All right. Good afternoon, everyone. Welcome to the session of the Morgan Stanley Global Healthcare Conference. I'm Judah Frommer, one of the SMID Biotech analysts here. We're very excited to have the team from Arcutis joining us. Let me just get through a quick disclosure before we get started. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. With questions, please contact your Morgan Stanley sales representative. All right. With that out of the way, Frank, I thought we could start with a brief history of Arcutis, the company celebrating its 10-year anniversary. Maybe just a couple of minutes on how the team, the pipeline, and the commercial effort came together. Sure. Yeah. We just celebrated our 10th anniversary in June, and I have my 10th anniversary in six weeks. I think it's coming up pretty fast. The company was actually founded by Frazier Healthcare. They saw an opportunity in the dermatology space where there wasn't a lot of innovation happening at that point in time, and they thought that there was a good opportunity. So they created the company and they hired our founder, David Osborne, and said, "Invent a dermatology product." David went down in his basement. He literally has a laboratory in his basement. Wow and invented what became ZORYVE. The minute he came up with ZORYVE, they thought, "Okay, well, we've got a company now." So they hired a dermatologist and myself, and the three of us went from there. Over the last 10 years, we've gone from three people, and I think we had $150,000 in the bank at the beginning, to we're about 450 now and with about a $3 billion market cap, depending on the day of the week. Wow. So it's been an amazing journey. All of it really built on ZORYVE, but we're at a really exciting point now where ZORYVE is generating enough money. We've become a cash flow positive, usually profitable, self-sustaining biotechnology company, and that's giving us the resources now to invest not only in our inland ZORYVE business, but into expanding the use of ZORYVE and also in building and advancing a pipeline. Okay. Excellent. That's great background. Maybe just starting a bit higher level on ZORYVE, how would you describe the product's differentiation, maybe across the cream and the foam in terms Sure. Yeah. of both risk-benefit profile, quality-of-life measures, versus maybe topical steroids and then other non-steroidals topicals as well? I think the difference from non-steroidals is probably the most important, and Patrick is a dermatologist, so he's going to keep me honest, but for inflammatory skin diseases like psoriasis, seborrheic dermatitis, and atopic dermatitis, steroids have been the foundational therapy literally for decades, for 70 years, right? It's what dermatologists go to first. And steroids are effective therapies in treating these diseases. The problem is there's this mismatch that steroids are safe for short-term use, and these are all chronic conditions. Dermatologists had invented these complicated regimens of multiple different therapies, different steroids, different formulations, some non-steroidals all combined together in these complicated regimens to try and manage these chronic diseases with a drug that's really only safe acutely, right? Making trade-offs between safety and tolerability on the one hand and efficacy on the other. With ZORYVE, we solved that problem. We have a product that's essentially comparable to a steroid in terms of its efficacy, but it can be used anywhere on the body, which steroids can't. It can be used for however long the patient wants, which steroids can't, and it can be used any amount that they want, which steroids can't. That's really, I think it's revolutionizing the treatment of these inflammatory skin conditions, making it easier for the doctor and for the patients, quite frankly, to manage these diseases, and ultimately then producing better outcomes. Okay. Great. Just thinking about recent performance for the franchise, second quarter ZORYVE franchise sales, about $130 million, up 23% sequentially. Before we get into kind of back half performance and thinking about that, what's been driving recent trends? The foam sales really stand out in our conversations. Well, I mean, the foam is a really unique asset, right? ZORYVE itself is a very unique asset. You asked about the other non-steroidals. We have a very effective drug with no safety concerns and very, very clean tolerability, and we have good access for the product, right? So that combination is very unique, but then you layer on top of that the foam. There are no other non-steroidals in a foam formulation or frankly, a formulation that is suitable for hair-bearing areas of the body, like the scalp, the face, the groin. We have a foam that is a very nice foam. People like it. Patients like it. You can put it in your hair. You leave it in. You don't have to wash it out. It doesn't disrupt hairstyle or hair color or anything like that. So that's been a real standout star for us. It's over half of all of our sales is the foam. It also has indications for both seborrheic dermatitis and plaque