Arcutis Biotherapeutics (NASDAQ: ARQT) - a young biotech company from California. Founded in 2016 and dedicated to the development of medical solutions in the form of creams, foams and suspensions for use in the field of dermatology in the treatment of skin diseases. Business went public after IPO 31 January 2020.
Where does the money come from
The company develops drugs for the treatment of psoriasis, Dermatitis, eczema and other skin diseases.
Business model involves the development of innovative drugs, which will most effectively and safely cover the needs of patients in the treatment and relief of symptoms of their diseases. Commercialization of essential medical products targeted at a broad global market.
Portfolio of drugs under development. Arcutis Biotherapeutics has several developments:
- ARQ-151: flagship drug for the treatment of plaque psoriasis and atopic dermatitis. Planned for sale worldwide.
- ARQ-154: foam for the treatment of seborrheic dermatitis and psoriasis of the scalp. Planned for sale worldwide.
- ARQ-252: cream against eczema on the skin of the hands and vitiligo disease. The development is at the preclinical stage and is planned for commercialization in the USA, ES, Japan and Canada.
- ARQ-255: suspension for the treatment of alopecia. Also in the early stages of development and slated for commercialization in the US, ES, Japan and Canada.
What's wrong
Pharmaceutical company without revenue. A familiar situation for the biotechnology sector - nevertheless, this does not allow us to forget about the risks of investing. All positive scenarios for business here are associated with the approval of its developments and their commercialization in a wide market.. But the competent authorities do not always give the green light to new drugs., and pay taxes, to service debt and spend a lot of money on a research asset, companies have to constantly.
Trouble with EBITDA. Profit is still regularly below zero and every year it is moving away from it more and more. Now the company has enough assets, and investors can not be afraid of its bankruptcy in the next couple of years, but without the successful launch of its products to the market, this illusory threat to Arcutis Biotherapeutics will become very real.
Doubts about attractiveness. Many investors choose biotech and have high hopes for the rapid growth of selected pharmaceutical companies in a short period of time.. But if you take as a starting point benchmark in the form of iShares Biotechnology ETF, which includes all US biotech companies listed on Nasdaq, then it becomes clear, that the prospects for "missiles" and explosive growth are not so obvious. The index recently hit a new all-time high and only slightly corrected down..
What good
Proximity to first drug approval. 4 October 2021, the company submitted an application to the Food and Drug Administration (FDA) for registration of its non-steroidal drug ARQ-151 for the treatment of plaque psoriasis in adults.
Wide market with many easily accessible customers. In the US alone, the company estimates a potential audience of 6 million people., who are now registered with dermatologists and receive prescription drugs. Many patients use short courses of steroid drugs, which creates the need for subsequent non-steroidal therapy, to satisfy the need in which the main developments of Arcutis Biotherapeutics are aimed.
Assets are increasing, liabilities are decreasing. 2020 IPO Benefits the Company and Helps Improve Financial Position: equity capital turned from negative to positive and continues to grow year on year, and the financial dependence ratio has gone down from a frightening value. 1,6 to modest 0,04.
What's the bottom line?
Arcutis Biotherapeutics successfully went public in 2020 and raised vital investments in its business just in time. The company's developments look promising and, if successfully approved, should make life easier for millions of people with skin diseases in the US and around the world.. In the same time, if things do not go according to plan and the commercialization of drugs is delayed or delayed, the company's shares can lose a lot of value and bring significant losses to investors.
