency and accuracy of critical business processes such as accounts receivable. Having seen early success with such thoughtful implementations of AI to our business, we will continue to pursue measured and intentional deployments of AI. It's just the latest example of meaningful innovation at the forefront of what we do here at Arcutis. Now before we proceed any further, I'm going to share what is, for me, very exciting news personally and for the Arcutis team. That is today, I'm pleased to announce that Rob Lisicki has agreed to stay on permanently as our Chief Commercial Officer. As I mentioned to you on our Q2 call, Rob brings a wealth of experience leading best-in-class commercial teams in the inflammation and immunology space and in driving rapid sales expansion to build blockbuster franchises. Rob and I have known each other for, gosh, more than 2 decades since our time working together on Enbrel. And I can say without reservation, he is one of the finest commercial leaders I have ever had the privilege of working with in my years in the industry. Unsurprisingly, Rob has effortlessly stepped into the CCO role and has already gained a firm handle on our strategic vision and the near and long-term plans for ZORYVE. He is making a significant impact as we continue to execute in 2026 and prepare for a very busy 2027. The leadership, commercial nous, and drive that Rob brings to bear are ideally matched to the moment that we are at with ZORYVE, and I can think of no better individual to drive ZORYVE to its full blockbuster potential. And with that, I'll now hand it over to Rob for his initial commentary on the business and the third quarter commercial results.

Thanks, Frank.

Rob -- sorry, your audio is breaking up a little bit. Rob, I think folks are having a hard time hearing you. Rob seems to be having some technical difficulties. So I think while we sort those out, maybe let me step in and...

Can you hear me?

You're coming in and out, Rob.

My apologies, everyone. Our tests all worked fine. Let me give this another try. And if I'm not clear, Frank or team, please just let me know.

Yes. Actually Rob, that's much better.

Wonderful. I'm delighted to join today's call and incredibly excited to be a part of this mission-focused and results-driven Arcutis team. I want to thank, Frank, first of all, and the Board as well for this opportunity. As Frank mentioned, we've known each other for decades. For me, it's been incredibly gratifying to watch Arcutis' steady rise as the next-generation leader in chronic inflammatory skin disease. Now it's a privilege to actually be a part of that and to lead the commercial organization that's been built upon such a firm and solid foundation. If you'll permit me, I just want to share a few quick first impressions since coming into the role. First, the momentum and growth and opportunities for ZORYVE and the franchise is really extraordinary with its unquestioned leadership of the growing branded topical nonsteroidal segment as the aging topical corticosteroid class is being steadily displaced by newer and more innovative options. I know from my time in the industry, the term paradigm shift is used very often, but for the millions of individuals that are impacted by chronic inflammatory skin conditions often for decades and in need of topical treatments, a product like ZORYVE that delivers efficacy that can be used anywhere on any part of the body for any duration of time truly does embody a paradigm shift. The market share that ZORYVE has captured thus far, in my opinion, is merely the tip of the iceberg. Building on what Frank said earlier, we believe that Arcutis is indeed in the right place at the right time with the right drug, and I would also add with the right team. In my time here, I have found this to be a deeply experienced, talented and dedicated group of people operating at the highest level with an unwavering dedication to help patients. Moving to Slide 8 and turning to commercial results for the quarter. We continue to see robust sales performance and demand-driven growth in the third quarter. Net product revenues...

Rob, sorry, we're losing you again. I think we're going to need to try something else. So let me maybe take over for a minute while Rob sorting out his audio issues. So we're still on Slide 8. So as Rob, I think, was saying, hopefully, you folks heard, sorry that we've got Murphy in our backpack today. We've seen really robust sales performance and demand-driven growth in the third quarter. Net product revenues were $143.9 million, representing a 45% increase from the third quarter of 2025 and an 11% increase over Q2 of this year.

Frank, I just came back on. For some reason, the system is muting me, my apologies.

Okay. Great.