psoriasis as well. All of our SKUs are continuing to grow. Atopic dermatitis is actually the newest indication, and we're seeing the highest growth, frankly, in AD, partially because it's new, but also that is a disease that continues to have a pretty high unmet need. I think the growth is because the product performs really well for customers. I think we have really got our commercialization engine dialed in, and it's very effective. Again, as I mentioned earlier, we have the resources now where we can invest into new initiatives that allow us to sustain that growth rate or hopefully even accelerate that growth rate going forward. All of that's happening in a context where, as I mentioned earlier, how foundational steroids were in dermatology, where dermatologists now are questioning the way that they've used steroids in the past and thinking about how they can change the practice of medicine and really reduce the reliance on steroids and steward their steroid usage better. Okay. Maybe just talk for a minute about kind of market share dynamics and kind of growing that non-steroidal pie and taking share within that versus Broadly on the overall market, we've seen a very nice growth in the branded non-steroidal market. We define it ourselves, topical tapinarof, topical ruxolitinib, and topical roflumilast. That was about 2% of the topical market when we launched. We're approaching about 10% now of that market, so a very nice, robust growth trend, and one that we think will continue on for quite some time. Right. I think this market could easily convert to be 30%, 40% branded non-steroidals ultimately. ZORYVE was the last of the branded non-steroidals Right in that group to launch. We started with a very small market share. We're now approaching almost 50% of that market. Again, I think because of the product performed so well. So we're really the engine driving the conversion from topical steroids to branded non-steroidal. Okay, great. Maybe just one more kind of high level on broader trends within the space. The more we talk to practitioners, it seems like there is maybe further penetration of nurse practitioners and PAs in terms of prescriptions than maybe just derms and primary care previously. Well, I think that's probably symptomatic of two things. One is, NPs and PAs are really a very important part of dermatology. Right? Over half of medical dermatology is treated by an NP or a PA now. Dermatologists have many other things to do besides gen derm, so they tend to shuttle a lot of those patients off to the NPs and the PAs and then do things like procedures themselves. So, that's why the NPs and PAs are important contributors. But, I think as Patrick's commented before, I think the NPs and the PAs are probably even more receptive to the ZORYVE message as well, right? Because of the, again, the safety. Some of them are younger, too, so maybe they're not quite so entrenched in their clinical practices Okay as some of the dermatologists are. Okay, makes sense. On the heels of the second quarter performance, you raised the full year guide to $525 million - $540 million. As we think about the back half of the year and then into 2027, where do you stand on where the franchise could go from here? Yep. I think actually, maybe Latha, you want to take that one? Yeah. So yeah, we did increase our guidance into Q2 call to $525 million - $540 million based on our strong performance in Q2, and the investments we're making, the initiative to drive growth for the rest of the year. We talked about a lot of those things in the call, and we can elaborate on some here, which is our sales force expansion, our step into primary care, our marketing initiatives, our DTC initiatives, and the work that we're doing on the market access side. With kind of two of the variables done with the quarter and what's left to go, we expect absolute net sales growth in Q3 over Q2. Not the same level of growth and a percentage because of the seasonality, which we've talked about, with the disease, and I'm sure Patrick can elaborate on that. Q4 is always our strongest quarter as we end the year, and the winter months- lend themselves for patients to use our products. Stepping into that and all the investments we are making, like I said, we are taking the leverage and being deliberate and being cash flow positive, but investing it in our business. that we expect to inflect that trend, which is that we will increase our growth in 2027. When you think of 2026 versus 2025, we expect to inflect the growth trend in 2027 versus 2026. Okay. Great. Maybe it is worth spending a second on that seasonality. I am always amazed at how surprised investors are from quarter to quarter, topical derm conditions, presumably more severe in the winter, but maybe just worth spending a second on. Yeah. Look, I think I have been in this business for decades, and pretty much every product experiences kind of seasonality, right? Yep. Q1 is the softest quarter. There's a nice rebound in Q2. A lot of that Q1 softness is driven by patients pulling demand forward in the prior year before their deductibles