Arcutis Biotherapeutics, Inc. 10-Q

Item 1. Financial Statements ARCUTIS BIOTHERAPEUTICS, INC. Condensed Consolidated Balance Sheets (In thousands, except share and par value) March 31, December 31, 2025 2024 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 53,104 $ 71,335 Restricted cash 617 617 Marketable securities 144,984 156,620 Trade receivables, net 85,415 73,066 Inventories 16,614 14,526 Prepaid expenses and other current assets 22,937 19,656 Total current assets 323,671 335,820 Property, plant, and equipment, net 1,496 1,041 Intangible assets, net 16,500 9,479 Operating lease right-of-use asset 1,842 1,953 Other assets 596 596 Total assets $ 344,105 $ 348,889 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 24,529 $ 14,220 Accrued liabilities 65,758 65,973 Operating lease liability 842 820 Total current liabilities 91,129 81,013 Operating lease liability, noncurrent 2,340 2,562 Long-term debt, net 107,618 107,203 Other long-term liabilities 360 570 Total liabilities 201,447 191,348 Commitments and contingencies Stockholders’ equity: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized at March 31, 2025 and December 31, 2024; no shares issued and outstanding at March 31, 2025 and December 31, 2024 — — Common stock, $ 0.0001 par value; 300,000,000 shares authorized at March 31, 2025 and December 31, 2024; 119,137,785 and 117,848,033 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively 12 12 Additional paid-in capital 1,289,789 1,279,479 Accumulated other comprehensive loss ( 140 ) ( 7 ) Accumulated deficit ( 1,147,003 ) ( 1,121,943 ) Total stockholders’ equity 142,658 157,541 Total liabilities and stockholders’ equity $ 344,105 $ 348,889 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) (unaudited) Three Months Ended March 31, 2025 2024 Revenues: Product revenue, net $ 63,846 $ 21,569 Other revenue 2,000 28,000 Total revenues 65,846 49,569 Operating expenses: Cost of sales 8,830 3,256 Research and development 17,543 23,141 Selling, general, and administrative 64,002 54,794 Total operating expenses 90,375 81,191 Loss from operations ( 24,529 ) ( 31,622 ) Other income (expense): Other income, net 2,730 4,044 Interest expense ( 2,982 ) ( 7,480 ) Loss before income taxes ( 24,781 ) ( 35,058 ) Provision for income taxes 279 324 Net loss $ ( 25,060 ) $ ( 35,382 ) Other comprehensive income (loss): Unrealized loss on marketable securities ( 137 ) ( 116 ) Foreign currency translation adjustment 4 ( 21 ) Total other comprehensive loss ( 133 ) ( 137 ) Comprehensive loss $ ( 25,193 ) $ ( 35,519 ) Per share information: Net loss per share, basic and diluted $ ( 0.20 ) $ ( 0.32 ) Weighted-average shares used in computing net loss per share, basic and diluted 126,036,862 111,048,525 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Condensed Consolidated Statements of Changes in Stockholders’ Equity (In thousands, except share data) (unaudited) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance—December 31, 2024 117,848,033 $ 12 $ 1,279,479 $ ( 7 ) $ ( 1,121,943 ) $ 157,541 Issuance of common stock upon the exercise of stock options 109,996 — 395 — — 395 Issuance of common stock upon the vesting of restricted stock units 1,179,756 — — — — — Stock-based compensation expense — — 9,915 — — 9,915 Unrealized loss on marketable securities — — — ( 137 ) — ( 137 ) Foreign currency translation adjustment — — — 4 — 4 Net loss — — — — ( 25,060 ) ( 25,060 ) Balance—March 31, 2025 119,137,785 $ 12 $ 1,289,789 $ ( 140 ) $ ( 1,147,003 ) $ 142,658 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance—December 31, 2023 96,787,349 $ 9 $ 1,070,558 $ 4 $ ( 981,904 ) $ 88,667 Issuance of shares of common stock net of discount and issuance costs of $ 10,820 18,157,895 3 161,679 — — 161,682 Issuance of common stock upon the exercise of stock options 21,863 — 82 — — 82 Issuance of common stock upon the vesting of restricted stock units 538,330 — — — — — Stock-based compensation expense — — 10,030 — — 10,030 Unrealized loss on marketable securities — — — ( 116 ) — ( 116 ) Foreign currency translation adjustment — — — ( 21 ) — ( 21 ) Net loss — — — — ( 35,382 ) ( 35,382 ) Balance—March 31, 2024 115,505,437 $ 12 $ 1,242,349 $ ( 133 ) $ ( 1,017,286 ) $ 224,942 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (unaudited) Three Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 25,060 ) $ ( 35,382 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 153 170 Non-cash lease expense 111 97 Amortization of intangible assets 2,979 188 Net accretion on marketable securities ( 859 ) ( 1,725 ) Non-cash interest expense 415 1,004 Stock-based compensation expense 9,778 10,030 Changes in fair value of embedded derivative instrument ( 210 ) ( 543 ) Changes in operating assets and liabilities: Accounts receivable, net ( 12,349 ) ( 11,347 ) Inventories ( 1,951 ) ( 113 ) Prepaid expenses and other current assets ( 3,282 ) 5,538 Accounts payable 309 992 Accrued liabilities ( 214 ) ( 332 ) Operating lease liabilities ( 200 ) ( 180 ) Net cash used in operating activities ( 30,380 ) ( 31,603 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of marketable securities ( 56,110 ) ( 105,952 ) Proceeds from maturities of marketable securities 68,468 77,255 Purchases of property and equipment ( 608 ) — Net cash provided by (used in) investing activities 11,750 ( 28,697 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock upon exercise of stock options 395 82 Proceeds from issuance of common stock, net of issuance costs — 161,682 Net cash provided by financing activities 395 161,764 Effect of exchange rate changes on cash 4 ( 73 ) Net (decrease) increase in cash, cash equivalents, and restricted cash ( 18,231 ) 101,391 Cash, cash equivalents, and restricted cash at beginning of period 71,952 89,323 Cash, cash equivalents, and restricted cash at end of period $ 53,721 $ 190,714 SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION: Milestone for intangible asset not yet paid in cash $ 10,000 $ — SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest expense paid in cash $ 2,568 $ 6,512 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 1. Organization and