Picking up from where Frank was, the sustained demand growth despite the typical Q3 seasonal headwinds underscores the momentum of the franchise. Importantly, we see demand growth in the period across all indications and all formulations. And as expected, we saw only marginal improvement in our gross to net rate from the second quarter, and that was primarily driven by lower co-pay expense. Overall, the GTN remains stable and in the low 50s. Looking ahead to the fourth quarter, we expect substantial sequential demand growth on the momentum of our base business drivers by the continued conversion of topical corticosteroids to branded nonsteroidal treatment options and by the impact of the numerous commercial initiatives that we are investing in to accelerate ZORYVE's growth. We also expect demand growth to be supported by typical fourth quarter seasonality tailwinds, and we expect gross to net discounts to remain stable into the fourth quarter with minimal pricing-driven sales growth. Moving to Slide 9. Weekly prescriptions of ZORYVE on a rolling 4-week average shows sustained growth across the portfolio. Demand in the quarter surpassed 300,000 prescriptions, reaching yet another high watermark for quarterly demand with growth across all indications and all formulations for ZORYVE. As this chart highlights, ZORYVE continues to experience substantial prescription growth with no signs of attenuation. This sustained demand growth will remain the primary driver of ZORYVE's revenue expansion through the rest of the year, and we continue to expect an acceleration in this trend in 2027 based on the investments we are making in the business. Now turning to Slide 10. In September, we launched the Skin to Believe In campaign in partnership with Simone Biles. This campaign is aimed at raising awareness of seborrheic dermatitis and eczema and inspiring people affected by these diseases to explore nonsteroidal treatment options. Let me first start by saying we are absolutely thrilled to be working with Simone on this important initiative. Simone is truly a unique brand ambassador. She is a credible role model, not only because of her tremendous athletic achievements as a once-in-a-generation world champion gymnast, but also because of her history in advocating for awareness and discussion of mental health issues. And underlying all of that is her genuine approachable and warm personality. As Frank has already shared, Simone has made both ZORYVE foam and cream a part of her routine and is sharing what that means to her. We believe Simone will bring broad and deep reach to both disease and ZORYVE awareness. The campaign announcement itself generated more than 6 billion impressions, which speaks to the breadth of the impact that Simone will achieve. Today, if a patient ask their HCP for ZORYVE, that request is nearly always granted. The honor rate is driven by the safe, tolerable profile of the drug, its ease of administration and clinicians' experience with the rapid and robust efficacy and symptom relief that it provides to patients with inflammatory dermatosis. We would expect the campaign to increase the number of patients seeking care and asking for ZORYVE by name. The grant rate by dermatology clinicians should remain above 90%. This is an important initiative to fulfill our growth pillar and increase the new-to-brand prescription rate. History also tells us that DTC campaigns aid HCP awareness and also improve patient adherence. So there are numerous benefits this campaign should provide to the brand and to our business. The Skin to Believe In campaign is an omnichannel effort. It involves both patient and clinician-facing materials, advertising and communication. While the campaign is already being deployed nationally across various channels, we anticipate that the impact to demand in prescription volume will start to be more visible in early 2027 since awareness and activation for campaigns of this type requires some time to take effect. Slide 11. As Frank mentioned, the Skin to Believe In campaign is part of a comprehensive and impactful portfolio of investments we've rolled out in 2026 designed to sustain growth and inflection in ZORYVE sales. These initiatives fall into 3 distinct categories: grow awareness, win share and enable patient access. Our efforts to grow awareness are targeted at driving patients to seek medical consultation when signs and symptoms present for seborrheic dermatitis, atopic dermatitis and plaque psoriasis and when they seek treatment to consider ZORYVE. We're already driving meaningful patient engagement through our Free to Be Me patient awareness campaign featuring Tori Spelling, her daughter, Stella McDermott and professional golfer Max Homa. This campaign continues to resonate with a broad range of demographics. The addition of the Skin to Believe In campaign with Simone Biles will meaningfully broaden and deepen the level of engagement and awareness that we are generating. In addition to our celebrity endorsement campaigns, we are also deploying traditional media tactics to reach patients who stand to gain from ZORYVE awareness. This includes the use of social media deployments, search engine optimization, AI and the like. As we've been discussing throughout the year, we have also made investments to strengthen our commercial infrastructure through targeted additions to our sales force. Our new dermatology specialty reps have been in the field for about 6 months now. And as anticipated, we've begun to see the initial impact on growth from these reps as demonstrated by increases in weekly demand as we exited the third quarter. In the fourth quarter and moving into '27 and beyond, we expect to see continued and growing contribution to demand growth from this contribution. Our primary care and pediatric pilot sales force has now been in the field since the end of August. They're continuing to increase call activity and gain familiarity with their customer base. We're also seeing early signs and signals of primary care and pediatric BNST writers returning to ZORYVE as well as signs of new writers prescribing ZORYVE. These are early signals, and we're seeing this across the recently created territories. As a reminder, this is a highly targeted sales team, roughly 20 reps focused on very high-volume PCP and pediatricians who have shown either a prior inclination to use branded nonsteroidal topicals or who are concentrated in major metropolitan areas. We expect to see or begin seeing a clearer picture of this new team's impact on demand in the new year. As we've said previously, we will closely monitor the demand and impact of this initial deployment in PCP and pediatrics as we consider further actions. As detailed during the Q2 earnings call, we're also taking actions to enable seamless and efficient patient access to ZORYVE. Our virtual health platform is designed to meet patients where they are by addressing common barriers to dermatology care that can include long wait times for dermatology appointments or the absence of specialized dermatology care in some regions of the country. Our goal with this platform is to help more individuals access the therapies they need while continuing to partner with dermatology specialists. This platform, we believe, will grow in importance as we generate greater consumer awareness through our Skin to Believe In campaign with Simone Biles. As patients engage with the campaign, they will be provided with options to easily navigate to our virtual health platform should they wish to engage with the dermatologist online. This will be an important option for those seeking consultation with the dermatologist for the first time or those who face barriers to specialized dermatology care. We also recently announced that we have partnered with a leading AI-enabled prescription fulfillment workflow platform, which will allow us to streamline and systematize patient access to ZORYVE once they receive a prescription. This investment is designed to overcome the time-intensive process that physicians may experience when they prescribe therapy to an individual. Taken together, all of these initiatives mark an important maturation in our mission to develop meaningful innovation for individuals living with chronic skin disease. Millions of individuals with psoriasis, atopic dermatitis and seborrheic dermatitis across every age group and demographic deserve to take advantage of the unique benefits that target topical therapies like ZORYVE deliver, particularly compared to the aging topical corticosteroid class. With that, I will now hand the call over to Patrick for our quarterly R&D update.