reset, and then their deductibles reset, and we have more copay assistance we have to provide. That impacts Q1. Q2 rebounds. Q3 gets soft because doctors go on vacation, patients go on vacation, there's just fewer doctor visits. Then Q4 rebounds because they're coming back from vacation, but then also they're pulling demand forward from the next year's Q1. Yep. Right? You see this very typical sawtooth. Then in the inflammatory dermatosis space, Q3 is exacerbated because these diseases tend to improve in the summertime, right? Right. Patients are outdoors, more sunlight, higher humidity, so all three of these conditions will improve on their own spontaneously, so the patients aren't going to the doctors as much, right? Yeah. All of the topical see this pronounced sawtooth pattern quarter to quarter. Right Generally every year. We didn't see it last year because we happened to be launching in the third quarter. a new indication, and that masked that normal seasonality. This year should probably be somewhat typical. I think the fact that we're growing in absolute terms, Q3 over Q2, speaks to the strength of the underlying growth trend in spite of the seasonality. Okay, great. Maybe taking through some of those internal drivers, where do you stand on the dermatology sales force expansion? Are you seeing contribution here yet, or will we need more time on that? Yeah. The dermatology sales force, we expanded from 130 to 160 end of May. They hit the field. It typically takes about three months to see an effect from a sales force expansion. I would like to see the last couple of weeks were sort of the first green sprouts. We'll see in the coming weeks, but we do expect to see an impact from the expansion in the fourth quarter. We also launched a primary care and pediatric sales team in the third quarter. They hit the field at the end of August. Okay. They've only been out in the field for a few weeks. I think that the time to impact may be extended there because primary care docs are just a lot harder to get in to see. Yeah. Right. We don't anticipate seeing an impact from primary care and pediatrics probably until 2027. Okay. But I think that fits with Latha's point about the- Sure inflection that we expect to see in 2027. And maybe just remind us why it made sense to bring that sales effort in-house for primary care NPs and why the timing makes sense. Sure. Yeah. We had a partnership previously, and we signed that deal at a point in time where we financially didn't have the wherewithal to do it ourselves. Right. We and our partner subsequently decided to part ways mutually, amicably. We were at a point where we could do it ourselves. We have started that process. We are doing it in a very measured, methodical way so that we can ensure that we're getting a good return on investment from it. We started with 20 reps Right in primary care and pediatrics. I'm sure that will grow with time, but how big and how fast is really going to depend on the results that we can generate from that business so that we make sure we're doing it in a way that's shareholder value friendly. Okay, great. I'm going to front-run the mini survey we're going to ask you at the end here, but you're leaning into AI to enable prescription workflow, and you've begun a DTC effort as well. Any early signs of success there, how meaningful can those be as they ramp? Yeah. On the AI side, we actually partnered with an existing AI provider that provides workflow AI tools to doctor's offices. We're helping them train their AI model effectively, right? We have heard anecdotally from doctors that they've noticed an improvement in how the system handles our prescriptions, so that's very positive. I think over time, hopefully, we'll see more concrete metrics, and we'll share those as appropriate. On the direct-to-consumer side, we have been doing direct to consumer for some time. We started a new partnership with Max Homa, the PGA golfer, in the first quarter, I think it was earlier this year. I think what was really important was we launched a TeleDerm capability last quarter, where if a patient reads an article or hears about ZORYVE, instead of waiting six months to see a dermatologist, they can actually see a dermatologist within 24 hours going through the TeleDerm platform. Maybe just a second on the TeleDerm platform. I think some folks think that you're running that platform, just maybe how it works and the relationship with that. Yeah. I think this is really important. Yeah. For compliance reasons, this all has to be at an arm's length relationship. So if you go to zoryve.com, there's a tile that you can click, and it will take you to the TeleDerm portal. Right. That's an independent company. The patient pays that independent company for the doctor visit. We don't pay the doctor anything. Right. Those doctors work for that platform. They don't work for us. They don't have to write ZORYVE. Yeah. We're a good choice, and in many cases, they will choose ZORYVE, but they don't have to. If they write ZORYVE, then the patient comes back into our system for insurance and fulfillment for