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

Good day, and welcome to the Arcutis Biotherapeutics ZORYVE Foam Conference Call. [Operator Instructions]. As a reminder, today's call is being recorded. I would now like turn the conference to your host, Ms. Latha Vairavan, Arcutis Investor Relations. Please go ahead.

Thank you, Valerie. Good afternoon, everyone, and thank you for joining us today to discuss the launch of ZORYVE topical foam for seborrheic dermatitis. Slides for today's call are available on the Investors section of our website. On the call today, we have Frank Watanabe, President and CEO; Patrick Burnett, Chief Medical Officer; Todd Edwards, Chief Commercial Officer; John Smither, Chief Financial Officer; and our special guest, Dr. Melinda Gooderham, Medical Director at the SKiN Center for Dermatology. I would like to remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and uncertainties, and our actual results may differ. We encourage you to review all of the filings with the Securities and Exchange Commission, including descriptions of our business and risk factors. With that, let me hand the call over to Frank. Frank?

Thanks, Latha, and thanks everyone for joining us today for this very exciting call that has been literally years in the making. We're delighted to share that the launch of ZORYVE foam for seborrheic dermatitis is now officially underway. ZORYVE foam for seborrheic dermatitis is our second product approval in 18 months and is another very important step in our mission to building a leading innovation-driven dermatology company. We are really delighted with the label that we have received from the FDA and are incredibly excited about the opportunity to provide an important option for patients ages 9 and up living with seborrheic dermatitis. The launch of ZORYVE foam, along with the continued expansion in insurance coverage for both the cream and the foam and potential additional indications could drive up to a tenfold expansion in the next 12 months and the patient opportunity for topical roflumilast versus our initial commercial opportunity in plaque psoriasis. And we believe that ZORYVE foam is very well positioned for success, and we will share a lot more details today about our readiness on today's call. So with that, and to get us started, I'm going to hand things over to Patrick. Patrick?

