People standing by. Welcome to the Arcutis Biotherapeutics FDA approval conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during that session, you'll need to press star one one on your phone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr Eric McIntyre, Head of Investor Relations. Mr. McIntyre, please go ahead. Thank you, Chris. Good morning, everyone, and thank you for joining. As you can imagine, we're all incredibly proud and excited to be here with you this morning to discuss the FDA approval of ZORYVE for plaque psoriasis. Just a couple of logistical details before we get started. Today's webcast and posted presentation can be found under the Events and Presentations tab of our Investors section of our website. Just a reminder to everyone that the safe harbor rules govern our remarks today, as well as any forward-looking statements that we may make during this call. These statements are subject to any risks and uncertainties that could cause actual results to differ materially. With that, I will turn the call over to Frank Watanabe, President and CEO, to kick us off. Frank? Thanks, Eric. Welcome, everyone. Thanks for joining us. I'm actually on slide five of the slide deck, which is on the investor webpage of our website. You know, at the beginning of the year, we held an R&D day in Boston. We told you 2022 is gonna be a transformational year for Arcutis, and I think it would not be hyperbolic to say that we have been delivering on that promise. You know, the approval on Friday of ZORYVE is really the culmination of six long years of work to deliver on our vision of bringing meaningful innovation to dermatology and helping patients with the unmet needs that they're struggling with. You know, you all hear about pipeline in a molecule or pipeline in a product opportunities, but I think roflumilast really is one of those products. We of course have the plaque psoriasis approval on Friday. You all have seen the seborrheic dermatitis data with our foam that we reported at just a few months ago, and we have coming up before the end of the year as well, the readout from our scalp and body study with the foam. Then lastly, we will read out two of the atopic dermatitis trials before the end of the year. By you know, the end of this year, we'll have phase 3 data for four different indications, two different formulations with roflumilast. I think based on the strength of our phase 2 data, we're feeling very confident about the probability of success of all of the upcoming late-stage trials. We'll go into a little more detail as we talk today, but we are, as announced in the press release, continuing to strengthen our balance sheet by drawing an additional $125,000 from the credit facility, the debt facility that we have with SLR. That will, you know, give us the resources to launch ZORYVE effectively as well as to continue all of our pipeline development programs. Moving on to slide six, just to recap again, you know, what we are trying to achieve at Arcutis. I mentioned before, you know, really filling that innovation gap in dermatology that has developed because of the lack of companies developing innovative molecules and elevating the standard of care in the process. I think ZORYVE and the label that we received is a great example of that. We'll go into more details of some of the really unique features of ZORYVE and how those map to unmet needs that the patients with psoriasis have. I think ZORYVE based on the label, you know, really can be considered to be a best-in-class molecule. Certainly best-in-class in the PDE4 class, but I think arguably it's one of the best, if not the best, topical treatments for plaque psoriasis. Our team continues to deliver, and, I think, we're well positioned for a world-class launch, with the outstanding leadership that we've got in place. We continue, as I mentioned before, to work to develop our pipeline. Moving on to slide seven, just a reminder again of the size of the opportunity. You know, one of the things that we're very excited about, again, with multiple indications with ZORYVE is the number of patients already treated, with a topical in a dermatologist office for inflammatory skin diseases, which is the sweet spot for us. Specifically plaque psoriasis, the indication we're talking about today, about two million people in a dermatologist office today receiving topical prescription therapy. As Ken likes to say, the activation energy is very low. We don't need to mobilize patients to come in to see a doctor to start treatment to choose a topical. Those are patients that are already doing that, the doctors are already prescribing it. Getting them to switch to a better alternative should be relatively easy. You can see on the slide again, there are very large opportunities in addition to plaque psoriasis for our other indications in atopic dermatitis and seborrheic dermatitis. I would also remind you as well that there's a very sizable opportunity in the primary care arena and pediatric arena, especially outside of dermatology, that we'll be looking at in the future how we access that, most likely through a partnership. On slide eight, the profile for ZORYVE. You know, this is truly a next-generation PDE4 inhibitor. If you think about the previously approved PDE4 inhibitors, this is a very different product. Very excited that the FDA gave us the approval for the treatment of plaque psoriasis all the way down to age 12, which is, I think, a testament to the safety and tolerability of the profile of the product as well. You know, 4 really key points about the product profile. Obviously, we're delivering very strong efficacy, and it's rapid efficacy as well. With clearance of plaques as well as reduction in itch in all affected areas of the body. A very broad label, and I would say a uniquely broad label. I mentioned the age 12 and above, mild, moderate, and severe patients. I think importantly, the inclusion of intertriginous plaques in the label, in the indication statement. This is the first topical in history to have an approval for the treatment of intertriginous plaques. That's a very common area of plaque psoriasis and also one that's very, very difficult for doctors to treat with the heretofore available treatments. Safety profile, tolerability profile is very, very good. It's a steroid-free drug. We see very few adverse reactions of the type that are associated with pretty much all of the other topical agents for plaque psoriasis have some type of local application site reaction. You know, we've talked many times before, and some of you even felt our vehicle, but you know, we have a unique and proprietary vehicle based on what we call HydroARQ technology that produces a very light moisturizing and easily absorbing cream, which really fits into patients' lifestyles. Lastly, it's effective and is suitable for long-term use based on the safety profile, which is very important for a chronic disease like plaque psoriasis. You don't want to have safety issues develop because you're using a drug for long term, which is unfortunately a limitation with many of the existing treatments. With those sort of introductory remarks, I wanna turn things over to Patrick Burnett, our Chief Medical Officer, to go in a little more detail about the data. Great. Thanks, Frank. I'm on slide 10, and what I'm gonna do is I'm really excited to take you through the data that supports this clinical profile that Frank just outlined and really explain why it is that I'm so excited about what I believe ZORYVE can bring to patients with plaque psoriasis. On slide 10, as you see, that psoriasis is a very common disease, about nine million individuals affected in the U.S. Despite the innovation in the systemic treatment in biologics and orals, it's still true that greater than 90% of U.S. patients are treated with topicals. Frank touched on the fact that your past topicals, those that are currently being used up until the approval of ZORYVE and kind of advances in topical therapy, have had numerous shortcomings. Physicians and patients have really been forced to make a trade-off, and this was reflected in data that we generated in our