Tarsus Pharmaceuticals Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 1, 2025

There are 11 speakers on the call.

Operator

day, ladies and gentlemen, and thank you for standing by. Welcome to the Tarsus First Quarter twenty twenty five Earnings Conference Call. At this time, participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, this conference call is being recorded.

Operator

At this time, I would like to turn the conference over to Mr. David Nacasone. Sir, please begin.

Speaker 1

Thank you. Before we begin,

Speaker 2

I encourage everyone to go to the Investors section of the Tarsus website to view the earnings release and related materials we will be discussing today. Joining me on the call this afternoon are Bobby Azamian, our Chief Executive Officer and Chairman Aziz Motawala, our Chief Commercial Officer Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer and joining us for the question and answer session, Faishan Irvana, our Chief Operating Officer. I'd like to draw your attention to slide three, which contains our forward looking statements. During this call, we will be making forward looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially.

Speaker 2

I encourage you to consult the risk factors contained in our SEC filings for additional detail. With that, I'll turn the call over to Bobby.

Speaker 1

Thank you, Dave. Good afternoon, everyone, and thank you for joining us. 2025 is off to a tremendous start in terms of both patient impact and the exceptional sales growth of Xtendi. I'm pleased to share that in the first quarter, we generated more than $78,000,000 in Xtendi sales, a year over year increase of 217%, driven by approximately 72,000 bottles that were dispensed to patients. The results we have delivered to date demonstrate the impressive executional ability of our team to establish an entirely new market and foster its growth.

Speaker 1

They also highlight the difference and positive impact we can have on the millions of patients we aim to serve on our way to becoming an eye care leader. Aziz will provide more specifics on our commercial achievements this quarter, future plans for our innovative DTC campaign, and the team's ongoing efforts to build even more momentum. Having just come back from visiting doctors in Cincinnati, I wanted to share my personal perspective on how different it is to be in the field today versus a year ago or even a quarter ago. MDs and ODs are looking for more DB patients and beginning to prescribe Xtendi across all DB patient segments of MGD, dry eye, cataracts and contact lenses. They are now fully empowered by the high quality access we secured across all payer channels and our high touch patient services that ensure patients can receive Xtendi at a reasonable cost.

Speaker 1

And patients are beginning to ask about DB after seeing our unique and action oriented DPC campaign. I also heard from several of the ECPs I visit that extend the is one of the best advances they've seen in decades and has become their new standard of care. It is clear our growth drivers are having a significant impact as our target physicians are rapidly moving from monthly to weekly to daily prescribing. And we strongly believe we are just beginning to scratch the surface on the maximum prescribing potential for all of our writers. Now, while our immediate focus remains on The US launch of Xembi, we are also continuing to explore the global potential of Xembi and pursuing our next category creating opportunity, ocular rosacea.

Speaker 1

We recently presented meaningful new data at the American Society of cataract and refractive surgery or a, showed that the high prevalence and significant impact of them in Japan is on par with The US. That is, there are millions of people in Japan suffering from deminex blepharitis and in need of extend the. We are confident about the potential opportunity here and look forward to meeting with regulatory authorities in the second half of this year to determine our best path forward in this region. We are also making great progress in Europe. As a reminder, to the stellar clinical data and product profile of extend the European medicines agency has stated we do not need to conduct a phase three study, and we remain on track for potential European regulatory approval in 2027.

Speaker 1

Turning to ocular rosacea, the more we learn about this pervasive and damaging eye disease, the more excited we are about its potential to be the next transformative category and I care. We are consistently hearing from that they are seeing as much in their as DV. And that it may be even more impactful to their patients in terms of how they look feel and see. Like, ocular rosacea is a large and underserved market that affects approximately fifteen to eighteen million Americans, with the majority of cases caused by an infestation of Demodex mites. It can also be quickly and simply diagnosed in any standard eye exam by looking for inflammation and redness.

