Hello, and thank you for standing by. Welcome to Arcutis Biotherapeutics Q2 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask the question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the call over to Latha Vairavan, Vice President, Finance and Investor Relations. You may begin. Thank you, Folanda. Good afternoon, everyone, and thank you for joining us today to review our second quarter 2024 financial results and business update. Slides for today's call are available on the investor section of the Arcutis website. On the call today are Frank Watanabe, President and CEO, Patrick Burnett, Chief Medical Officer, Todd Edwards, Chief Commercial Officer, and David Topper, Chief Financial Officer. I would like to remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and uncertainties, and our actual results may differ. We encourage you to review all of the company's filings with the Securities and Exchange Commission, including descriptions of our business and risk factors. With that, let me hand the call over to Frank. Thanks, Latha, and thanks to everyone for joining us today. Very excited to be able to provide you with an update on the most recent quarter of our performance. So let me start off on slide five of the deck. You know, we have continued really strong performance since our last earnings call, and I continue to be delighted and very proud of the Arcutis team and our execution in the quarter, and thrilled about the momentum that we're building towards the second half of the year. Once again, we saw strong growth during the quarter in our expanding Zoryve portfolio as healthcare providers and their patients see how Zoryve cream and Zoryve foam address real needs in the treatment of psoriasis and seborrheic dermatitis, respectively. Solid growth in prescriptions for both the cream and the foam, coupled with additional gross-to-net improvements during the quarter, drove strong revenue growth in the second quarter, both year-over-year and compared to Q1 2024, with net revenues of $30.9 million, 56% of which was cream and 44% was the foam. We've now generated more than 351,000 prescriptions for the cream and the foam combined from over 14,000 unique prescribers to date, as our product delivers positive clinical experience for healthcare professionals and their patients. We improved gross-to-net again this quarter, resulting in a blended GTN in the high 50s across both products for the second quarter, down from the low 60s last quarter. So looking forward for the remainder of the year, we believe we are well positioned for sustained revenue growth, with continued momentum on the psoriasis and sebderm launches, and atopic dermatitis will be additive in the second half, following the launch of that indication late in July. We're also very excited about the recently signed deal with Kowa Pharmaceuticals to expand our promotion into the primary care and pediatric space, although we wouldn't expect to see meaningful revenue contribution from those efforts until 2025. And we are delighted that we were able to favorably renegotiate the terms of our debt agreement with SLR, and David will provide more details on those terms later in the call. With that, let me turn it over to Todd to provide some further commentary around Zoryve cream and foam launches in psoriasis, sebderm, and atopic dermatitis. Todd? Thank you, Frank. I'm extremely enthusiastic about the expansion of our commercial portfolio, HCP and patient response to both Zoryve products and the immense opportunities that lie ahead. We achieved $30.9 million in net product revenues for Zoryve for the second quarter of 2024, reflecting 43% growth over Q1. This was driven by healthy prescription growth, substantial cleaner gross -to- net percentage improvement down to the high 50s, and the team's success of pulling through current prescriptions as well as improving coverage for the foam. For the remainder of 2024, we expect continued prescription growth and some gross-to-net improvement, primarily for Zoryve foam, as gross-to-net discounts for Zoryve cream, 0.3%, have already reached our expected steady state in the 50% range. Moving to slide 8. The Zoryve portfolio performance is showing promising growth and strength, reaching for the first time close to 10,000 scripts in a week. This new high shows the momentum we can continue to create for the Zoryve portfolio. The portfolio had quarter-over-quarter volume growth of 42% over Q1. We expect continued build as we include atopic dermatitis beginning this quarter, and we'll add a fourth indication in 2025, if approved by the FDA. On to slide nine. The Zoryve psoriasis TRx performances continue to show strength, and these results demonstrate that we can sustain our growth in psoriasis. We see the steady trend line with 8% growth over Q1 2024. Zoryve foam experienced volume growth of 102% versus Q1 2024. As we stated before, while the trajectory has moderated from the initial launch uptake, it is still phenomenal growth and a key factor in our portfolio's performance. On to slide 10. We have coverage for Zoryve 0.3% cream and foam from all three large PBMs and continue to progress with formulary access and downstream plans. When we examine the percent of prescriptions being covered by insurers, we see an encouraging trend in Zoryve 0.3% cream, with roughly four out of five prescriptions covered. For Zoryve foam, three out of four prescriptions are covered. This is very positive for the portfolio, lending to the gross-to-net improvements we have shown. I would also reiterate that the contribution to revenue growth coming from further gross-to-net improvements will likely moderate in coming quarters as we advance