Skin Insight Harris Poll that was released in March of this year, where we saw that 81% of patients wish they had more topical treatment alternatives to steroids because the innovation in this topical therapy has really lagged behind that which has been seen in systemic therapy. We think that has really changed. With the ZORYVE cream, what you can see in our kind of snapshot from the label on slide 11, some of these highlights where we were really excited about, how the labeling reflects the treatment profile for ZORYVE is, as Frank mentioned, the first to be labeled for indication of treatment of intertriginous areas. What you'll see from our profile is that this is a drug that is able to treat both those kind of hard-to-treat areas such as knees and elbows, where historically it's required higher potency topical steroids in order to get clearance. But as well, those where really local tolerability is critical, and that's intertriginous areas where you have skin-to-skin contact. Their topical therapies historically have really had a challenge because they didn't have the local tolerability that allowed to be used chronically in these areas. This is oftentimes can drive patients earlier to get systemic treatment. Having this specific label for intertriginous areas is really, I think a key differentiator for us. This tolerability is also reflected in the indication down to the age of 12 and above, so adolescents and adults, makes this more broadly available to patients with psoriasis, as well as the inclusion of itch data in our label. I'm gonna take you through these supporting data for this with Worst Itch Numeric Rating Scale, which is how we assess the benefit of patients on this kind of key symptom for psoriasis. Starting on slide 12, looking at the data, what we see on the left is DERMIS-1, first of two identical phase 3 trials, and on the right, DERMIS-2. What I'm showing here is investigator global assessment success. This was the primary endpoint of our trial, and this is a five-point scale. Patients coming in at mild, moderate, or severe, so that's a 2, a 3, or a 4. They had to get to clear or almost clear, and have a two-step improvement to be considered a success in this binary outcome. What you can see is that the primary endpoint at week eight for both trials, we've met statistical significance with a very low P value, and importantly, got 41.5% and 36.7% of patients to this key milestone, while vehicle only got between 6% and 7%, about 6%-7% of patients to this. You're also seeing an early response with statistical significance in IGA success at week two in DERMIS-1, as well as getting about 18%-19% of patients all the way to success as early as four weeks into treatment. You'll see this reflected as well in the itch response data. Keeping in mind that IGA success looks at the disease that's on a patient's skin, itch really reflects what a patient is experiencing, how they're experiencing their disease symptomatically. On slide 13, you can see one of these examples of a hard-to-treat area. This is a heel of a patient coming into the trial. You see an IGA of two. That's a patient with mild disease. You can see, though, that, especially in this location of a heel, this can have a significant impact on a patient because of the location of the disease. That's additionally one factor that makes the heel particularly hard to treat. There's a phenomenon known as Koebnerization, where if a piece of skin or an area of skin is repetitively rubbed or traumatized, it can actually drive psoriasis to keep coming back, and that's what really can cause, like, knees and elbows as well as an area like the heel to be chronically affected by the disease. That's why, when you see clearance in this patient, an IGA of zero already at week four and then maintaining that continually until or maintaining that through week eight, despite the fact that this is an area where you would anticipate patients have a shoe rubbing or something like that this is an example of being able to treat one of those hard-to-manage areas on patients. Moving to slide 14, we kind of go to the intertriginous. So this is at the other end of the spectrum. This is an area where patients are particularly sensitive to the tolerability profile, and that's what has made intertriginous or skin-skin contact areas hard to treat historically for topical therapies. This is using an intertriginous IGA success. The similar type of scale to what I described for kind of overall IGA success, but here just focusing on those areas of skin-skin contact. What you can see at week 8 is 71.5% of patients getting to IGA success and 67.5% in DERMIS-2, and again, well separated from vehicle, which were 13.8% and 17.4%. This is the first time that intertriginous disease has been included in an indication statement. I think the unique application of this endpoint of intertriginous IGA success is what really allows us to highlight the ability to treat this area that has typically been a hurdle for patients with psoriasis. You can see that in our Harris Poll, what we found is that two out of three patients have exhibited psoriasis in intertriginous areas at some point in their disease. This is something that commonly affects patients and can be a reason for them to progress onto systemic treatment potentially earlier than what they might otherwise. On slide 15, we're looking at the most important symptom for patients with psoriasis. When asking patients kind of what it is that really drives their understanding of the severity of their disease, it's itch, the symptom that they point to as opposed to even the distribution of the amount of body surface area which they have. Being able to control this key symptom early and to get high levels of success in this key endpoint was something that was, I think, also very differentiating for us with ZORYVE. What you can see is that at week eight, looking at Worst Itch Numeric Rating Scale success. These are patients who came in with at least a four or greater on a 10-point scale and then improved by at least four points during the course of treatment at the endpoint being, at the time point being assessed. 66.7% and 68.6% of patients reached this response criteria compared to 25% and 33% with vehicle. Importantly, if you look all the way up to week two, we're seeing success rates of around 35%-42%, which really shows an early response for patients. I think this could be important in allowing them to see that they're getting a response and can help with kind of maintaining their ongoing treatments with this chronic disease. That's another aspect that I think is differentiating for this product profile, is the ability to control a key symptom, and then tolerability, as well. If we go on to slide 16, you can see the data from both DERMIS-1 and DERMIS-2, now we're looking at combined data. Those adverse reactions that were reported in greater than or equal to 1% of subjects, over the eight -week treatment that these trials covered. You can see the list of adverse reactions there. I think the one which shows an imbalance really is worth discussing is diarrhea. This is a known PDE4 kind of adverse event that's associated with systemic treatment as an oral treatment. Dermatologists are very familiar with this from the many treatments patients that they treat with Otezla and other PDE4 inhibitors. You can see that it's a very low percentage, around 3%, which is significantly lower than what you see with oral treatments with a PDE4 inhibitor. Importantly, of these 18 subjects overall, out of the 576 in our trials who exhibited diarrhea, none of them discontinued due to this adverse event, and 17 out of the 18 were mild, with only one of them being moderate. Typically, it's associated earlier in treatment, and resolves. This is a part of, as I mentioned, this is something that's well understood from treatment with other PDE4 inhibitors. Coming on to slide 17. Now we're looking at the tolerability and efficacy profile as we progress through an open label extension study that came after our phase 2 data. We know that from the label of 594 subjects who continued up to 64 weeks in the open