What changed in this filing

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Item 1. Financial Statements

2026-08-05 compared with 2026-05-06 · 214 added, 167 removed, 464 unchanged (45% of the section changed)

3 unchanged sentences

(In thousands, except par value)

March 31, December 31,

June 30, December 31,

Current assets:

3 unchanged sentences

Trade receivables, net 155,162 146,229

37,391 22,634

Inventory 38,879 22,634

Prepaid expenses and other current assets 34,770 21,079

19 unchanged sentences

Common stock, $ 0.0001 par value;

300,000 shares authorized at March 31, 2026 and December 31, 2025;

125,042 and 123,333 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

300,000 shares authorized at June 30, 2026 and December 31, 2025;

125,591 and 123,333 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital 1,355,593 1,327,595

Accumulated other comprehensive loss ( 514 ) ( 44 )

Accumulated other comprehensive income (loss) ( 656 ) ( 44 )

Accumulated deficit ( 1,134,370 ) ( 1,138,084 )

3 unchanged sentences

ARCUTIS BIOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Product revenue, net $ 129,861 $ 81,504 $ 235,259 $ 145,350

5 unchanged sentences

Selling, general and administrative

82,138 69,170 156,214 133,172

Total operating expenses 113,432 96,115 227,919 186,490

Loss from operations ( 9,089 ) ( 24,529 )

Income (loss) from operations 16,429 ( 14,611 ) 7,340 ( 39,140 )

Other income (expense):

Interest income

2,279 2,076 4,554 4,613

Interest expense ( 3,406 ) ( 3,029 ) ( 7,774 ) ( 6,011 )

Other income (expense), net

Loss before income taxes

( 157 ) 20 ( 177 ) 213

Total other income (expense) ( 1,284 ) ( 933 ) ( 3,397 ) ( 1,185 )

Income (loss) before income taxes 15,145 ( 15,544 ) 3,943 ( 40,325 )

Provision for income taxes

Net loss $ ( 11,295 ) $ ( 25,060 )

Other comprehensive income (loss):

Unrealized loss on marketable securities

136 342 229 621

Net income (loss)

$ 15,009 $ ( 15,886 ) $ 3,714 $ ( 40,946 )

Other comprehensive income (loss):

Unrealized gain (loss) on marketable securities ( 96 ) ( 95 ) ( 447 ) ( 232 )

Foreign currency translation adjustment ( 46 ) 200 ( 165 ) 204

Total other comprehensive loss

Total other comprehensive income (loss) ( 142 ) 105 ( 612 ) ( 28 )

Comprehensive income (loss) $ 14,867 $ ( 15,781 ) $ 3,102 $ ( 40,974 )

Earnings (loss) per share:

$ 0.11 $ ( 0.13 ) $ 0.03 $ ( 0.32 )

Comprehensive loss $ ( 11,765 ) $ ( 25,193 )

Net loss per share, basic and diluted $ ( 0.09 ) $ ( 0.20 )

Weighted-average shares used in computing net loss per share, basic and diluted 129,365 126,037

$ 0.11 $ ( 0.13 ) $ 0.03 $ ( 0.32 )

Weighted-average shares used in computing earnings (loss) per share:

Basic 130,522 126,997 129,948 126,519

Diluted 135,898 126,997 135,951 126,519

See accompanying notes to the condensed consolidated financial statements.

3 unchanged sentences

Common Stock Additional

Capital Accumulated Other Comprehensive Loss

Capital Accumulated Other Comprehensive Income (Loss) Accumulated

Deficit Total Stockholders’ Equity

4 unchanged sentences

Stock-based compensation expense — — 10,867 — — 10,867

Unrealized loss on marketable securities — — — ( 351 ) — ( 351 )

Unrealized gain (loss) on marketable securities — — — ( 351 ) — ( 351 )

Foreign currency translation adjustment — — — ( 119 ) — ( 119 )

Net loss — — — — ( 11,295 ) ( 11,295 )

Net income (loss) — — — — ( 11,295 ) ( 11,295 )

Balance—March 31, 2026 125,042 12 1,339,529 ( 514 ) ( 1,149,379 ) 189,648

Issuance of common stock upon the exercise of stock options 202 — 1,361 — — 1,361

Issuance of common stock upon the vesting of restricted stock units 258 — — — — —

Shares issued pursuant to the employee stock purchase plan 89 — 1,629 — — 1,629

Stock-based compensation expense — — 13,074 — — 13,074

Unrealized gain (loss) on marketable securities — — — ( 96 ) — ( 96 )

Foreign currency translation adjustment — — — ( 46 ) — ( 46 )

Net income (loss)

— — — — 15,009 15,009

Balance—June 30, 2026 125,591 $ 12 $ 1,355,593 $ ( 656 ) $ ( 1,134,370 ) $ 220,579

See accompanying notes to the condensed consolidated financial statements.

