Arcutis Biotherapeutics, Inc.

Comparison of the Three Months Ended September 30, 2026 and 2025

Product revenue, net

*Not applicable

The increases in product revenue, net, for ZORYVE cream 0.3%, ZORYVE foam, and ZORYVE cream 0.15% were primarily driven by greater patient demand for each respective product.

The increase in product revenue, net, for ZORYVE cream 0.05% was due to its commercial launch in the United States in October 2025.

Cost of sales increased by $3.8 million for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase was primarily due to higher sales volumes and the associated increase in expenses recognized for product sold and royalties.

The increase in research and development expenses was primarily due to higher indirect costs attributable to investments in medical education and support of potential ZORYVE label expansions and an increase in direct program development costs for ARQ-234 stemming from continued enrollment in the Phase 1a/1b clinical study, partially offset by a decrease in direct topical roflumilast costs as we closed out the INTEGUMENT-INFANT trial and ZORYVE foam MUSE trial.

We expect research and development expenses to continue to increase in future periods, primarily due to our clinical development program for ARQ-234, as well as the development costs associated with ZORYVE label expansions and lifecycle management efforts.

Selling, general and administrative expenses increased by $37.2 million, or 60%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Marketing, media and celebrity costs accounted for $16.4 million of the increase, including those related to our recently announced “Skin to Believe In” awareness campaign. Additionally, $8.6 million of the increase in selling, general and administrative expenses related to compensation and personnel-related expenses, primarily associated with the growth in headcount for the expansion of our dermatology sales force and the build-out of a sales force dedicated to primary care practitioners and pediatricians. The remaining growth in selling, general and administrative expenses was primarily associated with commercialization efforts in support of increased ZORYVE sales volume.

We expect our selling, general and administrative expenses to continue to increase in future periods as we continue to support the commercialization and marketing of ZORYVE, as well as support our overall business operations.

Interest expense for the three months ended September 30, 2026 was materially consistent with that for the three months ended September 30, 2025.

Comparison of the Nine Months Ended September 30, 2026 and 2025

Product Revenue, Net

*Not applicable

The increases in product revenue, net, for ZORYVE cream 0.3%, ZORYVE foam, and ZORYVE cream 0.15% were primarily driven by greater patient demand for each respective product.

The increase in product revenue, net, for ZORYVE cream 0.05% was due to its commercial launch in the United States in October 2025.

Other Revenue

Other revenue for the nine months ended September 30, 2025 was related to a milestone payment received in connection with the Huadong Agreement. See Note 6 to the condensed consolidated financial statements for additional information.

Cost of sales increased by $8.2 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, due to higher sales volumes and the associated increase in expenses recognized for product sold and royalties, partially offset by $2.7 million of catch-up amortization expense recognized in the comparative period for an AstraZeneca milestone achieved.

The increase in research and development expenses was primarily due to a $12.0 million increase in ARQ-234 program costs, including the $10.0 million milestone that became payable to certain former Ducentis stockholders in the first quarter of 2026 upon the dosing of the first subject in the ARQ-234 Phase 1a/1b clinical study and $2.0 million stemming from continued enrollment in this clinical trial. Higher indirect costs were due primarily to growth in headcount and investments in medical education and support of potential ZORYVE label expansions. These increases were partially offset by lower direct other program costs following the completion of the Phase 1b clinical study for our ARQ-255 program in 2025.

We expect research and development expenses to continue to increase in future periods, primarily due to our clinical development program for ARQ-234, as well as the development costs associated with ZORYVE label expansions and lifecycle management efforts.

Selling, general and administrative expenses increased by $60.2 million, or 31%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Marketing, media and celebrity costs accounted for $20.3 million of the increase, including those related to our recently announced “Skin to Believe In” awareness campaign. Additionally, $23.0 million of the increase in selling, general and administrative expenses related to compensation and personnel-related expenses, primarily associated with the growth in headcount for the expansion of our dermatology sales force and the build-out of a sales force dedicated to primary care practitioners and pediatricians. The remaining growth in selling, general and administrative expenses was primarily associated with commercialization efforts in support of increased ZORYVE sales volume. These increases were partially offset by lower commissions following the termination of our promotion agreement with Kowa in January 2026.