Description of Business Arcutis Biotherapeutics, Inc., or the Company, is a commercial-stage biopharmaceutical company focused on developing and commercializing treatments for dermatological diseases with high unmet medical needs. The Company’s strategy is to focus on validated biological targets and to use its drug development platform and deep dermatology expertise to develop differentiated products that have the potential to address the major shortcomings of existing therapies in its targeted indications. The Company received U.S. Food and Drug Administration (FDA) approval of its first product, ZORYVE ® (roflumilast) cream 0.3% (ZORYVE cream 0.3%), on July 29, 2022, for the treatment of plaque psoriasis, including intertriginous psoriasis, in individuals 12 years of age and older (subsequently approved down to 6 years old), and began U.S. commercialization in August 2022. The Company also received Health Canada approval of ZORYVE cream in plaque psoriasis on April 28, 2023 and began Canadian commercialization in June 2023. The Company received FDA approval of ZORYVE ® (roflumilast) topical foam 0.3% (ZORYVE foam), on December 15, 2023, for the treatment of seborrheic dermatitis in individuals 9 years of age and older, and began U.S. commercialization in late January 2024. The Company received FDA approval of ZORYVE ® (roflumilast) cream 0.15%, (ZORYVE cream 0.15%) on July 9, 2024, for the treatment of mild to moderate atopic dermatitis in adult and pediatric patients 6 years of age and older, and began U.S. commercialization in late July 2024. The Company received Health Canada approval of ZORYVE foam for seborrheic dermatitis in October 2024 and ZORYVE cream 0.15% for atopic dermatitis in March 2025. Initial Public Offering and Follow-On Financings On February 4, 2020, the Company closed an initial public offering (IPO) issuing and selling shares of common stock receiving aggregate net proceeds of approximately $ 167.2 million. The Company completed subsequent public sales of its common stock in October 2020, February 2021, and August 2022, receiving aggregate net proceeds of $ 93.4 million, $ 207.5 million, and $ 161.6 million, respectively. In addition to the sale of common stock, the offering completed in October 2023 consisted of prefunded warrants to purchase 7,500,000 shares of the Company's common stock at $ 2.4999 per underlying share of common stock. The exercise price of the warrants is $ 0.0001 per underlying share of common stock. The prefunded warrants are exercisable at any time on or after their original issuance, and were not exercised as of March 31, 2025. On February 28, 2024, the Company completed an offering relating to the sale of 15,789,474 shares of the Company's common stock at $ 9.50 per share. The Company also granted the underwriters an option to purchase up to an additional 2,368,421 shares at $ 9.50 per share, which the underwriters exercised in full on February 29, 2024. The aggregate net proceeds to the Company was $ 161.7 million after deducting underwriting discounts, commissions, and estimated offering expenses payable by the Company. At-the-Market (ATM) Offerings On May 6, 2021, the Company entered into a sales agreement (Sales Agreement) with Cowen and Company, LLC (Cowen), under which the Company may from time to time issue and sell shares of its common stock through ATM offerings for an aggregate offering price of up to $ 100.0 million. Cowen will act as the Company's sales agent for the ATM program and is entitled to compensation for its services equal to 3 % of the gross proceeds of any shares of common stock sold under the Sales Agreement. In March 2022, the Company sold 882,353 shares under the ATM for $ 17.00 per share and received $ 14.5 million in net proceeds. In December 2023, the Company sold 1,250,000 shares under the ATM for $ 2.60 per share and received $ 3.1 million in net proceeds. In January 2024, the Company amended and restated its Sales Agreement with Cowen to reset the ATM program and provide for the offer and sale of shares of common stock having an aggregate gross offering price of up to $ 100.0 million. All other terms of the amended and restated Sales Agreement are substantially the same as the original Sales Agreement. The Company has not yet issued or sold any common stock under the amended and restated Sales Agreement. 5 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Liquidity The Company has incurred significant losses and negative cash flows from operations since its inception and had an accumulated deficit of $ 1,147.0 million and $ 1,121.9 million as of March 31, 2025 and December 31, 2024, respectively. Management expects to continue to incur operating losses. The Company had cash, cash equivalents, restricted cash, and marketable securities of $ 198.7 million and $ 228.6 million as of March 31, 2025 and December 31, 2024, respectively. The Company has $ 100.0 million outstanding under the Loan Agreement as of March 31, 2025. See Note 7. The Company believes that its existing capital resources will be sufficient to meet the projected operating requirements for at least 12 months from the date of issuance of its financial statements. If the Company's available cash, cash equivalents and marketable securities and anticipated future cash flows from operations are insufficient to satisfy its liquidity requirements, the Company may need to raise additional capital to fund its operations. No assurance can be given as to whether additional needed financing will be available on terms acceptable to the Company or at all. If sufficient funds on acceptable terms are not available when needed, the Company may be required to curtail certain planned activities. Failure to manage discretionary spending or raise additional funds, as needed, may adversely impact the Company’s ability to achieve its intended business objectives and have an adverse effect on its results of operations and future prospects. 2. Summary of Significant Accounting Policies Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The condensed consolidated financial statements include the Company's wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to revenue recognition, accruals for research and development activities, stock-based compensation expense, and income taxes. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates. Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated balance sheets as of March 31, 2025, the interim condensed consolidated statements of operations and comprehensive loss, and the condensed consolidated changes in convertible preferred stock and stockholders’ equity and cash flows for the three months ended March 31, 2025 and 2024 are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s audited annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three month periods are also unaudited. The condensed consolidated results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other future annual or interim period. The condensed consolidated balance sheets as of December 31, 2024 included herein was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024. Significant Accounting Policies 6 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) There have been no significant changes to the accounting policies during the three months ended March 31, 2025, as compared to the significant accounting policies described in Note 2 of the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024. Restricted Cash As of March 31, 2025 and December 31, 2024, the Company held $ 0.6 million of restricted cash as collateral for a letter of credit related to the Company's amended office space lease. Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company is exposed to credit risk in the event of a default by either the financial institutions holding its cash or by its customers owing trade receivables to the extent recorded on the condensed consolidated balance sheets. To manage accounts receivable credit risk, the Company continuously evaluates the creditworthiness of its customers and the need for an allowance for potential credit losses. Fair Value Measurement The Company’s financial instruments, in addition to those presented in Note 4, include cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt. The carrying amount of cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short maturities. As the long-term debt is subject to variable interest rates that are based on market rates which regularly reset, the Company believes that the carrying value of the long-term debt approximates its fair value. Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The Company is currently evaluating the impact of adopting ASU 2023-09. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. 7 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 3. Revenues Revenues are recognized under guidance within ASC 606, Revenue from Contracts with Customers . The following table presents the Company's disaggregated revenue for the periods presented (in thousands): Three Months Ended March 31, 2025 2024 ZORYVE cream 0.3% $ 23,387 $ 15,026 ZORYVE foam 30,240 6,543 ZORYVE cream 0.15% 10,219 — Total product revenue, net 63,846 21,569 Other revenue 2,000 28,000 Total revenues $ 65,846 $ 49,569 Other revenue relates primarily to the Sato and Huadong licensing agreements. See Note 6. 4. Fair Value Measurements The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): March 31, 2025 Level 1 Level 2 Level 3 Total Assets: Money market funds (1) $ 53,104 $ — $ — $ 53,104 Certificates of deposit — 5,084 — 5,084 Corporate debt securities — 62,216 — 62,216 U.S. Treasury and agency securities 77,684 — — 77,684 Total assets $ 130,788 $ 67,300 $ — $ 198,088 ______________ (1) This balance includes cash requirements settled on a nightly basis. December 31, 2024 Level 1 Level 2 Level 3 Total Assets: Money market funds (1) $ 71,335 $ — $ — $ 71,335 Certificates of deposit — 5,042 — 5,042 Corporate debt securities — 83,955 — 83,955 U.S. Treasury securities 67,623 — — 67,623 Total assets $ 138,958 $ 88,997 $ — $ 227,955 ______________ (1) This balance includes cash requirements settled on a nightly basis. Money market funds and U.S. Treasury and agency securities are valued based on quoted market prices in active markets, with no valuation adjustment. Commercial paper, certificates of deposit, and corporate debt securities are valued taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs. 8 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) The following table summarizes the estimated value of the Company’s cash, cash equivalents and marketable securities, and the gross unrealized holding gains and losses (in thousands): March 31, 2025 Amortized cost Unrealized gains Unrealized losses Estimated fair value Cash and cash equivalents: Money market funds (1) $ 53,104 $ — $ — $ 53,104 Total cash and cash equivalents $ 53,104 $ — $ — $ 53,104 Marketable securities: Certificates of deposit $ 5,084 $ — $ — $ 5,084 Corporate debt securities 62,161 59 ( 4 ) 62,216 U.S. Treasury and agency securities 77,557 128 ( 1 ) 77,684 Total marketable securities $ 144,802 $ 187 $ ( 5 ) $ 144,984 ______________ (1) This balance includes cash requirements settled on a nightly basis. December 31, 2024 Amortized cost Unrealized gains Unrealized losses Estimated fair value Cash and cash equivalents: Money market funds (1) $ 71,335 $ — $ — $ 71,335 Total cash and cash equivalents $ 71,335 $ — $ — $ 71,335 Marketable securities: Certificates of deposit $ 5,042 $ — $ — $ 5,042 Corporate debt securities 83,855 100 — 83,955 U.S. Treasury securities 67,404 219 — 67,623 Total marketable securities $ 156,301 $ 319 $ — $ 156,620 ______________ (1) This balance includes cash requirements settled on a nightly basis. As of March 31, 2025 and December 31, 2024, all securities have a maturity of 18 months or less and there were no individual securities that were in a significant unrealized loss position. The Company generally holds its marketable securities until maturity and does not intend to sell, and is not required to sell, the investments that are in an unrealized loss position before the recovery of their amortized cost basis. The following table summarizes the change in the fair value of the embedded derivative instrument for the three months ended March 31, 2025 and 2024 (in thousands). March 31, 2025 2024 Beginning balance $ 570 $ 849 Gain from changes in fair value ( 210 ) ( 543 ) Ending balance $ 360 $ 306 The fair value of the Company’s embedded derivative instrument is based on significant inputs not observed in the market, and thus represents a Level 3 measurement. Refer to Note 7 for further discussion on the embedded derivative instrument. 