0001787306-24-000124 | 10-Q | XBRL Viewer | Arcutis Biotherapeutics INC

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Fair Value Measurements - Change In The Fair Value Of The Embedded Derivative Instrument (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2024	Jun. 30, 2023
Fair Value Disclosures [Abstract]
Changes in fair value of embedded derivative instrument	$ (100,000)	$ (655,000)	$ 0
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Beginning balance		849,000
Gain from changes in fair value		(655,000)
Ending balance	$ 194,000	$ 194,000

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net loss	$ (52,332)	$ (35,382)	$ (70,991)	$ (80,100)	$ (87,714)	$ (151,091)

- Definition

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

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+ Details

Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 12,523	$ 10,578	$ 22,553	$ 20,057
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	3,799	4,220	7,456	7,908
Selling, general, and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 8,724	$ 6,358	$ 15,097	$ 12,149

Organization and Description of Business	6 Months Ended
Organization and Description of Business	Jun. 30, 2024
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 a commercial-stage biopharmaceutical company focused on developing and commercializing treatments for dermatological diseases with high unmet medical needs. 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 received U.S. Food and Drug Administration ("FDA") approval of its first product, ZORYVE® (roflumilast) cream 0.3% ("ZORYVE cream 0.3%"), on July 29, 2022, for the treatment of plaque psoriasis, including intertriginous psoriasis, in individuals 12 years of age and older (subsequently approved down to 6 years old), and began U.S. commercialization in August 2022. The Company also received Health Canada approval of ZORYVE cream 0.3% in plaque psoriasis on April 28, 2023 and began Canadian commercialization in June 2023. The Company received FDA approval of ZORYVE® (roflumilast) topical foam 0.3% ("ZORYVE foam"), on December 15, 2023, for the treatment of seborrheic dermatitis in individuals 9 years of age and older, and began U.S. commercialization in late January 2024. The Company received FDA approval of ZORYVE® (roflumilast) cream 0.15%, ("ZORYVE cream 0.15%") on July 9, 2024, for the treatment of mild to moderate atopic dermatitis in adult and pediatric patients 6 years of age and older, and began U.S. commercialization in late July 2024. 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, August 2022 and October 2023, receiving aggregate net proceeds of $93.4 million, $207.5 million, $161.6 million and $95.8 million, respectively. In addition to the sale of common stock, the offering completed in October 2023 consisted of 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, and were not exercised as of June 30, 2024. On February 28, 2024, the Company completed an offering relating to the sale of 15,789,474 shares of the Company's common stock at $9.50 per share. The Company also granted the underwriters an option to purchase up to an additional 2,368,421 shares at $9.50 per share, which the underwriters exercised in full on February 29, 2024. The aggregate net proceeds to the Company was $161.7 million after deducting underwriting discounts, commissions, and estimated offering expenses payable by the Company. 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 would 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. In December 2023, the Company sold 1,250,000 shares under the ATM for $2.60 per share and received $3.1 million in net proceeds. In January 2024, the Company amended and restated its Sales Agreement with Cowen, to reset the shares available for sale, from time to time, through the Company's ATM equity offering program to such number of shares as would generate aggregate gross sales proceeds of up to $100.0 million. All terms are substantially the same as the original Sales Agreement entered into in May 2021. The Company has not yet issued or sold any common stock under the amended and restated Sales Agreement. Liquidity The Company has incurred significant losses and negative cash flows from operations since its inception and had an accumulated deficit of $1,069.6 million and $981.9 million as of June 30, 2024 and December 31, 2023, respectively. Management expects to continue to incur operating losses. The Company had cash, cash equivalents, restricted cash, and marketable securities of $363.1 million and $272.8 million as of June 30, 2024 and December 31, 2023, respectively. The Company has $200.0 million outstanding under the Loan Agreement as of June 30, 2024. See Note 7. 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 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.

Fair Value Measurements - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
Fair Value Measurements - Narrative (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Fair Value Disclosures [Abstract]
Realized gains (losses) on investments	$ 0	$ 0	$ 0	$ 0
Debt securities, available-for-sale, term	18 months		18 months		18 months

Net Loss Per Share - Schedule of Potentially Antidilutive Shares Excluded from the Calculation of Diluted Net Loss Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
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)	12,580,842	11,194,877
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)	5,872,080	8,257,763
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)	0	7,416
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)	6,679,040	2,912,694
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)	29,722	17,004

Long-term debt (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Schedule of Long-Term Debt

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


	June 30, 2024		December 31, 2023
Long-term debt, gross	$	200,000	$	200,000
Accrued final fee	6,374		4,876
Unamortized debt issuance costs	(2,566)		(3,077)
Long-term debt, net	$	203,808	$	201,799

- 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.

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+ Details

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

The following summarizes option activity:


	Number of Options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($, in thousands)
Balance—December 31, 2023	7,919,699	$	18.52	7.35	$	1,435
Granted	3,622,916	5.12
Exercised	(169,353)	5.25
Forfeited(1)	(5,192,738)	23.05
Expired	(308,444)	24.45
Balance—June 30, 2024	5,872,080	$	6.32	8.28	$	25,327
Exercisable—June 30, 2024	2,050,582	$	8.01	6.25	$	8,640

______________

(1)The number of stock options forfeited includes those exchanged in the Option Exchange as described above.

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, 2023	2,929,602	$	15.24
Granted(1)	5,300,872	4.63
Vested	(982,595)	12.98
Forfeited	(568,839)	9.39
Unvested Balance—June 30, 2024	6,679,040	$	7.65

______________

(1)The number of RSU's granted includes those in association with the Option Exchange as described above.

