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Overview of Arctis Biotherapeutics
The last time we talked Arctis Biotherapeutics, Inc. (Nasdaq:ARQT) The company was preparing to expand the label for its drug Zolib (roflumilast) in several ways.Since then, I’m happy to hear you say that. We achieved most of this goal. First, as mentioned in a previous article, this drug was already approved for the treatment of patients with plaque psoriasis over the age of 12. article It was titledArcutis Biotherapeutics: PDUFA’s date until the end of 2023 is worth a look.“However, we were able to further expand Zolib’s label for the plaque psoriasis indication. This allowed us to target younger patients, ages 6 to 11.”
Regarding the seborrheic dermatitis indication, Zoryve foam has been approved by the FDA to treat this patient population.one of the labels While the expansion I noted has not yet been achieved, this is a great catalyst opportunity for investors to look forward to. The PDUFA date is set for July 7, 2024, by which time the FDA will decide whether to approve Zolib for the treatment of patients with atopic dermatitis.
Finally, regardless of the outcome of this decision, Zoyrve’s sales increased significantly. as a matter of fact, Q1 2024 Revenue Sales of the drug increased 675% to $21.6 million, according to just-released data. If these growth trends continue, I think this name could be a good name to keep for the long term.
Achievement of several label expansions should drive further sales growth for ARQT
As mentioned above, the company saw impressive revenue growth for its drug Zoryve in Q1 2024. The reason this is the case is because I was able to accomplish some of the goals in my previous article.
The first goal achieved was to expand the use of this drug to a younger population of psoriasis patients.In particular, it Received approval for expansion This has opened the door to capture a larger portion of the psoriasis market.The global psoriasis treatment market is Projected to reach $51.48 billion by 2030. This move was coupled with regulatory approval for an entirely different indication. This means that Zolibfoam has been approved by the FDA for the treatment of patients with seborrheic dermatitis. However, this case applies to adults and pediatric patients over 9 years of age. Both of these additional approvals allowed the company to significantly increase its drug revenue.
Some of these catalysts have already been achieved, but what can investors look forward to? For one, don’t overlook the 676% year-over-year revenue increase in Q1 2024. yeah. This means we can expect some new positive surprises when the company releases its next earnings report.
Second, Arcutis Biotherapeutics has the ability to further expand the label. this is, PDUFA date is July 7, 2024, established by the FDA. That’s when a decision will be made on whether Zolib Cream should be approved to treat patients with atopic dermatitis.
What’s special about this approval? Well, it’s also a multi-billion dollar market opportunity.The global atopic dermatitis market is expected to expand could reach $22.6 billion by 2031. In addition to the fact that Zolib targets another large target market indication, it may be a better treatment option for these patients. This drug is not only given to patients periodically, but also serves as a long-term treatment for patients to consider. The advantage of this is that you don’t have to stop and restart as often when a flare-up occurs.
Essentially, consider giving patients long-term control of their disease with just two maintenance doses per week. These benefits mean patients do not have to sacrifice safety, tolerability, or efficacy.
Arctis Financials
by 10-Q SEC FilingArctis Biotherapeutics had cash, cash equivalents, restricted cash, and marketable securities of $404.5 million as of March 31, 2024. The reason you have cash in hand is because you were able to accomplish some activities.
The first is that we raised approximately $172.5 million in gross proceeds from certain businesses. Public recruitment. This includes the exercise of the underwriter’s option to purchase additional shares. The second reason for the cash on hand is the strategic partnership agreement with Sato Pharmaceutical. The aim is to make topical roflumilast available in Japan. Acrutis received an upfront payment of $25 million You may be eligible to receive up to $40 million in development and commercial milestones. As a result, the company may earn double-digit royalties on net sales of roflumilast in Japan over time.
Although the financial transaction has been achieved, I believe we may need to raise additional cash again at some point in 2024. That’s because the company said in its 10th quarter SEC filing that it has enough cash for its next round of financing. cash runway Operations must continue for at least the next 12 months. moreover, cash burn Approximately $77.9 million per quarter.
I think the good news is that the increased revenue generated by Zoryve will keep the stock price higher. As mentioned at the beginning, revenue for the first quarter of 2024 was $21.6 million, an increase of 675% compared to the same period last year. If this growth trajectory continues over the next few quarters, I believe there is great value for this company and its stock.
Risk to business
There are several risks that investors should be aware of before investing in Arcutis Biotherapeutics.of first risk One thing to consider is the PDUFA date of July 7, 2024. That’s because that’s the date by which the FDA will decide whether to approve Zolib Cream to treat patients with atopic dermatitis. Even if a drug is successful in obtaining approval for other indications, there is no guarantee that it will receive approval for this specific indication. If that happens, it could take even longer before Zolib can be marketed for this multibillion-dollar indication.
of second risk A point to consider is the $21.6 million revenue increase achieved in Q1 2024. Although this quarter’s sales were impressive, there is no guarantee that we will see similar growth in the next quarter. If sales expectations are not met, the stock price could decline significantly.
of Third risk What should be considered is a partnership with Sato Pharmaceutical. That’s because even if Arctis gets a $25 million advance to promote Roflumilast in Japan, there’s no guarantee it will be approved there. Nor will it improve sales. If this partnership does not work out, he will not be eligible to receive his potential $40 million in development and commercial milestones. Additionally, you will no longer be able to earn double-digit royalties over time.
of The fourth and final risk What should be considered is the company’s financial situation. That’s because, as mentioned above in the finance section, we believe we only have enough cash to fund our operations for at least the next 12 months. Therefore, we believe we will need to raise funds again in the coming months. The company may take the approach of making another public offering of common stock, as it did in March 2024, but it could also use other financial instruments to raise funds.
conclusion
Arcutis Biotherapeutics has successfully expanded the Zoryve label for the treatment of patients with plaque psoriasis and seborrheic dermatitis. These two items have increased the revenue generated to date. In fact, his revenue for the first quarter of 2024 was strong at $21.6 million, an increase of 675% year over year. Based on the label expansion achieved with Zoryve, we believe sales can only get better from here. That’s not all. This is because there is a possibility that your sales will increase even more. Why? That’s because the PDUFA date is July 7, 2024, by which time the FDA will decide whether to approve Zolib Cream to treat patients with atopic dermatitis.
As previously stated, approval for this indication means that Arcutis Biotherapeutics, Inc. can tap into another large multi-billion dollar market. I believe this is another move that could further boost Zoryve’s revenue growth. Finally, the company does not rely solely on this drug to advance its business. The company is testing ARQ-255, a Janus kinase 1 (JAK1) inhibitor, for the treatment of patients with alopecia areata and chronic hand eczema. This would be a topical type of drug for these patients. We are also developing a biologic drug called ARQ234, a CD200 receptor agonist that is being developed to treat patients with atopic dermatitis. So this provides another shot at goal for this sign.