ARCUTIS BIOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands)

Common Stock Additional

Capital Accumulated Other Comprehensive Loss

Capital Accumulated Other Comprehensive Income (Loss) Accumulated

Deficit Total Stockholders’ Equity

4 unchanged sentences

Stock-based compensation expense — — 9,915 — — 9,915

Unrealized loss on marketable securities — — — ( 137 ) — ( 137 )

Unrealized gain (loss) on marketable securities — — — ( 137 ) — ( 137 )

Foreign currency translation adjustment — — — 4 — 4

Net loss — — — — ( 25,060 ) ( 25,060 )

Net income (loss)

— — — — ( 25,060 ) ( 25,060 )

Balance—March 31, 2025 119,138 12 1,289,789 ( 140 ) ( 1,147,003 ) 142,658

Issuance of common stock upon the exercise of stock options 19 — 61 — — 61

Issuance of common stock upon the vesting of restricted stock units 522 — — — — —

Shares issued pursuant to the employee stock purchase plan 119 — 1,319 — — 1,319

Stock-based compensation expense — — 10,717 — — 10,717

Unrealized gain (loss) on marketable securities — — — ( 95 ) — ( 95 )

Foreign currency translation adjustment — — — 200 — 200

Net income (loss)

— — — — ( 15,886 ) ( 15,886 )

Balance—June 30, 2025 119,798 $ 12 $ 1,301,886 $ ( 35 ) $ ( 1,162,889 ) $ 138,974

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 11,295 ) $ ( 25,060 )

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss) $ 3,714 $ ( 40,946 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Stock-based compensation expense 23,452 20,267

2 unchanged sentences

Net accretion on marketable securities

( 405 ) ( 1,554 )

Other non-cash items, net

1 unchanged sentence

Accounts receivable, net ( 8,934 ) ( 33,621 )

( 14,579 ) ( 1,951 )

Inventory ( 15,756 ) ( 1,433 )

Prepaid expenses and other current assets ( 14,274 ) 1,018

3 unchanged sentences

Net cash provided by (used in) operating activities 14,878 ( 30,056 )

2,239 ( 30,380 )

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Proceeds from maturities and sales of marketable securities 101,346 129,121

50,821 68,468

Milestone payment for intangible asset

Purchases of property and equipment ( 158 ) ( 686 )

Net cash provided by (used in) investing activities

( 26,556 ) 29,173

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock upon exercise of stock options 2,428 456

Proceeds from issuance of common stock pursuant to employee stock purchase plan

Payment of debt prepayment penalty ( 1,000 ) —

Net cash provided by financing activities 3,057 1,775

Effect of exchange rate changes on cash ( 165 ) 204

Net decrease in cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

( 8,786 ) 1,096

1 unchanged sentence

Cash, cash equivalents, and restricted cash at end of period $ 34,429 $ 73,048

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:

Milestone for intangible asset not yet paid in cash $ — $ 10,000

Purchases of property and equipment included in accounts payable $ 158 $ —

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

7 unchanged sentences

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 with the potential to address major shortcomings of existing therapies in its targeted indications.

The Company received United States (U.S.) Food and Drug Administration (FDA) approval of its first product, ZORYVE ® (roflumilast) cream 0.3% (ZORYVE cream 0.3%), in July 2022 for the treatment of plaque psoriasis.

The Company received U.S.

Food and Drug Administration (FDA) approval of its first product, ZORYVE ® (roflumilast) cream 0.3% (ZORYVE cream 0.3%), in July 2022 for the treatment of plaque psoriasis.

Since that time, the Company has obtained regulatory approvals and commercially launched ZORYVE in various formulations to treat additional disease states, in additional concentrations for various age groups, and in both the United States and Canada.

To date, ZORYVE has received regulatory approval and has been commercially launched, or is awaiting regulatory approval, as detailed below.

To date, ZORYVE has received regulatory approval and has been commercially launched, or is awaiting potential regulatory approval, as detailed below.