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	3,799	$	4,220	$	7,456	$	7,908
Selling, general, and administrative	8,724		6,358		15,097		12,149
Total stock-based compensation expense	$	12,523	$	10,578	$	22,553	$	20,057

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:


	Six Months Ended June 30, 2024	Year Ended December 31, 2023
Expected term (in years)	1.8 – 6.1	5.0 – 6.1
Expected volatility	79.1 – 83.2%	75.2 – 78.4%
Risk-free interest rate	3.9 – 5.0%	3.5 – 4.7%
Dividend yield	—%	—%

License Agreements & Acquisition - Sato License Agreement (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Feb. 27, 2024	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Other revenue		$ 0	$ 420	$ 28,000	$ 420
Sato
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Upfront payment received before taxes	$ 25,000
Potential additional payments to be received		10,000		10,000
Aggregate amount to be received upon achievement of sales milestones		30,000		30,000
Number of years after first commercial sale to receive royalties	10 years
Number of days for written notice	90 days
Other revenue		$ 25,000		$ 25,000

Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions			1 Months Ended	6 Months Ended
	Feb. 13, 2024	Jan. 16, 2024	Apr. 30, 2024	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeited (in shares)				5,192,738
Incremental cost of plan modification			$ 1.7
Intrinsic value of options exercised during the period				$ 0.8	$ 0.7
Grant date fair value of options vested during the period				$ 2.2	$ 14.9
Grant date fair value of options vested during the period (in USD per share)				$ 3.59	$ 10.25
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost				$ 33.7
Recognition period for unrecognized compensation costs related to unvested options expected to vest				2 years 3 months 18 days
RSUs subject to future vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)				5,300,872
Vesting period of stock-based awards granted				4 years
Unrecognized compensation cost				$ 42.5
Recognition period for unrecognized compensation costs related to unvested options expected to vest				2 years 7 months 6 days
Stock Option Exchange \| Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of eligible options exchanged		98.00%
Stock Option Exchange \| Stock Options \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Forfeited (in shares)		5,059,129
Stock Option Exchange \| RSUs subject to future vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental cost of plan modification				$ 8.6
Stock Option Exchange \| RSUs subject to future vesting \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award requisite service period (in years)				1 year
Stock Option Exchange \| RSUs subject to future vesting \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award requisite service period (in years)				3 years
Stock Option Exchange \| RSUs subject to future vesting \| First Grant Date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of stock-based awards granted	1 year
Stock Option Exchange \| RSUs subject to future vesting \| Second Grant Date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of stock-based awards granted	2 years
Stock Option Exchange \| RSUs subject to future vesting \| Third Grant Date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of stock-based awards granted	3 years
Stock Option Exchange \| RSUs subject to future vesting \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	2,129,594

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (87,714,000)	$ (151,091,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	334,000	373,000
Non-cash lease expense	198,000	175,000
Amortization of intangible assets	375,000	376,000
Net accretion on marketable securities	(4,113,000)	(3,985,000)
Non-cash interest expense	2,009,000	1,998,000
Stock-based compensation expense	22,553,000	20,057,000
Changes in fair value of embedded derivative instrument	(655,000)	0
Changes in operating assets and liabilities:
Accounts receivable, net	(16,524,000)	(8,749,000)
Inventories	(746,000)	(2,960,000)
Prepaid expenses and other current assets	3,369,000	(1,494,000)
Accounts payable	(4,172,000)	8,319,000
Accrued liabilities	8,726,000	(9,524,000)
Operating lease liabilities	(362,000)	(324,000)
Net cash used in operating activities	(76,722,000)	(146,829,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities	(231,727,000)	(85,273,000)
Proceeds from maturities of marketable securities	140,893,000	282,500,000
Purchases of property and equipment	0	(358,000)
Net cash provided by (used in) investing activities	(90,834,000)	196,869,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon exercise of stock options	888,000	174,000
Proceeds from issuance of common stock pursuant to employee stock purchase plan	649,000	993,000
Proceeds from issuance of common stock, net of issuance costs	161,682,000	0
Net cash provided by financing activities	163,219,000	1,167,000
Effect of exchange rate changes on cash	(99,000)	(43,000)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(4,436,000)	51,164,000
Cash, cash equivalents, and restricted cash at beginning of period	89,323,000	54,875,000
Cash, cash equivalents, and restricted cash at end of period	84,887,000	106,039,000
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:
Interest expense paid in cash	$ 13,021,000	$ 12,313,000

Fair Value Measurements - Schedule of Fair Value of Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 84,270	$ 88,398
Total assets	362,437	271,861
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	4,931	11,806
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	4,995
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	123,061	59,954
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	145,180	126,557
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	84,270	73,544
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	229,450	200,101
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 \| Certificates of deposit
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 \| 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	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	145,180	126,557
Level 1 \| Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	84,270	73,544
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	132,987	71,760
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	4,931	11,806
Level 2 \| Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents and debt securities, available for sale	4,995
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	123,061	59,954
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 \| Certificates of deposit
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 \| 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	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

Stock-Based Compensation - Schedule of Assumptions in Calculating Stock Option Awards (Details) - Stock Options	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, minimum	79.10%	75.20%
Expected volatility, maximum	83.20%	78.40%
Risk-free interest rate, minimum	3.90%	3.50%
Risk-free interest rate, maximum	5.00%	4.70%
Dividend yield	0.00%	0.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	1 year 9 months 18 days	5 years
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

License Agreements & Acquisition - AstraZeneca (Details) - USD ($)	1 Months Ended		3 Months Ended			6 Months Ended
	Aug. 31, 2019	Jul. 31, 2018	Jun. 30, 2024	Jun. 30, 2023	Sep. 30, 2022	Jun. 30, 2024	Jun. 30, 2023
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Amortization of intangible assets			$ 200,000	$ 200,000		$ 375,000	$ 376,000
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
Intangible asset, useful life					10 years
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
Royalty expense			$ 900,000			$ 1,600,000
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

Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2024	Aug. 09, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
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	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		116,891,023
Entity Central Index Key	0001787306
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues:
Product revenue, net	$ 30,858	$ 4,770	$ 52,427	$ 7,551
Other revenue	0	420	28,000	420
Total revenues	30,858	5,190	80,427	7,971
Operating expenses:
Cost of sales	3,464	776	6,720	1,559
Research and development	19,298	25,219	42,439	60,564
Selling, general, and administrative	58,173	45,958	112,967	88,876
Total operating expenses	80,935	71,953	162,126	150,999
Loss from operations	(50,077)	(66,763)	(81,699)	(143,028)
Other income (expense):
Other income, net	5,229	3,121	9,273	6,328
Interest expense	(7,484)	(7,349)	(14,964)	(14,391)
Loss before income taxes	(52,332)	(70,991)	(87,390)	(151,091)
Provision for income taxes	0	0	324	0
Net loss	(52,332)	(70,991)	(87,714)	(151,091)
Other comprehensive income (loss):
Unrealized income (loss) on marketable securities	(127)	128	(243)	852
Foreign currency translation adjustment	(34)	(6)	(55)	(58)
Total other comprehensive income (loss)	(161)	122	(298)	794
Comprehensive loss	$ (52,493)	$ (70,869)	$ (88,012)	$ (150,297)
Per share information:
Net loss per share, basic (in USD per share)	$ (0.42)	$ (1.16)	$ (0.75)	$ (2.46)
Net loss per share, diluted (in USD per share)	$ (0.42)	$ (1.16)	$ (0.75)	$ (2.46)
Weighted-average shares used in computing net loss per share, basic (in shares)	123,480,849	61,430,620	117,264,687	61,300,577
Weighted-average shares used in computing net loss per share, diluted (in shares)	123,480,849	61,430,620	117,264,687	61,300,577