label extension, the adverse reaction profile was similar to that of vehicle control trials. I showed you those vehicle control trials on the earlier slide. What that tells us is that we weren't seeing kind of new adverse events, new safety issues that are popping up through this chronic treatment period all the way out to 64 weeks of total treatment, including both the phase 2 as well as the open label extension. This chronic ability to treat a chronic disease with long-term therapy and have a kind of anticipatable and representable safety profile, I think is really critical because of the chronic nature of psoriasis in patients. Importantly, the discontinuation rates were low. We expected about 50%, based on other topical therapies treating over this similar duration. In fact, we found that 73.5% of patients actually completed treatment. You can see the discontinuation rates due to lack of efficacy and any adverse event are low and actually lower than what we anticipated going into the study. Our efficacy was durable over that period. We saw a median duration of maintaining patients at IGA of clear or almost clear for 37 weeks, which really reflects the ability of ZORYVE to kind of keep patients at that level of clear or almost clear, which means that their psoriasis is well controlled. The graph on the left shows you two cohorts, one on the yellow, which is coming across from the phase 2 study, being treated previously with 0.3% for 12 weeks and then continuing for an additional 52 for 64 weeks of treatment. That in the darker brown showing patients who were on vehicle previously and kind of reaching quickly their the similar levels of IGA clear or almost clear as their other cohort who had already been on active treatment in the phase 2 study and then maintaining that for the 52-week treatment. With that, I'm gonna turn it over to Ken to talk about our launch strategy. All right. Thanks, Patrick. I'm now on slide 19. I'd like to speak a little bit about some key product profile considerations and market dynamics and commercial execution plans for the launch of ZORYVE. On slide 15, with the FDA approval of ZORYVE, a next-generation topical PDE4 inhibitor, we're really well-positioned to simplify the overall management of plaque psoriasis across multiple stakeholders. Several years ago, we surveyed physicians regarding what they'd like to see in an ideal topical, and they responded with three key things. One was to have something that worked powerfully and fast like a steroid. Secondly, something that could be used anywhere on the body. Thirdly, something that could be used for an unlimited duration. ZORYVE is uniquely positioned to deliver on these asks today, as well as to reduce the need to prescribe multiple agents for varying locations of disease, as well as providing a worry-free formulation without concern over misuse or overuse of the product. We also seek to reduce the overall burden of prescribing by minimizing the need for multiple step edits or prior authorizations to obtain the product, which really aligns with the way that HCPs use topicals today. For patients, they want something that's once a day, non-greasy, and easy to use and adhere to. No complicated instructions, no more juggling multiple prescriptions and paying for multiple co-pays, and importantly, a potential reduction in the time needed to attend to their condition. Lastly, with our responsible pricing approach, a chance for payers to benefit from cost relief in an ever-expanding category that's been pressuring budgets continuously since the advent of systemic and biologic therapies nearly 20 years ago. It's really a unique situation when a novel therapy actually brings together and aligns the interest of all three of these key stakeholders. More often than not, there's a deep misalignment, which ZORYVE is well positioned to avoid. On page 20, as mentioned earlier, we've obtained an FDA label that's clearly recognizing our highly differentiated profile. In this table, you can see how ZORYVE stacks up in terms of on-label attributes against other recently approved therapies in the space. Now starting with intertriginous efficacy, which we've already talked about, ZORYVE is the first and only topical agent to demonstrate in-label efficacy for these areas and the only to be specifically indicated for that use case. This is really remarkable because while other agents might claim to be tolerated in those areas, ZORYVE has uniquely demonstrated safety, tolerability, and most importantly, proven efficacy. Being the only agent to have this within the actual indication statement may also provide with some payers and medical policies an opportunity for true first-line use with or co-administration with another agent without a step-through in the case of intertriginous involvement. Now, another important aspect of the label is the broad indication that we've talked about, it being approved for patients down to age 12 is a really important nod in terms of the safety profile of ZORYVE. While pediatric prevalence of plaque psoriasis is rather low, the safety halo conferred by this really speaks to the comfort level that the FDA had with our profile and adds to the overall interpretation of the ZORYVE safety and tolerability story. The next remarkable addition in label is what Patrick already talked about, which is involving reduction of itch, which is one of the chief complaints of plaque psoriasis patients, and the ability to significantly and rapidly address the itch of psoriasis is unique to ZORYVE as a non-steroidal and confers a welcomed addition to its overall efficacy profile. Lastly, the lack of warnings and precautions and limitations on use confers a healthy differentiation from steroid-based products, which as mentioned before, is a longer-term aspirational goal of ours to displace in the treatment paradigm. Moving to slide 21, I want to just reiterate some aspects around our patient-friendly formulation. Akela once told me that the most efficacious agent is the one that the patient actually uses. In ZORYVE, we have not only just formulated a highly potent agent that delivers the drug to the target, but also one that patients will enjoy using and enhances the probability of adherence to that therapy. As a once-a-day steroid-free cream, ZORYVE features our proprietary HydroARQ technology that is non-greasy, absorbs rapidly, and has the moisturizing properties of the market-leading ceramide-containing cream. Importantly, it is notable that it does not contain any desensitizing agents that are known to be contact irritants, such as propylene glycol or ethanol, which many current products rely on in their formulations. On slide 22, I just want to double down on some of the key market dynamics that facilitate our uptake and adoption. Frank already mentioned before the two million patients today in dermatology offices that are being treated topically for their plaque psoriasis, and these are the patients that we're really focused on with respect to our promotional activities. Frankly, you know, these patients really deserve better. As a topical agent, also mentioned, there's really minimal activation energy required for us to slot into the prescribing paradigm for prescribers. As a primary modality of treatment, we don't have to educate on how to use it. We really just have to make it available and easy to obtain to really slot into the practice. There's also many shots on goal for utilization, and the topical market is highly dynamic given the limits and duration of use of many of the initial therapies being prescribed that really force therapeutic switching and changes. This really bodes well for us as we really only have to wait at most weeks versus months for systemic and biologics to get a chance to be prescribed and used. Lastly, the competitive landscape for effective non-steroidal plaque psoriasis is sparse, and we expect to gain a great deal of synergy in driving the march away from dependence on steroids as the mainstay of therapy. On slide 23, we depict data from a recent survey of over 500 plaque psoriasis patients. What's readily apparent is that patients are looking