Product / Indication

2 unchanged sentences

ZORYVE cream for Plaque Psoriasis

Commercial Launch

Commercial launch August

0.3% Canada > 12 yrs

Commercial Launch

Commercial launch June

6 yrs -11 yrs

1 unchanged sentence

2 yrs - 5 yrs

sNDA Acceptance

Commercial launch

2 yrs - 12 yrs

SNDS Acceptance

SNDS accepted for review February

ZORYVE foam for Seborrheic Dermatitis

Commercial Launch

Commercial launch January

0.3% Canada > 9 yrs

Commercial Launch

Commercial launch November

ZORYVE cream for Atopic Dermatitis

Commercial Launch July

Commercial launch

0.15% Canada > 6 yrs

Commercial Launch April

Commercial launch

2 yrs - 5 yrs

Commercial Launch October

Commercial launch

2 yrs - 5 yrs

SNDS Acceptance

SNDS accepted for review October

3 mos - 2 yrs

sNDA Submittal

sNDA accepted for review June

ZORYVE foam for Scalp & Body Psoriasis 0.3% U.S.

Commercial Launch June

Commercial launch

0.3% Canada > 12 yrs

Commercial launch

The Company has incurred significant annual losses and negative cash flows from operations since its inception and had an accumulated deficit of $ 1,149.4 million and $ 1,138.1 million as of March 31, 2026 and December 31, 2025, respectively.

While the Company generated net income for the quarters ended September 30, 2025 and December 31, 2025, the extent of any net income or losses for future periods is uncertain, and the Company may continue to incur operating losses.

The Company had cash, cash equivalents, restricted cash, and marketable securities of $ 224.3 million and $ 221.3 million as of March 31, 2026 and December 31, 2025, respectively.

The Company had $ 100.0 million outstanding under the Loan Agreement as of March 31, 2026.

The Company has incurred significant annual losses and negative cash flows from operations since its inception and had an accumulated deficit of $ 1,134.4 million and $ 1,138.1 million as of June 30, 2026 and December 31, 2025, respectively.

While the Company has generated net income in certain recent fiscal quarters, the extent of any net income or losses for future periods is uncertain, and the Company may continue to incur operating losses.

The Company had cash, cash equivalents, restricted cash, and marketable securities of $ 238.9 million and $ 221.3 million as of June 30, 2026 and December 31, 2025, respectively.

The Company had $ 100.0 million outstanding under a loan and security agreement, as amended, with SLR Investment Corp.

(SLR) and the lenders party thereto as of June 30, 2026.

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.

13 unchanged sentences

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, 2025.

These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, and all intercompany balances and transactions have been eliminated.

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the condensed consolidated statements of operations and comprehensive loss, condensed consolidated statement of cash flows, and the notes to the condensed consolidated financial statements.

These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated.

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the condensed consolidated statements of operations and comprehensive income (loss), condensed consolidated statement of cash flows, and the notes to the condensed consolidated financial statements.

Use of Estimates

7 unchanged sentences

To manage accounts receivable credit risk, the Company continuously evaluates the creditworthiness of its customers and the need for an allowance for credit losses.

The Company evaluates its available-for-sale debt securities and accounts receivable for expected credit losses at each reporting date.

Based on the high credit quality of the issuers underlying its investment portfolio, the short-term nature of its investments, the credit quality of its customers, and its historical collection experience, the Company determined that expected credit losses were insignificant.

Accordingly, no allowance for credit losses was recorded as of June 30, 2026 and December 31, 2025.

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 Company’s financial instruments, in addition to those presented in Note 4, include cash and 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.

16 unchanged sentences

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.

The Company will adopt this guidance on its effective date, beginning with its Annual Report on Form 10-K for the year ending December 31, 2027, and for interim reporting, in the first quarter of 2028.

The Company is currently evaluating the impact on its consolidated financial statement disclosures, as well as whether the Company will adopt the guidance on a prospective or retrospective basis.

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,

Three Months Ended June 30,

Six Months Ended June 30,

2026 2025 2026 2025

ZORYVE cream 0.3%

2 unchanged sentences

ZORYVE cream 0.15% 24,231 14,617 45,972 24,836

21,741 10,219

ZORYVE cream 0.05% 2,926 — 4,286 —

4 unchanged sentences

$ 129,861 $ 81,504 $ 235,259 $ 147,350

Other revenue for the three months ended March 31, 2025 relates to the Huadong licensing agreement.

Product revenue, net outside the United States represented less than 10% of the Company’s consolidated product revenue, net, for the three months ended March 31, 2026 and 2025.

Other revenue for the six months ended June 30, 2025 relates to the licensing agreement with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.

Product revenue, net, from customers located outside the United States represented less than 10% of the Company’s consolidated product revenue, net, for all periods presented.

ARCUTIS BIOTHERAPEUTICS, INC.

2 unchanged sentences

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, 2026

June 30, 2026

Level 1 Level 2 Level 3 Total

11 unchanged sentences

Money market funds and cash

$ 37,541 $ — $ — $ 37,541

Certificates of deposit

7 unchanged sentences

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.

Treasury and agency securities are highly liquid investments and are actively traded with readily-available market prices that are publicly observable.