Revenue

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue

Revenues are recognized under guidance within ASC 606, Revenue from Contracts with Customers. The following table presents the Company's disaggregated revenue for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
ZORYVE cream 0.3%	$	17,258	$	4,770	$	32,284	$	7,551
ZORYVE foam	13,600		—		20,143		—
Total product revenue, net	30,858		4,770		52,427		7,551
Other revenue	—		420		28,000		420
Total revenues	$	30,858	$	5,190	$	80,427	$	7,971

Other revenue relates to the Sato and Huadong licensing agreements. See Note 6.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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+ Details

Balance Sheet Components (Tables)

6 Months Ended

Jun. 30, 2024

Balance Sheet Related Disclosures [Abstract]

Schedule of Inventories

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


	June 30, 2024		December 31, 2023
Raw materials	$	6,095	$	9,951
Work in progress	1,969		486
Finished goods	5,816		2,697
Total inventories	$	13,880	$	13,134

Schedule of Prepaid Expenses and Other Current Assets

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


	June 30, 2024		December 31, 2023
Prepaid co-pay assistance program and rebates	$	2,532	$	8,608
Prepaid clinical trial costs	1,698		1,024
Prepaid insurance	1,346		864
Other prepaid expenses and current assets	8,670		8,208
Total prepaid expenses and other current assets	$	14,246	$	18,704

Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	June 30, 2024		December 31, 2023
Accrued sales deductions	$	22,992	$	11,578
Accrued compensation	10,012		14,872
Clinical trial accruals	319		4,192
Accrued expenses and other current liabilities	9,309		3,299
Total accrued liabilities	$	42,632	$	33,941

Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Disaggregation of Revenue [Line Items]
Product revenue, net	$ 30,858	$ 4,770	$ 52,427	$ 7,551
Other revenue	0	420	28,000	420
Total revenues	30,858	5,190	80,427	7,971
ZORYVE cream 0.3%
Disaggregation of Revenue [Line Items]
Product revenue, net	17,258	4,770	32,284	7,551
ZORYVE foam
Disaggregation of Revenue [Line Items]
Product revenue, net	$ 13,600	$ 0	$ 20,143	$ 0

- 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 + Details

- 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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- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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Reference 20: http://www.xbrl.org/2003/role/disclosureRef
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Reference 25: http://www.xbrl.org/2003/role/disclosureRef
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Reference 26: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (SX 210.5-03(1))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483621/220-10-S99-2

+ Details

Stock-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) - RSUs subject to future vesting	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Number of Units
Beginning balance (in shares) \| shares	2,929,602
Granted (in shares) \| shares	5,300,872
Vested (in shares) \| shares	(982,595)
Forfeited (in shares) \| shares	(568,839)
Ending balance (in shares) \| shares	6,679,040
Weighted-Average Grant Date Fair Value
Beginning balance (in USD per share) \| $ / shares	$ 15.24
Granted (in USD per share) \| $ / shares	4.63
Vested (in USD per share) \| $ / shares	12.98
Forfeited (in USD per share) \| $ / shares	9.39
Ending balance (in USD per share) \| $ / shares	$ 7.65

Balance Sheet Components - Schedule of Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Balance Sheet Related Disclosures [Abstract]
Raw materials	$ 6,095	$ 9,951
Work in progress	1,969	486
Finished goods	5,816	2,697
Total inventories	$ 13,880	$ 13,134

License Agreements & Acquisition - Huadong (Details) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended		6 Months Ended
	Mar. 31, 2024	Sep. 30, 2023	Aug. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Other revenue				$ 0	$ 420	$ 28,000	$ 420
Huadong
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Upfront payment received before taxes		$ 27,000
Other revenue	$ 3,000	30,000		0		3,000
Upfront payment tax withholding obligation		$ 3,000		0		300
Potential additional payments to be received				21,000		21,000
Aggregate amount to be received upon achievement of sales milestones				$ 40,300		$ 40,300
Term			10 years

Subsequent Event (Details) - Secured debt - USD ($) $ in Millions	Aug. 14, 2024	Dec. 22, 2021	Dec. 31, 2023	Nov. 01, 2023
Loan agreement
Subsequent Event [Line Items]
Maximum borrowing capacity		$ 225.0	$ 200.0
Minimum net product revenue as a percentage of projected monthly net revenue				75.00%
Basis spread on variable rate		0.10%
Subsequent Event \| Loan agreement
Subsequent Event [Line Items]
Prepayment premium	1.00%
Minimum net product revenue as a percentage of projected monthly net revenue	80.00%
Interest rate, stated percentage, partial prepayment	0.0595
Basis spread on variable rate	2.50%
Penalty percentage	3.00%
Subsequent Event \| Loan Agreement, Tranche One, Expiring March 31, 2026
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 50.0
Subsequent Event \| Loan Agreement, Tranche One, Expiring June 30, 2026
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 50.0