Thank you, Frank. So I'm going to talk a little bit about our label and the data that supported the approval. We're just going to go a little bit out of order, because I know this is a condition that's new to some on the call. But I'm really excited that we have Dr. Melinda Gooderham with us today. So I want her to share her perspective on seborrheic dermatitis patients in general as well as her perspective as an investigator in our seb derm clinical trials. So data first, and then we'll come back and go into depth on the patient experience and the disease next with Dr. Gooderham. So turning to Slide 6. We know that seborrheic dermatitis, like many inflammatory diseases of the skin, has a skin barrier defect and these patients are very sensitive to stinging and burning. So formulation is really important. Today, we're launching our foam formulation, it's a great fit for patients with seborrheic dermatitis as the first approved indication, because we have a very favorable local tolerability profile, similar to what we've seen with the cream formulation, and it can be used anywhere that the disease appears. And this has always been a big challenge for managing patients with seborrheic dermatitis. This is a disease that often presents on the face, on the scalp, but also in skin folds, and the foam formulation is the right option for all these locations. This is a steroid-free once-daily foam, it's appropriate for use at all hair and skin types and not limited in duration. So there's a lot to unpack there. First, depending on gender and ethnicity, people don't all care for the hair in the same way, and it's rare for a product to be a good fit across all hair and skin types. One example of this is medicated shampoos, it's a relatively small group of people who shampoo their hair each day. So this is very limiting for some patients. However, ZORYVE foam is a once-daily leave-in treatment that isn't greasy, really can be used across all hair and skin types. Second, it's not limited by duration. So we studied the product use out to 52 weeks. And Dr. Gooderham is going to talk a little bit about some of the limitations of existing therapies. But I think this kind of chronic treatment of disease, even though we're not showing our long-term treatment data here today, chronic treatment is a really important aspect for choosing therapies for patients with seb derm because of the chronicity of the condition. So moving on to Slide 7. Some comments on the labeling that we received from the -- and talking about some comments on labeling we received from the FDA. Sometimes what's important is what doesn't appear in your label. And for us, disease severity is a very good example of this. You can see our indication statement that it was approved for the treatment of seborrheic dermatitis in adult and pediatric patients, 9 years of age and older. Importantly, we didn't have any limitation on disease severity, body part area or duration of use. We studied moderate-to-severe patients in our clinical trials, but the approval covered mild, moderate and severe patients. And the approval down to the age of 9 fits really well with patients with seborrheic dermatitis, because this is a disease that often has its onset around the time of puberty. And so we intentionally studied down to the age of 9, so that we could capture this really important aspect of pediatric patients and have a broad label that really covers the disease wherever it appears in patients right from the beginning, right from our initial approval. And importantly, we have -- its improvement data included in the label, and I'm going to talk a little bit of that as I now turn to the disease and some of our clinical data on Slide 8. So starting on the left, on Slide 8, Investigator Global Assessment. That was our primary endpoint. So here, we're showing that 80% of patients achieved IGA success at week 8. And you can see that already at week 2, we had 43% of patients reaching IGA success. So IGA success means that patients came in at a moderate or severe. And here, we're using an Investigator Global Assessment that goes from 0 to 4. So it's a 5-point scale. Patients came in at moderate or severe and they needed to get to clear or almost clear, which is a 0 or 1 on that scale to be considered a responder. As I mentioned, we got 80% of patients there at week 8 and already over 40% of patients just after 2 weeks of treatment. So we saw a really early onset of efficacy in this study. But the number that I think for me, as a dermatologist myself really was impactful was on the right, which is looking at an achieved IGA of clear. So this is an IGA of 0. And the guidance that we give to investigators for that is the patients can have no evidence of disease on their skin. So these are patients, who came in at moderate to severe, so that's at the far right of the scale, and we got over half the patients by 8 weeks to IGA of 0, meaning that the investigator couldn't find any evidence of seborrheic dermatitis any longer. And already by week 4, we had 1/3 of patients already reaching IGA of clear or IGA of 0 and 16% of patients even after just 2 weeks. So this is something that I really was kind of blown away when we saw these data. They really exceeded our expectations. Now most importantly, we're talking there about what are the signs or manifestations of the disease on the patients. If we turn towards the symptom that really drives impact on quality of life and the burden of disease, for seborrheic dermatitis, that's itch. And so moving to Slide 9 and talking about the itch response. And again, this was labeled. We got this into our label, which I think is really important. And we used the metric called the Worst Itch Numeric Rating Scale. That's the WI-NRS. And in order to be considered a responder here, patients had to have -- on a scale of 0 to 10, they had to come in with at least a 4 and then had to have an improvement of 4 points compared to baseline to be considered a responder. So we're really only looking at patients, who have the most amount of significant itch and then looking for an improvement of 4 or greater. And this is the kind of way that the FDA likes to have it done in order to support labeling. And that's why we were so pleased to have this, again, appear in our label. We have itch response also in our psoriasis label. And what you can see on Slide 9 is that over 60% of patients -- 63 almost percent of patients reached a WI-NRS level of response. And already at week 2, about 1/3 of patients reached that high level of response. And so what this tells us is that not only are we improving the erythema, the redness, the scaling, which are really disruptive for patients, because those could be observed by other people. Itching, which