Tarsus Pharmaceuticals Q2 2026 Earnings Report

Tarsus Pharmaceuticals EPS Results

• Actual EPS: -$0.43
• Consensus EPS: -$0.19
• Beat/Miss: Missed by -$0.24
• One Year Ago EPS: N/A

Tarsus Pharmaceuticals Revenue Results

• Actual Revenue: $173.91 million
• Expected Revenue: $169.65 million
• Beat/Miss: Beat by +$4.26 million
• YoY Revenue Growth: N/A

Tarsus Pharmaceuticals Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 8:00AM ET

Tarsus Pharmaceuticals (NASDAQ:TARS) is a clinical‐stage biopharmaceutical company focused on developing novel therapies for diseases of the eye and ocular surface. The company’s research platform centers on neuro‐effector modulation to address underlying disease mechanisms rather than solely treating symptoms. Tarsus’s lead candidate, OC-01 (varenicline solution), is an intranasal formulation in Phase 3 development for the treatment of dry eye disease, a condition affecting millions worldwide and associated with significant patient discomfort and reduced quality of life.

In addition to its dry eye program, Tarsus is advancing preclinical and early‐stage programs targeting other ophthalmic indications, including allergic conjunctivitis and retinal disorders. The company leverages a multidisciplinary pipeline strategy, combining small‐molecule drug discovery with novel delivery approaches to optimize tissue penetration and minimize systemic exposure. Tarsus collaborates with clinical research sites across North America and Europe to execute its global development plans and intends to explore strategic partnerships for later‐stage commercialization and distribution.

Founded in 2018 and headquartered in Westlake Village, California, Tarsus Pharmaceuticals was established by a team of industry veterans with deep experience in ophthalmology, neurology and pharmaceutical development. The company’s leadership team includes seasoned executives with track records in launching ophthalmic products and navigating regulatory pathways. Tarsus maintains corporate offices in the United States and engages with regulatory authorities to advance its portfolio toward potential approval and market launch.

Tarsus Pharmaceuticals Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: XDEMVY sales reached $173.9 million in Q2, up approximately 69% year over year and 20% sequentially. Full-year 2026 net product sales guidance increased to $685 million-$705 million, with gross margins expected near 93%.
• Positive Sentiment: XDEMVY adoption continues to broaden, with the number of ECPs prescribing on a yearly cadence doubling over the past year and retreatment rates reaching the high teens, potentially stabilizing around 20%. Consumer efforts also lifted unaided Demodex blepharitis awareness to roughly 30%.
• Positive Sentiment: Tarsus agreed to acquire Alkeus Pharmaceuticals and its late-stage Stargardt disease therapy, ALK-001, for $450 million upfront—$270 million in cash and $180 million in stock—plus up to $350 million in regulatory and commercial milestones. The company cited encouraging visual-function, retinal-atrophy, and long-term tolerability data from more than 400 treated patients.
• Neutral Sentiment: ALK-001’s NORTHSTAR Phase III study is enrolling approximately 230 patients ages 8 to 45, with topline results expected in the second half of 2029; Tarsus is also evaluating a second Phase III trial. Management believes the therapy could represent a billion-dollar-plus opportunity, but approval and commercialization remain several years away.
• Negative Sentiment: Full-year R&D expense guidance rose to $190 million-$210 million, partly reflecting the $75 million upfront payment for the prior iRenix acquisition, while additional Alkeus-related costs are excluded. Management still sees potential profitability in 2027, though the expanded pipeline and future sales-force investment could delay that timeline by one or two quarters.

Presentation

[Operator]

Hello, welcome to Tarsus Pharmaceuticals' second quarter 2026 financial results conference call, announcement to acquire Alkeus Pharmaceuticals. As a reminder, this call is being recorded and all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. At this time, I would like to turn the call over to Sarah Nives, investor relations, to lead off the call.

