Arcutis Biotherapeutics, Inc. (ARQT) Earnings Call Transcript & Summary

Okay. Terrific. Let's get under right here. Welcome, everybody, to the second day of Goldman Sachs Healthcare Conference. My name is Chris Shibutani, and I'm with the research team, together with my colleague, Stephen Sloan, who does all the work on all the names. I'm very happy to have Arcutis here with us. Frank Watanabe, CEO; and in the audience, we have the rest of the team as well. So it's a great opportunity for everybody to interact at this incredible juncture here before the second quarter quite period as well. I was just trying to get an update. But Frank, as I paid attention to the store for a couple of years now, there was kind of an outline of a goal and an objective to -- you would come up with a stand-alone entity that could address the needs of the dermatology community and really kind of break through in those had many difficult to do it beforehand. And you certainly did many things in terms of like developing a pipeline, taking it through clinical development and the commercialization. And with every endeavor, there's obvious serious challenges and things to navigate. There's no linear path in this sport of biotherapeutics, et cetera. So talk to us as we sit here, approaching new year of 2023. You've been a public entity for a while. We've got a lot of inbound interest in the stock, in the name and awesome sort of like paradoxes of all these cross cuts and how to think about things. So I let you take the floor at the beginning of just sort of frame the story and how this group of folks who are here and listening online can understand what is the opportunity based upon where you've been and what your plans are going forward?

Yes, sure. So I think you summarized very well our vision as a company, right? When we were first founded that the vision was to really revitalize innovation in the dermatology space and to address some of the more challenging disease entities in dermatology. And we've made, I think, terrific headway in the last 7 years on that front, and we feel very good about the future going forward. You think about today, we've got a single product on the market approved and that launch continues to make progress, and we can go into more details about the launch in just a minute. But we're on the cusp of another potential approval. We have a PDUFA for our foam seborrheic dermatitis before Christmas, December 16. We are expecting to file our third indication in atopic dermatitis late Q3, early Q4 this year. So probably that's a launch sometime around Q3 of next year. And then we have a fourth indication for scalp and body and psoriasis that we'll file sometime after the seborrheic dermatitis approval. So on the course of a 2-year period, we'll have 4 products on the market, each 1 of them really addressing real unmet needs in medical dermatology. And I think coupled with that opportunity is the progress that we've made on access and reimbursement, which continues to go exactly as we had hoped it would. We've now already have 12 million commercial lives covered with ZORYVE. 90% of that without a prior authorization, which we've said all along is really -- is the key. And that's because there's this very large established market of topical steroids out there, they're very easy to write and to get. And for us to convert a significant chunk of that over to ZORYVE. ZORYVE has to be equally easy to get, and that's really our whole access strategy has been built around that. So if you think about this in the not-too-distant future, we'll have gone from a total addressable market around 2 million patients right now, plaque psoriasis in the dermatology office, sixfold plus increase in the next couple of years in terms of our total addressable market as we pick up these additional indications and as we expand out into primary care and dermatology -- and outside of dermatology and the primary care pediatrics through a partnership. We don't intend to build our own primary care sales force, but that is a dramatic increase in the number of lives that we can treat, but also the revenue potential and our ability to generate shareholder value.

No. Again, you really frame a couple of elements of the evolution of the company. And maybe the support scarcity value in terms of having multiple products approved across a series of indications, crossing 2 rate inflection point being in a commercial entity and is typical of many enterprises are certain people for certain roles at each stage of the evolution of the company. And now when you're thinking about expanding further and pressing into a very competitive dynamic in a challenging payer environment, that is always evolving. Talk to us about sort of how you're thinking about the enterprise, the company, in particular, some of the leadership? You have some recent people changes here, highlight for us your confidence in the changes that are happening and what we should expect going forward?

