Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT), a late-stage biopharmaceutical company focused on developing and commercializing treatments for unmet needs in immune-mediated dermatological diseases and conditions, or immuno-dermatology, today reported financial results for the quarter ended March 31, 2020 and provided a business update.

“Despite the global challenges presented by COVID-19, Arcutis continued to make progress in executing upon our mission of addressing the gap we see in dermatology drug development by leveraging recent advances in inflammation and immunology,” said Frank Watanabe, Arcutis’ President and Chief Executive Officer. “Our priorities during these unprecedented times are first and foremost to safeguard the health and well-being of our trial participants, investigators, and employees; then to continue effective operations to support our clinical trial sites and to advance our pipeline of drug candidates; and to maintain the financial strength and stability afforded us by our recent successful initial public offering. Although some of our clinical sites have experienced disruptions as a result of COVID-19, at this time we do not expect delays to any of our previously disclosed clinical timelines, and we still expect to have six clinical data readouts over the next 18 months, including our pivotal Phase 3 clinical trials of topical roflumilast cream as a potential treatment for plaque psoriasis. We currently have four product candidates in development for seven indications, with an addressable U.S. market of over 20 million patients.”

Pipeline UpdateTopical roflumilast cream (ARQ-151) - a highly potent and selective phosphodiesterase type 4 (PDE4) inhibitor in a cream formulation, being developed as a potential treatment for plaque psoriasis, including intertriginous psoriasis, and atopic dermatitis.

  • Arcutis initiated two Phase 3 clinical trials (DERMIS-1 and -2) evaluating the compound in plaque psoriasis in January 2020, and anticipates announcing topline data in the first half of 2021. At the request of the U.S. Food and Drug Administration (FDA), in March the Company submitted a protocol amendment to include children ages 2 to 11 years old in these studies.
  • In February, the Company announced the enrollment of the first patient in a Phase 3 open label extension study (DERMIS-OLE) of the compound in plaque psoriasis.
  • On-going Phase 2 long-term safety study in plaque psoriasis has completed enrollment with topline data anticipated in the first half of 2021.
  • The Company expects to begin a Phase 2b study in atopic dermatitis in the second half of 2020 with topline data anticipated in the second half of 2021.

Topical roflumilast foam (ARQ-154) - a highly potent and selective phosphodiesterase type 4 (PDE4) inhibitor in a foam formulation, designed to overcome the challenges of delivering topical drugs in hair-bearing areas of the body, being developed as a potential treatment for seborrheic dermatitis and scalp psoriasis.

  • Arcutis initiated a Phase 2 proof-of-concept study in seborrheic dermatitis in December 2019 and anticipates announcing topline data in the second half of 2020.
  • The Company initiated a Phase 2b study in scalp psoriasis in January 2020 with topline data anticipated in the fourth quarter of 2020 or first quarter of 2021.

ARQ-252 - a potent and highly selective topical small molecule inhibitor of janus kinase type 1 (JAK1), being developed as a potential treatment for chronic hand eczema and other inflammatory dermatoses.

  • Arcutis began enrollment in the safety cohort of a Phase 1/2b study in chronic hand eczema in April. Enrollment in the efficacy cohort of the study is anticipated to begin in the second half of 2020, with topline data expected in the second half of 2021.
  • The Company anticipates initiating a Phase 2a study in vitiligo in the second half of 2020.

ARQ-255 - an alternative topical formulation of ARQ-252 designed to reach deeper into the skin in order to potentially treat alopecia areata.

  • Formulation and preclinical efforts are underway

Recent Corporate Highlights

  • In February, the Company closed on its Initial Public Offering, with net proceeds of approximately $167.2 million.
  • The Company appointed two experienced biopharmaceutical leaders to its Board of Directors:
    • Halley E. Gilbert, J.D., Director 
    • Joseph L. Turner, Director and Audit Committee Chair
  • Over the course of the first quarter, the Company announced that three senior executives had joined the Company:
    • Patricia Turney, Senior Vice President of Operations
    • Heather Rowe Armstrong, Vice President of Investor Relations and Corporate Communications.
    • Kimberly Lathroum, Vice President of Marketing

First Quarter 2020 Summary Financial ResultsCash, cash equivalents and marketable securities were $249.3 million as of March 31, 2020, compared to $101.3 million as of December 31, 2019.  Arcutis believes that its current cash, cash equivalents and marketable securities, will be sufficient to fund its operations through 2021.

Research and development (R&D) expenses for the quarter ended March 31, 2020 were $25.2 million compared to $6.2 million for the corresponding period in 2019.  The increase was primarily due to the initiation of multiple clinical trials during the last year.

General and administrative (G&A) expenses for the quarter ended March 31, 2020 were $3.5 million compared to $0.7 million for the corresponding period in 2019.  The increase was due to higher headcount and professional services costs.