[Sarah Nives, Investor Relations at Tarsus Pharmaceuticals]

Thank you. Before we begin, I encourage everyone to visit the investors section of the Tarsus website to view the press releases issued today related materials we will be discussing today. Joining me on the call are Bobby Azamian, our Chief Executive Officer and Chairman, Neera Clase, our Interim Chief Commercial Officer, Sesha Neervannan, our Chief Operating Officer, Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer. Joining us for Q&A is Dr. Liz Yeu, our Chief Medical Officer. I'd like to draw your attention to slide three, which contains our forward-looking statement. 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, our actual results may differ materially. I encourage you to consult the risk factors contained in our SEC filings for additional details.

[Sarah Nives, Investor Relations at Tarsus Pharmaceuticals]

With that, I'll turn the call over to Bobby.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

Hello, thank you for joining us. Today is an important day for Tarsus. We're reporting another exceptional quarter for XDEMVY announcing the acquisition of Alkeus Pharmaceuticals and gildeuretinol, or ALK-001, a late-stage investigational therapy for Stargardt disease. When we launched XDEMVY, we believed Demodex blepharitis, or DB, was one of the largest diseases in eye care, hiding in plain sight. Our ambition was never simply to commercialize a single medicine.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

It was to demonstrate that by identifying diseases that have been overlooked for years, creating categories, developing medicines with the potential to redefine the standard of care, executing with excellence, we could fundamentally change patient care while building a leading eye care company. XDEMVY continues to prove that thesis. Nearly three years after launch, more than 700,000 patients have been treated.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

XDEMVY has generated almost $1 billion in net product sales reported to date. We are well on our way to over $2 billion in potential annual peak sales. This quarter alone, XDEMVY generated approximately $174 million in net product sales, representing more than 69% year-over-year growth. XDEMVY has never been stronger. We believe we are still in the early stages of realizing its full commercial opportunity.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

What's more, XDEMVY is powering innovation at Tarsus, and that's precisely why we have the confidence to make strategic investments like the one we are announcing today. We are investing in assets with novel disease-modifying approaches, compelling clinical evidence, and a clear strategic fit to build a leading eye care company. ALK-001 is exactly that, as it has the potential to preserve vision for longer and become a foundational treatment for Stargardt disease.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

This devastating inherited retinal disease often affects children and young adults. Today, there are no FDA-approved treatment options. It also broadens our presence in retina, one of the largest and most important specialties in eye care. We've already begun building capabilities through our recent acquisition of IRX-101 and aim to create a distinct portfolio positioned to address serious retinal diseases over time. I would like to take a moment and thank the Alkeus team for all their passion and commitment in developing ALK-001, a truly novel medicine.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

To date, they have developed one of the most robust clinical data sets. We believe ALK-001 has the potential to preserve vision longer in patients suffering from Stargardt disease. XDEMVY remains the cornerstone from which we're building a leading eye care company, one with the capability, pipeline, and innovation to repeatedly bring meaningful medicines to patients.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

With today's announcement, we took an important step on this journey. This acquisition is expected to build upon the commercial success of XDEMVY, and with the addition of ALK-001, creates one of the most exciting pipelines in eye care and beyond. One that is positioned to deliver multiple potential blockbuster medicines over the next several years. Before I turn the call over, I would like to welcome Neera Clase, our Interim Chief Commercial Officer, to her first earnings call. Neera has been instrumental in building our commercial organization and ensuring the ongoing success of XDEMVY. We are thrilled to apply her leadership and expertise to this new chapter. Neera, over to you.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Thank you, Bobby. I'm honored to step into this role at such an exciting time for Tarsus, and I look forward to advancing the playbook that has put XDEMVY on the path to more than $2 billion in potential peak sales. As Bobby mentioned, XDEMVY is the cornerstone of our company. Across every metric that matters, eye care professional adoption, consumer activation, and commercial execution, the business has never been stronger. These three priorities are reinforcing one another, which is exactly why XDEMVY continues to outperform.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

The clearest evidence is the change we're seeing in ECP behavior. I recently spent time in the field hearing firsthand from doctors about how the conversation around DB has evolved. Eye care professionals, or ECPs, are no longer asking whether they should treat DB. They're asking how broadly they should be screening for it, and how many more patients can they treat.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