Yes. So I think as I look across the team, with the exception of Scott, everyone is doing a great job. No, I'm just kidding. No, I think we have the right team in place to continue to grow the company. We don't expect to grow in size dramatically, right? We have more growth in terms of revenue and indications and products and so forth. But the team has been built to be successful for the long haul, and I feel very confident about that. Specifically with regard to Ken, as we indicated in the press release, that was a personal family matter. Ken is a very good Chief Commercial Officer and also a very good friend. And I'm sorry to see him go. And more importantly, I'm tiry that he's having these personal family issues. But he felt like this was the right thing to do for his family, and I respect his decision. And -- so we've appointed an interim Chief Commercial Officer, Ayisha Jeter, who has been our Payer Lead for about 3 years now, a very experienced executive over 20 years in the industry. Sales experience, sales management, market access and a very strong leader. So she's filling in on an interim basis as our Chief Commercial Officer. We have a very strong team of vice presidents as well in commercial. And then because I'm a commercial guy, by background as well, I'm spending a lot more of my time with the commercial team right now managing through the transition. And then we're running a nationwide search at the moment to find a permanent replacement for Ken. But I think that beyond Ken, I don't anticipate in any significant evolution in -- certainly in the leadership. And the organization is pretty much in a stable position as well.

And you made reference to furthering the footprint in terms of commercialization outside of the U.S. core market and the focus internationally and you've been very consistent in other investor opportunities, panel presentations talking about just fundamental logic of not necessarily putting the investment in place, but partnering and the leveraging just because you -- the category, the markets themselves have really right domain across primary care, et cetera. So talk to us about how you are giving consideration to the timing of potential partnerships and what will be the right fit for you guys? And I come at this partly because there's a genesis of the company where you guys are really good risk fillage Amgen, expats, people bring a lot of crowd and ability and wanted to be into this cool company that is really focused here and the inevitability of the opportunity to go bladder, you need to be smart, which I think you are, but talk to me about potential prospect of plan.

Yes. Sure. I'll start with the timing. I think as you look across the markets, psoriasis is very heavily concentrated in the dermatology office. Atopic dermatitis is actually -- the majority of the patients are not in the dermatology office. They're in primary care or pediatrics, and Seb Derm is about halfway in between about roughly 50-50. So in our minds, the timing for a potential partnership really is driven by the atopic dermatitis opportunity. But there's so much of the opportunity outside of atopic dermatitis, could you do it earlier, certainly could. There would be a downside to it. But I think you really need to have it by around the atopic dermatitis launch. And I say around because you have to win with the dermatologist first, right? They're the opinion leaders. So if it's not at launch, that's probably okay, but it needs to be sometime shortly thereafter. In terms of who you're ideally looking for someone who has an existing primary care sales force, right? They're very large expensive sales forces, 500 reps probably is what you're looking for at least in primary care. And fortunately, for us, there are a number of companies, including some very large big pharma companies that have the right kind of commercial footprint in primary care, who could be partners for us. And so we'll be looking to talk with those partners. I think one of the nice things about this particular setup is that it's a division by prescriber, right? So we'll keep dermatology and we'll partner ex dermatology. And so we can see where the scripts are coming from, and we don't need to participate -- share the economics with the dermatologist, but we'll share the economics on the non-dermatologists where they're driving the business in the future.

Okay. No, that's tremendous logic to that and makes sense. So I think investors are very attentive to the ongoing commercial launch and detailed progress, which is the format for the model. So let me turn it over to Stephen, who is typically very disciplined about these things and organized with this questioning and it can be helpful to go through some of the key issues here and get the latest update. Over to you.

Thanks, Chris. Frank, let's walk through, I guess, maybe just starting broad your view of the current status of the ZORYVE launch in plaque psoriasis. Key things our team is doing well, maybe some issues. Just talk broadly and then we can dive deeper.

