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

Good afternoon, everyone. Let's go ahead and get started. This is the fireside chat with Arcutis Therapeutics. Happy to have with me on the stage the team from Arcutis. Frank and Todd, thank you for joining us. Really appreciate it. Before we get started, let me just read a brief disclosure statement. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions please reach out to your Morgan Stanley sales representative.

My name is Vikram Purohit I'm one of the Biotech analysts with Morgan Stanley Research, and let's dive into it. Frank, maybe we'll start with you before we get into any sort of specifics on reimbursement, pipeline, et cetera, just start off by discussing how ZORYVE has been trending in psoriasis and now with the foam in Seb Derm versus your initial expectations for these categories, call it, 2 years ago?

Sure. So I think psoriasis got off to a little bit of a slower start, quite frankly. I think there were some growing pains and some learning experiences for us, for our first launch. We had a very experienced team, but I think every new product has its own learning curve. I think one of the strengths that are Arcutis is that we're pretty nimble learning organization. We learned from that launch. And I think we applied all those lessons learned for the Seb Derm launch and I think you saw a very different response with the Seb Derm launch. And then I think still early days with atopic dermatitis, but it's going very well as well. And I think very clearly, we've been able to incorporate those lessons in the atopic dermatitis launch as well. So each launch, we're getting the system down better and better and better. And in particular, with the Todd and the new commercial team in place, I feel like we've got the right people behind us. So all 3 products, I think, are performing very well. We've got good underlying growth of demand. We continue to make improvements on our gross net. I feel very good about where we are from a coverage standpoint. We're starting to make headway now with the government payers. And in the meantime, we continue to progress the pipeline, as you mentioned before. So I'm happy with how things are going.

Great. The topical derm segment was a bit of an unknown. The branded topical derm segment was a bit of an unknown to a lot of investors and analysts about 2 or so years ago. What do you think, from your perspective, have been some of the biggest lessons learned in the category? Now again, with 2 presentations of ZORYVE in the market? And what have been some of the, I guess, surprises to the upside?

Lessons you mean for an organization?

Correct.

So I think all the complexities around fulfillment and pull-through with topical products is different than it is for the systemic agents, right. And I think that was an important adjustment that we've made. And one of the things that really has helped us to get our coverage where it is, is figuring out all of that, and having Todd and his team and their background and experience in the space, I think has helped us a lot. I think the other probably big takeaway has been, it's just the force of habit, right. And anyone who's ever tried to quit smoking or stop swearing or lose weight or anything knows how hard it is to change habits. Dermatologists are in the habit writing topical steroids, right. And they don't really think about it that much. They've been doing it every day since they started their residency. They do it 30 times a day. It's just sort of like automatic. And getting them to change that habit, that behavior is taking time. I'm encouraged because if you look at -- I worked at, I used to work on Prozac and it took a while to switch psychiatrists from TCAs to SSRIs. And it took a while to get them to switch from neuroleptics to atypical antipsychotic s. It to go out to get people to switch from warfarin to Factor Xa and you go through a whole series of drugs. It takes a while for those habits to change. But once they change, it's a profound shift. And I think that we are starting to see that in dermatology move away from topical steroids. We're also starting to see the specialty acknowledge that they need to start moving away from topical steroids. Topical steroids are great acute drugs and these are chronic diseases, right. And they're perfectly fine for a couple of weeks, but if you're on them for months, you're going to run into problems. And dermatologists, I think, are starting to realize that now that they've got really good nonsteroidal options, it's time for them to start rethinking about their treatment paradigm in the topical space.

Do you think there's going to be kind of a tipping point where we see a sudden change in behaviors over time for that category broadly…

If you look at these other markets that have gone through this sort of transformation, it's a fairly linear process over a number of years. But by year 7, year 8, the majority of the market has converted over to the new class of drugs. Half of the steroid market converts over. This is going to be a gigantic category, right, because there are so many topical steroid scripts out there. And I think Todd and I both feel and I think, Patrick, our Chief Medical Officers, our product really has the kind of profile where we actually could replace topical steroids in a meaningful way.

Got it. Okay. Another big area of focus for the category has been reimbursement. So on gross to net, I guess, start off with just kind of recapping your progress from the psoriasis launch to now for the cream. And then also for the film, how that gross to net is trending? And your guidance on the best way to think about implying and calculating gross to net as you report out the quarter.

Todd, do you want to go?