the ZORYVE. But the diagnosis and prescription are all completely independent of Arcutis, which is really important from a compliance standpoint that we set it up that way. Okay, great. Just higher level for the franchise, I think investors very much appreciate kind of the annual sales guidance you guys started giving, I think end of last year. Yeah, late last year, yeah. started giving it. But in terms of peak ZORYVE sales, you've talked about a $2.5 billion - $3 billion range. I guess, there's momentum for the franchise clearly now, and as that continues to build, can you comment on kind of evolving confidence around those targets? Yeah. I think we reiterated it again on the last quarter call. We continue to think that the $2.5 billion, $3 billion for our existing indications is a very achievable number. That translates into something like 15%-20% of topical patients being on ZORYVE versus maybe 3.5% today. If you think about the momentum we have and this shift in medical practice away from topical steroids, I don't think that that's an unreasonable level of conversion. That would imply probably something like 30%-40% for the branded nonsteroidal class as a whole. Right. You compare that to similar markets, and that would actually be a low level of conversion compared to a lot of the other markets we see. So we feel very confident about that. As we continue to add on these additional indications, that obviously would tend to bring the peak sales guidance up as well. Okay, great. I think both for that peak sales guide, but also for the nearer term, annual guidance into next year, we have talked about robust reimbursement. Specifically on government pay, that is kind of evolving. Where do we stand, and where can we see progress coming up? Yeah. On the commercial side, we are effectively done, right? Yep. Very good coverage, well over 80% coverage on the commercial side and with very good access. We have made very good headway in Medicaid. We have about half of all Medicaid lives have access to ZORYVE through a single step or better. Like in California, there is no step for ZORYVE. We are starting to make headway in Medicare as well. There has been a lot of disruption in the overall Part D program, as many investors are aware, and that has led to a resistance to add new therapies to the Medicare formularies. We were really pleased that we picked up about a third of all Medicare lives earlier this year. We continue to negotiate to get additional plans to add ZORYVE. We are the only branded nonsteroidal on the Medicare formulary right now, so we feel good about that. We have work to do, and it is taking time. I wouldn't expect to see any news before the beginning of the year on the Medicare front. Okay. That's helpful. I want to touch on some of the potential indication expansions. Maybe starting with infinity, you have a February 2027 PDUFA for infant atopic derm. Will ZORYVE expand the population here, or are you competing for patients that already are on EUCRISA? How should we think about that in terms of the population? Yeah. Actually, maybe I'll throw that one over to Patrick as a practicing dermatologist. Yeah. One of the challenges in that 3 - 24 month space, and it's a fairly large size population, even though it's a pretty narrow cut age-wise, just given the dynamics of when patients get their atopic dermatitis, which is oftentimes early in life. They actually represent about 10% of the patients under treatment. It's about 1 million patients that are being seen and managed for their atopic dermatitis. What's challenging about them is that it's really steroids, and then as you mentioned, EUCRISA. In that group, especially when you can't communicate whether you're having any stinging or burning, we know that the patients are kind of miserable from itching. Yeah. You can see them scratching. It's been challenging to manage them, with local side effects. Right. I think from our perspective, steroids have been the major treatment because they know that they work, they don't have stinging and burning, but the challenge there is that parents generally do not want to be putting a topical steroid onto a three- to six-month-old. It's been very difficult to really manage those patients. They oftentimes end up with high frequency in pediatric dermatology offices. Right They don't really have anything new to offer them. What we've heard back over and over again is, like this 3- 24-month-old. Yeah because of the lack of non-steroidal treatments that we can use, has been very challenging to manage. We are excited to be coming there with a profile that they know and is really well-suited to this age group. Okay. But, to put a point on your question, the bulk of the patients are using steroids? Sure. Sure. We think the bulk of our business will come from steroids. Yeah. Okay, that makes sense. Then just vitiligo and HS, those are material potential indication expansions. So maybe we start with the size of the opportunity for each and unmet need for both vitiligo and HS that remains. Sure. I'll take the easy part and then I'll throw it back here to