Net loss was $28.0 million, or $1.15 per basic and diluted share, for the first quarter of 2020 compared to $6.7 million, or $4.08 per basic and diluted share, for the first quarter of 2019.

About Arcutis - Bioscience, applied to the skin.Arcutis is a late-stage biopharmaceutical company focused on developing and commercializing treatments for unmet needs in immune-mediated dermatological diseases and conditions, or immuno-dermatology. Arcutis exploits recent innovations in inflammation and immunology to develop potential best-in-class therapies against validated biological targets, leveraging our deep development, formulation and commercialization expertise to bring to market novel dermatology treatments, while maximizing our probability of technical success and financial resources.  Arcutis is currently developing three novel compounds, including topical roflumilast cream (ARQ-151), topical roflumilast foam (ARQ-154), and ARQ-252 for multiple indications, including psoriasis, atopic dermatitis, seborrheic dermatitis, and eczema. For more information, please visit www.arcutis.com or follow the Company on LinkedIn.

Forward Looking StatementsThis  press  release  contains  "forward-looking"  statements,  including,  among  others,  statements regarding the potential for its topical drugs in development to address large markets with significant unmet need; expectations with regard to the timing of data events anticipated during 2020/2021; and the company’s belief that its current cash, cash equivalents and marketable securities will  be  sufficient  to  fund  its  operations  through 2021. These  statements involve  substantial  known  and  unknown  risks,  uncertainties  and  other  factors  that  may  cause  our actual  results,  levels  of  activity,  performance  or achievements  to  be  materially  different  from  the information  expressed  or  implied  by  these  forward-looking  statements and  you  should  not  place undue reliance on our forward-looking statements. Risks and uncertainties that may cause our actual results to differ include risks inherent in the clinical development process and regulatory approval process,  the  timing  of  regulatory  filings,  and  our  ability  to  defend  our  intellectual  property.  For  a further description of the risks and uncertainties applicable to our business, see the "Risk Factors" section of our Form 10-Q to be filed with U.S. Securities and Exchange Commission (SEC) on May 12, 2020, as well as any subsequent filings with the SEC. We undertake no obligation to revise or update information herein to reflect events or circumstances in the future, even if new information becomes available.

Contact:Heather Rowe Armstrong Vice President, Investor Relations & Corporate Communicationsharmstrong@arcutis.com805-418-5006, Ext. 740                                                      

ARCUTIS BIOTHERAPEUTICS, INC.Condensed Balance Sheets(In thousands, except share and par value)

  March 31,   December 31,
  2020   2019
  (unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 190,893       $ 63,336    
Marketable securities 58,426       37,929    
Prepaid expenses and other current assets 4,559       5,209    
Total current assets 253,878       106,474    
Property, plant, and equipment, net 241       227    
Operating lease right-of-use asset 226       264    
Other assets 47       47    
Total assets $ 254,392       $ 107,012    
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)      
Current liabilities:      
Accounts payable $ 4,759       $ 1,405    
Accrued liabilities 7,281       3,654    
Operating lease liability 182       178    
Total current liabilities 12,222       5,237    
Operating lease liability, noncurrent 82       129    
Other long-term liabilities 206       184    
Total liabilities 12,510       5,550    
Convertible preferred stock, $0.0001 par value; no shares and 48,787,898 shares authorized at March 31, 2020 and December 31, 2019, respectively;  no shares and 24,385,388 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively       166,491    
Stockholders’ equity (deficit):      
Preferred stock, $0.0001 par value; 10,000,000 and no shares authorized at March 31, 2020 and December 31, 2019, respectively; no shares issued and outstanding at March 31, 2020 and December 31, 2019;          
Common stock, $0.0001 par value; 300,000,000 and 65,820,000 shares authorized at March 31, 2020 and December 31, 2019, respectively; 38,154,550 and 2,879,763 shares issued at March 31, 2020 and December 31, 2019, respectively; 37,471,997 and 2,120,853 shares outstanding at March 31, 2020 and December 31, 2019, respectively 3          
Additional paid-in capital 336,145       1,244    
Accumulated other comprehensive income (loss) 19       (1 )  
Accumulated deficit (94,285 )     (66,272 )  
Total stockholders’ equity (deficit) 241,882       (65,029 )  
Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $ 254,392       $ 107,012    
       

ARCUTIS BIOTHERAPEUTICS, INC. Condensed Statements of Operations and Comprehensive Loss (In thousands, except share and per share data)(unaudited)

  Three Months Ended March 31,
  2020   2019
Operating expenses:      
Research and development $ 25,182       $ 6,203    
General and administrative 3,469       749    
Total operating expenses 28,651       6,952    
Loss from operations (28,651 )     (6,952 )  
Other income, net 638       294    
Net loss $ (28,013 )     $ (6,658 )  
Per share information:      
Net loss per share, basic and diluted $ (1.15 )     $ (4.08 )  
Weighted-average shares used in computing net loss per share, basic and diluted 24,256,402       1,632,694    
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