License Agreements & Acquisition	6 Months Ended
License Agreements & Acquisition	Jun. 30, 2024
License Agreements And Acquisition Disclosure [Abstract]
License Agreements & Acquisition	License Agreements & Acquisition Sato License Agreement On February 27, 2024, the Company entered into a License Agreement with Sato Pharmaceutical Co., Ltd. (“Sato”). Pursuant to the terms of the License Agreement, the Company grants to Sato an exclusive, sublicensable (under certain circumstances) license under certain patent rights and know-how controlled by the Company for Sato to develop, conduct medical affairs activities for, manufacture, commercialize, and otherwise exploit roflumilast formulations (the “Licensed Products”) for all therapeutic uses for certain dermatological indications in humans (the “Field”) in Japan (the "Territory"). The License Agreement sets forth each party’s respective obligations with respect to the development, medical affairs activities, manufacture and supply, and commercialization of the Licensed Products. Pursuant to the terms of the License Agreement, Sato will, at its expense, develop, obtain regulatory approval for, commercialize, and conduct medical affairs activities related to the Licensed Products in the Field in Japan, subject to certain of the Company’s approval and oversight rights. Pursuant to the terms of the License Agreement, the Company received an upfront payment of $25.0 million and will potentially receive additional payments (i) up to an aggregate amount of $10.0 million upon the achievement of certain regulatory milestones and (ii) up to an aggregate amount of $30.0 million upon the achievement of certain sales milestones. In addition, on a Licensed Product-by-Licensed Product basis, commencing from the first commercial sale of such Licensed Product in Japan until the latest of (i) the expiration of the last valid claim in the intellectual property rights licensed by the Company to Sato under the License Agreement covering such Licensed Product in Japan, (ii) the expiration of regulatory exclusivity for such Licensed Product in Japan, or (iii) ten years after the first commercial sale of such Licensed Product in Japan, the Company will receive low double-digit to mid-teen double-digit percentage royalties on Sato’s, its affiliates’ and sublicensees’ total annual net sales of all Licensed Products, subject to certain royalty reductions. The term of the License Agreement continues until, on a Licensed Product-by-Licensed Product basis, the expiration of the Royalty Term. The License Agreement may be terminated by either party in its entirety if the other party commits a material breach, subject to a cure period, or if the other party becomes insolvent. Sato may terminate the License Agreement at-will in its entirety upon 90 days’ written notice. Unless unenforceable under applicable law, the Company may terminate the License Agreement in its entirety if Sato, its affiliate or sublicensee contests or assists a third party in contesting the scope, validity or enforceability of any patent or patent application licensed by the Company to Sato. The Company may also terminate the License Agreement if Sato or any director, officers, employee, agent, affiliate, sublicensee, or subcontractor is charged by a governmental authority for a violation of any anti-corruption, anti-money laundering, sanctions or export or import control laws or regulations, or, subject to the terms of the License Agreement, if Sato, its affiliates and sublicensees do not conduct any material development or commercialization activities of a Licensed Product in Japan for a certain period of time. Other revenue under the Sato agreement was $25.0 million for the three and six months ended June 30, 2024. 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. In addition, the Company received a payment of $3.0 million in March 2024 related to the achievement of a development and regulatory milestone. The Company may also potentially receive additional payments: (i) up to an aggregate amount of $21.0 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. For the three and six months ended June 30, 2024, the Company recognized zero and $3.0 million, respectively, of Other revenue and zero and $0.3 million, respectively, of income tax expense related to the achievement of a development and regulatory milestone. No milestones were achieved for the three and six months ended June 30, 2023. 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 ZORYVE 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 cream 0.3%, 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 was $0.2 million during the three months ended June 30, 2024 and 2023 and $0.4 million during the six months ended June 30, 2024 and 2023. 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 from the first commercial sale of such AZ-Licensed Product in such country. As a result of the commercialization of ZORYVE cream 0.3% in August 2022, the Company began accruing royalties payable to AstraZeneca, which are recorded in cost of sales and accrued liabilities. Royalty expense was $0.9 million and $1.6 million during the three and six months ended June 30, 2024, respectively. Royalty expense during the three and six months ended June 30, 2023 were not material. There were no milestone payments made or payable in connection with AZ-Licensed Products for the three and six months ended June 30, 2024 and 2023.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
Statement of Stockholders' Equity [Abstract]
Stock issuance costs	$ 10,820

Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Balance Sheet Related Disclosures [Abstract]
Prepaid co-pay assistance program and rebates	$ 2,532	$ 8,608
Prepaid clinical trial costs	1,698	1,024
Prepaid insurance	1,346	864
Other prepaid expenses and current assets	8,670	8,208
Total prepaid expenses and other current assets	$ 14,246	$ 18,704

Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of Potentially Antidilutive Shares Excluded

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 June 30,
	2024	2023
Stock options to purchase common stock	5,872,080	8,257,763
Early exercised options subject to future vesting	—	7,416
RSUs subject to future vesting	6,679,040	2,912,694
ESPP shares subject to future issuance	29,722	17,004

Total	12,580,842	11,194,877

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2024

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):


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	84,270	$	—	$	—	$	84,270
Commercial paper	—		4,931		—		4,931

Certificates of deposit	—		4,995		—		4,995
Corporate debt securities	—		123,061		—		123,061
U.S. Treasury and agency securities	145,180		—		—		145,180
Total assets	$	229,450	$	132,987	$	—	$	362,437

______________

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


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	73,544	$	—	$	—	$	73,544
Commercial paper	—		11,806		—		11,806
Corporate debt securities	—		59,954		—		59,954
U.S. Treasury securities	126,557		—		—		126,557
Total assets	$	200,101	$	71,760	$	—	$	271,861

______________

(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):


	June 30, 2024
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	84,270	$	—	$	—	$	84,270

Total cash and cash equivalents	$	84,270	$	—	$	—	$	84,270
Marketable securities:
Commercial paper	$	4,932	$	—	$	(1)	$	4,931

Certificates of deposit	4,995		—		—		4,995
Corporate debt securities	123,145		4		(88)		123,061
U.S. Treasury and agency securities	145,238		15		(73)		145,180
Total marketable securities	$	278,310	$	19	$	(162)	$	278,167

______________

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


	December 31, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	73,544	$	—	$	—	$	73,544
Corporate debt securities	14,851		3		—		14,854
Total cash and cash equivalents	$	88,395	$	3	$	—	$	88,398
Marketable securities:
Commercial paper	$	11,817	$	1	$	(12)	$	11,806
Corporate debt securities	45,056		45		(1)		45,100
U.S. Treasury securities	126,492		82		(17)		126,557
Total marketable securities	$	183,365	$	128	$	(30)	$	183,463

______________

(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):


	June 30, 2024
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	84,270	$	—	$	—	$	84,270

Total cash and cash equivalents	$	84,270	$	—	$	—	$	84,270
Marketable securities:
Commercial paper	$	4,932	$	—	$	(1)	$	4,931

Certificates of deposit	4,995		—		—		4,995
Corporate debt securities	123,145		4		(88)		123,061
U.S. Treasury and agency securities	145,238		15		(73)		145,180
Total marketable securities	$	278,310	$	19	$	(162)	$	278,167

______________

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


	December 31, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	73,544	$	—	$	—	$	73,544
Corporate debt securities	14,851		3		—		14,854
Total cash and cash equivalents	$	88,395	$	3	$	—	$	88,398
Marketable securities:
Commercial paper	$	11,817	$	1	$	(12)	$	11,806
Corporate debt securities	45,056		45		(1)		45,100
U.S. Treasury securities	126,492		82		(17)		126,557
Total marketable securities	$	183,365	$	128	$	(30)	$	183,463

______________

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

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table summarizes the change in the fair value of the embedded derivative instrument for the six months ended June 30, 2024 (in thousands). There was no activity for the six months ended June 30, 2023.


