Conference Transcript - ARQT 2026-06-09

Operator

Good afternoon. Let's kick off the next session. I am pleased to be hosting Arcutis Biotherapeutics for the next session. And with me is Frank and Latha, CEO and CFO of the company. We have a lot to go through today. Very exciting quarter from what we saw last time. And then looking forward to a lot going on this year. So before we kick it off with the question, I'm going to turn it to you guys for open remarks.

Frank Watanabe, CEO

Sure. Yeah, I mean, look, I think that everything is going very well from our perspective at Arcutis. You know, Zarif continues to grow very strongly. We had another very strong quarter last quarter. We think we're still in the very early stages of growth of this product. and we reiterated we think that the product ultimately will generate probably $2.5 to $3 billion in peak sales which is not a stretch given the size of this market and the product profile that we have we've also achieved cash flow positive and that has put us in a position where we can continue to invest in the growth of Zareev for its currently approved indications but also to start to reinvest back into research and development both looking at new indications for Zareev, and we have a couple that we're studying already that I think you wanted to talk about today, but also we have a biologic that we've now advanced in the clinic, and we've got the resources to advance that program as well. So we're a fairly unusual setup in that we're a self-sustaining biotechnology company that's not burning cash, right?

Operator

Right, right.

Frank Watanabe, CEO

And I think that we had laid out a strategy late last year to the investment community. I think the team has done an outstanding job of executing against that strategy and delivering.

Operator

Right, fantastic. So why don't we talk a little bit about a catalyst for the next 12 months. There are some indications in development for that. Maybe just walk us through some of the key catalysts in your perspective. Sure, yeah.

Frank Watanabe, CEO

So I think the first nearest catalyst, actually, is we're expecting approval from the FDA for Zaree for the treatment of psoriasis in two- to five-year-olds at the end of this month. June 29th is the PDUFA date. We've also filed with the FDA for the approval of the treatment of atopic dermatitis in three to 24 month olds. We have not received a PDUFA date yet from the FDA, but we'd expect this probably early next year for that approval. We also are running a phase two trial right now for Zareve in the treatment of vitiligo. And we've said that we expect to read the results out from that study at the end of this year and and then we're running two phase two trials for the use of Zareev to treat HS and we expect to read out those studies in the early part of next year so in the next nine months we've got a number of I think important catalysts coming up. Fantastic so last

Operator

quarter sales for up 65% year over year but we're down 17% quarter over quarter And you guys mentioned that it was impacted by those typical seasonal effects and also severe weather. So while this quarter is not affected by weather, but there's a lot of macro uncertainties like inflation, gas price, how is the current inflationary environment affecting patients getting access to medication? and will we see an effect to sales this quarter and going forward?

Frank Watanabe, CEO

Yeah, so I think every business has to deal with the macro forces going on in the country right now. I think it's not the most benign business environment. But I think specifically to our acutists, we don't expect it to be a particularly acute effect. If you think about a commercial patient, we buy patients co-pay down to zero if your insurance company covers Zareeve. It's $35 if your insurance company doesn't cover Zareeve. And that isn't affected by inflation, right? So for commercial patients, Zareeve itself isn't really a major impediment for them. For Medicaid patients, you know, they're paying $10, $15 maybe per prescription. And so, again, we don't see that being a major impact. And then in the case of Medicare, that's not a major source of business for us. We're starting to pick up Medicare, so we think over time that's probably going to grow. And, you know, in the case of Medicare, we've got this strange system where patients have this total annual copay deductible that they have to work their way through. But that's, again, fixed. So I don't think inflation per se is going to impact us nearly as much as maybe some other products.

Operator

I see. Okay, got it. So given that the weather, I think you guys mentioned the severe weather, affected patients' access to medication last quarter, Does it mean that the GTN for second quarter will be worse unusually? Because a lot of patients who were not having access last quarter are now coming in this quarter, but they haven't really met their deductibles because of the access.

