0001787306-23-000124 | 10-Q | XBRL Viewer | Arcutis Biotherapeutics INC

Long-term debt (Tables)

9 Months Ended

Sep. 30, 2023

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


	September 30, 2023		December 31, 2022
Principal loan balance	$	200,000	$	200,000
Accrued final fee	4,118		1,871
Unamortized debt issuance costs	(3,335)		(4,102)
Long-term debt, net	$	200,783	$	197,769

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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+ Details

Balance Sheet Components

9 Months Ended

Sep. 30, 2023

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

Inventories

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


	September 30, 2023		December 31, 2022
Raw materials	$	11,200	$	5,659
Work in progress	367		395
Finished goods	2,346		1,460
Total inventories	$	13,913	$	7,514

Prepaid Expenses and Other Current Assets

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


	September 30, 2023		December 31, 2022
Prepaid co-pay assistance program	$	4,948	$	3,226
Prepaid insurance	852		956
Prepaid clinical trial costs	4,196		172
Other prepaid expenses and current assets	10,184		6,257
Total prepaid expenses and other current assets	$	20,180	$	10,611

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Accrued compensation	$	13,741	$	14,000
Accrued sales deductions	7,308		1,567
Clinical trial accruals	4,629		7,896
Accrued expenses and other current liabilities	2,317		4,860
Total accrued liabilities	$	27,995	$	28,323

Net Loss Per Share - Schedule of Potentially Antidilutive Shares Excluded from the Calculation of Diluted Net Loss Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	11,229,576	9,122,294
Stock options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	8,228,270	7,480,040
Early exercised options subject to future vesting
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	3,698	18,573
RSUs subject to future vesting
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	2,924,356	1,567,946
ESPP shares subject to future issuance
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially antidilutive shares excluded from the calculation of net loss per share (in shares)	73,252	55,735

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2023	Oct. 31, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-39186
Entity Registrant Name	ARCUTIS BIOTHERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-2974255
Entity Address, Address Line One	3027 Townsgate Road
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Westlake Village
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91361
City Area Code	805
Local Phone Number	418-5006
Title of 12(b) Security	Common Stock, par value $0.0001
Trading Symbol	ARQT
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		94,382,074
Entity Central Index Key	0001787306
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

License Agreements & Acquisition - Huadong (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Revenue		$ 38,109	$ 725	$ 46,080	$ 725
Huadong
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Upfront payment received before taxes	$ 27,000
Revenue	30,000	30,000		30,000
Upfront payment tax withholding obligation	3,000	3,000		3,000
Potential additional payments to be received	24,000	24,000		24,000
Aggregate amount to be received upon achievement of sales milestones	$ 40,300	$ 40,300		$ 40,300

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

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+ Details

Stock-Based Compensation - Schedule of Assumptions in Calculating Stock Option Awards (Details) - Stock Options	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, minimum	75.20%	77.90%
Expected volatility, maximum	77.10%	82.10%
Risk-free interest rate, minimum	3.50%	1.40%
Risk-free interest rate, maximum	4.70%	4.20%
Dividend yield	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years 3 months 18 days	5 years 4 months 24 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	6 years 1 month 6 days	6 years 1 month 6 days

Property and Equipment, net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Line Items]
Depreciation	$ 200	$ 157	$ 573	$ 462
Minimum
Property, Plant and Equipment [Line Items]
Useful life	2 years		2 years
Minimum \| Property, plant and equipment, excluding leasehold improvements
Property, Plant and Equipment [Line Items]
Useful life	2 years		2 years
Maximum
Property, Plant and Equipment [Line Items]
Useful life	5 years		5 years
Maximum \| Property, plant and equipment, excluding leasehold improvements
Property, Plant and Equipment [Line Items]
Useful life	5 years		5 years

License Agreements & Acquisition	9 Months Ended
License Agreements & Acquisition	Sep. 30, 2023
License Agreements And Acquisition Disclosure [Abstract]
License Agreements & Acquisition	License Agreements & Acquisition Huadong License and Collaboration Agreement In August 2023, the Company entered into a license and collaboration agreement with Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd (“Huadong”), a wholly owned subsidiary of Huadong Medicine Co., Ltd. Pursuant to the terms of the agreement, the Company granted to Huadong an exclusive, sublicensable (under certain circumstances) license under certain patent rights and know-how controlled by the Company for Huadong to develop, conduct medical affairs activities for, manufacture, commercialize, and otherwise exploit both cream and foam topical roflumilast for all therapeutic uses for certain dermatological indications ("Huadong Licensed Products") in Greater China (mainland China, Hong Kong, Macau, and Taiwan) and Southeast Asia (Indonesia, Singapore, The Philippines, Thailand, Myanmar, Brunei, Cambodia, Laos, Malaysia, and Vietnam) ("Huadong Territories"). Huadong will, at its expense, develop, obtain regulatory approval for, commercialize, and conduct medical affairs activities for the Huadong Licensed Products, subject to certain of the Company’s approval and oversight rights. The Company will retain exclusive rights for the development, manufacture and commercialization of topical roflumilast outside the Huadong Territories. As consideration for the rights granted under the Huadong Agreement, Huadong paid the Company a non-refundable upfront fee pursuant to the terms of the agreement, upon closing in September 2023. The Company received a net payment of $27.0 million, which consisted of a $30.0 million upfront payment less the applicable tax withholding obligation in China of $3.0 million. The Company may also potentially receive additional payments: (i) up to an aggregate amount of $24.0 million upon the achievement of certain development and regulatory milestones, (ii) up to an aggregate amount of $40.3 million upon the achievement of certain sales milestones, and (iii) low double-digit to high-teen double-digit tiered percentage royalties on net sales of the Huadong Licensed Products. The term of the Huadong Agreement continues on a Licensed Product-by-Licensed Product and country or region-by-country or region basis, until the expiration of the Royalty Term, which is: (i) the date of expiration of the last valid patent claim related to the Huadong Licensed Products, (ii) ten years after the first commercial sale of a the Huadong Licensed Product and (iii) the expiration of any regulatory exclusivity as to a Huadong Licensed Product. The License Agreement may be terminated by both parties under certain circumstances. Other revenue and related income tax expense recognized under the Huadong agreement was $30.0 million and $3.0 million, respectively, for the three and nine months ended September 30, 2023. See Note 2. AstraZeneca License Agreement In July 2018, the Company entered into an exclusive license agreement, or the AstraZeneca License Agreement, with AstraZeneca AB (AstraZeneca), granting the Company a worldwide exclusive license, with the right to sublicense through multiple tiers, under certain AstraZeneca-controlled patent rights, know-how and regulatory documentation, to research, develop, manufacture, commercialize and otherwise exploit products containing roflumilast in topical forms, as well as delivery systems sold with or for the administration of roflumilast, or collectively, the AZ-Licensed Products, for all diagnostic, prophylactic and therapeutic uses for human dermatological indications, or the Dermatology Field. Under this agreement, the Company has sole responsibility for development, regulatory, and commercialization activities for the AZ-Licensed Products in the Dermatology Field, at its expense, and it shall use commercially reasonable efforts to develop, obtain and maintain regulatory approvals for, and commercialize the AZ-Licensed Products in the Dermatology Field in each of the United States, Italy, Spain, Germany, the United Kingdom, France, China, and Japan. The Company paid AstraZeneca an upfront non-refundable cash payment of $1.0 million and issued 484,388 shares of Series B convertible preferred stock, valued at $3.0 million on the date of the AstraZeneca License Agreement, which were both recorded in research and development expense. The Company subsequently paid AstraZeneca the first milestone cash payment of $2.0 million upon the completion of a Phase 2b study of roflumilast cream in plaque psoriasis in August 2019 for the achievement of positive Phase 2 data for an AZ-Licensed Product, which was recorded in research and development expense. In the third quarter of 2022, the Company paid $7.5 million to AstraZeneca as a result of the approval of ZORYVE, which was recorded as an intangible asset. The Company is amortizing the intangible asset to cost of sales over its useful life of 10 years from the date of first commercial sale as this is the minimum amount of time that the related License Agreement will be in effect. Amortization expense during the three and nine months ended September 30, 2023 was not material. The Company has agreed to make additional cash payments to AstraZeneca of up to an aggregate of $5.0 million upon the achievement of specified regulatory approval milestones with respect to the AZ-Licensed Products, and payments up to an additional aggregate amount of $15.0 million upon the achievement of certain aggregate worldwide net sales milestones, of which $5.0 million will become payable when the Company achieves $100.0 million in worldwide sales. With respect to any AZ-Licensed Products the Company commercializes under the AstraZeneca License Agreement, it will pay AstraZeneca a low to high single-digit percentage royalty rate on the Company’s, its affiliates’ and its sublicensees’ net sales of such AZ-Licensed Products, subject to specified reductions, until, as determined on an AZ-Licensed Product-by-AZ-Licensed Product and country-by-country basis, the later of the date of the expiration of the last-to-expire AstraZeneca-licensed patent right containing a valid claim in such country and ten years from the first commercial sale of such AZ-Licensed Product in such country. As a result of the commercialization of ZORYVE in August 2022, the Company began accruing royalties payable to AstraZeneca, which are recorded in cost of sales and accrued liabilities. Royalty expense during the three and nine months ended September 30, 2023 was not material. There were no milestone payments made or payable in connection with AZ-Licensed Products for the three and nine months ended September 30, 2023 and 2022. Hengrui Exclusive Option and License Agreement In January 2018, the Company entered into an exclusive option and license agreement, or the Hengrui License Agreement, with Jiangsu Hengrui Medicine Co., Ltd. (Hengrui), whereby Hengrui granted the Company an exclusive option to obtain certain exclusive rights to research, develop, and commercialize products containing the compound designated by Hengrui as ivarmacitinib, a Janus kinase type 1 inhibitor, in topical formulations for the treatment of skin diseases, disorders, and conditions in the United States, Japan, and the European Union (including for clarity the United Kingdom). The Company made a $0.4 million upfront non-refundable cash payment to Hengrui upon execution of the Hengrui Option and License Agreement, which was recorded as research and development expense. In December 2019, the Company exercised its exclusive option under the agreement, for which it made a $1.5 million cash payment, which was recorded in research and development expense, and also contemporaneously amended the agreement to expand the territory to additionally include Canada. In addition, the Company has agreed to make cash payments of up to an aggregate of $20.5 million upon achievement of specified clinical development and regulatory approval milestones with respect to the licensed products and cash payments of up to an additional aggregate of $200.0 million in sales-based milestones based on certain aggregate annual net sales volumes with respect to a licensed product. With respect to any products the Company commercializes under the Hengrui License Agreement, it will pay tiered royalties to Hengrui on net sales of each licensed product by the Company, or its affiliates, or its sublicensees, ranging from mid single-digit to sub-teen percentage rates based on tiered annual net sales bands subject to specified reductions. The Company is obligated to pay royalties until the later of (1) expiration of the last valid claim of the licensed patent rights covering such licensed product in such country and (2) expiration of regulatory exclusivity for the relevant licensed product in the relevant country, on a licensed product-by-licensed product and country-by-country basis. Additionally, the Company is obligated to pay Hengrui a specified percentage, ranging from the low-thirties to the sub-teens, of certain non-royalty sublicensing income it receives from sublicensees of its rights to the licensed products, such percentage decreasing as the development stage of the licensed products advance. In June 2022, the Company entered into a side letter agreement with Hengrui and one of its subsidiaries to extend certain rights and obligations under the Hengrui License Agreement to the subsidiary under specified circumstances, including a change of control of such subsidiary. There were no payments made or due in connection with Hengrui for the three and nine months ended September 30, 2023 and 2022. Iolyx Collaboration Agreement In June 2019, the Company entered into a collaboration agreement, or Iolyx Agreement, with Iolyx, a related party with common ownership, for the development of clinical compounds, including roflumilast. The Iolyx Agreement grants Iolyx an exclusive license to certain intellectual property developed under the agreement as it relates to the development of new applications of such compounds. Contemporaneously with the execution of the Iolyx Agreement, the Company entered into a stock purchase agreement, purchasing 995,000 shares of Iolyx's common stock at $0.0001 per share, representing 19.9% of the outstanding common stock of Iolyx at the time of the purchase. In accordance with the Iolyx Agreement and in conjunction with Iolyx’s sale and issuance of Series A convertible preferred stock, Iolyx issued 4,256,686 fully-paid fully-vested shares of common stock to the Company. As a result of this issuance of common stock, the Company recorded $0.4 million in Other revenue in the three months ended June 30, 2023. Also, in conjunction with the issuance of the Series A convertible preferred stock, the Company revalued its common stock acquired with the execution of the Iolyx agreement, resulting in $0.1 million recognized in Other income. There are no other upfront payments, milestones, or royalties pursuant to the Iolyx Agreement. The Company determined that Iolyx is a VIE for which consolidation is not required as it is not the primary beneficiary. Ducentis Biotherapeutics LTD Acquisition On September 7, 2022, the Company entered into a Share Purchase Agreement with Ducentis Biotherapeutics LTD (Ducentis), pursuant to which the Company acquired (the “Acquisition”) all of the outstanding equity interests in Ducentis for (i) 610,258 shares of the Company common stock valued at approximately $12.5 million and $15.9 million in cash, inclusive of liabilities acquired, and (ii) contingent payments, the amount of which is indeterminable until achieved, which may become payable upon the achievement of certain development, regulatory, and commercial milestones. The Company currently estimates that these contingent payments may be up to an aggregate of approximately $400 million (although the actual amount may differ depending on whether the applicable milestones are achieved). In addition, if applicable, the Company will make payments amounting to a mid-single-digit percentage of any annual net sales of Ducentis’s products exceeding $1.5 billion. As of September 30, 2023, none of the milestones were probable of achievement and, accordingly, no amounts have been recognized in the accompanying unaudited condensed consolidated financial statements with respect to these contingent payments. Under the terms of the Share Purchase Agreement, the Company will develop and seek FDA approval of a therapeutic product containing Ducentis’s DS-234 product candidate, now ARQ-234, for an atopic dermatitis indication, and if FDA approval of ARQ-234 is obtained by the Company, to launch it in the United States. The Company accounted for this purchase as an in-process research and development asset acquisition and in the third quarter of 2022 recorded a charge to research and development expense in the amount of $29.6 million, which was not tax deductible.

