Arcutis Biotherapeutics, Inc. 10-Q

Item 1A. RISK FACTORS For a discussion of our potential risks and uncertainties, see the information in Part I, "Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Other than the risk factors set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021. We have limited experience as a commercial company and the sales, marketing, and distribution of ZORYVE or any future approved products may be unsuccessful or less successful than anticipated. We recently received approval of our NDA of ZORYVE and we have initiated a commercial launch of ZORYVE in the United States. As a company, we have no prior experience commercializing a drug. The success of our commercialization efforts is difficult to predict and subject to the effective execution of our business plan, including, among others, the continued development of our internal sales, marketing, and distribution capabilities and our ability to navigate the significant expenses and risks involved with the development and management of such capabilities. For example, our commercial launch may not develop as planned or anticipated, which may require us to, among others, adjust or amend our business plan and incur significant expenses. Further, given our lack of experience commercializing products, we do not have a track record of successfully executing a commercial launch. If we are unsuccessful in accomplishing our objectives and executing on our business plan, or if our commercialization efforts do not develop as planned, we may not be able to successfully commercialize ZORYVE and any future approved products, we may require significant additional capital and financial resources, we may not become profitable, and we may not be able to compete against more established companies in our industry. As we have not yet commenced commercial sales of ZORYVE and we continue to develop a pipeline of drug products through clinical trials, our capital requirements are difficult to predict and may change. We may need additional financing in the future and may be unable to obtain additional financing on terms favorable to us or at all. We expect to expend substantial resources for the foreseeable future in connection with our commercialization efforts, the development of our current product candidates, the maintenance and expansion of our business operations and capabilities and the development or acquisition of additional product candidates. These expenditures will include costs associated with marketing and selling any products approved for sale, including ZORYVE, conducting non-clinical studies and clinical trials, obtaining regulatory approvals, and securing manufacturing and supply of product candidates. Our operating expenses and capital requirements are difficult to predict and are affected by, and are subject to assumptions regarding, among others, the success of our commercialization efforts involving ZORYVE, market acceptance of ZORYVE, competing products, our ability to successfully execute on our business plan, and our internal projections and estimates of costs and execution timing. Our plans and capital requirements may change as a result of many factors, including factors currently unknown to us. If our capital resources are insufficient to satisfy our requirements, we may need to fund our operations through the sale of our equity securities, accessing or incurring additional debt, entering into licensing or collaboration agreements with partners, grants, or other sources of financing. Such financing may result in dilution to stockholders, imposition of burdensome debt covenants and repayment obligations, or other restrictions that may affect our business. There can be no assurance that sufficient funds will be available to us at all or on attractive terms when needed from these sources. If we are unable to obtain additional funding from these or other sources when needed, it may be necessary to significantly reduce our current rate of spending through, among other things, reductions in staff and delaying, scaling back, or stopping certain research and development programs. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. 40 Table of Contents Issuer Purchases of Equity Securities None. Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. MINE SAFETY DISCLOSURES Not applicable.