Frank Watanabe, CEO

You know, it's an interesting hypothesis. So let's break this down in two ways. With regard to the first quarter, and this was not unique to Zarif, right? There are many, many products that saw the impact of the extreme weather. And, you know, I think one of the ways you can really validate that it was the weather is that it was very regional as well, right? The West Coast was not affected. Volume was not affected. The East Coast, and especially the Southeast, was very affected. And then we saw a rebound in March and then on into Q2 in demand. So that occurred for a lot of products. It's probably a little bit exacerbated in dermatology because, you know, there are very long waiting lists to see a dermatologist. And so, you know, for example, our chief medical officer is practicing still, and they shut down for a week. It's six months before they could get those week's worth of patients rescheduled for that demand to come back in the system. You know, other therapeutic areas aren't as backed up as dermatology, right? So I think that that maybe exacerbated the volume impact of the weather in dermatology compared to other specialties. In terms of the gross-to-nets, I understand your question. What I would say is what we saw in the first quarter was that we were actually spending less on the copay card than we normally do. So that would tend to mitigate against that carrying on into Q2. I think we're actually in a better position now in gross-to-nets than we were last year and than we expected. Latha, do you have any?

Latha Vairavan, CFO

No, I was going to add something similar. So, yeah, I think also some of that effect, you would have seen it prolong in March when we didn't. We saw the demand pick up. So I don't think there's anything that signals that there's an undue copay burn in Q2. And we're seeing strong volume growth in the last quarter to date of Q2 to date versus last Q1. So that's also another signal that we don't think there's any impact from what you're describing. I mean, it's possible, but it wasn't as severe that we think that there's that impact to co-pay.

Frank Watanabe, CEO

We think we'll carry this GTN favorability through the year.

Operator

I see. Okay, got it. That's encouraging to hear. Can you guys remind us sort of these in-house efforts that are ongoing in terms of supporting the primary care and the pediatric? What are you doing that Cowell wasn't doing or doing well? And then what's the timing of that launch for that sales team again? And then what's that initial scope and the size of that effort?

Frank Watanabe, CEO

So let me start off with talking about COA. I don't think that people should think of it as COA was not doing it well. I think the challenge for COA was they had an existing sales force. It's about 200 reps. And they had a product, and they lost exclusivity on that product. So they had this existing sales force. I needed the sales force, so we struck this deal with them. Their sales force was probably just too big, right? And so it was not an economically viable business for them long-term. And that was really why we agreed to separate. We are taking a very different approach. We're starting off very small. We've communicated that we're starting out with 20 sales reps. We're putting them in major metropolitan areas and really focusing them on high-volume primary care docs and pediatricians. We will probably grow that footprint over time. I don't know how big it's going to be. It's really going to depend on the success that we've had. But what we're doing with that 20 is really piloting the primary care and pediatric market and seeing what's the best way to market in that segment as opposed to dermatology. And then we'll start to scale it once we figure all of that out.

Operator

I see. And so what is that difference then in terms of promotion to the PCPs and the pediatrics compared to them? Is there any notable difference in how you guys engage with them?

Frank Watanabe, CEO

Not in how we engage with them, but I think first and foremost, dermatologists, the most common diseases dermatologists see are acne, psoriasis, AD, and sevderm. Derms probably see 60, 50, 60 patients a day. Maybe half of those patients have one of the diseases that we treat. So there's a big opportunity there, and it's a big part of their practice. You got a primary care doctor or a pediatrician, they're treating everything from asthma to herpes zoster. There's a very small volume of their patients that have psoriasis, AD, or seb derm, so it's not front and center for them. And they're trying to keep track of all these other diseases. I used to work in primary care. The biggest challenge in primary care, frankly, is getting the primary care doctor's attention. And we expect it to be a longer selling cycle. Access can be a little more challenging. The calls tend to be a little shorter, and this is not their primary business treating skin diseases, right, versus dermatologists. I think the other difference is that dermatologists are very used to, in fact, I would say are committed to working with specialty pharmacies. The primary care docs aren't nearly as familiar with that. We think that's going to be an important part of our success in primary care is getting them to use the specialty pharmacies where they get the white glove treatment to make sure that the patients are actually getting their prescriptions. and the insurance is processing it correctly.