Stockholders’ Equity

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Stockholders’ Equity

Common Stock

The holders of the Company’s common stock have one vote for each share of common stock. Common stockholders are entitled to dividends when, as, and if declared by the board of directors. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. As of September 30, 2023, no dividends had been declared by the board of directors.

The Company reserved the following shares of common stock for issuance as follows:


	September 30, 2023	December 31, 2022

Options issued and outstanding	8,228,270	7,476,223
Common stock awards available for grant under employee incentive plans	3,927,638	3,784,386
Restricted stock units outstanding	2,924,356	1,576,529
Total common stock reserved	15,080,264	12,837,138

Authorized Share Capital

On February 4, 2020, the Company’s certificate of incorporation was amended and restated to provide for 300,000,000 authorized shares of common stock with a par value of $0.0001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.0001 per share. There were no shares of preferred stock outstanding as of September 30, 2023 and December 31, 2022.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (i)
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (a)
-Publisher FASB
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 16
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-16

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	107,471	$	—	$	—	$	107,471
Commercial paper	—		26,516		—		26,516

U.S. Treasury securities	93,126		—		—		93,126
Total assets	$	200,597	$	26,516	$	—	$	227,113

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	53,641	$	—	$	—	$	53,641
Commercial paper	—		177,099		—		177,099
Corporate debt securities	—		13,821		—		13,821
U.S. Treasury securities	165,028		—		—		165,028
Total assets	$	218,669	$	190,920	$	—	$	409,589

______________

(1)This balance includes cash requirements settled on a nightly basis.

Money market funds and U.S. Treasury securities are valued based on quoted market prices in active markets, with no valuation adjustment.

Commercial paper and corporate debt securities are valued taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs.

The following table summarizes the estimated value of the Company’s cash, cash equivalents and marketable securities, and the gross unrealized holding gains and losses (in thousands):


	September 30, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	107,471	$	—	$	—	$	107,471

Total cash and cash equivalents	$	107,471	$	—	$	—	$	107,471
Marketable securities:
Commercial paper	$	26,516	$	—	$	—	$	26,516

U.S. Treasury securities	93,195		5		(74)		93,126
Total marketable securities	$	119,711	$	5	$	(74)	$	119,642

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	53,641	$	—	$	—	$	53,641
Corporate debt securities	—		—		—		—
Total cash and cash equivalents	$	53,641	$	—	$	—	$	53,641
Marketable securities:
Commercial paper	$	177,099	$	—	$	—	$	177,099
Corporate debt securities	13,890		—		(69)		13,821
U.S. Treasury securities	166,045		7		(1,024)		165,028
Total marketable securities	$	357,034	$	7	$	(1,093)	$	355,948

______________

(1)This balance includes cash requirements settled on a nightly basis.

Realized gains or losses on investments for the three and nine months ended September 30, 2023 and 2022 were not material. As of September 30, 2023, it was determined that no credit losses exist, because the change in market value of those securities resulted from fluctuations in market interest rates since the time of purchase, rather than a deterioration of the credit worthiness of the issuers. As of September 30, 2023 and December 31, 2022, all securities have a maturity of 18 months or less and all securities with gross unrealized losses have been in a continuous loss position for less than one year. The Company generally holds its marketable securities until maturity and does not intend to sell, and is not required to sell, the investments that are in an unrealized loss position before the recovery of their amortized cost basis.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Estimated future amortization expense for the intangible assets subsequent to September 30, 2023 is as follows (in thousands):


	Amounts
2023 (October through December)	$	188
2024	750
2025	750
2026	750
2027	750
Thereafter	3,438
Total amortization	$	6,626

Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands					1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 01, 2023	Jan. 01, 2022	Jan. 01, 2021	Jan. 30, 2020	Nov. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2019	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)						15,080,264		15,080,264		12,837,138
Intrinsic value of options exercised during the period								$ 1,200
Grant date fair value of options vested during the period								$ 22,100
Grant date fair value of options vested during the period (in USD per share)								$ 8.76
Total stock-based compensation expense						$ 9,999	$ 8,789	$ 30,056	$ 23,418
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost						$ 46,200		$ 46,200
Recognition period for unrecognized compensation costs related to unvested options expected to vest								2 years 4 months 24 days
Expected dividend yield								0.00%		0.00%
RSUs subject to future vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)						2,924,356		2,924,356		1,576,529
Vesting period of stock-based awards granted								4 years
Granted (in shares)								2,029,000			0
Unrecognized compensation cost						$ 40,000		$ 40,000
Recognition period for unrecognized compensation costs related to unvested options expected to vest								3 years
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in shares available for grant, percentage of shares outstanding				1.00%
Purchase price of common stock, as a percentage of closing trading price per share				85.00%
Total stock-based compensation expense						$ 234	$ 216	$ 781	$ 637
Employee Stock Purchase Plan \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares authorized (in shares)	610,522	503,457	436,778
Shares available for grant (in shares)						1,524,787		1,524,787
Number of shares authorized for sale under the ESPP (in shares)				351,000
Maximum shares to be issued				5,265,000
2020 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)				2,134,000
Increase in shares available for grant, percentage of shares outstanding				4.00%
Based number of options issuable (in shares)				11,000,000
Number of additional shares authorized (in shares)	2,442,090	2,013,830	1,747,112
Shares available for grant (in shares)						1,487,426		1,487,426
Expected dividend yield								0.00%
2020 Equity Incentive Plan \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of stock-based awards granted								4 years
2017 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)				1,550,150
2022 Employment Inducement Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved (in shares)												1,250,000
Number of additional shares authorized (in shares)					1,500,000
Shares available for grant (in shares)						915,425		915,425

Balance Sheet Components - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Accrued compensation	$ 13,741	$ 14,000
Accrued sales deductions	7,308	1,567
Clinical trial accruals	4,629	7,896
Accrued expenses and other current liabilities	2,317	4,860
Total accrued liabilities	$ 27,995	$ 28,323

Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands	Total	At-The-Market	Common Stock	Common Stock At-The-Market	Additional Paid-In Capital	Additional Paid-In Capital At-The-Market	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021			50,255,614
Beginning balance at Dec. 31, 2021	$ 297,677		$ 5		$ 706,233		$ (255)	$ (408,306)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock net of discount and issuance costs (in shares)				882,353
Issuance of shares of common stock, net of discount and issuance costs		$ 14,366		$ 0		$ 14,366
Issuance of common stock upon the exercise of stock options (in shares)			102,935
Issuance of common stock upon the exercise of stock options	260				260
Issuance of common stock upon the vesting of restricted stock units (in shares)			79,421
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)			40,025
Lapse of repurchase rights related to common stock issued pursuant to early exercises	25				25
Stock-based compensation expense	6,533				6,533
Unrealized gain (loss) on marketable securities	(765)						(765)
Net loss	(64,324)							(64,324)
Ending balance (in shares) at Mar. 31, 2022			51,360,348
Ending Balance at Mar. 31, 2022	253,772		$ 5		727,417		(1,020)	(472,630)
Beginning balance (in shares) at Dec. 31, 2021			50,255,614
Beginning balance at Dec. 31, 2021	297,677		$ 5		706,233		(255)	(408,306)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Unrealized gain (loss) on marketable securities	(1,341)
Foreign currency translation adjustment	0
Net loss	(239,439)
Ending balance (in shares) at Sep. 30, 2022			60,908,641
Ending Balance at Sep. 30, 2022	270,774		$ 6		920,109		(1,596)	(647,745)
Beginning balance (in shares) at Mar. 31, 2022			51,360,348
Beginning balance at Mar. 31, 2022	253,772		$ 5		727,417		(1,020)	(472,630)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)			57,113
Issuance of common stock upon the exercise of stock options	156				156
Issuance of common stock upon the vesting of restricted stock units (in shares)			6,625
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)			27,830
Lapse of repurchase rights related to common stock issued pursuant to early exercises	20				20
Shares issued pursuant to the employee stock purchase plan (in shares)			74,237
Shares issued pursuant to the employee stock purchase plan	976				976
Stock-based compensation expense	8,096				8,096
Unrealized gain (loss) on marketable securities	(232)						(232)
Net loss	(67,406)							(67,406)
Ending balance (in shares) at Jun. 30, 2022			51,526,153
Ending Balance at Jun. 30, 2022	195,382		$ 5		736,665		(1,252)	(540,036)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock net of discount and issuance costs (in shares)			8,625,000
Issuance of shares of common stock, net of discount and issuance costs	161,657		$ 1		161,656
Issuance of shares of common stock related to acquisition of Ducentis Biotherapeutics LTD (in shares)			610,258
Issuance of shares of common stock related to acquisition of Ducentis Biotherapeutics LTD	12,468				12,468
Issuance of common stock upon the exercise of stock options (in shares)			130,817
Issuance of common stock upon the exercise of stock options	494				494
Issuance of common stock upon the vesting of restricted stock units (in shares)			12,695
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)			3,718
Lapse of repurchase rights related to common stock issued pursuant to early exercises	37				37
Stock-based compensation expense	8,789				8,789
Unrealized gain (loss) on marketable securities	(344)						(344)
Foreign currency translation adjustment	0
Net loss	(107,709)							(107,709)
Ending balance (in shares) at Sep. 30, 2022			60,908,641
Ending Balance at Sep. 30, 2022	270,774		$ 6		920,109		(1,596)	(647,745)
Beginning balance (in shares) at Dec. 31, 2022			61,037,403
Beginning balance at Dec. 31, 2022	209,581		$ 6		930,425		(1,086)	(719,764)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)			31,497
Issuance of common stock upon the exercise of stock options	100				100
Issuance of common stock upon the vesting of restricted stock units (in shares)			285,314
Issuance of common stock upon the vesting of restricted stock units	0
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)			3,718
Lapse of repurchase rights related to common stock issued pursuant to early exercises	0				0
Stock-based compensation expense	9,479				9,479
Unrealized gain (loss) on marketable securities	724						724
Foreign currency translation adjustment	(52)						(52)
Net loss	(80,100)							(80,100)
Ending balance (in shares) at Mar. 31, 2023			61,357,932
Ending Balance at Mar. 31, 2023	139,732		$ 6		940,004		(414)	(799,864)
Beginning balance (in shares) at Dec. 31, 2022			61,037,403
Beginning balance at Dec. 31, 2022	$ 209,581		$ 6		930,425		(1,086)	(719,764)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)	239,517
Unrealized gain (loss) on marketable securities	$ 1,017
Foreign currency translation adjustment	(115)
Net loss	(195,856)
Ending balance (in shares) at Sep. 30, 2023			61,858,044
Ending Balance at Sep. 30, 2023	46,717		$ 6		962,515		(184)	(915,620)
Beginning balance (in shares) at Mar. 31, 2023			61,357,932
Beginning balance at Mar. 31, 2023	139,732		$ 6		940,004		(414)	(799,864)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)			35,700
Issuance of common stock upon the exercise of stock options	74				74
Issuance of common stock upon the vesting of restricted stock units (in shares)			77,221
Vesting of founder shares subject to repurchase	0
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)			3,719
Lapse of repurchase rights related to common stock issued pursuant to early exercises	0				0
Shares issued pursuant to the employee stock purchase plan (in shares)			155,446
Shares issued pursuant to the employee stock purchase plan	993				993
Stock-based compensation expense	10,578				10,578
Unrealized gain (loss) on marketable securities	128						128
Foreign currency translation adjustment	(6)						(6)
Net loss	(70,991)							(70,991)
Ending balance (in shares) at Jun. 30, 2023			61,630,018
Ending Balance at Jun. 30, 2023	80,508		$ 6		951,649		(292)	(870,855)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)			172,320
Issuance of common stock upon the exercise of stock options	867				867
Issuance of common stock upon the vesting of restricted stock units (in shares)			51,988
Lapse of repurchase rights related to common stock issued pursuant to early exercises (in shares)			3,718
Lapse of repurchase rights related to common stock issued pursuant to early exercises	0				0
Stock-based compensation expense	9,999				9,999
Unrealized gain (loss) on marketable securities	165						165
Foreign currency translation adjustment	(57)						(57)
Net loss	(44,765)							(44,765)
Ending balance (in shares) at Sep. 30, 2023			61,858,044
Ending Balance at Sep. 30, 2023	$ 46,717		$ 6		$ 962,515		$ (184)	$ (915,620)

Organization and Description of Business (Details) $ / shares in Units, $ in Thousands				1 Months Ended				9 Months Ended
	Oct. 24, 2023 USD ($) $ / shares shares	May 06, 2021 USD ($)	Feb. 04, 2020 USD ($)	Aug. 31, 2022 USD ($)	Mar. 31, 2022 USD ($) $ / shares shares	Feb. 28, 2021 USD ($)	Oct. 31, 2020 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock								$ 0	$ 161,592
Accumulated deficit								915,620		$ 719,764
Cash, cash equivalents, restricted cash and marketable securities								228,000		410,800
Long-term debt								200,783		$ 197,769
Subsequent Event
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock and warrants	$ 94,000
Number of shares issued in transaction (in shares) \| shares	32,500,000
Stock price (in USD per share) \| $ / shares	$ 2.50
Loan agreement \| Secured debt
Subsidiary, Sale of Stock [Line Items]
Long-term debt								$ 200,000
IPO
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of shares under ATM, net of issuance costs			$ 167,200
Secondary Equity Public Offering
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock							$ 93,400
Third Equity Public Offering
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock						$ 207,500
Fourth Equity Public Offering
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock				$ 161,600
Private placement
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock							$ 35,000
At-The-Market \| Common Stock \| Cowen
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock					$ 14,500
Issuance of shares of common stock for sales agreement		$ 100,000
Share sales agreement, percentage of gross sales price		0.03
Number of shares issued in transaction (in shares) \| shares					882,353
Stock price (in USD per share) \| $ / shares					$ 17.00