Speaker 1

And these are just a couple of the many parallels to demonic blepharitis that give us great confidence in our ability to deliver another impactful therapeutic that targets the root cause of disease. The potential medicine we are advancing is TPO4, a convenient sterile ophthalmic gel formulation of our best in class molecule, Lodilaner. It is specifically designed to be used around the eye, and the ECPs we have spoken with are excited about this approach. We are accelerating this program as quickly as possible and remain on track to initiate a phase two trial later this year. Finally, I'd like to highlight our recent equity financing, which secured approximately $135,000,000 no small feat in the current market environment.

Speaker 1

The significant support that our existing and new shareholders demonstrated through their participation in this upsized equity offering speaks to the confidence they have in the potential value of Xembi and our pipeline. These funds further strengthen our financial position and will enable us to continue to drive the growth of extend the potentially create another new category in ocular rosacea and continue to advance our pipeline. There is clearly a lot to be excited about. We have a proven category creating blueprint for success. We are advancing a pipeline of category creating medicines that could potentially be the standard of care.

Speaker 1

And we believe that we are well positioned to achieve substantial and sustained revenue growth for years to come. With that, I will turn

Speaker 3

the call over to Aziz. Thanks, Bobby. From the beginning, we have said category creation provides great opportunity. It also requires a tailored, custom built strategy that delivers consistent and increasing growth through a surround sound approach of education, ease of access, and flawless execution, all of which we are delivering. Our strong Q1 results exceeded our expectations even in the face of the typical headwinds like the annual resetting of deductibles and the impact of holidays and medical meetings.

Speaker 3

In the first quarter, approximately 72,000 bottles of Xtendi were dispensed to patients, and we generated more than $78,000,000 in net sales, a quarter over quarter growth of 18%. These results were principally driven by our recently expanded sales force, which is just beginning to demonstrate their ability to reach our target universe of prescribers more frequently and more effectively. Their efforts to drive awareness and change practice patterns have led to a profound shift in monthly to weekly prescribing. At the end of the first quarter, we saw an increase of approximately 110% in the number of ECPs, which is now in the thousands, writing more than one prescription per week compared to the end of Q3 of twenty twenty four. And we saw very similar increases in daily prescribing as well.

Speaker 3

This increase in routine prescribing clearly underscores the value of this first in class therapeutic and the importance of an optimized sales force. What's even more encouraging is knowing that while we made remarkable progress again this quarter, we still have millions more to serve. Our top prescribers say they haven't even come close to reaching their limits, and there are thousands more of our target ECPs who have the capacity to prescribe Exenvi every week and every day. Our success this quarter was also driven by broad commercial and Medicare coverage and the growing impact of our direct to consumer advertising campaign. We began the year with more than 90% of commercial and Medicare lives covered.

Speaker 3

This remarkable access has all but eliminated the most significant hurdle to physician adoption, and we are now seeing both an increase in ECP prescribing and patient access, particularly among Medicare patients. We are also well on our way to making Xembia a household name, thanks to the impact of our innovative DTC campaigns, coupled with our surround sound approach to physician and patient education. In the first quarter, we expanded our effort from streaming platforms into network television, which increased the average weekly website visits by 140% in March 2025, compared to December 2024. We're also seeing thousands of patients taking the DB quiz every week. Given these strong results, we have a lot of optimism and confidence as we look to expand this effort even further through the end of the year.

Speaker 3

As Bobby mentioned, we just came back from ASCRS and heard from several doctors that patients are starting to ask for Xtendi by name. And while this is really exciting, keep in mind that every patient journey is different. And for the vast majority of patients, they typically need to see the ad multiple times, eventually make an appointment, and then of course fill the prescription. As we look at the second quarter and step into the next phase of the launch, we are confident we'll begin to see even more benefits from the growth drivers we implemented last year. Namely, first, the sales force.

Speaker 3

With essentially two quarters under their belt, they are just beginning to hit their stride. Second, the benefits of broad access. With more than 90% of all lives covered, we have eliminated a major roadblock to access and expect to see an ongoing increase in patient volumes. Third, our action oriented DTC campaign. Frequent airing on streaming and network TV supported by our digital and social efforts is meaningfully increasing website traffic and patient engagement.