9 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 5. Balance Sheet Components Inventories The components of inventory are summarized as follows (in thousands): March 31, 2025 December 31, 2024 Raw materials $ 7,559 $ 4,300 Work in progress 783 584 Finished goods 8,272 9,642 Total inventories $ 16,614 $ 14,526 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): March 31, 2025 December 31, 2024 Prepaid co-pay assistance program and rebates $ 6,924 $ 7,369 Prepaid clinical trial costs 3,382 3,244 Prepaid insurance 1,401 844 Other prepaid expenses and current assets 11,230 8,199 Total prepaid expenses and other current assets $ 22,937 $ 19,656 Accrued Liabilities Accrued liabilities consist of the following (in thousands): March 31, 2025 December 31, 2024 Accrued sales deductions $ 47,008 $ 38,430 Accrued compensation 9,160 20,747 Clinical trial accruals 25 — Accrued expenses and other current liabilities 9,565 6,796 Total accrued liabilities $ 65,758 $ 65,973 6. License Agreements & Acquisition Sato License Agreement On February 27, 2024, the Company entered into a License Agreement with Sato Pharmaceutical Co., Ltd. (Sato). Pursuant to the terms of the License Agreement, the Company grants to Sato an exclusive, sublicensable (under certain circumstances) license under certain patent rights and know-how controlled by the Company for Sato to develop, conduct medical affairs activities for, manufacture, commercialize, and otherwise exploit roflumilast formulations (the Licensed Products) for all therapeutic uses for certain dermatological indications in humans (the Field) in Japan (the Territory). The License Agreement sets forth each party’s respective obligations with respect to the development, medical affairs activities, manufacture and supply, and commercialization of the Licensed Products. Pursuant to the terms of the License Agreement, Sato will, at its expense, develop, obtain regulatory approval for, commercialize, and conduct medical affairs activities related to the Licensed Products in the Field in Japan, subject to certain of the Company’s approval and oversight rights. Pursuant to the terms of the License Agreement, the Company received an upfront payment of $ 25.0 million and will potentially receive additional payments (i) up to an aggregate amount of $ 10.0 million upon the achievement of certain regulatory milestones and (ii) up to an aggregate amount of $ 30.0 million upon the achievement of certain sales milestones. In addition, on a Licensed Product-by-Licensed Product basis, commencing from the first commercial sale of such Licensed Product in Japan until the latest of (i) the expiration of 10 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) the last valid claim in the intellectual property rights licensed by the Company to Sato under the License Agreement covering such Licensed Product in Japan, (ii) the expiration of regulatory exclusivity for such Licensed Product in Japan, or (iii) ten years after the first commercial sale of such Licensed Product in Japan, the Company will receive low double-digit to mid-teen double-digit percentage royalties on Sato’s, its affiliates’ and sublicensees’ total annual net sales of all Licensed Products, subject to certain royalty reductions. The term of the License Agreement continues until, on a Licensed Product-by-Licensed Product basis, the expiration of the Royalty Term. The License Agreement may be terminated by either party in its entirety if the other party commits a material breach, subject to a cure period, or if the other party becomes insolvent. Sato may terminate the License Agreement at-will in its entirety upon 90 days’ written notice. Unless unenforceable under applicable law, the Company may terminate the License Agreement in its entirety if Sato, its affiliate or sublicensee contests or assists a third party in contesting the scope, validity or enforceability of any patent or patent application licensed by the Company to Sato. The Company may also terminate the License Agreement if Sato or any director, officers, employee, agent, affiliate, sublicensee, or subcontractor is charged by a governmental authority for a violation of any anti-corruption, anti-money laundering, sanctions or export or import control laws or regulations, or, subject to the terms of the License Agreement, if Sato, its affiliates and sublicensees do not conduct any material development or commercialization activities of a Licensed Product in Japan for a certain period of time. No milestones were achieved for the three months ended March 31, 2025. Other revenue under the Sato agreement was $ 25.0 million for the three months ended March 31, 2024. Huadong License and Collaboration Agreement In August 2023, the Company entered into a license and collaboration agreement with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd (Huadong), a wholly owned subsidiary of Huadong Medicine Co., Ltd. Pursuant to the terms of the agreement, the Company granted to Huadong an exclusive, sublicensable (under certain circumstances) license under certain patent rights and know-how controlled by the Company for Huadong to develop, conduct medical affairs activities for, manufacture, commercialize, and otherwise exploit both cream and foam topical roflumilast for all therapeutic uses for certain dermatological indications (Huadong Licensed Products) in Greater China (mainland China, Hong Kong, Macau, and Taiwan) and Southeast Asia (Indonesia, Singapore, The Philippines, Thailand, Myanmar, Brunei, Cambodia, Laos, Malaysia, and Vietnam) (Huadong Territories). Huadong will, at its expense, develop, obtain regulatory approval for, commercialize, and conduct medical affairs activities for the Huadong