Arcutis Biotherapeutics, Inc. 10-Q

Item 5. OTHER INFORMATION Trading Plans On October 12, 2023 , Howard G. Welgus , M.D., a member of our board of directors , terminated a Rule 10b5-1 trading plan , which plan was previously adopted on August 29, 2023 and intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The plan provided for the potential sale of up to 120,000 shares of Common Stock held by Mr. Welgus between December 1, 2023 and November 29, 2024. Prior to its termination, no shares were sold under the plan. Amendment to Loan Agreement On November 1, 2023, we entered into an amendment to the Loan Agreement. Pursuant to the amendment, the terms of the Loan Agreement were revised to, among others, (i) eliminate the undrawn tranche C term loan of up to $25.0 million, (ii) modify the financial covenant relating to minimum net product revenue and remove the market capitalization threshold, and (iii) include an additional minimum financing covenant. The amended Loan Agreement provides for term loans in aggregate principal amount of up to $200.0 million, which amounts were fully drawn as of September 30, 2023. Pursuant to the amendment, the modified financial covenant requires us to generate a minimum net product revenue equal to 75% of each month's projected net product revenue as set forth in our annual plan for the respective period, tested on a trailing 12 month basis for the month ending December 31, 2023 and then tested on a trailing six month basis, as of the end of each month, for the month ending January 31, 2024 and each month thereafter. Pursuant to the amendment, each annual plan shall be approved by our board of directors and SLR, in its capacity as collateral agent, in its reasonable discretion. Any failure by us to deliver such annual plan on or before December 15 of the prior year shall be an immediate event of default. In addition, we agreed to raise at least $31.0 million in net cash proceeds, during the period commencing on November 1, 2023 and ending on April 1, 2024, from (a) the sale or issuance of the our equity interests, (b) business development or collaboration agreements (including upfront, milestone, royalty and other payments), or (c) subordinated debt, in each case as permitted pursuant to the terms of the Loan Agreement. Any failure by us to raise such net cash proceeds during the specified period shall be an immediate event of default. This description of the amendment to the Loan Agreement does not purport to be complete, and is subject to and qualified in its entirety by reference to the full text of the amendment, which is attached as Exhibit 10.2 to this Quarterly Report on Form 10-Q and incorporated herein by reference. Employment Matters 47 Table of Contents On October 31, 2023, David W. Osborne, Ph.D., Senior Vice President and Chief Technical Officer, notified the Company of his intention to retire from the Company effective as of December 31, 2023. Dr. Osborne has served as an executive officer of the Company since April 2017 and is one of the Company’s co-founders. In connection with Dr. Osborne’s retirement, Bethany Dudek, Vice President, Quality, will succeed to Dr. Osborne’s responsibilities commencing in November 2023. Dr. Osborne has agreed to enter into a consulting agreement with the Company at a later date following this transition period. 48 Table of Contents ITEM 6. EXHIBITS Exhibit Number Description of Document Incorporated by Reference Form Date Number Filed/Furnished Herewith 3.1 Restated Certificate of Incorporation. 10-Q 5/12/20 3.1 3.2 Restated Bylaws. 10-Q 5/12/20 3.2 4.1 Form of Common Stock Certificate. S-1/A 1/21/20 4.1 4.2† Amended and Restated Investors’ Rights Agreement, dated October 8, 2019, by and among the Registrant and certain of its stockholders. S-1/A 1/21/20 4.2 10.1† L icensee Agreement, dated August 10, 2023, by and between the Registrant a nd Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd . X 10.2 First Amendment to Amended and Restated Loan and Security Agreement, dated November 1 , 2023 , by and among the Registrant, Arcutis Canada, Inc., SLR Investment Corp., and the lenders party thereto. X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 32.1* Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema Document. X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). X 49 Table of Contents ______________ † Registrant has omitted portions of the exhibit as permitted under Item 601(b)(10) of Regulation S-K, and/or certain of the exhibits and schedules to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. * The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Arcutis Biopharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing. 50 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized. ARCUTIS BIOTHERAPEUTICS, INC. Date: November 03, 2023 By: /s/ Todd Franklin Watanabe Todd Franklin Watanabe President, Chief Executive Officer and Director (Principal Executive Officer) Date: November 03, 2023 By: /s/ John W. Smither John W. Smither Chief Financial Officer (Principal Financial and Accounting Officer)