Speaker 3

And finally, our ongoing evidence generation, as illustrated by the new data highlighting the global prevalence and real world patient burden of DD, and the recently presented MGD data in DD patients, which is expected to further drive utilization across all patient segments. With these in place, we have the confidence that we will continue delivering consistent and increasing growth in one of the fastest growing categories and firmly establish our position as the next leader in eye care. I'll now turn it over to Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer, to discuss our financial results. Jeff? Thanks, Aziz, and good afternoon, everybody.

Speaker 4

Tarsus' first quarter performance reflected both our executional strength and our team's unwavering dedication and commitment to patients. MEXTEMV net product sales were $78,300,000 driven by approximately 72,000 bottles dispensed to patients, and a gross to net discount of approximately 47%. As a reminder, we recognize revenue when XDEMV is shipped from our warehouse to the distributors, not on bottles dispensed to patients. Additionally, we ended the quarter with approximately two and a half weeks of inventory in the channel, which is in line with previous quarters. The gross to net discount of approximately 47% reflects the excellent coverage we started the year with, as well as an adjustment to our estimate for the Medicare accrual for the fourth quarter of twenty twenty four.

Speaker 4

This adjustment made in the first quarter resulted in a reduction of the discount of approximately 1% or approximately $1,500,000 Absent this adjustment, our gross to net discount for the first quarter would have been about 48%, which is in line with what we guided to on our previous earnings call. From a U. S. GAAP perspective, gross to net accruals in any given quarter are based upon estimates that are trued up upon subsequent invoices and data received. Continuing through the P and L, total operating expenses were approximately $104,600,000 increase of $14,000,000 compared to Q4 twenty twenty four was driven primarily by Xtendvi direct to consumer advertising and other related commercial and marketing costs.

Speaker 4

Gross margins remained relatively flat and were approximately 93%. While uncertain and evolving, we also believe that even if tariffs were to be implemented as currently rumored, they would have an insignificant impact to our gross margins or other expenses. For background, we have approximately two years of API in The United States, and several more years in Europe. Additionally, Xtendi is currently being filled and finished by a well known contract manufacturer in Europe, and we are well into the process of bringing on a second contract manufacturer located in The United States. Importantly, as I noted earlier, we have strong gross margins, and like any other small molecule therapeutic or eye drop, Xtendi manufacturing costs represent a very small part of our total cost of sales.

Speaker 4

Therefore, even if tariffs were imposed, we would not expect a material impact to the P and L, given our low cost of goods. Moving to the balance sheet, we ended the first quarter with $407,900,000 in cash and cash equivalents, which includes the $134,800,000 from our recent equity raise. Echoing Bobby's comments, this oversubscribed and upsize financing demonstrates continued shareholder appreciation for XTENB's strong potential, and importantly, their support for Tarsus. Turning to our performance aspirations, we continue to anticipate strong annual growth of Xtendvi, as our fully deployed sales force builds further momentum with ECPs, our DTC campaign encourages more and more patients to visit an ECP, and doctors moving from monthly to weekly to daily prescribing. Looking specifically at the second quarter and factoring in historical second quarter headwinds of ECP conferences, holidays and spring break, we remain confident Xtendi will continue on its strong trajectory and expect the following.

Speaker 4

Bottles dispensed to meaningfully increase compared to the first quarter and in the range of 85,000 to 90,000, and the gross to net discount is expected in the range of 45% to 47%. We also reiterate our expectation that we will likely see more modest revenue growth in the third quarter due to typical sector summer dynamics with stronger growth returning in the fourth quarter. Moving to operating expenses, given the early positive signals of our DTC advertising and surround sound campaigns, we've made the strategic decision to broaden our advertising efforts and increase our network spend even more. As a result, we now anticipate an increase in SG and A XtendV related marketing costs of approximately 5,000,000 to $10,000,000 compared to the first quarter of twenty twenty five, as we amp up our DTC activities and spend with the goal of boosting this launch even further, we expect full year 2025 DTC costs to be in the range of $70,000,000 to $80,000,000 with the potential to add even more in the second half of the year if we continue to see strong signals the campaign is resonating with ECPs and patients. Additionally, as we noted on last quarter's call, in the second half of this year, we expect R and D expenses to increase with the planned initiation of the Phase II study of TP-four in ocular rosacea.

