Good day and thank you for standing by. Welcome to the Arcutis Biotherapeutics Second Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your speaker today, Eric McIntyre, Head of Investor Relations. Please go ahead.

Thank you, Cory. Good afternoon, everyone, and thank you for joining our Arcutis second quarter earnings call. Slides for today are available on the Investors section of our website. On the call today, we have Frank Watanabe, President and CEO; Ayisha Jeter, our Interim Chief Commercial Officer; Patrick Burnett, Chief Medical Officer, and Scott Burrows, Chief Financial Officer. I'd remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and uncertainties, and actual results may differ materially. We encourage you to review the information disclosed in our latest SEC filings. With that intro, I'll hand the call over to Frank.

Thanks, Eric. I'm going to make some brief introductory comments and then I'll turn it over to the experts here. So I'm on slide 5 of the slide deck. I'm really proud that our team is effectively executing on our strategy to build the leading innovation-driven dermatology company. The ZORYVE launch is strengthening on all fronts, laying a solid foundation for sustained long-term growth. Physician and patient feedback remains exceedingly positive, and the launch is building momentum. We're really encouraged by our script growth as clinicians gain positive real-world experience with ZORYVE. In Q2, we saw around 40% growth in TRxs versus Q1 and we've seen even further growth so far in Q3. And remember, we're just scratching the surface here on the broader topical steroid opportunity which is still roughly 20 times the size of the current non-steroid market. One key element to unlocking the broad and the long-term conversion from topical steroids is our success in obtaining broad high-quality access and we're thrilled to have announced the CVS coverage decision in early July. In less than 12 months from launch, we've now secured coverage at all three of the large national PBMs as well as other large downstream health plans, which is unusually fast for any launch, and we think is validation of our pricing and access strategy. Currently, more than 130 million commercially insured patients have access to ZORYVE and over 90% of those patients have access without any prior authorization, which meets our goals for high-quality access. I'm also pleased to report that gross-to-net has improved in the second quarter as we had previously indicated. And so far in Q3, we are seeing additional improvement in part due to the expanded coverage, as well as our focused execution with the percentage of scripts being covered reaching all-time highs and we expect further gross-to-net improvement in Q3 and additional improvement in Q4. Beyond the ZORYVE US launch, we're also executing to build for the future. In June, we launched ZORYVE in Canada, and thus far we've had an excellent reception from physicians and patients as well as rapid progress in building the same high-quality access that we've achieved in the US. It's still early days, but the script growth has been healthy and we've already secured coverage for ZORYVE with the top three private payers representing more than half of the Canadian private market. We also strengthened our overall patent estate with the recent issuance of a new patent covering methods of treatment of seborrheic dermatitis with roflumilast foam, and that's a U.S. patent by the way. We already enjoyed very strong IP protection on top of the roflumilast foam and cream through 2037, and this new patent extends protection for the foam and seborrheic dermatitis through 2041, which we're obviously delighted with. So turning now to slide six. We've shown this slide previously, but I think it's a good reminder of the true opportunity for topical roflumilast and also what makes it a very unique molecule with potentially four products in one as we execute multiple launches in the quarters ahead. With ZORYVE today, we're competing in a market of about 2 million patients possibly treated for their psoriasis in US dermatology offices. Then we have potential upcoming launches every two to three quarters with seb derm at the beginning of the second half of 2024 and then scalp and body psoriasis in 2025. We also have a very large opportunity outside of the dermatology office, particularly with the expected approvals in atopic dermatitis and seborrheic dermatitis, both of which are frequently treated in the primary care setting. As we have indicated before, we do not intend to build our own primary care sales force, but we'll look for a partnership to help us access this market in a cost-effective way. So when you factor in all those opportunities we're pursuing, both inside dermatology and out, that's a 13 million patient addressable market and more than a six-fold increase over the current psoriasis market we're competing in. Now, I want to turn the call over to Ayisha Jeter, our Interim Chief Commercial Officer, to provide more details on the ZORYVE launch. But before I do, I want to comment on how impressed I've been with her performance as our Interim CCO over the past few months. I have no doubt about Ayisha's ability to fill in as an Interim CCO when we appointed her to that role. And she's done incredibly well filling in while we search for a permanent Chief Commercial Officer. She is providing strong leadership and our commercial team has not missed a beat as you can see in our recent sales performance. And with that, Ayisha, go ahead.