Property and Equipment, net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,461	$ 3,034
Less accumulated depreciation	(1,726)	(1,153)
Property and equipment, net	1,735	1,881
Computer hardware
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,128	983
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	661	379
Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	104	104
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,568	$ 1,568

Commitments and Contingencies - Schedule of Operating Lease Payments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
2023 (October through December)	$ 241
2024	995
2025	1,024
2026	1,054
2027	1,087
2028	653
Total minimum lease payments	5,054
Less: Amounts representing interest	(769)
Present value of future minimum lease payments	4,285
Current portion operating lease liability	715	$ 657
Operating lease liability, noncurrent	3,570	$ 4,117
Total operating lease liability	$ 4,285

Organization and Description of Business	9 Months Ended
Organization and Description of Business	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	Organization and Description of Business Arcutis Biotherapeutics, Inc., or the Company, is an early commercial-stage biopharmaceutical company focused on developing and commercializing treatments for dermatological diseases with high unmet medical needs. The Company received U.S. Food and Drug Administration (FDA) approval of its first product, ZORYVE® (roflumilast) cream 0.3%, on July 29, 2022, for the treatment of plaque psoriasis, including intertriginous psoriasis, in individuals 12 years of age and older, and began U.S. commercialization in August 2022. The Company also received Health Canada approval of ZORYVE in plaque psoriasis on April 28, 2023 and began Canadian commercialization in June 2023. The Company's current portfolio is comprised of what management believes to be highly differentiated topical and systemic treatments with significant potential to treat immune-mediated dermatological diseases and conditions. The Company believes it has built the industry's leading platform for dermatologic product development. The Company’s strategy is to focus on validated biological targets and to use its drug development platform and deep dermatology expertise to develop differentiated products that have the potential to address the major shortcomings of existing therapies in its targeted indications. The Company believes this strategy uniquely positions it to rapidly advance its goal of bridging the treatment innovation gap in dermatology, while maximizing its probability of technical success. Initial Public Offering and Follow-On Financings On February 4, 2020, the Company closed an initial public offering (IPO) issuing and selling shares of its common stock receiving aggregate net proceeds of approximately $167.2 million. The company completed subsequent public sales of its common stock in October 2020, February 2021 and August 2022, receiving aggregate net proceeds of $93.4 million, $207.5 million, and $161.6 million, respectively. In October 2020, the Company also sold shares of common stock in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, receiving net proceeds of $35.0 million. On October 24, 2023, the Company completed a public offering of its common stock and prefunded warrants to purchase shares of its common stock and received aggregate net proceeds of $94.0 million. See Note 12. At-the-Market (ATM) Offerings On May 6, 2021, the Company entered into a sales agreement (Sales Agreement) with Cowen and Company, LLC (Cowen), under which the Company may from time to time issue and sell shares of its common stock through ATM offerings for an aggregate offering price of up to $100.0 million. Cowen will act as the Company's sales agent for the ATM program and is entitled to compensation for its services equal to 3% of the gross proceeds of any shares of common stock sold under the Sales Agreement. In March 2022, the Company sold 882,353 shares under the ATM for $17.00 per share and received $14.5 million in net proceeds. Liquidity The Company has incurred significant losses and negative cash flows from operations since its inception and had an accumulated deficit of $915.6 million and $719.8 million as of September 30, 2023 and December 31, 2022, respectively. Management expects to continue to incur operating losses. The Company had cash, cash equivalents, restricted cash, and marketable securities of $228.0 million and $410.8 million as of September 30, 2023 and December 31, 2022, respectively. On October 24, 2023, the Company completed a public offering of its common stock and prefunded warrants to purchase shares of its common stock and received net proceeds of $94.0 million. The Company has $200.0 million outstanding under the Loan Agreement as of September 30, 2023. See Note 8. The Company believes that its existing capital resources will be sufficient to meet the projected operating requirements for at least 12 months from the date of issuance of its financial statements. If the Company's available cash and marketable securities, amounts available under the Loan Agreement and anticipated future cash flows from operations are insufficient to satisfy its liquidity requirements, the Company may need to raise additional capital to fund its operations. No assurance can be given as to whether additional needed financing will be available on terms acceptable to the Company, if at all. If sufficient funds on acceptable terms are not available when needed, the Company may be required to curtail certain planned activities. Failure to manage discretionary spending or raise additional financing, as needed, may adversely impact the Company’s ability to achieve its intended business objectives and have an adverse effect on its results of operations and future prospects.

Stockholders’ Equity - Schedule of Components of Shares of Stock for Issuance (Details) - shares	Sep. 30, 2023	Dec. 31, 2022
Class of Stock [Line Items]
Common stock reserved (in shares)	15,080,264	12,837,138
Options issued and outstanding
Class of Stock [Line Items]
Common stock reserved (in shares)	8,228,270	7,476,223
Common stock awards available for grant under employee incentive plans
Class of Stock [Line Items]
Common stock reserved (in shares)	3,927,638	3,784,386
Restricted stock units outstanding
Class of Stock [Line Items]
Common stock reserved (in shares)	2,924,356	1,576,529

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

Net Loss Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per ShareThe following outstanding potentially dilutive shares have been excluded from the calculation of diluted net loss per share for the periods presented due to their anti-dilutive effect:


	As of September 30,
	2023	2022
Stock options to purchase common stock	8,228,270	7,480,040
Early exercised options subject to future vesting	3,698	18,573
RSUs subject to future vesting	2,924,356	1,567,946
ESPP shares subject to future issuance	73,252	55,735

Total	11,229,576	9,122,294

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues:
Total revenues	$ 38,109	$ 725	$ 46,080	$ 725
Operating expenses:
Cost of sales	1,182	269	2,741	269
Research and development	26,236	69,731	86,800	148,558
Selling, general, and administrative	47,595	35,473	136,471	85,101
Total operating expenses	75,013	105,473	226,012	233,928
Loss from operations	(36,904)	(104,748)	(179,932)	(233,203)
Other income (expense):
Other income, net	2,721	1,938	9,114	2,501
Interest expense	(7,559)	(4,899)	(21,950)	(8,737)
Loss before income taxes	(41,742)	(107,709)	(192,768)	(239,439)
Provision for income taxes	3,023	0	3,088	0
Net loss	(44,765)	(107,709)	(195,856)	(239,439)
Other comprehensive income (loss):
Unrealized income (loss) on marketable securities	165	(344)	1,017	(1,341)
Foreign currency translation adjustment	(57)	0	(115)	0
Total other comprehensive income (loss)	108	(344)	902	(1,341)
Comprehensive loss	$ (44,657)	$ (108,053)	$ (194,954)	$ (240,780)
Per share information:
Net loss per share, basic (in USD per share)	$ (0.73)	$ (1.89)	$ (3.19)	$ (4.52)
Net loss per share, diluted (in USD per share)	$ (0.73)	$ (1.89)	$ (3.19)	$ (4.52)
Weighted-average shares used in computing net loss per share, basic (in shares)	61,727,278	57,091,743	61,462,025	53,028,962
Weighted-average shares used in computing net loss per share, diluted (in shares)	61,727,278	57,091,743	61,462,025	53,028,962
Product revenue, net
Revenues:
Total revenues	$ 8,109	$ 725	$ 15,660	$ 725
Other revenue
Revenues:
Total revenues	$ 30,000	$ 0	$ 30,420	$ 0

Fair Value Measurements - Schedule of Fair Value of Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 107,471	$ 53,641
Total assets	227,113	409,589
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	26,516	177,099
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale		13,821
U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	93,126	165,028
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	107,471	53,641
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	200,597	218,669
Level 1 \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 1 \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale		0
Level 1 \| U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	93,126	165,028
Level 1 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	107,471	53,641
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	26,516	190,920
Level 2 \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	26,516	177,099
Level 2 \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale		13,821
Level 2 \| U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 2 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Level 3 \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 3 \| Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale		0
Level 3 \| U.S. Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	0	0
Level 3 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 0	$ 0

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Operating Lease

The Company leases a facility in Westlake Village, California under an operating lease that commenced in February 2019 and was amended in April 2020 in order to relocate to a new expanded space comprising 22,643 square feet, for which the Company recognized the ROU asset and lease liability. The lease terminates 91 months after December 31, 2020, with a renewal option for a term of five years. The Company will have a one-time option to cancel the lease after month 67.

The amended lease agreement also required the Company to have an available letter of credit of $1.5 million upon occupying the space, which is allowed to be reduced throughout the lease period as rent obligations are met. Accordingly, in November 2020, the Company entered into a letter of credit for $1.5 million, which it secured with a restricted cash account in the same amount. In March 2022 and 2023, the Company reduced the letter of credit and related restricted cash account to $1.2 million and $0.9 million, respectively.

The minimum annual rental payments of the Company’s operating lease liability as of September 30, 2023 are as follows (in thousands):


	Amounts
2023 (October through December)	$	241
2024	995
2025	1,024
2026	1,054
2027	1,087
2028	653
Total minimum lease payments	$	5,054
Less: Amounts representing interest	(769)

Present value of future minimum lease payments	$	4,285
Current portion operating lease liability	715
Operating lease liability, noncurrent	3,570
Total operating lease liability	$	4,285

Straight-line rent expense recognized for operating leases was $184,000 and $551,000 for the three and nine months ended September 30, 2023, and $186,000 and $530,000 for the three and nine months ended September 30, 2022, respectively. There were no significant variable lease payments, including non-lease components such as common area maintenance fees, recognized as rent expense for operating leases for the three and nine months ended September 30, 2023 and 2022.

The following information represents supplemental disclosure for the condensed consolidated statements of cash flows related to the Company’s operating lease (in thousands):


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Cash paid for amounts included in the measurement of lease liabilities	$	723	$	547

The following summarizes additional information related to the operating lease:


	September 30, 2023
Weighted-average remaining lease term (in years)	4.8
Weighted-average discount rate	7.0	%

Manufacturing Agreements

The Company has entered into manufacturing supply agreements for the commercial supply of ZORYVE which include certain minimum purchase commitments. Firm future purchase commitments under these agreements are approximately $1.2 million within the next three months, and then approximately $0.8 million per year for 2024 and 2025. This amount does not represent all of the Company’s anticipated purchases, but instead represents only the contractually obligated minimum purchases or firm commitments of non-cancelable minimum amounts.

Indemnification

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless, and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by the provisions of the Company's Bylaws and the Delaware General Corporation Law. The Company currently has directors’ and officers’ insurance coverage that reduces its exposure and enables the Company to recover a portion of any future amounts paid. The Company believes any potential loss exposure under these indemnification agreements in excess of applicable insurance coverage is minimal.

License Agreements

The terms of certain of the Company's license agreements require us to pay potential future milestone payments based on product development success. The amount and timing of such obligations are unknown or uncertain. See Note 6.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

In January 2020, the Company’s board of directors approved the 2020 Equity Incentive Plan (2020 Plan), which became effective January 30, 2020 in connection with the IPO. The 2020 Plan serves as the successor incentive award plan to the Company’s 2017 Equity Incentive Plan (2017 Plan) and initially reserved 2,134,000 shares of common stock available for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit (RSU) awards, and other stock-based awards, plus 1,550,150 shares of common stock that were reserved for issuance pursuant to future awards under the 2017 Plan at the time the 2020 Plan became effective, plus shares represented by awards outstanding under the 2017 Plan that are forfeited or lapsed unexercised and which following the effective date of the 2020 Plan are not issued under the 2017 Plan. In addition, the 2020 Plan reserve will increase on January 1 of each year beginning in 2021 through 2030, by an amount equal to the lesser of (a) four percent of the shares of stock outstanding (on an as converted basis) on the day immediately prior to the date of increase and (b) such smaller number of shares of stock as determined by the Company's board of directors; provided, however, that no more than 11,000,000 shares of stock may be issued upon the exercise of incentive stock options. Accordingly, on January 1, 2023, 2022 and 2021, the 2020 Plan reserve increased by 2,442,090, 2,013,830 and 1,747,112 shares, respectively. As of September 30, 2023, the Company had 1,487,426 shares available for future grant under the 2020 Plan.

The 2020 Plan provides for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the board of directors, and consultants of the Company under terms and provisions established by the board of directors. Under the terms of the 2020 Plan, options may be granted at an exercise price not less than fair market value. The Company generally grants stock-based awards with service conditions. Options granted typically vest over a four-year period but may be granted with different vesting terms.

Following the Company’s IPO and in connection with the effectiveness of the Company’s 2020 Plan, the 2017 Plan terminated and no further awards will be granted under that plan. However, all outstanding awards under the 2017 Plan will continue to be governed by their existing terms.

In December 2021, the Company’s board of directors approved the 2022 Employment Inducement Incentive Plan (2022 Plan). The 2022 Plan initially reserved 1,250,000 shares of common stock available for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, RSU awards, and other stock-based awards. In November 2022, the 2022 Plan reserve was increased by 1,500,000. As of September 30, 2023, the Company had 915,425 shares available for future grant under the 2022 Plan.

Stock Option Activity

The following summarizes option activity (in thousands, except share amounts):


	Number of Options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance—December 31, 2022	7,476,223	$	19.93	7.98	$	18,667
Granted	1,608,110	$	12.67
Exercised	(239,517)	$	4.45
Forfeited	(479,288)	$	20.48
Expired	(137,258)	$	26.75
Balance—September 30, 2023	8,228,270	$	18.81	7.51	$	3,269
Exercisable—September 30, 2023(1)	4,571,413	$	18.62	6.59	$	3,269

______________

(1)Options exercisable includes early exercisable options.

The aggregate intrinsic value is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of September 30, 2023. The intrinsic value of options exercised for the nine months ended September 30, 2023 was $1.2 million.

The total grant-date fair value of the options vested during the nine months ended September 30, 2023 was $22.1 million. The weighted-average grant-date fair value of employee options granted during the nine months ended September 30, 2023 was $8.76.