Speaker 4

We continue to expect this study to cost between 7,000,000 and $10,000,000 and the cost should be split between 2025 and 2026. In closing, we enter the second quarter of twenty twenty five with a tremendous amount of momentum and strength, both operationally and fiscally, and we look forward to sharing more updates with you in the coming quarters. I will now turn the call back to Bobby for final remarks.

Speaker 1

Thank you, Jeff, and thank you all for making the time to join us today. As I said at the beginning, we have a lot to be excited about. We have a proven blueprint for success. Xtendvi is setting a new standard for product launches, And we have a strong financial position that enables us to continue driving the growth of extend the and continue advancing a robust pipeline of other potential category creating. Please open the line for questions.

Operator

Yes, sir. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the q and a roster. Our first question or comment comes from the line of Lachlan Hanbury Brown from William Blair. Your line is open.

Speaker 5

Hey, guys. Thanks for the questions, and congrats on the strong quarter. A couple of questions. I guess, first, you were talking about you have spoken in the past about meeting with the FDA to align on study design for both pipeline products. I just wanted to check, have you seen any disruptions?

Speaker 5

Have you been able to have those meetings or schedule them as you expected? And then second, on Xtembi, in this past quarter, with Medicare coming online, can you give a sense of how much of the volume of the prescribing is going to commercial versus Medicare patients at the moment?

Speaker 6

Thank you, Lachlan, for the question. I'll take the first part of the first question with the pipeline. We are, as you know, we are creating a new paradigm with our programs, especially with ocular rosacea, with our blueprint of developing the new disease, new endpoints, and we are well on track to starting the trial in the second half of the year. And we are proceeding with every sense of urgency as well as looking at the patient population and learning a lot from the physicians in the field about the disease and the patients as well.

Speaker 1

And I'll just reiterate, Lachlan, to your question, we have not had any delays in our meeting schedule. So, we have not seen the impact on our pipeline for your question.

Speaker 3

Great. And then for the second part of that question, when you think about our script volume in the first quarter, it's a relatively equal split between Medicare and commercial prescriptions. I think the one thing to keep in mind is the Medicare coverage, the bulk of

Speaker 7

that came

Speaker 3

in activated in the first quarter. So when you look at it versus say the fourth quarter, we definitely saw an increase in Medicare prescriptions. But as we look at the total volume of scripts, it's about equally split. What we expected to see. And the only other thing I'd add there is getting that coverage is a huge catalyst for us.

Speaker 3

And I think it's been a tremendous growth driver. If you look back, that's probably the one piece of feedback we received from physicians that that was one of the key barriers. And now that that's out of the way, I think we'd anticipate to see continued volume growth based on that great coverage.

Speaker 5

Thanks for the questions.

Operator

Thank you. Our next question or comment comes from the line of Andrea Newkirk from Goldman Sachs. Ms. Newkirk, your line is open.

Speaker 8

Thank you. Good afternoon. Thanks for taking the questions. Aziz, I was just wondering if you could discuss the pushes and pulls that you're seeing to repeat prescribing, more specifically around your comments around prescribers who are writing daily versus weekly versus monthly scripts.

Speaker 3

Absolutely. And that's been one of the great things to see as we continue to accelerate this launch at the beginning of the year, that progression of doctors writing the product more frequently. And when I look at what the key drivers are there, I think there's a couple that are in the near term that have really impacted particularly in the first quarter. First would be the expanded sales force. Everyone recalls that we expanded the sales force late last year.

Speaker 3

They're off to a great start. They've done a phenomenal job. And with that said, think having those repeat visits in front of those new customers for that expanded team is really starting to have that impact. And I think those repeat visits are resulting in further education, encouraging doctors to look across the different patient segments and expand their utilization. So that's going very well.

Speaker 3

The second one, as I mentioned earlier, is the coverage. That was probably the biggest barrier we heard to deepening adoption when the doctor couldn't differentiate who had coverage and who didn't. Now with over ninety percent of lives covered, doctors can be a little bit more open in terms of who they're thinking about treating. And if you think about a particular segment, say your cataract patient, that's a heavy Part D patient. And we're able to address that segment more effectively now.