Certificates of deposit are recorded at book value, as their book values approximates fair value due to their short-term maturities of three months or less.

Commercial paper 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.

7 unchanged sentences

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, 2026

June 30, 2026

cost Unrealized

3 unchanged sentences

Money market funds and cash $ 28,658 $ — $ — $ 28,658

$ 27,950 $ — $ — $ 27,950

Certificates of deposit

Treasury & agency securities

5,463 — — 5,463

2 unchanged sentences

Commercial paper $ 16,584 $ — $ ( 17 ) $ 16,567

$ 6,900 $ 1 $ ( 3 ) $ 6,898

Corporate debt securities 94,325 1 ( 192 ) 94,134

8 unchanged sentences

Money market funds and cash $ 37,541 $ — $ — $ 37,541

$ 37,541 $ — $ — $ 37,541

Certificates of deposit

5,366 — — 5,366

Total cash and cash equivalents $ 42,907 $ — $ — $ 42,907

1 unchanged sentence

Commercial paper $ 14,782 $ 8 $ ( 1 ) $ 14,789

$ 14,782 $ 8 $ ( 1 ) $ 14,789

Corporate debt securities 78,687 81 ( 4 ) 78,764

2 unchanged sentences

Total marketable securities $ 177,962 $ 134 $ ( 21 ) $ 178,075

As of March 31, 2026, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the issuers of the available-for-sale securities.

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.

As of June 30, 2026, no significant facts or circumstances were present to indicate a deterioration in the creditworthiness of the issuers of the available-for-sale securities.

The Company generally holds its marketable securities until maturity and neither intends to sell nor is required to sell investments that are in an unrealized loss position before the recovery of their amortized cost basis.

For each security with a fair value less than its amortized cost basis, the Company determined the decline in fair value below the amortized cost basis to be non-credit related, and no allowance for losses has been recorded.

As of March 31, 2026, there were no individual securities that were in a significant unrealized loss position.

As of June 30, 2026, there were no individual securities that were in a material unrealized loss position.

To date, the Company has not recorded any impairment charges on available-for-sale securities.

1 unchanged sentence

Accrued interest receivable related to available-for-sale securities is presented in prepaid expenses and other current assets, separate from marketable securities, on the consolidated balance sheet.

As of March 31, 2026 and December 31, 2025, accrued interest receivable was immaterial.

As of June 30, 2026 and December 31, 2025, accrued interest receivable was immaterial.

The Company has made an accounting policy election not to recognize an allowance for credit losses for accrued interest receivables on available-for-sale securities and to write off any uncollectible accrued interest receivable by recognizing credit loss expense.

The Company has not written off any accrued interest receivables as of March 31, 2026 and December 31, 2025.

To date, the Company has not written off any accrued interest receivables.

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

The following table summarizes the amortized cost and fair value of marketable securities by contractual maturity at March 31, 2026 and December 31, 2025.

March 31, 2026 December 31, 2025

The following table summarizes the amortized cost and fair value of marketable securities by contractual maturity at June 30, 2026 and December 31, 2025.

June 30, 2026 December 31, 2025

cost Estimated

9 unchanged sentences

The components of inventory are summarized as follows (in thousands):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Raw materials $ 15,931 $ 5,047

2 unchanged sentences

Total inventory $ 38,879 $ 22,634

$ 37,391 $ 22,634

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Prepaid co-pay assistance program and rebates

5 unchanged sentences

Accrued liabilities consist of the following (in thousands):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Accrued sales deductions $ 107,754 $ 78,308

1 unchanged sentence

Accrued Ducentis milestone 9,198 —

Clinical trial accruals 692 425

Accrued expenses and other current liabilities 14,327 17,469

9 unchanged sentences

Pursuant to the terms of the Sato Agreement, the Company received an upfront payment of $ 25.0 million and will potentially receive additional payments (i) of up to an aggregate amount of $ 10.0 million upon the achievement of certain regulatory milestones and (ii) of up to an aggregate amount of $ 30.0 million upon the achievement of certain sales milestones.

In addition, on a Sato Licensed Product-by-Sato Licensed Product basis, commencing from the first commercial sale of such Sato Licensed Product in Japan until the latest of (i) the expiration of the last valid claim in the intellectual property rights licensed by the Company to Sato under the Sato Agreement covering such Sato Licensed Product in Japan, (ii) the expiration of regulatory exclusivity for such Sato Licensed Product in Japan, or (iii) ten years after the first commercial sale of such Sato 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 Sato Licensed Products, subject to certain royalty reductions.