Thanks, Rob, and good afternoon, everyone. I'm on Slide 13. I'd like to provide an update on what the R&D team has been doing to support grow, expand and build, starting with our clinical activities supporting the grow pillar. As Frank mentioned at the top of the call, we're excited to have initiated a new trial evaluating the use of ZORYVE cream 0.3% for the treatment of patients with moderate to severe atopic dermatitis. It's our belief that patients with this more severe burden of disease may benefit from the higher potency formulation of ZORYVE cream. This addition would provide HCPs even more flexibility in choosing ZORYVE for their AD patients across the spectrum of disease severity. Importantly, for patients receiving systemic therapy, other branded nonsteroidal topicals such as ruxolitinib are contraindicated. And so ZORYVE is an important treatment option for controlling residual disease and flares. As patients in this moderate to severe segment are the most likely to require biologic or oral therapy, this approach will provide a badly needed treatment option even if they transition to systemic therapy. This trial is just now getting underway, and we look forward to sharing further updates as it progresses. We also continue to prepare for our upcoming PDUFA action date on February 23, 2027, for the supplemental NDA for ZORYVE cream 0.05% for the treatment of mild to moderate atopic dermatitis in infants down to 3 months. This follows on our approval just last year for ZORYVE cream 0.05% for children with atopic dermatitis down to the age of 2. As I've mentioned previously, I'm a dermatologist still actively taking care of patients. So I know all too well the unique challenges of treating young patient population, particularly the very young infants and toddlers. The skin of infants in this 3- to 24-month age group is not yet fully developed, which can result in increased systemic absorption of topical agents. In addition, atopic dermatitis often affects more surface area in younger children compared to adolescents and adults. It's very hard for parents and caregivers to see their little ones suffer with atopic dermatitis. It's compounded by a concern for the potential harmful side effects of topical steroid use. Because of these factors, this young patient population represents one of the most urgent needs for a safe, effective and well-tolerated nonsteroidal topical. We're very excited to be on the threshold of bringing the innovation of ZORYVE to these patients and their parents and caregivers. If approved as anticipated, it will be a particularly gratifying milestone for our team. We continue to enroll patients in the 2 trials we initiated in the second quarter. The first is INTEGUMENT-ITCH, which we're conducting in adults to better elucidate ZORYVE's impact on pruritus or itch. As a reminder, we initiated this trial based on compelling data from the INTEGUMENT infant trial that showed reductions in itch within 10 minutes of the first application. The second trial is evaluating the impact of ZORYVE on nail psoriasis, a notoriously difficult-to-treat presentation of plaque psoriasis that often fails systemic therapy. We've seen some exciting signals of ZORYVE's efficacy in nail psoriasis through case reports as described previously and are eager to further evaluate the opportunity to help this subset of psoriasis patients. Now turning to our clinical progress under the expand pillar, which includes activities to extend the ZORYVE franchise to help individuals with additional chronic inflammatory diseases beyond our current approved indications. As Frank mentioned, we remain on track to report a readout for our vitiligo proof-of-concept trial this quarter and concurrently, a decision on whether to advance the program. I'll say more about the basis for our interest in vitiligo shortly. We also continue to enroll our Phase II proof-of-concept trials of ZORYVE foam for patients with hidradenitis suppurativa and expect to report trial results and a decision on advancement for that program in the first quarter of 2027. Hidradenitis suppurativa is a disease where ZORYVE could potentially provide an important and highly differentiated therapeutic option. There are currently no FDA-approved topical options for patients with HS, and none for milder patients, while more severe patients typically rely on systemic therapies. A topical therapy that could be used as monotherapy or in combination with systemic therapy without limitation would provide an important treatment option for patients and their health care providers. And our foam formulation could be a major additional benefit for patients as HS typically presents in hair-bearing areas like the groin or axillae. Separately, we're preparing to enroll a trial evaluating the impact of ZORYVE cream, 0.3% on cutaneous adverse events in cancer patients receiving PD-1 or PD-ligand 1 checkpoint inhibitor treatment. Such side effects occur in as many as half of patients receiving these life-saving treatments, and they often lead to interference with cancer therapy. If ZORYVE is able to effectively manage such treatment-related dermatosis, as suggested by the case reports we've seen, it may help cancer patients to persist with their treatment regimen. This trial is another meaningful example of the broad potential applications of ZORYVE across inflammatory skin conditions. Now finally, our build pillar and ARQ-234. This is our novel CD200R biologic for the treatment of atopic dermatitis. We've progressed it to the final single SAD cohort and have begun enrolling atopic patients into the multiple ascending dose component of the trial. We're pleased that we were able to enroll through all of the single ascending dose segments and encouraged by the safety profile that this begins to establish. As we've indicated previously, we plan to initiate a small proof-of-concept cohort after we've completed the MAD component of the study, and we will not be reporting out results from this trial until that proof of concept is completed. But we do look forward to sharing more data on the promise of ARQ-234 in the future. And moving now to Slide 14. As we approach the readouts from our initial proof-of-concept trials evaluating the indication expansion for ZORYVE, I would like to highlight some important aspects of ZORYVE's pleiotropic mechanism of action to help explain the breadth of potential applications that we're evaluating. ZORYVE inhibits phosphodiesterase 4 or PDE4, an enzyme that's widely expressed in cells throughout the human body, where it regulates cyclic adenosine monophosphate or cyclic AMP, an intracellular messenger that has various roles in cells depending on the cell type. PDE4 inhibitors have historically been viewed as immune modulating agents. And in fact, in immune cells, PDE4 inhibition impacts multiple biologic processes implicated in immune-mediated inflammatory skin conditions. Specifically, PDE4 inhibition reduces the expression of multiple key pro-inflammatory cytokines, including interferon gamma, type 1 interferon alpha, TNF alpha and then IL-4, IL-6, IL-17 and IL-23, which spans signaling through TH1, TH 2 and TH 17 immune-mediated responses. The PDE4 inhibition plays a far broader role than just immune modulation. For example, PDE4 also plays a role in sensory neuron activation. So inhibiting PDE4 likely directly mediates the itch sensation, consistent with the rapid and profound impact on itch demonstrated with ZORYVE across multiple studies. As mentioned, we're seeking to better define the speed of effect of ZORYVE on pruritus in atopic dermatitis through the INTEGUMENT-ITCH trial that we're currently enrolling. PDE4 inhibition also normalizes keratinocyte activation and differentiation, which can lead to mitigation of the epidermal barrier dysfunction that occurs in many inflammatory dermatoses. PDE4 inhibition in general and roflumilast specifically has also demonstrated antifibrotic properties across multiple diseases, including lung fibrosis and on keloids. There are fibrotic components to several inflammatory skin diseases, including hidradenitis suppurativa as we continue to evaluate ZORYVE's application in that indication. This component of roflumilast pleiotropic mechanism of action could potentially be very meaningful. The different elements of this mechanism highlighted on this slide and including the neuronal itch mechanism that I described earlier were reviewed in a recent publication by Dr. Raj Chovatiya? in the International Journal of Dermatology. As we think about each individual indication, these different elements of the PDE4 mechanism of action may be more or less relevant. For instance, in HS, in addition to controlling fibrosis, modulating neuronal signaling and suppressing the core inflammatory pathways that drive disease activity are all important. Approximately 50% of HS patients experience itch and 60% of patients rate their pain as moderate to severe. So potentially being able to address this directly and not just through modulating inflammation could be a benefit. In HS, the inflammatory profile includes TNF alpha and IL-17, where several biologic therapies have been approved. These are pathways clearly linked to PDE4 inhibition and implicated in the efficacy of ZORYVE in approved indications like psoriasis and seborrheic dermatitis. This appears to make ZORYVE and the PDE4 mechanism of PDE4 inhibition, a uniquely interesting fit for hidradenitis suppurativa, a disease which dramatically impacts quality of life and has historically been difficult to manage. And finally, as I now focus on vitiligo, PDE4 inhibition increases melanocyte proliferation, melanocytic gene and protein expression and protects melanocytes from apoptosis. These effects, taken together with the anti-inflammatory properties of ZORYVE, create a wholly differentiated approach to treating vitiligo, one that could potentially address both sides of the disease, putting out the fire by reducing the inflammatory signals driving melanocyte destruction while also rebuilding the house by supporting melanocyte recovery and repigmentation. This mechanistic rationale for ZORYVE's potential impact in vitiligo is one of the components of the basis of our interest in clinical evaluation for ZORYVE in that disease. Another component is the clinical signals that we've seen from the field. I'm now on Slide 15. As we presented at our R&D event last fall, our new indication exploration is guided by a large body of case reports from clinicians who have used ZORYVE in various inflammatory dermatosis beyond our current approved indications. We've been encouraged by multiple case reports from clinicians who pursued vitiligo as a novel application for ZORYVE, particularly in difficult-to-treat vitiligo presentations and the signal of efficacy repigmentation after prior inadequate response to other treatments with no adverse events reported. Today, I wanted to highlight the case of a 37-year-old male patient in Canada that was recently published in the Journal of Drugs in Dermatology. As you can see, this patient with recalcitrant and long-standing vitiligo experienced striking repigmentation across his face at 4 months that further deepened and was maintained at 7 months with the use of ZORYVE cream and narrowband ultraviolet B therapy. This type of case study makes it clear why we've been encouraged to further study the application of ZORYVE in vitiligo. Before moving on, I'll remind you of some aspects of our ongoing Phase II proof-of-concept study with ZORYVE foam 0.3% for the treatment of vitiligo. The purpose of this open-label, single-center proof-of-concept study is to determine whether the clinical signal with ZORYVE supports advancement into Phase III development. The study has met its enrollment target of 20 patients, and the primary endpoint of the study is a number of patients achieving a 50% improvement in their facial vitiligo Area and Severity Index score at week 24. As mentioned, we expect to report results in the fourth quarter, similar efficacy to approved therapies may be enough to support advancement of the program given ZORYVE's strong therapeutic profile with any potential separation in efficacy establishing a potential best-in-class profile. Of course, the Phase III data will influence whether and how we move forward and any registrational program would require alignment with regulatory authorities on the appropriate Phase III design. Even as we advance the vitiligo and HS studies, we continue to evaluate other diseases for similar proof-of-concept studies, and we will keep the investment community apprised if and when we decide to initiate additional proof-of-concept trials. With that, I'll turn it over to Latha to review the financial results.