for what ZORYVE can deliver. Over nine out of 10 patients surveyed wish for more effective options, a once-a-day application, a single agent for all parts of their bodies, and really trying something new. Additionally, our survey revealed that over the course of the disease, two out of three patients have exhibited psoriasis in intertriginous areas, and that an overwhelming majority of patients would be more adherent to their treatment regimens if a single agent could be used on all parts of their body. I'm now on slide 24, and a few thoughts on our access strategy. From the beginning, Arcutis has been dedicated to responsible pricing that's designed to obtain broad and rapid coverage from payers with minimal utilization management or hurdles to prescribing, such as multiple step edits or prior authorizations. The minimization of hurdles and lowering prescriber burden is key in our minds to the maximization of volume. Lastly, as we're today speaking about psoriasis, ZORYVE has the potential to become a four-in-one asset, with three new indications expected over the course of the next several years, which provides for volume opportunities and reductions in costs that drive gross to net. Slide 25 ultimately depicts our list price of $825 a tube, which ultimately delivers on our access objectives, will broaden the availability for patients, and maximizes our franchise value across current and future indications. Now, taking into account our goals and coupled to an outstanding clinical profile and label, the price we've decided upon is an output of the access that we've sought, which is the minimization of prescribing hurdles and a more rapid pace of formulary coverage as to shift that primary responsibility of third-party payers versus carrying that burden ourselves. On slide 26 is just simply a reference of the current landscape of branded medications and their pricing, and you can see that we're not only substantially lower than many in our competitive set, but also below the critical CMS specialty tier threshold of $830 a month. While this might seem less applicable given the current mix of insurance seen in plaque psoriasis patients, it does come into play more strongly for government-paid patients, where many of our future indications will play. For some health plans today, they're actually considering this in determination of what types of utilization management they're going to apply even in their commercial patients. On slide 27, a few words on our patient support efforts at launch. Our ZORYVE Direct Savings Program will make ZORYVE available to commercially insured patients for $25 or $75, depending on if their plan has covered the product. This offer is designed to be enduring and consistent throughout the life cycle of the product, unlike many offers which are introduced only to be repeatedly changed, clawed back, and ultimately causing prescriber and patient frustration. Excitingly, for patients who are uninsured or underinsured, and as part of our mission to support access for as many patients as we can, we're proud to offer the only of its kind patient assistance program in topical psoriasis treatment that provides therapy at no cost to financially eligible patients. My last slide, 28, depicts our readiness. I'm happy to say that with the FDA approval, we've officially activated our second wave of sales representatives who will start mid-month, and that we are now out detailing our product as of Saturday morning, where we were at two major dermatology conferences and able to build significant buzz, awareness, and excitement around our approval. We expect commercial product in the distribution channel fully within the next two weeks, and we're ready with our broad sampling program to ensure that as many patients and physicians will have a chance to experience the benefit of ZORYVE. Lastly, our patient support program is active and ready to support patients as they get prescribed ZORYVE to help offset out-of-pocket costs or even provide it at no cost via the Arcutis Cares program. I'll hand it back now to Frank to summarize the call. Certainly, you can hear the excitement in Ken's voice. Hopefully, you also get a sense of the amount of preparation that he and his team have put into this launch. I think this is gonna be a great example of what a fantastic topical launch looks like. I'm on slide 30. You know, again, at the beginning of the year in Boston, we shared with you this slide on the expected catalysts that we were going to have during 2022. For those of you who have followed the story, I think most of you know we do what we say. We told you that we would have our sebderm data in Q2. We've delivered on that. We told you we'd have our plaque psoriasis approval this quarter. We've delivered on that. We have been telling you that we will have scalp and body psoriasis data late this quarter or the early part of next quarter. We will deliver on that, and we are expecting to have atopic dermatitis data from the INTEGUMENT 1 and 2 trials before the end of the year. Stay tuned for more exciting news from Arcutis between now and the end of the year. On slide 31, I started off with this slide, and I wanna end with this slide as well. You know, again, as I said at the beginning, we see the approval of ZORYVE and the product profile that Patrick and Ken just walked you through as really being the realization of our vision to bring meaningful innovation to dermatology and to the patients who suffer from plaque psoriasis. We look forward to bringing meaningful innovation to other patient groups as well. This really truly is a pipeline and a product as we just discussed. You know, by the end of the year, we will have demonstrated that with multiple phase 3 wins in various indications. You know, as I said earlier, we remain very confident in the readouts from the scalp and body psoriasis phase 3, as well as the atopic dermatitis phase 3s, and we look forward to sharing that data with you. Then again, just a quick reminder, I'm sure there'll be some follow-up questions on this. We are taking down that additional $125 million from the SLR facility so that we can bolster our balance sheet. With that, we will wrap up the prepared comments and open it up for questions and answers. Thank you, sir. As a reminder, to ask a question, you'll need to press star one one on your phone. Please stand by as we compile the Q and A roster. Our first question shall come from Ken Cacciatore of Cowen. Your line is open. Hey, congratulations, team. Real exciting times. Ken, you went through a lot of detail. Just wanna take a little bit of time with a few of them. On ZORYVE Direct, can you talk about that in a little bit more detail? Obviously, access early in a launch is critical. Is this gonna be managed in-house? Can you talk about, is it modeled on any other successful launch or program that you all kind of observed. You talk about the pricing decision, and there's a nice umbrella against some of your competitors. Can you talk about actual specifics, maybe speed to access here, the conversations you've been having, I know have been in great detail, but maybe you could help us understand when do we think we could have some early wins? I'll have a follow-up. Thanks. Sure. I'll just say, Ken, good morning. Our program is really, you know, designed to, you know, maximize both the speed to coverage as well as the accessibility. While there are many programs out there today, you know, we really went at this sort of scientifically in looking at first and foremost different thresholds of sustainability around out-of-pockets, what type of abandonment we might see. We planned on the numbers that we did really through, you know, quite a bit of modeling in our work. It wasn't just we plucked it out of thin air, but really thought about, you know, what's a reasonable price for patients to pay out of pocket. One thing you can quickly see that it's not zero. That's something that I think, you know, our research tells us, and it's been consistent over the past couple decades that I've been doing this kind of work, is that sometimes a $0 copay isn't always the best in that, you know, it