drives a lot of the scratching of the scalp and can lead to hair breakage is also something that is improving quite quickly. And that's what drives patients to realize that they're getting a benefit, and it can improve compliance over time. So if we turn to Slide 10, Here, we have an example of some patient response over our clinical trials. We have at the left, their baseline. And again, IGA is Investigator Global Assessment. So 3 is a moderate patient and a 4 is a severe patient at baseline. And then IGA of 1 is a patient, who got to almost clear, still considered a responder and then IGA of 0 was one of these patients, who have no evidence of seborrheic dermatitis on their body any longer. So starting with the patient along the top. This is a young girl school age. I think she was 9 years old. And you can see at baseline, she had thick adherent plaques of scale on her scalp. And for me, really thinking about the impact of this child going into the classroom, trying to just do her schoolwork, trying to get through the school day with this on her scalp really drives an understanding of just how burdensome this can be for patients. Now already at week 2, she's improved to an IGA of 2. And then by week 8, she's had an IGA of 1. And I love showing a patient with an IGA of 1, which is almost clear, because what you could see is that there's very little disease that's left, because patients with an IGA 1 can have just a few papules, a little bit of scaling. It's a very, very high bar to have IGA success. So even a patient like this, because she was a responder, but she didn't get to completely clear, but this is obviously a completely life-changing event for this school-age girl. Now looking at the patient down below, We have an African-American woman who comes in with an IGA of 3. So this is a patient with moderate. But what I like about this photo is that it shows hypopigmentation, which is a very commonly associated pigmentary change that comes when patients have inflammation of their skin, and they have a lot of baseline pigmentation. So it disrupts the ability of that pigment to kind of find its way to the normal location. And then this adds to the burden of disease in this patient population. And what really surprised me when we saw these photos coming out from the clinical trial is, I anticipate that this is something that would take months in order to kind of get corrected. It's not actually captured within the Investigator Global Assessment. But this patient and many others in the trial showed that even by week 2, we're starting to see a lessening of that change in pigmentary abnormality. And by week 8, she's really already established her normal pigment pattern. And also have no evidence of the disease. And so that was something we were really excited to see. And that's something -- unless you see the photos, you just have no idea how patients are responding. And we did hear feedback from our investigators about that they were seeing this in the trial. And I think that's going to really play well when we get the product out into the -- into physician's hands now. So turning to Slide 11, a little bit about the tolerability and safety. So what we can see are low and balanced adverse events rates between ZORYVE and Vehicle. And most importantly, if you look at those who discontinued the study drug due to an adverse event, and I would like to highlight this, because this is -- these are patients who can just walk into the investigators office one day and say, "You know what, I no longer want to be included in this." And if they say it was because they had an adverse event, which is with many, many drugs, common reasons for patients to discontinue, that is reported directly into the database and those are numbers that appear on a slide like this. We've always had very low discontinuation rates due to an adverse event. And for me, that informs us on the very good safety and tolerability profile that we have, especially with the topical, where a little bit of stinging and burning will drive a patient to discontinue. Interestingly, we're at 0.7% for ZORYVE and vehicle itself is sitting at 2%. So we actually did better than vehicle. And that probably relates to the fact that some of the patients had untreated seborrheic dermatitis, which caused them to discontinue in the vehicle arm. So moving on to my last slide, which is about the most common adverse events. And here, we're reporting greater than 1% in any group. Whether that's vehicle or ZORYVE. And then they're listed out by the most common overall percentage. And what we see is the most commonly reported adverse event with COVID-19, that was just based on when the studies were conducted, and that was balanced between active and vehicle. Similarly, urinary tract infection and nasopharyngitis were both well balanced. It's not until we get down to nausea, which is our really most common adverse event at only 1.6% that we can really kind of trace back to the PDE4 mechanism of action. And importantly, all of those cases were mild, and we didn't have discontinuation due to any nausea in the trial. I will highlight here application site pain is not an issue associated with ZORYVE. It was actually appearing in about 2% of vehicle. And this is again because application site here is where patients have active seborrheic dermatitis and they can get pain, stinging and burning associated with the disease state. So not treating the disease state can lead to that being reported. So I just want to end my portion, and I'm very pleased to introduce Dr. Melinda Gooderham. She's sitting with me here, we're actually at the Maui Derm medical congress. So it's a really auspicious time for us to be launching the product, because this is really the very heavy meeting time period for dermatology. So we seem to have one about every week. And already, we were just out at the conference just a couple of hours ago. And the word is getting around this that we've launched this foam. People have been very excited about it, and I know there's a lot of pent-up interest in it. So we're also pleased to be able to be sitting here with Dr. Melinda Gooderham. She's a Medical Director at the SKiN Center for Dermatology and a principal investigator for SKiN Research Center. She's also an Assistant Professor of Dermatology at Queens University, and fellow of the Royal College of Physicians and Surgeons of Canada, Vice President of the Dermatology Association of Ontario. Not only does she run a very busy clinical practice in Peterborough, Canada, but she also has been integrally involved with our ZORYVE clinical program, including both the cream and foam and has just been a great partner and investigator for us in our clinical trials. So Melinda?