We expect our selling, general and administrative expenses to continue to increase in future periods as we continue to support the commercialization and marketing of ZORYVE, as well as support our overall business operations.

Interest expense increased by $1.7 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to fees incurred to maintain the availability of the tranche C-1 and tranche C-2 term loans through March 31, 2026 and June 30, 2026, respectively.

Liquidity, Capital Resources, and Requirements

Liquidity

Our primary sources of capital to date have been private placements of preferred stock, our Initial Public Offering (IPO) and follow-on financings, our Loan Agreement, our ATM program, and revenue from the sale of ZORYVE products. We have incurred annual operating losses since our inception and have an accumulated deficit as a result of ongoing efforts to develop and commercialize our products and product candidates, including conducting nonclinical and clinical trials and providing selling, general and administrative support for these operations. As of September 30, 2026, we had cash, cash equivalents, restricted cash, and marketable securities of $259.8 million, and an accumulated deficit of $1,125.6 million and had $100.0 million principal outstanding under the Loan Agreement. In November 2026, we increased the offering capacity under our ATM program to $200.0 million.

We believe that our existing capital resources will be sufficient to meet the projected operating requirements for at least 12 months from the date of issuance of our financial statements.

If our capital resources are insufficient to satisfy our requirements, we may need to fund our operations through the sale of our equity securities, accessing or incurring additional debt, entering into licensing or collaboration agreements with partners, grants, or other sources of financing. There can be no assurance that sufficient funds will be available to us at all or on attractive terms when needed from these sources. If we are unable to obtain additional funding from these or other sources if or when needed, it may be necessary to significantly reduce our current rate of spending through, among other things, reductions in staff and delaying, scaling back, or stopping certain research and development programs, nonclinical studies, clinical trials, or other development activities, and commercialization efforts. In addition, market conditions impacting financial institutions could impact our ability to access some or all of our cash, cash equivalents, and marketable securities, and we may be unable to obtain alternative funding when and as needed on acceptable terms, if at all.

We have based our projected operating requirements on assumptions that may prove to be incorrect, and we may use all our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development, and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Any future funding requirements will depend on many factors, including, but not limited to:

•the timing, receipt, and amount of sales of any current and future products;

•the scope, progress, results, and costs of researching and developing our product candidates or any future product candidates, and conducting nonclinical studies and clinical trials, in particular our planned or ongoing development activities and our formulation and nonclinical efforts;

•suspensions or delays in the enrollment or changes to the number of subjects we decide to enroll in our ongoing clinical trials;

•the number and scope of clinical programs we decide to pursue, and the number and characteristics of any product candidates we develop or acquire;

•the timing of, and the costs involved in, obtaining regulatory approvals for any future product candidates;

•the cost of manufacturing ZORYVE or any future product candidates and any products we successfully commercialize, including costs associated with building out our supply chain;

•the cost of commercialization activities for ZORYVE or any future product candidates that are approved for sale, including marketing, sales and distribution costs, and any discounts or rebates to obtain access;

•our ability to acquire attractive assets or businesses or to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such agreements that we may enter into;

•the costs related to milestone payments to AstraZeneca or any future collaborator or licensing partner, upon the achievement of predetermined milestones;

•any product liability or other lawsuits related to our products;

•the expenses needed to attract and retain skilled personnel;

•any disputes, lawsuits, or other legal proceedings related to contracts or employment matters;

•the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing our intellectual property portfolio; and

•costs associated with any adverse market conditions or other macroeconomic factors.

As part of our business strategy, we regularly evaluate and engage in discussions with third parties regarding potential strategic transactions, including the in-license or acquisition of product candidates, products, technologies or businesses that we believe may complement our existing portfolio and business. We may engage in such discussions at any time, and any such transaction could be material to our business, financial condition and results of operations and could require significant upfront, milestone or other payments, the issuance of equity securities, the incurrence of debt or the use of a significant portion of our cash, cash equivalents and marketable securities. There can be no assurance that any such discussions will result in a definitive agreement or that any transaction will be completed on favorable terms, or at all; however, any such transaction may impact our liquidity and funding and operating requirements.

