Arcutis and Padagis Agree to Stay Patent Lawsuit

Rhea-AI Summary

Arcutis Biotherapeutics (Nasdaq: ARQT) and Padagis have agreed to stay their ongoing patent litigation regarding ZORYVE® cream 0.3%. The joint stipulation, filed in the U.S. District Court for the District of Delaware on April 2, 2025, will vacate all calendared dates and trial.

Under the agreement, Padagis must report any FDA correspondence regarding their ANDA for a potential generic alternative to ZORYVE. The parties agreed to extend the 30-month Hatch-Waxman stay of regulatory approval by one day for every day the litigation is stayed from March 24, 2025.

ZORYVE, protected by patents until at least 2037, is indicated for topical treatment of plaque psoriasis in patients 6 years and older. The company maintains confidence in their patent portfolio and will continue defending their intellectual property rights if the stay is lifted.

Positive

• Patent protection for ZORYVE secured until at least 2037
• Extended Hatch-Waxman stay prevents immediate generic competition
• Company maintains strong market position for ZORYVE in three dermatological conditions

Negative

• Ongoing patent challenge from Padagis threatens ZORYVE market exclusivity
• Potential future generic competition for key product ZORYVE

Insights

Patent Attorney

This patent litigation stay represents a strategic advantage for Arcutis in its ongoing intellectual property dispute with Padagis. The jointly stipulated agreement contains two crucial elements that strengthen Arcutis' position: 1) The extension of the 30-month Hatch-Waxman stay period, which effectively delays FDA approval of Padagis' generic alternative by one day for every day the litigation remains stayed; and 2) The requirement that Padagis disclose FDA correspondence regarding their ANDA submission.

From a legal standpoint, this preserves Arcutis' full statutory protection period while maintaining all their patent enforcement rights should litigation resume. With patent protection for ZORYVE extending until at least 2037, this procedural maneuver buys Arcutis valuable time without sacrificing any legal position. The reporting requirement also creates an unusual transparency advantage where Arcutis gains visibility into their competitor's regulatory progress.

While the reasons behind Padagis' request for a stay remain undisclosed, such moves typically indicate either strategic repositioning or potential settlement discussions occurring behind the scenes. Either scenario likely benefits the patent holder. This development doesn't resolve the underlying patent dispute, but it certainly extends Arcutis' market exclusivity for ZORYVE in the near term, which translates to tangible commercial value.

Pharmaceutical Analyst

This litigation stay carries significant commercial implications for Arcutis' flagship product ZORYVE. The extension of the Hatch-Waxman 30-month stay directly correlates to extended market exclusivity, allowing Arcutis to continue building prescription momentum without imminent generic competition. ZORYVE represents a key growth driver as it's approved for three major inflammatory dermatoses - plaque psoriasis, seborrheic dermatitis, and atopic dermatitis.

The CEO's statement about "strong adoption" suggests positive commercial traction in the marketplace. This procedural victory helps protect that momentum while Arcutis continues its commercialization efforts. The topical dermatology market highly values patented innovations that offer alternatives to steroids, which frequently face limitations in long-term use.

From an investor perspective, this development reduces near-term uncertainty regarding generic competition for ZORYVE through at least the duration of the stay. It allows management to focus on commercial execution rather than being distracted by active litigation. While the fundamental patent challenge remains unresolved, this agreement effectively maintains status quo market conditions for Arcutis' primary revenue generator for the foreseeable future.

The requirement for Padagis to report FDA correspondence also provides Arcutis with unusual competitive intelligence regarding the potential generic threat's regulatory progress, allowing for more informed commercial planning.

WESTLAKE VILLAGE, Calif., April 02, 2025 (GLOBE NEWSWIRE) -- Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT), a commercial-stage biopharmaceutical company focused on developing meaningful innovations in immuno-dermatology, is pleased to announce that Padagis Israel Pharmaceuticals Ltd., Padagis US LLC, and Padagis LLC (Padagis) have requested a stay to the ongoing patent litigation between Padagis and the Company, and the Company has agreed to enter a joint stipulation to stay the case, which was filed in the U.S. District Court for the District of Delaware on April 2, 2025. After the Court enters the joint stipulation, all calendared dates and trial for the patent litigation will be vacated.

As part of the joint stipulation agreement, Padagis is required to report to Arcutis any U.S. Food and Drug Administration (FDA) correspondence regarding their Abbreviated New Drug Application (ANDA) for their potential generic alternative to Arcutis’ patented product, ZORYVE® (roflumilast) cream 0.3% for plaque psoriasis. In addition, the parties agreed to extend the 30-month Hatch-Waxman stay of regulatory approval by one day for every day the litigation is stayed as of March 24, 2025, such that in the event the litigation resumes in the future, Arcutis will still benefit from the entirety of the stay afforded to it under the Hatch-Waxman Act.