closer to our expected steady state blended gross-to-net. Going forward, most revenue growth will likely come from prescription demand growth in psoriasis, SebDerm, and new demand in atopic dermatitis, as well as from expansion of our prescriber universe. I'm now on slide 11. Zoryve 0.3% cream is foundational to the brand, with a value proposition that is meaningful and impactful to patients. Prescribers have an option that can resolve plaques that affect many different parts of the body, hard to treat areas like elbows and knees, but also the sensitive areas like the face, groin, and underarms. The combination of efficacy, rapid response, and tolerability profile are becoming well-recognized by dermatologists as differentiating factors. The quotes here from real patients and prescribers confirm this brings value. Moving to slide 12. In SebDerm, Zoryve brings transformational value. The clinician and patient feedback about Zoryve foam from the real world usage gives us the insight that these patients have been yearning for solutions such as this. The happiness of patients when they experience relief in a more efficient and convenient manner reinforces how the foam is addressing the unmet need for patients whose only option for decades have been steroids and antifungals. Now on slide 13. While there have been treatment advances, significant opportunity remains in the atopic dermatitis market today. 68% of patients are still being treated with topical corticosteroids. Nonsteroidal topicals only represent 19% of the total market opportunity. These are agents that have been on the market for several years now, and uptake is likely limited due to safety concerns. While this market has also seen an increase in biologic and oral JAK treatments, these treatments still only account for 13% of the total market, since the benefit risk profile, combined with the high cost, typically positions their use as later lines of therapy and for hard to treat or severe patients. The incremental value that Zoryve brings within this more established AD market is highly differentiated, with no box warning, no limitations on body surface area treated or location of treatment, and it can be used for any duration, which is very important for a chronic disease. Zoryve is also well-tolerated and does not contain any penetration enhancers, sensitizers, or common skin irritants. And very importantly for patients, Zoryve is the first topical AD treatment that only requires once-a-day application. This unique combination of benefits positions Zoryve well for use early and chronically in the treatment algorithm. On slide 14. With the performance in PSO and SebDerm and the recent AD approval, we are creating a portfolio of Zoryve solutions for dermatologists that will sustain the brand growth. The benefits of a Zoryve portfolio products that will address three different dermatology diseases, where the current standard of care is topical steroids, is unprecedented and creates simplicity for the dermatology prescriber and patient management. The common clinical attributes of Zoryve across indications will make the prescribing simpler and when paired with common market access, copay card, and an efficient and predictable fulfillment pathway, further simplifies the dermatology practice operations as well. We are well on our way to becoming the preferred topical brand in dermatology. Now on slide 15. We are extremely pleased to have entered a co-promotion collaboration with Kowa that allows us to bring Zoryve to primary care and pediatric physicians. We have been working on identifying a primary care partner for some time, and we are thrilled that Kowa checks all our boxes with respect to covering a broad PCP target universe, having a proven track record of successful co-promotions, and possessing the bandwidth to prioritize Zoryve promotion. We are working with Kowa to identify the PCP and pediatric targets who have the highest potential to write Zoryve. The Kowa sales force will have a dedicated focus on our product for at least the first two years, and there are significant commercial synergies in this co-promote with our existing dermatology focus strategy. Kowa will use the same branding and promotional messaging and materials and product reimbursement training. Kowa's PCP and pediatric targets will have the same access to samples as our dermatology offices. They will also be able to access dermatology experts for peer-to-peer programs to advance the understanding of Zoryve in the primary care setting. The patients in the PCP and pediatric offices will benefit from our existing copay card and favorable market access coverage. Our collaboration plan is built on transparency, teamwork, and shared accountability to ensure a successful partnership. Now I'll turn it over to you, Patrick. Thank you, Todd. Starting off on slide 17, I'm extremely proud of the team's performance in delivering on the promise of topical roflumilast, the dermatology community in the clinic, and continuing to hit all of our timelines with regards to regulatory milestones. Echoing what you heard from Todd, I see the HCP excitement around Zoryve cream for atopic dermatitis continues to grow as we release more data. Building on the foundation of their clinical experience with Zoryve in psoriasis and SEBDERM, dermatology clinicians find Zoryve's product profile to be well suited for what they and their atopic dermatitis patients are looking for. We've already started looking to expand the indications also for Zoryve foam, having recently filed another sNDA with the FDA in scalp and body psoriasis in July. If approved, this will represent our fourth indication for Zoryve, and I'm going