The term of the Sato Agreement continues until, on a Sato Licensed Product-by-Sato Licensed Product basis, the expiration of the Royalty Term, which is (i) the expiration of the last valid claim in the licensed technology covering such Sato Licensed Product in Japan, (ii) the expiration of regulatory exclusivity for such Sato Licensed Product in Japan, or (ii i) ten years after the first commercial sale of such Sato Licensed Product in Japan.

In addition, on a Sato Licensed Product-by-Sato Licensed Product basis, commencing from the first commercial sale of such Sato Licensed Product in Japan until the latest of (i) the expiration of the last valid claim in the intellectual property rights licensed by the Company to Sato under the Sato Agreement covering such Sato Licensed Product in Japan, (ii) the expiration of regulatory exclusivity for such Sato Licensed Product in Japan, or (iii) 10 years after the first commercial sale of such Sato 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 Sato Licensed Products, subject to certain royalty reductions.

The term of the Sato Agreement continues until, on a Sato Licensed Product-by-Sato Licensed Product basis, the expiration of the Royalty Term, which is (i) the expiration of the last valid claim in the licensed technology covering such Sato Licensed Product in Japan, (ii) the expiration of regulatory exclusivity for such Sato Licensed Product in Japan, or (ii i) 10 years after the first commercial sale of such Sato Licensed Product in Japan.

The Sato 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.

2 unchanged sentences

The Company may also terminate the Sato Agreement if Sato or any director, officer, 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 Sato Agreement, if Sato, its affiliates, and sublicensees do not conduct any material development or commercialization activities of a Sato Licensed Product in Japan for a certain period of time.

No revenue was recorded pursuant to the Sato Agreement for the three months ended March 31, 2026 and 2025.

No revenue was recorded pursuant to the Sato Agreement for the three and six months ended June 30, 2026 and 2025.

ARCUTIS BIOTHERAPEUTICS, INC.

1 unchanged sentence

Huadong License Agreement

In August 2023, the Company entered into a license agreement with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.

(Huadong), a wholly owned subsidiary of Huadong Medicine Co., Ltd.

In August 2023, the Company entered into a license agreement with 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).

10 unchanged sentences

The Huadong Agreement may be terminated by both parties under certain circumstances.

Other revenue and related income tax expense related to the Huadong Agreement was zero for the three months ended March 31, 2026.

Other revenue and related income tax expense related to the Huadong Agreement was $ 2.0 million and $ 0.2 million, respectively, for the three months ended March 31, 2025.

No revenue or income tax expense was recorded pursuant to the Huadong Agreement for the three and six months ended June 30, 2026.

For the three and six months ended June 30, 2025, the Company recognized zero and $ 2.0 million, respectively, other revenue, and zero and $ 0.2 million, respectively, income tax expense, in each case related to the achievement of a development and regulatory milestone.

AstraZeneca License Agreement

2 unchanged sentences

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 October 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 May 2025, the Company paid $ 10.0 million to

In October 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

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

AstraZeneca upon achievement of $ 250.0 million in worldwide net sales, which was recorded as a cumulative catch-up adjustment to the carrying value of the intangible asset.

catch-up adjustment to the carrying value of the intangible asset.

In May 2025, the Company paid $ 10.0 million to AstraZeneca upon achievement of $ 250.0 million in worldwide net sales, which 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 AstraZeneca Agreement will be in effect .

Amortization expense was $ 0.6 million and $ 3.0 million for the three months ended March 31, 2026 and 2025, respectively.

Amortization expense was $ 0.6 million and $ 1.1 million f or the three and six months ended June 30, 2026, respectively, and $ 0.6 million and $ 3.5 million for the three and six months ended June 30, 2025, 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 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 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, 2026 and 2025 was $ 3.2 million and $ 1.9 million, respectively.

With respect to any AZ-Licensed Products the Company commercializes under the AstraZeneca 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 10 years from the first commercial sale of such AZ-Licensed Product in such country.

As a result of the commercialization of ZORYVE in August 2022, the Company began accruing royalties payable to AstraZeneca, which are recorded in cost of sales and accrued and other current liabilities.

Royalty expense was $ 3.9 million and $ 7.1 million f or the three and six months ended June 30, 2026, respectively, and $ 2.5 million and $ 4.4 million for the three and six months ended June 30, 2025, respectively.

Ducentis Biotherapeutics LTD Acquisition

8 unchanged sentences

The Company paid $ 0.8 million of this amount in April 2026.

The Company will issue promissory notes for the remaining $ 9.2 million owed to the former stockholders of Ducentis pursuant to the Share Purchase Agreement.

The Company issued promissory notes in April 2026 for the remaining $ 9.2 million owed to the former stockholders of Ducentis pursuant to the Share Purchase Agreement.

The promissory notes bear no interest, become payable 12 months from issuance, and are callable by the holders as early as seven months from issuance.