Thank you very much, Patrick. And one other special thing about today is the publication in the Journal of the American Academy of Dermatology for ZORYVE foam in seborrheic dermatitis. So one other thing to note for today. But I'm really pleased to be here to talk about seborrheic dermatitis given overview, because I'm finally -- happy to see this, finally getting the attention that it deserves. Seborrheic dermatitis, although it has historically been classified as a form of eczema. We know that's not the case. It's its own entity. There is some current research going on to help define the pathophysiology. We do see seborrheic dermatitis in some patients with eczema. We do see it in patients with psoriasis, but we -- I see it more so in patients without eczema or psoriasis. So clearly, it's own distinct disease that's finally getting the attention that it deserves. You probably -- just based on numbers, everyone on this call knows somebody with seborrheic dermatitis, it's that common. And it presents with itchy red patches, but the scaling helps us differentiate it from these other conditions because the scaling of greasy, flaky, you can see from some of the photos on Slide #14, along with some of the pictures that you showed, the greasy scaling that makes it so uncomfortable for the patients, we see specific areas of the body that are covered, usually the oil-producing areas where we see more sebaceous gland. So the scalp, sort of that central space, you can see again on Slide 14, a couple of illustrations there, some more severe disease, around the nose and the eyebrows, between the eyebrows, but also on the upper chest, we can see the upper back and the groin, that's another place that people don't always talk about seborrheic dermatitis, but very uncomfortable for people, especially if you're itchy in the groin and you're in the public and you don't know what to do when you want to give a good scratch. So having a new treatment to help those patients is going to be very welcomed. The itch being the number one impact on the quality of life in addition to the visibility in some areas. And patients will say to me all the time, I don't know why this won't go away. I'm a very clean person. I wash regularly. I don't know why this is coming back. So moving on to Slide 15. You can see the current standard of care is kind of all over the place. It's one of those situations where the more treatments you see for something means the less likely it is that the treatment actually helps the conditions in everyone. So looking here at ketoconazole being the most commonly used, we see it, as you mentioned, in the medicated shampoos as well as some topical creams. Then we have a whole range of topical steroids, and that's where I see one of the bigger problems that what you can use on your face and what you can use on your scalp are completely different things. So for the face, we're going to use a milder steroid and a lighter cream. But on the scalp, we use something stronger, such as clobetasol, it's usually in a solution format. And back 20 years when I graduated from residency, and I got some compounding recipe from one of my teachers and I'm still kind of using that, because nothing new has come along since I graduated in 2004. So compounding steroids with ketoconazole or other antifungals really does make it confusing for patients. They have got the solution for their scalp, the cream for their face, the milder cream for the groin. And that really leads to lack of adherence or compliance with the medication. So also pharmacists, telling the patient, "Oh, this is a steroid, only use it for 2 to 4 weeks, then you must stop". So patients often come in saying, "Oh, my doctor just gave me a cream, but I can't use it long term, so I guess I have to live with this". And that's not the case. And we can see now with new innovative treatments that we're able to offer our patients other options, which is great. The other thing from being an investigator in the trial is the foam format, which is so welcomed by patients. Patients love a foam. They can use it on their scalp, they can use it on their face, in the groin. So it really makes it more simple for them. They have one product that they can use in all of their areas. It's effective. And as you mentioned earlier, there's no end date. The pharmacist isn't going to tell them, you can't use this past 4 weeks. They're going to be able to use it as long as they need it, and this is a chronic condition that will need ongoing care. So to always bring it back to the patient, moving on to Slide 16. There was a Harris Poll done in 2022 on 300 patients. You can see really how this common condition can have such an impact on patients' lives. You can see that 3/4 of patients felt it contributed to their anxiety. This is on their face, in business meetings, it's got their itchy scalp. They've got an itchy groin. So it really can lead to anxiety, almost all patients, 91% felt it negatively impacted their social life, their social interactions, as they're being very self-conscious, knowing that this rash is so visible. And on almost half of patients have missed work at some point, because of the seborrheic dermatitis symptoms. So you can see on this pretty robust data set here that there is a very significant impact on patients. And as I sort of started out by saying I'm so happy to see that this condition is really starting to get the attention that it deserves.