to give just a brief peek at why we're so excited to bring this indication to patients. Writing out this table, we look to the submission of our sNDA, sNDA for the treatment of mild to moderate AD in 2- to 5-year-olds, which is planned for Q1 2025. And finally, we're also looking forward to our expected IND filing for ARQ-234, our biologic CD200 receptor agonist for atopic dermatitis in 2025. On slide 18, we see our next new therapeutic focus is leveraging the properties of Zoryve foam to help patients with scalp and body psoriasis. We know that approximately 40% of psoriasis patients also suffer from scalp involvement, and our foam has demonstrated reliable clearance of plaques, as well as rapid and robust impact on itch. One of the major challenges for managing psoriasis patients with scalp disease is the complexity of the regimen. Often, they end up with several prescriptions for their scalp and at least one or more for their body. If these are steroids, then the potency is vastly different between the solution that might be used on the scalp versus the cream that would be used on the face. One of the consistent themes about the Zoryve profile is that it simplifies treatment for a patient, and Zoryve foam for psoriasis is a perfect example of that. You'll see in a moment that we designed the pivotal trial to highlight this benefit through the use of co-primary endpoints for scalp and body IGA. Zoryve foam can be used once daily on any area of the body where psoriasis occurs, including hair-bearing areas such as the scalp, where creams, lotions, or ointments are suboptimal. I'm on slide 19. I'm just going to quickly review the data from ARRECTOR, our pivotal phase III trial for Zoryve foam in scalp and body plaque psoriasis. We selected patients with at least moderate severity of the scalp and with mild, moderate, or severe disease by body IGA, and that's Investigator Global Assessment. We had 432 patients who were randomized 2:1 to receive roflumilast or vehicle foam over an 8-week dosing period. As I mentioned, we measured 2 co-primary endpoints of scalp Investigator Global Assessment, or scalp IGA, and Body Investigator Global Assessment, or body IGA success at week eight. Now, on the right side of the slide, we have a brief summary of our results from the ARRECTOR trial. We achieved positive and statistically significant results on both of our co-primary endpoints of scalp IGA success and body IGA success. Over 66% of patients experienced highly statistically significant improvements in scalp symptoms, and approximately 46% of patients also achieved highly statistically significant improvements in body psoriasis, with clear separation from vehicle. As a clinician, I'm very pleased to see that the foam performs essentially identically to the cream in treating body psoriasis, giving dermatology clinicians the option of treating plaques anywhere on the body, including the scalp, with Zoryve foam, which should considerably simplify treatment regimens for these patients. The incidence of adverse events was low and generally similar between active treatment and vehicle. Overall, the most common adverse events included headache, diarrhea, and COVID-19. We previously announced these results in September of 2022 and are expecting a strong reception to this new indication based on the positive experience that healthcare providers have already had with foam in seborrheic dermatitis. With that, I'll pass it over to you, David. Thanks, Patrick. I'm on slide 21, showing financial results both year-over-year and quarter-over-quarter. As you've heard, our net product revenues for the quarter were $30.9 million, which is up 547% from Q2 of 2023, and 43% from Q1 of this year. For the second quarter, our R&D expenses, which include our clinical research, medical affairs activities supporting Zoryve, and manufacturing costs for pipeline candidates, were $19.3 million, which is down from Q2 of 2023 due to continued decreases in the development costs of topical roflumilast programs, and also down sequentially from Q1 of this year due to lower spend in our early-stage programs. You'll recall that we had some one-time spend in Q1 of 2024 related to ARQ-234. SG&A expenses were $58.2 million for the second quarter versus $46 million in the same period last year, as we invested in both our current and future launches, including our field force. Our SG&A expenses were slightly higher quarter-over-quarter, primarily due to incremental stock comp expense incurred in connection with the retirement of a former executive. We believe we are investing appropriately in our product launches to support the Zoryve growth trajectory while constantly looking for ways to achieve savings and efficiencies. On page 22, slide 22, you can see we had cash and marketable securities of $363 million on our balance sheet as of June 30th, which translates to a cash burn in the quarter of $45 million. Our current capital, together with our product revenues, enable us to continue operating the business for the foreseeable future, including our continued investment in commercial launches. I'd like to add, as we've said repeatedly, we do not envision a need to come back to the equity market to support our existing businesses. I'm now on slide 23. This slide summarizes the key features of the recently signed amendment to our debt agreement with SLR. The management team, together with our board, took advantage of the opportunity to renegotiate our debt to provide Arcutis with considerably improved financial flexibility. The revised deal, which becomes effective at the start of October of this year, provides a number of very important improvements, including an extended