Thank you, Patrick, and good afternoon, everyone. I'm on Slide 17. In the third quarter, we generated net product revenues of $143.9 million, which is up 45% from Q3 of 2025. This year-over-year increase was driven primarily by increased patient demand as well as very modest improvements in gross to net sales deduction. Sales grew 11% versus Q2 2026, driven by increased patient demand with our gross to net remaining stable in the 50s and consistent with the prior quarter. Cost of sales in the third quarter were $12.5 million compared to $8.7 million in the third quarter of 2025, primarily due to increasing ZORYVE sales volume. For the third quarter of 2026, our R&D expenses were $22.4 million versus $19.6 million for the corresponding period in 2025. This year-over-year increase was driven by increased clinical development expenses for ARQ-234. SG&A expenses were $99.6 million for the second quarter of 2026 compared to $62.4 million for the same period last year. I apologize, I meant third quarter of 2026, up 60%, driven by increased media spend, primarily in support of the Skin to Believe In campaign as well as increased personnel-related costs driven by our sales force expansion. Looking forward to the fourth quarter, we expect expenses to remain at this level as we continue to invest in our commercialization efforts for ZORYVE to build a foundation for sales inflection in 2027 as we continue to advance our innovative pipeline. We produced net income of $8.8 million for the quarter as compared with net income of $7.4 million for the same period for 2025. Moving on to Slide 18. We ended the quarter with cash and marketable securities of $259.8 million as we produced positive cash flow from operating activities of $18.9 million for the period. We expect to maintain positive cash flow through the end of the year. And as we discussed throughout this call, we intend to continue to invest the capital we generate back into our business to accelerate growth in 2027 and beyond, although we will continue to be careful stewards of our cash and shareholder equity. We have total debt of $109.4 million. As Frank mentioned during his opening remarks, with consideration of the strength of our Q3 results, we are increasing our net revenue guidance to $535 million to $545 million from previous range of $525 million to $540 million. With that, I will turn the call back to Frank for final thoughts.