Okay. Thanks, Melinda. All right. With that, we'll turn it over to Todd Edwards to talk about our commercial execution.

Yes. Good afternoon, everyone, and thank you, Dr. Gooderham. We appreciate your comments and insights. As the prior speakers have indicated, this is a very exciting time for patients, their healthcare providers and the company. Enthusiasm we have seen for this foam launch is very encouraging, and I will talk about that in a moment. Approximately 4 months into the job here, I am impressed with what we are seeing in the ongoing psoriasis launch. While we are in the midst of completing our year-end close and reporting, what I can share with you is that we expect strong top line revenue growth Q4 over Q3 and good gross to net improvement Q4 over Q3. Now let's discuss the ZORYVE foam launch starting on Slide 18. Through surveys and direct patient feedback, we have learned that many seborrheic dermatitis patients are dissatisfied with their current treatment options, treatment options that are cumbersome and inconvenient. There has been no innovation or new branded products in this space in over 2 decades, leaving patients frustrated managing complex and onerous treatment regimens. Patients are eager for new options, leading to a significant pent-up demand, making the dynamics favorable for rapid adoption of ZORYVE foam. Turning to Slide 19. ZORYVE foam offers a unique value proposition and the potential to be a new standard of care in seb derm. A once-a-day monotherapy treatment delivered in a novel foam supported by a study that reflects the reality of BSA and facial involvement for seb derm and a label unconstrained by severity, duration or location. This product is different than anything else that dermatologists and patients have ever seen for this disease, and as such, has the potential to swiftly become the new standard of care for managing seb derm. On Slide 20, I want to highlight a significant overlap in PsO and seb derm targets. Approximately 98% of seb derm call plan targets overlap with our current psoriasis targets. Therefore, our field team has established relationships with the dermatologist as psoriasis targets. Through engaging these dermatologists, since the psoriasis launch, they have built relationships with their staff and have had the ample opportunity to educate them on our product access and support programs such as our co-pay card and formulary information for the commercial PBMs and payers. There is tremendous synergy here since the co-pay card will be the same for ZORYVE cream and ZORYVE foam as well as payer access and processes. Furthermore, dermatologists have firsthand positive clinical experience with ZORYVE cream in psoriasis. This means we can leverage all the engagement and positive experiences we have had with our target dermatologists and our product to make a swift impact driving rapid uptake of ZORYVE foam. Turning to Slide 21. Since our seb derm approval, we have been very pleased with the early demand signals. This is not surprising given just how many seb derm patients are in the clinic every month. Close to 75 on average. Dermatologists tell us that as soon as they met with their seb derm patients after approval, they were eager to offer ZORYVE foam as a new treatment option, something they haven't been able to do for these patients. And as a result, we are aware that there are many prescriptions for patients pending at pharmacies, and we have received substantial orders for pharmacies awaiting fulfillment. This is exciting news for the launch as today, shipments are in route. Many of these pharmacies are within our contracted network and are well familiar with our co-pay program and how to process the ZORYVE prescriptions. Now on Slide 22. As discussed in our approval call, we have secured access with the 3 national PBMs who recognized ZORYVE foam as a line extension of the ZORYVE cream existing contracts. This will translate into an increased volume of covered prescriptions, importantly, in the early launch period, resulting in a favorable impact on gross to net. And we continue to work with the PBM affiliated downstream health plans being them onboard and covering ZORYVE foam. And finally, I want to inform you that the key EMR platforms list ZORYVE foam as an available electronic prescription. In summary, on Slide 23, we are confident that we have the ingredients in place for a successful launch. Relationships are already well established with the dermatologist. Our field team is well trained on the value proposition of ZORYVE foam and are ready to promote and educate. Contracted pharmacies ready to dispense with orders already in place, and awareness of the co-pay card and processes that go with the product will enable rapid uptake. Access with the PBMs to ensure patients can get the drug as a covered prescription will have a positive impact on gross to net. And finally, shipments of the new ZORYVE foam are in wrap to pharmacies. And I will now hand the call back over to Frank.