maturity to August 1st, 2029, a decrease in the interest rate of 150 basis points, the flexibility to repay up to $100 million in the fourth quarter this year, together with the ability to redraw that money anytime through the first half of 2026, thereby saving us considerable interest expense. We've also deferred our 6.95% exit fee on the redrawn $100 million to the August 2029 maturity date and removed restrictions on asset purchases. With that, I'll hand it back to Frank for some closing comments, and then we'll open for Q&A. Thanks, David. You know, our goal here is to make a positive and meaningful impact on the lives of people afflicted with chronic dermatologic diseases. And with Zoryve now launched in two indications and the atopic dermatitis launch now underway, we are proud to be helping millions of medical dermatology patients while allowing us, at the same time, to create additional shareholder value. We're confident that our strong performance in Q2 2024 portends for a strong and sustained growth for the rest of 2024 and beyond. And with that, we'll wrap it up and open up to Q&A. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone and then wait to hear your name announced. To withdraw your question, please press star one, one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Vikram Purohit with Morgan Stanley. Your line is open. Hi, good afternoon. Thanks for taking our questions. We had two. First on Zoryve, both for psoriasis and also for SebDerm. We were just curious if you could comment on your latest findings on refill rates and your, I guess, most recent estimates for how many tubes or cans per year you think patients are going to be working through. And then secondly, I just wanted to get your sense on where you think steady state gross- to- net, excuse me, could be for the foam product once that settles out over the coming quarters. Thanks. Yeah. Hi, Vikram. Yeah, Todd, you want to take those two? Yeah, absolutely. Yeah. Thank you, Frank. So in reference to PSO and SebDerm and the latest refill rates, we see on psoriasis, our refill rates are roughly around 38% of our total volume. And with SebDerm, we see something similar, although we do see some signals that there will likely be a higher refill rate on SebDerm eventually than that of psoriasis. So we're very encouraged with the refill rate percentages for both products. And then in reference to utilization of those products, we're assessing that, and at this time, our estimates are that for a patient—average patient utilization per year for SebDerm will likely be around two cans per year. For psoriasis, it's going to be likely around 2-3 tubes per year for psoriasis. Then reference to the steady state gross-to-net for foam, you know, we've seen an encouraging ramp relative to improvements in our gross-to-net for foam, especially with the line extensions of the three PBMs, and that we anticipate that we're in a very good position to be able to be in that steady state, high 50s%, you know, well into the end of this quarter, beginning of the fourth quarter of this year. Understood. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Tyler Van Buren with TD Cowen. Your line is open. Hey, guys, congratulations on another solid quarter and all the progress. I have two for you. So the first one is just the prescriptions for the cream have made a nice week-over-week jump over the past two weeks. So I'm curious to understand if this is pull through from the early atopic derm launch already, and if you believe this could be a new trend line moving forward. And then the second question is, considering the latest performance for the foam, do you believe that the foam and the cream will split overall Zoryve sales pretty evenly in the long term, or that one of the products will be substantially larger than the other? Sure. Todd, I hate to keep doing this to you, but- No, I'm happy to do it. These are great questions. So, thank you, Frank. In reference to the Zoryve cream, we are pleased with the most recent per week-over-week performance for that product. And I think that there's a couple things here that are creating some positive tailwinds for us. And that is that, you know, with the launch of Zoryve foam and creating a portfolio of products, this has really resonated with the providers as far as Zoryve cream across these two patient populations of psoriasis and SebDerm, creating a halo effect on both products to include the Zoryve cream. Not only that, but, you know, we have expanded our field sales organization, that we expanded it by roughly 40 representatives. That was fully executed on July first of this year. So I think that additional share of voice is starting to have a positive impact relative to our Zoryve cream and psoriasis brand performance. And then in reference to, you know, foam, once again, we're very encouraged by the performance of the foam, especially in the last weeks. We're seeing very positive week-over-week prescription growth. And relative to, you know, the split on the business between psoriasis and foam, I would anticipate that we will have a higher, you know, weekly TRx prescriptions eventually in foam than we want psoriasis. Because the market is so much larger relative to Seb Derm and foam. There's no brand of competition within that market. There's been no innovation in many years, and so it creates a great opportunity relative to, you know, the value proposition that we offer to these patients. We continue to hear very, very encouraging and positive feedback, not only from the dermatology community, but from patients. I think that that's what we can expect going forward. Thank you. Please stand by for our next question. Our