May 16, 2024

Member Spotlight: Arcutis Biotherapeutics

Arcutis Biotherapeutics is Working to Change the Treatment Paradigm in Dermatology with Innovative and Non-Steroidal Treatments for Chronic Skin Conditions

Arcutis Biotherapeutics may not be a household name yet, but the LA-based dermatology company has been making big breakthroughs in treating chronic skin conditions since its founding in 2016. Its topical roflumilast treatments, Zoryve foam, have been FDA-approved for seborrheic dermatitis (a red, itchy and scaly rash on oily areas of the body) and Zoryve cream for plaque psoriasis (thick, dry and itchy areas that are often covered in white scales) and both are available by prescription. The foam version of Zoryve, which was approved last year for seborrheic dermatitis, was the first new topical drug with a new mechanism of action to come to market for the condition in over 20 years.

At the helm of the company as president and CEO is Frank Watanabe, who wants everyone to be comfortable in their own skin. Franks says the pharmaceutical industry has overlooked treating chronic skin conditions and many current therapies are in serious need of innovation. With a 30-year career in life science and having served in the U.S. Navy Reserves for 25 years as a commissioned officer, Frank is leading Arcutis in its mission to be one of the preeminent innovation-based dermatology companies.

In celebration of Asian American and Pacific Islander Heritage Month, we spoke with Frank about his career, what life science companies need to do to diversify their leadership at both the C-suite and board levels and learned about exciting new products in the company’s pipeline.

How did you get your start in the life science industry?

It came through a roundabout way—my ex-wife got into law school in Indiana, and I needed to find a job to support us. I applied with every big company in Indianapolis, and Eli Lilly happened to be the company that hired me. That was literally how I got into pharma! I never imagined working in healthcare, but very quickly I realized that pharma was what I wanted to do for the rest of my career. I enjoyed it immensely.

What was most impactful for me was when I was in the military, and later working in government, is you got up every day and went into work knowing that you were making the world a better place. You were defending your country, doing something important. I didn’t think that I was going to have that same kind of experience when I went into private industry, but realized in pharmaceuticals that you do. You have that gratification of knowing that you are making a difference.

I was working in the CNS field and psychiatry, specifically, where doctors and patients really depend on the drugs that the industry generates. That was a very gratifying experience, and so I’ve just stayed in the field ever since. I was at Eli Lilly for eight years, and I even moved to the Czech Republic with them—that’s how I learned to speak Czech.

Arcutis specializes in dermatology and developing non-steroidal therapies for chronic skin conditions, as topical steroids have limitations on their long-term use. Why the focus on dermatology and addressing these unmet needs in healthcare?

There are large swaths of dermatology that had been neglected by the pharmaceutical industry. This happens for two reasons. One is because there’s been massive consolidation in dermatology over the last 20 years or so. Along with that consolidation, a lot of the R&D innovation had dried up. The second is that skin disorders are not considered to be as serious as other diseases. The two other individuals who started Arcutis , David Osborne, Ph.D. and Howard Welgus, M.D. and I had all worked in dermatology before. We knew about the lack of innovation and this perception. You hear things like, ‘well, it’s not going to kill you’ or ‘it’s just your skin.’

However, I make the point frequently that if you have a chronic skin condition, many times people will treat you differently because the disease is visible. The psychosocial impact on patients is very profound. About a year ago, we had a patient who came in and spoke to the company. He had plaque psoriasis in a sensitive area of his body, and he said it effectively had shut down his personal life and relationships. No one should have to live like that.

Arcutis’ founders said treating skin conditions is an opportunity and unmet need. They hired our first employee, David Osborne, who I think is the greatest topical formulator in the industry—Zoryve foam was his 36th FDA-approved product that he developed.

What differentiates Arcutis in this field?

Lots of companies say ‘the patient is first,’ but do they really understand what their patients are dealing with? One of the things that’s unusual about Arcutis is we have seven dermatology clinicians on staff and a number of them still practice medicine. They bring a depth of understanding about dermatology and what patients are dealing with to every conversation we have at the company. And not just clinically—they bring perspectives on working with insurance and pharmacies—all the little details that go along with treating a patient that are important for drug companies to be aware of.

It’s our dream, mission and vision to be one of the preeminent innovation-based dermatology companies in the industry. There aren’t many pure dermatology companies anymore. Most of the companies in dermatology are large companies that happen to have a dermatology product, rather than being companies who are really dedicated to the treatment of skin disease.

It sounds like an exciting time for the company. Aside from the recent FDA approval, this spring Arcutis closed its public offering of common stock, generating total gross proceeds of $172.5 million. What is some other news that you can share?