Operator

I see. Okay. Got it. Can you give us an update on the Medicare business? I know you guys have that access that you guys mentioned. Were you about a third of the Medicare patients now?

Frank Watanabe, CEO

Yeah, that's right. We picked up two of the big plans. We've got about a third of Medicare lives now have access to Zarif. And, you know, unlike the commercial plans and Medicaid, Medicare has this annual deductible. It's $2,100 now. Patients have to burn through their $2,100, and then everything is free after that. So, you know, the first part of the year is a little more challenging, especially for a new drug. But I think, you know, we'll see a pickup in Medicare as the year progresses. I think we're also hoping that we get additional Medicare coverage in 2027, picking up some of the other plans. The Medicare formula is typically only changed once a year in January. But we do anticipate that over time, Medicare will be an important driver of growth for Zarev.

Operator

Right. And then you get the cover by a non-preferred access position. Is there a possibility to move to preferred, and how would that change? If you get from non-preferred to preferred, how would that move to NITO?

Frank Watanabe, CEO

The change between non-preferred and preferred really only affects the patient's copay. I think it's highly unlikely that they would produce in a preferred position. Being a branded on-formulary period is a big deal. There are no other branded topicals on the Medicare formularies. So we were very happy to get non-preferred, quite frankly. And, you know, I think for us to rebate our way down to being preferred, you know, we probably have to get down close to a generic price, and that's just not going to be economically feasible.

Operator

I see. That makes sense. And when should we hear another update on these Medicare patients regarding the other two-thirds of coverage?

Frank Watanabe, CEO

As I said, typically they change the formulas in January. They have to get reviewed by CMS. So there's a whole process around it for Medicare that doesn't exist for the other plans. So I would hope that we would be able to, in January on the Q4 call in February, we'd be able to announce some additional wins.

Operator

I see. Okay. So in the fourth quarter last year, you guys highlighted that label expansion for SORIV. as part of that three pillars of growth. And VertiLiGO and NHS were identified as sort of the top two indication to begin that process based on, I think, 40-plus case studies. Otesla, which is also a PDE4 inhibitor, has shown mixed results in these two indications and has not advanced to phase three development. Why do you have conviction that so we could work given that a similar drug would...

Frank Watanabe, CEO

Well, a similar target. Target. Very different drug. Target, yeah. So, you know, reflumelast, the active ingredient in Zareve, is, you know, 100 to 300 times more potent as a PD-4 inhibitor than apremolast is. And, you know, to quantify that, you know, people typically take 60 milligrams a day of apremolast. When you take reflumelast orally for COPD, you take one half of one milligram. So 120th as much drug as you take apremolast, right? That speaks to the potency. in addition to that you know we're delivering reflumelast topically with zariv we get very very high localized concentrations of zariv in the skin where you apply it 50 to 100 times more in the skin than you're seeing in the rest of the body and so we we get a very profound local effect on pd4 inhibition that you just can't achieve with a premilast orally or reflumelast orally for that matter right because you would have intolerable side effects you know headache nausea, diarrhea, vomiting, right? I think that's really the difference. But, you know, the data is going to be the data. We'll see what we see. We're certainly very encouraged by the case reports we've seen in HS and vitiligo. I think we've also seen there is good evidence that PD4 plays a role directly in the melanocyte, which would tend to point towards efficacy in vitiligo as well. And in the case of HS, I think people really don't appreciate the impact of itch and pain in HS as a disease, and the high score that everyone looks at doesn't actually look at itch or pain, but it's very common in those patients. And again, PDE4 works in the neurons, and so we're probably having a direct effect on the itch and the pain as well, and we saw that in the case reports that we were clearing itch and pain.

Operator

Oh, interesting. And why do you guys choose that 0.3% form? Why not go a little higher, higher concentration, or test multiple doses for that matter?

Frank Watanabe, CEO

Higher than 0.3, it gets really hard to formulate with flumolast topically, right? So we're kind of up. That's the maximum. Going with a lower strength, we didn't see a need. Really, the only reason why we have a lower strength for atopic dermatitis is that it tends to be very high body surface area. A lot of the patients are kids, and there is a skin barrier defect, and so a drug gets in more easily in atopic dermatitis skin than other normal skin or psoriatic skin. You don't have any of those issues in HS or vitiligo. The skin is normal. It's small body surface areas, and it's not predominantly kids. So there really wasn't any reason to use the lower strengths. And we know the 0.3 is very, very well tolerated and safe.