Yes. So I think from our perspective, the launch continues to go well. I think the most important thing is that the clinical profile is meeting or exceeding physicians' expectations, right, based on the feedback that we've been getting. The efficacy has been a pleasant surprise. I think doctors have been -- dermatologists have been burned so many times in the past with new nonsteroidal is coming out and making a lot of claims and then not delivering on that promise in the clinic. And that's not what we're hearing from doctors. And again, if anything, they are surprised to how well it works, including in the most difficult-to-treat plaques, certainly, elbows and knees, but we have a lot of case reports even of pounds and souls, which is by far the most difficult part of the body to treat. So the clinical performance efficacy-wise has been very good. I think also from a tolerability and safety standpoint, doctors are really pleasantly surprised by the tolerability and the safety of the product. And then the other piece is access and reimbursement is key. And as I mentioned, we've made very good headway there. 2 out of 3 big national PBMs already covering the product. Almost no one having to do prior authorizations for the product, and we expect to make further progress there. And that's really important, I think, nowadays in dermatology, too. These doctors are seeing 40, 50 patients a day, right? That's not an unusual load in a dermatology office. And if they have to stop and spend a lot of time dealing with the insurance company filling out a prior authorization or doing callbacks or things like that. It just creates friction and it's another reason not to prescribe your product, right? So to make it easy to get is very important. And then the feedback from doctors has been that -- it's been very easy to get ZORYVE. On the access front, we're less than a year-end. We've already picked up 2 of the 3 big PBMs, and we've communicated that we expect to pick the third one up hopefully this year and potentially even well before the end of the year. And we expect coverage of the third one probably be as good as, if not better than what we've already achieved the first 2, which I think is already very good. So we feel very good about that as well. In terms of challenges, I think we knew going into this. The #1 challenge was going to be habit. Dermatologists write topical steroids, 30 times, 40 times a day. There used to be a joke that what does the dermatologist do? He writes topical steroids, right? And that's still -- there's some truth to that. They write a lot of them. And so we are having to change the behavior. And I think it helps there are multiple new nonsteroidals out there pushing on this habit and trying to get doctors to change. It also helps that what we've seen in the last couple of years is that the dermatologists themselves are starting to recognize that, well, it may have been okay to use topical steroids everywhere in the past. It's not okay anymore and you really need to start thinking differently about it. And we're starting to hear that now from the podium at major dermatology conferences. And so I think that momentum on breaking the habit is certainly going to change as well. Specifically in Q1, we did talk about the fact that we saw some reversion on our gross-to-net in Q1, not an unusual thing, I think to see that in Q1 for a retail product. And I think there are 3 sort of major buckets of things that we saw in Q1. The first one is just the normal January reset of deductibles. So even where you have coverage, right, you're having to buy the patient down because they're in their deductible window for the year. That will obviously resolve itself as the year progresses. The second one is we were -- we have signed a contract and the announced coverage with the second big national PBM in March. It was supposed to be effective March 1. It became apparent very quickly thus that we were not getting paid as we were supposed to. And so we went back to the insurance company and determined that they had made a mistake in the implementation, and it took them a while to work that out. So we started getting paid May 1 for those scripts from that PBM. But we lost revenue in March and April, the coverage because of that their implementation mistake. May 1, it sorted out, and we're seeing the scripts coming through now. So everything is fine on that front. And that will be a contributor to the improvement that we expect to see in Q2 and our gross-to-net. And then the third one is, I would say, just generally, I would categorize as sort of education of doctors and pharmacies making sure that they're doing what they need to do in order for the claims to get processed correctly and for us to get reimbursed. We don't have a prior authorization, which is a big plus for the office, but they do need to provide the indication and prior field therapies because there's a step edit on our product as there is really for all the branded topicals, and that's required some education in the offices. There's also some education that needs to happen at the pharmacy level. And we mentioned on the call in Q1 that we have built a dedicated pharmacy team. We've actually expanded that team now that's working with pharmacies to make sure that they're handling the prescriptions correctly. So we feel good about our gross net plan, and we have the right tactics. We expect to see improvement -- some improvement in Q2, I would say, and then an accelerating improvement in Q3 and Q4. And I think real importantly, we've been able to secure the coverage we have with reasonable rebates we're not having to give up the farm to get our coverage. And so we remain comfortable that we're going to get to something around 50% as our steady-state gross-to-net. And I think that's about as good as anyone that does, unfortunately, these days anymore in our industry. There are so many other people taking money out of the bucket that if you get to a 50% gross net, you're doing really well.