Indebtedness

On December 22, 2021, we entered into a loan and security agreement (the Prior Loan Agreement) with SLR and the lenders party thereto. The Prior Loan Agreement was amended and restated on January 10, 2023 (the AR Loan Agreement) to include Arcutis Canada, Inc., a corporation incorporated under the laws of the Province of Ontario, as a borrower and party. On November 1, 2023, we entered into an amendment to the AR Loan Agreement to, among others, (i) modify the financial covenant relating to minimum net product revenue, and (ii) include an additional minimum financing covenant. On August 9, 2024, we entered into a second amendment to the AR Loan Agreement (the AR Loan Agreement, as amended by the first and second amendments, the Loan Agreement) to, among others, (i) permit, during the period commencing on October 7, 2024 and ending on December 15, 2024, an optional partial prepayment of term loans outstanding, subject to a 1.0% prepayment penalty (the 2024 Partial Prepayment), (ii) add the tranche C-1 and tranche C-2 term loans, and (iii) facilitate certain other changes, including with respect to the applicable interest rate and maturity date in the event of a 2024 Partial Prepayment. The term loan facility is 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, (iv) a tranche C-1 term loan of up to $50.0 million, and (v) a tranche C-2 term loan of up to $50.0 million (collectively, the Term Loans). The tranche A term loan was funded in December 2021. With the approval of ZORYVE cream 0.3% on July 29, 2022, the tranche B term loans were funded in August 2022. As of September 30, 2026 and December 31, 2025, the aggregate principal amount outstanding under the Loan Agreement was $100.0 million.

In October 2024, we made a 2024 Partial Prepayment of $100.0 million, which reduced the aggregate principal amount outstanding under the Loan Agreement to $100.0 million. In connection with the 2024 Partial Prepayment, we paid a prepayment penalty of $1.0 million during the second quarter of 2026 and are obligated to pay a final fee of $6.95 million, representing the final fee applicable to the amount of the 2024 Partial Prepayment, on January 4, 2027. As a result of such 2024 Partial Prepayment, subject to us generating a minimum net product revenue for the trailing six-month period ending as of the month prior to the borrowing date equal to 80% of our projected net product revenue as set forth in our annual plan for the respective period, we obtained the ability to draw down the tranche C-1 and tranche C-2 term loans. The tranche C-1 term loan availability expired on March 31, 2026, and the tranche C-2 term loan availability expired on June 30, 2026. Neither tranche was drawn prior to its expiration. In addition, as a result of the 2024 Partial Prepayment, (i) the maturity date of the Loan Agreement is August 1, 2029 (such date, the Maturity Date), (ii) the applicable per annum interest rate is equal to 5.95% plus the greater of (a) 2.50% per annum and (b) the one-month Secured Overnight Financing Rate (SOFR), (iii) we are no longer subject to certain cost and purchase price restrictions regarding acquisitions, and (iv) we may prepay principal amounts outstanding under the Term Loans in minimum increments of $25.0 million, subject to a prepayment premium of (a) 2.0% for any prepayment made after August 9, 2025 and prior to August 9, 2026 or (b) 1.0% for any prepayment made after August 9, 2026 and prior to the Maturity Date.

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. Prior to the 2024 Partial Prepayment, the applicable rate was a per annum interest rate equal to 7.45% plus the greater of (a) 0.10% and (b) the one-month SOFR. As a result of such 2024 Partial Prepayment, the applicable interest rate is a per annum interest rate equal to 5.95% plus the greater of (a) 2.50% and (b) the one-month SOFR. On September 30, 2026, the rate was 9.69%. The benchmark SOFR is subject to change in the event of certain events with respect to the benchmark rate. Interest payments are payable monthly following the funding of any Term

Loan. Any principal amounts outstanding under the Term Loans, if not repaid or prepaid, are due and payable on August 1, 2029.

As security for the obligations under the Loan Agreement, we granted SLR, for the benefit of the lenders, a continuing security interest in substantially all of our assets, including our intellectual property, subject to certain exceptions.

If the Term Loans are accelerated due to, among others, the occurrence of a bankruptcy or insolvency event, we are required to make certain 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 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 our ability to dispose of our business or property, to change our 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 our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock or to redeem capital stock. We also agreed to a financial covenant whereby we must generate a minimum net product revenue equal to 75% of our projected net product revenue as set forth in our annual plan for the respective period, tested on a trailing six-month basis as of the end of each month. Each annual plan shall be approved by our board of directors and SLR, in its capacity as collateral agent, in its reasonable discretion. Any failure by us to deliver such annual plan on or before December 15 of the prior year shall be an immediate event of default.