Patrick again. Yeah. Each of them is about a third the size of the psoriasis opportunity. with, I think, the nuance that there's a lot less competition right now in both of them as well. Yeah. They're not gigantic markets, but they're good-sized markets, I think, with a high unmet need and Yeah not that much competition. Yeah, as far as unmet need, both of these indications are somewhat unusual in dermatology in that steroids are either not used, like in the case of HS. Yeah. There it is partially because of the location. It is in these areas where you have skin-on-skin contact, very high level of atrophy. They just don't work particularly well. For vitiligo, steroids aren't used so much because oftentimes it is on the face, the back of the hands, and again, it doesn't work well, so you have to use very high potency, and a lot of potential atrophy there. So that leaves, really, a dearth of treatment options for these patients historically. For HS, it really is some off-label topical antibiotics, maybe some oral antibiotics. So having a new mechanism of action there. Right especially with ZORYVE's profile, which is really well-suited to be able to treat potentially those mild to moderate patients, but then also with our label adjunctively as they might move on to a systemic treatment where the efficacy rates aren't so high that there isn't a need to use them oftentimes in combination, I think would be well-received even as that landscape evolves. Similarly with vitiligo, right? Vitiligo, we have a single approved mechanism of action right now. I think there's a lot of room for additional entrants with a new mechanism of action. Here, the PDE4 inhibition that we're providing with ZORYVE has an impact potentially on both the melanocyte, where you're kind of sustaining the melanocyte to produce pigment, which can speed the recovery, which is what patients will see, and we'll show them an early benefit. But also the inflammatory component, which is where we're showing efficacy across other indications. So I think it's, again, a good fit, and with very few treatment options for those patients. Okay, great. So maybe just starting with vitiligo, you'll have top line and a go, no go decision, I think in Q4 is the timing. Yep. You said you're looking for superiority and speed of onset or efficacy versus existing branded non-steroidal. Are there any case reports or off-label use that may increase your confidence, or are we just waiting for data to make the decision? Well, certainly the case reports, and there are a number of case reports for both diseases. That's what really led us to do the studies. Yeah Give us confidence, but we do still need to see the data. These are relatively small open label studies. I don't think we're going to get a crystal clear picture of the efficacy profile from these studies. Right. We're just looking for a signal that it actually works, right? Right. Then we'll move into phase III, which will allow us to fully characterize the efficacy of both the drugs. Patrick, do you want to maybe comment on sort of what we are expecting to see from the two POC studies? Yeah, I think from our perspective, we look at the case reports that have been published. We listen to derms that are out there using the treatment of their own volition and kind of feeding that back to our medical affairs group. That's kind of formed our understanding of what we think the efficacy profile will be. What we're looking for here is really confirmation of that. with a fixed denominator where we can say, okay, this gives us an idea of. Especially to your point, like you talked about our efficacy relative to existing therapies. Yeah. Again, given that this is a very wide open space. Yeah We're not necessarily saying that we need to be superior to, we need to be clinically meaningful for these patients in order to move this forward into phase III. The onset of efficacy. Yeah As you mentioned, we think is something that we've heard from healthcare providers. We should be able to see that also in this study, and it fits with the mechanistic understanding that we have for vitiligo. Okay. I would just maybe also add, I think the fact that we are studying our foam in both indications- Right is important because, I am a good example, you are a good example. If you are treating vitiligo on the face- the foam for a lot of men especially, is very attractive. Right. Right? In the case of HS, it is almost always in the groin or in the armpits, and again, hair-bearing areas, so having a foam can be a meaningful differentiator versus the competition. Right. Okay, that makes sense. HS, kind of similar approach to that data set and that go, no go decision in terms of clinical meaningfulness? Right. In principle, yeah. Okay, great. You did announce a PD-L1 cutaneous AE study. I think you framed it to kind of generate publishable data to support access rather than necessarily supporting a registrational path that you will pursue internally. Could running a full pivotal program be in the plan at some point? Has that decision been made? Yeah, we certainly haven't ruled that