For sure. Yes. To your first point, we do get a lot of positive feedback from physicians, KOLs, we tended AD this past year, lots of positive feedback on ZORYVE, nonsteroidal topicals and yes, increased awareness that you just can't use these, ZORYVE as longer term. And I think there is a faction that season is very effective, very cheap, very easy to prescribe. There's that hurdle to overcome, but I think definitely lots of feedback -- positive feedback from the field. And we continue to see the prescription trends increase, which I think is great. And like you talked about, there have been some executional operational issues, converting covered scripts to actual revenue. So maybe you spoke a little bit about this new field-based team. We're expanding the field-based team address the issues at the pharmacy level. Now that this has been implemented in place for a little bit of time, can you speak to any efficiencies that you've seen? Or I don't know, to date, has that really improved the kind of translation of these covered scripts?

Yes. There's no question. We definitely can see an impact. We started building a team out in January, so recall, around beginning of the year. And we initially had 4 camps around the country. And we saw an almost immediate impact in terms of the performance of the pharmacies where we had a camp. But most dermatologists spend most of their topical scripts through these little local specialty pharmacies that only do derm products, and there are literally hundreds of these things around the country. And so when we saw the impact that the camps were having, and we looked at the number of pharmacies that we were dealing with, we realized that we needed to expand that team. And so that was when we made the decision to go from 4 camps up to 10. And then I think I mentioned earlier, we also have brought on a contract team to supplement that team. But there's no question we see an impact when we put one of these camps in place.

Got it. Okay. And we'll be looking for updates on the forward it to that team and their efficiencies there. So your team obviously doesn't provide a year-long guidance, but you have been giving kind of some qualitative soft quarter-over-quarter guidance, including next quarter, you do expect a sequential increase in revenues, primarily driven from volume to a lesser extent, improvements in gross-to-net. Can you just further elaborate on that, like what factors are going into this softer sort of guidance? I think investors were expecting a bit more of an improvement in some of the gross-to-net dynamics. So we'll discuss the key pulls and takes there.

So from a guidance standpoint, I think that our stance has been consistently that at some point, we will start to issue guidance. It is we're still -- we're less than a year into the launch. And so I don't think we feel comfortable yet in issuing guidance. And then we have the added complexity to Chris' earlier point, that we have another launch just a few months away and then another launch a few months after that and another launch a few months after that. And so that certainly adds to the complexity of when we will start issuing guidance. We want to make sure that when we start to issue guidance that it's credible, right? I don't want to make guesses and then have the guesses prove wrong. And the second part of your question was just around gross-to-net? Yes. So I think the deductible piece is going to resolve itself at time that happens, although it will hit everyone again in Q1 of next year. the coverage with the second PBM, as I mentioned, has already sorted out, and the third 1 will be coming hopefully later this year. And both of those certainly will be contributing to gross-to-nets as well. And then I think that these tactics that we are putting in place in order to continue to enhance our gross-to-nets as well. A number of those are already in action, and we're seeing an impact. But I think as the year goes on, they will continue to have a greater impact. And so we'll see a steady improvement in our gross-to-net. Did I cover all the questions? Well, it's a complicated question. We make sure we covered all that.

Thank you, you hit all the aspects there. This 50% gross-to-net study stay, I think that's been pretty consistent since we've been following the story. Can you just talk about the time line to get to that trajectory?

That is also difficult to predict because, again, with the new launches, every new launch with some insurers, we will have to go back and renegotiate coverage. So I think it's difficult, given the rapid succession of launches that we have for us to predict exactly when we will get to steady state with the overall portfolio. But I mean it's not a 5-year evolution, right, to get there. And I wouldn't expect it by the end of the year either, right?