Yes. On the gross to net as reported during the Q2 earnings call when the gross to net is in the high 50s. When you break that out by product indication. We think of the ZORYVE 0.3 to psoriasis indication. The gross to net to be at a steady state, which is in the mid-50s. Thinking about we've been fortunate to have ZORYVE foam treat as a line extension with the payers, which means we get rapid formulary coverage, which quickly transitions to coverage scripts. If you think about it, we launched in January, 75% or slightly more of ZORYVE foam scripts are now covered, positive impact on gross to net. It's getting close to that of the psoriasis gross to net. We think by end of the year, we'll be the steady state with the ZORYVE foam. Atopic dermatitis, you can think of that they will take a similar ramp-up and slope in gross to net as ZORYVE foam because it will be treated as a line extension likewise. So we believe that mid-next year, we'll be at a steady state with atopic dermatitis.

And do you think the steady state in atopic dermatitis versus psoriasis versus Seb Derm? Do you think the level of competition in its respective category or the lack thereof maybe impact the steady state at each indication specific growth to that category?

I don't necessarily think the competition will have an impact on the steady state of the gross to net. I think it's more how quickly can we garner coverage scripts. So how quickly we get the formulary coverage, how quickly can we translate that to a coverage script is what's going to really help accelerate these gross to net. We've seen that with ZORYVE foam seborrheic dermatitis how quickly it ramped up. And how quickly the -- over time, the gross spend has improved. And I think we'll see a similar trajectory with atopic dermatitis.

And I think one of the real advantages we have with the various indications and formulations of ZORYVE is that the process for getting reimbursement is exactly the same. So the offices has already figured this out. They've already got the systems in place. They know how to get it done. And I think that's one of the contributors to the rapid ramp-up in the foam and what we expect to see with the cream. I think the other worth pointing out to getting into the 50s and your gross to nets is a pretty significant accomplishment in the current day and age across any therapeutic area, at least on the retail side, right. And I think historically, one of the things that has undermined a lot of branded atopicals was their inability to get down to a reasonable gross to net down in the 50s. A lot of them were stuck in the 70s, even some of the products in 80s. You're just not making any money with a gross net like that, right. So you're generating volume, but you're not generating revenue. So we've been very focused on getting our gross to net down as quickly as we could so that shareholders actually benefit from the volume that we're generating at the patient level.

Got it. Okay. That's helpful. So on volumes then, psoriasis has picked up recently, right? What do you think is driving that script growth? Are there specific patient subtypes, prescriber subtypes, geographies that are disproportionately driving some of the script growth we're seeing on a weekly basis?

Yes. With the recent the growth that we've seen in psoriasis. I think it's twofold. I think that first is broad-based relative to the patient type. I think one catalyst of that has been the halo effect of the Seb Derm launch, meaning that the more dermatologists that are prescribing ZORYVE foam that may have not prescribed psoriasis or getting a positive experience with the foam and were willing to prescribe ZORYVE cream for psoriasis now. The other is we expanded our field sales organization July 1. I think that's having a positive impact. I think what's important about that is we expanded it meaningfully by about 40 reps, the representatives that we hired all have dermatology experience, but more importantly, established relationships with those offices where they can have an immediate impact. I think the other is the seasonality we're coming out of the, what I'll call the seasonality time frame during the year. We're -- the weather is changing, dermatologists receive more patients and the dermatologists are not on vacation. So I think that's likewise having a positive impact on this trend.

And I think beyond the vacation piece too, these diseases do wax and wane during the year, and as it gets warmer and wetter, all 3 diseases tend to get better in general. And as it gets colder and dryer, they tend to get worse. And so we probably had some effect of that as we went to spring and into the summer. And now as we head into the fall, we should see a ramp back up and frankly, patients flaring.

Got it. Okay. Helpful context. In terms of refill rates and annual utilization, where do psoriasis currently stand? And where do you think Seb Derm is going to get to once that launch is a bit more mature?

Yes. So relative to refill its recurring stands today on psoriasis the total volume there, about 40% of that is refills for psoriasis. On Seb Derm where we stand today, the total volume, 33% of that is refills. We're very pleased to see where we are both on refill rates for both products. If you think about this, take psoriasis, for instance, if you look at our clinical trials within 8 weeks, 40 patients, 30% of patients were clear or almost clear. I mean they're using less product. And so when you think about these topicals on average, it's 2 or 3 units per patient per year. So we're on track with our refill rates and where we should be for psoriasis. And we see early signals on Seb Derm that will likely exceed what we projected before as far as an average of 2 cans per patient per year will likely be 3.