Speaker 3

So that's a real tangible example where we're hearing qualitatively doctors are starting to utilize it's gonna be more and more. So I think the two near term drivers have been the sales force and the coverage. And then I think when we look at what's gonna continue that going forward, I think there's still a lot more room for the sales force to continue to make amplification. I think that the coverage is gonna be a key driver, but also we're seeing early indicators that DTC is having a positive effect. And also, as we mentioned earlier, we just came back from a major conference and doctors are also responding very nicely to the MGD data and other evidence that's out there.

Speaker 3

So real short way to think about this is near term, it's been the sales force and coverage that's gonna continue to ramp. And then on the back of that, we've got DTC and new data as well.

Speaker 1

Yeah, and Andrew, I'll just give you some color from my interactions with doctors. I mean, they can't stress how amazed they are by the effect and overall profile of the medicine. I think that really drives them to look more and more because they see how well it works and every patient they prescribe it to is what they tell us and that motivates them to look more. As Aziz mentioned, the evidence that we're gonna generate will help them look even more. So we see only opportunity ahead in terms of that progression that is used to track.

Speaker 8

Got it. And Bobby, maybe I can ask a follow-up there then. Just given the efficacy that the physicians are recognizing and observing here, To what extent are you then seeing retreatments happening? Has that started coming in in a more meaningful way than in previous quarters?

Speaker 1

Yeah, we're definitely hearing about it more and more. When I was in the field, I heard it from a lot of the offices that they're asking about when and how should I think about retreatment. Our sales force is able to talk them through the data that shows that by a year, about forty percent of patients recur in phase three follow-up we had. And they're starting to see that themselves. So I'll pass to Aziz to talk a little bit about how we see that going forward.

Speaker 1

But I do think that it's exactly as we suspected so far, and we do expect that to be a meaningful long term growth driver for us.

Speaker 3

Yeah, I can add a little bit more color. Think the first thing I always remind folks of is with any product, even chronic medications adherence is pretty low. So to be successful, it's all about driving new patients. And we've got 25,000,000 patients out there that we want to continue to drive diagnosis and treatment for those patients. That's really the core emphasis.

Speaker 3

To Bobby's point, we do contemplate retreatment as a tailwind for us. And when you look at the IQVIA data today, you're seeing a high single digit refill rate. And if you start to do a little bit of math and you impute patients that were treated say a year ago relative to the volumes today, you can assume that the actual retreatment rate is probably leading that or even higher than what you're seeing in the refill rate in IQVIA. So a very positive trend. And I think that trend is what gives us confidence in reaffirming our estimate of about 20% annualized retreatment rates that we talked about before.

Speaker 3

And then again, looks really good and it's trending in the right direction.

Speaker 8

Okay, thank you guys.

Operator

Thank you. Our next question or comment comes from the line of Pavan Patel from Bank of America. Your line is open.

Speaker 7

Hey, guys. This is Salin on for Jason Gerberry. First question is how is the feedback from the ORION Registry and the combined IRSA Ria, MGD data being received by eye care professionals? Are you seeing evidence that this new data is influencing prescribers' behavior or expanding use into specific patient segments such as such as dry eye? And then the second question is regarding the upcoming phase two trial for PPO4 and ocular rosacea.

Speaker 7

Can you share any details on the study design, primary endpoints and patient population? Thank you.

Speaker 3

Yeah, thanks for the question. I'll speak a little bit to the receptivity on the new data and so she could speak to the pipeline developments here. I'd say that coming fresh off a conference, it's really exciting to see how doctors respond to the increasing base of evidence around the disease state and the product. I think when you look at the Orion registry, the real key takeaway there is that the vast majority, over ninety percent of patients are symptomatic. And that's really prompting doctors to wanna look more, look at the lids more and help identify more patients.

Speaker 3

And then I think when you look at the IRSA Raya data, what we're hearing very clearly is that there's evidence now that shows that Xtendi has impact on a constellation of symptoms, as well as improving the oil secretions that are really important for eye health. And these two things combined really do two things. They help the doctor want to diagnose more, but then they start thinking about the types of patients. And they're not just thinking about their traditional DB patient, they're thinking about a dry eye patient. They're thinking about the impact of fluctuating vision, say on a cataract patient or a contact lens intolerant patient.