Restricted Stock Unit Activity

The following table summarizes information regarding the Company's RSUs:


	Number of Units	Weighted-Average Grant Date Fair Value
Balance—December 31, 2022	1,576,529	$	20.73
Granted	2,029,000	$	14.36
Vested	(414,523)	$	21.21
Forfeited	(266,650)	$	18.81
Unvested Balance—September 30, 2023	2,924,356	$	18.47

The grant date fair value of an RSU equals the closing price of the Company's common stock on the grant date. RSUs generally vest equally over four years. There were no RSU grants prior to January 1, 2020.

Stock-Based Compensation Expense

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	4,058	$	3,448	$	11,966	$	9,437
Selling, general, and administrative	5,941		5,341		18,090		13,981
Total stock-based compensation expense	$	9,999	$	8,789	$	30,056	$	23,418

As of September 30, 2023, there was $46.2 million of total unrecognized compensation cost related to unvested options that are expected to vest, which is expected to be recognized over a weighted-average period of 2.4 years. As of September 30, 2023, there was $40.0 million of total unrecognized compensation cost related to RSUs that is expected to vest, which is expected to be recognized over a weighted-average period of 3.0 years.

In determining the fair value of the stock options granted, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Fair value of common stock — The Company uses its closing stock price as reported on Nasdaq on the grant date for the fair value of its stock.

Expected Term — The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company uses the simplified method (based on the mid-point between the vesting date and the end of the contractual term) to determine the expected term.

Expected Volatility — Beginning in 2022, having over two years of trading history, the Company began using solely its own historical stock price for expected volatility.

Risk-Free Interest Rate —The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Dividend Yield —The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

The fair value of stock option awards granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:


	Nine Months Ended September 30, 2023	Year Ended December 31, 2022
Expected term (in years)	5.3 – 6.1	5.4 – 6.1
Expected volatility	75.2 – 77.1%	77.9 – 82.1%
Risk-free interest rate	3.5 – 4.7%	1.4 – 4.2%
Dividend yield	—%	—%

2020 Employee Stock Purchase Plan

The Company adopted the 2020 Employee Stock Purchase Plan, or the ESPP, which became effective on January 30, 2020 in connection with the IPO. The ESPP is designed to allow the Company’s eligible employees to purchase shares of the Company’s common stock, at semi-annual intervals, with their accumulated payroll deductions. Under the ESPP, participants are offered the option to purchase shares of the Company’s common stock at a discount during a series of successive offering periods. The option purchase price will be the lower of 85% of the closing trading price per share of the Company’s common stock on the first trading date of an offering period in which a participant is enrolled or 85% of the closing trading price per share on the purchase date, which will occur on the last trading day of each offering period.

The ESPP is intended to qualify under Section 423 of the U.S. Internal Revenue Service Code of 1986, as amended. The maximum number of the Company’s common stock which will be authorized for sale under the ESPP is equal to the sum of (a) 351,000 shares of common stock and (b) an annual increase on the first day of each year beginning in 2021 and ending in 2030, equal to the lesser of (i) 1% of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares of common stock as determined by the Company’s board of directors; provided, however, no more than 5,265,000 shares of the Company’s common stock may be issued under the ESPP. Accordingly, on January 1, 2023, 2022 and 2021, the ESPP reserve increased by 610,522, 503,457, and 436,778 shares, respectively. As of September 30, 2023, the Company had 1,524,787 shares available for future grant under the ESPP.

Stock-based compensation expense related to the ESPP was $234,000 and $781,000 for the three and nine months ended September 30, 2023, respectively, and $216,000 and $637,000 for the three and nine months ended September 30, 2022, respectively.

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

The following summarizes option activity (in thousands, except share amounts):


	Number of Options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance—December 31, 2022	7,476,223	$	19.93	7.98	$	18,667
Granted	1,608,110	$	12.67
Exercised	(239,517)	$	4.45
Forfeited	(479,288)	$	20.48
Expired	(137,258)	$	26.75
Balance—September 30, 2023	8,228,270	$	18.81	7.51	$	3,269
Exercisable—September 30, 2023(1)	4,571,413	$	18.62	6.59	$	3,269

______________

(1)Options exercisable includes early exercisable options.

Schedule of Restricted Stock Unit Activity

The following table summarizes information regarding the Company's RSUs:


	Number of Units	Weighted-Average Grant Date Fair Value
Balance—December 31, 2022	1,576,529	$	20.73
Granted	2,029,000	$	14.36
Vested	(414,523)	$	21.21
Forfeited	(266,650)	$	18.81
Unvested Balance—September 30, 2023	2,924,356	$	18.47

Schedule of Stock-Based Compensation Expense

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	4,058	$	3,448	$	11,966	$	9,437
Selling, general, and administrative	5,941		5,341		18,090		13,981
Total stock-based compensation expense	$	9,999	$	8,789	$	30,056	$	23,418

Schedule of Assumptions in Calculating Stock Option Awards

The fair value of stock option awards granted was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:


	Nine Months Ended September 30, 2023	Year Ended December 31, 2022
Expected term (in years)	5.3 – 6.1	5.4 – 6.1
Expected volatility	75.2 – 77.1%	77.9 – 82.1%
Risk-free interest rate	3.5 – 4.7%	1.4 – 4.2%
Dividend yield	—%	—%

Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2023

Balance Sheet Related Disclosures [Abstract]

Schedule of Inventories

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


	September 30, 2023		December 31, 2022
Raw materials	$	11,200	$	5,659
Work in progress	367		395
Finished goods	2,346		1,460
Total inventories	$	13,913	$	7,514

Schedule of Prepaid Expenses and Other Current Assets

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


	September 30, 2023		December 31, 2022
Prepaid co-pay assistance program	$	4,948	$	3,226
Prepaid insurance	852		956
Prepaid clinical trial costs	4,196		172
Other prepaid expenses and current assets	10,184		6,257
Total prepaid expenses and other current assets	$	20,180	$	10,611

Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Accrued compensation	$	13,741	$	14,000
Accrued sales deductions	7,308		1,567
Clinical trial accruals	4,629		7,896
Accrued expenses and other current liabilities	2,317		4,860
Total accrued liabilities	$	27,995	$	28,323

Long-term debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
Principal loan balance	$ 200,000	$ 200,000
Accrued final fee	4,118	1,871
Unamortized debt issuance costs	(3,335)	(4,102)
Long-term debt, net	$ 200,783	$ 197,769

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

License Agreements & Acquisition - AstraZeneca (Details) - USD ($)	1 Months Ended		3 Months Ended		9 Months Ended
	Aug. 31, 2019	Jul. 31, 2018	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Patents
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Intangible asset, useful life			10 years		10 years
AstraZeneca
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License agreement, cash payment	$ 2,000,000	$ 1,000,000	$ 0	$ 0	$ 0	$ 0
Product milestone payment for first product approval				$ 7,500,000
Maximum milestone payments for licensed products					5,000,000
Maximum milestone payments for net worldwide sales					15,000,000
Future payable milestone payment			$ 5,000,000		5,000,000
Annual net sales					$ 100,000,000
Term of agreement					10 years
AstraZeneca \| Patents
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Intangible asset, useful life			10 years		10 years
AstraZeneca \| Series B Preferred Stock
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Preferred stock issued (in shares)		484,388
Preferred stock issued		$ 3,000,000

Balance Sheet Components - Schedule of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Raw materials	$ 11,200	$ 5,659
Work in progress	367	395
Finished goods	2,346	1,460
Total inventories	$ 13,913	$ 7,514

Long-term debt - Narrative (Details) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended
	Aug. 02, 2022	Feb. 01, 2022	Dec. 22, 2021	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Nov. 01, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Payment of debt issuance costs						$ 0	$ 2,187
Maturity, due 2027				$ 213,900		$ 213,900
Secured debt \| Loan agreement
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 225,000
Milestone period			6 months
Stated interest rate			7.45%
Basis spread on variable rate			0.10%
Interest rate at end of period				12.88%		12.88%
Market capitalization			$ 400,000
Default rate			4.00%
Payment of debt issuance costs			$ 1,000
Final fee			6.95%
Exit fee			3.00%
Exit fee expiration period			10 years
Deferred final fee			$ 13,700
Effective interest rate				14.79%		14.79%			13.79%
Interest expense				$ 7,600	$ 4,900	$ 22,000	$ 8,700
Secured debt \| Loan agreement \| Subsequent Event
Debt Instrument [Line Items]
Maximum borrowing capacity								$ 200,000
Secured debt \| Loan agreement \| Tranche A term loan
Debt Instrument [Line Items]
Maximum borrowing capacity			75,000
Proceeds from issuance of debt			75,000
Secured debt \| Loan agreement \| Tranche B-1 term loan
Debt Instrument [Line Items]
Maximum borrowing capacity			50,000
Secured debt \| Loan agreement \| Tranche B-2 term loan
Debt Instrument [Line Items]
Maximum borrowing capacity			75,000
Incremental amount available for borrowing			15,000
Secured debt \| Loan agreement \| Tranche C term loan
Debt Instrument [Line Items]
Maximum borrowing capacity			25,000
Net product revenue milestone			$ 110,000
Milestone period			6 months
Secured debt \| Loan agreement \| Tranche C term loan \| Subsequent Event
Debt Instrument [Line Items]
Maximum borrowing capacity								$ 25,000
Secured debt \| Loan agreement \| Tranche B term loan
Debt Instrument [Line Items]
Proceeds from issuance of debt	$ 125,000
Secured debt \| Loan agreement \| Prior to December 22, 2022
Debt Instrument [Line Items]
Prepayment premium		3.00%
Secured debt \| Loan agreement \| After December 22, 2002 and prior to December 22, 2023
Debt Instrument [Line Items]
Prepayment premium		2.00%
Secured debt \| Loan agreement \| After December 22, 2023 and prior to December 22, 2025
Debt Instrument [Line Items]
Prepayment premium		1.00%
Secured debt \| Loan agreement \| Minimum
Debt Instrument [Line Items]
Periodic principal payment		$ 5,000

Property and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment, net consists of the following (in thousands):


	September 30, 2023		December 31, 2022
Computer hardware	$	1,128	$	983
Furniture and fixtures	661		379
Software	104		104

Leasehold improvements	1,568		1,568
Property and equipment, gross	3,461		3,034
Less accumulated depreciation	(1,726)		(1,153)
Property and equipment, net	$	1,735	$	1,881

Commitments and Contingencies - Schedule of Operating Lease Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Cash paid for amounts included in the measurement of lease liabilities	$ 723	$ 547

Stockholders’ Equity (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Schedule of Components of Shares of Stock for Issuance

The Company reserved the following shares of common stock for issuance as follows:


	September 30, 2023	December 31, 2022

Options issued and outstanding	8,228,270	7,476,223
Common stock awards available for grant under employee incentive plans	3,927,638	3,784,386
Restricted stock units outstanding	2,924,356	1,576,529
Total common stock reserved	15,080,264	12,837,138

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(27))
-SubTopic 10
-Topic 210
-Publisher FASB
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 210
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(28))
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-URI https://asc.fasb.org//1943274/2147480566/210-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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-SubTopic 10
-Name Accounting Standards Codification
-Section S99
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Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
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-Section 50
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-7

+ Details

Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) segment	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Property, Plant and Equipment [Line Items]
Number of operating segment \| segment			1
Restricted cash	$ 925,000		$ 925,000		$ 1,234,000
Allowance for credit loss	0		0
Intangible assets, milestone payment		$ 7,500,000
Amortization expense	188,000,000	125,000	563,000	$ 125,000
Tangible asset impairment charges	0	0	0	0
Unrecognized tax benefits, income tax penalties and interest expense			0
Provision for income taxes	$ 3,023,000	$ 0	$ 3,088,000	$ 0
Patents
Property, Plant and Equipment [Line Items]
Intangible asset, useful life	10 years		10 years
Minimum
Property, Plant and Equipment [Line Items]
Useful life	2 years		2 years
Payment terms (in days)			31 days
Maximum
Property, Plant and Equipment [Line Items]
Useful life	5 years		5 years
Payment terms (in days)			65 days

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Operating Lease Payments

The minimum annual rental payments of the Company’s operating lease liability as of September 30, 2023 are as follows (in thousands):


	Amounts
2023 (October through December)	$	241
2024	995
2025	1,024
2026	1,054
2027	1,087
2028	653
Total minimum lease payments	$	5,054
Less: Amounts representing interest	(769)

Present value of future minimum lease payments	$	4,285
Current portion operating lease liability	715
Operating lease liability, noncurrent	3,570
Total operating lease liability	$	4,285

Schedule of Operating Lease Supplemental Cash Flow Information

The following information represents supplemental disclosure for the condensed consolidated statements of cash flows related to the Company’s operating lease (in thousands):


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Cash paid for amounts included in the measurement of lease liabilities	$	723	$	547

The following summarizes additional information related to the operating lease:


	September 30, 2023
Weighted-average remaining lease term (in years)	4.8
Weighted-average discount rate	7.0	%