next question comes from the line of Seamus Fernandez with Guggenheim. Your line is open. Well, thanks, thanks very much, and, congrats on the, on the quarter and all the progress. A couple questions on the, progression in AD and how we should think about it. One question that I have is just as, Kowa comes on to, you know, expand the promotion of, Zoryve, can you help us understand, you know, some of the key impact points, and how we should be thinking about the prospect of acceleration there? And then separately, just hoping to understand how you're thinking about the opportunity in the pediatric AD setting. Obviously, that's another, SNDA file would bring the, availability of Zoryve to a very important younger patient population. Interested to know how you're thinking about, the promotion, in that, in that setting and, Great. And the importance of it as well. Yeah, Seamus, your second question, you're asking about the 2- to 5-year-olds? Correct. Yeah. Yeah, sure. Okay, Todd, maybe if you could take the question about Kowa, and then Patrick, maybe you could kick us off on a question around AD, just from a clinical standpoint. You want to start, Patrick? Yeah, sure. I'll, I'll take that one. Thanks, Seamus, for the question. Appreciate it. So when we're thinking about pediatric AD, that 2- to 5-year-old represents about 10% of the AD patients that are in dermatologist's office. You know, but I think what's really important is to keep in mind that the pediatric AD community is already very much involved in our launch, given that we have 6- to 11-year-olds with the 0.15% approval that we just had in July, as well as adolescents. And both of those are kind of core patients for this pediatric AD treating community. So, you know, I, I think that we're already really heavily engaged with them. And then as we bring the age range down into the 2- to 5-year-olds, we'll just be able to kind of build upon that. If you think back to the data that we had for 2- to 5-year-olds, it's very, very consistent with what we have for ages 6 and above. It'll seem like a very natural extension, I think, as we add on that additional age to the indication. Then, Seamus, if this all was clear, your first question was in reference to the progression of AD and our expanded promotion and kind of what are some of the key impact points? That's right. Yeah. Yeah. Yeah, absolutely. So, first and foremost, we're very pleased with the start of the atopic dermatitis launch. We're receiving very positive feedback from the dermatology community. And I think some of the key impact points that we're looking at is, I think first and foremost, is for the EHR, electronic health records, to have them all brought online to where Zoryve cream 0.15% for AD is loaded up into the EHRs. We've been actively working on that and expect that to happen over the next couple weeks. The other is, we've mentioned access. Two of the PBMs now have treated atopic dermatitis as a line extension. I think another key driver accelerator will be when that third PBM comes online, which we anticipate that to come online very likely next month. The other is that, you know, we have the EHR, we have the access, we have the promotion. We've got to make certain that we're driving covered scripts. So, we are working hand in hand with the pharmacies within our contracted pharmacy network, just to make certain that, you know, that we can drive coverage scripts with those pharmacies. We're also working with the dermatology offices relative to the PA process, and I think we have a significant strategic advantage here. As we mentioned before, that these offices or the pharmacies, you know, it's the same coverage across the three different products, same co-pay card, same contracted pharmacy network. So we see a lot of synergies that are being built here, across the offices and pharmacies to drive those coverage scripts. So I think we couple those together, we'll be well on our way to a very successful launch. Yeah, and Seamus, maybe I'll just add, you know, specifically with regard to Kowa, you know, we expect them to start promoting, you know, in the field probably towards the end of this quarter. But as I mentioned in my comments, we don't expect to see, you know, an inflection in Zoryve growth f rom the primary care and pediatric piece, probably this year. I, I would expect that to be more of a contributor in 2025. You know, very much like when we first launched with plaque psoriasis in dermatology, the primary care and the pediatric doctors don't know Zoryve yet. And so, you know, there's gonna be some education that has to go into that. But, you know, Kowa has relationships with many of these doctors. They've got a proven track record in the primary care space, so we feel very good about it. But I do think there's gonna be a bit of a lag in terms of when we see the impact. You know, I, I would expect to see more in 2025 from the primary care deal. Just with regard to the pediatric piece, I would also just point out that, you know, we do anticipate also in the future studying Zoryve in 3- to 24-month-olds. That's something probably that will come post-approval in the 2- to 5-year-old. But again, I think it's an important opportunity, both in the dermatology setting, but also especially in the pediatric setting. As you know, there are many AD patients below the age of 2. Great. And then maybe just one question. Is there a point where, you know, David and Frank, you are, you know, and, and Todd are all carefully looking at the value contribution of a broader, you know, sort of DTC campaign? Where do you think that starts to become most impactful? Is that kind of, you know, end of 2025, 