Thanks, Todd, and I'm incredibly excited to have Todd leading our commercial effort in this launch. Once again, today's launch is ZORYVE foam for seb derm marks the second product approval and commercial launch in less than 18 months for Arcutis. And I think it really is a great further demonstration of our continued strength in execution across our organization. Just briefly on Slide 25. As we've discussed before, we have the potential to expand our total patient opportunity about tenfold in the next 12 months as we now have the seb derm commercial opportunity, a hopeful approval in atopic dermatitis this summer; we continue to work on expansion of coverage into Medicare and Medicaid; and we also continue to work on a potential partnership that would allow us to access the primary care and pediatrics market. So very, very large expansion in the opportunity for ZORYVE just in the next 12 months. And turning to Slide 26. We talked about this at our last call as well that '24 is really going to be a transformational year for us. With ZORYVE cream and now ZORYVE foam in the early stages of the commercial launch, and then the July 7 PDUFA date for roflumilast cream, we've got a lot of very exciting catalysts coming up, and we're very excited about the coming year. In October, we completed a secondary offering that raised about $100 million, putting us in about -- it was $100 million, putting us in a strong financial position to support our continued investment in the plaque psoriasis launch as well as for the launches of seb derm and potentially atopic dermatitis while continuing to develop our pipeline. Launching drugs obviously requires -- to do it properly requires substantial investments in staff and promotional investments and having multiple launches in a short period of time, magnifies those resource demands. At the same time, we recognize the importance of being good stewards of the investor capital that's been entrusted to us. Thus, we have undertaken significant expense management initiatives to decrease our cash burn and lengthen our cash runway, focused primarily on R&D activities and noncustomer-facing staff across the organization. And that's allowed us to reduce our projected spend by approximately $50 million over the next couple of years. We'll provide some further color around OpEx during our 2023 end of year earnings call late next month. But with these reductions, we have the adequate capital to fully invest in the psoriasis and seb derm and potentially atopic dermatitis launches. Todd laid out for you the commercial opportunity for ZORYVE and our plan to execute against that opportunity and that is our primary focus. Successful execution, combined with the expense actions we announced today, our current cash position and some near-term business development milestones could reduce or even eliminate our need for additional capital, although, of course, we'll remain opportunistic to ensure we can carry out our strategy and ensure the success of our launches. We're incredibly excited to bring meaningful innovations to the millions of people suffering from psoriasis and now seborrheic dermatitis, and we're looking forward to helping millions more with the expected approval in atopic dermatitis, all of which will allow us to create shareholder value and make our mission of addressing unmet needs and the lack of innovation in medical dermatology a reality. So with that, we'll open up the call for Q&A.

[Operator Instructions] Our first question comes from the line of Uy Ear of Mizuho.

So I guess first question for the KOL. Dr. Gooderham, you indicated that currently there's about -- patients have about 6 prescriptions on hand. How do you sort of see ZORYVE cream fit into this treatment paradigm? Do you expect most of these prescriptions to go away? Or -- and ZORYVE -- I'm sorry, ZORYVE foam, I'm replacing these prescriptions and it will be sort of like a one-stop shop for the foam formulation? And I guess the second question is, you guys indicated there will be about a $50 million in savings. Is that off of 2023? Or is that off of your internal estimate for 2024?

Yes. So Dr. Gooderham, would you like to take the first question about standard of care? And then maybe, John, you could address the OpEx question.

Sure can.

Okay. Great. Yes. So the number of prescriptions that people are getting now, I think, can all be replaced with one product. So yes, I look forward to being able to tell my patients, this is the one thing that you can use it everywhere. There's no stop date to using it and we would get rid of all of the other inconvenient messy treatments that they have. And I know from -- when I did the clinical trials, patients were so excited to have that option.

It's John Smither. With respect to your question, think about it as against our internal forecast, and it's over '24 and '25. And we'll be providing more insights into our spend at our earnings call, as Frank mentioned.

Can I have a follow-up question? So Patrick, I think you mentioned that this time period is sort of a heavy derm meetings time period. So like could you sort of help us think about how many of these meetings are there and whether this would potentially impact the uptake, I guess, in the first quarters of doing these meetings?