Licensed Products, subject to certain of the Company’s approval and oversight rights. The Company will retain exclusive rights for the development, manufacture and commercialization of topical roflumilast outside the Huadong Territories. As consideration for the rights granted under the Huadong Agreement, Huadong paid the Company a non-refundable upfront fee pursuant to the terms of the agreement, upon closing in September 2023. The Company received a net payment of $ 27.0 million, which consisted of a $ 30.0 million upfront payment less the applicable tax withholding obligation in China of $ 3.0 million. In addition, the Company received a net payment of $ 2.7 million in March 2024, which consisted of $ 3.0 million related to the achievement of a development and regulatory milestone less the applicable tax withholding of $ 0.3 million. The Company received a net payment of $ 1.8 million in each of December 2024 and March 2025, which consisted of $ 2.0 million related to the achievement of development and regulatory milestones less the applicable tax withholding of $ 0.2 million. The Company may also potentially receive additional payments: (i) up to an aggregate amount of $ 17.0 million upon the achievement of certain development and regulatory milestones, (ii) up to an aggregate amount of $ 40.3 million upon the achievement of certain sales milestones, and (iii) low double-digit to high-teen double-digit tiered percentage royalties on net sales of the Huadong Licensed Products. The term of the Huadong Agreement continues on a Licensed Product-by-Licensed Product and country or region-by-country or region basis, until the expiration of the Royalty Term, which is: (i) the date of expiration of the last valid patent claim related to the Huadong Licensed Products, (ii) ten years after the first commercial sale of a the Huadong Licensed Product and (iii) the expiration of any regulatory exclusivity as to a Huadong Licensed Product. The License Agreement may be terminated by both parties under certain circumstances. For the three months ended March 31, 2025, the Company recognized $ 2.0 million of Other revenue and $ 0.2 million of income tax expense related to the achievement of a development and regulatory milestone. For the 11 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) three months ended March 31, 2024, the Company recognized $ 3.0 million of Other revenue and $ 0.3 million of income tax expense related to the achievement of a development and regulatory milestone. AstraZeneca License Agreement In July 2018, the Company entered into an exclusive license agreement, or the AstraZeneca License Agreement, with AstraZeneca AB (AstraZeneca), granting the Company a worldwide exclusive license, with the right to sublicense through multiple tiers, under certain AstraZeneca-controlled patent rights, know-how and regulatory documentation, to research, develop, manufacture, commercialize and otherwise exploit products containing roflumilast in topical forms, as well as delivery systems sold with or for the administration of roflumilast, or collectively, the AZ-Licensed Products, for all diagnostic, prophylactic and therapeutic uses for human dermatological indications, or the Dermatology Field. Under this agreement, the Company has sole responsibility for development, regulatory, and commercialization activities for the AZ-Licensed Products in the Dermatology Field, at its expense, and it shall use commercially reasonable efforts to develop, obtain and maintain regulatory approvals for, and commercialize the AZ-Licensed Products in the Dermatology Field in each of the United States, Italy, Spain, Germany, the United Kingdom, France, China, and Japan. The Company paid AstraZeneca an upfront non-refundable cash payment of $ 1.0 million and issued 484,388 shares of Series B convertible preferred stock, valued at $ 3.0 million on the date of the AstraZeneca License Agreement, which were both recorded in research and development expense. The Company subsequently paid AstraZeneca the first milestone cash payment of $ 2.0 million upon the completion of a Phase 2b study of ZORYVE cream in plaque psoriasis in August 2019 for the achievement of positive Phase 2 data for an AZ-Licensed Product, which was recorded in research and development expense. In the third quarter of 2022, the Company paid $ 7.5 million to AstraZeneca as a result of the approval of ZORYVE cream 0.3%, which was recorded as an intangible asset. In the second half of 2024, the Company paid $ 5.0 million to AstraZeneca upon achievement of $ 100.0 million in worldwide net sales, which was recorded as a cumulative catch-up adjustment to the carrying value of the intangible asset. In the first quarter of 2025, $ 10.0 million became payable to AstraZeneca upon achievement of $ 250.0 million in worldwide net sales and was recorded as a cumulative catch-up adjustment to the carrying value of the intangible asset. The Company is amortizing the intangible asset to cost of sales over its useful life of 10 years from the date of first commercial sale as this is the minimum amount of time that the related License Agreement will be in effect. Amortization expense was $ 3.0 million and $ 0.2 million for the three months ended March 31, 2025 and 2024, respectively. The Company has agreed to make additional cash payments to AstraZeneca of up to an aggregate of $ 5.0 million upon the achievement of specified regulatory approval milestones with respect to the AZ-Licensed Products. With respect to any AZ-Licensed Products the Company commercializes under the AstraZeneca License Agreement, it will pay AstraZeneca a low to high single-digit percentage royalty rate on the Company’s, its affiliates’ and its sublicensees’ net sales of such AZ-Licensed Products, subject to specified reductions, until, as determined on an AZ-Licensed Product-by-AZ-Licensed Product and country-by-country basis, the later of the date of the expiration of the last-to-expire AstraZeneca-licensed patent right containing a valid claim in such country and ten years from the first commercial sale of such AZ-Licensed Product in such country. As a result of the commercialization of ZORYVE cream in August 2022, the Company began accruing royalties payable to AstraZeneca, which are recorded in cost of sales and accrued liabilities. Royalty expense during the three months ended March 31, 2025 was $ 1.9 million. Royalty expense during the three months ended March 31, 2024 was not material. 