Thanks, Frank. Moving to commercial performance on slide eight. We are proud of the growing momentum across all aspects of our launch. Everything starts with ZORYVE's strong product profile at the core, which continues to pay dividends with patients, physicians, and payers. We are seeing steady prescription growth as more clinicians gain experience and determine in the real world how ZORYVE can perform for a variety of their patients. As we've said in the past, to successfully launch drugs companies need to constantly evaluate tactics and adjust as needed, and our team is doing just that. Our results in Q2 reflect our ongoing adjustments and improvements, and we will look for ways to further optimize our performance going forward. On this slide, we're showing IQVIA demand data. Now, approaching one year into launch, we see healthy, consistent growth trends with nearly 40% TRx growth quarter-over-quarter in Q2, plus further growth in the third quarter to date, surpassing all-time highs in both TRx and NRx post the 4th of July holiday. HCP and patient feedback on ZORYVE's performance in the real world remains exceptional, especially its rapid efficacy with the once-daily treatment that can be used anywhere on the body, the ability to use it in intertriginous and sensitive areas, as well as very positive feedback on its effectiveness in treating the most difficult plaques in areas like elbows and knees. And of course, clinicians and patients really appreciate the favorable tolerability profile of ZORYVE as well. Moving to slide nine. Since launch, we have made great strides in unblocking broad, high-quality access for ZORYVE that will drive further patient demand and gross-to-net improvement. As Frank mentioned, ZORYVE is now covered on the top three largest commercial PBMs on their national formularies, which gives HCPs peace of mind about how easy it is for their commercially insured patients to obtain ZORYVE. With over 130 million commercial lives now covered, we have secured access for 80% of commercial lives in the US. With this broad coverage, HCPs don't have to think about where ZORYVE may or may not be reimbursed. Importantly, of that 80% of commercial lives, over 90% are covered without a prior authorization, which reduces the household factor that typically limits prescribers from putting pen to paper. We believe this distinction along with our product profile is critical to facilitating the long-term conversion from topical steroids. We also expect that the high-quality coverage enjoyed by ZORYVE will also help with our expected launches in seborrheic dermatitis and atopic dermatitis in 2024. On Slide 10, the slide details our broad high-quality commercial coverage for ZORYVE on the national formularies of the three largest PBMs. Payers are responding favorably to ZORYVE's clinical profile with the most recent example being CVS not requiring a step for patients with psoriasis in sensitive areas, certainly a notch or our differentiated label and aligned with what is best for these patients in practice. Our pricing and access strategy is resonating with payers as evidenced by a growing number of instances where we have an advantage in utilization management criteria, preferential tier status, and certainly our time to coverage compares favorably to other recently launched branded topical agents. We're also making progress with coverage outside of the commercially insured population. The VA just recently updated its clinical guidelines, where we see another example of payers valuing the clinical profile of ZORYVE. Like CVS, there is no step requirement for patients with plaques in sensitive areas. And the VA also imposed a requirement to step through ZORYVE to get to the other new branded non-steroidal. As we said all along, this differentiated high-quality coverage ultimately makes ZORYVE less burdensome for health care providers to write, which is critical to converting the topical steroid market over the long-term. Additionally, we're also starting to see benefits of our improved coverage and focused field execution on our gross-to-net. Our field reimbursement team is now fully on board. We have further fine-tuned our co-pay offerings. And our sales team is making positive strides in pulling through covered prescriptions. We have the right plan and tactics in place and are executing against that. In Q2, we saw improvement in the percentage of prescriptions covered and that improvement has accelerated in Q3. In fact, in July, we've seen our best month yet in terms of covered prescriptions giving us confidence in our plans and team's execution. We are seeing improvement in the percentage of covered prescriptions across all major PBMs. Most notably, since the CVS coverage decision in early July, we have seen a more than doubling in the percentage of prescriptions reimbursed by CVS. We expect our improved coverage coupled with sales force execution to produce improved gross-to-net in Q3 with further improvement in Q4, which reinforces our conviction that we can achieve our target steady-state gross-to-net over time. On Slide 11, I will remind you all of the three pillars to commercial success that we've set out for sustained ZORYVE growth. First, driving HCP awareness and expanding the prescriber base. We have now seen over 7,500 unique writers since launch. We remain focused on increasing our reach and frequency with the highest prescribing health care providers. At the same time, there is still a lot of headroom for further expansion of providers, and we're actively targeting those HCPs who have yet to begin prescribing the newer non-steroidals. Second, patient engagement and experience. Refills are growing very nicely. In Q1, we averaged approximately 20%. It increased in Q2 to 27%. And for the month of July, our refills were approximately 33%. Sustained growth here is important to achieve the long-term potential of ZORYVE, and also is an encouraging indicator of patient adherence to ZORYVE. We previously said that we would look at enhancing our DTC efforts as access comes on board more broadly. With our recent progress on coverage, we feel the time is right to fuel the next leg of the ZORYVE launch into 2024 and beyond. As a result, we will be going live with a focused connected TV campaign later this quarter, which will activate patients to ask their dermatologist for ZORYVE. In closing, we look forward to delivering on the long-term promise of ZORYVE. And with that, I will hand it over to Patrick.

Thank you, Ayisha. From my end, I just wanted to provide a quick update on our near-term clinical and regulatory milestones. These are on Slide 13. These all remain on track, building significant sustained long-term growth potential as Frank mentioned earlier. So starting off with atopic dermatitis. We have the INTEGUMENT-PED readout on track for later this quarter. And as a reminder, this study is in the two - to five-year-old AD population. We also look forward to submitting the sNDA in late Q3 early Q4 for atopic dermatitis for ages six and above based on the INTEGUMENT-1 and 2 positive readouts. Turning to seborrheic dermatitis, we have our PDUFA set for December 16 and HCP excitement is already incredibly high. Right now, we're doing a lot of disease state awareness with the medical team in the field. Briefly on psoriasis, we look forward to the potential approval for a label expansion for ZORYVE down to the age of two in the fourth quarter. This builds on our existing label for adolescents and adults in psoriasis. One additional update on the early pipeline: recall that we started a Phase 1b study with our unique topical JAK for alopecia areata, initially in healthy volunteers, and now we've progressed to enrollment of our first alopecia areata subject in that study. We'll have more to share on this study as it nears enrollment completion. With that, I'll turn it over to Scott.

Thanks, Patrick. Turning to Page 15 of the slide deck. Total revenues were $5.2 million in the second quarter. Net product revenues were $4.8 million driven by nearly 40% quarter-over-quarter demand growth as well as improved gross-to-net. Recall, we communicated in our last earnings call that we expected most of our second-quarter growth would be driven by demand, but we are pleased to see gross-to-net improvements meaningfully contributing to revenue growth as well in Q2. Based on the expanded insurance coverage that Ayisha highlighted, as well as our efforts to ensure prescriptions are appropriately processed as covered prescriptions, we expect further gross-to-net improvement in Q3 and continued improvement in Q4. In the second quarter, we also recognized $400,000 in other revenues, which was the value of an equity stake received from a previous collaboration partner. Turning to the rest of the P&L, research and development expenses were $25 million in the second quarter. The decrease year-over-year is primarily due to lower clinical development costs as we wind down our topical roflumilast programs. In addition to lower roflumilast development costs, the comparison versus the first quarter also benefited from the $3 million seborrheic dermatitis FDA filing fee in the first quarter, some one-time favorable clinical study true-ups, and our broader efforts to reduce spend in our early-stage R&D programs. For Q3, we would expect R&D to tick back up closer to $30 million as we do not expect the same one-time favorability from study true-ups. We expect a further step down in R&D expenses in 2024. SG&A expenses were $46 million for the quarter, reflecting our continued investment in the ZORYVE launch and the upcoming launches in seborrheic dermatitis and atopic dermatitis. As Ayisha mentioned, we will begin our focused connected TV efforts later this quarter and into Q4, driving some additional SG&A expense growth. Net loss per share was $1.16 for the quarter compared to $1.31 in the same period last year. Turning to our final slide on page 16, we provide some key balance sheet and cash flow items. We remain well capitalized with cash of $270 million as of June 30. Our burn decreased in the second quarter, driven by lower R&D costs and the timing of certain payments. Similar to my operating expense comments, we would expect cash burn to tick back up slightly in the third quarter as we invest in the psoriasis and upcoming seb derm launches. Over time, we'd expect a general downward trend in quarterly cash burn as revenues continue to grow and as we benefit from sales across multiple indications. We also remain confident in our near-term ability to further strengthen the balance sheet with non-dilutive capital through our ex-US e-licensing efforts. This concludes the financial update. I'll now turn the call back to Frank.

Thanks, Scott. So just in closing, first of all, I would like to thank all the members of the Arcutis team. As you can imagine, folks are working incredibly hard to deliver these results, and I am constantly impressed by the dedication of our team. I also want to thank everyone of you for taking the time out of your day to call in on our quarterly earnings call. And with that, we will wrap up and open things up to questions and answers.

Thank you. We will now conduct a question-and-answer session. Our first question comes from Tyler Van Buren of TD Cowen. Your line is open.

Hey, good afternoon. It's great to see the improvement in coverage that occurred over the last quarter. You mentioned that the percentage of covered prescriptions is at an all-time high. So, my first question is, what was the percentage of covered prescriptions during Q2 and July separately compared to Q1? For my second question, which is somewhat related, could you provide additional detail on the cadence of improvement in gross-to-net during Q2? I assume May and June performed better than April since the second PBM started on May 1. Looking ahead into Q3, was the gross-to-net in June significantly better compared to May?

So, Tyler thanks for your questions. Maybe I'll take the first one and then I'll ask Ayisha to go into a little more detail on your second question. In terms of percentage covered prescriptions, that's a level of detail that we probably aren't comfortable really getting into but I will say that we are seeing a steady trend upwards every quarter in a percentage covered. And that includes, as I mentioned earlier, since the end of Q2, we've seen further improvement. Ayisha, do you want to maybe talk about what we saw within the quarter in terms of the cadence of improvement?

Sure. First, I want to point out that there were a couple of different factors involved. One was the deductible resets, and we began to notice an improvement as patients successfully navigated their deductible. Additionally, with the implementation of the second Pharmacy Benefit Manager, we observed progress, and soon after that, we started to see enhancements in the pull-through related to the reimbursement field team.

I think Corey, we can go to the next question.

Yeah. Our next question comes from Vikram Purohit of Morgan Stanley.

Hi, good afternoon. Thanks for taking our questions. We had two questions, both on ZORYVE and psoriasis. First, could you just provide a bit of color on how the mix of patients being prescribed ZORYVE might be changing over time since the launch in terms of line of use, prior treatment status, and things like that? And then secondly, back to gross-to-net, but taking a step back, what's your current thinking on what a steady-state gross-to-net could look like? And what do you think your timeline is for getting there? Thanks.

Yeah. So maybe I'll take the second one and then I'll ask Ayisha to talk about the mix of patients. Although I will say our granularity in that data isn't perfect. But I think we've continued to say that we remain confident in our ability to get to a steady state gross-to-net in somewhere in the 40% to 60% range. And we still believe that today, particularly with the improvement that we're seeing in Q2 and in Q3. I think it's probably going to take us a little bit longer to get there than what we had initially anticipated. But certainly, we think that's well within our reach. The exact timing I think is really difficult to predict. We're in I think a somewhat unusual circumstance that we're launching multiple products in the same window of time before we get to steady state with the expected seb derm launch in early 2024 and then AD in mid-2024 and then scalp in early 2024 sometime in 2025. And every time you launch a new product, that has an impact on your gross-to-net trends. So I think it's difficult at this point for us to say exactly when we will get to a steady state. I said before, it certainly won't be in 2023, but I also don't think it's going to be 2028. But at this point, I think it's too early to call, and we'll update you guys as we get more clarity going forward on that. Ayisha, can you maybe talk about the mix of patients that we're seeing.

Absolutely. So Vikram, as it relates to the patients. So first off, it's similar to what we've discussed in the past. First, it's the patients that have tried a steroid and/or other topicals. And then also it's been a mix of patients that have tried a single steroid for the most part.

Great. Can I just add just as a reminder. In any given year, 95% of psoriasis patients are continuing patients. There's not a huge amount of new patients coming into the system every year. And so most patients have been on something previously for the plaque psoriasis.

Sure. Understood. Thank you.

Thank you. Our next question comes from Seamus Fernandez of Guggenheim Securities. Your line is open.

Thank you for the question. I have two quick inquiries. Can you clarify the number of accounts you are currently engaged with and marketing to? I'm trying to gain a clearer understanding. Some survey work we've conducted indicates strong penetration among physicians and users of both ZORYVE and Vitama, showing good growth expectations for their internal use. However, it appears that the growth will largely depend on practice growth and enhanced experience to drive script growth for ZORYVE, rather than significant new growth in the practices you are focusing on. Additionally, can you explain if you believe your current sales force and marketing efforts are adequately resourced to launch the foam once the Seb Derm indication is approved? Thank you.

Sure. Seamus, when you say accounts, you're talking about physician accounts, right?

Correct. Yeah, yeah. Exactly.

Yeah. So I think Ayisha mentioned on the call that right now, about 7,000 unique physicians have prescribed ZORYVE, and that's out of about 13,000 targets. So there's still quite a bit of headroom in terms of bringing new doctors on to prescribing ZORYVE. And then I think the other facet, and I made reference to this, if you think about the size of the topical steroid market today being 20 times the size of the non-steroid market, even in those markets, those offices that have started to adopt ZORYVE, there's still a great deal of upside in terms of deepening the prescribing base as well. So we think about growth as being both of those, both an expansion of the base and the deepening of the prescribing base. And I think, as I mentioned in my introductory comments, we really think that we're just scratching the surface particularly as I think the momentum around the move away from steroids builds in the dermatology community. And then with regard to your same question around resourcing for the Seb Derm launch, maybe again I'll ask Ayisha to comment on that as CCO.

Absolutely, Frank. Regarding resourcing, the team is well-equipped from both the sales and marketing perspectives. We are currently focused on educating providers about disease state awareness while ensuring that we also reach patients. I feel very confident in the resources we have to support our launch for Seborrheic Dermatitis.

Great. Thanks for the questions.

Thank you. One moment for our next caller. Our next question comes from Uy Ear of Mizuho. Your line is open.

Thank you for taking my question. Just a quick one. Could you address the persistent rate? You mentioned a 3% refill rate, but are you seeing more patients continuing to use the therapy? Also, Scott, you mentioned a projected downtick in 2024. Could you provide some clarity on that in terms of R&D spending? Thank you.

Yeah, okay. So in terms of persistence on ZORYVE, I think it's still very early days to gauge exactly what that is. Ayisha mentioned that refills in July have grown now to 33% of total volume. And so we certainly have seen a steadily increasing number of refills from patients. There are some patients who are refilling quite frequently. I think Ken previously mentioned that we've seen patients refill as many as five times. But I think that's really at the skinny end of the tail of the bell-shaped curve. We continue to think that there is probably something like three tubes a year. And so the bulk of patients may be just coming up on their first prescription refill right now, but that's something that we'll continue to monitor. In terms of discontinuation due to a lack of efficacy or due to side effects and tolerability, I think that's one of the really encouraging things we continue to hear from clinicians is that they very rarely, if ever, see non-response to ZORYVE, which I think is consistent with the data that we've shared in the past where 95% of patients in our clinical trial improved on ZORYVE. And the side effect profile what we hear anecdotally is that it's at least as good, if not better than what's in the label. Again in our long-term extension study, you probably recall, we saw about 50% higher adherence in our long-term study than what has been historically the case in topical trials. So we are definitely encouraged by the early signs around adherence.

It's still a little early to provide specific details on R&D spending for ZORYVE. However, the main factors include our ongoing pediatric AD study and the long-term extension study, which we expect will reduce costs in 2024. Until we receive approval for seb derm, some of our ongoing efforts, such as manufacturing, will continue to impact the R&D budget. Once we have that approval, those expenses will be removed from the R&D line. These are the primary elements we anticipate will influence our spending as we head into 2024.

Okay. Thank you.

Thank you. One moment for our next caller. Our next question comes from the line of Chris Shibutani at Goldman Sachs. Your line is open.

Hey team. This is Stephen on behalf of Chris. Thanks for taking my question. I have two inquiries. First, can you describe the physicians who have not yet prescribed ZORYVE and how you plan to gain their attention? Are they not seeing the product's value, or have they not been properly informed yet? Secondly, could you explain why now is the right time to start TV marketing ads? I recall you previously mentioned waiting until you had adequate payer coverage, which makes sense. I would just like to hear your thoughts on this. Thank you.

Yes sir, Ayisha, can you maybe take those two?

Yes, absolutely. Regarding the prescribers who have not yet written prescriptions for ZORYVE, it's important to acknowledge that many providers have established routines that involve using topical steroids. Our team is actively engaging with them to highlight the benefits of ZORYVE and emphasizing its significance. Feedback from those who have prescribed ZORYVE shows that they are very satisfied and supportive of its clinical profile. Regarding your question about direct-to-consumer marketing, you've correctly noted that we have been considering this approach for a while. However, we wanted to ensure that our coverage for ZORYVE was secure first. We now believe we have reached a point where we are ready to proceed and activate this marketing strategy.

Perfect. Thank you very much.

Thank you. One moment for our next question. Our next question comes from Louise Chen of Cantor. Your line is now open.

Hi. Thank you for taking my question. So I wanted to ask you on seb derm what gives you confidence that you could build a greenfield opportunity here? Secondly, can you leverage any of the payer work you did for ZORYVE in psoriasis for your atopic derm opportunity? And then lastly, how do you think about a primary care partner? What would be an ideal company for you? And any thoughts on the timing of when we might see something, would it be this year more likely next year and beyond? Thank you.

Sure. I'll discuss the PCP aspect, and then I'll have Ayisha share our insights on seb derm. I want to ensure Patrick is ready to address that as a clinician. Afterward, Ayisha will cover the coverage aspect. Regarding the PCP partnership, we consistently believe this should be established around the atopic dermatitis launch, likely in the second half of next year. While there could be advantages to implementing it sooner, especially since seb derm is often addressed in primary care, we don't feel an urgent need to finalize the partnership for seb derm just yet. It will certainly add value as we gain traction. So, I would anticipate this happening in the latter half of next year. As for the IDeA partner, this is a firm with a capable and extensive primary care sales force engaging both internists and general practitioners, as well as pediatricians who treat numerous atopic dermatitis patients. If allergists can be included, that would be beneficial, but it’s not essential given the overall scale of the three opportunities. For us, the priority is finding a partner who excels in execution and collaborates well with our team. Patrick, could you elaborate a bit on the seb derm opportunity and how much development we need to undertake versus entering an established market?

Yes, absolutely. I think one of the key things about seborrheic dermatitis patients is that they're already in dermatologists' office. We heard this very early when we started talking to them, and it's been borne out by repeated ad boards and just more and more conversations. They have just as many seborrheic dermatitis patients in their office as they do psoriasis. And that's just people come in. Keep in mind that there hasn't been a new drug for seborrheic dermatitis for decades. And so now we're going to be bringing a non-steroidal treatment that is really kind of the first opportunity for them as HCPs to be able to offer something new to their patients. For the entirety of most of their practice, they've been using topical steroids and antifungals in some combination. And when a patient gets referred to them with seborrheic dermatitis, they've oftentimes been treated with these already. And now they don't really have anything to offer them. So I think that's one of the reasons I mentioned that we have just very high HCP excitement over this launch is because it really fits with patients that they're already seeing and now it's going to give them something new to be able to treat them. I think that's one of the things that makes being a physician rewarding.

And then Ayisha, do you want to talk a little bit about coverage and how psoriasis and seb derm might interact?

Yes, absolutely. What we've accomplished so far is laying the groundwork with key payer agreements related to psoriasis, which will help us establish the foundation for our access to seborrheic dermatitis. In the past, we mentioned having agreements already in place. This will provide us with the necessary access and foundation to secure coverage for seborrheic dermatitis.

Thank you.