Thanks, Latha, and thanks again to all of you for joining us today and for your continued interest in Arcutis. As you can see, we continue to make important progress executing against all 3 of our grow, expand, build strategy pillars. We're proud of all the achievements we've realized thus far on behalf of patients, and we're incredibly excited about the many potential opportunities to extend our reach and impact in the future. As always, I want to thank our team for their continued commitment, which underlies all of our mission-driven progress and positions us to deliver lasting value for shareholders. And with that, we'll open the call up to questions.

And the first question is going to come from Seamus Fernandez with Guggenheim.

So 2 quick ones. First, just on the trajectory of the business, the team has been commenting that you see actually accelerating growth in 2027 over 2026. That would suggest a pretty impressive trajectory relative to the current consensus. Just hoping that you could help sort of frame that acceleration for us. And if I'm getting this wrong, please correct me. And then the second question is, Patrick, on the opportunities ahead, hidradenitis, all of the other potential indications, vitiligo in particular, we saw and we do see extremely high rates of persistence as it relates to vitiligo treatment. So I'm just hoping to get a better understanding on the commercial side and where you would see the persistence actually laying out should vitiligo actually be successful and advance into Phase III and ultimately be approved. What would you say the increase in the sort of number of tubes per patient could potentially be relative to the utilization that we see today?

Seamus, always good to hear from you. So just quickly on the -- your question about the sales trajectory. Look, I think you guys can all see the underlying strength of the business as it stands currently. And you take that and factor in the size of this market opportunity that we continue to talk about and the steady progress in dermatologists moving towards the advanced topical therapies. And then on top of that, you add the strategic investments that we continue to make in the business and that we detailed here today. We are very excited about our ability to sustain or even accelerate our growth into the future. I think I'll get in trouble if I get into too much specifics here. So I'm going to turn things over to Latha to maybe provide a little more color on that, and then Patrick can answer your question about some of the new indications.

Seamus, I hope you're doing well. I think I'll kind of summarize it in 3 points. We had a strong quarter. We took up the guide that's a proof point of the momentum as we enter into Q4 and close out the year. And as you know, Q4 is always our strongest quarter. Second, I'm going to be consistent and say that we are going to improve our growth and inflect our 2027 net sales because that's our path to the peak sales that we put out there. And all the investments we're making are geared towards that inflection. And this is not the time where I'm going to give a soft guide. I know we did it last year because it was our first time. So we'll have to wait until we close out the year and come into 2027. And I'll hand it to Patrick to answer your second question.

Yes, Seamus, I think you point out some really interesting aspects of these 2 diseases, especially if you look at them in contrast to psoriasis, seb derm and atopic dermatitis, right? Those are conditions where patients tend to treat, they get the disease under control. We ran some pretty short trials in those indications, 4 weeks for atopic dermatitis, 8 weeks otherwise. And then once it's under control, patients may either intermittently or a couple of times a week or maybe stop treatment for a bit and then resume. And what I hear you pointing out is that particularly in vitiligo, I mentioned a 24-week endpoint. But also, I would add, hidradenitis suppurativa. These are diseases that tend to take a long time to get under control just by their very nature historically. But also, there are treatments that are often applied every single day for a year plus. So I think that is a little bit different than what we've seen with some of the other indications that we are approved for right now. How that specifically would translate into tube usage over time, I think we're going to need a little bit of time to kind of think through that. It's going to be impacted by the body surface area of the typical patient that's out there. So I think it's going to take a little bit more time to kind of sort that out. But I think you are highlighting an important difference between these 2 indications in particular and some of those that were approved for.

And our next question will come from Steve Seedhouse with Cantor.

Congrats on the impressive growth. I actually wanted to focus on the R&D side with a couple of questions. And drilling down actually into that vitiligo case report on Slide 15 first, just to start, like it's pretty tantalizing response, actually maybe more impressive than any of the others published to date. Curious if there's anything about the case, patient history, anything else that strikes you as maybe explaining why there was such a good responder? And should we expect responses like this basically in your open-label trial? Or would you not want to set that expectation? And then also, when a patient has a complete resolution like this, it appears like, would they continue to treat? It seems like they did from month 4 to 7, is it warranted to just keep treating indefinitely? Or at some point, do they just discontinue if they sort of completely respond?