possibility out. Okay. What we were trying to communicate there is that HS and vitiligo, those are indications that we are really closely monitoring to be able to potentially advance them into phase III. As we were just talking about, we are running a lot of these trials in other indications also to get an understanding of where we might be seeing some really robust efficacy, again, based on our communication with healthcare providers that are out there just trying to manage their patients and using this as a tool in their hands. I think we are going to need to see the data from that. But we do know that having even relatively small data sets in this population can be picked up and entered into guidelines. Yeah Just because there isn't an expectation oftentimes to have an approved phase III in the label study in order for access to be given, because you are talking about being able to prolong the time that a patient is on a life-saving medication. For us, it really is about this first step is just getting the information, not ruling out downstream. but it's not currently in the plans to be able to do that. Okay. That's helpful. Now, I want to make sure we touch on the other asset in your pipeline, ARQ-234. What led you to the CD200 receptor as a target? Yeah. If you look at the CD200 receptor pathway, I think the most convincing data early on and why people gravitated toward atopic dermatitis and asthma as well is through the GWAS data that really shows that there's an association genetically for this pathway with those kind of atopic indications. Then as you start to study where it is that the CD200 receptor is being expressed on immune cells, then it starts to click with why that GWAS data may be pointing you in that direction. That's what originally led people towards that. Then Lilly published an earlier phase study where they showed efficacy with some kind of prolonged pharmacodynamic effect, which was really interesting, and also fits with this mechanism, which is more like tuning the immune system and down-regulating overactive pathways as opposed to providing immune suppression, which then can have other adverse effects just from limiting portions of the immune system. We thought that those data really made sense with the pathway. Yeah. We're excited to be bringing this through as we announced recently that we're already into our multiple ascending dose- and excited to just keep moving the program forward. Okay. Maybe just remind us the timing around the phase I data and what you'd be looking for to justify a phase II in atopic derm. This study ends in a proof of concept trial after we move through our multiple ascending dose section. We are in atopic dermatitis patients right now. As we move to the higher single ascending dose Yeah all of our MAD cohorts are in atopic dermatitis patients, obviously the proof of concept will be as well. All of those will be generating data. We are not planning to disclose any of the data till the trial is completely closed. Okay. We have not set a date yet Yep for that. As we move further through, we intend to give updates on the progress through the trial, and then as we get closer to the end of the study, we will announce when we plan to have data. It's tough to call in the phase I because we don't know how many Sure cohorts we're going to have. Sure. Hopefully it takes us a long time Right because we get through every dose cohort with. Okay. That's helpful. Maybe you mentioned the Lilly program. I think that was a CD200 receptor 1 agonist, I guess. But I think the program was pulled from the pipeline. Any additional learnings from that one that are additional read-throughs? Yeah. It's the same pathway, but a different way of approaching the pathway. Yeah. So there it's a monoclonal antibody that was agonizing the receptor. What we have is a fusion protein with two ligands that have been modified to increase the affinity to the ligand or to the receptor. Yeah. So we feel like we have a better approach. The fact that we have potential for two binding sites within each molecule also I think may give us a mechanistic advantage, including the fact that we have an extended half-life. So obviously coming out of the phase I trial, we'll be able to opine on what exactly that half-life maps out to. But I think there are reasons for us to believe that we can show success in atopic dermatitis. Okay. Excellent. You touched on it at the top, Frank, but you recently achieved that positive cash flow in line with your guidance with I think about close to $240 million in cash. You've called business development kind of a nice to have rather than a must-have. How should we be thinking about business development as a lever you could pull? Yeah. I think that's a very accurate characterization. Look, I think that Patrick and his team and our tech ops team have demonstrated outstanding development capabilities, right? We have seven on-time FDA approvals in the last four years. We're coming up very quickly on our eighth. Yeah. I think it's a really impressive track record. I think our commercial organization now has