Got it. Okay. On the volume side, the prescriptions have been slowly climbing. I think, relative to some other nonsteroidal competitors, they've had kind of this initial pretty rapid increase in volume, and then it's not maybe plateau but slowed down a bit where seems to continue to climb this very consistent slope. Should we expect that to continue? Or are there any inflection points near term that might move it one way or the other?

Yes. I think probably for the end of -- for the remainder of the year, we would expect to see the continuation of sort of a steady growth trend. The major catalyst probably for the remainder of the year really are around coverage and coverage decisions tend not to have like an inflection because you get a coverage decision, the doctor doesn't immediately call all of these patients in or her patients and to switch them to your product, right? They'll switch the patient the next time they see them. And for anyone who's seen a dermatologist, I think in most parts of the country, it's a 4- to 6-month wait to see a dermatologist. So it doesn't happen quickly. And that kind of spreads it out so that you see more of a linear trend versus an inflection point. I think Seb Derm could very well be an inflection, just given the level of excitement and the size of that market opportunity as we look out into '24. And then in terms of our uptake versus the others. I think if you look at the last 6 or so branded topical launches, all of them did plateau around 3 months to 6 months in their launch. We haven't seen that plateau. I think part of that is because a lot of them had fairly aggressive free drug programs early on, which sort of artificially boosted demand. And then when you withdraw that artificial stimulus the trend line shifts. In some cases, it's also been a coverage challenge. We didn't have an aggressive free drug program at launch, and so we didn't have that artificial demand, and we haven't faced coverage issues either. And so we don't -- we haven't seen any kind of plateauing even now 10 months into the launch, and we don't expect to see 1 going forward either.

Got it. Okay. Maybe 1 last for me on the ZORYVE launch. Chris, if you have any, feel free to hop in. Can you speak to active promotions that you're doing with ZORYVE if you've done DTC and if you plan to do that? And how you see kind of the return on some of these investments?

Yes. So we have an active direct-to-consumer program. It's primarily an online paid search social media, we do have some print DTC as well and then we have in office DTC. We have not done TV yet. It's something that we continue to evaluate as a potential tactics. Our feeling is until you have your coverage sorted out, it doesn't make sense to make a big investment into direct-to-consumer TV because then you're driving in nonprofitable scripts that you're paying for. I think as we get we started approaching the 80% coverage, then it starts making sense to put more fuel on the fire through things like direct-to-consumer. And so I think it's something that we'll continue to evaluate as the year progresses. Even if we do, I don't anticipate us doing sort of broad national broadcast TV that you see of Skyrizi or Otezla doing. And that's a $100 million plus a year investment. And I don't think the topical markets really support that just given their price point.

Got it. Chris, anything else on ZORYVE and the clinical...

No, no. It's been interesting to let the trajectory, and it's been kind of this cadence. Just the fundamental strategic premise was this idea that if you priced higher, but then get a lot of patient assistance programs that you will generate demand and then you come to the builders of the payers and say, look at all these scripts that we have, that's a old school that I want, right? And you guys took a twist in a different turn on that, strategically, even the price point that you thought about with great specificity in terms of where we're at certain key threshold levels. And the screen, as is characteristic in in-patients over watching and comparing and everyone takes the script trends and overload them and sort of see who's climbing up into the right faster, et cetera. And so it is very intriguing to see that, to a certain extent, your hypothesis about being able to sustain the slow and steady wins the race, let's maybe just metaphorically not the most accurate. But I think we're at this juncture where we could see some of that play out. Does this come as a relief? Does this come out as, no, it's right on time? Just as this is playing out because the street is just inherently more impatient.