Yes. So this is an interesting case. And I think that's one of the challenges of case reports, and that's why we wanted to run our own study, even though it's a relatively small open-label trial, is it there you get an understanding of the denominator because case reports can represent some of the most impressive responses. However, like acknowledging that, I think that the fact that this patient did achieve what is really a very striking response and I would say, one that is pretty unique in caring for vitiligo patients in my career. It's not something that you would anticipate to see with a lot of the therapies that we have right now. So I think it's very intriguing. It is a single case report. So that's why we're looking a little bit more. The addition of narrowband UVB, however, I would say, is a component of treatment that's been a mainstay for many patients. We even tell patients to go out and get a little bit of ultraviolet light outside if they're in a region where they can do that and the season is appropriate for it. It's very rare to hear dermatology recommending someone to go outside and tan in the sun. But I think that, that's probably not a big confounder here just because we all have a pretty good understanding of what that efficacy looks like, and it doesn't look like what this patient had. So I think time will tell. I wouldn't want to set that as a bar for what a ZORYVE response looks like in every patient. As we know any time you're treating patients, you see a kind of spectrum of responses. But I think that what you're touching on also as far as the longevity of treatment, we just had a really good engagement with vitiligo experts between our team kind of helping us to plan for future trials. And what you're talking about is exactly a core part of therapy from their recommendation, which is that when a patient does have a good response, they're expecting that they would continue to treat that 4 months just to ensure that any kind of residual inflammation is gone from the skin. And when to stop is an issue of active debate within the field right now. So I think the preference is for patients to continue for long-term therapy even if they have a really good response and then kind of slowly maybe withdraw over time, but certainly wouldn't stop if a patient were having a great response and then just wait and see right away. That's not where the field is going.

Yes. Steve, if I could maybe add 2 more thoughts on this particular case with full caveat that I'm not a dermatologist unlike Patrick. But I think it is also really notable that this individual had failed topical steroids and topical calcineurin inhibitors before he had this remarkable response on ZORYVE, which I think adds to our excitement about seeing the vitiligo data. And then I think the other thing that really stands out about this case is the rapidity of the response, which I think may -- those 2 things may relate back to what Patrick was talking about the pleiotropic approach of PDE4 inhibition in vitiligo compared to the traditional solely anti-inflammatory approach that steroids and other topical treatments have really been addressing with vitiligo.

Yes. Looking forward, obviously, to seeing your full data set here soon. And just on one different topic, I wanted to follow up on a comment made in the prepared remarks just on BD or external innovation. It sounded like you mentioned some general interest there and some goals maybe on the scope of that. I just want to see if you could elaborate on your thoughts there. Like what's your motivation level to acquire any additional asset or assets? And what type of deal size or stage of development is within your scope and timing of anything in that regard?

Yes, sure. Thanks for that question, Steve. I think we've talked about this on a number of occasions in the past with the investment community. Look, on the one hand, we are certainly interested in adding additional products to our portfolio. I think our development team has proven their amazing capabilities with 7 FDA approvals all on time in the last 4 years, an eighth one not too far away, 9 successful Phase III trials. It's an impressive record for a large company, let alone a small company. So I think they've shown their ability to deliver on clinical development programs and manufacturing. And we -- as we don't stop, but slow down the pace of ZORYVE developments as we're completing all of our existing indications, I think there's capacity for us to do more things. That's on the one hand. On the other hand, given all the things that we have on our plate across in-line ZORYVE, ZORYVE life cycle expansion and ARQ-234, what I've said previously, and I continue to believe this, that business development is a nice to have but not a must-have for our company. And I think that puts us in an enviable position of being able to choose to do business development or not, right? Because I think when companies get into situations where they have to do business development to sustain themselves, they start making bad decisions. We have a really great team that's looking at probably a dozen assets at any one point in time. We've looked at probably 350 or more assets in the last 10 years, and we've only bought two. So that tells you a little how high the bar is. And we're going to continue to be very disciplined in our evaluation of assets. But I've also mentioned to the Street that we are seeing, I think, an increased deal flow. I don't know if that's the overall funding environment or whether that's because we're now seen as one of the preferred partners if you're looking to license out your asset. But we certainly have plenty of opportunities, and it's really a matter of do we find something where we think we can generate shareholder value. And if so, we'll move. And if we don't, then we are not going to waste shareholder money.

And the next question will come from Andrew Tsai with Jefferies.

Maybe the first one as a follow-up to BD because, Frank, you said BD isn't nice to have, not a must-have. My question is, what would you do with all the cash you're going to be building up in the next few quarters otherwise? And then secondly, for vitiligo and HS coming up, when you share the top line data sets, how detailed of a data set can we expect for each program? And in addition to providing us the go/no-go decision, would you plan to share a rough design of the Phase III at the time of the top line? Or is that update later in 2027 after FDA discussions?

Yes. Thanks, Andrew. Two very good questions. However, I'm going to turf them both over. So Latha, if you want to maybe take the question around use of capital going forward. And then, Patrick, if you could maybe comment on what to expect around the top line data from vitiligo and HS.