also demonstrated an outstanding ability to commercialize these products. We have a bit of a gap in the mid stage in the pipeline. I would love to put another asset in there. But given all of the opportunities we have in front of us with ZORYVE and with 234- I don't have to do something, which I think is a good position for a management team. It's a good position for investors, right? Right. People do stupid things when their backs are against the wall, and we don't feel the need to have to do something, right? That gives us the discipline to really evaluate opportunities. As I mentioned on the quarterly call, we're seeing a lot of deal flow Yeah all the time. Most of them don't meet our criteria, and that's why we haven't done any deals of late. But we'll continue to look and see if there's something that we feel can meaningfully create shareholder value. Okay. Great. Maybe last one, just harping on that cash flow positivity. We get this question from time to time. Is the guidance for cash flow positivity every quarter on an annual basis at this point? Our intention is to maintain our spending so that it's cash flow positive every quarter. Could we trip one quarter? Possibly. I think that's a trend Yep that investors should expect in the absence of a significant business development transaction, right? Sure. That would obviously change the equation. Sure we have the resources for all of the commercial investments we talked about, for the new indications for ZORYVE, and for ARQ-234 advancement. Okay. Excellent. All right. With that, I'm just going to tick through the mini survey that I mentioned earlier that we're asking all of the Okay biotech management teams here. No pressure. The first is on China's rise in biotech. How are you thinking about competitive position here? Does Chinese biotech innovation influence R&D business development in your mind in any way? I think we certainly look at China as Yeah a source of innovation. You have to also monitor China as a competitive threat. I am the Vice Chairman of BIO, so I am up to my neck in Yeah the discussions. I think that the direction of travel is clear from Washington. There are going to be some policy changes. I do not know exactly what it is going to look like. I think we are all going to have to continue to be nimble as Washington changes the rules of the game. We also have to recognize that the Chinese are doing some very good science. Yeah. I think it is in the best interest of U.S. patients and U.S. shareholders to look at China for sources of innovation. Okay. And we touched on one area within your business that's leveraging AI, but how is Arcutis leveraging AI broadly? How are you thinking about a potential for AI to have a disruptive impact on the industry? One of my favorite aphorisms is when all you have is a hammer, everything looks like a nail. I think that AI is a very large hammer, Yeah people are spending a lot of money banging bolts and screws and everything else they can find with the AI hammer. We do leverage AI at the company. We haven't detailed our exact program, but we're very thoughtful about the use of AI, both when we use it and also protecting our data, and we only operate AI inside of a firewall. Right. We don't use any public, so we don't have any leakage. I think that ultimately AI is going to have a very disruptive effect on our industry. I think particularly at the early stages of discovery. Yeah. When you think about the impact of AlphaFold, the money we used to spend on x-ray Yeah crystallography, and you're going to do it in seconds for free. Right. That's amazing, right? Right. I think it could unlock the real potential of computational chemistry. The farther back you get in the pipeline, I think the more discrete the business cases become, but I think there are going to be opportunities throughout. But I think that early on is where it's going to be most disruptive, in my opinion. Okay, great. The last topic is regulatory. I guess, which area of regulatory is most impactful to the business? I think some of the topics we've heard are changes at FDA, MFN pricing, tariffs. Anything on the regulatory front that I think MFN is something that is going to change our entire industry and our business model. Yeah. Right? I don't anticipate that that issue is going to go away. Tariffs, who knows? It changes, I think, on a daily basis. The FDA is very important. I think that the announcements that we saw a couple of weeks ago Yep were very encouraging. I think both Karim and Mike Davis are both excellent choices for the director heads. It's nice to have stability and Right real professionals in there. We've been fortunate where I do not think we have been affected by some of the turmoil at the FDA. Yeah I know many of my colleagues have been. Sure. I think the direction, it seems to be going in the right direction of the FDA. Fingers crossed that things stabilize because it is critical for innovation in our industry. Okay, great. With that, we are just about out of time, so thank you again for being here today. Okay. Great seeing you. Thanks a lot. You as well.