Operator

I see. What are these trials looking like in terms of the size? When should we see the data? Maybe like what are the endpoints that you guys are looking at?

Frank Watanabe, CEO

So they're all around 10, 20 patients. They're small proof-of-concept studies. We don't have to look at safety, tolerability. We already know the answer on that one. And we've said that we expect to read out the vitiligo trial by the end of this year and that we should read out the HS trials early part of next year. And then in vitiligo, we're just looking at improvement in pigmentation. And in the HS trials, we're looking at abscesses and nodules.

Operator

I see. So how do you define success for these two indications? Like, what do you have to see for you to say that, you know, we're going to advance?

Frank Watanabe, CEO

I think we want to see a clear sign of efficacy. There's no particular threshold we're looking for, particular high score or ASI score or something like that.

Operator

So without sort of like a control arm, I mean, these DCs, like HS, is known for like this wax and wang period.

Frank Watanabe, CEO

Right, but not in very short periods of time. And these are fairly short trials, and in the case reports, the efficacy was very rapid. So I think that mitigates, again, some of the natural waxing and waning that you see with the disease. It's not like atopic dermatitis where, you know, you wake up in the morning, you're clear, and in the afternoon you've got an abscess or a nodule, right? Or the same with vitiligo, you know, the lesions don't just suddenly appear or disappear. I see. And how long are these trials running for? Let's see, the vitiligo trial we're running out to 26 weeks.

Latha Vairavan, CFO

I believe HS is 16. 16 weeks, yes.

Operator

26 weeks for vitiligo and then 16 weeks for HS. I see, okay. Okay, got it. Okay, let's move on to the other, you have another asset in development. The ARQ-234. So this is a CD200. It's a checkpoint inhibitory receptor?

Frank Watanabe, CEO

No, it's a checkpoint agonist. Right, so it's the opposite of a checkpoint inhibitor.

Operator

Right, right, okay. So can you tell us what drives the interest of pursuing this as a target for AD?

Frank Watanabe, CEO

Sure. I think many of these diseases, inflammatory skin diseases, are driven by overactive immune systems, right? That certainly is the case in atopic dermatitis. You know, historically, we have approached managing these diseases by blocking signaling pathways, various cytokines, IL-4, IL-13, in the case of atopic dermatitis, IL-31, psoriasis, we're going after 17, 23, TNF-alpha. The checkpoint agonists are different in that you're actively affecting the immune cells themselves. By agonizing these immune checkpoints, you're taking an activated immune cell and you're putting it back in its inactivated state, which will consequently probably downstream also affect all the inflammatory cytokines, but you're upstream of that process. I think people can think of it as the opposite of Keytruda or Obdivo, right? If you inhibit the immune checkpoints, that tends to rev up the immune system. If you agonize the checkpoint, it downregulates the immune system. So it's a different pathway. We are excited about this because there's been some very compelling biologic proof of concept with another molecule against this target. We think there's clear unmet needs for new therapies in atopic dermatitis and potentially other therapeutic indications as well. And the asset that we acquired when we bought Ducentus we felt was the best in class for this particular target.

Operator

I see. And what is that rationale? Now, I mean, after looking, Lily has something similar, a CD200 agonist as well. An antibody, yeah. Anybody. An agonizing antibody, yeah. And then Gilead has an antibody. And then they discontinued it. So any redo from that, any concern, redo, and how do you think 234 compared to that?

Frank Watanabe, CEO

Yeah, I don't really think that they're, based on what we know today, we don't really see any read-through other than, you know, we don't think they had a safety issue with their trials. We probably would have heard about it from the FDA if there was a particular safety signal of interest. You know, I've been in big pharma a good bit of my career. They deprioritize programs all the time. I don't particularly, you know, put a lot of weight into the fact that they deprioritized it. You know, they published the results from the study. I think the study results look very good.