Yes. Hi Andrew, so first, to answer your question, yes, as we continue to build leverage, we will invest in our business. So like I've said, and I think we've been reiterating this, the dramatic shift in operational leverage will come in the latter part of '27 into '28. Until then, it will be investing in our business to inflect the growth trend. And after that point, as we build extreme leverage, as you pointed out, lots and lots of cash, as you said, then still we haven't done a BD, then I think your question is fair. But by that time, I think we'll find the right asset to fit our pipeline. And we're mostly, I think, keyed in on late Phase II, early Phase III assets. So for now, the leverage is to invest in the business to inflect the trend. And then as that solidifies and we'll put it back into BD. So I think long term, by '29, I'm sitting on leverage and haven't done BD, then we'll talk.

Yes. And I can take the question on vitiligo. Yes, what you should expect as we would read out this study and then kind of talk about our decision to advance is that we would present the level of data and detail that I think can help you to understand why it is that we would be advancing this program and how it is and we came to our decision and then the data that would support that. So it's kind of hard to -- in a study of 20 patients like this, we've given some of the clinical context from case reports coming from the field that are really important for helping us to understand the possible clinical profile and then talk about how it is that this trial refined our understanding of that profile. We would certainly sketch out what a Phase III program would look like for this indication. But as you mentioned, the final details on what that program will look like will necessitate more engagement with the FDA to make sure that we're all thinking of the same thing to get the product registered should we advance it.

And the next question will come from Tyler Van Buren with TD Cowen.

This is Ikenna on for Tyler. Congrats guys on the wonderful quarter. I just had a quick one. You guys mentioned you're advancing the 0.3% cream in moderate to severe AD. I was wondering what was your decision making -- why that skew? And where do you see a topical fitting in that treatment landscape? And what you think the opportunity there is?

Sure. Patrick, do you want to take that one, too?

Yes, absolutely. Yes, I'm excited about this program because I think what it really helps us to do is to kind of bracket if you kind of take a step back and think about where we are in AD. After February of next year, should the approval for three to 24 months come with the 0.05% and then eventually with the addition of this, we're really bracketing an AD patient regardless of their age from three months, which is the earlier onset for a patient with atopic dermatitis for their entire life. And now we were also talking about bracketing the entirety of the severity profile, mild to moderate and then also moderate to severe. So we chose the 0.3% because this is the highest strength that we have approved and we think probably the highest strength that is going to add any possible benefit. And in these patients that are on the more severe end, and you have to keep in mind that we have mild to moderate already approved. And now we're talking about moderate to severe. So even though you may say, well, like you're just talking about adding severe patients and to a certain extent, that is true. But health care providers kind of think about these as two different groups that overlap in the center. And when we are talking about moderate to severe patients, these are patients where you might be thinking eventually they are probably going to be needing a systemic therapy. And what we've heard from health care providers is that ZORYVE plays a really important role in that decision-making process. And oftentimes, patients are put on to ZORYVE to see if they can avoid going on to a systemic therapy. And we've heard case reports and anecdotal reports that sometimes they've initiated even the paperwork to put a patient on the systemic and then found that they don't actually need to progress that because of the response that's been seen. So generating data, specifically with the higher strength really offers an opportunity to capture every possible atopic dermatitis patient that's out there that's appropriate for treatment with ZORYVE and then also to have them potentially continue should they need to advance on to a systemic therapy because we know that, that's a good fit for the ZORYVE approved indications where we're not excluded from that concomitant use with biologics or oral treatments.

And the next question is going to come from Mike Ulz with Morgan Stanley.

This is Parth on for Mike. Just to follow up on that moderate to severe AD opportunity. Do you guys see this as like a key population to kind of get to that previously provided peak sales number? And then for next year with the infant AD population, how do you guys think about the growth there later into next year?

Yes. Rob, do you want to maybe take that one?

Yes, I'll start with the -- so on the first part of the question, the idea is essentially from cradle to cane, any patient, any time, you have an option for that patient with a topical with or without systemic, particularly as you start to enter the severe range. On the infant to three to 24, we think we have an opportunity to unlock significant potential and value there. If you look at that category, the claims data shows that there's more than 1 million claims for patients between the ages of three and 24. Part of the rationale and the strategy behind the PCP and Peds advancement was to capture some of those ancillary treaters, which tend to be pediatricians and some PCPs. So we think between the product and our sales force, we're uniquely structured to capitalize on that opportunity. And we also think we can demonstrate a clear benefit in these patients that will expand to patients above 24 months as well.

And the next question will come from Douglas Tsao with H.C. Wainwright.

I'm just curious if you could provide some sort of color in terms of sort of the script trends we've seen of late because after the approval of the cream last winter, we sort of had a nice bump. And then I know we typically see some seasonality in the beginning part of the year, but then sort of script growth seem kind of flat and then they really have sort of taken off again in the last few weeks. And just curious if you have any color in terms of just what has driven it since the summer?

Yes. Rob, do you want to take that one, too? Sorry to pick on.

Yes, I will take the question. Thank you for the question. I think you touched on a couple. Part of it is seasonality and sometimes there can be some variance quarter-to-quarter or year-to-year and when seasonality picks up based on when holidays fall and vacations, those types of things. I think that the other element that we see is some of the early signals that I mentioned with the derm expansion. What I've seen in looking at that data is that when we get the targeting and frequency to the level that we think is appropriate, that business really expands at a very dramatic and rapid rate. And we started to see that for the first time really in the month of September. We've also seen some increases in adherence with patients as well. So it's the combination of those factors where we're starting to see some of those key investments pay off. And as physicians get more experience with the product, they tend to keep their patients on drug longer.