The numbers reinforce the acceleration we are seeing. Over the past year, the number of ECPs prescribing XDEMVY at a year daily cadence has doubled, and our top doctors have continued to increase prescribing month after month. That's an important shift. It signals that the market has moved beyond initial adoption and towards the standard of care. We're also seeing retreatment rates advance into the high teens, creating an increasing source of demand alongside new patient prescriptions. Combined with broader ECP adoption, that gives us even greater confidence in the long-term trajectory of the business. Our growing body of clinical evidence is also helping to deepen that conviction. Recent studies have shown that DB is common in patients with chalazia, which further reinforces XDEMVY as the standard of care over tea tree oil and highlights the potential infection risk associated with Demodex and bacterial co-infestation.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Together, these findings are encouraging ECPs to screen more consistently during routine eye exams and identify patients with DB they may not have diagnosed previously. In addition, our key account leaders, or KALs, are now fully deployed across our highest potential practices. They are helping those practices embed screening more consistently, identify more patients, and expand treatment over time. The field feedback I'm hearing was echoed in a recent survey of these same doctors. More than 80% of physicians told us that they expect to increase XDEMVY prescribing over the next year and beyond. This strongly signals continued momentum as we work to reach the estimated 25 million Americans living with DB. While ECP behavior is deepening the market, our consumer efforts are expanding the top of the funnel. Our consumer campaigns are introducing millions of people to a disease that they never heard of.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

John Cena, our celebrity spokesperson, brings credibility and authenticity through his own experience with DB, while our new unbranded DTC campaign featuring Barry the Cat helps patients recognize symptoms in a way that's approachable, memorable, and easy to understand. As a result of these efforts, many patients are now asking for XDEMVY by name.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

We've also seen a 19% increase in high-value actions on the xdemvy.com website, including the use of our Find a Doctor tool and lastly, our AI-powered concierge, which helps patients better understand their symptoms and take the next step with their ECP. Unaided awareness of DB has also climbed to approximately 30%, which is remarkable when you think about how far we've come since we first launched our DTC campaign. The response has been powerful and clearly resonates with patients. They aren't simply hearing the message. They're becoming educated, engaged, and motivated to seek care.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Our commercial pillars are working in concert just the way we envisioned. Greater awareness brings more informed patients into eye care practices. Stronger evidence and field execution helps physicians identify and treat more patients. Positive clinical experience further reinforces confidence and adoption. When I look at the business today, I see a potential $2 billion opportunity that is unfolding exactly as we planned. That's why my confidence in XDEMVY has never been stronger. Its continued success is not only driving growth, it is creating the foundation for Tarsus to invest in programs like gildeuretinol and expand our impact for patients across eye care. With that, I'll turn it over to Sesha.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

Thank you, Neera. This is a momentous day for Tarsus and our mission to serve patients. We believe ALK-001 is the most compelling program in development for Stargardt disease. As you heard from Bobby, it has the potential to become a foundational medicine for patients with no approved therapies today. Stargardt is a serious inherited retinal disease that often begins in childhood or adolescence, with more than 36,000 diagnosed patients and a total estimated 86,000 patients in the United States. Vitamin A is essential for healthy vision and is a key component of the visual cycle. Stargardt is caused by a genetic mutation that leads to formation of toxic vitamin A dimers known as bisretinoids. These toxic dimers can damage the retinal cells responsible for central vision, and over time can cause blindness. The consequences can be devastating.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

Half of patients diagnosed before age of 20 are expected to become legally blind within seven years. Seven years. That's a reality facing many children and young adults living with Stargardt disease today, and it's also the urgency for this program. ALK-001 is an investigational modified vitamin A analog designed to slow the formation of these toxic byproducts while preserving the normal visual cycle. It has the potential to address the dimensions that matter most to patients, slowing the progression of a blinding disease and preserving visual function. To date, the program has generated encouraging evidence of visual function preservation with no evidence of negative treatment-related effects on night vision, dark adaptation, or color vision. As you can see here, the Phase studies showed ALK-001's potential to preserve the visual cycle and acuity, slow retinal atrophy, and its unmatched long-term tolerability profile.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