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The condensed consolidated financial statements include the Company's wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to revenue recognition, accruals for research and development activities, stock-based compensation expense, and income taxes. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates.
Segments	Segments To date, the Company has viewed its financial information on an aggregate basis for the purposes of evaluating financial performance and allocating the Company’s resources. Accordingly, the Company has determined that it operates in one segment.
Unaudited Interim Condensed Consolidated Financial Statements	Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated balance sheet as of September 30, 2023, the interim condensed consolidated statements of operations and comprehensive loss, and the condensed consolidated changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for the three and nine months ended September 30, 2023 and 2022 are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s audited annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three and nine month periods are also unaudited. The condensed consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2022.
Cash and Cash Equivalents and Restricted Cash	Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of money market funds, commercial paper, U.S. Treasury securities, and short-term corporate debt securities. Restricted Cash As of September 30, 2023 and December 31, 2022, the Company held $0.9 million and $1.2 million, respectively, of restricted cash as collateral for a letter of credit related to the Company's amended office space lease.
Marketable Securities	Marketable Securities Marketable securities consist of investment grade short to intermediate-term fixed income investments that have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in fixed income securities at the time of purchase. Available-for-sale securities with original maturities beyond three months at the date of purchase, including those that have maturity dates beyond one year from the balance sheet date, are classified as current assets on the condensed consolidated balance sheets due to their highly liquid nature and availability for use in current operations. Unrealized gains and losses are excluded from earnings and are reported as a component of other comprehensive income (loss) on the condensed consolidated balance sheets. Realized gains and losses as well as credit losses, if any, on marketable securities are included in other income, net. Interest on marketable securities is included in other income, net. The Company evaluated the underlying credit quality and credit ratings of the issuers during the period. To date, no such credit losses have occurred or have been recorded. The cost of investments sold is based on the specific-identification method.
Trade Receivables, net	Trade Receivables, net The Company’s trade accounts receivable consists of amounts due primarily from pharmaceutical wholesalers and specialty pharmacy providers in the United States and Canada (collectively, its "Customers") related to sales of ZORYVE and have standard payment terms. For certain Customers, the trade accounts receivable for the Customer is net of distribution service fees, prompt pay discounts, and other adjustments. The Company monitors the financial performance and creditworthiness of its Customers so that it can properly assess and respond to changes in their credit profile. The Company will reserve against trade accounts receivable for estimated credit losses that may arise and any amounts determined to be uncollectible will be written off against the reserve when it is probable that the receivable will not be collected. The reserve amount for estimated losses was not material as of September 30, 2023 and December 31, 2022.
Inventory	Inventory The Company values its inventories at the lower-of-cost or net realizable value. The Company determines the cost of its inventories, which includes costs related to products held for sale in the ordinary course of business, products in process of production for such sale, and items to be currently consumed in the production of goods to be available for sale, on a first-in, first-out (FIFO) basis. Due to the nature of the Company’s supply chain process, inventory that is owned by the Company is physically stored at third-party warehouses, logistics providers, and contract manufacturers. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified. If they occur, such charges are recorded as a component of cost of sales in the condensed consolidated statements of operations. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. Products that may be used in clinical development programs are excluded from inventory and their costs are charged to research and development expense in the condensed consolidated statement of operations as incurred, as long as they do not have an alternative use. Prior to the initial date regulatory approval is received, costs related to the production of inventory were recorded as research and development expense on the Company’s condensed consolidated statements of operations in the period incurred.
Intangible Assets, net	Intangible Assets, netThe Company paid a milestone payment of $7.5 million to AstraZeneca in the third quarter of 2022 related to the FDA approval and launch of ZORYVE. This milestone payment was capitalized as an intangible asset and will be amortized to cost of sales over its useful life of 10 years from the date of first commercial sale, as this is the minimum amount of time that the related License Agreement will be in effect.The Company evaluates its long-lived assets, including intangibles, for impairment whenever events or changes in circumstance indicate that the carrying value of an asset might not be fully recoverable. To do so, the Company compares the carrying value of the intangible asset to the undiscounted net cash flows over its remaining useful life, and if not recoverable, will estimate the fair value of the asset. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results.
Valuation of Other Investments	Valuation of Other Investments The Company reviews agreements it enters into with third-party entities, pursuant to which the Company may have a variable interest in the entity, in order to determine if the entity is a variable interest entity (VIE). If the entity is a VIE, the Company assesses whether or not it is the primary beneficiary of that entity. In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (i) the power to direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. If the Company determines it is the primary beneficiary of a VIE, it consolidates that VIE into the Company’s condensed consolidated financial statements. The Company’s determination about whether it should consolidate such VIEs is made continuously as changes to existing relationships or future transactions may result in a consolidation or deconsolidation event. The Company currently does not consolidate any VIEs. The Company accounts for its equity interest in common stock in Iolyx Therapeutics Inc. ("Iolyx", formerly known as Hawkeye Therapeutics, Inc.) in accordance with Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities (“ASC 321”). Under ASC 321, the Company elects to utilize the allowed "measurement alternative", and measures the investment at cost, minus impairment and any changes, plus or minus, resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The carrying value is included in Other assets and changes are recognized in Other income (expense).
Concentration of Credit Risk and Other Risks and Uncertainties	Concentration of Credit Risk and Other Risks and UncertaintiesFinancial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company is exposed to credit risk in the event of a default by either the financial institutions holding its cash or by its customers owing trade receivables to the extent recorded on the condensed consolidated balance sheets. To manage accounts receivable credit risk, the Company continuously evaluates the creditworthiness of its customers and the need for an allowance for potential credit losses.
Fair Value Measurement	Fair Value Measurement The Company’s financial instruments, in addition to those presented in Note 3, include cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt. The carrying amount of cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short maturities. As the long-term debt is subject to variable interest rates that are based on market rates which regularly reset, the Company believes that the carrying value of the long-term debt approximates its fair value. Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Property and Equipment	Property and EquipmentProperty and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets which range from two to five years. Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or lease terms. Maintenance and repairs are expensed as incurred. The Company reviews the carrying values of its property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Leases	Leases The Company determines if an arrangement is or contains a lease at inception. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The classification of the Company’s leases as operating or finance leases, along with the initial measurement and recognition of the associated ROU assets and lease liabilities, is performed at the lease commencement date. The measurement of lease liabilities is based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate, based on the information available at commencement date, to determine the present value of lease payments when its leases do not provide an implicit rate. The Company uses the implicit rate when readily determinable. The ROU asset is based on the measurement of the lease liability, includes any lease payments made prior to or on lease commencement and is adjusted for lease incentives and initial direct costs incurred, as applicable. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. The Company considers a lease term to be the non-cancelable period that it has the right to use the underlying asset, including any periods where it is reasonably assured the Company will exercise the option to extend the contract. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option. The Company’s lease agreements includes lease and non-lease components and the Company has elected to not separate such components for all classes of assets. Further, the Company elected the short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to leases with terms of 12 months or less (short-term leases) for all classes of assets.
Accrued and Prepaid Nonclinical and Clinical Costs	Accrued and Prepaid Nonclinical and Clinical CostsThe Company records accrued liabilities for estimated costs and prepaid costs for research and development activities conducted by third-party service providers, which include the conduct of nonclinical studies, clinical trials, and contract manufacturing activities. These costs are a significant component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities and prepaid costs balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities.
Revenues	Revenues Pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when a customer obtains control of promised goods or services. The Company records the amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied. Product Revenue, Net The Company sells its product to its Customers in the United States and Canada. The Company’s Customers subsequently resell the products to pharmacies, health care providers, and patients. In accordance with ASC 606, the Company recognizes net product revenue from sales when the Customers obtain control of the Company’s products, which typically occurs upon delivery to the Customer. The Company’s payment terms are generally between 31 - 65 days. Revenue from product sales are recorded at the net sales price, or “transaction price,” which includes estimates of variable consideration that result from (a) invoice discounts for prompt payment and distribution service fees, (b) government and private payer rebates, chargebacks, discounts and fees, (c) product returns and (d) costs of co-pay assistance programs for patients, as well as other incentives. Reserves are established for the estimates of variable consideration based on the amounts earned or to be claimed on the related sales. The reserves are classified as reductions to trade receivables, net if payable to a Customer or accrued liabilities if payable to a third party. Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be constrained and is included in net product revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary from the Company’s estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known. Distribution Service Fees: The Company engages with wholesalers and specialty pharmacies to distribute its products to end customers. The Company pays the wholesalers and certain specialty pharmacies a fee for services such as: data reporting, inventory management, chargeback administration, and service level commitment. The Company estimates the amount of distribution services fees to be paid to the Customers and adjusts the transaction price with the amount of such estimate at the time of sale to the Customer. Prompt Pay Discounts: The Company provides its Customers with a percentage discount on their invoice if the Customers pay within the agreed upon timeframe. The Company estimates the probability of Customers paying promptly based on the percentage of discount outlined in the purchase agreement between the two parties, and deducts the full amount of these discounts from its gross product revenue and accounts receivable at the time such revenue is recognized. Product Returns: The Company provides Customers a return credit in the amount of the purchase price paid by Customers for all products returned in accordance with the Company’s returned goods policy. In the initial sales period, the Company estimates its provision for sales returns based on industry data and adjusts the transaction price for such estimate at the time of sale to the Customer. Once sufficient history has been collected for product returns, the Company will utilize that history to inform its returns estimate. Once the product is returned, it is destroyed. The Company does not record a right-of-return asset. Chargeback: A chargeback is the difference between the manufacturer's invoice price to the wholesaler and the wholesaler’s customer's contract price. The wholesaler tracks these sales and "charges back" the manufacturer for the difference between the negotiated prices paid between the wholesaler's customers and wholesaler's acquisition cost. The Company estimates the percentage of goods sold that are eligible for chargeback and adjusts the transaction price for such discount at the time of sale to the Customer. Co-payment Assistance: Patients who meet certain eligibility requirements may receive co-payment assistance. The Company records contra-revenue for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators. Rebates and Discounts: The Company accrues rebates for contractually agreed-upon discounts with commercial insurance companies and mandated discounts under government programs such as the Medicaid Drug Rebate Program in the United States. The Company's estimates for expected utilization of commercial insurance rebates are based on data received from its customers. The Company's estimates for rebates under government programs are based on statutory discount rates and expected utilization as well as historical data it has accumulated since product launch. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters’ unpaid rebates. If actual rebates vary from estimates, the Company may need to adjust accruals, which would affect revenue in the period of adjustment. Other Revenues Other revenues is related to the Huadong License and Collaboration Agreement. See Note 6. The Company evaluated the agreement with Huadong and determined that it is within the scope of ASC 606. The Company applied the five-step model as required by ASC 606 to determine revenue recognition. The nonrefundable upfront payment that the Company received in September 2023 in connection with the transfer of the license and related know-how to Huadong was determined to be a distinct performance obligation, and therefore was recognized in Other revenues. The Company evaluated whether the development and regulatory milestones are considered probable of being reached and determined that their achievement is highly dependent on factors outside of the Company’s control. Therefore, these payments are subject to significant revenue reversal and are therefore not included in the transaction price. At the end of each reporting period, the Company will re-evaluate the probability of achievement of each milestone and, if necessary, adjust its estimate of the overall transaction price and accordingly recognize the related revenue once the probability of significant reversal of revenue is low. Any such adjustments are recorded on a cumulative catch-up basis, and would be reported in Other revenues in the period of adjustment. The sales milestones and royalties will be recognized in Other revenues when the related sales occur.
Cost of Sales	Cost of Sales Cost of sales includes direct and indirect costs related to the manufacturing and distribution of ZORYVE, including raw materials, third-party manufacturing costs, packaging services, freight-in, third-party royalties payable on the Company’s net product revenue, and amortization of certain intangible assets associated with ZORYVE. Cost of sales may also include period costs related to certain inventory warehouse and distribution operations and inventory adjustment charges. The Company began capitalizing inventory costs upon FDA approval of ZORYVE on July 29, 2022. As a result, manufacturing and other inventory costs incurred prior to FDA approval of ZORYVE were expensed and, therefore, are not included in cost of sales.
Research and Development	Research and Development Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, license fees, stock-based compensation expense, materials, supplies, and the cost of services provided by outside contractors. All costs associated with research and development are expensed as incurred. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods are received or services are rendered. Such payments are evaluated for current or long-term classification based on when they will be realized. The Company has entered into, and may continue to enter into, license agreements to access and utilize certain technology. In each case, the Company evaluates if the license agreement results in the acquisition of an asset or a business. To date, none of the Company’s license agreements have been considered an acquisition of a business. For asset acquisitions, the upfront payments to acquire such licenses, as well as any future milestone payments made before product approval that do not meet the definition of a derivative, are immediately recognized as research and development expense when paid or become payable, provided there is no alternative future use of the rights in other research and development projects.
Stock-Based Compensation	Stock-Based Compensation The Company accounts for share-based payments at fair value. The fair value of stock options is measured using the Black-Scholes option-pricing model. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for such awards is the date of grant and the expense is recognized on a straight-line basis, over the expected vesting period. For share-based awards that vest subject to a performance condition, the Company will recognize compensation cost for awards if and when the Company concludes that it is probable that the awards with a performance condition will be achieved on an accelerated attribution method. The Company accounts for forfeitures as they occur.
Income Taxes	Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net deferred tax assets have been fully offset by a valuation allowance. The Company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based on the merits of the position. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit.
Foreign Currency Translation	Foreign Currency Translation The Company translates the assets and liabilities of its foreign subsidiaries where the local currencies have been determined to be the functional currencies into U.S. dollars using current exchange rates. Adjustments for foreign currency translation adjustments are recognized in other comprehensive income (loss) in the condensed consolidated statements of operations and comprehensive loss. The earnings or loss of these subsidiaries are translated in U.S. dollars using average exchange rates in effect during each reporting period.
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive. Shares of common stock subject to repurchase are excluded from the weighted-average shares.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements There have been no new accounting pronouncements issued or effective that are expected to have a material impact on the Company's condensed consolidated financial statements.

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Assets Measured on a Recurring Basis

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	107,471	$	—	$	—	$	107,471
Commercial paper	—		26,516		—		26,516

U.S. Treasury securities	93,126		—		—		93,126
Total assets	$	200,597	$	26,516	$	—	$	227,113

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	53,641	$	—	$	—	$	53,641
Commercial paper	—		177,099		—		177,099
Corporate debt securities	—		13,821		—		13,821
U.S. Treasury securities	165,028		—		—		165,028
Total assets	$	218,669	$	190,920	$	—	$	409,589

______________

(1)This balance includes cash requirements settled on a nightly basis.

Schedule of Cash and Cash Equivalents

The following table summarizes the estimated value of the Company’s cash, cash equivalents and marketable securities, and the gross unrealized holding gains and losses (in thousands):


	September 30, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	107,471	$	—	$	—	$	107,471

Total cash and cash equivalents	$	107,471	$	—	$	—	$	107,471
Marketable securities:
Commercial paper	$	26,516	$	—	$	—	$	26,516

U.S. Treasury securities	93,195		5		(74)		93,126
Total marketable securities	$	119,711	$	5	$	(74)	$	119,642

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	53,641	$	—	$	—	$	53,641
Corporate debt securities	—		—		—		—
Total cash and cash equivalents	$	53,641	$	—	$	—	$	53,641
Marketable securities:
Commercial paper	$	177,099	$	—	$	—	$	177,099
Corporate debt securities	13,890		—		(69)		13,821
U.S. Treasury securities	166,045		7		(1,024)		165,028
Total marketable securities	$	357,034	$	7	$	(1,093)	$	355,948

______________

(1)This balance includes cash requirements settled on a nightly basis.