I guess I'll just make one more comment, just sort of -- Rob doesn't have the history being fairly new to the team. I think we get this question on occasion. I think if you step back and look at the trend with this product, certainly since the launch of the foam in early '24, it has really been a very strong and sustained growth trend. You get weekly variability. I have told you guys previously, the investment community should definitely not look at weeklies, right? They're just too noisy. At a minimum, you should be looking at rolling four-week averages. And when you look at a rolling four-week average, you see a very clear and consistent growth trend. We get this question occasionally about deceleration. I don't see it in the data. And I think you can miss the force for the trees if you look too closely at these finite cuts of data. The trend has been consistently to the up and to the right, and we expect that to continue. A

And Frank, I don't -- and I think that's a good point. I guess just to me, what was just striking is just what we've seen really since September 1, right, where -- and I think in talking to investors, it's sort of like, oh, gee, what's going on here? And that's sort of what was the genesis of the question.

Yes, absolutely. And I think to Rob's point, we've been investing throughout '26 in driving growth in the business. I think we set the expectation that many of these would not see big returns in '26. I think we'll see a lot of the effect in '27. But we are starting to see the effect of some of those investments. And as Rob mentioned, I think the derm expansion is one that we have enough time underneath our belt that we probably are starting to see the leading edge of that impact for sure.

And you did also mention sort of improvement in adherence. And I'm just curious what initiatives are driving that improvement?

Yes, sure. Rob?

Yes. So we have been with various specialty pharmacy providers that may provide reminders to patients. The other thing that we've had a real focus on from an execution standpoint is when a physician prescribes ZORYVE or an NP or PA to really encourage the physician to include refills on that. That's been in place, I think, since the start of the year. So I think that those are two relatively straightforward tactics that we've been able to use to help and make a difference in some of what you're probably referring to that you're seeing in September.

And the next question is going to come from Serge Belanger with Needham & Company.

This is John on for Serge tonight. Just wanted to touch on expectations for ZORYVE growth in 2027. So you guys have a number of initiatives that you've started to implement, whether it be the dermatology sales force expansion, the new PCP team as well as the virtual health platform that's now been underway for the past few months. I understand it's early days here, but just curious if you've had any anecdotal perspective for us on how these programs are getting off the ground here in '26? And then looking forward to '27, which of these kind of three levers do you see as kind of the key player in order to either maintain ZORYVE's growth or even inflect?

Rob, you're really earning your pay to date. Do you want to take that one?

Yes. I mean I'll do the telehealth piece. So we think that's an important initiative really over the course of the product's life. You're seeing more and more need for telehealth based on access to the specialty, based on the remoteness and just the health care system kind of writ large as well. So it's the early days, but what we're seeing is that when we can get a qualified patient into the system, the conversion rate is exceedingly high. In fact, it could not get much higher. I think the challenge as we scale this is how we continue to increase the amount of traffic that comes to the telehealth site that is qualified. It's part of -- like when we talk about all of the different tactics and investments we're making, sometimes there's a tendency to look at these things in isolation to understand the impact they have. We look at these collectively, right? So how does the Simone Biles' campaign help drive traffic to telehealth? How is the work that we're doing with Tori Spelling and her daughter help driving traffic. So all these things in total are driving traffic there, but it's really early to really decide whether or not to claim victory essentially. But what I'm seeing right now is when we get qualified patients into that site, we have an exceedingly high conversion rate, and we're going to continue to drive that over the course of '27.

And the next question is going to come from Richard Law with Goldman Sachs.

Congrats on the progress so far. Just want to follow up on the vitiligo, that case study. So the disease pathway is pretty highly heterogeneous and complex. Do you believe that there are certain drivers that we may not work? I mean just kind of going back to that case study, it looks very impressive. But have you also heard about other case studies where patients with concurrent like vitiligo with AD or psoriasis that haven't worked on the vitiligo symptoms?

Yes. So Rob, you get a pass finally. Patrick, do you want to take that one?

Yes, absolutely. Yes, I agree with you that there is some heterogeneity in the vitiligo population. There's no doubt about that. We probably aren't hearing about patients that are being treated and aren't responding. Certainly, a lot of those patients don't make it into a case report. So I think it's difficult for me to kind of comment on that. But if I kind of take a step back and look at the mechanism, and I kind of like realize just how ridiculous it was as I was reading out all the different pathways that are targeted from an immune perspective by PD and roflumilast and ZORYVE, thereby. It really is kind of striking that this is immune modulating, but it's not immune suppressive despite the fact that it's touching on all of these different components. So while there is some heterogeneity within the vitiligo population, and we'll certainly learn more about that as we would expand into bigger trials where we could have data to be able to kind of talk about it specifically. What we haven't seen in vitiligo is that there's like a clear responder, non-responder population based on aspects of the disease. And in fact, I mentioned this engagement we just had with some of the key thought leaders. And they were telling us that even duration of disease, which is something that has emerged in some of these autoimmune conditions as a real predictor of possible treatment response that in their mind, duration of disease may not actually be that good of a predictor for whether a patient will respond. So I think we'll just have to learn, but it's something I'll definitely keep my eye on.

I show no further questions at this time. I will now turn the call back over to Frank for closing remarks.

Okay. Well, once again, really appreciate you guys' attendance and all the great questions that we get from you, and we look forward to updating you all on the full year 2026 in just a few months. Hope everyone has a great holiday and look forward to talking to you then. Thanks a lot. Bye-bye.

This concludes today's conference call. Thank you for participating, and you may now disconnect.