Thank you. One moment for our next call. Our next call comes from Sean Kim of JonesTrading. Your line is open.

Hi. Thank you for taking my questions. I guess just one follow-up question on the prescriber base. So of that 3,000 dermatologists that you mentioned earlier in the call, how many are considered high prescribers? And all of the 7,500 unique prescribers that you mentioned, how many are also considered high prescribers? And if you're seeing any improvements in terms of the number of prescriptions per prescriber? And one question on pipeline is just for alopecia areata. Just wondering what the timing of the top-line readout might be and if there are any efficacy endpoints for that program? Thank you.

Sure. With regard to the prescriber base, I think it's a relative term. There are probably around 20,000 clinicians working in dermatology — that's MDs, DOs, as well as nurse practitioners and physicians' assistants. So the 13,000 that we're targeting already are the higher prescribing clinicians. And then within that, there obviously are gradations as well. There's a relatively small group of the very highest physician prescribers or clinician prescribers, the so-called decile 8, decile 9, decile 10 doctors. That's a relatively small number. And then you've got middling doctors and then the lower end of the high prescribing volume right, if you can think about it. I think, as Ayisha mentioned, there's no correlation between likeliness to use the newer non-steroidals and volume. You have some very large volume doctors who aren't using the new non-steroidals. You have some very low volume doctors or relatively low volume doctors who are. And then fortunately, you have high-volume doctors who are writing a lot of the newer non-steroidals, including ZORYVE as well. But it really comes back to just looking at their total volume across the entirety of the prescribing basket, right? The relevant prescription basket. Ayisha, I don't know if you have any additional comments that you wanted to add about the characterization of the prescriber base.

Nothing else, Frank. I think you've covered it.

Yes, absolutely. So yes, this is a Phase Ib trial, so it's not really designed to give us a clear read on efficacy. We're really looking at PK profile, safety, tolerability data, as well as certain biomarkers that we would use to potentially inform our efficacy expectations within the next trial, a Phase II trial. We've completed the healthy volunteer portion and we're enrolling alopecia areata patients right now, as I mentioned. With regard to the timing of that study, I think as we get further into the enrollment and we have a clearer idea of exactly what that timeline will be, we'll come back to you with a little bit more information on that. But as of right now, given where we are in the study, we're just not ready to give anything more about it.

Yes, thank you.

Thank you. Next question comes from Rohit Bhasin of Needham. Your line is open.

Hi, this is Rohit on for Serge. Can you just talk about where you currently stand in terms of managed care coverage and where you expect to be down the line? And then what are your expectations for the upcoming INTEGUMENT-PED trial? Should we expect different results than previous Phase III trials? Thanks.

Sure. Ayisha can you maybe address the managed care question, then Patrick talk about INTEGUMENT-PED?

Sure. First off, as it relates to our managed care coverage, as it relates to commercial, as I noted earlier in our remarks, we have 80% of commercial coverage for our patients for plaque psoriasis for ZORYVE, excuse me. And then of the 80% 90% of those patients do not have to — there is no prior authorization. Additionally, I will say is outside of the commercial patient population, we did receive notice from the VA that we did receive access for ZORYVE. And so the clinical guidelines have been updated where there is no step required for patients with ZORYVE that have sensitive — that have plaques in sensitive areas.

Yes. I can pick up on INTEGUMENT-PED. So just as a reminder, that is a study in the two- to five-year-olds with atopic dermatitis and it's with a 0.05% dose. The 0.05% and the 0.15% were both studied in the Phase II, and the efficacy looked similar between those two doses in that trial. Our expectation for the readout of INTEGUMENT-PED is that we would see a very similar safety and efficacy profile to what we showed in INTEGUMENT one and two with ages six and above. In general, atopic dermatitis tends to have similar efficacy across the different age ranges when looking at earlier clinical development programs.

Thank you.

Thank you. At this time, I would now like to turn the conference back to Frank Watanabe, CEO.

Okay. Well, first of all, thanks once again to everyone for calling in and thank you for, as usual, a group of really good questions. I think we're blessed with a wonderful group of analysts that are covering the company. We look forward to talking to everyone again in about 90 days for the next quarterly call. Thanks a lot.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.