	June 30,
	2024
Beginning balance	$	849
Gain from changes in fair value	(655)
Ending balance	$	194

- 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
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+ Details

Insider Trading Arrangements	3 Months Ended	6 Months Ended
Insider Trading Arrangements	Jun. 30, 2024 shares	Jun. 30, 2024 shares
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		Trading Plans On June 14, 2024, Todd Franklin Watanabe, our Chief Executive Officer, entered into a Rule 10b5-1 trading plan, 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 75,000 shares of Common Stock held by Mr. Watanabe between September 13, 2024 and September 30, 2025.
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Todd Franklin Watanabe [Member]
Trading Arrangements, by Individual
Name	Todd Franklin Watanabe
Title	Chief Executive Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	June 14, 2024
Expiration Date	September 30, 2025
Arrangement Duration	382 days
Aggregate Available	75,000	75,000

Fair Value Measurements

6 Months Ended

Jun. 30, 2024

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):


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	84,270	$	—	$	—	$	84,270
Commercial paper	—		4,931		—		4,931

Certificates of deposit	—		4,995		—		4,995
Corporate debt securities	—		123,061		—		123,061
U.S. Treasury and agency securities	145,180		—		—		145,180
Total assets	$	229,450	$	132,987	$	—	$	362,437

______________

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


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	73,544	$	—	$	—	$	73,544
Commercial paper	—		11,806		—		11,806
Corporate debt securities	—		59,954		—		59,954
U.S. Treasury securities	126,557		—		—		126,557
Total assets	$	200,101	$	71,760	$	—	$	271,861

______________

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

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

Commercial paper, certificates of deposit, 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):


	June 30, 2024
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	84,270	$	—	$	—	$	84,270

Total cash and cash equivalents	$	84,270	$	—	$	—	$	84,270
Marketable securities:
Commercial paper	$	4,932	$	—	$	(1)	$	4,931

Certificates of deposit	4,995		—		—		4,995
Corporate debt securities	123,145		4		(88)		123,061
U.S. Treasury and agency securities	145,238		15		(73)		145,180
Total marketable securities	$	278,310	$	19	$	(162)	$	278,167

______________

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


	December 31, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash and cash equivalents:

Money market funds(1)	$	73,544	$	—	$	—	$	73,544
Corporate debt securities	14,851		3		—		14,854
Total cash and cash equivalents	$	88,395	$	3	$	—	$	88,398
Marketable securities:
Commercial paper	$	11,817	$	1	$	(12)	$	11,806
Corporate debt securities	45,056		45		(1)		45,100
U.S. Treasury securities	126,492		82		(17)		126,557
Total marketable securities	$	183,365	$	128	$	(30)	$	183,463

______________

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

Realized gains or losses on investments for the three and six months ended June 30, 2024 and 2023 were not material. As of June 30, 2024, 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 June 30, 2024 and December 31, 2023, 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.


	June 30,
	2024
Beginning balance	$	849
Gain from changes in fair value	(655)
Ending balance	$	194

The fair value of the Company’s embedded derivative instrument is based on significant inputs not observed in the market, and thus represents a Level 3 measurement. Refer to Note 7 for further discussion on the embedded derivative instrument.

- 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

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+ Details

Organization and Description of Business (Details) $ / shares in Units, $ in Thousands				1 Months Ended							6 Months Ended
	Feb. 28, 2024 USD ($) $ / shares shares	May 06, 2021 USD ($)	Feb. 04, 2020 USD ($)	Jan. 31, 2024 USD ($)	Dec. 31, 2023 USD ($) $ / shares shares	Oct. 31, 2023 USD ($) $ / shares shares	Aug. 31, 2022 USD ($)	Mar. 31, 2022 USD ($) $ / shares shares	Feb. 28, 2021 USD ($)	Oct. 31, 2020 USD ($)	Jun. 30, 2024 USD ($) shares	Jun. 30, 2023 USD ($)
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock	$ 161,700										$ 161,682	$ 0
Stock price (in USD per share) \| $ / shares	$ 9.50
Number of shares issued in transaction (in shares) \| shares	15,789,474
Accumulated deficit					$ 981,904						1,069,618
Cash, cash equivalents, restricted cash and marketable securities					272,800						363,100
Long-term debt					201,799						203,808
Loan agreement \| Secured debt
Subsidiary, Sale of Stock [Line Items]
Long-term debt											$ 200,000
Prefunded Warrant
Subsidiary, Sale of Stock [Line Items]
Warrants to acquire shares of common stock (in shares) \| shares						7,500,000					7,500,000
Stock price (in USD per share) \| $ / shares						$ 2.4999
Exercise price (in USD per share) \| $ / shares						$ 0.0001
IPO
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance initial public offering			$ 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
Fifth Equity Public Offering
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock						$ 95,800
Underwriters' option
Subsidiary, Sale of Stock [Line Items]
Stock price (in USD per share) \| $ / shares	$ 9.50
Potential number of shares to be issued (in shares) \| shares	2,368,421
At-The-Market \| Cowen \| Common Stock
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock					$ 3,100			$ 14,500
Stock price (in USD per share) \| $ / shares					$ 2.60			$ 17.00
Number of shares issued in transaction (in shares) \| shares					1,250,000			882,353
Issuance of shares of common stock for sales agreement		$ 100,000		$ 100,000
Share sales agreement, percentage of gross sales price		0.03

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Restricted cash	$ 617	$ 925

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
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)	116,480,267	96,787,343
Common stock, shares outstanding (in shares)	116,480,267	96,787,343

Long-term debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Long-term debt, gross	$ 200,000	$ 200,000
Accrued final fee	6,374	4,876
Unamortized debt issuance costs	(2,566)	(3,077)
Long-term debt, net	$ 203,808	$ 201,799

- Definition

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

+ References + Details

Net Loss Per Share - Narrative (Details) - shares	Jun. 30, 2024	Oct. 31, 2023
Prefunded Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Warrants to acquire shares of common stock (in shares)	7,500,000	7,500,000