devalues the product or patients might not have that skin in the game proverbially to actually, you know, be invested in taking your product. That's where that came from. The $75 for without insurance was also sort of derived, if you will, modeled out again, based on, you know, kind of our calculations and making sure that we had things that worked well for us while preserving gross-to-net. That's how we got to the program. I think your question was around managing it in-house. Is that just to clarify, are you saying versus say like a third party hub? Or what do you mean by that? Yeah, correct. Yeah. To what degree are you all monitoring kind of on a daily, you know, minute by minute? Yeah. In terms of access in-house and make adjustments as necessary? Yeah. Thank you. We are doing that in-house. We're working with our copay partners. We'll be watching that very carefully. Now, the intent, as I mentioned earlier, is to keep this, you know, constant. What we've seen over time is that sometimes, you know, there's a very attractive offer early on, and then you end up sort of pulling that back over time. If you study some of the historical topical products, you know, I think that was something that you saw sort of starting very, very low and then ratcheting up as companies were trying to manage their gross-to-nets. It causes a great deal of confusion and frustration at a patient and physician level. This is designed for the long haul across multiple indications. Across different formulations and therapeutic areas. That's the goal here. Just to clarify too, we don't have a hub, if that's, I think, also part of the question. There's no sort of call center hub set up. We don't feel that we need that type of setup, given the relative simplicity of our offer and of our price points. We don't need an in-house management of, you know, prior authorizations and things like that. As for your second part of the question regarding, you know, speed to access and things like that. We've previously talked about sort of the basic, you know, benchmark timelines of getting access between 12-18 months to get to about 80% of commercial lives coverage. We feel very good about sort of where we landed on price and ultimately the ability for that to yield both earlier and better formulary coverage decisions. Specifically from earlier, you know, obviously we don't have anything in our hand to show you at this moment. We'll be sharing that over time and tracking. Every one of the individual PBMs and health plans has their own typical cadence. Relative to those benchmark cadences, you know, that's how we'll be tracking our progress in terms of how quickly we can bring, you know, formulary coverage to patients. Great. Thanks so much. If I can, Frank, obviously Ken is really ready to launch this in a very targeted way, but you did mention the broader GP and broader market in general, and that there may be conversations to be had in terms of partnerships. Just wondering if you could talk about, I know we just got the approval, but can you talk about some of those conversations? Those often lead to conversations about the broader company. Anything you would give us, any context you would give us on maybe strategic conversations early in the game would be wonderful. Thanks again, and congratulations to the team. Yeah, thanks, Ken. Great to see you. Yeah. On that question, the opportunity in psoriasis really is pretty squarely in the dermatologist's office, as you guys saw in the patient numbers. Where we see a need to expand beyond dermatology really is as we pick up the atopic dermatitis indication and maybe to a lesser extent, seborrheic dermatitis. In an atopic dermatitis, a very large percentage of the patients are outside the dermatologist's office in primary care pediatrics. We see the need to extend our promotion into those fields as well. I think we've been very clear that we don't intend to build our own primary care sales force. We will look to find a partner at some point to help us address those physicians. That's, again, several years from now. Well, it's a way out, you know, considering we'll just read out the atopic dermatitis data at the end of this year and still need to prepare the NDA and file it and then get FDA approval. Thank you. One moment for our next question. Maybe while we're waiting for the next question, I did want to also follow up on one thing that Ken talked about. You know, I think everyone probably recognizes, you know, we're engaged in a bit of an experiment, a bold experiment, I would say, around our product pricing. You know, we're somewhere between 40%-60% lower at our list price than recently approved topical branded topicals. That was very intentional. You know, Ken talked about the strategy behind that. I think in the coming months, you know, you should measure us by our success in gaining, as Ken phrased it, you know, broad and high quality access for this product. We'll be very excited to share with you all the progress we're making on gaining access. We feel very confident that with the lower list price that we've set, we're going to gain very good coverage for this product, and we'll be looking to prove to you the success of the strategy that we've developed. Thank you. Our next question comes from Ms Louise Chen of Cantor. Your line is open. Hi. Congratulations, and thanks for taking my questions here. I had a few for you. I wanted to ask you about the intertriginous opportunity and how many currently approved products can effectively treat these regions of the body. Can you give us more color on how it affects patients? Then I'll ask you the other questions. Yeah, sure. Patrick, you wanna take that one? Yeah. So most of the currently approved products include either a topical steroid or a vitamin A or a vitamin D analog or some kind of combination of those. Intertriginous areas are kind of particularly sensitive to all three. For topical steroids, it's about the skin atrophy and the striae that can form with the kind of concentration and higher dose of steroids that's required in order to clear the psoriasis. That really presents a challenge and oftentimes limits even when it's used to relatively short periods. For vitamin A and vitamin D analogs, which make up a lot of the other prescriptions for this area, you have an issue of local tolerability. It can be too irritating. One of the aspects of intertriginous disease is that oftentimes it can be associated with stinging and burning because rather than having thick adherent scale, which is kind of like armor plating on the skin, here, because of the location, it actually gets kind of an eroded or wet or macerated appearance to the scale, which means that you have this underlying beefy red exposure of the skin which can sting and burn and as well as itch. Really the other topical therapies have a significant challenge in being able to treat this. That's, I think, the unique aspect of the ability of ZORYVE to have the potency to be able to control psoriasis, but also a local tolerability, which allows it to be used chronically even in this very sensitive area. Okay. I also wanted to ask you, it follows on an earlier question that Ken had asked you, how can you leverage the plaque psoriasis platform, commercial platform to launch atopic dermatitis? How much more will you need to build out if you get atopic dermatitis approved? Yeah. Ken, you wanna take that one? Yeah, certainly. Good morning, Louise. So, you know, atopic dermatitis, the treatment mix, if you will, is a little bit less concentrated as it is in psoriasis. It's a little bit more of a probably a 60-40 split or 55-45 split with respect to primary care versus dermatology. We most likely would look to harness additional sales teams both in-house and then ultimately look to partner, you know, to really gain access to that full footprint of primary care. You know, we have not sort of definitively decided on sort of what our sales team composition will look like. Obviously, it will depend on, you know, how well we're able to launch with psoriasis, what our access looks like, et cetera. You know, I would expect, you know, some kind of