12 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 7. Long-term debt On December 22, 2021, the Company entered into a loan and security agreement (the Prior Loan Agreement) with SLR Investment Corp. (SLR) and the lenders party thereto. The Prior Loan Agreement was amended and restated on January 10, 2023 (the AR Loan Agreement) to include Arcutis Canada, Inc. as a borrower and party. On November 1, 2023, the Company entered into an amendment to the AR Loan Agreement to, among others, (i) modify the financial covenant relating to minimum net product revenue, and (ii) include an additional minimum financing covenant. On August 9, 2024, the Company entered into a second amendment to the AR Loan Agreement (the AR Loan Agreement, as amended by the first and second amendments, the Loan Agreement), which it determined to be a modification, to, among others, (i) permit, during the period commencing on October 7, 2024 and ending on December 15, 2024, an optional partial prepayment of term loans outstanding, subject to a 1.0 % prepayment penalty (the 2024 Partial Prepayment), (ii) add the tranche C-1 and tranche C-2 term loans, and (iii) facilitate certain other changes, including with respect to the applicable interest rate and maturity date in the event of a 2024 Partial Prepayment. As security for the obligations under the Loan Agreement, the Company granted SLR, for the benefit of the lenders, a continuing security interest in substantially all of the Company's assets, including its intellectual property, subject to certain exceptions. The term loan facility is comprised of (i) a tranche A term loan of $ 75.0 million, (ii) a tranche B-1 term loan of $ 50.0 million, (iii) a tranche B-2 term loan of up to $ 75.0 million, (iv) a tranche C-1 term loan of up to $ 50.0 million, and (v) a tranche C-2 term loan of up to $ 50.0 million (collectively, the Term Loans). The tranche A term loan was funded on December 22, 2021. With the approval of ZORYVE cream 0.3% on July 29, 2022, the tranche B term loans were funded on August 2, 2022. As of March 31, 2025 and December 31, 2024 , the aggregate principal amount outstanding under the Loan Agreement was $ 100.0 million. On October 8, 2024, the Company made a 2024 Partial Prepayment of $ 100.0 million, which reduced the aggregate principal amount outstanding under the Loan Agreement to $ 100.0 million. In connection with the 2024 Partial Prepayment, the Company is obligated to pay a prepayment penalty of $ 1.0 million by June 30, 2026 and a final fee of $ 6.95 million, representing the final fee applicable to the amount of the 2024 Partial Prepayment, on January 1, 2027. As a result of such 2024 Partial Prepayment, subject to the Company generating a minimum net product revenue for the trailing six ( 6 ) month period ending as of the month prior to the borrowing date equal to 80 % of the Company’s projected net product revenue as set forth in its annual plan for the respective period, the Company will be able to draw down the tranche C-1 and tranche C-2 term loans. The tranche C-1 term loan availability will expire on March 31, 2026 and the tranche C-2 term loan availability will expire on June 30, 2026. In addition, as a result of the 2024 Partial Prepayment, (i) the maturity date of the Loan Agreement is August 1, 2029, (ii) the applicable per annum interest rate is equal to 5.95 % plus the greater of (a) 2.50 % per annum and (b) the one-month Secured Overnight Financing Rate (SOFR), (iii) the Company is no longer subject to certain cost and purchase price restrictions regarding acquisitions, and (iv) the Company may prepay principal amounts outstanding under the Term Loans in minimum increments of $ 25.0 million, subject to a prepayment premium of (a) 3.0 % for any prepayment made prior to the first anniversary of the second amendment, (b) 2.0 % for any prepayment made prior after the first anniversary of the second amendment and prior to the second anniversary of the second amendment, or (c) 1.0 % for any prepayment made prior after the second anniversary of the second amendment and prior to the maturity date. Principal amounts outstanding under the Term Loans will accrue interest at a floating rate equal to the applicable rate in effect from time to time, as determined by SLR on the third business day prior to the funding date of the applicable Term Loan and on the first business day of the month prior to each payment date of each Term Loan. Prior to the 2024 Partial Prepayment, the applicable rate was a per annum interest rate equal to 7.45 % plus the greater of (a) 0.10 % and (b) the one-month SOFR. As a result of such 2024 Partial Prepayment, the applicable interest rate will be a per annum interest rate equal to 5.95 % plus the greater of (a) 2.50 % and (b) the one-month SOFR. On March 31, 2025, the rate was 10.27 %. The benchmark SOFR is subject to change in the event of certain events with respect to the benchmark rate. Interest payments are payable monthly following the funding of any Term Loan. 13 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) If the Term Loans are accelerated due to, among others, the occurrence of a bankruptcy or insolvency event, the Company is required to make mandatory prepayments of (i) all principal amounts outstanding under the Term Loans, plus accrued and unpaid interest thereon through the prepayment date, (ii) any fees applicable by reason of such prepayment, (iii) the prepayment premiums set forth in the paragraph above, plus (iv) all other obligations that are due and payable, including expenses and interest at the Default Rate (as defined below) with respect to any past due amounts. The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, requirements as to financial reporting and insurance and restrictions on the Company’s ability