2026? There have been good returns on DTC advertising, but just wondering how you're thinking about spend. You know, I think we have a direct-to-consumer program ongoing all the time. You know, we've expanded that with SebDerm, and we will expand it further with atopic dermatitis. You know, I think specifically with regard to broadcast TV, you know, that's something that we are constantly evaluating. I don't know if or when we will, you know, really ramp up direct broadcast TV. It's very expensive, right? Because you're competing against the likes of Coke and Ford, as well as, you know, the big biologic companies for buying that advertising space. And the economics for direct-to-consumer TV for, you know, a $70,000 a year product is very different than the economics for a product that, you know, is probably something like $2,000 a year. So I wouldn't say at this point, we've made a commitment to going into broadcast TV. It's something that we'll continue to evaluate. But, you know, we would only launch that if we felt that there was a really compelling business case that drove shareholder value. Great. Thank you. Thank you. Please stand by for our next question. Our next question comes from Uy Ear with Mizuho. Your line is open. Hey, guys. Yeah, congrats on a solid quarter. Thanks for taking our questions. So I guess our first question is, maybe just help us to understand a little bit about the gross-to-net changes. I think you indicated from low 60s to high 50s, but if you just take the sales number and divide it by the total scripts, the net, you know, the implied price seems to be relatively flat. So that's sort of the first question. And the second question is, could you maybe just help us understand, like, the proportions of pediatric patients in the derm offices that you currently detail to, versus those in the primary care and pediatric markets that you're expecting Kowa to go after? Yeah, and I guess, maybe thirdly, you indicated that the amended term loans has now removed restriction on asset purchases. Just wondering, what do you have in mind in terms of BD? Thanks. Okay, great. It's a lot, Uy. So let me take the easiest one first. In terms of the proportion of peds, or of children, excuse me, in derms versus PCP and peds, I think that Patrick mentioned earlier, in dermatology offices, it's only about 10% of the AD patients they're seeing are children, the 90% being adolescents and adults. It's a very different picture in primary care, where, you know, in the pediatric offices, all of the kids obviously are pediatric, and the majority of the pediatric AD population are sitting with pediatricians, which is why we think this PCP co-promote is so important. There are a lot of adults as well, who are seen by PCPs and not by dermatologists. I think that's, you know, both a function of the difficulty of seeing a dermatologist. You know, in many cities around the country, it's a six-month wait to see a dermatologist. But also, and Patrick can comment on this, too, I think many PCPs feel very comfortable treating eczema as opposed to psoriasis. And then, you know, Todd, maybe you can talk a little bit more about the gross-to-net changes. I'm not 100% sure I'm clear about your comment about the implied price, but Todd can talk about the gross- to- nets in a little more detail. And then after he's done, we'll get David to address the debt and business development. Yeah, in reference to the gross-to-net, what's been driving—First, what's been driving the improvement in gross-to-net? What's probably been driving that is the increased number of covered prescriptions that we've had in place. And that's, there's kind of three factors that are driving that. First, is we have had some improvements in relative to our market access. This gives us the opportunity to increase the percent of product that's now being covered by the insurance companies. The other is that, you know, we've had a—as mentioned earlier, a nice acceleration of gross- to- net improvement with Zoryve foam, with the three PBM line extensions as it happened there. You know, a little bit of a higher volume in SEBDERM, that's, you know, give it a positive mix when you blend the two together to give us improvements also within our gross-to-net. In addition to that, some of the changes that we've made with our co-pay card to create efficiencies in covered prescriptions versus non-covered prescriptions and how those are accounted for, has also lent to this improvement. So well, I'm not sure if that explains it. If there's further questions, I'm happy to answer. No, no, that explains it. Thanks. Yeah. Yeah, but on the prior questions, I was also wondering, you know, whether there's a large proportion of pediatrics or patients in the primary, you know, and psoriasis as well, in SEBDERM, that have gone untouched. Just- You know, we've stated before, about 1/3, roughly, of the primary care psoriasis population is treated outside of dermatology. You know, that's a little bit scarier disease, quite frankly, for non-dermatologists, so they tend to refer more. Whereas, eczema or atopic dermatitis and seborrheic dermatitis, you know, many doctors are comfortable treating those patients in their own practice. And so about half of the eczema population and roughly half of the SEBDERM population are outside of dermatology. And then I think it's also important to note that particularly SEBDERM and to some extent, eczema and psoriasis, there are a fair number of patients who are also not being treated. You know, they've even either given up or they don't realize they have a treatable condition. And I think that over time, we may see some growth in the marketplace, particularly