Speaker 3

And they're also thinking about how they can incorporate this in their daily routine. So the data is being received very well. It's still early, data dissemination takes time. They have to see it and hear it multiple times, but the initial response is really positive. And in particular with the doctors that have really increased their frequency of prescribing, they do look back and say, Hey, I'm having multiple repeat visits with a rep and I'm hearing more and more about this great data.

Speaker 3

And that's really prompting me to look. Sesh, you want to talk about the pipeline?

Speaker 6

Yes, thanks, Aditha. Great question, Pawan. In terms of the ocular rosacea, as Bobby alluded to earlier, ocular rosacea is a highly prevalent disease, and more than fifty percent of those patients of the disease is actually caused by Demodex mite. So, this is a great opportunity for us to create another category, and we have the potential to pioneer a standard of care for ocular rosacea. And the key features of ocular rosacea are prominent blood vessels on the eye, on the lid and area surrounding the eye, and then erythema surrounding the eye.

Speaker 6

So those are the two features of ocular rosacea, which the physicians use to diagnose the disease. And those are the some of the objective measures that we are planning to look at in our trial. The size of the trial and how we're going to be looking at and all the details will come later this year as we get closer to starting the trial, but the endpoints and the measures that we are contemplating are also something that the FDA are in alignment with, so we are on a good track here.

Speaker 1

Yeah, and I just highlight two points on ocular rosacea from some of the interactions we had in recent weeks with doctors. One is this is new. There's never been a medicine developed or trialed for ocular rosacea. Under Stacia's leadership, our team is diligently translating some of those important clinical findings into a robust clinical plan. And the other thing that I am just so encouraged about, the doctors, the ECPs, both MDs and OD's are so enthusiastic about the rosacea.

Speaker 1

They are seeing it more and more now that they're looking at eyelids and my assessment is that they're even more familiarized with the ocular rosacea than they were with DB when we were at a similar stage. So I think this is an opportunity that really is a compelling one. It's hard to really state how big that is until we get out there and get data. But as Sesha said, this looks and feels a lot like demonic blepharitis and it's another example we think of how Tarsus can pioneer a new category of medicine.

Operator

Thank you. Our next question or comment comes from the line of Eddie Hickman from Guggenheim. Your line is open.

Speaker 9

Thanks for the questions and congrats on the quarter. When you think about providing guidance going forward, what are the potential factors, I guess, beyond the summer bumpiness where you have less visibility right now that might prevent you from accurately extrapolating volumes and price going forward? And then maybe I missed this, but you noted previously that you had already reached the target 15,000 docs and they're increasing their frequency of prescribing. But do you know how many more ECP's beyond that target have been reached? Thanks.

Speaker 4

Hey, Eddie, it's Jeff. I'll take the first part of that question and pass it over Aziz. We look at the potential to provide guidance on a quarter by quarter basis. I think the two factors that are really causing us pause and preventing us providing long range guidance is one, some of the impact of the DTC campaign, particularly the expanded network campaign. We want to make sure we get our arms around that and see what the impact of that is in the back half of this year.

Speaker 4

Secondly, there's a lot of macro events going on as we speak, and we're keeping an eye on that. And we want to be thoughtful as we think about moving forward on that front as well. But we do make an assessment on a quarterly basis, whether we are going to move forward on the revenue guidance.

Speaker 3

And then when it comes to the target prescribing base, certainly it's grown beyond 15,000 in terms of the number of doctors that have utilized the product. With that said, we know that the vast majority of prescriptions, over 85 are likely gonna come from that core 15,000. So we focus the efforts there and really focus our efforts on deepening the prescribing. And obviously if it continues to grow, we have other mechanisms in which we can address that broader base. But when it comes to the sales force and the vast majority of our strategic efforts, it's on that core 15,000 audience and really moving the needle from that monthly to weekly, weekly to daily prescribing.

Speaker 9

Great. And as that increases, do you expect the level of stocking that you have in the channel to change at all?

Speaker 4

We don't anticipate that Eddie, it's been hovering around two to two and a half weeks consistently over the last five quarters. I think the pharmacies and distributors don't like to hold a large amount of inventory just given the pricing dynamics and managing their balance sheet. So, we don't anticipate from a sort of weekly basis that really evolving much beyond that two point five weeks.