11 unchanged sentences

In the normal course of business, the Company enters into manufacturing supply agreements for the commercial supply of ZORYVE, which include certain minimum purchase commitments.

There have been no material changes to the Company's minimum purchase commitments during the three months ended March 31, 2026.

There have been no material changes to the Company's minimum purchase commitments during the six months ended June 30, 2026.

Indemnification

12 unchanged sentences

Regardless of outcome, litigation can have an adverse impact on the Company because of the defense costs, the diversion of management resources, and other factors.

As of March 31, 2026 and December 31, 2025, the Company determined that no loss contingencies from legal proceedings met the threshold of "probable" and "reasonably estimable", as defined in ASC 450.

As of June 30, 2026 and December 31, 2025, the Company determined that no loss contingencies from legal proceedings met the threshold of "probable" and "reasonably estimable", as defined in ASC 450.

Accordingly, no material amounts have been accrued related to loss contingencies under ASC 450.

9 unchanged sentences

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, 2026 and December 31, 2025 , the aggregate principal amount outstanding under the Loan Agreement was $ 100.0 million.

The tranche A term loan was funded in December 2021.

With the approval of ZORYVE cream 0.3% on July 29, 2022, the tranche B term loans were funded in August 2022.

As of June 30, 2026 and December 31, 2025 , 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.

In connection with the 2024 Partial Prepayment, the Company paid a prepayment penalty of $ 1.0 million during the three months ended June 30, 2026, and is obligated to pay a final fee of $ 6.95 million, representing the final fee applicable to the amount of the 2024 Partial Prepayment, on January 4, 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 obtained the ability to draw down the tranche C-1 and tranche C-2 term loans.

The tranche C-1 term loan availability expired 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 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 after the second anniversary of the second amendment and prior to the maturity date.

The tranche C-1 term loan availability expired on March 31, 2026 and the tranche C-2 term loan availability expired on June 30, 2026.

Neither tranche was drawn prior to its expiration.

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) 2.0 % for any prepayment made after August 9, 2025 and prior to August 9, 2026 or (b) 1.0 % for any prepayment made after August 9, 2026 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, 2026, the rate was 9.61 %.

As a result of the 2024 Partial Prepayment, the applicable interest rate is a per annum interest rate equal to 5.95 % plus the greater of (a) 2.50 % and (b) the one-month SOFR.

On June 30, 2026, the rate was 9.57 %.

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.

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.

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

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.

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.

1 unchanged sentence

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, 2026.

The Company was in compliance with all covenants under the Loan Agreement as of June 30, 2026.

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.

Upon the occurrence and for the duration of an event of default, an additional default interest rate equal to 4.0 % per annum (Default Rate) 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.

The fair value of the embedded derivative as of March 31, 2026 and December 31, 2025 was immaterial and any gains (losses) recognized as a result of the change in fair value during the three months ended March 31, 2026 and 2025 were immaterial.

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 each Term Loan funded upon (i) any change of control transaction or (ii) a revenue milestone, calculated on a

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

trailing six-month basis.

The fair value of the embedded derivative as of June 30, 2026 and December 31, 2025 was immaterial and any gains (losses) recognized as a result of the change in fair value during the three and six months ended June 30, 2026 and 2025 were immaterial.

I n connection with the Loan Agreement, the Company is obligated to pay 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 (A) with respect to any 2024 Partial Prepayment, upon the earliest to occur of (a) January 4, 2027, (b) the acceleration of all outstanding Term Loans and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, and (B) 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.

The Company was also obligated to pay (i) a $ 1.0 million facility fee with respect to tranche C term loans, which was accrued for in the first quarter of 2026 and paid out in the second quarter of 2026, and (ii) a $ 1.0 million extension fee with respect to tranche C term loans that remained unfunded after December 31, 2025, which was accrued for and paid out during the period commencing January 1, 2026 and ending on June 30, 2026.

Notwithstanding the prepayment or termination of the Term Loan, the exit fee will expire 10 years from the date of the Loan Agreement.

1 unchanged sentence

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, 2026 and December 31, 2025, the effective interest rate was 10.75 % and 10.92 %, respectively.

Interest expense relating to the term loan for the three months ended March 31, 2026 and 2025 was $ 4.4 million and $ 3.0 million, respectively.

The final fee of $ 13.9 million and other fees referenced in the previous paragraph are recognized throughout the life of the term loan and recorded in interest expense.

At June 30, 2026 and December 31, 2025, the effective interest rate was 10.71 % and 10.92 %, respectively.

Interest expense relating to the term loan was $ 3.4 million and $ 7.8 million for the three and six months ended June 30, 2026, respectively, and $ 3.0 million and $ 6.0 million for the three and six months ended June 30, 2025, respectively.