“This joint stipulation is a positive development for Arcutis that fully preserves our ability to assert our intellectual property while also preserving the Hatch-Waxman stay. As we have previously communicated, we maintain confidence in the strength of our broad patent portfolio that protects the innovative aspects of ZORYVE and in our legal position against Padagis. If and when the stay is lifted, we will continue to vigorously defend our intellectual property rights as appropriate, and to fight against any attempts by Padagis to infringe our patents,” said Frank Watanabe, president and CEO, Arcutis. “Our focus is to continue to build upon the strong adoption of ZORYVE as a safe and effective therapy and alternative to steroids for three major inflammatory dermatoses and continue to deliver meaningful innovation to millions of individuals impacted by plaque psoriasis, seborrheic dermatitis and atopic dermatitis.”

Patent protection for ZORYVE cream 0.3% extends until at least 2037.  ZORYVE cream 0.3% is indicated for the topical treatment of plaque psoriasis, including intertriginous areas, in adult and pediatric patients 6 years of age and older.

About Arcutis
Arcutis Biotherapeutics, Inc. (Nasdaq: ARQT) is a commercial-stage medical dermatology company that champions meaningful innovation to address the urgent needs of individuals living with immune-mediated dermatological diseases and conditions. With a commitment to solving the most persistent patient challenges in dermatology, Arcutis has a growing portfolio including three FDA approved products that harness our unique dermatology development platform coupled with our dermatology expertise to build differentiated therapies against biologically validated targets. Arcutis’ dermatology development platform includes a robust pipeline with multiple clinical programs for a range of inflammatory dermatological conditions including scalp and body psoriasis, atopic dermatitis, and alopecia areata. For more information, visit www.arcutis.com or follow Arcutis on LinkedIn, Facebook, Instagram and X.

INDICATIONS
ZORYVE cream, 0.3%, is indicated for topical treatment of plaque psoriasis, including intertriginous areas, in adult and pediatric patients 6 years of age and older.

ZORYVE cream, 0.15%, is indicated for topical treatment of mild to moderate atopic dermatitis in adult and pediatric patients 6 years of age and older.

ZORYVE foam, 0.3%, is indicated for the treatment of seborrheic dermatitis in adult and pediatric patients 9 years of age and older.

IMPORTANT SAFETY INFORMATION
ZORYVE is contraindicated in patients with moderate to severe liver impairment (Child-Pugh B or C).

Flammability: The propellants in ZORYVE foam are flammable. Avoid fire, flame, and smoking during and immediately following application.

The most common adverse reactions (≥1%) for ZORYVE cream 0.3% for plaque psoriasis include diarrhea (3.1%), headache (2.4%), insomnia (1.4%), nausea (1.2%), application site pain (1.0%), upper respiratory tract infection (1.0%), and urinary tract infection (1.0%).

The most common adverse reactions (≥1%) for ZORYVE cream 0.15% for atopic dermatitis include headache (2.9%), nausea (1.9%), application site pain (1.5%), diarrhea (1.5%), and vomiting (1.5%).

The most common adverse reactions (≥1%) for ZORYVE foam 0.3% for seborrheic dermatitis include nasopharyngitis (1.5%), nausea (1.3%), and headache (1.1%).

Please see full Prescribing Information for ZORYVE foam and full Prescribing Information for ZORYVE cream.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For example, statements contained in this press release regarding matters that are not historical facts are forward-looking statements. These statements are based on The Company’s current beliefs and expectations. Such forward-looking statements include, but are not limited to, statements regarding Arcutis’ patent portfolio, regulatory processes and litigation and related proceedings, as well as adoption of ZORYVE. These statements are subject to substantial known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. Risks and uncertainties that may cause our actual results to differ include risks inherent in our business, reimbursement and access to our products, the impact of competition and other important factors discussed in the “Risk Factors” section of our Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) on February 25, 2025, as well as any subsequent filings with the SEC. Any forward-looking statements that the company makes in this press release are made pursuant to the Private Securities Litigation Reform Act of 1995, as amended, and speak only as of the date of this press release. Except as required by law, we undertake no obligation to revise or update information herein to reflect events or circumstances in the future, even if new information becomes available.

Contacts:
Media
Amanda Sheldon, Head of Corporate Communications
media@arcutis.com

Investors
Latha Vairavan, Vice President, Finance and Corporate Controller
ir@arcutis.com

FAQ

What is the impact of the patent litigation stay between Arcutis (ARQT) and Padagis?

The stay preserves Arcutis' intellectual property rights and extends the Hatch-Waxman regulatory approval stay, preventing immediate generic competition for ZORYVE.

When does Arcutis (ARQT) ZORYVE patent protection expire?

ZORYVE's patent protection extends until at least 2037.

What are the terms of the April 2025 stipulation agreement between ARQT and Padagis?

Padagis must report FDA correspondence about their ANDA, and the 30-month Hatch-Waxman stay extends by one day for each day of litigation stay from March 24, 2025.

What is the approved indication for ARQT's ZORYVE cream 0.3%?

ZORYVE is approved for topical treatment of plaque psoriasis, including intertriginous areas, in patients 6 years and older.