Operator

I see. And how's that phase, when you get up phase one study going for AD, how's that enrolling, and when should we see data?

Frank Watanabe, CEO

So we're in the middle of the SAD portion of the trial, right? You know, each cohort enrolls very quickly, but it's very small, and you've got to wait, and then you start the next cohort. It's very traditional, SAD. And then we'll move on to the MAD portion as well. I'm actually hoping this takes a long time because that means I'm going all the way through a bunch of dose cohorts and get to a very high dose. We don't have a timeline at this point because it will all depend on what the maximum tolerated dose is.

Operator

I see. Okay. Now let's move on to the franchise indication for SORIF. So now SORIF spans across plaque psoriasis, atopic dermatitis, seborrheic dermatitis, across multiple formulations. So there's obviously no safety concerns for corticosteroids. We know that people talk about it all the time. It's very well perceived that these have safety issues. And Solvee is clean, easier to use, and you don't have the safety baggage. Do you see there's a realistic chance to remove some of these step edits that you have to go to corticosteroid in the future? I mean, how do you get there?

Frank Watanabe, CEO

So, first of all, I don't think that the, you know, in the commercial side of the business, we're pretty much a single step across the board through a topical steroid. In Medicaid, about half of patients, it's a single step through a topical steroid. So that's the majority of patients, a single step. That is not a big barrier because all these patients have already been on a topical steroid, so they've already been on a step right here, right? I don't lose a lot of sleep over that. I think we may see some improvements in that formulary position. For example, California Medicaid, there is no step for Zarev. It's first-line therapy. There are some small commercial plans that have moved to no step for Zarev. I think as insurance companies realize that Zareef could prevent or delay patients moving on to expensive systemic therapies, they may start to prefer Zareef more and make it easier to get Zareef. But again, I really don't think that the step at it is a major obstacle. You know, a year, year and a half ago, when we would talk to dermatologists, you know, we'd get pushback like, you know, I know steroids have issues, but I know how to manage it. You know, it's fine.

Operator

Right, right, right.

Frank Watanabe, CEO

We don't get that anymore, right? I think there's a growing sentiment in the dermatology community that it's time to move away from topical steroids. There's always going to be a role for topical steroids, but that's an acute treatment, and these are chronic diseases, and that's a mismatch. And I would point to, in particular, earlier this year, the American Academy of Dermatology came out with new pediatric AD guidelines, and they stated right in the guidelines that dermatologists should prefer non-steroidals over steroids because of long-term safety issues. So now even the AAD has come out with a firm stance saying non-steroidals are the way to go. I think it's just a matter of slow change in physician habits. And we're seeing that every month, every quarter. We're seeing a growing share of the business going to the non-steroidals. And with 50% market share, we're the main beneficiary of that.

Operator

Sure, sure, absolutely. And then so when you look at the current use pattern for patients who are new to treatment, when they get on corticosterone, do you see there's a shortening of the time that people get on that corticosterone before they switch to sleeve?

Frank Watanabe, CEO

Is there a change in that? 90%, 95% of patients are not new onset, so they've already been on something. So they're coming in the office for a steroid refill or some follow-up visit, and they've already been on a steroid. And most insurance companies also, you have to have been on a steroid in the last 180 or 130 or 365 days. It's not like you have to start the steroid and then wait four weeks and then move on, right? So it's rare that a patient is coming in completely treatment-naive and the doctor is saying, oh, I want to use Arribita. But if that's what they need to do, you know, it depends on the steroid. But, for example, if the patient's, you know, plaque psoriasis and they need clobetazole or halobetazole, those drugs are really only safe for about four weeks, and then you need to stop the treatment for safety reasons. And so then the patient can go to Zareef.

Operator

I see. And a lot of time when I look at these conditions, because there's that whole wax and wing component to it, where the condition would just go away for some time and it'll come back and flare up and come back again. So in that, in those period where the disease sort of like calms down and then it flares up again, do they, for patients, do they jump back to another steroid and then before they can get on Zareef? Like, how does that work? Or do they, because they're already on Sol Reef, and then let's say they stop, the condition feels, they feel better. Then in the next flare-up, can they go straight to Sol Reef, or do they go back to the steroid first before Sol Reef?