expansion potentially, either by way of partnership or internal or both, to fully capitalize, remembering that, you know, the opportunity size is so much bigger than psoriasis, that we really wanna be able to capitalize on that full opportunity. Okay, thanks. Just maybe if I could squeeze in one more question that I've been getting is, your SG&A expenses for third and fourth quarter, can you provide us any color on how to think about that? Scott, you wanna take that one? Sure, yeah. I mean, we're not providing specific P&L or OpEx guidance, but I would say that you can expect some growth in the SG&A line given that, as Ken mentioned, we activated the second half of the sales force, which wasn't on board in the second quarter. That'll be some incremental growth. You know, we'll be activating promotional activities and such. You should expect some SG&A growth. The other thing I note, though, is the P&L will benefit as the R&D line moderates because we've had all these phase three programs running, and those are starting to wind down. You know, we read out the DERMIS study earlier this year. We'll be reading out scalp psoriasis and then AD later in the year. The R&D line will moderate while SG&A will pick up a bit. Okay, thank you very much. Thank you. One moment for our next question. Our next question comes from Seamus Fernandez of Guggenheim Partners. Your line is open. Great. Thanks, guys, and congratulations on the success so far and looking forward to more in the future. Just a couple of quick follow-ups here. On the itch opportunity, when you guys sort of speak to actually having the information in the label itself. When you talk about, you know, sort of promotional materials, can you just give us a little bit of a hand on how far you can go in promotional materials, with regard to the itch claims, or at least the itch data? Then separately, how far you can go with the intertriginous data. It sounds like that being a claim will give you more flexibility in promotional differentiation when it comes to DTC advertising. Just love to get a little bit of incremental color there. You know, separately, when we think about your guys' discussion of metrics and, you know, perhaps how others are communicating certain metrics, can you just help us better understand the coverage metrics that you feel are absolutely essential to, you know, sort of effectively deliver on an improved gross to net rather than just sort of a general coverage update? Thanks. Sure. First off, Seamus, thanks for the questions. I should also mention, Louise, thank you for your questions too. Ken, those both sound squarely in your camp. You wanna take those? Sure. Good morning, Seamus. Just as it relates to kind of, I think your question is sort of how powerful is it that we have those aspects of both, itch as well as intertriginous within the label, and how does that translate to promotion? You know, one of the things is key about having something in your label is the strength and, I think, you know, lack of better term, conviction with which you can actually promote. You can make bolder claims, you can feature things more prominently, as opposed to if something is sort of consistent with label being not in label. Sometimes you can actually talk about it too in promotion, but it's less claimy, so you can't be as forward or be on your front foot about it. You can talk about the data, but really it's just a very objective sort of presentation versus being able to make sort of bigger, bolder claims that, to your point, around DTC and other things like that you would not be able to do, say, for example, if it were not prominently sort of in the four corners of your label. So it definitely confers, I think, a significant promotional advantage to have those things in. Again, I think one the thing I'm quite excited about is the having sort of the intertriginous aspect within indication itself, you know, really is a competitive insulator for us. There's no other product that actually has it in the indication statement or specifically indicated for treatment of those areas. As I mentioned, kind of the sort of net effect of that is that it can also assist in discussions and negotiations, and importantly, the formation of medical policies, which then sort of dictate what line of therapy you're in. In the case if you have a patient who has intertriginous involvement, and there's only one product that's actually indicated for that, you know, the ability to sort of be denied, I think for that sort of comes, you know, falls away a little bit more so than, say, in the case of sort of standard, quote, unquote, "standard psoriasis." I think that's a huge benefit on top of just the promotional aspects of it. As for the metrics and the coverage, you know, we talk about sort of velocity to coverage. I think that's important. I think sometimes it's hard to appreciate given that it's not maybe as well known sort of what the traditional timelines are. You know, it's a little bit opaque, I think, to the general public around how long it takes. Each of the major PBMs historically does have some sort of timeline that we've been tracking in terms of. Some are automatic. For example, you know, you have ones that are on the dot, 4 months, make a decision one way or another. More often than not, typically, those are exclusions out of the gate. Then you also have the quality or degree of which the coverage, you know, is. So for example, something can be covered, but if it's covered poorly, and my definition of poorly is, you know, multiple step edits, right? We've talked about in the past products, recent products that have had, you know, three-step edits plus prior authorization. In my mind, that's not a quality coverage, right? It is coverage, but it's not a high-quality coverage. Those are the distinctions that we would expect to bring to the table. Lastly, I'd say with respect to our progress, I think one thing that we've also seen, you know, with some of, you know, other players, as, let's just say, is sort of the announcement of signing of contracts. You know, I think signing of contracts in and of itself is not an action. I mean, it's significant, but it doesn't translate ultimately to patients being able to get drug, right? It's really about the formulary decisions and the adoption of those contracts that happen at the GPO level down to the payers and the health plan. We won't be sort of talking about sort of, hey, we signed, you know, two of the three GPOs. Fantastic. You know, that doesn't literally mean at that point you've gotten coverage. We wanna be more measured in thinking about when we actually get those formulary wins, we'll be able to sort of talk about them and bring them forward. You know, fingers crossed, as Frank mentioned, kind of in our controlled experiment here, those will be, you know, frequent and early in terms of the way we think about obtaining coverage. Great. Maybe just one final question. You know, Frank, can you just remind us a little bit of the intellectual property position that you guys have with topical roflumilast? I know that you've really been building quite an impressive array of patents that really differentiate or show the differentiation of topical roflumilast, but just wanted a quick reminder of the number of patents that you guys have successfully landed and how far out they go. Thanks. Yeah, sure. At the moment, I think the latest count was we have eight patents issued in the United States. We have a number of patents issued overseas as well. The issued patents cover both aspects of the formulation of ZORYVE. As well as the unique pharmacokinetic profile of topical ZORYVE. We also have an impressive array of pending patents that you know we'll be disclosing in the future. You know we continue to generate additional intellectual property around ZORYVE. We feel very confident that we'll be able to maintain exclusivity at least through 2037 being the first of the issued patents that would expire. Great. Thanks, everybody. Congrats again. Thank you. One moment please for the next question. Pardon me. Our next question comes from Chris Shibutani of Goldman Sachs. Your line is