On Wednesday, Goldman Sachs adjusted its outlook on Arcutis Biotherapeutics Inc . (NASDAQ: NASDAQ:ARQT), increasing the price target to $11 from $6, while maintaining a Neutral rating on the stock. This revision follows the company's reported fourth-quarter results, which showcased higher-than-expected net sales for its Zoryve (roflumilast cream) treatment for plaque psoriasis.
Arcutis announced net sales of $13.5 million for Zoryve in the last quarter, surpassing both Goldman Sachs and Visible Alpha Consensus estimates, which were $12.3 million and $11.4 million respectively.
The sales beat was attributed to better gross-to-net discounts and prescription volume growth. The discounts improved to the mid-60s percentile in the fourth quarter compared to the low-70s in the third quarter.
Despite anticipated gross-to-net (GTN) erosion in the first quarter of 2024 due to seasonal factors like plan changes and deductible resets, the management of Arcutis expects to achieve discounts in the mid-50% range for the second half of the year. This forecast aligns with previous guidance aiming for 40-60% discounts at a steady state.
Arcutis also reported a promising start for the launch of Zoryve foam in treating seborrheic dermatitis. While acknowledging the positive impact of the new product launch, Goldman Sachs remains cautious, looking for additional data to determine if the initial demand will persist or if it represents a short-term trend.
Based on the recent performance and the successful initial launch for seborrheic dermatitis treatment, Goldman Sachs has revised its sales projections for Zoryve. The firm now estimates 2030 sales of approximately $375 million for the psoriasis treatment, up from the previous estimate of around $330 million, and about $265 million for the seborrheic dermatitis treatment, increased from roughly $190 million.
The new sales estimates and minor model adjustments have led to the raised price target. Goldman Sachs reaffirms its Neutral stance, reflecting a wait-and-see approach regarding the long-term demand for Arcutis's products.
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