Frank Watanabe, CEO

So first, let's talk about the waxing and waning. Psoriasis is not a terribly waxing and waning disease. It does tend to get better in the summertime, especially. And then it will predictably get worse again in the fall and the winter. um seb derm is also fairly chronic in nature ad is much more changeable it can you can be fine in the morning and by lunchtime you can be in a flare right um but so regardless across those diseases if the patient's disease clears because it's spring or summer or the patient's been using the drug and they get better and they get clear they typically will stop treating at that point when the disease returns they probably have zariv in the cabinet already they don't go to the doctor they just start using the zariv again right and there's no issues with stopping and starting with zariv right right in atopic dermatitis specifically because it can flare so quickly there is a move in dermatology towards preventative treatment treating continuously to prevent the next flare and in our long-term studies with zariv and atopic dermatitis we showed that that was a very effective strategy. Patients who got to clear went to twice weekly dosing instead of daily dosing. And in adults, they were able to go 10 months without a flare. And in children, they went eight months without a flare. And that's quite a long time with just twice weekly dosing. If they did flare again, they could switch right back to once daily dosing without any problem. And that treatment paradigm of proactive management is something that atopic dermatitis experts are really encouraging their colleagues to move towards.

Operator

I see.

Frank Watanabe, CEO

But to answer your question, too, you know, if you've had a Zarev script and you need to refill it, you know, six months later, you don't have to go through a steroid again. You just refill and continue on.

Operator

That makes a lot of sense. So SEPTER, this is one indication that a lot of investors are very excited about. It's always been undertreated and underdiagnosed or treated intermittently. How has Sarif sort of changed that pattern of use in this population and the recognition of the treatment?

Frank Watanabe, CEO

Yeah, so first of all, and, you know, I remember talking with investors before the approval and saying, you guys are missing it. This is really, really big. This is a big indication. People are like, I get what you're talking about. I think I was proved right, right? It's a very prevalent condition. It's at least as common as sebderm. There are some estimates that as many as one in five Americans has sebderm, which would be you know a gigantic market right um historically the challenges had been uh that the existing treatments um were not terribly effective right or they weren't safe for long-term use or a combination of the two uh and and so when a dermatologist was having to treat seborrheic dermatitis it took a lot of time and it wasn't terribly satisfying right i remember prior to our launch uh it was towards the end of covid and we were talking with some dermatologists And they said, you know, I haven't seen some of these patients for two years. And they come in, they say, what do you have new for my seb derm? And the answer is nothing, right? Because it had been 20 years since anyone had come out with a new drug. What really, I think, changed with Zarif is several things. One is profound efficacy, right? We had an 80% response rate at eight weeks with Zarif. 50% of patients were completely clear, no sign of any disease at eight weeks. We had very rapid onset of itch, which, you know, is one of the key symptoms of the sebderm. At 48 hours, we separated on itch. It's a once-a-day formulation that's easy to use in your hair. You don't have to wash it out. You don't have to take a shower, which you do with the shampoo treatments. And it's safe to use chronically, right? There's never been a drug like that. So it makes it really easy for the doctor to treat their sebderm patients. It's like a 30-second conversation. Hey, here's your zareascript. Use it once a day. I'll see you in six months versus this complicated regimen. And it works for patients, and it's safe. And so I think that that's shifted dermatologists' willingness to treat seborrheic dermatitis, right? Because now it's easy for them to treat these patients, and the patients are happy.

Operator

I see.

Frank Watanabe, CEO

Is that a population?

Operator

I mean, when I look at that, right, that the form makes a lot of sense for these patients. I don't think there's a foam like corticosteroid foam.

Frank Watanabe, CEO

There are corticosteroid foams in existence. Olux, oh gosh, I'm trying to think of some of the other brands out there. They're very, very expensive. They're very difficult to get. So you don't see much use at all of the steroid foams. Ironically, they're more expensive than Zarev, even though they're generic, right? But also you have all the safety issues of steroids.