Schedule of Marketable Securities

The following table summarizes the estimated value of the Company’s cash, cash equivalents and marketable securities, and the gross unrealized holding gains and losses (in thousands):


	September 30, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	107,471	$	—	$	—	$	107,471

Total cash and cash equivalents	$	107,471	$	—	$	—	$	107,471
Marketable securities:
Commercial paper	$	26,516	$	—	$	—	$	26,516

U.S. Treasury securities	93,195		5		(74)		93,126
Total marketable securities	$	119,711	$	5	$	(74)	$	119,642

______________

(1)This balance includes cash requirements settled on a nightly basis.


	December 31, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	53,641	$	—	$	—	$	53,641
Corporate debt securities	—		—		—		—
Total cash and cash equivalents	$	53,641	$	—	$	—	$	53,641
Marketable securities:
Commercial paper	$	177,099	$	—	$	—	$	177,099
Corporate debt securities	13,890		—		(69)		13,821
U.S. Treasury securities	166,045		7		(1,024)		165,028
Total marketable securities	$	357,034	$	7	$	(1,093)	$	355,948

______________

(1)This balance includes cash requirements settled on a nightly basis.

- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-9

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (aa)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (aaa)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

+ Details

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2022	Mar. 31, 2022
Stock issuance costs	$ 10,844
At-The-Market
Stock issuance costs		$ 634

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares, issued (in shares)	61,861,736	61,052,250
Common stock, shares outstanding (in shares)	61,858,044	61,037,403

Subsequent Event	9 Months Ended
Subsequent Event	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Event	Subsequent Events Financing On October 24, 2023, the Company completed an offering relating to the sale of securities consisting of: (i) 32,500,000 shares of the Company's common stock at $2.50 per share, and (ii) prefunded warrants to purchase 7,500,000 shares of the Company's common stock at $2.4999 per underlying share of common stock. The exercise price of the warrants is $0.0001 per underlying share of common stock. The prefunded warrants are exercisable at any time on or after their original issuance. The aggregate net proceeds to the Company was $94.0 million after deducting underwriting discounts, commissions and estimated offering expenses payable by the Company. The Company has granted the underwriters an option to purchase up to an additional 6,000,000 shares of the Company's common stock at $2.50 per share. This option is exercisable, in whole or in part, for a period of 30 days from the date of the underwriting agreement executed in connection with the offering. Loan Agreement Amendment On November 1, 2023, the Company entered into an amendment to the Loan Agreement with SLR. Pursuant to the amendment, the terms of the Loan Agreement were revised to, among others, (i) eliminate the undrawn tranche C term loan of up to $25.0 million, (ii) modify the financial covenant relating to minimum net product revenue and remove the market capitalization threshold, and (iii) include an additional minimum financing covenant. The amended Loan Agreement provides for term loans to the Company in aggregate principal amount of up to $200.0 million, which amounts were fully drawn as of September 30, 2023. Pursuant to the amendment, the modified financial covenant requires the Company to generate a minimum net product revenue equal to 75% of each month's projected net product revenue as set forth in the Company's annual plan for the respective period, tested on a trailing 12 month basis for the month ending December 31, 2023 and then tested on a trailing six month basis, as of the end of each month, for the month ending January 31, 2024 and each month thereafter. Pursuant to the amendment, each annual plan shall be approved by the Company’s board of directors and SLR, in its capacity as collateral agent, in its reasonable discretion. Any failure by the Company to deliver such annual plan on or before December 15 of the prior year shall be an immediate event of default. In addition, the Company agreed to raise at least $31.0 million in net cash proceeds, during the period commencing on November 1, 2023 and ending on April 1, 2024, from (a) the sale or issuance of the Company’s equity interests, (b) business development or collaboration agreements (including upfront, milestone, royalty and other payments), or (c) subordinated debt, in each case as permitted pursuant to the terms of the Loan Agreement. Any failure by the Company to raise such net cash proceeds during the specified period shall be an immediate event of default. See Note 8 for additional information regarding the Loan Agreement.

Long-term debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Long-term debt

On December 22, 2021, the Company entered into a loan and security agreement, or Loan Agreement, with SLR Investment Corp. (SLR) and the lenders party thereto. The Loan Agreement was amended and restated on January 10, 2023 to include Arcutis Canada, Inc. as a borrower and party to the Loan Agreement. The lenders agreed to extend term loans to the Company in an aggregate principal amount of up to $225.0 million, comprised of (i) a tranche A term loan of $75.0 million, (ii) a tranche B-1 term loan of $50.0 million, (iii) a tranche B-2 term loan of up to $75.0 million, available in minimum increments of $15.0 million, and (iv) a tranche C term loan of up to $25.0 million (Term Loans). As security for the obligations under the Loan Agreement, the Company granted SLR, for the benefit of the lenders, a continuing security interest in substantially all of the Company's assets, including its intellectual property, subject to certain exceptions.

The tranche A term loan under the Loan Agreement was funded on December 22, 2021 in the amount of $75.0 million. With the approval of ZORYVE on July 29, 2022, the tranche B term loans were funded and the Company received $125.0 million on August 2, 2022. The tranche C term loan is available following the achievement of a net product revenue milestone of $110.0 million, calculated on a trailing six month basis. The tranche C term loan will remain available for funding until September 30, 2024.

Principal amounts outstanding under the Term Loans will accrue interest at a floating rate equal to the applicable rate in effect from time to time, as determined by SLR on the third business day prior to the funding date of the applicable Term Loan and on the first business day of the month prior to each payment date of each Term Loan. The applicable rate is a per annum interest rate equal to 7.45% plus the greater of (a) 0.10% and (b) the per annum rate published by the Intercontinental Exchange Benchmark Administration Ltd. (or on any successor or substitute published rate) for a term of one month, subject to a replacement with an alternate benchmark rate and spread in certain circumstances. On September 30, 2023, the rate was 12.88%. Starting in July 2023, the Secured Overnight Financing Rate (SOFR) for a term of one month was substituted for the benchmark rate. The maturity date for each term loan is January 1, 2027.

Commencing on February 1, 2022, interest payments are payable monthly following the funding of any Term Loan. Any principal amounts outstanding under the Term Loans, if not repaid sooner, are due and payable on January 1, 2027, or the Maturity Date. The Company may voluntarily prepay principal amounts outstanding under the Term Loans in minimum increments of $5.0 million, subject to a prepayment premium of (i) 3.0% of the principal amount of such Term Loan so prepaid prior to December 22, 2022, (ii) 2.0% of the principal amount of such Term Loan so prepaid after December 22, 2022 and prior to December 22, 2023, or (iii) 1.0% of the principal amount of such Term Loan so prepaid after December 22, 2023 and prior to December 22, 2025.

If the Term Loans are accelerated due to, among others, the occurrence of a bankruptcy or insolvency event, the Company is required to make mandatory prepayments of (i) all principal amounts outstanding under the Term Loans, plus accrued and unpaid interest thereon through the prepayment date, (ii) any fees applicable by reason of such prepayment, (iii) the prepayment premiums set forth in the paragraph above, plus (iv) all other obligations that are due and payable, including expenses and interest at the Default Rate (as defined below) with respect to any past due amounts.

The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, requirements as to financial reporting and insurance and restrictions on the Company’s ability to dispose of its business or property, to change its line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on its property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock or to redeem capital stock. The Company has also agreed to a financial covenant whereby, beginning with the month ending December 31, 2023, the Company must generate net product revenue in excess of specified amounts for applicable measuring periods pursuant to the Loan Agreement; provided, however, that such financial covenant shall not apply if the Company’s average market capitalization over the trailing five day period prior to the last day of any measurement month is equal to or in excess of $400.0 million. The Company was in compliance with all financial covenants under the Loan Agreement as of September 30, 2023.

In addition, the Loan Agreement contains customary events of default that entitle the lenders to cause any indebtedness under the Loan Agreement to become immediately due and payable, and to exercise remedies against the Company and the collateral securing the Term Loans. Under the Loan Agreement, an event of default will occur if, among other things, the Company fails to make payments under the Loan Agreement, the Company breaches any of the covenants under the Loan Agreement, subject to specified cure periods with respect to certain breaches, the lenders determine that a material adverse change has occurred, or the Company or the Company's assets become subject to certain legal proceedings, such as bankruptcy proceedings. Upon the occurrence and for the duration of an event of default, an additional default interest rate, or the Default Rate, equal to 4.0% per annum will apply to all obligations owed under the Loan Agreement. The prepayment upon default and other potential additional interest provisions under the Loan Agreement were determined to be a compound embedded derivative instrument to be bifurcated from the loan and accounted for as a separate liability for accounting purposes under the guidance in ASC 815, Derivatives and Hedging. At the inception of the Loan Agreement and at each balance sheet date through September 30, 2023, the fair value of the embedded derivative was determined to be immaterial and will be remeasured at fair value each reporting period with any future changes in fair value reported in earnings.

In connection with the Loan Agreement, the Company paid a closing fee of $1.0 million on December 22, 2021, and is further obligated to pay (i) a final fee equal to 6.95% of the aggregate original principal amount of the Term Loans funded upon the earliest to occur of the Maturity Date, the acceleration of any Term Loan and the prepayment, refinancing, substitution, or replacement of any Term Loan and (ii) a certain amount of lenders’ expenses incurred in connection with the execution of the Loan Agreement. Additionally, in connection with the Loan Agreement, the Company entered into an Exit Fee Agreement, whereby the Company agreed to pay an exit fee in the amount of 3.0% of each Term Loan funded upon (i) any change of control transaction or (ii) a revenue milestone, calculated on a trailing six month basis. Notwithstanding the prepayment or termination of the Term Loan, the exit fee will expire 10 years from the date of the Loan Agreement.

On November 1, 2023, the Company entered into an amendment to the Loan Agreement with SLR. Pursuant to the amendment, the terms of the Loan Agreement were revised to, among others, (i) eliminate the undrawn tranche C term loan of up to $25.0 million, (ii) modify the financial covenant relating to minimum net product revenue, and (iii) include an additional minimum financing covenant. The amended Loan Agreement provides for term loans to the Company in aggregate principal amount of up to $200.0 million, which amounts were fully drawn as of September 30, 2023. See Note 12 for additional information.

The debt issuance costs have been recorded as a debt discount which are being accreted to interest expense through the maturity date of the term loan. Interest expense is calculated using the effective interest method, and is inclusive of non-cash amortization of debt issuance costs. The final maturity payment of $13.7 million is recognized over the life of the term loan through interest expense. At September 30, 2023 and December 31, 2022, the effective interest rate was 14.79% and 13.79%, respectively. Interest expense relating to the term loan for the three and nine months ended September 30, 2023 was $7.6 million and $22.0 million, respectively. Interest expense relating to the term loan for the three and nine months ended September 30, 2022 was $4.9 million and $8.7 million, respectively.

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


	September 30, 2023		December 31, 2022
Principal loan balance	$	200,000	$	200,000
Accrued final fee	4,118		1,871
Unamortized debt issuance costs	(3,335)		(4,102)
Long-term debt, net	$	200,783	$	197,769

Upon the contractual maturity of the Company's long term debt, a payment of principal and final fees of $213.9 million is due on January 1, 2027.

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 107,471	$ 53,641
Restricted cash	925	1,234
Marketable securities	119,642	355,948
Trade receivables, net	19,417	8,458
Inventories	13,913	7,514
Prepaid expenses and other current assets	20,180	10,611
Total current assets	281,548	437,406
Property, plant, and equipment, net	1,735	1,881
Intangible assets, net	6,625	7,188
Operating lease right-of-use asset	2,455	2,721
Other assets	596	78
Total assets	292,959	449,274
Current liabilities:
Accounts payable	13,179	8,827
Accrued liabilities	27,995	28,323
Operating lease liability	715	657
Total current liabilities	41,889	37,807
Operating lease liability, noncurrent	3,570	4,117
Long-term debt, net	200,783	197,769
Total liabilities	246,242	239,693
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 and December 31, 2022;	0	0
Common stock, $0.0001 par value; 300,000,000 shares authorized at September 30, 2023 and December 31, 2022; 61,861,736 and 61,052,250 shares issued at September 30, 2023 and December 31, 2022, respectively; 61,858,044 and 61,037,403 shares outstanding at September 30, 2023 and December 31, 2022, respectively	6	6
Additional paid-in capital	962,515	930,425
Accumulated other comprehensive loss	(184)	(1,086)
Accumulated deficit	(915,620)	(719,764)
Total stockholders’ equity	46,717	209,581
Total liabilities and stockholders’ equity	$ 292,959	$ 449,274

Commitments and Contingencies - Schedule of Operating Lease Additional Information (Details)	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Weighted-average remaining lease term (in years)	4 years 9 months 18 days
Weighted-average discount rate	7.00%

Stock-Based Compensation - Schedule of Stock Option Activity (Details) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares
Number of Options
Beginning balance, number of options (in shares) \| shares	7,476,223
Granted (in shares) \| shares	1,608,110
Exercised (in shares) \| shares	(239,517)
Forfeited (in shares) \| shares	(479,288)
Expired (in shares) \| shares	(137,258)
Ending balance, number of options (in shares) \| shares	8,228,270	7,476,223
Exercisable (in shares) \| shares	4,571,413
Weighted- Average Exercise Price
Beginning balance, weighted-average exercise price (in USD per share) \| $ / shares	$ 19.93
Granted (in USD per share) \| $ / shares	12.67
Exercised (in USD per share) \| $ / shares	4.45
Forfeited (in USD per share) \| $ / shares	20.48
Expired (in USD per share) \| $ / shares	26.75
Ending balance, weighted-average exercise price (in USD per share) \| $ / shares	18.81	$ 19.93
Exercisable, Weighted-Average Exercise Price (in USD per share) \| $ / shares	$ 18.62
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Remaining Contractual Term (Years)	7 years 6 months 3 days	7 years 11 months 23 days
Remaining contractual term, exercisable (years)	6 years 7 months 2 days
Aggregate Intrinsic Value \| $	$ 3,269	$ 18,667
Intrinsic value, exercisable \| $	$ 3,269

License Agreements & Acquisition - Ducentis Acquisition (Details) - USD ($)		3 Months Ended		9 Months Ended
	Sep. 07, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Asset Acquisition [Line Items]
Acquisition of in-process research and development				$ 0	$ 15,450,000
Research and development		$ 26,236,000	$ 69,731,000	86,800,000	$ 148,558,000
Ducentis Biotherapeutics LTD Equity Interests
Asset Acquisition [Line Items]
Equity interest issued or issuable, number of shares (in shares)	610,258
Acquisition of in-process research and development	$ 15,900,000
Future payable milestone payment	400,000,000
Annual net sales	1,500,000,000
Research and development			$ 29,600,000
Contingent consideration, liability		$ 0		$ 0
Ducentis Biotherapeutics LTD Equity Interests \| Common Stock
Asset Acquisition [Line Items]
Consideration transferred, equity interest issued and issuable	$ 12,500,000

Property and Equipment, net

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):


	September 30, 2023		December 31, 2022
Computer hardware	$	1,128	$	983
Furniture and fixtures	661		379
Software	104		104

Leasehold improvements	1,568		1,568
Property and equipment, gross	3,461		3,034
Less accumulated depreciation	(1,726)		(1,153)
Property and equipment, net	$	1,735	$	1,881

Depreciation expense was $200,000 and $573,000 for the three and nine months ended September 30, 2023, respectively, and $157,000 and $462,000 for the three and nine months ended September 30, 2022. Leasehold improvements are depreciated over the term of the lease, which is the shorter of the improvements' expected useful lives and the lease term. All other fixed asset depreciation is recorded using the straight-line method over the estimated useful lives of the assets (two to five years).