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

The following summarizes additional information related to the Company's long-term debt (in thousands):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Long-term debt, gross

4 unchanged sentences

Total carrying value of debt

108,900 108,959

Less current portion

( 6,950 ) ( 1,000 )

Long-term debt, net $ 101,950 $ 107,959

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.

Stockholders' Equity

S tockholders' Equity

The Company's authorized capital stock consists of 310,000,000 shares, all with a par value of $ 0.0001 per share, of which 300,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock.

There were no shares of preferred stock outstanding as of March 31, 2026.

There were no shares of preferred stock outstanding as of June 30, 2026.

Equity Offerings

In October 2023, the Company completed a public sale of its common stock, receiving aggregate net proceeds of $ 95.8 million.

In addition to the sale of common stock, the Company issued prefunded warrants to purchase 7,500,000 shares of the Company's common stock at $ 2.4999 per underlying share of common stock.

The prefunded warrants have an exercise price of $ 0.0001 per underlying share of common stock, were fully exercisable upon issuance, and have no expiration date.

In October 2025, certain prefunded warrants were exercised, resulting in the issuance of 2,285,000 shares.

As of March 31, 2026, prefunded warrants to purchase 5,215,000 shares of the Company's common stock remained outstanding.

In February 2024, the Company completed a public sale of its common stock, receiving aggregate net proceeds of $ 161.7 million.

In addition to the sale of common stock, the Company issued pre-funded warrants to purchase 7,500,000 shares of the Company's common stock at $ 2.4999 per underlying share of common stock.

The pre-funded warrants have an exercise price of $ 0.0001 per underlying share of common stock, were fully exercisable upon issuance, and have no expiration date.

In October 2025, certain pre-funded warrants were exercised, resulting in the issuance of 2,285,000 shares.

As of June 30, 2026, pre-funded warrants to purchase 5,215,000 shares of the Company's common stock remained outstanding.

In March 2024, the Company completed a public sale of its common stock, receiving aggregate net proceeds of $ 161.7 million.

At-the-Market (ATM) Offerings

4 unchanged sentences

The Company has not yet issued or sold any common stock under the amended and restated Sales Agreement.

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

Equity Incentive Plans

In December 2021, the Company’s board of directors approved the 2022 Employment Inducement Incentive Plan (2022 Plan).

The 2022 Plan initially reserved 1,250,000 shares of common stock available for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, RSU awards, and other stock-based awards.

In November 2022 and April 2026, the 2022 Plan reserve was increased by 1,500,000 and 1,200,000 shares, respectively.

As of March 31, 2026, the Company had 112,325 shares available for future grant under the 2022 Plan, excluding the April 2026 increase.

As of June 30, 2026, the Company had 990,908 shares available for future grant under the 2022 Plan.

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

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).

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 RSUs 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.

On February 13, 2024, immediately following the expiration of the Option Exchange, the Company granted 2,129,594 Replacement RSU Awards, pursuant to the terms of the Option Exchange.

The Replacement RSU Awards 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 periods ( 1 - 3 years).

7 unchanged sentences

( 238,285 ) 13.25

Balance—March 31, 2026 7,603,593 $ 12.39 7.91 $ 90,568

Exercisable—March 31, 2026

3,090,137 $ 8.45 6.45 $ 47,502

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, 2026.

The intrinsic value of options exercised for the three months ended March 31, 2026 and 2025 was $ 2.5 million and $ 1.2 million, respectively.

The total grant-date fair value of the options vested during the three months ended March 31, 2026 and 2025 was $ 1.9 million and $ 0.7 million, respectively.

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2026 and 2025 was $ 18.58 and $ 9.70 , respectively.

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

Balance—June 30, 2026 7,484,867 $ 12.82 7.73 $ 101,667

Exercisable—June 30, 2026 3,472,101 $ 9.27 6.55 $ 59,188

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 June 30, 2026.

The intrinsic value of options exercised for the six months ended June 30, 2026 and 2025 was $ 5.7 million and $ 1.4 million, respectively.

The total grant-date fair value of the options vested during the six months ended June 30, 2026 and 2025 was $ 7.0 million and $ 4.6 million, respectively.

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2026 and 2025 was $ 17.95 and $ 9.69 , respectively.

Restricted Stock Unit Activity

3 unchanged sentences

Balance—December 31, 2025 6,007,515 $ 10.83

1,823,875 26.81

Granted 2,320,599 26.02

Vested ( 1,832,747 ) 10.53

Forfeited ( 264,917 ) 13.61

Unvested Balance—March 31, 2026 6,132,244 $ 15.67

Unvested Balance—June 30, 2026 6,230,450 $ 16.46

The grant date fair value of an RSU equals the closing price of the Company's common stock on the grant date.