in seborrheic dermatitis, going for patients who weren't on drug previously coming on to our drug. Okay. And then, David, can you maybe talk a little bit about the debt revisions and specifically business development, sort of our thinking around business development? Oh, I'm sorry. I thought you wanted us to address some of the math around gross-to-net, which I can do for a moment, if you like. So, have we addressed your questions around gross-to-net? I think I was sort of wondering about the mix. And I think you guys have sort of explained it. But David, feel free to address the math. Yes. Oh, the only thing I was gonna add is, you know, same, same thing we talked about multiple times at the end of last quarter, right? The way we've chosen to handle commercially insured, but uncovered scripts, makes it difficult for you to calculate the exact gross-to-net. You don't have all the inputs you need, but it is in the fifties. Okay, thanks. Yeah. And then, David, I'm sorry. Can you take the question about business development? Yeah, I'm sorry. Could you repeat the business development question? You removed the asset purchase restrictions on the amended term loan. Yeah. Just wondering what you have in mind? Well, the original agreement had a hard dollar cap on asset acquisitions. That's in our amendment that has been removed. Yeah, and then, you know, I think going more broadly, you know, I think we think of business development as a potential opportunity, but not a necessity, right? You know, we've got, you know, three very strong products now approved, a fourth one we just filed. You know, we have some earlier stage programs in our pipeline. And we have a pretty high bar in terms of buying things, right? We don't need to go out and buy revenue because of the products that we have and the products we have in our pipeline. But you know, we're always looking, and if something came along that we felt we could create additional shareholder value with, we certainly would think very seriously about that. You know, I think we've built a wonderful development organization, both in R&D and in technical operations. And so, you know, finding something that we think is a diamond in the rough, like ARQ-234, is something we're always looking for. But we're not looking to do, you know, at this point in the game, you know, some sort of a roll-up, where we're just adding a bunch of revenue that doesn't really create shareholder value. Okay, thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Serge Belanger with Needham. Your line is open. Good afternoon, thanks for taking my question. First one on managed care coverage. I think over the last couple updates, you've highlighted, you've secured Medicaid coverage from some prominent states. Just curious where you stand on Medicare, and I guess, where you expect to be once we flip to 2025 and the Kowa co-promote begins? And also related to that, I think in the past, you've mentioned that you expected your Medicare and Medicaid book of business to be as profitable as the commercial book. Has that - have those expectations changed now that you are starting to secure that coverage? Thanks. Yeah, sure. Great question, Serge. Todd, you wanna take those two? Yeah, absolutely. First, in reference to Medicaid, as mentioned earlier, we've been able to secure coverage in Texas, Florida, and New York. We are, you know, in negotiations with other states for Medicaid and those negotiations are moving forward, and we're having very positive conversations. And so, I expect to pick up additional coverage with Medicaid states as we roll through 2024. In reference to Medicare, we continue to have positive dialogues with the PBMs that manage the Part D plans. We expect, as you mentioned, we roll over 2025 and into the quote "partnership" relative to Medicare. We do expect to be able to have some Medicare access as we initiate and go into 2025. Those conversations with those Part D plans are going well, and the coverage would very likely be initiated on 2025, although we are having conversations about the potential to pull some of that forward into 2024. Todd, can you also comment on what we expect gross- to- nets to look like in Medicare and Medicaid versus commercial? Yeah, absolutely. So relative to gross-to-nets, we're in a very good position, and that's a result of the strategic pricing, the WAC pricing for Zoryve that falls below the specialty product threshold within Medicare. So we won't have to pay, you know, exorbitant rebates to the Part D plans to be able to secure that access. Once we secure that access, it should have a very nominal impact on our gross-to-net. Likewise, within Medicaid, we're in a very good position in what we've had to negotiate there relative to discounts. We should have, you know, minimal to no impact on our gross relative to the Medicaid access that we're securing. You know, we strategically priced the product that way, and it's starting to play out strategically for us, both across Medicaid and Medicare, very positively. Great. And maybe a follow-up on a prior question regarding the gross-to-net calculations for the quarter. And, and regarding more specifically to a program where you count the commercially insured, but non-covered scripts and how they don't impact the co-pay card. I don't know if you can disclose how many, the, the volume of scripts going through that program and whether it's increasing or stable from quarter- to- quarter. Yeah. Yeah, I'd be happy to address that question. So, relative to the program that we've mentioned, as far as the volume going through that versus the what I'll frame as the traditional program that we have, we do see a high level of the