to dispose of its business or property, to change its line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on its property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock or to redeem capital stock. The Company also agreed to a financial covenant whereby the Company must generate a minimum net product revenue equal to 75 % of its projected net product revenue as set forth in the Company's annual plan for the respective period, tested on a trailing six-month basis, as of the end of each month. Each annual plan shall be approved by the Company’s board of directors and SLR, in its capacity as collateral agent, in its reasonable discretion. Any failure by the Company to deliver such annual plan on or before December 15 of the prior year shall be an immediate event of default. The Company was in compliance with all covenants under the Loan Agreement as of March 31, 2025. In addition, the Loan Agreement contains customary events of default that entitle the lenders to cause any indebtedness under the Loan Agreement to become immediately due and payable, and to exercise remedies against the Company and the collateral securing the Term Loans. Under the Loan Agreement, an event of default will occur if, among other things, the Company fails to make payments under the Loan Agreement, the Company breaches any of the covenants under the Loan Agreement, subject to specified cure periods with respect to certain breaches, the lenders determine that a material adverse change has occurred, or the Company or the Company's assets become subject to certain legal proceedings, such as bankruptcy proceedings. Upon the occurrence and for the duration of an event of default, an additional default interest rate, or the Default Rate, equal to 4.0 % per annum will apply to all obligations owed under the Loan Agreement. The prepayment upon default and other potential additional interest provisions under the Loan Agreement were determined to be a compound embedded derivative instrument to be bifurcated from the loan and accounted for as a separate liability for accounting purposes under the guidance in ASC 815, Derivatives and Hedging. At the inception of the Loan Agreement, the fair value of the embedded derivative was determined to be immaterial. The embedded derivative instrument is remeasured at fair value each reporting period with any future changes in fair value reported in Other income, net in the condensed consolidated statement of operations and comprehensive loss. During the three months ended March 31, 2025 and 2024, the Company recognized a $ 0.2 million and $ 0.5 million gain, respectively, in Other income, net related to the change in fair value of the embedded derivative instrument. The fair value of the embedded derivative instrument as of March 31, 2025 and December 31, 2024 was a liability of $ 0.4 million and $ 0.6 million, respectively, and is included in Other long-term liabilities in the accompanying condensed consolidated balance sheets. See Note 4. I n connection with the Loan Agreement, the Company is obligated to pay (i) a final fee equal to 6.95 % of the aggregate original principal amount of the Term Loans outstanding as of the date of the second amendment (x) with respect to any 2024 Partial Prepayment, upon the earliest to occur of (a) January 1, 2027, (b) the acceleration of all outstanding Term Loans and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, and (y) with respect to the Term Loans outstanding as of the date of the second amendment (other than the 2024 Partial Prepayment), upon the earliest to occur of (a) the maturity date, (b) the acceleration of all outstanding Term Loans and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, (ii) a 2.00 % fee with respect to tranche C term loans, due and payable on the earliest to occur of (a) the maturity date, (b) the acceleration of all outstanding Term Loans and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, (iii) a 2.00 % extension fee with respect to tranche C term loans which remain unfunded after December 31, 2025, which shall accrue during the period commencing January 1, 2026, and ending on the earliest to occur of (a) the expiration of the tranche C term loan availability, and (b) the date on which tranche C term loan is fully drawn, and (iv) a certain amount of lenders’ expenses incurred in connection with the execution of the Loan Agreement. Additionally, in connection with the original Prior Loan Agreement, the Company previously had entered into an Exit Fee Agreement, whereby the Company agreed to pay an exit fee in the amount of 3.0 % of 14 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) each Term Loan funded upon (i) any change of control transaction or (ii) a revenue milestone, calculated on a trailing six-month basis. Notwithstanding the prepayment or termination of the Term Loan, the exit fee will expire 10 years from the date of the Loan Agreement. The debt issuance costs have been recorded as a debt discount which are being accreted to interest expense through the maturity date of the term loan. Interest expense is calculated using the effective interest method, and is inclusive of non-cash amortization of debt issuance costs. The final maturity payment of $ 13.9 million is recognized over the life of the term loan through interest expense. At March 31, 2025 and December 31, 2024, the effective interest rate was 11.38 % and 11.57 %, respectively. Interest expense relating to the term loan for the three months ended March 31, 2025 and 2024 was $ 3.0 million and $ 7.5 million, respectively. The following summarizes additional information related to the Company's long-term debt (in thousands): March 31, 2025 December 31, 2024 Long-term debt, gross $ 100,000 $ 100,000 Accrued final fee 7,678 7,324 Accrued prepayment penalty 1,000 1,000 Unamortized debt issuance costs ( 1,060 ) ( 1,121 ) Long-term debt, net $ 107,618 $ 107,203 Upon the contractual maturity of the Company's long-term debt, a payment of principal and final fees of $ 107.0 million is due on August 1, 2029. 