Yes. So look, I think that you've been around this business a long time. This is a marathon, not a sprint right? And no product does a lot in their first year. You have to be solving for what your revenues are going to be in the peak year. And particularly, again, with multiple indications and also the importance of Medicare and Medicaid with some of these indications as well. We were thinking about the long-term strategic value of ZORYVE and how we maximize the ultimate value of this product. And so our pricing and access strategy were really built around that. Having said that, again, I think I hear this all the time about high whack, high rebate wins the day. Well, the data doesn't support that, right? There are a number of other branded topical products that took the high WAC, high rebate strategy, who has the best coverage. We do. We got better coverage. We got it faster. So where is the data to support the high WAC, high rebate strategy. And again, as you think about the longer term, if you're giving up huge rebates, then you're permanently constraining your gross to net, you're also constraining your ability to play in the Medicare and Medicaid space. As you mentioned, ZORYVE is priced intentionally below the CMS threshold for a specialty product. And that's because we realized that if you're a specialty product, you're just not going to get much uptake in Medicare and Medicaid. Atopic dermatitis, the majority of patients are government pay. Seborrheic dermatitis about half of the patients are government pay. And so that's a very large opportunity for us that we think it was important to price in such a way that we could effectively compete in those portions of the market.

So Wall Street continue to be patient. Continue Stephen.

Sure. Yes. Let's dive into some of the other indications for topical reform last, including atopic dermatitis, which you've had 2 positive Phase III studies read out last year, we'll be filing later this year. Now that we've seen a couple of other competitive data sets, can you talk about how you see the efficacy safety profile relative to some of the competitive agents?

Sure. So I think it's important when you think about the atopic dermatitis market to recognize that the majority of those patients are children. And so safety and tolerability are important in every therapeutic area, but it's particularly important when you're treating kids. And I think one of the other interesting dynamics about the atopic dermatitis market is that the parent is actually a major decision maker in the process. You talk to dermatologists, they all have these horror stories that they prescribe X drug. Mom goes to the pharmacy, the pharmacist says it has a box warning. Mom calls the doctor back, yells at the doctor and makes the doctor switch, right? Or the steroid phobia that doctors have to deal with all the time. So how a product is viewed by the parent, I think, is really important. As you look across the landscape for atopic dermatitis, still the majority -- vast majority of patients are on steroids, right, in spite of the fact that parents are very resistant to put their kids on steroids. So we see being a nonsteroidal is being a big opportunity. The calcineurin inhibitors and more recently, the JAK inhibitors have been saddled with boxed warnings, which I don't think most dermatologists are terribly worried about the box warnings. But again, the parent certainly is frequently concerned. And the JAK inhibitors have a bunch of additional restrictions on the label around body surface area and age and duration of use and so forth that complicates their usage as well. And then the other piece is that atopic dermatitis patients are more sensitive to local side effects than really any other patient rates a skin barrier defect tends to occur with very large body surface areas, and they're just sensitive to everything. And so if you have a drug that has local tolerability issues, burning, stinging, folliculitis, contact dermatitis, that becomes a major barrier then to the use of the product. And unfortunately, we saw this come to pass, right, not too distant past with another nonsteroidal atopic dermatitis space, where the local tolerability just completely killed the drug. So we feel that the ZORYVE product profile and the complete absence of local side effects really positions us very well. And then from an efficacy standpoint, our Phase IIIs would suggest that our efficacy is probably about on par with the mid-potency steroid, which is the standard of care in atopic dermatitis. So we think that combination of efficacy comparable to your favorite steroids, but not a steroid and a really great safety tolerability profile puts us in a very nice position. I think there are some other products that maybe have better headline efficacy, but have other issues either with local tolerability or coverage or their label, which will give us a competitive advantage in the marketplace.

And we don't necessarily see this as I think you've said before that it's 1 versus 1 market with a nonsteroidal topical. I think it's market building, generating awareness, so it's not necessarily, winner takes all or winner takes everything.

Yes. that's right.

Okay. And yes, you mentioned, obviously, atopic dermatitis is highly prevalent in younger patients, INTEGUMENT had a Phase III study reading out top line data in 3Q, I believe, which is setting pediatrics age 2 to 5. Can you just quantify what incremental commercial opportunity that adds to the atopic dermatitis market?