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 us and the collateral securing the Term Loans. Upon the occurrence and for the duration of an event of default, an additional default interest rate (the Default Rate) equal to 4.0% per annum will apply to all obligations owed under the Loan Agreement.

In connection with the Loan Agreement, we are obligated to pay a final fee equal to 6.95% of the aggregate original principal amount of the Term Loans outstanding as of the date of the second amendment, (A) with respect to any 2024 Partial Prepayment, upon the earliest to occur of (a) January 4, 2027, (b) the acceleration of all outstanding Term Loans, and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans, and (B) with respect to the Term Loans outstanding as of the date of the second amendment (other than the 2024 Partial Prepayment), upon the earliest to occur of (a) the Maturity Date, (b) the acceleration of all outstanding Term Loans and (c) the prepayment, or refinancing, substitution or replacement of all outstanding Term Loans. We were also obligated to pay (i) a $1.0 million facility fee with respect to tranche C term loans, which was paid in the second quarter of 2026, (ii) a $1.0 million extension fee with respect to tranche C term loans that remained unfunded after December 31, 2025, which was accrued for and paid out during the period commencing January 1, 2026, and ending on June 30, 2026, and (iii) a certain amount of lenders’ expenses incurred in connection with the execution of the Loan Agreement. Additionally, in connection with the original Prior Loan Agreement, we had previously entered into an Exit Fee Agreement, whereby we 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 Loans, the exit fee will expire 10 years from the date of the Loan Agreement.

We were in compliance with all covenants under the Loan Agreement as of September 30, 2026.

Cash Flows

The following table sets forth our cash flows for the periods indicated:

Net Cash Provided by (Used in) Operating Activities

During the nine months ended September 30, 2026, net cash provided by operating activities primarily consisted of net income of $12.5 million and net changes in operating assets and liabilities of $17.9 million. Non-cash items primarily related to stock-based compensation expense of $35.8 million. The overall decrease in cash from changes in our net operating assets and liabilities was the result of increasing accounts receivable associated with growing sales, increasing inventory due to timing of raw material purchases and increased production to support continued sales growth, and higher prepaid assets primarily related to the timing of payments. These were partially offset by an increase in accrued sales deductions resulting from growing sales volumes, as well as the $9.2 million Ducentis milestone liability recorded in 2026 and payable as of September 30, 2026. Other fluctuations in our operating assets and liabilities were due to the timing of payments made to third parties.

During the nine months ended September 30, 2025, net cash used in operating activities was $31.8 million, which consisted of a net loss of $33.5 million and a change in net operating assets and liabilities of $32.5 million, partially offset by net non-cash charges of $34.2 million. The net non-cash charges were primarily related to stock-based compensation expense of $30.3 million and amortization of intangible assets of $4.1 million.

Net Cash Provided by (Used in) Investing Activities

During the nine months ended September 30, 2026, net cash used in investing activities was $48.6 million, which consisted primarily of purchases of marketable securities of $199.1 million, partially offset by proceeds from the maturities of marketable securities of $150.7 million.

During the nine months ended September 30, 2025, net cash provided by investing activities was $3.9 million, which was comprised primarily of proceeds from the maturities of marketable securities of $172.4 million, partially offset by purchases of marketable securities of $157.8 million and a milestone payment made to AstraZeneca of $10.0 million.

Net Cash Provided by (Used in) Financing Activities

During the nine months ended September 30, 2026, net cash provided by financing activities was $5.5 million, which was comprised primarily of $4.9 million of proceeds from the issuance of our common stock upon exercise of employee stock options and $1.6 million of proceeds from purchase of shares pursuant to our employee stock purchase plan. These were partially offset by a $1.0 million payment of the prepayment penalty associated with our tranche A term loan.

During the nine months ended September 30, 2025, net cash provided by financing activities was $3.3 million, which was comprised primarily of proceeds from the issuance of our common stock upon exercise of employee stock options and purchase of shares pursuant to our employee stock purchase plan.

Contractual Obligations and Contingent Liabilities

Other than the change related to Ducentis described in Note 6 to the condensed consolidated financial statements in Item 1, there have been no material changes to our contractual obligations and commitments outside the ordinary course of business as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025.