Okay. So it sounds like 2 to 3 tubes or cans per patient per year is kind of where both indications are trending. Do you anticipate something similar for atopic derm? I know it's early days for the launch.

Yes, yes. Very similar for atopic derm.

Got it. Okay. And any feedback from the field on how both the cream and the foam for psoriasis and Seb Derm are being used? Are patients using it kind of in conjunction with topical steroids on certain parts of the body or are patients that are adopting it heavily kind of using it as their main stay treatment?

Yes. Really, it varies from doctor to doctor, patient to patient. I think there are some doctors who are still comfortable, particularly if a patient is flaring with maybe starting them with a high potency steroid. I know there are some doctors who are starting -- the high potency steroid and ZORYVE at the exact same time. And then 2 to 4 weeks in they're withdrawing the steroid and then just keeping the patient on ZORYVE. Other doctors are doing sequentially, steroid to ZORYVE. A lot of these patients are just being managed chronically as well. And ZORYVE is a better maintenance option than the other options out there today. And so there are some patients who are switching over to that as well. But really, I think it varies from clinician to clinician or how the employ ZORYVE. But across the board, we're getting very positive feedback on the clinical experience. The 2 comments that we hear consistently -- well, 3 comments, I would say, is it's a very reliable drug, right. They give it to the patient, they know the patient is going to get better. And our data bears that out with response rates in excess of 90%. They get no feedback in terms of side effects with the drug and that it's relatively easy to get coverage for it. And so those are the 3 dynamics, I think, that are contributing to the steady growth of the product over time.

Got it. Okay. You've a branded competitor in psoriasis currently right, Dermavant's Vtama. What are you hearing from the field in terms of how doctors are choosing one option versus the other?

I would say, if you look at the data, too, I think a lot of doctors have tried both. It's not an unusual thing to give both products to try. And I don't spend a lot of my time and energy focusing on what's going on with the Dermavant product. We continue to see our primary competition as being branded or being topical steroids, right, because that's where all the patients are. Their drug works. I think it's associated with some tolerability issues, which I think has been a bit of a headwind for them. Based on what we've heard them report, I think they're having a little challenges with their gross to nets, which again, I think a lot of topicals have had problems with that. But look, I think this is a big market. There's room for multiple branded competitors. We have a branded competitor in atopic dermatitis space as well, which is a very good drug. I think there's room for both of us. Again, the name of the game really is the conversion of that steroid business over to the newer nonsteroidal agents.

Right. Okay. Fair enough. Similar question for Seb Derm as well. Obviously, much earlier stages of launch there than psoriasis. But what are you hearing in terms of the patient benefits that are being reported, the level of disease control patients are reporting? How they're using the product versus antifungals, for example?

Yes. In Seb Derm the foam is really a paradigm-changing drug. I can't -- I don't think overstate that. The existing therapies were both not terribly effective and not very convenient for the patients. And it required a fairly complicated regimen. So having a single drug that can be used anywhere for any amount of time and really fits into a patient's lifestyle is a game changer for doctors and patients. I got an e-mail a couple of weeks ago from a gentleman who had been suffering from Seb Derm his whole life and had tried everything, nothing could control this disease. He read about ZORYVE foam on the Internet, asked his doctors. His doctor put it on him. He said within a week he had cleared and he e-mailed me. He said, "Your drug has literally changed my life." It was a very inspiring e-mail. I just got a photograph the other day from a doctor of before and after of a patient with Seb Derm on the face and profound improvement in a very short period of time. So I think this is really revolutionizing the treatment of this disease. And what we're starting to hear as well from some doctors is that it's so easy for them to treat Seb Derm with ZORYVE foam that they're willing to treat patients that they might not have treated in the past, right, because it was going to be a very complicated regimen and they're like, is it really worth the trouble. Now like, hey, you've got Seb Derm I've got a solution for you. So I think it's still too early to say, but we potentially could see some growth in the market even which we didn't expect with the launch of ZORYVE because it's performing so well.

Got it. Okay. Obviously, a pretty sharp uptake curve for Seb Derm in the first couple of weeks and months. Where do you think it kind of stabilizes out, excuse me?

I suspect we're probably in the kind of steady state growth trend here.

Yes, we are. Yes.

So the weekly growth that we're seeing now, you think that's sustainable for the near to mid-term?

Yes, I think so. I think with the Seb Derm, it's a big market. There's no competition within the market. So I think you can see that the trajectory we're on, we'll continue on that trajectory.