Speaker 3

Great. Thanks, guys.

Operator

Thank you. Our next question or comment comes from the line of Corey Juvenvil from LifeSci Capital. Your line is open.

Speaker 10

Thanks for taking our questions, and, congrats on these numbers. You know, quick from us. Based off the q one numbers that we're seeing today, we're now looking at a run rate over 300,000,000 and growing for Xtendi, which is greater than 2024 OpEx. Obviously, spend is going to increase in 2025 as you increase that marketing spend, advance some of these additional clinical programs. But curious if you could add some commentary on total projected 2025 spend beyond that DTC campaign and maybe add some color about the potential to bridge to cash flow positivity following the recent equity raise.

Speaker 10

From your projections, can you achieve profitability with the current balance sheet?

Speaker 4

Yeah, Corey, this is Jeff. We are anticipating OpEx to continue to grow as we talked about in terms of the DTC investment and of course, are certain variable costs as revenues go up. So do some of those costs including cost of goods sold, obviously. We have not provided long range guidance in terms of when we might go cash flow positive. I'll highlight we're not opposed to going cash flow positive, but we are thinking about investments in the pipeline, including investments in ocular rosacea and such there.

Speaker 4

So I think until we have in a position to provide top line revenue guidance, we're probably not going to provide any type of cash flow positive guidance either.

Speaker 10

Got it. And maybe one for Aziz. So in the targeted streaming service DTC campaign that you had last year, you mentioned that there's potential to get some really powerful analytics regarding the the conversion rates on certain profiles of patients, but it still seemed a bit too early at the time to start seeing those impacts. And today, mentioned that the DTC campaign is driving that 140% increase to site traffic. I guess at this point, do you have a good sense of who the most responsive patients are to DTC campaigns?

Speaker 10

And if so, what does that patient profile look like?

Speaker 3

Yeah, it's a great question, Corey. So I think when we did the streaming, we did get a lot of great insights. And an example or two of that is we've got a good understanding of what our demographic likes to watch, what sort of programs they respond well to, when's the ideal time to run an ad, for instance. We also learned which of the activities really lead to eventual prescriptions. So we highlighted earlier on our prepared comments, increasing the number of website visits and quizzes, those correlate nicely to prescription volume.

Speaker 3

So it gave us a lot of insights on where to place our bets. When you think about the typical patient, as you can imagine, it's going to mirror sort of how we saw the coverage of all. So there's your mid-40s patient that's got commercial coverage, that's active, their eyesight is integral to their day to day activities. They're gonna wanna make an appointment because they want perfect vision. They're going in there, they wanna have the ability to wear their contact lenses, be able to be at work, and be able to have clear vision during the day.

Speaker 3

Things like Bufferitis obviously get in the way. And then the other demo that's really opened up with Medicare coverage is that 60 person who is potentially going in for cataract surgery and really wants to enjoy high quality vision and a great quality lifestyle. And of course, we know that Demodex blepharitis increases as you age in terms of the prevalence. Those are the two patients types we think or the two consumer types we think about. And with the learnings we've had, we've really been able to tailor our programming choices specifically to those demographics.

Speaker 3

So I think that's performing well and that's really informed our approach to deploying the money we are into DTC.

Speaker 1

Yeah, and Corey, this is Bobby. Just one other bit of feedback that's beyond the analytics. I know our team is gonna be very data driven and looking for great return on investment here as we're seeing. But when we got in front of doctors, I heard something I think powerful that when doctors started now talking to patients about XtendV and DB, they said I've heard of this. And that's a change, that's a real educational change that we've seen and heard over the last few months with this ad now playing.

Speaker 1

So we're creating a new category, and patient education is a key growth driver as we've mentioned.

Speaker 6

Excellent. That's helpful. Thanks, and, congrats again.

Operator

Thank you. I'm showing no additional questions in the queue at this time. Ladies and gentlemen, this concludes the program. Thank you for your participation. You may now disconnect.

Operator

Everyone, have a wonderful day.

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Earnings Conference Call
Tarsus Pharmaceuticals Q1 2025
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