Zoryve volume going through that new program, which is having a positive impact on our gross-to-net. And we anticipate that will, you know, it is a high volume, so it will increase, but modestly, because it is a pretty significant part of our volume that is now flowing through there. And we anticipate this as we ramp up in atopic dermatitis, we would expect the same thing. Yeah, and, you know, Serge, I might just emphasize again, you know, what we're really focused on is covered prescriptions, right? Because, you know, shareholders don't make money on an uncovered script. In fact, you know, normally, you lose money on an uncovered script. So, we have taken to telling you guys what percentage the scripts are covered. And Todd mentioned, I think earlier in the conversation, about 4 in 5 of the cream scripts currently are being reimbursed by insurance, and about 3 in 4 of the foam scripts are being reimbursed by insurance. So those are, those are fully paid scripts, right? Yeah. And so you guys can do the math. Our gross-to-net that we're reporting is on the scripts that are covered because there is no gross-to-net on an uncovered script, right? Because you're not getting paid anything for them. Yeah, and Frank, on that note, I will mention that, when we look at branded topical products, when you were able to accomplish four out of five prescriptions are covered, that's a, that's a very high number of scripts as far as covered when you look at branded topicals. Yep. Thanks for the call. Good point. Yep. Thank you. As a reminder, ladies and gentlemen, that's star one one to ask the question. Please stand by for our next question. Our next question comes from the line of Chris Shibutani with Goldman Sachs. Your line is open. Great. Thank you very much, Frank and team. Congratulations on the progress. Two questions directionally, if I could. One, financial. As I think about operating expenses and the possibility that you could inflect towards positive EBITDA at some point over the next several quarters or years, what are the factors that, now that you have the partnership in place, are guiding how we should be thinking about your own SG&A leverage? That seems to be one of the toggles that could help drive towards that profitability here. And then secondly, to talk about the pipeline a little bit, 255, any insight into when we could learn about that? Because you know we get impatient, and what have you done for me lately? You do have a pipeline. You're focused on dermatology, tremendous commercial success, but we're gonna be increasingly curious in the months ahead and quarters ahead about what else you could be having, in terms of portfolio and particularly in the pipeline. Thank you. Yeah, sure, Shib. So David, you want to take the question around profitability, and then Patrick, could you maybe address the pipeline? Sure. Well, I'm not gonna comment on timing to profitability or break even, but what I will say, obviously, if you break SG&A into S on the one hand and G&A on the other hand, selling obviously is, you know, always gonna be pretty closely correlated with revenue. So the way you get to break even in this kind of business, obviously, is through economies of scale on the G, and the A items, right? And we're certainly experiencing that already. We watch it very closely, we look at it in our own internal projections, and I think, you know, it's well on its way to the sort of levels that you'd want it to be at, okay? Now, obviously, circumstances can change. When you launch products like AD, for example, or launch a PCP program, you do, you do incur some, some startup costs and things like that. But in general, if you strip out those one-time items, the G and the A are, are moving in the direction that you'd like to see them in to achieve what you're referring to? I think maybe the only amplifying comment I would add to that is, you know, Shib, as primary care starts to kick in and drive top line revenue, you know, that, that's we aren't spending our money or shareholders' money, you know, to drive that business, right? That, that's really coming from the partner side. Yeah. And so that's something that will give us more leverage in terms of profitability. It's revenues without expenses, really. Yeah, that, that's reassuring on the partnership front, so. And then on the pipeline 255, I think we're in phase I. When do we get to see some of the profile? Yeah, sure. Patrick, you want to take that one? Yeah, absolutely. So, you know, our kind of historical precedent has been that we're, when we're conducting a clinical trial, when we get to where we've had the last patient enrolled, then we'll kind of make a statement about when we anticipate having the data. You know, up until that point, you know, we just wanna make sure that we're being precise with regard to, you know, any prognostication that we provide on timing. So, you know, as we move towards having last patient in, we'll, like, make an announcement on the 255. You know, just today, we did include an update on ARQ-234, which is the CD200 receptor agonist, you know, kind of noting that we're planning to do an IND filing there in 2025. You know, as we get closer to that, we will kind of continue to refine the date. So now we've kind of put that up on the map as well today. Thank you. That's helpful. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back to Frank for closing remarks. Okay. Well, appreciate everyone making time in their day to join us today and for the great questions. And look forward to speaking to everyone in about 90 days for the next quarter. Thanks again for joining us. Take care. Bye-bye. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.