Got it. Okay. So like we discussed earlier, you launched an AD recently with the cream as well the 0.15%. How is that tracking versus what you expected? And what do you think is the best way for all of us to interpret that launch curve when we compare it to your branded competitor through insight and then also through ZORYVE in psoriasis or even Seb Derm? How should we frame what that launch curve could or should look like?

Yes. So I think I said at the last quarterly call, right, that I thought it was going to fall somewhere in between the psoriasis launch and the Seb Derm launch. It's tracking a lot closer to Seb Derm than the psoriasis, which I'm very happy to see. I'd say I've been pleasantly surprised at the early uptake. It's still early days. We're about 6 weeks in the launch. But the uptick, I think, has been very good and clinician feedback has been very positive. We're also making rapid progress on the payer front. I don't think we have that sort of warehousing phenomenon we saw with Seb Derm, right. There was just -- there were no options in Seb Derm, there are other options in the atopic dermatitis space. The flip side of that is AD is a very, very large market. And this is an ideal product for atopic dermatitis. And I think it's really important. It's the very first topical that's once a day, which, especially if you're treating a little kid, I mean that's a big difference for a parent, not having to strip your kid naked twice a day and slather them in an ointment, right. So I think we will be very competitive in a very large market. I think we can see really nice growth in atopic dermatitis going forward from the starting point. And the most important thing is that the drug performs, right. And that's the feedback we've been getting from doctors.

Do you think you're competing for a different subset of patients versus Opzelura? Or do you think it's probably head to head?

Yes, probably a slightly different patient demographic. I mean, look, Opzelura is a very good drug. I mean, there's no question about that. The label is little scary. And there are a fair number of hoops to jump through in terms of access and reimbursement. ZORYVE has a very clean label, no box warning, no limitations on age, on -- well, down to 6, no duration on limitation duration of treatment on body surface area. So it's, I think, well suited to compete against steroids and topical calcineurin inhibitors as a first-line agent. Some patients are probably going to progress to DUPIXENT or Opzelura, and that's okay. It's a big market, and that's just kind of a normal course of clinical treatment.

Got it. How much kind of cross indication user are you seeing with the different presentations of the product? So for example, the foam being used for psoriasis, the cream being used for Seb Derm, the 0.15% being used in place of 0.30%. Are you seeing a significant amount of that?

We don't see any of it, no, because the insurance companies want to see an AD diagnosis for this psoriasis diagnosis for that and Seb Derm diagnosis for this. If the dermatologist decides, well, I think that's Seb Derm that's what we see is that it's Seb Derm foam. Anecdotally do we hear about doctors doing that? Yes, it's difficult to quantify because it doesn't show up in the data. We obviously don't ever promote our drugs off-label. But dermatologists know it's the same drug and they can pick and choose.

Got it. Okay. Now that you're out there in 3 dermatological indications, do you have the motivation to try to study ZORYVE in more conditions like Vitiligo, others?

We have a force, that we file scalp and body psoriasis, and we expect probably approval middle of next year. I think whether we pursue an indication, additional indications or not is still to be determined. There are probably other applications for ZORYVE. I think you're already seeing a large number of case reports of ZORYVE working in other disease states, and there have been any number of them published, including some rare and very difficult diseases. There was a poster at EADV last year on the use of ZORYVE in a very rare genetic skin disorder. So dermatologists are experimenting with it. Whether we go down the long road of getting FDA approval or not, I think we'll have to see, we haven't made any decisions about that. If we do make a decision, we'll let the investment community know. We have other pipeline programs, obviously and so we're constantly evaluating what's the best way for us to deploy the shareholder capital that we have in the company, and we don't want to pursue indications where we don't think that we can create shareholder value.

Got it. Okay. Makes sense. Maybe we can switch over now to your recently announced partnership with Kowa. The first question, how did you come upon Kowa as kind of the best fit for broadening out the reach for ZORYVE to the primary care segment?

Yes. We've been looking at the primary care space for quite some time now and think about who might be the best partner. We really were looking for 3 characteristics. One, we wanted someone with an existing primary care sales force, 2 we wanted someone who was willing to put ZORYVE in a high-priority position, first or second position detail. And 3, we ideally wanted someone who had done co-promotes before and had experience with what made those work. And as we went through and looking at the various opportunities, potential partners, Kowa was one of the very few companies that met all 3 of those criteria. There are plenty of other companies that have primary care sales forces. Many of them would not give us a first or second position detail, you can probably guess at some of those names. And there are a number of companies that didn't have primary care experience -- sorry, co-promote experience, excuse me. And so Kowa really just fit all the key parameters, and we were able to negotiate, I think, a mutually beneficial deal between the 2 companies.

