This Biotech Stock Could Cure Your Portfolio's Pain
Key Points
Arcutis already has its key drug approved for various diseases and concentrations.
Sales are expanding rapidly, and Arcutis is positioned for growth.
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Investors seeking a biotech stock with significant upside potential to add to their portfolio may want to consider Arcutis Biotherapeutics (NASDAQ: ARQT). The stock price is already up 112% in 2025, as I write, but there could be more to come in the next few years. Here's why.
Arcutis has a bright future
The company's primary product is Zoryve, a non-steroidal topical medication available in cream and foam formulations, which treats a variety of inflammatory skin diseases, including plaque psoriasis, atopic dermatitis (also known as eczema), and seborrheic dermatitis. It contains the active ingredient roflumilast, a PDE4 inhibitor that reduces the skin's inflammatory response.
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Arcutis has already received approval across a range of applications and indications, with the next approval likely to be for Zoryve cream in children aged two to five years old. Arcutis also has Zoryve in phase 2 trials for three other indications/concentrations.
Sales are growing strongly this year, with third-quarter net product revenue of $99.2 million, up 122% compared to the same period last year and 22% compared to the second quarter of 2025. Wall Street expects $358 million in sales for 2025 and then $467 million in 2026.
Image source: Getty Images.
Peak sales
CEO Frank Watanabe believes peak roflumilast/Zoryve sales could be $2.6 billion to $3.5 billion, and considering the current market cap is $3.6 billion. Wall Street analysts believe Arcutis could have net income profit margins of 30%. The stock appears to be a great value if Watanabe is right, and Arcutis can come anywhere near his peak sales projection. Meanwhile, the company has another drug, ARQ-23, which is aimed at reducing inflammatory immune responses and is in early-stage development.
With a relatively low-risk approval process on track and good upside potential from maintaining its sales momentum, Arcutis is an attractive stock for growth-oriented investors.
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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.
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