It is almost impossible to obtain a drug label from the FDA for pediatric use - this topical non-steroidal drug ZORYVE is very safe and highly effective for both pediatric and adult patients. The drug is potent in the skin, it is not well absorbed and is quickly metabolized which limits systemic exposure and minimizes side effect risks. As a non-steroidal disease modifying drug it will be widely adopted in dermatology and it is already reimbursed.
Important to note that the dermatology sector is moribund and there is virtually no new drug development catering to this segment of medicine - therefore new drug launches are noted and welcomed by practitioners who are well paid but bored out of their minds.
The incidence and prevalence of atopic dermatitis (26 million) and plaque psoriasis (9 million) and seborrheic dermatitis (10 million) is extremely large totalling 46 million patients which represents an immense total addressable market. The marketing of this drug is focused on 12,000 practicing US dermatologists which can be achieved with a modest sized sales force of two dozen reps.
The company has a solid cash position of $80M and will be cash flow break even in 2026 making it no longer reliant on dilutive equity financings. As sales are growing at 45% and EPS will swing to profitability the company enterprise value will increase substantially in 2026.
Once roflumilast sales reach $250M per quarter in the next 12-15 months the company will be acquired for 5x sales - ie $5B. Price target in the next 12 months is $40/share. 100% upside potential for a long equity position. Consider purchasing ATM covered call options with Jan 2027 expiration for more upside potential.
How well do narratives help inform your perspective?
Disclaimer
The user Coward_Nutlick holds no position in NasdaqGS:ARQT. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