Operator

Sure, sure. So that's one setting where Zarev just rides to the top, right?

Frank Watanabe, CEO

That's right. I think it's rapidly becoming the standard of care in SebDerm. It's also, Zaree foam is really unique in the scalp psoriasis space, right? Just like SebDerm, there really aren't any options to treat scalp psoriasis. And scalp psoriasis is a form of psoriasis that's A, very prevalent, and B, it doesn't respond well to biologic therapy. So we think that's a really important continued growth opportunity for us in Zaree as well.

Operator

I see. That makes a lot of sense. So when you look across all these different settings, what do you think are the largest growth driver across these different indications?

Frank Watanabe, CEO

The largest growth driver is conversion from topical steroids, right? You know, sitting here today, you know, there are 25 million prescriptions written a year for one of these three indications. 16 million of those were topical steroids last year, and 1 million were branded non-steroidals. So, you know, as that market converts over, you know, the opportunity for us to grow five-fold is really not that much of a stretch.

Operator

Yeah, I see. And then for atopic dermatitis, you guys have a couple new approvals in that area. And now you have from adults to children to infants. How quickly are these indications added to the formularies? Or in general, when you guys have these?

Frank Watanabe, CEO

approvals? How quickly do they get at it? Our contracts with the insurance companies generally are for the Zarif portfolio. And so it's relatively quick. It can take a couple months for us to get a new indication, particularly if it's a new SKU. If it's an existing SKU, it can be a little bit faster. But it does take the insurance company some time. The SKU has to show up in the compendium. They've got to update their computer systems. But I would say probably two months is probably a reasonable time frame. Maybe it's a little bit shorter in some cases.

Operator

And also when you get these approvals, especially in that infant age group, how quickly, I think we talk about the payers, but how quickly when you look at how the patients are treated from a derm or pediatric, the pediatric side, you're still ramping up the effort there. How quickly did they, when these approvals kick in, did the sales or revenue start reflecting these indications?

Frank Watanabe, CEO

For the 3- to 24-month AD, I think we're going to see a very rapid adoption. If you think about it today, the only things approved to treat kids under the age of 2 with AD are Eucrissa or six of the topical steroids. And everyone knows Eucrissa stings and burns. And topical steroids are particularly worrisome in a young kid. So to have a safe, effective, once-a-day cream approved in that population, the pediatric dermatologists are foaming at the mouth to get their hands on this product. When we got the 2- to 5-year-old approval, their response was, well, when do you get 3- to 24? I was like, well, what about the 2- to 5-year-olds? Don't I get any credit for that? There's a huge amount of pent-up demand. And anyone who's a parent can just think about what that would mean if they had a safe non-steroidal to treat their little baby with atopic derms.

Operator

So even though you haven't really ramped up in that pediatric sort of sales effort yet, a lot of these patients have already been seeing the pediatric derms.

Frank Watanabe, CEO

By a pediatric derm or just a general derm.

Operator

There aren't very many pediatric derms, so a lot of the little kids have been seen by regular gen derms. So basically, there's no barrier to getting...

Frank Watanabe, CEO

Not in the dermatology space, no.

Operator

Even though you haven't really ramped up that pediatric space.

Frank Watanabe, CEO

I think the pediatrics is an additional additive opportunity. But there's a big opportunity for three to 24 months in dermatology.

Operator

No, this has been a very interesting discussion, very helpful for us to help investors think do the story to continue growing in the future. So we're out of time. So before we close the session, I'm going to turn it to you for any final remarks. She hasn't said anything, so I'm going to let her close it up.

Latha Vairavan, CFO

No, I think our closing remarks are everything is going per plan that we said that we're going to execute on since last year when we had our investor day. We've put out guidance. We updated the guidance, and we feel strongly about our business and the growth trajectory. we are self-sustaining investing in that growth and we keep coming back to update the investor community on those investments so we're excited for the outlook of Zareev and a lot of the label expansions and pipeline that we just talked about.

Frank Watanabe, CEO

That's my conclusion.

Operator

Fantastic.

Latha Vairavan, CFO

Thank you.

Operator

Thanks everyone.