Here's Why This Biotherapeutics Company's Stock Surged Higher by 30% Today

Shares in Arcutis Biotherapeutics (NASDAQ: ARQT) soared by almost 30% in trading to 10:30 a.m. ET today. The move comes after an excellent set of third-quarter earnings and an investor day presentation replete with positive near- and medium-term guidance that exceeded analyst expectations.

Arcutis Biotherapeutics' growth plans

Management aims to turn Arcutis into a leading player in medical dermatology through its Zoryve (roflimilast) portfolio of topical treatments. Zoryve is a selective phosphodiesterase-4 (PDE4) inhibitor (a drug that inhibits the PDE4 enzyme, resulting in anti-inflammatory effects) that the Food and Drug Administration (FDA) has already approved in plaque psoriasis and atopic dermatitis, in cream form, and seborrheic dermatitis, in foam form.

It has also been submitted to the FDA for approval for plaque psoriasis in 2- to 5-year-olds and for phase 2 (foam) trials in vitiligo and hidradenitis suppurativa.

As ever with any pharmaceutical company in clinical trials, there's an element of risk involved, but the statistical evidence suggests pre-approved drugs have a much higher chance of success in new indications than novel compounds.

Partly based on this confidence, management sees a bright future for the company with Zoryve sales potentially reaching $2.6 billion to $3.5 billion over time. The near-term outlook is positive, too, with management forecasting sales of $455 million to $470 million in 2026. That figure excited the market today, because it's significantly higher than the $438 million Wall Street analysts had penciled in.

Image source: Getty Images.

What's next for Arcutis?

Noting that the high point of management's target for peak Zoryve sales is higher than the market cap of less than $3 billion at the time of writing, plus the impressive 30%-plus sales growth projection over the next couple of years, and the relatively less risky clinical trials in progress, Arcutis appears to have a bright future ahead of it.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.