We have Zoryve cream approved for plaque psoriasis. There was one other product approved right about the same time as us [in 2022], and together these two products were the first steroid-free topical treatments approved in 26 years to treat psoriasis. We just had Zoryve foam approved for seborrheic dermatitis, and it had been over 20 years since a new drug with a new mechanism of action had come out for that chronic skin disease. There’s still an opportunity to change the treatment paradigm for patients with atopic dermatitis, and we have a submission under FDA review with an approval date this summer.

We will be filing for approval of our foam treatment for patients with scalp and body psoriasis in the second half of this year. And then we are investigating a novel topical to treat alopecia areata—hair loss driven by the immune system. That’s in clinical trials right now and we’re very excited about that drug. The only things approved right now by the FDA for this condition are oral drugs and we would be potentially the first topical drug to treat it.

What’s your biggest challenge right now?

‘Clinical inertia’ is probably the best way to put it. Dermatologists have prescribed steroids throughout their entire careers—they know how to use them, they know they work, they’re cheap and relatively easy to get. It’s just taking time to change that paradigm and move dermatologists toward using these newer nonsteroidals, that are safe and effective for long-term use.

Dermatologists are also busy clinicians—seeing 50 or 60 patients a day is not unusual—that’s why it’s so hard to get in to see them. They may like Zoryve and believe in it, but when they get busy, they just forget and do what they’ve always done, which is prescribe topical steroids. So, it’s as much reminding as it is educating.

This has happened in multiple therapeutic areas across our industry, and it just takes time for treatment patterns to change. I’m sure they will because it’s a better option for patients.

We’re actually a fairly diverse industry at the journeyman level … But as you rise up in an organization in our industry, that diversity drops off precipitously. We have to take intelligent risks with people. If you insist on only hiring someone who has been a CEO or on a board before, that’s a recipe for the perpetuation of what you’ve had in the past. … For us to increase diversity at the top levels, we have to stretch people and be willing to take those kinds of chances, particularly with underrepresented groups.

Arcutis is based in Los Angeles, which is a growing biotech hub. How does it feel to be a part of the booming industry there?

I moved to LA in 2007, and there’s been a real transformation since. Back then, mainly Amgen and Baxter were here and they had one or two sites. Years ago, when we were talking about where we were going to put the headquarters, my board thought I was crazy to put the office in LA! . But no one argues with me about it anymore. Now you look around and there’s biotech clusters in Westlake Village, Pasadena and Santa Monica. There’s a burgeoning biotech scene, which I think is very exciting.

It’s reflective of the good pool of talent in LA. We have a series of world-class universities, and a lot of the innovation that companies are working on came out UCLA or USC, and that creates the right ecosystem for these clusters to start springing up. We’re not San Diego or San Francisco or Boston yet, but we’re punching above our weight at this point in game.

May is Asian American and Pacific Islander Heritage Month. What does this month mean to you and why is it so important that we celebrate it?

The Asian American community has been an important contributor to this country. It’s important for us to remember our history and that the Asian community, particularly the Japanese community, has suffered in the not-too-distant past in our culture. A lot of Americans don’t even know about the Exclusion Order or the internment camps. We don’t ever want to repeat what happened to Japanese Americans during World War II with any group—it’s important to remind people of that history so that we don’t make those same mistakes.

I think the ongoing debate right now about immigration in our country is a perfect testament as to why that part of our culture and our history are important. One of the things that makes America great is the mixture of all the different cultures that we have. It’s what makes us strong and an interesting place to live. Aside from AAPI Heritage Month, every opportunity that we have to embrace and celebrate the diversity of this country, I think it’s important to do so.

Also, I don’t know that Americans are aware of the contributions that Asian Americans have made to this country, whether in medicine, the tech industry, or even the automotive industry. That to me is another reason why I think it’s important to have this particular month to celebrate.

What is one thing that you would like to see more life science companies implement to foster an inclusive industry?

We’re actually a fairly diverse industry at the journeyman level, when you look at the scientists and marketers, and so forth. But as you rise up in an organization in our industry, that diversity drops off precipitously. By the time you get to the CEO, there are not that many non-whites, women, or openly LGBTQ people—it tends to get homogenous at the top and that’s true at the board level, too.

We have to take intelligent risks with people. If you insist on only hiring someone who has been a CEO or on a board before, that’s a recipe for the perpetuation of what you’ve had in the past. Everyone who is a CEO today was a CEO for the first time once. For us to increase diversity at the top levels, we have to stretch people and be willing to take those kinds of chances, particularly with underrepresented groups.

What advice do you have for a young person who wants to start their career in the life science industry?

I would say two things. One is that it can be a hard industry to get into, but don’t give up! Second, it’s important to start with the end in mind. Don’t think about what your next job is going to be. Think about where you want to end up in your career, and then think about how you get there and about each job you take as a steppingstone on the path toward that ultimate destination, rather than just focusing on what comes next. That was probably the best career advice I’ve ever gotten from my mentor early on in my career and it is advice that I’ve continued to give.