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The condensed consolidated financial statements include the Company's wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to revenue recognition, accruals for research and development activities, stock-based compensation expense, and income taxes. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Actual results could differ from those estimates.

Segments

To date, the Company has viewed its financial information on an aggregate basis for the purposes of evaluating financial performance and allocating the Company’s resources. Accordingly, the Company has determined that it operates in one segment.

Unaudited Interim Condensed Consolidated Financial Statements

The interim condensed consolidated balance sheet as of September 30, 2023, the interim condensed consolidated statements of operations and comprehensive loss, and the condensed consolidated changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for the three and nine months ended September 30, 2023 and 2022 are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s audited annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial information. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three and nine month periods are also unaudited. The condensed consolidated results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending

December 31, 2023 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2022.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of money market funds, commercial paper, U.S. Treasury securities, and short-term corporate debt securities.

Restricted Cash

As of September 30, 2023 and December 31, 2022, the Company held $0.9 million and $1.2 million, respectively, of restricted cash as collateral for a letter of credit related to the Company's amended office space lease. See Note 7.

Marketable Securities

Marketable securities consist of investment grade short to intermediate-term fixed income investments that have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in fixed income securities at the time of purchase. Available-for-sale securities with original maturities beyond three months at the date of purchase, including those that have maturity dates beyond one year from the balance sheet date, are classified as current assets on the condensed consolidated balance sheets due to their highly liquid nature and availability for use in current operations.

Unrealized gains and losses are excluded from earnings and are reported as a component of other comprehensive income (loss) on the condensed consolidated balance sheets. Realized gains and losses as well as credit losses, if any, on marketable securities are included in other income, net. Interest on marketable securities is included in other income, net. The Company evaluated the underlying credit quality and credit ratings of the issuers during the period. To date, no such credit losses have occurred or have been recorded. The cost of investments sold is based on the specific-identification method.

Trade Receivables, net

The Company’s trade accounts receivable consists of amounts due primarily from pharmaceutical wholesalers and specialty pharmacy providers in the United States and Canada (collectively, its "Customers") related to sales of ZORYVE and have standard payment terms. For certain Customers, the trade accounts receivable for the Customer is net of distribution service fees, prompt pay discounts, and other adjustments. The Company monitors the financial performance and creditworthiness of its Customers so that it can properly assess and respond to changes in their credit profile. The Company will reserve against trade accounts receivable for estimated credit losses that may arise and any amounts determined to be uncollectible will be written off against the reserve when it is probable that the receivable will not be collected. The reserve amount for estimated losses was not material as of September 30, 2023 and December 31, 2022.

Inventory

The Company values its inventories at the lower-of-cost or net realizable value. The Company determines the cost of its inventories, which includes costs related to products held for sale in the ordinary course of business, products in process of production for such sale, and items to be currently consumed in the production of goods to be available for sale, on a first-in, first-out (FIFO) basis. Due to the nature of the Company’s supply chain process, inventory that is owned by the Company is physically stored at third-party warehouses, logistics providers, and contract manufacturers. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified. If they occur, such charges are recorded as a component of cost of sales in the condensed consolidated statements of operations. The Company capitalizes inventory costs associated

with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. Products that may be used in clinical development programs are excluded from inventory and their costs are charged to research and development expense in the condensed consolidated statement of operations as incurred, as long as they do not have an alternative use. Prior to the initial date regulatory approval is received, costs related to the production of inventory were recorded as research and development expense on the Company’s condensed consolidated statements of operations in the period incurred.

Intangible Assets, net

The Company paid a milestone payment of $7.5 million to AstraZeneca in the third quarter of 2022 related to the FDA approval and launch of ZORYVE. This milestone payment was capitalized as an intangible asset and will be amortized to cost of sales over its useful life of 10 years from the date of first commercial sale, as this is the minimum amount of time that the related License Agreement will be in effect. See Note 6. Amortization expense for the three and nine months ended September 30, 2023 was $188,000 and $563,000, respectively. Amortization expense for the three and nine months ended September 30, 2022 was $125,000.

Estimated future amortization expense for the intangible assets subsequent to September 30, 2023 is as follows (in thousands):


	Amounts
2023 (October through December)	$	188
2024	750
2025	750
2026	750
2027	750
Thereafter	3,438
Total amortization	$	6,626

The Company evaluates its long-lived assets, including intangibles, for impairment whenever events or changes in circumstance indicate that the carrying value of an asset might not be fully recoverable. To do so, the Company compares the carrying value of the intangible asset to the undiscounted net cash flows over its remaining useful life, and if not recoverable, will estimate the fair value of the asset. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results.

Valuation of Other Investments

The Company reviews agreements it enters into with third-party entities, pursuant to which the Company may have a variable interest in the entity, in order to determine if the entity is a variable interest entity (VIE). If the entity is a VIE, the Company assesses whether or not it is the primary beneficiary of that entity. In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (i) the power to direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. If the Company determines it is the primary beneficiary of a VIE, it consolidates that VIE into the Company’s condensed consolidated financial statements. The Company’s determination about whether it should consolidate such VIEs is made continuously as changes to existing relationships or future transactions may result in a consolidation or deconsolidation event. The Company currently does not consolidate any VIEs.

The Company accounts for its equity interest in common stock in Iolyx Therapeutics Inc. ("Iolyx", formerly known as Hawkeye Therapeutics, Inc.) in accordance with Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities (“ASC 321”). Under ASC 321, the Company elects to utilize the allowed "measurement alternative", and measures the investment at cost, minus impairment and any changes, plus or minus, resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The carrying value is included in Other assets and changes are recognized in Other income (expense). See Note 6.

Concentration of Credit Risk and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company is exposed to credit risk in the event of a default by either the financial institutions holding its cash or by its customers owing trade receivables to the extent recorded on the condensed consolidated balance sheets. To manage accounts receivable credit risk, the Company continuously evaluates the creditworthiness of its customers and the need for an allowance for potential credit losses.

Fair Value Measurement

The Company’s financial instruments, in addition to those presented in Note 3, include cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt. The carrying amount of cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short maturities. As the long-term debt is subject to variable interest rates that are based on market rates which regularly reset, the Company believes that the carrying value of the long-term debt approximates its fair value.

Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active;

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets which range from two to five years. Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or lease terms. Maintenance and repairs are expensed as incurred. The Company reviews the carrying values of its property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There were no impairments recognized during the three and nine months ended September 30, 2023 and 2022.

Leases

The Company determines if an arrangement is or contains a lease at inception. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The classification of the Company’s leases as operating or finance leases, along with the initial measurement and recognition of the associated ROU assets and lease liabilities, is performed at the lease commencement date. The measurement of lease liabilities is based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate, based on the information available at commencement date, to determine the present value of lease payments when its leases do not provide an implicit rate. The Company uses the implicit rate when readily determinable. The ROU asset is based on the measurement of the lease liability, includes any lease payments made prior to or on lease commencement and is adjusted for lease incentives and initial direct costs incurred, as applicable. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. The Company considers a lease term to be the non-cancelable period that it has the right to use the underlying asset, including any periods where it is reasonably assured the Company will exercise the option to extend the contract. Periods covered by an option to extend are included in the lease term if the lessor controls the exercise of that option.

The Company’s lease agreements includes lease and non-lease components and the Company has elected to not separate such components for all classes of assets. Further, the Company elected the short-term lease exception policy, permitting it to not apply the recognition requirements of this standard to leases with terms of 12 months or less (short-term leases) for all classes of assets.

Accrued and Prepaid Nonclinical and Clinical Costs

The Company records accrued liabilities for estimated costs and prepaid costs for research and development activities conducted by third-party service providers, which include the conduct of nonclinical studies, clinical trials, and contract manufacturing activities. These costs are a significant component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities and prepaid costs balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. For the three and nine months ended September 30, 2023 and 2022, the Company has not experienced any material differences between accrued costs and actual costs incurred.

Revenues

Pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when a customer obtains control of promised goods or services. The Company records the amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied.

Product Revenue, Net

The Company sells its product to its Customers in the United States and Canada. The Company’s Customers subsequently resell the products to pharmacies, health care providers, and patients. In accordance with ASC 606, the Company recognizes net product revenue from sales when the Customers obtain control of the Company’s products, which typically occurs upon delivery to the Customer. The Company’s payment terms are generally between 31 - 65 days.

Revenue from product sales are recorded at the net sales price, or “transaction price,” which includes estimates of variable consideration that result from (a) invoice discounts for prompt payment and distribution service fees, (b) government and private payer rebates, chargebacks, discounts and fees, (c) product returns and (d) costs of co-pay assistance programs for patients, as well as other incentives. Reserves are established for the estimates of variable consideration based on the amounts earned or to be claimed on the related sales. The reserves are classified as reductions to trade receivables, net if payable to a Customer or accrued liabilities if payable to a third party. Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be constrained and is included in net product revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary from the Company’s estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known.

Distribution Service Fees: The Company engages with wholesalers and specialty pharmacies to distribute its products to end customers. The Company pays the wholesalers and certain specialty pharmacies a fee for services such as: data reporting, inventory management, chargeback administration, and service level commitment. The Company estimates the amount of distribution services fees to be paid to the Customers and adjusts the transaction price with the amount of such estimate at the time of sale to the Customer.

Prompt Pay Discounts: The Company provides its Customers with a percentage discount on their invoice if the Customers pay within the agreed upon timeframe. The Company estimates the probability of Customers paying promptly based on the percentage of discount outlined in the purchase agreement between the two parties, and deducts the full amount of these discounts from its gross product revenue and accounts receivable at the time such revenue is recognized.

Product Returns: The Company provides Customers a return credit in the amount of the purchase price paid by Customers for all products returned in accordance with the Company’s returned goods policy. In the initial sales period, the Company estimates its provision for sales returns based on industry data and adjusts the transaction price for such estimate at the time of sale to the Customer. Once sufficient history has been collected for product returns, the Company will utilize that history to inform its returns estimate. Once the product is returned, it is destroyed. The Company does not record a right-of-return asset.

Chargeback: A chargeback is the difference between the manufacturer's invoice price to the wholesaler and the wholesaler’s customer's contract price. The wholesaler tracks these sales and "charges back" the manufacturer for the difference between the negotiated prices paid between the wholesaler's customers and wholesaler's acquisition cost. The Company estimates the percentage of goods sold that are eligible for chargeback and adjusts the transaction price for such discount at the time of sale to the Customer.

Co-payment Assistance: Patients who meet certain eligibility requirements may receive co-payment assistance. The Company records contra-revenue for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators.

Rebates and Discounts: The Company accrues rebates for contractually agreed-upon discounts with commercial insurance companies and mandated discounts under government programs such as the Medicaid Drug Rebate Program in the United States. The Company's estimates for expected utilization of commercial insurance rebates are based on data received from its customers. The Company's estimates for rebates under government programs are based on statutory discount rates and expected utilization as well as historical data it has accumulated since product launch. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters’ unpaid rebates. If actual rebates vary from estimates, the Company may need to adjust accruals, which would affect revenue in the period of adjustment.

Other Revenues

Other revenues is related to the Huadong License and Collaboration Agreement. See Note 6. The Company evaluated the agreement with Huadong and determined that it is within the scope of ASC 606. The Company applied the five-step model as required by ASC 606 to determine revenue recognition.

The nonrefundable upfront payment that the Company received in September 2023 in connection with the transfer of the license and related know-how to Huadong was determined to be a distinct performance obligation, and therefore was recognized in Other revenues.

The Company evaluated whether the development and regulatory milestones are considered probable of being reached and determined that their achievement is highly dependent on factors outside of the Company’s control. Therefore, these payments are subject to significant revenue reversal and are therefore not included in the transaction price. At the end of each reporting period, the Company will re-evaluate the probability of achievement of each milestone and, if necessary, adjust its estimate of the overall transaction price and accordingly recognize the related revenue once the probability of significant reversal of revenue is low. Any such adjustments are recorded on a cumulative catch-up basis, and would be reported in Other revenues in the period of adjustment.