Yes. Thanks for the question, Uy. There are some down periods for dermatology meetings, even though there is an absolutely massive number of derm meetings to kind of keep us on the road for a good portion of the year. I would say that this is really one of the busiest times, because we've come out of the holidays. We had winter clinical just like -- here in Hawaii, just a week ago essentially. Now we have Maui Derm. We had a meeting in Aruba. And this really goes on until the American Academy of Dermatology meeting in March. So they're really too numerous to name, and it's every single week. So this is really the perfect time to be getting people's attention. And just even this morning being out there, our press release went out, and we were just kind of chatting with people and talking with them. And as you walk by, they literally seen Arcutis person, they're like when -- you guys got the approval, when can I write and it's a very easy question to answer right now. So I really do think that, that has an impact on our ability to be able to kind of get this message out there. The other thing is that every one of these -- and Dr. Gooderham is a much sought -- and you can see why she such a sought-after speaker after her joining us today. But when you're a speaker at one of these meetings, you need to have interesting things to be talking about. So a new approval and a product being available gives them something to talk about. So actually, I was talking to another KOL, who is going to be on the podium tomorrow. And she was very excited to learn that we had made this available, because she was like, it gives me a new piece of news to be talking to people and not just kind of going over the same stuff that they might have heard 2 weeks ago at the last meeting. So I do think that the timing of this really plays favorably for us.

Our next question comes from the line of Tyler Van Buren of Cowen.

This is Tara on for Tyler. So I was wondering if you could provide some more clear expectations for what you think the initial launch trajectory will look like in the first 1, 2 or 3 quarters? What should we expect throughout this year? And if scripts will be reported by third parties?

Yes. Todd, do you want to take that one?

Yes, absolutely. So the scripts will be reported by third party. And I think looking at the trajectory of this product, I think it's -- a couple of things to keep top of mind is that this is a large potential market. There's 9.7 million patients with seborrheic dermatitis that are diagnosed, of that 6.9 million are treated with a prescription and 4.4 million are diagnosed and treated with an Rx in the derm setting. As mentioned earlier, there's been no advances in this. We're starting from a position of strength with our formulary access. And so I would think that there would be a robust uptake of this product and a very positive trajectory as we roll forward. Not going to provide any specific guidance at this time, but I think that the situation is ripe with a product like this to have a nice positive uptake, the ZORYVE foam.

Yes. And Tara, maybe just clarify. We expect that IQVIA will report the foam and the cream separately since they are separate indices.

Our next question comes from the line of Seamus Fernandez of Guggenheim.

So just wanted to follow up on that uptake question in a little bit more. I think in the past, we've talked about the opportunity here only in market asset. And admittedly, now you've really got a great baseline reimbursement for patients. So I just wanted to kind of clarify 2 things. One, I think in the past when we've talked about this, a reasonable comp was the launch of ZORYVE cream in psoriasis. But assuming if we were to assume that, that launch had actually been without a competitor. So basically, is it reasonable to look at the overall novel topical psoriasis market as a good comparison for the launch of ZORYVE foam? And then I'll just follow up with the question after that.

So I'll make a comment, and then Todd may have some additional thoughts. But I think it's always difficult to predict the future. If I could do that, I probably wouldn't be doing this for living. But I do think that there are a number of positive tailwinds, one of them being the cream prior experience, as Todd mentioned; secondly, the favorable access position that we're in; third is the lack of competition; fourth is the very high unmet need that Dr. Gooderham mentioned. So I think all of those things, in my mind, point to very, very high potential for ZORYVE foam. And like you, we'll be tracking it on a weekly basis over the next several months. But I would expect that we'll see a very good uptake of the product right out of the gates. And I think Patrick mentioned before, a lot of our customers are saying that they have a ready pool of patients that they'll be prescribing as soon as it's available, which will be this week.

Great. And then just to follow up...

Sorry -- just -- Todd, anything else you want to add on that?

Yes. Just one, in addition to your comments, Frank, I would mention that -- what I mentioned earlier in my comments is that just the demand for this product is exceptional, meaning that we're keenly aware that there are prescriptions already at the pharmacy waiting for fulfillment. And in addition to that, we received significant orders from those pharmacies. And so I think that's a very positive signal relative to this pent-up demand that these providers and patients have here.

And then Seamus, did you have a follow-up question?

I did, yes. So I just wanted to kind of also maybe level set the playing field on the gross-to-net comments. So the ability to have a positive gross to net, but we also have a first quarter situation coming up with high deductible impacts. So I just wanted to maybe -- help us -- if you could help us think about what gross to net pushes and pulls we should be thinking about versus what you'll report as gross to net or at least what we'll calculate as gross to net from the fourth quarter would be really helpful.

Yes. Todd, do you want to take that one, too?