The total grant-date fair value of the RSUs vested during the three months ended March 31, 2026 and 2025 was $ 16.5 million and $ 10.3 million, respectively.

The total grant-date fair value of the RSUs vested during the six months ended June 30, 2026 and 2025 was

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

$ 19.3 million and $ 14.7 million , respectively.

RSUs generally vest equally over four years , except for those issued in connection with the Option Exchange as previously described.

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,

Stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Research and development

1 unchanged sentence

Selling, general and administrative

9,356 7,281 16,894 14,039

Total stock-based compensation expense

$ 12,762 $ 10,489 $ 23,452 $ 20,267

As of March 31, 2026, there was $ 46.7 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 3.25 years.

As of March 31, 2026, there was $ 88.4 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 3.3 years.

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 5,215,000 and 7,500,000 shares of the Company's common stock were included in the weighted-average common shares outstanding used in calculating net loss per share for the

ARCUTIS BIOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

three months ended March 31, 2026 and 2025, respectively, as the exercise price of the pre-funded warrants is negligible and the pre-funded warrants are fully vested and exercisable.

Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method.

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share, since the effects of potentially dilutive securities are antidilutive.

Shares of common stock subject to repurchase are excluded from the weighted-average shares.

Potential dilutive securities, which include unvested RSUs and unvested performance-based RSUs for which established performance criteria have been achieved as of the end of the respective periods, vested and unvested options to purchase common stock, and shares to be issued under the Company's employee stock purchase plan (ESPP), have been excluded from the calculation of diluted net loss per common share in each period in which the Company recorded a net loss, as the effect is antidilutive.

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 antidilutive effect:

As of March 31,

As of June 30, 2026, there was $ 44.0 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 years.

As of June 30, 2026, there was $ 89.5 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 3.2 years.

Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average common shares outstanding.

Diluted net earnings per share is computed by dividing net income (loss) by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method.

Pre-funded warrants to purchase 5,215,000 shares of the Company's common stock for the three and six months ended June 30, 2026, and 7,500,000 shares of the Company's common stock for the three and six months ended June 30, 2025, were included in the weighted-average common shares outstanding used in calculating basic and diluted net income (loss) per share, as the exercise price of the pre-funded warrants is negligible and the pre-funded warrants are fully vested and exercisable.

The following table is a reconciliation of the share amounts used in calculating basic and diluted earnings (loss) per share:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Weighted-average common shares outstanding - Basic

130,522,399 126,997,384 129,947,615 126,519,777

Effect of dilutive securities

5,375,847 — 6,003,245 —

Weighted-average common shares outstanding - Diluted

135,898,246 126,997,384 135,950,860 126,519,777

The Company's potential dilutive securities include unvested RSUs and unvested performance-based RSUs for which established performance criteria have been achieved as of the end of the respective periods, vested and unvested options to purchase common stock, and shares to be issued under the Company's employee stock purchase plan (ESPP).

Certain of these potential dilutive securities have been excluded from the calculation of diluted net income (loss) per common share as the effect would be anti-dilutive.

The following outstanding potentially dilutive shares have been excluded from the calculation of diluted net income (loss) per share for the periods presented due to their antidilutive effect:

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Stock options to purchase common stock 1,911,509 6,922,441 1,882,027 6,922,441

10 unchanged sentences

The table below is a summary of the segment profit or loss, including significant segment expenses (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Total revenues $ 129,861 $ 81,504 $ 235,259 $ 147,350

1 unchanged sentence

Topical roflumilast program costs

1,983 2,827 5,290 4,273

ARQ-234 program costs 1,302 845 12,305 2,034

2 unchanged sentences

Selling, general and administrative expenses 82,008 69,033 155,962 132,917

73,954 63,884

Other segment expenses (1)

6,295 5,509 12,156 12,694

Total operating expenses 113,432 96,115 227,919 186,490

Operating loss ( 9,089 ) ( 24,529 )

Operating income (loss) 16,429 ( 14,611 ) 7,340 ( 39,140 )

Interest income 2,279 2,076 4,554 4,613

1 unchanged sentence

Other income (expense), net

( 157 ) 20 ( 177 ) 213

Provision for income taxes 136 342 229 621

Segment and consolidated net loss $ ( 11,295 ) $ ( 25,060 )

Segment and consolidated net income (loss) $ 15,009 $ ( 15,886 ) $ 3,714 $ ( 40,946 )

(1) Other segment expenses include professional services related to research and development, medical affairs, depreciation and amortization expenses.

Table of Content s

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements