Ladies and gentlemen, thank you for standing by. Welcome to the Arcutis Biotherapeutics Inc.'s 4th Quarter Fiscal Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Brian Sholkoff, Head of Investor Relations. Please go ahead.

Thank you, Michelle. Good afternoon, everyone, and thank you for joining us today to review our fourth quarter in full year 2025 financial results and business update. Slides for today's call are available on the Investors section of the Arcudis website. Joining me on the call today are Frank Watanabe, President and CEO of Arcudis, Todd Edwards, Chief Commercial Officer, Patrick Burnett, Chief Medical Officer, and Lotta Vyravann, Chief Financial Officer. I'd like to remind everyone that we will be making forward-looking statements during this call. These statements are subject to certain risks and uncertainties, and our actual results may differ. We encourage you to review all of the company's filings with the Securities and Exchange Commission, including descriptions of our business and risk factors. With that, let me hand it over to Frank to begin today's call.

Thanks, Brian, and thanks, everyone, for joining us today. I want to start out today's call by reviewing some key highlights and achievements from 2025, a year that was characterized by tremendous growth and progress for our QTIS as we pursue our mission of serving individuals living with chronic inflammatory skin conditions. We'll then transition to Todd for a commercial update, and then Patrick for an R&D update, and Lata for a review of our financial results. So in 2025, we made significant strides to solidify our cutisist position as one of the industry's foremost leaders in delivering meaningful innovation in medical dermatology. Throughout the year, we saw robust net product sales revenue growth, steady prescription growth, and a strong market share growth across all of our improved indications and formulations of Zareve or topical reflomal acid. We are incredibly humbled by the increasing number of healthcare practitioners and patients who are placing their trust in Zareve as an innovative, safe, and effective treatment option for chronic inflammatory skin conditions, an important and welcome alternative to topical steroids. In 2025, we saw explosive revenue growth for Zareve, strengthening its position as the number one branded non-steroidal topical treatment across all of our approved indications, psoriasis, seborrheic dermatitis, and atopic dermatitis. There hasn't previously been a drug for chronic inflammatory conditions with a profile or the reach of Zareve. An advanced topical targeted topical that can be used safely and effectively for any duration, anywhere on the body, across multiple indications and age groups. This unique profile of Zareev, and at a moment in time when there's increasing calls by both providers and patients for innovative, safe alternatives to topical steroids, has really fueled Zareev's robust commercial growth and success. So in 2025, net product revenues grew to $372 million, representing a 123% year-on-year increase versus 2024. This revenue growth was driven by year-on-year doubling in total prescription volume and has further cemented our leadership position in the branded non-steroidal topical segment, where we now hold roughly 45% and a growing share of prescription volume across our approved indications. Zareev's commercial growth in 2025 was bolstered by FDA approvals of Zareev foam 0.3% for patients with psoriasis of the scalpel and body 12 years of age and older, as well as the approval of Zareev cream 0.05 for the treatment of atopic dermatitis in children ages 2 to 5 years of age. These approvals, which mark our fifth and sixth Zarev approvals respectively, demonstrate our commitment to ensuring that we can bring the benefits of Zarev to as broad a group of patients with psoriasis, seb derm, and AD as possible. The approval of Zarev foam's expanded indication offered an important new option for individuals who struggle with psoriasis of the scalp and other sensitive areas. These patients now have a formulation that can be used anywhere in their body, affording them a new level of convenience to manage their chronic skin condition. And we're particularly proud of the approval of Zareev Cream 0.05% in young children with AD, given the frequent early onset of this disease and the meaningful number of patients in this age group. For far too long, there has been a significant unmet need, and we are proud now to be in a position to address it with Zareev. In 2025, we also submitted a supplemental NDA for Zareev Cream 0.3% for psoriasis in children ages 2 to 5, with the target action date of June 29th of this year. And if approved, this will mark another critical step in serving the unmet needs of this pediatric demographic and their parents and caregivers. On the clinical development front, in 2025, we completed enrollment in the Phase 2 Integumant Infant Trial, evaluating Zareev Creme 0.05 in infants ages 3 to 24 months with atopic dermatitis. And earlier this month, we were delighted to report positive top-line results from that study, which Patrick will review later on call. And we're now preparing to submit this data to the FDA for a further label expansion. This is another important milestone as we work diligently to ensure that we can serve this youngest and most vulnerable population who have nearly no FDA-approved treatment options. In 2025, we also initiated Phase II proof-of-concept studies with Zarev, Foam 0.3%, Invitiligo, and Hydradinida Suprativa, or HS, marking an important step as we explore potential new indications that would enable us to expand the benefits of Zareev to additional individuals in need of effective treatment options and further maximize the pipeline in a molecule opportunity that Zareev represents. Finally, last year, we submitted an IND application for ARQ-234, our novel biologic with best-in-class potential to address a large unmet need in atopic dermatitis as we look to expand our pipeline and extend our mission to deliver meaningful innovation to patients with chronic inflammatory skin conditions. In short, we have had a tremendous year of progress, and we are confident that these accomplishments have set the stage for a successful 2026 and well beyond. None of this, of course, would be possible without the incredible talent, hard work, and persistence of the Arcutis team. So I'd like to take a moment to acknowledge and thank each and every one of our team members for their deep and continued dedication to our company's mission, and, above all, to the patients that we serve. Moving to slide six, to frame the rest of today's discussion, I'd like to recap the three-pillar corporate strategy that we introduced a few months ago to describe how we will sustain both near- and long-term growth for our QDIS. We have already made progress across all three of these pillars. On the growth front, I just mentioned the compelling data from the Integma and Infant Trial and our plans to pursue a label expansion based on that data. And as you'll hear more from Todd in just a minute, we've recently announced an expansion of our dermatology specialty sales force to drive further Zareev growth, as well as our decision to take over promotion of Zareev to primary care physicians and pediatricians. In terms of the expand pillar, as Patrick will expound on shortly, we continue to progress our phase two POCs in HS and vitiligo and look forward to sharing data from these trials later this year or early next, and we are evaluating additional POC studies for other diseases. Finally, we look forward to enrolling the first patients in the Phase I study of ARQ-234 shortly and eventually sharing data from that study with the investment community. These concrete steps in realizing our strategy are evidence of our dedicated and disciplined strategic approach to ensuring ARQ-DIS is well-positioned for both a near- and long-term success. Before turning the call over to Todd and Lot to review our fourth quarter results in more detail, I want to give an update on some key points about the revenue guidance that we gave during our Investor Day in November of last year. First, we are raising our 2026 full-year net product revenue guidance range from originally the $455 million to $470 million to now $480 million to $495 million to reflect both the strong momentum for Zareeve as demonstrated by our fourth quarter results and also the investments that we continue to make in the franchise that the team will detail further today. We will evaluate our revenue guidance throughout the year and may update that when appropriate. Second, not only did we achieve positive cash flow in Q4 as promised, but we are reaffirming that we will maintain positive cash flow on a quarterly basis throughout 2026, even as we continue to increase our investment in Zaree's growth and our pipeline. And with that, I'll hand the call over to Todd for a Q4 commercial update.

Thank you, Frank, and good afternoon, everyone. Turning to slide eight, as Frank noted, the strong momentum of Zaree's growth continues in the final quarter of 2025. Where we generated sustained revenue growth is driven by the increased adoption of Zareve across our approved indications. In the fourth quarter, net product revenues were $127.5 million. This reflects 84% year-over-year growth and 29% sequential growth from the third quarter of 2025. This sequential revenue growth was primarily fueled by sustained increases in prescription volume of 19%. This reflects the increasing confidence clinicians and patients have in Zareve as a trusted treatment across a broad spectrum of inflammatory diseases. And while still in the early days of launch, we are encouraged by the initial uptake of Zareve cream at 0.05%, the treatment of atopic dermatitis in children aged 2 to 5 years old, following the approval in the fourth quarter of 2025. There was also a very small contribution from a channel inventory build during the period, accounting for approximately 2% or $2.5 million of revenue in the fourth quarter, which we anticipate will unwind in Q1. We also saw a stronger than anticipated price improvement in the fourth quarter, driven by a continued reduction of copay card utilization as more patients met their deductibles and out-of-pocket maximums, contributing to the remainder of our quarter-over-quarter growth. Our gross-to-net remains stable in the 50s, and we anticipate it will remain in the same range in 2026. Unlike some of our competitors in the veranda topical space, we did not see any gross-to-net erosion last year, and we do not anticipate any significant gross-to-net erosion as we progress through 2026 we do anticipate a typical reduction in net product revenues in the first quarter of 2026 as compared to the fourth quarter of 2025 this sequential decrease in sales will primarily be driven by typical seasonality resulting from patient deductible resets leading to higher co-pay usage this will lead to an increase in our gross to net rate to the high 50s in the first quarter, which will then gradually improve throughout the year and end with the lowest gross to net in the fourth quarter, as we experienced in 2025. Additionally, we did see demand across a couple weeks in January was impacted by winter storm fern, as expected from a storm of this magnitude. These factors in aggregate will lead to a more pronounced step-down in quarter-on-quarter total product revenue, Q4 versus Q1, than we experienced in 2025, when we saw increased quarter-on-quarter demand driven by our launch in AD that offset the typical seasonal headwinds. This is only a Q1 dynamic. As you heard from Frank earlier, our conviction in Zaree's continued growth and momentum in 2026 is strong and increasing giving us the confidence to raise our guidance range at this early point in the year as you can see from slide nine wiki prescriptions on a rolling four-week average were approximately 22 000 scripts another record high for the zareed franchise over the next year we anticipate robust and sustained demand remain the primary driver Zareed's revenue expansion. A factor that will contribute to the sustained volume growth in 2026 is a recent market access improvements that we have made with multiple national PBMs and health plans. On the commercial side, several plans improve Zareed's access by expanding coverage and improving utilization management criteria to a single step to a topical steroid. Furthermore, more. We were successful in obtaining coverage with several Medicare Part D plans effective January 1st, with roughly one-third of all Medicare Part D recipients now having access to Zareve through their insurance plan. This makes Zareve the only branded non-seruminal topical included on these Medicare formularies and helps us open the door to access for patients served by Medicare. This has been a key objective for our cutis from day one, and these formulary wins are clear validation of our differentiated pricing and access strategy. Because Medicare formularies favor generic therapeutics, such as topical corticosteroids, Cereva has been assigned to the non-preferred drug tier, which is associated with higher co-pays or coinsurance costs than preferred tier drugs. While we're delighted to expand access to Zarev because of this achievement, we anticipate that the impact of demand may be tempered due to Zarev's non-preferred position. Turning to slide 10, our sustained momentum in Q4 and throughout 2025 highlights Zarev's exceptional utility. The growing confidence in our brand among both clinicians and patients, and the broader shift in the treatment of inflammatory skin diseases away from topical corticosteroids. The three charts on this slide demonstrate important factors shaping the treatment paradigm for inflammatory skin diseases. The chart on the left illustrates that the branded non-steroidal topical segment continues to grow meaningfully, gaining share from topical corticosteroids where usage remains flat or declining. Within the branded non-steroidal category, Zareev is driving the majority of that growth. The pie chart in the center highlights the share shift driven by faster growth in advanced targeted topicals versus topical steroids. As a result, branded non-sterotopicals now account for 7% of total topical prescriptions against a sizable 2025 base of 24 million prescriptions. This represents meaningful progress. As volume continues to shift from topical cortical steroids to branded non-steroidal topicals, growth should accelerate. Each one-point share shift from topical cortical steroids translates to approximately 15% volume growth for the branded non-steroidal topical segment. And finally, the chart on the right-hand side of the slide makes clear that Zareev is positioned to overwhelmingly benefit from this trend of topical cortical steroid displacement. as we hold a strong and expanding share of branded non-steroidal volume at 45%. At our Investor Day last October, we shared our peak sales guidance and reaffirmed our conviction that Zareeve could become a multi-billion dollar brand. This confidence is rooted in the ongoing shift of a meaningful portion of the topical steroid market toward advanced targeted topical therapies like Zareeve. For every one point of share we capture in the corticosteroid-dominated topical market, we estimate approximately $150 million in incremental revenue. Evidence that this shift is underway is strong and growing as we enter 2026. Demand from both providers and patients for safer, non-steroidal options to manage chronic inflammatory skin diseases continues to build. At the major dermatology conferences held in the first quarter of this year, A consistent theme from the podium was the need to move beyond topical steroids and adopt advanced targeted topicals. We remain well positioned to provide a safe and effective alternative for those seeking one. Now moving to slide 11, I'd like to spend some time providing further detail on a recently announced dermatology sales force expansion and the benefits we anticipate gaining from it. In January, we announced that we would expand our dermatology sales force by approximately 20% to roughly 160 sales personnel. The primary intent of this expansion is to increase our call frequency with mid-decile prescribers without impacting or diluting the level of engagement we have with our most productive top decile dermatology clinicians. Said another way, the intent of the investment is to optimize the frequency of our sales force touch points in dermatology, as we already have sufficient breadth of coverage in this provider setting. To further illustrate our strategy with this expansion, we have detailed prescribing behaviors across different provider categories. High docile prescribers are relatively few in number, but as you can see, have the highest volume of potential 0-E patients. And it is important to note that we evaluate activity based on total topical prescription writing, including topical corticosteroids, not Zareev writing or non-steroidal topical These health care providers have an outsized impact on prescriptions they write a year and have been our primary focus to date. With our Salesforce expansion in mid-2024, bone approval and atopic dermatitis, we had already optimized our coverage of these highest-value clinicians, briefly engaging them on the potential benefits Zaree can offer their patients. The mid-decile prescriber group is more numerous and frequently see patients in Zaree's target indications, albeit not the same very high volume as the high-decile group. To date, we have also been engaging at least these clinicians, but to focus our efforts on the highest potential prescribers, the frequency of the cells team's interaction within them has been lower than optimal and less than high prescribers. With the expansion of our sales force, we'll be able to increase our call frequency among mid-decile prescribers to an optimal level, driving increased awareness and adoption as a read within this group. And to round out the picture, there's the final category of low-decile prescribers who are far more numerous than the other groups based on their low prescription writing or lower priority for our sales efforts. We are already in the process of hiring these additional reps to strengthen our sales force and are enthusiastic about the level of talent we are bringing to the team and the impact they will have once in the field. We anticipate beginning to see the impact of this investment in the second half of the year and expect it to be accretive in the first year as the team ramps up. Turning to slide 12, expanding our QDIS's commercial presence into primary care physician and pediatricians is a key component of our growth pillar. As announced in January, we have begun building a targeted sales force focused exclusively on these clinicians. In earlier stages of Zareed's commercialization, while executing our new product launches and building our operational leverage, the partnership model provided an effective approach to this segment of the market that reduced our financial exposure. We now have the opportunity to combine what we have learned through the initial partnership with our core commercial capabilities to create a targeted, accretive opportunity that can scale with time as we further expand our operating leverage. Importantly, this initial deployment is focused not on whether to pursue the opportunity, but on how best to execute it. We're taking a disciplined, stepwise approach, starting with a limited pilot to refine our go-to-market strategy, then will scale thoughtfully while maintaining a highly targeted focus on the highest-value PCPs and pediatricians. The additional sales team that we are putting in place for this will be compromised with approximately 30 sales reps and supporting personnel. This effort is distinct from and additive to our Dermatology Sales Force Expansion, which remains exclusively focused on driving growth within dermatology practices. As we expanded primary care in pediatrics, we do so with four distinct competitive advantages that position us to execute effectively and drive meaningful impact. First, a highly targeted approach focused on high-volume early adopter PCPs and pediatricians positioning this investment to be accreted from the outset. Second, proven reimbursement support capabilities, including our patient access infrastructure to help ensure written prescriptions translate into reimbursed prescriptions. And third, the ability to leverage the core commercial model has driven our success in dermatology. And fourth, strong dermatologist advocacy, which provides important specialist validation for PCPs and pediatricians. Cere's differentiated profile as a safe, non-stero-topical, suitable for use anywhere on the body and for any duration offers primary care clinicians a level of confidence not typically associated with topical steroids. As the shift away from topical steroids expands beyond dermatology, we are well-positioned to benefit. While we begin with a focused pilot with early adopters, we believe Zuri's profile has the potential to resonate broadly over time across both primary care and pediatricians. I am now on slide 13. Yesterday, we are excited to announce that Max Houma has joined our Free to Be Me Awareness Campaign, sharing his experience in managing seborrheic dermatitis with Zarif foam. Max joins Tori Spelling, who along with her daughter, Stella, have shared their experience with atopic dermatitis and seborrheic dermatitis in advocating for individuals with inflammatory skin diseases to initiate conversations with their healthcare providers about Zareef, a safe, effective, long-term treatment for these chronic diseases. The range of impact that Tori and Stella have had in driving awareness around treatment options for atopic dermatitis and sederm have been wide and impactful with coverage in over 60 traditional news outlets and thousands of broadcast and radio TV airings to achieve close to 5 billion media impressions. and social media reaching millions on Instagram and TikTok. We look forward to Max further contributing to these efforts, and based on the media and social media coverage, in the last 24 hours, it's off to a great start, with over 25 original articles achieving over 400 million impressions. And with that, I'll turn it over to Patrick.

Thank you, Todd. I'm now on slide 15. Ensuring that we can deliver Zarev to as broad a number of individuals with psoriasis, seborrheic dermatitis, and atopic dermatitis as possible, thereby benefiting from the unique profile of this drug, remains a top priority for us. Our ongoing efforts to support young children with plaque psoriasis and infants suffering from atopic dermatitis are central to this goal. I'd like to start off today by highlighting the positive top-line results from the Integravent infant phase 2 trial of Zareve cream 0.05% in infants aged 3 to less than 24 months with mild to moderate atopic dermatitis, which we announced earlier this month. 58% of participants achieved a 75% improvement in eczema area and severity index, also known as an EZ75. The Zareve cream 0.05 percent at week four and notably a third of patients reached easy 75 already after only two weeks of treatment demonstrating a very rapid and robust result and one that has already garnished garnered highly positive feedback from clinicians turning to safety we saw no treatment emergence serious adverse events and only one patient discontinuing the study due to an adverse event reinforcing the consistency of the safety and tolerability profile of Zarev cream 0.05 percent already seen in the four-week pivotal Integument PED clinical trial in children ages two to five years. Finally, and still on slide 15, we have photographs of a 10-month-old Latino child from the study who achieved an EZ75 at week four. We can see clearly he has significant atopic dermatitis at baseline on the arms and the legs as well as a facial involvement which is really characteristic of infants with atopic dermatitis. As a practicing dermatologist seeing this type of rapid and meaningful sin clearance in patients at this young age who historically been difficult to treat given very limited available therapeutic options is really encouraging. Of note enrollment in the trial for this age range was very brisk and exceeded typical enrollment patterns and our expectations confirming that there's significant interest in non-steroidal treatment options for these most vulnerable patients these results of the integument infant trial are extremely promising as infant atopic dermatitis patients urgently need innovative alternatives to topical steroids with vanishing few fda approved treatment options for this segment and unlike other inflammatory skin conditions atopic dermatitis often presents at an early age nearly 10 million children in the U.S. are impacted by atopic dermatitis with roughly 60% developing symptoms in their first year of life. And within just the studied age range here, infants 3 to 24 months old, there are nearly 1 million prescription topically treated patients in need of better therapeutic options. AD presents unique challenges in these younger age groups, not only because the skin is more sensitive, but also because the condition often covers a greater percentage of their total body surface area compared to adolescents and adults this raises the risk of greater systemic absorption therefore parents of these young infants are particularly sensitive to potential negative side effects of topical steroids these concerns range from the impact of chronic steroid use on the child's growth and bone development to more media concerns like application to the child's face where contact with the eyes and mouth can be difficult to control given the size of the patient population and the acute need for safe and tolerable therapeutic interventions. We've been methodically pursuing label expansion for Zarif to younger ages of children with atopic dermatitis. Notable about the integument infant data is that we're moving closer to having a marketed product that can be used to treat individuals with chronic inflammatory skin conditions like atopic dermatitis across the lifetime continuum from infant to adult. This means that there will be a non-steroidal treatment option that spares patients from the youngest stage onward from exposure to steroids while effectively treating their skin conditions. Moving on to slide 16, we're already engaging pediatricians on our currently approved indication for two- to five-year-old atopic dermatitis patients, and the integument infant data combined with our pending PDUFA date for two- to five-year-olds in psoriasis, if approved, all support further outreach to pediatricians by our internal sales force but the treatment alternative to steroids that is now demonstrated to be safe and effective once approved for infants and as pediatricians gain familiarity with prescribing zarive to for example a 12-month-old infant with atopic dermatitis they'll be more likely and more inclined to then prescribe it for an older child or an adolescent as well as todd noted we've been encouraged by our initial launch of zarive cream 0.05% for the treatment of children ages 2 to 5 years old with atopic dermatitis, a population of about 1.8 million patients. We're excited to continue our introduction of this important new therapeutic option to clinicians and, most importantly, to pediatric patients and their caregivers. We plan to report the full results of the Integment Infant Trial at a future medical Conference. Based on these data, we plan to submit an SNDA for Zareef Cream 0.05% in infants in the second quarter of this year. In addition to atopic dermatitis, we're also pursuing a label expansion to treat pediatric plaque psoriasis patients. While this patient population is smaller than that of pediatric AD patients, there's still an acute need for better therapeutic interventions that we are working to address. In quarter three of last year, we announced that we submitted a supplemental NDA for Zareve Cream 0.3% to expand its indication to the treatment of plaque psoriasis in ages 2 to 5. We've been assigned a PDUFA date of June 29th and look forward to the FDA's decision. If approved, Zareve Cream would be the first and only topical PDE4 inhibitor indicated for plaque psoriasis in children as young as 2, offering patients and caregivers an important alternative to topical steroids and vitamin D analogs. As we potentially gain label expansions for these younger patient populations across atopic dermatitis and plaque psoriasis, having an internal sales force dedicated to primary care and, importantly, pediatric clinicians will be of great value in our efforts to educate healthcare providers on Zarev as an alternative therapeutic option to topical corticosteroids. Beyond our clinical development efforts to make Zareve available to more pediatric patients, we also continue to evaluate incremental data generation opportunities to further bolster our currently approved indications. At our Investor Day, we highlighted a case report that demonstrated the effectiveness of Zareve in treating nail psoriasis. This is a good example of where incremental data generation could further strengthen our current indications and we look forward to providing further updates throughout the year. Turning to slide 17, pursuing a new patient population that may benefit from Zareef has been a principal focus for our clinical development strategy from the outset. This is evidenced by the five approvals we've secured since our initial plaque psoriasis approval in 2022. These have expanded our indications to include seborrheic dermatitis and atopic dermatitis and lowered the approved ages for psoriasis in AD patients. We have good reason to believe that there are additional skin diseases that may respond to and more patients who may benefit from Zarev, represented by the expand pillar of our strategy that Frank highlighted at the outset of today's call. This belief is supported by our understanding of Zarev's broadly applicable anti-inflammatory and anti-prioritic properties, as well as its potential impact on protecting melanocytes and by the direct and ongoing feedback we've received from healthcare providers in the field on their real-world Zareve experiences. To that end, we continue to make progress with our Phase II proof-of-concept studies with Zareve foam 0.3% in vitiligo and hydradenitis suppertiva, or HS, with subjects continuing to enroll. Vitiligo and HS both represent chronic inflammatory skin conditions with significant unmet patient needs. These are just two examples of multiple indications in which Zareev has demonstrated encouraging early evidence as promising treatment. Based on that evidence, we initiated the ongoing proof-of-concept studies in vitiligo and HS. We continue to evaluate additional diseases where Zareev might be a good therapeutic option, and as we decide to initiate additional POC studies, we will inform the investment community of those developments. We anticipate reporting a decision whether to advance vitiligo, including the Phase II proof-of-concept data in the fourth quarter of 2026, and an advancement decision in HS, including the HS Phase II data in the first quarter of 2027. On Slide 18, as a reminder, there are three cases that typify the sort of case reports and case series that we receive and that are informing our Zarev expansion efforts. The two Two patients on the left are both children with recalcitrant facial vitiligo. The girl on the upper left has previously failed multiple topical therapies, including both topical steroid and topical JAK inhibitors, and you can see meaningful repigmentation after only seven months of Zarif treatment. The boy on the lower left also previously failed topical steroid treatment and shows good response after only five months of Zarif treatment. On the right-hand side of the slide, you see a 31-year-old woman with Hurley Stage 1 HS who exhibited complete clearance of her HS, including pain and itch, and only four weeks of treatment with Zarev, in conjunction with two non-inflammatory medications. In the lower right, you also see details from two other mild HS patients who had similarly impressive results following Zarev treatment. It's clear to see what's driving the enthusiasm that we are hearing from clinicians who are independently exploring these novel applications of Zareev. Now on slide 19, as I've touched upon today and as represented on this slide, we're looking forward to multiple near-term clinical catalysts in the coming year. Importantly among these clinical activities is the advancement of ARQ-234, our novel biologic targeting CD200R with best-in-class potential to address a large unmet need in atopic dermatitis and potentially additional inflammatory skin diseases. With excitement around other emerging AD mechanisms, such as OX40, recently coming under more scrutiny, we look forward to moving ARQ-234 into the clinic to validate what has the potential to be a meaningful therapeutic advancement for AD patients with more severe disease. This program has come to our third pillar, BUILD, encompassing our efforts to expand our clinical pipeline beyond the REVE. We expect to begin dosing patients in the Phase I trial for ARQ-234 very soon. And with that, I'll turn the call over to Lata for the financial update.

Thank you, Patrick. I'm now on slide 21, showing financial results both year-over-year and quarter-over-quarter for the fourth quarter. We generated net product revenues in the fourth quarter of $127.5 million, which is up 84% from the fourth quarter of 2024 and 29% from the third quarter of 2025. We generated $2 million of other revenue in the fourth quarter from a Wadong milestone payment. Cost of sales in the fourth quarter were $11.7 million compared to $6.9 million in the fourth quarter of 2024, primarily driven by increased series sales volume. For the fourth quarter, our R&D expenses were $20.5 million, which is a $6 million increase from $14.5 million in the fourth quarter of 2024, when a clinical trial credit of $3.3 million lowered our R&D expenses for that period. Looking ahead to 2026, we expect an increase in our R&D expenses as we continue to advance dereive life cycle management clinical development activities and initiate the phase one trial of ARQ 234. SG&A expenses were $79 million for the fourth quarter of 2025 versus $57.6 million in the same period last year, a 37% increase attributable to investments in our continued commercialization efforts for Zareeve. In 2026, we expect to see an increase in SG&A expense as we continue to make incremental investments in Zareeve commercialization efforts, including the expansion of our dermatology sales force and the initial build of our internal primary care and pediatric sales team, as detailed by Todd earlier. Net income for the quarter was $17.4 million, compared to a net loss of $10.8 million for the same period last year and net income of $7.4 million for the third quarter of 2025. While we continue to expect positive cash flow on a quarterly basis throughout 2026, we may fluctuate between an operating income and operating loss position quarter-to-quarter driven by non-cash expenses, such as stock compensation and milestone payments. As anticipated and reported in our Q3 financial update, the continued momentum of the REED net sales growth, combined with our expense discipline, allowed us cash flow positive position in the fourth quarter of 2025, which was earlier than expected and an important milestone and achievement for our company. Our cash and marketable securities balance as of December 31, 2025, was $221.3 million, with a positive cash flow from operations of $26.2 million for the period. We have total debts of $108 million and have the option to withdraw another $100 million in whole or in part at our discretion through the middle of 2026, providing us with operational flexibility. The success of the Zaree franchise and the economies of scale we are generating will permit us to invest in the business for sustained growth over the years ahead. Now turning to our full year 2025 results. I'm on slide 22. For the full year 2025, net product revenues were $372.1 million, an increase of 123%, or $205.5 million versus 2024. This meaningful year-over-year increase in product revenue was primarily driven by increasing demand across Cisari products. Other revenue in 2025 was $4 million compared to $30 million in 2024 when we received a $25 million upfront payment in connection with the Sato Japan License Agreement. Cost of sales for 2025 were $36.7 million compared to $19.1 million the prior year driven by increased derivative unit volume. R&D expenses remain consistent year-over-year with $77.1 million expense in 2025 compared to $76.4 million in 2024 as increased development costs for riflumilas in pediatric atopic dermatitis were largely offset by a decrease in preclinical development costs. SG&A costs increased 20% in 2025 to $274.6 million. This year-over-year increase was primarily driven by our continued and increasing investments in sales and marketing activities related to our commercialization efforts for Zareeve. Our net loss in 2025 was $16.1 million compared to $140 million net loss in 2024. This reduction in our net loss of $123.9 million was driven by an increase in net product sales that substantially outpaced the increase in our expense base. While expenses continue to grow due to strategic ROI positive and accretive investments, the considerably faster growth of our top-line revenues is an indicator of the growing operating leverage we expect to benefit from going forward as the REVE continues its growth trajectory. Now moving to slide 23. As we touched upon earlier, across this business, we have multiple near-term value-driving catalysts. Adding to Patrick's summary of expected clinical and regulatory developments, we anticipate continued commercial progress in 2026. This year, we anticipate full-year net product sales to be in the range of $480 million to $495 million. This represents an increase of $25 million on the top and bottom ends of our guidance range announced as part of our investor day in October of last year. Our confidence in increasing our sales guidance for the year is informed both by the sustained momentum in our Zareed business, as demonstrated in the Q4 results discussed today, as well as the investments we are making in the franchise, such as the dermatology salesforce expansion Todd reviewed earlier. I will note that the effect of this particular investment will take some time to materialize and will be evident in the back half of the year, but will likely have no meaningful impact in quarters one and two. We are confident that we will be able to fund the investments we've described today to grow, build, and expand our business with the capital produced from our core Zareed business while maintaining positive cash flow. We will continue to be protective of shareholder capital and attentive to managing our capital allocation to ensure that this dynamic plays out. We are fortunate to have a portfolio of high ROI investment opportunities paired with the cash flow generating franchise like Zareev. I will now hand the call back to Frank for some closing remarks.

Okay, thanks Lath and thanks to all of you for joining us today. You know, based on our expansive progress and achievements in 2025 and our multiple anticipated value driving catalysts across the business in 2026, we are more energized than ever about the future of Zareev, of our company overall, our ability to grow shareholder value, and most importantly, of our ability to amplify the impact we can have on individuals impacted by chronic inflammatory skin diseases. We look forward to providing you with more updates throughout the year, and we thank you for your continued interest in the unfolding Arcuda story. And with that, we'll open things up to Q&A.

Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced to withdraw your question please press star 1-1 again and the first question will come from Seamus Fernandez with Guggenheim your line is open great thanks so much and uh congrats on the uh the great results You know, Frank, I really wanted to just kind of tackle the update that we got from one of the potential competitors in the market.

I think Insight was commenting on some challenges or need to lower Opsil or pricing in order to improve access. It sounds like access isn't really a problem for Zareev. So just wanted to get your thoughts and commentary around the dynamics that are occurring in the market today within both the AD marketplace, but also your broader efforts to continue to take share against topical steroids. Thanks.

Seamus, thanks. Great question again. Not a surprise after this morning. A little funny to be talking to different parts of the hotel. You know, I think maybe for a different perspective, I'll ask Todd to comment on that since you heard my answer earlier today.

Yeah, I'm happy to answer that. And hello, Seamus, thank you for the question. So first, you know, we do not anticipate any material erosion of our growth to net resulting from actions to increase our access in 2026. As previously mentioned, we were able to achieve significant improved access in 2025. If you look at our commercial access, more than 80% of patients insured by commercial insurance have access to Zareve, and it's high-quality access, meaning that it's at a single-step edit through a steroid. As mentioned earlier, too, we have exceptional Medicaid access with more than half of the patient population in Medicaid having access to Zareev with a single-step edit or less. And then just announced was our Medicare Part D wins effective January 1st. And so we've had optimal access, and we don't anticipate having to give any additional rebates in 2026 that would adversely impact our gross net to be able to maintain that. And then I just want to also remind that, you know, our pricing strategy has been designed to facilitate this kind of reimbursement that allows for meaningful patient access. You know, our strategic privacy has made a difference, and now we can see that within access across both commercial insurance and government insurance.

Yeah, so maybe I'll just chime in and take a little bit of a victory lap here. You know, as I mentioned earlier, you know, I think when we launched, there were a lot of investors who were questioning our access strategy and why we were taking such a different approach than other players in the branded topical space. And, you know, I would make a strong case that the last three years has proven out the wisdom of the strategy that we adopted. You know, Todd has just summarized. We've really achieved outstanding access across commercial Medicare and Medicaid now. And that's come with a very reasonable and stable gross net, you know, in the 50s. And we expect it to remain there. And so I think, you know, really the marketplace has proven that we took the right strategy from the outset. And it's paying off not only for our investors, but also for patients.

Great. And if I could just ask one quick follow-up question, it's actually more related to some of the decisions and, you know, the federal court decisions around rebate dynamics and also, you know, some labor law dynamics that are calling into question, I think, some rebate But we've also heard that it's going to be really challenging to kind of change the dynamics of the current marketplace as it relates to, you know, the presence that the GPOs have. So as you guys look at some of the dynamics in the marketplace, do you see potential positive changes from an access perspective emerging from some of these recent updates and changes?

Thanks so much, and I'll jump back into Q. Um, yeah, so Seamus, that's also a really interesting question. You know, I think that there, there's a lot of discussion going on right now in Washington about our current reimbursement environment. You know, we saw in the, in the budget bill that was passed last month, you know, I think the first steps in some meaningful reforms to the current payer system, but those were pretty limited steps. You know, there continues to be a lot of discussion in Congress, as well as in the administration, about changes to the PBM environment, to the reimbursement environment, excuse me, more broadly. And I think it's really too early to say what Washington is going to do on that front. You know, we remain confident that regardless of how the situation evolves, Arcudis is well positioned to continue to both make Zareef widely available to patients, and to be able to generate a reasonable return for our investors. But I, for one, I think it's much too early to say how this is all going to shake out in terms of a meaningful reform to the insurance system in the U.S. Thank you.

Thank you. And our next question is going to come from Tyler Van Buren with TD Co. And your line's open.

Hi, this is Eken O'Coffer on for Tyler. Congrats, guys, on the quarter. We noticed that in your presentation, you guys didn't break out sales for each one of the SKUs.

We're wondering if you can comment on that and any growth trends that you expect for the different SKUs going into 2026.

Yeah, sure. Todd, do you want to take that one?

Yeah, I will. Yeah, we had, as mentioned before, we had growth across the portfolio and had meaningful growth within each of the SKUs. The SKUs, if you look at the growth across those SKUs, you know, we see, you know, an increased demand more so with the Zuri foam, given that we have the two indications, seborrheic dermatitis, but also the scalp and body psoriasis, but nonetheless, very positive growth across the products. And we do anticipate to continue to have growth across the portfolio as we enter to 2026 and throughout 2026. You know, across these products, they're all highly differentiated relative to the vehicle itself and also relative to the patient being that it's once-a-day dosing. You can put it anywhere for an iteration on the body and is exceptional relative to long-term disease control with these inflammatory skin conditions. So we look forward to continued growth across the portfolio as we continue to roll through 2026.

Yeah, I might just add, you know, I do think for investors, you know, looking at the Rx split data, since we have different SKUs, is a pretty accurate depiction of the split, right? The gross to nets are effectively the same across the SKUs. There's a little bit of a lag when we first launch a product like 0.05, but that very quickly catches up to the other SKUs. So you can look at the SKU split and get a pretty good sense of what's happening. You know, the one exception is the foam where we have two different indications. And frankly, we don't even have enough data at this point to tease out what's sebderm versus what's scalp psoriasis. You know, I think as time goes on, we might get a better sense of an estimate of that, and we'll share that with the investment community. But, you know, we're never going to have complete transparency since it is the same SKU.

I can also add that we have the breakout of net sales in our reported financial statements. And we're happy to send you those details, but the net sales are broken out by SKU, as Frank just said, in the financial statements, and you can look at those.

Perfect, guys.

Thank you. And the next question is going to come from Judah Frommer with MS. Your line is open.

Yeah. Thanks for taking the question, and congrats on the progress. Just curious to get a little more color on the confidence to raise the full-year guide. You know, obviously a strong Q4, but heading into what sounds like a seasonality-affected Q1. So maybe if you could just break out between formulary access, you know, confidence in the additions to the sales force, and anything else that underscored changes to the inputs in your model.

Yeah, so, Todd, not to wear out my welcome, but I think I'll probably turf that one over you, too.

Yeah, yeah. So we spent a lot to kind of frame this. One, first is the exceptional momentum that we have in Q4, that to be coupled with the investment that we're making in the franchise. One, the termontariate field sales force expansion, which we will see that impact in the second half of the year. In addition to that, the investment in primary care pediatricians and the launch into that space, once again, have an impact the second half of the year. But in reference to formula access, as mentioned, we continue to have exceptional formula access. We did in the previous year. We will carry that forward into 2026 as we go forward. So in reference to the Q1 dynamic, I mean, this is typical seasonality that you see with any pharmaceutical product to include non-steroidal branded topicals. And as mentioned, it's probably because the deductible reset that happens at the beginning of the year. And also patients are changing insurance plans. effective the first of the year, which results, you know, I'm saying, into higher increased co-pay usage and therefore higher gross to net rate within the first quarter, which we mentioned will be in the high 50s. But from the first quarter, that gross to net rate will continue to trend down, as we saw in 2025, to the lowest rate in Q4. We raised the guidance. We're very confident in our performance. It's going to happen in 2026, and we expect to have sequential quarter over-crow or growth as we roll through out of Q1 to Q4, aligned with the restated guidance. Once again, taking note that the investments, the dermatology expansion and PCP expansion will have impact in the second half of the year.

Thank you. And the next question is going to come from where you're with Mizuho. Your line is open.

Hey, guys. Yeah, congrats on the good quarter. Maybe a couple of questions, if I may. First question is, I think in the fourth quarter, you indicated that quarter over quarter growth was 29%, and about 19% of that came from RX, and 2% contributed to inventory. So that sort of implies that about 8% came from price. Just wondering, do you expect this sort of benefit to continue through the year and particularly in the fourth quarter of next year as well? That's the first question. And the second question is, you indicated that you have about a third of Part D. Maybe just help us understand what is it, you know, like why you're able to get this third and when would you be able to get the remaining and what was it about this particular third that may, you know, that facilitate, I guess, access?

Thanks. Todd? Yeah, no problem. Yeah, relative to the fourth quarter dynamics, you are accurate relative to the 29%, with 19% of that being attributed to volume, the 2%, which was an inventory bill that we had. Once again, 2% or $2.5 million that we expect to unwind in Q1. And then the other relative was to the price upside, which was a result of patients moving quicker through their deductibles, which lowered our copay card expenses. You know, we will see the seasonality in Q1 that we mentioned, but then also, as mentioned, the gross to net will continue to improve through the quarters through Q4 as patients start to achieve their out-of-pocket maximum, which reduces our copay card expenditures. That typically starts at the highest in Q1 and then levels down quarter by quarter to a lower expense to us, which lowers our gross to net in Q4. Relative to the Medicare Part B and the one-third, how and why were we able to achieve this? It's two reasons. One is our strategic pricing. We priced Zaree so that we could have access across both government and commercial payers and PBMs. And the other is that Zaree is highly differentiated. One is the portfolio that we have, which no other brand of topical company can offer a portfolio of products across the disease indications that we can. Other is the significant volume uptake that we've had within our commercial business is duly noted by the Part D plans, realizing that there's a demand from Medicare Part D beneficiaries to have access to this type of product, which has resulted in us picking up that one-third of the Part Ds. Relative to the remainder of Medicare Part D, we will continue to work with the remaining plans and PBMs, but don't anticipate picking that up until likely the first part of 2027, but work diligently to try to pull that forward if possible.

I do think it's worth dwelling on just how big a deal this is to gain Medicare access, Part D access, right? It's very rare for patients to be able to get branded products on the Part D formularies. And I think Todd mentioned in the call, we're the only branded topical on the formulary. You know, these are your grandmothers, your mothers, you know, these are people who deserve access to medical innovation as much as anyone else, if not more so. And we're really proud of our success so far in gaining Medicare coverage and are looking forward to getting the remaining Part D formularies on board. I would also just remind investors that Part D, unlike Medicaid, looks a little bit more like commercial markets where there's multiple commercial plans managing the Part D plans. And so you have to gain formulary access to each individual Part D provider, which is why it's lumpy the way commercial coverage is.

Okay, thank you. And the next question is going to come from Andrew to side with Jeffries. Your line is open.

Hey, Brian, on here for Andrew. Just on HS and Vitiligo, can you just remind us on the primary endpoints for both of those, as well as the outcomes that you'd like to see to take them both to phase three?

Sure. Patrick, you want to take that one?

Yeah. I think what we're looking to focus on as we move into the fourth quarter for vitiligo for a decision and presenting those data, and then the first quarter for HS is to really be able to get an understanding of what does this kind of the kinetic response of patients look like, because I think here timing of the response is really important in both of these diseases. You know, they've been challenging with regard to, you know, how long it's taken for patients to get to a response that is meaningful to them. so we're really going to be focused on that. And then as well, you know, for us, it's, it'll be important for us to understand kind of what is that fraction of the patients that are being treated, given that these are open label studies, who are showing a meaningful clinical improvement over that time point, so that we would be able to kind of make a, you know, an educated guess as to what the expectation for a pivotal trial would look like as we revert then to, you know, kind of the characteristic endpoints that you would, you know, that you would expect for a pivotal in vitiligo and HS. You know, but I think that the profile that we've seen of excellent tolerability, once a day treatment, and rapid response, which has kind of characterized our, you know, efficacy patterns and safety patterns across all three indications is what we'd be hoping to replicate here.

Thank you. And the next question will come from Serge Bellinger with Needham. Your line is open.

Hi, good afternoon, and congrats on a strong end to 2025. First question regarding the pediatric opportunity. I think you've been on the market now with a 0.05% cream product for nearly four months. So, can you provide more color on the level of awareness and the willingness to prescribe the product in this market segment? And then secondly, you now have an expanding sales force on two fronts and a growing cash balance with positive cash flow. So does that change your appetite to add a commercial asset to the bag of this sales force? Thanks.

Maybe I'll take the first one, or second question, then I'll turn the first question over at time to give him a little bit of a break. I would say that a commercial stage asset is probably not our highest priority right now. And, you know, I think the major reason for that is just the wealth of new opportunities that we have around Zareeve, right? You know, we've had six approvals in the last roughly three years. We expect at least one more approval this year, possibly two, depending on the speed with which the FDA reviews the three to 24 months. But, you know, we still have a lot of work to do to optimize Zareev promotion, and what I don't want to do is put products in the bag that end up distracting us from what is the highest margin commercial opportunity we have, which is driving Zareev growth. So I think really that's probably not a very high priority for us, where I think the real opportunity for us to create shareholder value is, quite frankly, is in more development stage assets, especially probably mid-stage development. You know, Patrick and his team and Bethany and her team, I think, have demonstrated that they are an exceptionally strong development organization. And we have, what, six FDA approvals under our belt, four Health Canada approvals under For a small company, that's a pretty amazing track record, all of them on time, no CRLs. And so, you know, taking a strong asset and putting it in our development team's hands, I think, is the best opportunity for us to create value beyond continuing to drive the growth of Zareev and continuing to advance ARQ-234. And then, Todd, do you want to just comment on what we're seeing on the pediatrics?

Yeah, relative to the 0.05% natomic dermatitis for two to five years old, there is a strong willingness to prescribe this product, and we're seeing robust uptake of the product since the launch. This is a great product relative to that patient population, offering, once again, once a day, you know what I'm saying, a very soothing, moisturizing vehicle. It's highly effective. That can be put anywhere on the body for any duration. This is a product that drives long-term disease control and is a great option for replacing steroids. You know, caregivers and pediatricians and dermatologists prefer not to use steroids in this patient population at this age. And that's where Cereve offers a significant value proposition both to the caregiver patient and to the provider. So we're very encouraged with the uptake and continue to get very positive feedback, not only from providers, but from patients.

Thank you. And the next question is going to come from Rich Law with GS. Your line is open.

Hey, guys. Congrats on the progress. A couple of questions here. How much of that new 2026 guidance factors in the potential sales improvement in that primary care and pediatric setting now that you're moving those efforts in-house and you're also kicking off these pilot programs.

So, I mean, just based on that minimal contribution from CAUA, I think that's why you guys terminated that contract. Is there an opportunity for 2026 sales to go even higher just based on what you guided, if you're able to make improvement in that PCP and pediatrics segment?

I think it's probably a little early to speculate on the magnitude of the primary care contribution. you know that's something that we'll continue to guide you know as Todd mentioned in his call we're taking a very methodical and stepwise approach to primary care you know we're going to start with a very small team focused on the highest value customers so that we can really fine-tune our go-to-market strategy and figure out what's the right way to access this very large but very diffuse opportunity in primary care and pediatrics and then we'll scale that as we figure that out. So, the rate that we scale that and also the rate that it starts to inflect the top line, I think, is probably premature for us to speculate on.

Okay, got it. And then just a follow-up on the Medicare patients, what's the OOP expense for these patients as that non-preferred branded category?

Thank you. Yeah, I can go ahead and get that one, Frank. So, you're talking relative to the out-of-pocket expense for the Medicare beneficiaries, what's the maximum limit on the cap? If that's the question, it would be in 2026, the cap's now $2,100. So a patient needs to pay the co-pay or co-insurance that's aligned with the product up to the maximum out-of-pocket expense to $2,100, and then the products are covered thereafter by the Part D plan.

Yeah, I would just add to Todd's point, just a reminder, that $2,100 is total out-of-pocket for all drugs, right? So for an elderly patient who's maybe on multiple medications, their total out-of-pocket expense for the year is capped at $2,100. And patients can also opt in for smoothing, which means that they pay, their maximum out-of-pocket in any month is one-twelfth of $2,100. So it's very manageable. For his re-prescription, it really depends on the patient's plan, what the actual dollar amount is going to be. It varies depending on both the insurance company, but also on what plan the patient has bought. Great. Thank you.

Thank you. And the next question is going to come from Douglas DeSalle with H.C. Wainwright. Your line is open.

Hi. Good afternoon. Thanks for taking the questions. Frank, maybe just a follow-up on the KALA and the primary care opportunity. I guess, obviously, as you put it, it's a very large opportunity as well as diverse. Was it simply a function that you didn't think that they were taking the right approach and that you sort of saw a different way forward? Or was it just simply, you know, just capturing all the economics for herself. Thank you.

I wouldn't say it was either. You know, when we signed this deal with Kawa, I guess it's been about a year and a half ago, you know, we weren't in a financial position where we could build our own primary care team. We're in a very different place today. And, you know, Kawa's a perfectly fine company, but, you know, when something really matters to you, it's often best to do it yourself, right? So, given that we're in a financial position to do this ourselves. We felt that the best way to maximize shareholder returns was for us to drive primary care and pediatric promotion ourselves. I will say, as you pointed out, we do keep all the economics on that, but there are some expenses associated with it too. But we feel very confident that we're going to be able to do this in a way that will be accretive very quickly to our shareholders.

And Frank, if I can, as a follow-up, I mean, is it also just given the momentum that you've seen with Zarif that it just bolsters your confidence that this is sort of doable from the company?

Yeah, absolutely. And I think, you know, I would add to that that some of the early experience with Kala added to our conviction around this. You know, there's a very high level of excitement, I would say, in primary care and pediatrics around Zarif for doctors who they had called on, you know, they started running speaker programs at the end of 2025. And, you know, for those of you who haven't been in the business, speaker programs are very difficult to run these days. The response, the attendance at those programs, frankly, astounded us, and I think really speaks to the very high level of interest in the primary care and pediatric communities. And I think that's only going to build as we continue to expand our pediatric indications to two to five in psoriasis and eventually three to 24 months in atopic dermatitis as well. So that added to our conviction that this is a real opportunity. The other thing I think that's really important is to remind everyone, we talked about this on the investor call, that there's something like 300,000 primary care providers in the United States, right? That's a colossal number for any company, but certainly for a smaller company like us. But, and we talked about this and the investor call, about 5% of those providers are writing about a third of all topical scripts. So there's actually a very, very high value concentrated pocket of primary care and pediatricians. And really where we're going to focus our efforts is on that very concentrated, high productivity segment of the market. We may pick up some volume in the other portions of the market too, But we're not looking to build a massive primary care sales force that's calling on tens of thousands or hundreds of thousands of primary care providers. That just doesn't make sense for us. So we're really going to focus on the tip of the spear where there are very, very high volume primary care doctors for topical therapies.

Okay, great. That's a very helpful caller.

Okay. I am showing no further questions in the queue at this time. I will now turn the call back over to Frank for closing remarks.

Okay, well, I will keep it short. As always, thank you for the great questions. Thank you for making the time to call in and listen to our discussion today, and we look forward to talking to you all in another 90 days to update you on the first quarter. Thanks a lot. Bye-bye.

This concludes today's conference call. Thank you for participating, and you may now disconnect.