And remind us of time lines there. When could they be out in the field and when could you start seeing a script uplift and sales benefit from that?

Yes, Kowa will launch into the market at the end of this month, so they'll be actively promoting in primary care and peds. But we don't expect a meaningful impact until 2025 from their promotional efforts. It's a long selling cycle within primary care, given time to orient the physicians to ZORYVE relative to the fulfillment process will take a bit of time. So 2025, we expect an impact.

Any initial thoughts on what the scale of that impact could be? Just when you consider the opportunity in primary care versus where you are currently?

I think as you look across the various diseases, about half of atopic dermatitis patients are treated by non-dermatologists, mostly primary care patients and pediatricians. About half of Seb Derm patients are treated outside of dermatology and about 1/3 of psoriasis patients are treated outside dermatology. These are really large opportunities in, and they're not obviously all in primary care and pediatrics, but a lot of them are. There's a ton of patients sitting out in this space and we think that this product is very well suited to use by primary care doctors. It's not complicated, there isn't any major safety issues. There's nothing scary in the label. So I think eventually, it could be a very significant contributor to revenue. As Todd said, I think it will take a little while. This is a brand-new drug for them and they -- this is not bread and butter for them trading AD and Seb Derm the way it is for psoriasis -- for dermatologists. Probably half the patients that a doctor – a dermatologist sees has 1 of 3 diseases we treat, right. I think it will take a little bit more time, but eventually, I think it will be a very major contributor.

Got it. Okay. And the time frame for that partnership, how long does that last?

It's a 5-year deal.

Got it. Okay. I guess taking a step back, we'll put scalp psoriasis to the side right now just because you're not commercialized there, but psoriasis, Seb Derm and AD, if you had to benchmark what those commercial opportunities could mean or could look like and where could they could stack versus one another for ZORYVE, call it 3 to 5 years from now, how would you rank them?

We haven't given revenue guidance, but we did share, I think, last year's R&D data. We think that each one of these products at peak could be somewhere in the $700 million to $1.2 billion range and all roughly of similar size. I think what will be interesting is that once we get the scalp and body indication, I think that the foam across scalp and body and Seb Derm is probably going to be bigger than the 0.3 cream --the psoriasis cream, right, because you've got 2 indications with one formulation and 2 formulations that are very well suited to treating the diseases. And then I think AD, the 0.15 will be quite substantial just because of the size of the market. And then of course, we are getting ready to file a sNDA for 2-5 year-old as well for atopic dermatitis, and we hope to do that late this year or early next year.

Okay. Given the sense of what portion of the AD population that represents the 2-5?

2-5 is a pretty sizable chunk of AD in general. In dermatology, it's only about 10%. The young kids, a lot of them are being treated by primary care doctors -- by pediatricians, excuse me.

Yes understood. Okay. I guess for scalp psoriasis foam, how would you contextualize what that opportunity could mean on top of these 3 indications? And do you see a risk of potential cannibalization with the 0.3%?

Maybe I'll start with the second one because that's the easier one. Absolutely, I think that the foam will cannibalize the cream when we get the scalp psoriasis indication, and I absolutely don't care. The cost basis is, the price is the same and the cost of goods sold is about the same. As long as they're raining ZORYVE I don't really care. In terms of the opportunity, almost half of psoriasis patients have scalp involvement. And like Seb Derm there really aren't good options for treating scalp psoriasis. You're using a shampoo or a solution, you haven't used it multiple times a week, you're probably using a different drug to treat your body psoriasis. So to have a drug that is very effective, very safe and well tolerated and a single drug that can be used everywhere in the body, on the scalp, on the face, on the elbows, on the knees, in the groin, they've never had a drug like that. And it just simplifies the doctor's job and it simplifies the patient's treatment regimen. I think that scalp and body is going to be a really important driver of growth for this product long term. And I think it will look a lot more like Seb Derm because it's so highly differentiated versus all the other options and so we expect that to do very well performance-wise. And yes, I do think it will end up replacing the cream for a lot of psoriasis patients.

Got it. Okay. Quite a few moving parts here, but do you think that there's potential for ZORYVE sales guidance at some point? What you guys...