open. Hi. Good morning. This is Steven on for Chris. Congratulations on the approval. Just wanted your updated thoughts on the potential magnitude of the gross-to-net discounts that you're expecting at the steady state, given now that we've seen a couple quarters of one of your competitors' launches. Can you provide any updated color on your strategy for commercialization outside of the United States, particular regions such as Europe and United Kingdom? I'm just wanting to understand your thoughts there. Thank you. Sure. So maybe I'll take the second question, then I'll turn it over to Ken for the first. On international, we continue to actively engage with potential partners for outside of the U.S. and Canada. Many of you may have seen, we filed in Canada and it's been accepted, and we started building our Canadian organization. We'll commercialize in Canada ourselves. Outside of the U.S. and Canada, our primary focus right now really is in Asia, because we think that the commercial opportunity is greater there. We, I think, will eventually get to Europe, but frankly, reimbursement for topicals in Europe is really dreadful in spite of the innovation because of just the nature of European reimbursement system. I think that's a lower priority for us, but certainly somewhere that we'll eventually go. Ken, do you want to address the gross-to-net question? Sure. Good morning, Steven. As we've talked about before, I think one should expect, outside of specific guidance, you know, a relatively higher trajectory to start with gross nets. Now, you know, with our pricing strategy, what we're trying to avoid, I think, deliberately, too, is sort of outsized rebates, which then also sort of put you in a hole. We've also had a chance to learn quite a bit about historical, you know, sort of approaches and what drives those components and perhaps, you know, leads to those numbers. One of the thing that benefits us, I think, significantly right out of the gate is just, you know, the more modest pricing. Also I think what I consider very careful management of our patient assistance programs. I think inadvertently, sometimes companies get into trouble there and then start having to sort of play around with things or discover, if you will, sort of some mistakes that are made and ultimately have to change those offers, you know, when trying to kind of plug holes that were discovered and sort of they cause these very large gross to nets. I've talked about in the past that, you know, on average in the industry, gross to net across all categories is about 50%. I think our competitors have mentioned that already as sort of a good place to be and then what they aspire to be at, you know, by, you know, roughly the fourth quarter of their launch. I think, you know, we aspire to have, you know, similar numbers. I aspire also to get there sooner and also not start, I think, as deeply as maybe what we saw with that product. You know, directionality, you know, one can expect again high to low. It does take 12-18 months typically to bring on that coverage and sort of again shift that payer burden away from the company subsidizing or paying for being the primary payer over to the third party. You know, look for that, and ideally we'll bring that, you know, timeframe in. Again, the target, if you will, or the benchmark of what we've seen is about 50% or so as a benchmark gross to net. Okay. Perfect. Thank you very much, and congratulations again. Thank you. One moment please for our next question. Our next question will come from Uy Ear of Mizuho Securities. Your line is open. Good morning, guys. Congratulations. I have a few questions. I guess the first one is, you know, on your R&D day, you gave a sales aspiration for plaque psoriasis in the $700 million-$1.2 billion. Just curious, given the revelation of the pricing today, whether this, you know, how that might change or whether it still stands. I guess my second question is, so we've been getting some questions on the drug-drug interaction on your label, and just wondering, how you're thinking about it, whether this will impact or not impact your promotional effort. I guess the third question is also on the pricing. How do you think your you know this kind of pricing and your gross to net might impact the number of step edits and the need for prior authorization? Just thanks. Hey, Uy. I'll let Patrick address the drug-drug interaction question and maybe Ken can talk a little bit more about access. I, you know, I think in terms of the revenue forecast, you know, at this point in the game, I think it's probably too early for us to think about revising our guidance. You know, I think we still stand by what we discussed at the R&D day, but you know, wouldn't move that number materially up or down. Patrick, do you wanna talk a little bit about the drug-drug interaction? Yeah. The drug-drug interactions description that you're talking about, Uy, and good morning. Sorry about that. The drug-drug interactions that you're talking about are, you know, really a part of how the drug is metabolized in the event that you have systemic absorption. And we know that the drug is metabolized by CYP3A4, and you see that kind of called out on the label. Interestingly, the specific drugs you're talking about is gestodene, which is actually an oral contraceptive that's not available in the U.S. So it's really just about, kind of, you know, this labeling is something that we really see as being most relevant for systemic treatment. Obviously, roflumilast is available for the treatment of COPD, and so a lot of it is documented, but it is, you know, for topical treatment in the event of systemic exposure, something that, you know, doctors are being made aware of. That being said, you know, given the fact that the drug is being put on the skin, this isn't something that we really see as. First of all, it's something we anticipated. It's also not something that we really see as being a significant impact on how doctors think about patient selection, given the relatively rare amount of patients who are on these kinds of drugs that would be included in the drug-drug interaction chart. Thanks. Ken, you wanna take the access question? Sure. Good morning, Uy. I think your question is, how is the pricing impacting our thinking about gross to net, is that correct, and sort of the ultimate access that we achieve? I would say, you know, the price that we derived again is sort of a function of sort of the access that we were seeking. Very frankly, you know, going above that price range that would not likely achieve our goals, and actually going below that range doesn't actually buy us an appreciable amount of better, quote unquote, you know, access. We've been very targeted and specific regarding the type of access that we are seeking with payers. From the very beginning when we started speaking with payers very early in 2021, we were very upfront regarding both what we were bringing to the table clinically, but also specifically what type of access and what we were trying to solve for. You know, going anywhere below that sort of again, doesn't buy us, you know, we're probably never gonna get into a place where we're going to be in front of, you know, the low-cost generic products. Ultimately, if we're trying to thread that needle and get into a kind of a minimal, you know, single-step edit type scenario, you know, this type of pricing actually facilitates that without, again, sort of leaving a lot on the table. We feel very good about that, ultimately. Now, as to the impact on gross to net, you know, I don't expect that to change, meaning that, you know, the rebid expectations and things like that, again, are not then substantial, you know, correspondingly necessarily higher percentage-wise. You know, we're sort of threading that needle between those payers that are interested in sort of high rebate, high cost, and those that are interested in sort of lowest net cost. I think we've sort of solved for a happy medium there. Again, you know, going back to Frank's initial comment, you know, this is an experiment, you know, obviously a controlled experiment, but we believe