Fair Value Measurements - Schedule of Estimated Value of Cash and Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Cash and Cash Equivalents [Line Items]
Amortized cost	$ 84,270	$ 88,395
Unrealized gains	0	3
Unrealized losses	0	0
Estimated fair value	84,270	88,398
Amortized cost	278,310	183,365
Unrealized gains	19	128
Unrealized losses	(162)	(30)
Estimated fair value	278,167	183,463
Commercial paper
Cash and Cash Equivalents [Line Items]
Amortized cost	4,932	11,817
Unrealized gains	0	1
Unrealized losses	(1)	(12)
Estimated fair value	4,931	11,806
Certificates of deposit
Cash and Cash Equivalents [Line Items]
Amortized cost	4,995
Unrealized gains	0
Unrealized losses	0
Estimated fair value	4,995
Corporate debt securities
Cash and Cash Equivalents [Line Items]
Amortized cost	123,145	45,056
Unrealized gains	4	45
Unrealized losses	(88)	(1)
Estimated fair value	123,061	45,100
U.S. Treasury securities
Cash and Cash Equivalents [Line Items]
Amortized cost	145,238	126,492
Unrealized gains	15	82
Unrealized losses	(73)	(17)
Estimated fair value	145,180	126,557
Money market funds
Cash and Cash Equivalents [Line Items]
Amortized cost	84,270	73,544
Unrealized gains	0	0
Unrealized losses	0	0
Estimated fair value	$ 84,270	73,544
Corporate debt securities
Cash and Cash Equivalents [Line Items]
Amortized cost		14,851
Unrealized gains		3
Unrealized losses		0
Estimated fair value		$ 14,854

Balance Sheet Components - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Balance Sheet Related Disclosures [Abstract]
Accrued sales deductions	$ 22,992	$ 11,578
Accrued compensation	10,012	14,872
Clinical trial accruals	319	4,192
Accrued expenses and other current liabilities	9,309	3,299
Total accrued liabilities	$ 42,632	$ 33,941

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	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. Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated balance sheet as of June 30, 2024, the interim condensed consolidated statements of operations and comprehensive loss, and the condensed consolidated statements of changes in stockholders' equity and cash flows for the three and six months ended June 30, 2024 and 2023 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 six month periods are also unaudited. The condensed consolidated results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2023 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, 2023. Significant Accounting Policies There have been no significant changes to the accounting policies during the three and six months ended June 30, 2024, as compared to the significant accounting policies described in Note 2 of the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023. Restricted Cash As of June 30, 2024 and December 31, 2023, the Company held $0.6 million and $0.9 million, respectively, of restricted cash as collateral for a letter of credit related to the Company's amended office space lease. 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 4, 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. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2024
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.
Unaudited Interim Condensed Consolidated Financial Statements	Unaudited Interim Condensed Consolidated Financial Statements The interim condensed consolidated balance sheet as of June 30, 2024, the interim condensed consolidated statements of operations and comprehensive loss, and the condensed consolidated statements of changes in stockholders' equity and cash flows for the three and six months ended June 30, 2024 and 2023 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 six month periods are also unaudited. The condensed consolidated results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, 2023 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, 2023.
Restricted Cash	Restricted Cash As of June 30, 2024 and December 31, 2023, the Company held $0.6 million and $0.9 million, respectively, of restricted cash as collateral for a letter of credit related to the Company's amended office space lease.
Concentration of Credit Risk and Other Risks and Uncertainties	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	Fair Value Measurement The Company’s financial instruments, in addition to those presented in Note 4, 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.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

Revenue (Tables)

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table presents the Company's disaggregated revenue for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
ZORYVE cream 0.3%	$	17,258	$	4,770	$	32,284	$	7,551
ZORYVE foam	13,600		—		20,143		—
Total product revenue, net	30,858		4,770		52,427		7,551
Other revenue	—		420		28,000		420
Total revenues	$	30,858	$	5,190	$	80,427	$	7,971

Net Loss Per Share

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average common shares outstanding. Pre-funded warrants to purchase 7,500,000 shares of the Company's stock were included in the weighted-average common shares outstanding used in calculating net loss per share for the three and six months ended June 30, 2024.

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 June 30,
	2024	2023
Stock options to purchase common stock	5,872,080	8,257,763
Early exercised options subject to future vesting	—	7,416
RSUs subject to future vesting	6,679,040	2,912,694
ESPP shares subject to future issuance	29,722	17,004

Total	12,580,842	11,194,877

Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
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
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
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]
Unrealized gain (loss) on marketable securities	852
Foreign currency translation adjustment	(58)
Net loss	(151,091)
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)
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
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)
Beginning balance (in shares) at Dec. 31, 2023		96,787,349
Beginning balance at Dec. 31, 2023	88,667	$ 9	1,070,558	4	(981,904)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock net of discount and issuance costs of $10,820 (in shares)		18,157,895
Issuance of shares of common stock net of discount and issuance costs of $10,820	161,682	$ 3	161,679
Issuance of common stock upon the exercise of stock options (in shares)		21,863
Issuance of common stock upon the exercise of stock options	82		82
Issuance of common stock upon the vesting of restricted stock units (in shares)		538,330
Stock-based compensation expense	10,030		10,030
Unrealized gain (loss) on marketable securities	(116)			(116)
Foreign currency translation adjustment	(21)			(21)
Net loss	(35,382)				(35,382)
Ending balance (in shares) at Mar. 31, 2024		115,505,437
Ending Balance at Mar. 31, 2024	224,942	$ 12	1,242,349	(133)	(1,017,286)
Beginning balance (in shares) at Dec. 31, 2023		96,787,349
Beginning balance at Dec. 31, 2023	$ 88,667	$ 9	1,070,558	4	(981,904)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)	169,353
Unrealized gain (loss) on marketable securities	$ (243)
Foreign currency translation adjustment	(55)
Net loss	(87,714)
Ending balance (in shares) at Jun. 30, 2024		116,480,267
Ending Balance at Jun. 30, 2024	186,427	$ 12	1,256,327	(294)	(1,069,618)
Beginning balance (in shares) at Mar. 31, 2024		115,505,437
Beginning balance at Mar. 31, 2024	224,942	$ 12	1,242,349	(133)	(1,017,286)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon the exercise of stock options (in shares)		147,490
Issuance of common stock upon the exercise of stock options	806		806
Issuance of common stock upon the vesting of restricted stock units (in shares)		443,365
Shares issued pursuant to the employee stock purchase plan (in shares)		383,975
Shares issued pursuant to the employee stock purchase plan	649		649
Stock-based compensation expense	12,523		12,523
Unrealized gain (loss) on marketable securities	(127)			(127)
Foreign currency translation adjustment	(34)			(34)
Net loss	(52,332)				(52,332)
Ending balance (in shares) at Jun. 30, 2024		116,480,267
Ending Balance at Jun. 30, 2024	$ 186,427	$ 12	$ 1,256,327	$ (294)	$ (1,069,618)