8. Stock-Based Compensation Stock Option Exchange Program On January 16, 2024, the Company commenced an offer to certain eligible employees and consultants to exchange certain outstanding eligible options to purchase shares of the Company’s common stock for a lesser number of restricted stock unit (RSU) awards pursuant to an option exchange program (the Option Exchange). The Option Exchange expired on February 12, 2024. Pursuant to the Option Exchange, eligible option holders elected to exchange, and the Company accepted for cancellation, eligible options to purchase an aggregate of 5,059,129 shares of the Company’s common stock, representing approximately 98 % of the total shares of common stock underlying the eligible options. On February 13, 2024, immediately following the expiration of the Option Exchange, the Company granted 2,129,594 shares of Replacement RSU Awards, pursuant to the terms of the Option Exchange. The Replacement RSU Awards will vest based on continued service with the Company over a period of either 1 , 2 or 3 years, depending on the grant date of the exchanged options. The exchange of stock options was treated as a modification for accounting purposes, which requires an incremental expense of $ 8.6 million to be recognized for the Replacement RSU Awards over their new service 15 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) periods ( 1 - 3 years). In addition, any unamortized expense remaining on the exchanged options as of the modification will be recognized over their original remaining service period. Stock Option Activity The following summarizes option activity: Number of Options Weighted- Average Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value ($, in thousands) Balance—December 31, 2024 5,342,909 $ 6.69 8.01 $ 43,120 Granted 1,889,175 13.66 Exercised ( 109,996 ) 3.59 Forfeited ( 156,896 ) 3.97 Expired ( 2,865 ) 26.87 Balance—March 31, 2025 6,962,327 $ 8.68 8.33 $ 52,018 Exercisable—March 31, 2025 2,188,154 $ 8.07 6.39 $ 20,021 The aggregate intrinsic value is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of March 31, 2025. The intrinsic value of options exercised for the three months ended March 31, 2025 and 2024 was $ 1.2 million and $ 0.1 million, respectively. The total grant-date fair value of the options vested during the three months ended March 31, 2025 and 2024 was $ 0.7 million and $ 0.5 million, respectively. The weighted-average grant-date fair value of employee options granted during the three months ended March 31, 2025 and 2024 was $ 9.70 and $ 2.71 , respectively. Restricted Stock Unit Activity The following table summarizes information regarding the Company's RSUs: Number of Units Weighted-Average Grant Date Fair Value Balance—December 31, 2024 6,055,087 $ 8.04 Granted 2,529,525 13.67 Vested ( 1,181,781 ) 8.73 Forfeited ( 209,884 ) 8.53 Unvested Balance—March 31, 2025 7,192,947 $ 9.89 The grant date fair value of an RSU equals the closing price of the Company's common stock on the grant date. RSUs generally vest equally over four years , except for those issued in connection with the Option Exchange as previously described. 16 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Stock-Based Compensation Expense Stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands): Three Months Ended March 31, 2025 2024 Research and development $ 3,020 $ 3,657 Selling, general, and administrative 6,758 6,373 Total stock-based compensation expense $ 9,778 $ 10,030 As of March 31, 2025, there was $ 37.0 million of total unrecognized compensation cost related to unvested options that are expected to vest, which is expected to be recognized over a weighted-average period of 3.0 years. As of March 31, 2025, there was $ 63.0 million of total unrecognized compensation cost related to RSUs that are expected to vest, which is expected to be recognized over a weighted-average period of 3.1 years. The fair value of stock option awards granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions: Three Months Ended March 31, 2025 Year Ended December 31, 2024 Expected term (in years) 6.0 – 6.1 1.8 – 6.1 Expected volatility 79.4 – 79.5 % 79.1 – 83.2 % Risk-free interest rate 4.1 – 4.4 % 3.6 – 5.0 % Dividend yield — % — % 9. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average common shares outstanding. Pre-funded warrants to purchase 7,500,000 shares of the Company's stock were included in the weighted-average common shares outstanding used in calculating net loss per share for the three months ended March 31, 2025 and 2024. The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect: As of March 31, 2025 2024 Stock options to purchase common stock 6,962,327 5,473,764 RSUs subject to future vesting 7,192,947 6,813,506 ESPP shares subject to future issuance 77,830 359,184 Total 14,233,104 12,646,454 17 Table of Contents ARCUTIS BIOTHERAPEUTICS, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 10. Segment Reporting The Company has one reportable segment relating to the development and commercialization of treatments for dermatological diseases. The Company’s Chief Operating Decision Maker (the CODM) is its Chief Executive Officer. The CODM evaluates financial information on a consolidated basis for the purposes of allocating resources and assessing performance. The table below is a summary of the segment profit or loss, including significant segment expenses (in thousands): Three Months Ended March 31, 2025 2024 Total revenues $ 65,846 $ 49,569 Less: Cost of sales 5,851 3,068 Topical roflumilast program costs 1,446 3,588 Topical JAK inhibitor program costs 376 667 Other early-stage programs costs 1,995 4,133 Research and development compensation and personnel-related expenses 9,638 10,378 Selling, general and administrative expenses 63,884 54,671 Other segment expenses (1) 7,185 4,686 Total operating expenses 90,375 81,191 Operating loss ( 24,529 ) ( 31,622 ) Other income, net 2,730 4,044 Interest expense ( 2,982 ) ( 7,480 ) Provision for income taxes 279 324 Segment and consolidated net loss $ ( 25,060 ) $ ( 35,382 ) (1) Other segment expenses include professional services related to research and development, medical affairs, depreciation and amortization expenses. 18 Table of Contents