Yes. So about 90% of atopic dermatitis patients are age 6 and above in the dermatologist office, I make an important comment there. So the initial studies that we did in INTEGUMENT-1 and INTEGUMENT-2 in the 6 and above population is the vast majority of atopic dermatitis opportunity in dermatology. And obviously, if you're in pediatrics, it's skewed much more to the younger end of the spectrum. But that initial indication will allow us to really establish a very strong beachhead in atopic dermatitis. The 2 to 5 is important. It is -- in and of itself, it's an important 10%. It's nothing to ignore. But I think also there's the safety halo of having that indication. And then the FDA typically will want us to study ages 3 to 24 months after approval as well that's been sort of the standard practice in the past. And so we'll be pursuing that as probably as a post-approval label expansion.

Got it. Okay. And maybe in the time left, you can touch on seborrheic dermatitis, which you have a PDUFA date in December. Always we get tons of positive KOL feedback on this indication.

Yes.

Yes. Can you walk us through your expectations for this launch? Do you think this will look like ZORYVE and plaque psoriasis? Any differences to note there? Just help frame expect it.

Yes. So I think I would hope that the launch of the foam and seb derm could be at least as good even better than what we saw with the cream. There really aren't any other branded alternative. And existing alternatives aren't very good, right? So standard of care is either a topical antifungal, which -- they don't work very well. And dermatologist will tell you that, quite frankly, they don't work very well, but they're safe or topical steroids, which work reasonably well, but there's particular concerns about using the steroids on the face. And the majority -- vast majority of seb derm patients have involvement on their face. And so that's really the conundrum for the use of topical steroids. So they have a single drug that is highly effective. And I would say our data is better than any other drug in seborrheic dermatitis. Recall, we had an 80% response rate in Phase III at week 8 with 50% of patients completely clear at 8 weeks. And we had 70% of patients have their itch resolved at 8 weeks. That's an incredible product profile. And in a formulation that's very easy to use and convenient for the patients. We think that, that could be a really significant catalyst, and it's a really big market, right? Dermatologists see as many seb derm patients as they do, psoriasis patients. I think Wall Street really has underestimated the size of that opportunity. So we think that's going to be a really significant growth driver for us in '24 and beyond.

Got it. And as we're thinking about some of the commercial factors, pricing, payer access. I think historically, you've talked about potentially a slight premium of the foam relative to the cream. Can you walk us through your current thinking there as well as the cadence of getting payer access fast or slow...

Yes. I would expect the foam to be very priced very similarly to the cream. Again, keeping in mind the CMS specialty threshold, right? You don't want to cross that line if you can avoid it. So I expect it to be very similar in price. In terms of the cadence, I think some payers will like their grandfather the foams and just say, we're covering the cream, we're covering the foam at the same price. Some will want to rework the negotiations, but I think having ZORYVE already on formulary should speed that process up. So we would expect the payer coverage to progress more quickly with the foam than we saw with the cream and I would expect a similar kind of pattern with atopic dermatitis when it's approved as well.

Okay. I know we have just about a minute left. Chris, any last-minute questions?

Any final thoughts for you, I think we're at this midpoint most of the audience here is looking to figure out how to get names in to drive some performance. If you look at ZORYVE, the stock is at, expectations seem to be pretty modest. And there's a little bit of a show-me dimension to the tone currently in investor conversations. What's the message that you would close our conversation here with?

Yes. I would just say I think we remain very confident about the long-term prospects of this product. I think all of the elements for this to be a blockbuster product, the one that really meets the potential and the expectations of Wall Street are there. And the clinical profile is there. The coverage is there. We continue to execute. We think we've got the right strategy. And we remain very, very bullish about the future and hopefully, investors feel the same way.

We look forward to continuing to track the launch. Thank you very much for sharing the thoughtful comments.

Good to see you all.

Thank you. Thanks for doing a good job.