Stock-Based Compensation - Schedule of Stock Option Activity (Details) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024 USD ($) $ / shares shares	Dec. 31, 2023 USD ($) $ / shares shares
Number of Options
Beginning balance, number of options (in shares) \| shares	7,919,699
Granted (in shares) \| shares	3,622,916
Exercised (in shares) \| shares	(169,353)
Forfeited (in shares) \| shares	(5,192,738)
Expired (in shares) \| shares	(308,444)
Ending balance, number of options (in shares) \| shares	5,872,080	7,919,699
Weighted- Average Exercise Price
Beginning balance, weighted-average exercise price (in USD per share) \| $ / shares	$ 18.52
Granted (in USD per share) \| $ / shares	5.12
Exercised (in USD per share) \| $ / shares	5.25
Forfeited (in USD per share) \| $ / shares	23.05
Expired (in USD per share) \| $ / shares	24.45
Ending balance, weighted-average exercise price (in USD per share) \| $ / shares	$ 6.32	$ 18.52
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Exercisable (in shares) \| shares	2,050,582
Exercisable, Weighted-Average Exercise Price (in USD per share) \| $ / shares	$ 8.01
Remaining Contractual Term (Years)	8 years 3 months 10 days	7 years 4 months 6 days
Remaining contractual term, exercisable (years)	6 years 3 months
Aggregate Intrinsic Value ($, in thousands) \| $	$ 25,327	$ 1,435
Intrinsic value, exercisable \| $	$ 8,640

Long-term debt - Narrative (Details) - USD ($)			3 Months Ended		6 Months Ended
Long-term debt - Narrative (Details) - USD ($)	Aug. 02, 2022	Dec. 22, 2021	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023	Nov. 01, 2023
Debt Instrument [Line Items]
Embedded derivative, gain (loss) on embedded derivative, net			$ 100,000		$ 655,000	$ 0
Embedded derivative, fair value of embedded derivative liability			200,000		200,000		$ 800,000
Maturity, due 2027			$ 213,900,000		$ 213,900,000
Secured debt \| Loan agreement
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 225,000,000					$ 200,000,000
Stated interest rate		7.45%
Basis spread on variable rate		0.10%
Interest rate at end of period			12.88%		12.88%
Default rate		4.00%
Payments of debt issuance costs		$ 1,000,000
Final fee		6.95%
Exit fee		3.00%
Milestone period		6 months
Exit fee expiration period		10 years
Minimum net product revenue as a percentage of projected monthly net revenue								75.00%
Net cash proceeds agreed to raise								$ 31,000,000
Deferred final fee		$ 13,700,000
Effective interest rate			14.79%		14.79%		14.81%
Interest expense			$ 7,500,000	$ 7,400,000	$ 15,000,000	$ 14,400,000
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		$ 5,000,000
Secured debt \| Loan agreement \| Tranche A term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		75,000,000
Proceeds from issuance of debt		75,000,000
Secured debt \| Loan agreement \| Tranche B-1 term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		50,000,000
Secured debt \| Loan agreement \| Tranche B-2 term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		75,000,000
Incremental amount available for borrowing		15,000,000
Secured debt \| Loan agreement \| Tranche C term loan
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 25,000,000						$ 25,000,000
Secured debt \| Loan agreement \| Tranche B term loan
Debt Instrument [Line Items]
Proceeds from issuance of debt	$ 125,000,000

Long-term debt

6 Months Ended

Jun. 30, 2024

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.

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 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 cream 0.3% on July 29, 2022, the tranche B term loans were funded and the Company received $125.0 million on August 2, 2022. 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 December 31, 2023.

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. Starting in July 2023, the Secured Overnight Financing Rate (SOFR) for a term of one month was substituted for the benchmark rate. On June 30, 2024, the rate was 12.88%. 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 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 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.

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, the fair value of the embedded derivative was determined to be immaterial. The embedded derivative instrument is remeasured at fair value each reporting period with any future changes in fair value reported in Other income, net in the condensed consolidated statement of operations and comprehensive loss. During the three and six months ended June 30, 2024, the Company recognized a $0.1 million and $0.7 million gain, respectively, in Other income, net related to the change in fair value of the embedded derivative instrument. The fair value of the embedded derivative instrument as of June 30, 2024 and December 31, 2023 was a liability of $0.2 million and $0.8 million, respectively, and is included in Other long-term liabilities in the accompanying condensed consolidated balance sheets. See Note 4.

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.

Pursuant to the amendment, the modified financial covenant requires the Company to generate a minimum net product revenue equal to 75% of its 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. The Company raised the required capital during the first quarter of 2024 and was in compliance with all financing covenants under the Loan Agreement as of June 30, 2024.

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 June 30, 2024 and December 31, 2023, the effective interest rate was 14.79% and 14.81%, respectively. Interest expense relating to the term loan for the three and six months ended June 30, 2024 was $7.5 million and $15.0 million, respectively, and $7.4 million and $14.4 million for three and six months ended June 30, 2023.

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


	June 30, 2024		December 31, 2023
Long-term debt, gross	$	200,000	$	200,000
Accrued final fee	6,374		4,876
Unamortized debt issuance costs	(2,566)		(3,077)
Long-term debt, net	$	203,808	$	201,799

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.

In July 2024, the Company entered into an additional amendment to the Loan Agreement which substantially changed the terms discussed above, See Note 10.