The sales milestones and royalties will be recognized in Other revenues when the related sales occur.

Cost of Sales

Cost of sales includes direct and indirect costs related to the manufacturing and distribution of ZORYVE, including raw materials, third-party manufacturing costs, packaging services, freight-in, third-party royalties payable on the Company’s net product revenue, and amortization of certain intangible assets associated with ZORYVE. Cost of sales may also include period costs related to certain inventory warehouse and distribution operations and inventory adjustment charges. The Company began capitalizing inventory costs upon FDA approval of ZORYVE on July 29, 2022. As a result, manufacturing and other inventory costs incurred prior to FDA approval of ZORYVE were expensed and, therefore, are not included in cost of sales.

Research and Development

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, license fees, stock-based compensation expense, materials, supplies, and the cost of services provided by outside contractors. All costs associated with research and development are expensed as incurred. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods are received or services are rendered. Such payments are evaluated for current or long-term classification based on when they will be realized.

The Company has entered into, and may continue to enter into, license agreements to access and utilize certain technology. In each case, the Company evaluates if the license agreement results in the acquisition of an asset or a business. To date, none of the Company’s license agreements have been considered an acquisition of a business. For asset acquisitions, the upfront payments to acquire such licenses, as well as any future milestone payments made before product approval that do not meet the definition of a derivative, are immediately recognized as research and development expense when paid or become payable, provided there is no alternative future use of the rights in other research and development projects.

Stock-Based Compensation

The Company accounts for share-based payments at fair value. The fair value of stock options is measured using the Black-Scholes option-pricing model. For share-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for such awards is the date of grant and the expense is recognized on a straight-line basis, over the expected vesting period. For share-based awards that vest subject to a performance condition, the Company will recognize compensation cost for awards if and when the Company concludes that it is probable that the awards with a performance condition will be achieved on an accelerated attribution method. The Company accounts for forfeitures as they occur.

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. The Company records a valuation allowance to reduce deferred tax assets to an amount for which realization is more likely than not. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net deferred tax assets have been fully offset by a valuation allowance.

The Company recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based on the merits of the position. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. To date, there have been no interest or penalties incurred in relation to the unrecognized tax benefits.

Income tax expense of $3.0 million and $3.1 million for the three and nine months ended September 30, 2023, respectively, were primarily due to income tax expense related to withholding tax on the Huadong License and Collaboration Agreement. See Note 6.

Foreign Currency Translation

The Company translates the assets and liabilities of its foreign subsidiaries where the local currencies have been determined to be the functional currencies into U.S. dollars using current exchange rates. Adjustments for foreign currency translation adjustments are recognized in other comprehensive income (loss) in the condensed consolidated statements of operations and comprehensive loss. The earnings or loss of these subsidiaries are translated in U.S. dollars using average exchange rates in effect during each reporting period.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive. Shares of common stock subject to repurchase are excluded from the weighted-average shares.

Recently Adopted Accounting Pronouncements

There have been no new accounting pronouncements issued or effective that are expected to have a material impact on the Company's condensed consolidated financial statements.

Insider Trading Arrangements	3 Months Ended	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2023 shares	Sep. 30, 2023 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Terminated	false
Todd Franklin Watanabe [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On October 12, 2023, Howard G. Welgus, M.D., a member of our board of directors, terminated a Rule 10b5-1 trading plan, which plan was previously adopted on August 29, 2023 and intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The plan provided for the potential sale of up to 120,000 shares of Common Stock held by Mr. Welgus between December 1, 2023 and November 29, 2024. Prior to its termination, no shares were sold under the plan.Amendment to Loan Agreement
Arrangement Duration	452 days
Howard G. Welgus [Member]
Trading Arrangements, by Individual
Name	Howard G. Welgus
Title	member of our board of directors
Adoption Date	August 29, 2023
Rule 10b5-1 Arrangement Terminated	false
Termination Date	October 12, 2023
Aggregate Available	120,000	120,000

License Agreements & Acquisition - Hengrui (Details) - Hengrui - USD ($)	1 Months Ended		3 Months Ended		9 Months Ended
	Dec. 31, 2019	Jan. 31, 2018	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License agreement, cash payment	$ 1,500,000	$ 400,000	$ 0	$ 0	$ 0	$ 0
Maximum milestone payments for licensed products					20,500,000
Maximum milestone payments for net worldwide sales					$ 200,000,000

Commitments and Contingencies - Narrative (Details)	1 Months Ended	3 Months Ended		9 Months Ended
Commitments and Contingencies - Narrative (Details)	Apr. 30, 2020 USD ($) ft²	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Mar. 31, 2022 USD ($)	Nov. 30, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Restricted cash		$ 925,000		$ 925,000			$ 1,234,000
Straight-line rent expense		184,000	$ 186,000	551,000	$ 530,000
Variable lease cost		0	$ 0	0	$ 0
Purchase obligation, remainder of current year		1,200,000		1,200,000
Purchase obligation, next year		800,000		800,000
Purchase obligation, year two		$ 800,000		$ 800,000
Westlake Village, California Lease Arrangement
Lessee, Lease, Description [Line Items]
Square footage of leased space (in square feet) \| ft²	22,643
Lease term (in months)	91 months
Renewal term	5 years
Lease term prior to termination option	67 months
Available letter of credit	$ 1,500,000
Restricted cash						$ 900,000		$ 1,200,000	$ 1,500,000

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (195,856)	$ (239,439)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	573	462
Non-cash lease expense	266	237
Amortization of intangible assets	563	125
Acquired in-process research and development	0	29,630
Net (accretion) amortization on marketable securities	(5,517)	89
Non-cash interest expense	3,014	1,590
Stock-based compensation expense	30,056	23,418
Changes in operating assets and liabilities:
Accounts receivable, net	(10,959)	(2,431)
Inventories	(6,399)	(4,307)
Prepaid expenses and other current assets	(10,087)	2,299
Accounts payable	4,345	1,383
Accrued liabilities	(323)	577
Operating lease liabilities	(489)	(283)
Net cash used in operating activities	(190,813)	(186,650)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(107,660)	(377,301)
Proceeds from maturities of marketable securities	350,500	271,061
Purchases of property and equipment	(422)	(210)
Acquisition of in-process research and development	0	(15,450)
Milestone payment for intangible	0	(7,500)
Net cash provided by (used in) investing activities	242,418	(129,400)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon exercise of stock options	1,041	1,000
Proceeds from issuance of shares under ATM, net of issuance costs	0	14,455
Proceeds from issuance of common stock, net of issuance costs	0	161,592
Proceeds from issuance of common stock pursuant to employee stock purchase plan	993	976
Proceeds from long-term debt	0	125,000
Payment of debt issuance costs	0	(2,187)
Net cash provided by financing activities	2,034	300,836
Effect of exchange rate changes on cash	(118)	0
Net increase (decrease) in cash, cash equivalents, and restricted cash	53,521	(15,214)
Cash, cash equivalents, and restricted cash at beginning of period	54,875	97,991
Cash, cash equivalents, and restricted cash at end of period	108,396	82,777
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Interest expense paid in cash	18,862	6,923
Acquired in-process research and development in exchange for the issuance of common stock	$ 0	$ 12,468

Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of Potentially Antidilutive Shares Excluded from the Calculation of Diluted Net Loss Per Share

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


	As of September 30,
	2023	2022
Stock options to purchase common stock	8,228,270	7,480,040
Early exercised options subject to future vesting	3,698	18,573
RSUs subject to future vesting	2,924,356	1,567,946
ESPP shares subject to future issuance	73,252	55,735

Total	11,229,576	9,122,294

Subsequent Event (Details) - USD ($) $ / shares in Units, $ in Millions	Oct. 24, 2023	Nov. 01, 2023	Dec. 22, 2021
Loan agreement \| Secured debt
Subsequent Event [Line Items]
Maximum borrowing capacity			$ 225.0
Tranche C term loan \| Loan agreement \| Secured debt
Subsequent Event [Line Items]
Maximum borrowing capacity			$ 25.0
Subsequent Event
Subsequent Event [Line Items]
Number of shares issued in transaction (in shares)	32,500,000
Stock price (in USD per share)	$ 2.50
Proceeds from issuance of common stock and warrants	$ 94.0
Subsequent Event \| Loan agreement \| Secured debt
Subsequent Event [Line Items]
Maximum borrowing capacity		$ 200.0
Minimum net product revenue as a percentage of projected monthly net revenue		75.00%
Net cash proceeds agreed to raise		$ 31.0
Subsequent Event \| Tranche C term loan \| Loan agreement \| Secured debt
Subsequent Event [Line Items]
Maximum borrowing capacity		$ 25.0
Subsequent Event \| Prefunded Warrant
Subsequent Event [Line Items]
Stock price (in USD per share)	$ 2.4999
Number of shares called by warrants (in shares)	7,500,000
Exercise price (in USD per share)	$ 0.0001
Subsequent Event \| Underwriters' option
Subsequent Event [Line Items]
Stock price (in USD per share)	$ 2.50
Potential number of shares to be issued (in shares)	6,000,000
Option to purchase stock, term	30 days

Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 9,999	$ 8,789	$ 30,056	$ 23,418
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	4,058	3,448	11,966	9,437
Selling, general, and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 5,941	$ 5,341	$ 18,090	$ 13,981

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net loss	$ (44,765)	$ (70,991)	$ (80,100)	$ (107,709)	$ (67,406)	$ (64,324)	$ (195,856)	$ (239,439)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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Reference 35: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 230
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 28
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482740/230-10-45-28

Reference 36: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482790/220-10-45-1A

Reference 37: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482790/220-10-45-1B

Reference 38: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(20))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483621/220-10-S99-2

Reference 39: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483589/942-220-S99-1

+ Details

Stock-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) - RSUs subject to future vesting - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2019
Number of Units
Beginning balance (in shares)	1,576,529
Granted (in shares)	2,029,000	0
Vested (in shares)	(414,523)
Forfeited (in shares)	(266,650)
Ending balance (in shares)	2,924,356
Weighted-Average Grant Date Fair Value
Beginning balance (in USD per share)	$ 20.73
Granted (in USD per share)	14.36
Vested (in USD per share)	21.21
Forfeited (in USD per share)	18.81
Ending balance (in USD per share)	$ 18.47

Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Prepaid co-pay assistance program	$ 4,948	$ 3,226
Prepaid insurance	852	956
Prepaid clinical trial costs	4,196	172
Other prepaid expenses and current assets	10,184	6,257
Total prepaid expenses and other current assets	$ 20,180	$ 10,611

Fair Value Measurements - Schedule of Estimated Value of Cash and Cash Equivalents and Marketable Securities (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 107,471,000		$ 107,471,000		$ 53,641,000
Cash and cash equivalents, estimated fair value	107,471,000		107,471,000		53,641,000
Debt Securities, Available-for-sale [Line Items]
Amortized cost	119,711,000		119,711,000		357,034,000
Unrealized gains	5,000		5,000		7,000
Unrealized losses	(74,000)		(74,000)		(1,093,000)
Estimated fair value	119,642,000		119,642,000		$ 355,948,000
Realized gains (losses) on investments	$ 0	$ 0	$ 0	$ 0
Debt securities, available-for-sale, term	18 months		18 months		18 months
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized cost	$ 26,516,000		$ 26,516,000		$ 177,099,000
Unrealized gains	0		0		0
Unrealized losses	0		0		0
Estimated fair value	26,516,000		26,516,000		177,099,000
Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized cost					13,890,000
Unrealized gains					0
Unrealized losses					(69,000)
Estimated fair value					13,821,000
U.S. Treasury securities
Debt Securities, Available-for-sale [Line Items]
Amortized cost	93,195,000		93,195,000		166,045,000
Unrealized gains	5,000		5,000		7,000
Unrealized losses	(74,000)		(74,000)		(1,024,000)
Estimated fair value	93,126,000		93,126,000		165,028,000
Money market funds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	107,471,000		107,471,000		53,641,000
Cash and cash equivalents, estimated fair value	$ 107,471,000		$ 107,471,000		53,641,000
Corporate debt securities
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents					0
Cash and cash equivalents, estimated fair value					$ 0

Stockholders’ Equity - Narrative (Details)	Sep. 30, 2023 USD ($) vote $ / shares shares	Dec. 31, 2022 $ / shares shares	Feb. 04, 2020 $ / shares shares
Equity [Abstract]
Votes per share of common stock (in votes) \| vote	1
Dividends declared \| $	$ 0
Common stock, shares authorized (in shares)	300,000,000	300,000,000	300,000,000
Common stock, par value (in USD per share) \| $ / shares	$ 0.0001	$ 0.0001	$ 0.0001
Convertible preferred stock, shares authorized (in shares)			10,000,000
Convertible preferred stock, par value (in USD per share) \| $ / shares			$ 0.0001
Preferred stock, shares outstanding (in shares)	0	0

Summary of Significant Accounting Policies - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Accounting Policies [Abstract]
2023 (October through December)	$ 188
2024	750
2025	750
2026	750
2027	750
Thereafter	3,438
Total amortization	$ 6,626

License Agreements & Acquisition - Iolyx (Details) - USD ($)	1 Months Ended	3 Months Ended			9 Months Ended
	Jun. 30, 2019	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Feb. 04, 2020
Variable Interest Entity [Line Items]
Common stock, par value (in USD per share)		$ 0.0001			$ 0.0001		$ 0.0001	$ 0.0001
Other income, net		$ 2,721,000		$ 1,938,000	$ 9,114,000	$ 2,501,000
Iolyx
Variable Interest Entity [Line Items]
Number of shares purchased in VIE (in shares)	995,000
Percentage purchased of VIE	19.90%
Issuance of fully-paid fully-vested shares of common stock (in shares)	4,256,686
Payments, milestones or royalties					$ 0
Iolyx \| Series A convertible preferred stock
Variable Interest Entity [Line Items]
Other revenue			$ 400,000
Other income, net			$ 100,000
Iolyx
Variable Interest Entity [Line Items]
Common stock, par value (in USD per share)	$ 0.0001