You're not the first person to ask me that. At some point, yes. I think that the challenge for us has been, we've been commercializing now for just about 2 years. And in those 2 years, we've had 3 launches, and we have a fourth one coming and then we have the primary care partnership on top of that. There's a lot of catalysts going on that create uncertainty around the top line. We don't want to start issuing guidance until we can issue guidance with some degree of confidence. I think that given that we're in the midst of another launch right now, and we're looking at probably another launch middle of next year, I think it's unlikely that we would issue guidance in '25. David Topper may have a different view, we'll have to see. But I think until we feel like all the indications are in some steady state where we can accurately project it, we probably won't issue guidance.

Got it. Okay. Fair enough. When scalp psoriasis launches assuming approval, do you expect another uptick in your sales force expansion, excuse me?

We just mentioned, we just expanded field sales organization. I think we're very much rightsized for the ZORYVE portfolio to include the psoriasis foam product. The intent of this most recent expansion was to make certain that we could have the appropriate frequency and share of voice on the high decile, high-prescribing physicians. And I think that we're very much rightsized for that. We're prepared to add ZORYVE foam for psoriasis into the portfolio.

Got it. Okay. Great. And then from a pipeline perspective, what's your current focus for the pipeline? What do you want the pipeline to look like, call it, 3 to 5 years from now? The announcement you had recently on the alopecia drug, kind of what are your aspirations for that product? I'd just love to get some context...

Yes. So, as you mentioned, we just announced, I think, this morning that we have completed enrollment in the Phase I study for ARQ-255, which is our topical JAK for alopecia areata. We'd expect to see a readout from that study for that 3-month treatment period. So, the last patient visit won't be until the end of the year. So sometime first half of '25 we would see the readout from that. It is a Phase I, so the most likely readout is, okay, yes, we can progress now to Phase II. With alopecia drugs, you typically need to treat for 6 months to see hair growth. The hair growth cycle is fairly slow. So, I don't think people should have too many expectations and efficacy signals from this Phase I trial. But we're hoping to be able to progress that in the Phase II. And then the other major focus is ARQ-234, which is our biologic the fusion protein against CD200R, which is one of the newer checkpoint agonist -- checkpoints in the immune system been discovered. It's a checkpoint agonist. And so by agonizing the checkpoints unlike a checkpoint inhibitor, you do the opposite, right. You tamp down the immune system, you reset activated immune cells. And I think there's some very compelling data around the target. We think we have a very good asset. And we announced at the Q2 earnings call that we expect to open the IND for ARQ-234 during 2025. And then would be looking to move into the clinic at some point with that program as well. In terms of looking forward, we've got a very strong development organization, both on the clinical side and on the manufacturing side. We have our own internal programs. I mentioned the 2 most advanced ones. We are always looking at other opportunities. Right at the moment, I don't think that business development is an imperative for our company. We've got a lot on our plate. If a really good asset came along, we certainly would look at it seriously, but I don't think that acquiring additional assets is something that we need to do certainly right now in here and now.

Got it. If the alopecia therapy, if that progresses to Phase II and let's say you get an encouraging signal, would you want to keep prosecuting that independently? Or do you think there's an opportunity to partner that and basically just kind of be a…

We can develop it ourselves -- no question about that, right. I mean we've done it now for 4 different products developed successfully ourselves. And in terms of commercialization, it would slide in very nicely into the dermatology sales organization. Alopecia areata is a drug –disease. Its predominantly treated by dermatologists. So, I don't think that there would be a compelling need to find a partner for that. ARQ-234 is a little bit different because I think like many other of the immune modulating targets, it probably has application well beyond atopic dermatitis and potentially well beyond dermatology, right. So, I think we'll have to see how the field evolves. But that might be one where it makes sense for us to partner with someone maybe if they want to development in rheumatology or gastroenterology or something like that.

Understood. Okay. We have about less than a minute left. Maybe a good point to close out on is kind of your financial position. Just remind us of your current cash balance and how you're thinking about future financing needs for the company?

Sure. So, we ended last quarter, a lot to keep me honest here, but $363 million in cash in the bank. And we feel we're in a very strong position financially. David has said, I think, publicly on a number of occasions that with our current set of programs, we don't anticipate the need to raise additional capital from equity markets. We're generating revenue, and we continue to grow that revenue. And we think that combination, along with what we have in the bank should be sufficient for us to continue to operate the company. If we were to do something business development wise, that may change. But again, we don't have any plans to do that at the moment. So, we think we're in a very good position. We also just renegotiated our debt agreement, which will save us quite a bit of money in interest expense, and that, of course, is contributing to our management of the burn as well.

Got it. Great. With that, we're actually out of time. It's a good time to close out. Thanks so much for joining us. Frank, Todd I appreciate it. Thank you.

Great talk to you.

All right, thanks.