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 84,270	$ 88,398
Restricted cash	617	925
Marketable securities	278,167	183,463
Trade receivables, net	43,411	25,807
Inventories	13,880	13,134
Prepaid expenses and other current assets	14,246	18,704
Total current assets	434,591	330,431
Property, plant, and equipment, net	1,347	1,539
Intangible assets, net	6,063	6,438
Operating lease right-of-use asset	2,163	2,361
Other assets	595	596
Total assets	444,759	341,365
Current liabilities:
Accounts payable	7,943	11,992
Accrued liabilities	42,632	33,941
Operating lease liability	777	735
Total current liabilities	51,352	46,668
Operating lease liability, noncurrent	2,978	3,382
Long-term debt, net	203,808	201,799
Other long-term liabilities	194	849
Total liabilities	258,332	252,698
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at June 30, 2024 and December 31, 2023; no shares issued and outstanding at June 30, 2024 and December 31, 2023	0	0
Common stock, $0.0001 par value; 300,000,000 shares authorized at June 30, 2024 and December 31, 2023; 116,480,267 and 96,787,343 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	12	9
Additional paid-in capital	1,256,327	1,070,558
Accumulated other comprehensive loss	(294)	4
Accumulated deficit	(1,069,618)	(981,904)
Total stockholders’ equity	186,427	88,667
Total liabilities and stockholders’ equity	$ 444,759	$ 341,365

Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock Option Exchange Program

On January 16, 2024, the Company commenced an offer to certain eligible employees and consultants to exchange certain outstanding eligible options to purchase shares of the Company’s common stock for a lesser number of RSUs pursuant to an option exchange program (the “Option Exchange”). The Option Exchange expired on February 12, 2024. Pursuant to the Option Exchange, eligible option holders elected to exchange, and the Company accepted for cancellation, eligible options to purchase an aggregate of 5,059,129 shares of the Company’s common stock, representing approximately 98% of the total shares of common stock underlying the eligible options. On February 13, 2024, immediately following the expiration of the Option Exchange, the Company granted 2,129,594 shares of Replacement RSU Awards, pursuant to the terms of the Option Exchange. The Replacement RSU Awards will vest based on continued service with the Company over a period of either 1, 2 or 3 years, depending on the grant date of the exchanged options.

The exchange of stock options was treated as a modification for accounting purposes, which requires an incremental expense of $8.6 million to be recognized for the Replacement RSU Awards over their new service periods (1 - 3 years). In addition, any unamortized expense remaining on the exchanged options as of the modification will be recognized over their original remaining service period.

Stock Option Activity

The following summarizes option activity:


	Number of Options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value ($, in thousands)
Balance—December 31, 2023	7,919,699	$	18.52	7.35	$	1,435
Granted	3,622,916	5.12
Exercised	(169,353)	5.25
Forfeited(1)	(5,192,738)	23.05
Expired	(308,444)	24.45
Balance—June 30, 2024	5,872,080	$	6.32	8.28	$	25,327
Exercisable—June 30, 2024	2,050,582	$	8.01	6.25	$	8,640

______________

(1)The number of stock options forfeited includes those exchanged in the Option Exchange as described above.

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 June 30, 2024. The intrinsic value of options exercised for the six months ended June 30, 2024 and 2023 was $0.8 million and $0.7 million, respectively.

The total grant-date fair value of the options vested during the six months ended June 30, 2024 and 2023 was $2.2 million and $14.9 million, respectively. The weighted-average grant-date fair value of employee options granted during the six months ended June 30, 2024 and 2023 was $3.59 and $10.25, respectively.

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, 2023	2,929,602	$	15.24
Granted(1)	5,300,872	4.63
Vested	(982,595)	12.98
Forfeited	(568,839)	9.39
Unvested Balance—June 30, 2024	6,679,040	$	7.65

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(1)The number of RSU's granted includes those in association with the Option Exchange as described above.

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, except those issued in connection with the Option Exchange as described above.

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	3,799	$	4,220	$	7,456	$	7,908
Selling, general, and administrative	8,724		6,358		15,097		12,149
Total stock-based compensation expense	$	12,523	$	10,578	$	22,553	$	20,057

As of June 30, 2024, there was $33.7 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 2.3 years. As of June 30, 2024, there was $42.5 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 2.6 years.

In April 2024, in connection with the retirement of the former Chief Financial Officer, the Company modified the terms of this individual's historical stock awards. As a result of the modifications, the Company recognized $1.7 million of incremental stock compensation expense during the period, which is included in selling, general and administrative expenses.

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:


	Six Months Ended June 30, 2024	Year Ended December 31, 2023
Expected term (in years)	1.8 – 6.1	5.0 – 6.1
Expected volatility	79.1 – 83.2%	75.2 – 78.4%
Risk-free interest rate	3.9 – 5.0%	3.5 – 4.7%
Dividend yield	—%	—%

Balance Sheet Components

6 Months Ended

Jun. 30, 2024

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

Inventories

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


	June 30, 2024		December 31, 2023
Raw materials	$	6,095	$	9,951
Work in progress	1,969		486
Finished goods	5,816		2,697
Total inventories	$	13,880	$	13,134

Prepaid Expenses and Other Current Assets

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


	June 30, 2024		December 31, 2023
Prepaid co-pay assistance program and rebates	$	2,532	$	8,608
Prepaid clinical trial costs	1,698		1,024
Prepaid insurance	1,346		864
Other prepaid expenses and current assets	8,670		8,208
Total prepaid expenses and other current assets	$	14,246	$	18,704

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	June 30, 2024		December 31, 2023
Accrued sales deductions	$	22,992	$	11,578
Accrued compensation	10,012		14,872
Clinical trial accruals	319		4,192
Accrued expenses and other current liabilities	9,309		3,299
Total accrued liabilities	$	42,632	$	33,941

Subsequent Event	6 Months Ended
Subsequent Event	Jun. 30, 2024
Subsequent Events [Abstract]
Subsequent Event	Subsequent Events In July 2024, the Company entered into a co-promotion agreement with Kowa Pharmaceuticals America, Inc. ("Kowa") to leverage Kowa's primary care sales force to exclusively market and promote ZORYVE cream and ZORYVE foam to primary care practitioners and pediatricians for all FDA-approved indications until July 2029. Under the terms of the agreement, Arcutis will recognize all revenue and Kowa will receive a commission from sales attributed to Kowa. In August 2024, the Company amended its Loan Agreement with SLR which substantially changed the terms, including (i) allowance for a one-time partial prepayment of existing term loans after October 7, 2024, and on or before December 15, 2024, with a 1.0% prepayment premium (the "2024 Partial Prepayment"); (ii) upon making the 2024 Partial Prepayment, an additional tranche C-1 term loan of up to $50.0 million (expiring March 31, 2026) and an additional tranche C-2 term loan of up to $50.0 million (expiring on June 30, 2026) will become available, subject to the Company generating a minimum net product revenue equal to 80% of its projected net product revenue as set forth in our annual plan for the respective period (iii) extension of the maturity date to August 1, 2029, or January 1, 2027 if the 2024 Partial Prepayment is not made; (iv) if the 2024 Partial Prepayment is made, the applicable per annum interest rate will be equal to 5.95% plus the greater of (a) 2.50% per annum and (b) SOFR; (v) permission for us to prepay the full loan amount prior to the maturity date with a prepayment penalty of up to 3.0%; and (vi) removal of the cap on acquisition costs.