based on our negotiations and conversations to date, that, you know, this will yield, again, the type of access we're looking for, with the speed that we're looking for. Importantly, you know, prior authorizations, you know, that's explicitly what we're trying to avoid. I don't think that this price versus our prior range that we talked about, you know, adds any further risk to that equation. Okay. Thanks so much. Yeah. Chris, maybe since we're at the half hour, maybe we can do two more questions. Yes, sir. One moment please for our next question. Our next question will come from Vikram Purohit of Morgan Stanley. Your line is open. Hey, great. Good morning. Thanks for taking my question. I had two on real-world use that I'd be curious to get your thoughts on now that you have an approval and a label in hand. First, what is your current thinking now about the number of tubes per year that a typical patient could work through annually? Two, what do you think will be the typical patient settings and the typical patient profiles for the use of ZORYVE? For example, would you expect patients to consistently use topical corticosteroids for certain parts of the body and then use ZORYVE for other parts of the body? Or do you think that there's a significant portion of patients now that it's possible that they'll be using ZORYVE as their mainstay topical treatment? Yeah. I'll let Patrick take the second one. On the first one, you know, we had previously communicated that we expect patients to go through something like three to four tube s a year. I don't think that has changed meaningfully. You know, I think it's important to remember that about half of patients get to clear or almost clear with ZORYVE treatment. And you know, as those patients clear, they use less drug, right? You don't treat typically clear skin. When they get to clear, many patients will actually stop treatment for some period of time and then restart when the disease eventually appears, which it always does, unfortunately, as a chronic disease. We think that threee to four is pretty typical based on what we see in current usage patterns, and taking into account the clinical efficacy that we've seen. Patrick, do you wanna take the second question? Yeah. Hi, good morning, Vikram. So I think you saw in our March R&D day, we kind of talked about how there's this burgeoning interest within dermatology to really try and manage patients without topical steroids. It's being driven by the development programs of drugs like ZORYVE and the kind of profiles that we're generating, where it offers the ability to really kind of chronically manage a patient without using steroids or combination products that include a steroid. I think the real advantage that we've shown here is that ZORYVE can treat both the hardest to treat areas, knees, elbows. I showed a heel earlier in the presentation, as well as those areas that are most sensitive to the local tolerability effects, which would include the face or intertriginous areas. We showed long-term data with both the safety and tolerability as well as the efficacy. I really think that the profile of this drug is one where it doesn't need to be combined. In fact, I think the benefit that you're gonna hear from dermatologists is that it offers the ability to supplant the use of topical steroids. Yeah, there's data emerging that kind of chronic continuous use of topical steroids is associated with some of the side effects that we normally just think of as being associated with oral treatment or systemic treatment with prednisone and other steroids. You know, kind of you looking at those data and now having the ability to manage a patient long term with a non-steroidal, steroid-free cream as offered by this profile, I think means that, it really is a standalone treatment, and that's how I anticipate it's gonna be used primarily by doctors. Got it. Thanks. If I could ask you a quick follow-up. Frank, going back to your earlier comments about how investors should be gauging the initial trajectory of this launch. I guess a question back to you, what sorts of metrics do you anticipate providing guidance on through the first few quarters here? Yeah, sure. Sorry, but Ken, that one's back to you. Yeah, certainly. As we shared at our investor day, you know, I think early on, just the initial, you know, what you would expect from the launch, right? TRx trends, NRx trends, you know, probably too early for gross nets initially. We do wanna talk about kind of our access given that it's such a forward piece of our strategy. We would expect to bring that in terms of, you know, major payers, sort of, you know, brought on and the type of access that we're achieving in terms of its quality. Also some of the logical targets for metrics are things like, you know, physicians reached, perhaps the prescribing non-steroidal category growth, things like that. As we get deeper into our launch, you know, we'll be able to actually bring you things like, you know, gross net, et cetera. I would say just the usual suspects in terms of, you know, kind of early indicators, plus I'd say, maybe some additional transparency around access. Got it. Thank you. Thank you. One moment, please. Our last question comes from Gregory Fraser of Truist Securities. Sir, your line is open. Frank, great. Thanks for fitting me in, and congrats on securing the approval on the broad label. Can you talk a bit more about the reach of the sales force? How many dermatologists will the rest be calling on, and what portion of the topical scripts for psoriasis that are written by derms are written by the docs that you'll be calling on? Then, can you just also comment on the sampling program in terms of the volume of samples that you plan to provide and the size of those samples? Thanks so much. Sure. Ken, again. Yeah. Hi, Greg. Just a quick touch on sales force reach. I think we talked about this before, you know, with our 80 sales reps, we expect to reach upwards of, I guess about 90-ish% or more of the topical market value, if you will, across about 6,000 dermatologists and another few thousand or so extenders. We feel very good about the reach. Despite the compact footprint, we feel we can actually reach those physicians quite easily and efficiently. The portion of topical prescriptions written by these. We are sort of, I'd say, overly focused or hyper-focused on sort of those doctors that are, you know, strong topical writers. They index higher in our call plans and our targeting exercises. That is the focus of our promotion, again, to sort of what I would call in a jump on a train that's already moving. Those physicians that are already writing a significant portion of branded topical medications would be the initial focus. As it relates to sampling, is your question exactly how many samples we're going to give, or is it more just do we have them? I think if I'm interpreting your question, I'll say that, you know, we have plenty of samples. Those samples are actually 5 grams in size. A little bit bigger than what you see in recent launches. I think, you know, that's important to just make sure that people get the full benefit. You know, you're not just trying to see, you know, what this feels like, but more importantly, you wanna be able to experience the benefit. We do, you know, have a nice healthy sample. We're going to be sampling broadly, as we've talked about early on, to really drive, you know, as much clinical experience as we possibly can. Thank you. Thank you. I see no further questions. I would now like to turn the conference over to Frank Watanabe for closing remarks. Well, I'll be very brief since I know we're over. I really appreciate everyone making the time to listen to the call today. We're obviously very excited to be in this new phase of being a commercial company and bringing this exciting product to patients and dermatologists. We look forward to sharing with you all a lot more data, both about roflumilast and also about our successful ZORYVE launch in the coming months ahead. Thanks again, everyone, and look forward to talking to you soon. This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.