Together, these studies give us confidence that ALK-001 can be a breakthrough medicine that can potentially prevent the progression of Stargardt disease. As with any chronic therapy, especially one that impacts pediatric and adolescent patients that may ultimately be taken for a lifetime, the long-term safety profile is paramount. ALK-001 has been evaluated in more than 400 patients, demonstrating a favorable tolerability profile and with treatment exposure extending up to seven years. This is exactly the type of program we look for. Differentiated disease-modifying approach, compelling long-term tolerability, and a potential to meaningfully alter the course of the disease for patients with no approved treatment options today. Turning to next steps in the program. NORTHSTAR, the ongoing phase III study, is designed to demonstrate that ALK-001 can slow disease progression in patients with Stargardt disease.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

The study is expected to enroll approximately 230 patients between ages of eight and 45. The primary endpoint will measure the rate of retinal lesion growth over 24 months, and the secondary endpoint will assess a key aspect of visual function change in low luminescence visual acuity. Coupled with the compelling data from these trials, ALK-001 is expected to generate a differentiated and the most robust clinical data set in Stargardt disease. The program has been developed with the FDA, and we anticipate top-line results in the second half of 2029. We are also considering a potential second phase III trial to support approval. The trial, to be discussed with the FDA, is envisioned to focus on younger and faster progressors and include additional exploratory endpoints.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

We believe ALK-001 has the potential to become a foundational treatment for patients with Stargardt disease, one which can blind a child within seven years. ALK-001 is a differentiated disease-modifying medicine that protects the retina without impacting the normal visual cycle. It advances our pipeline in retina, and most importantly, gives these patients something they've never had, an investigational medicine with the potential to meaningfully slow progression of this blinding disease. Jeff, over to you.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

Thank you, Sesha. Good morning, everyone. All around, this was another outstanding quarter for Tarsus. We delivered XDEMVY revenue, continued expanding our leadership in eye care, and advanced another important step in our long-term growth strategy through the acquisition of iRenix and today's announced pending acquisition of Alkeus. In the second quarter, XDEMVY net product sales were $173.9 million, representing more than 69% growth year-over-year and approximately 20% growth quarter-over-quarter. Gross margins were flat at approximately 93%, and we ended the quarter with cash equivalents, and marketable securities of $449.7 million. For additional details on our Q2 financial performance, please refer to the earnings release we issued today. Turning to guidance, we have updated our outlook for the remainder of 2026 and increased XDEMVY full year net product sales guidance to $685 million-$705 million from our prior guidance of $670 million-$700 million.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

This increase reflects our confidence in the underlying strength of the business. As we have previously discussed, we expect the quarterly revenue progression throughout the remainder of the year to reflect the normal seasonality of the eye care market. The summer period typically includes fewer physician office visits due to vacations, holidays, and conferences, and we expect tempered growth in the third quarter. We then expect more robust growth in the fourth quarter, supported by the usual year-end patient dynamics, and this cadence is reflected in our increased full-year guidance. Moving to operating expenses, we continue to expect gross margins of approximately 93% and SG&A expenses of $545 million-$565 million. We now expect full year R&D expense to be in the range of $190 million-$210 million, an increase from our previous guidance of $115 million-$135 million.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

This increase reflects the upfront consideration of $75 million for the acquisition of iRenix Medical. This guidance does not include the pending acquisition of Alkeus. Turning to the financial terms of the Alkeus transaction. This upfront consideration is $450 million, consisting of $270 million in cash and $180 million in Tarsus common stock. This includes up to $350 million in potential milestones tied to regulatory approval in the United States and the first commercial sale, as well as low single-digit tier decreasing royalties on future net sales.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

In addition, we secured $125 million through a private placement financing from a syndicate of leading healthcare investors, including several shareholders of Alkeus. This transaction reflects the disciplined which we've discussed with investors over the past several years. We're investing from a position of strength while maintaining the financial flexibility to continue executing on XDEMVY and advancing our broader pipeline.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

The Alkeus transaction is expected to close later this year, subject to the expiration of an applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions. Financially, this transaction strengthens our long-term growth profile while remaining consistent with our strategic approach to capital allocation. It expands our presence in retina and adds a differentiated late-stage program with significant potential. Personally for the entire Tarsus team, it represents a significant and potentially transformative opportunity to help patients, particularly children and adolescents, maintain vision longer by slowing the progression of this blinding disease. We look forward to updating you as the transaction progresses. With that, I'll turn the call back to Bobby.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

Thank you, Jeff. Before we open the line this morning, let me leave you with one final thought. Everything we've talked about today starts with XDEMVY. Its success has changed the standard of eye care, created extraordinary momentum for our business, and most importantly, expanded what's possible for Tarsus. Today's announcement is another important step in that journey. Together with our other retina acquisition, IRX-101, strengthens our retina portfolio and reinforces our mission to build one of the most innovative and differentiated companies in eye care. We're incredibly excited about the opportunity ahead. Operator, please open the line for questions.

[Operator]

Thank you. As a reminder, if you have a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Graig Suvannavejh of Mizuho. Your line is open.

[Ryan Rieth, Analyst at Mizuho]

Hey, good morning. This is Ryan Rieth on today for Graig Suvannavejh. Thanks for taking our question. Just wanted to ask a little bit about the new asset and how you see it comparing in efficacy to tinlarebant, the Stargardt medication in phase II trials for Belite Bio, which has a head start. Is there any differentiating factor that you think could help gildeuretinol to capture more market share relative to tinlarebant? Thanks.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

Thank you, Ryan. This is Bobby. We're really excited about this asset. As mentioned, we really surveyed the landscape and found a very compelling late-stage opportunity. We understand that we're likely going second here. We're still very compelled by this. In terms of overall profile, we see something that can really change the course of this disease that demonstrated effectiveness in a couple dimensions that are really important to patients. Both the progression of disease as measured by atrophy and the progression of disease measured by visual acuity, low light visual acuity in particular. That's unique in this field. We also see a great safety profile with up to seven years of data over 400 patients treated. We think that presents a compelling opportunity.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

I'll pass to our Chief Operating Officer, Sesha, to talk a little bit more about that profile and we can certainly dig deeper here over the course of the call.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

Thank you, Bobby, thanks for that question, Rieth. As I mentioned in the prepared remarks, gildeuretinol, or ALK-001, is a medicine that has been designed to reduce or curtail the toxic dimers in the eye without impacting the visual cycle. That's a very key gating factor for us with this particular molecule and this particular mechanism. Toxic dimers are the key cause of retinal cell death, we also want to make sure that the vitamin A participation in the visual cycle is not perturbed. That's precisely what this medicine does. It's actually shown in the data that we don't see any night vision adaptation or color disturbances, a very good safety and tolerability profile. We think this medicine will differentiate itself on those properties, it's very important for the patient, especially in a blinding disease, to not impact the visual cycle.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

Ryan, maybe I'll add. This is Jeff. We did some market research on what Sesha just highlighted there. Showing structural benefit, functional benefit with LLVA, a really nice safety profile. We surveyed 100 retinal docs. Based on that, we really think that this is a billion-dollar-plus opportunity based on that micro by that differentiation there.

[Ryan Rieth, Analyst at Mizuho]

Great. All right, thanks guys.

[Operator]

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

[Eddie Hickman, Analyst at Guggenheim Securities]

Hey, guys. Good morning, thanks for the question, congrats on all the progress and the deals. Now that you're building towards two retinal launches sort of on different timelines, can you talk about the difference in sort of call points that you need to sort of build out and sort of how we should think about the sequencing of that commercial build, in terms of size and scope? Appreciate it.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

Thank you. Yeah, Eddie, I'll start, I'll pass to our Commercial Officer, Neera. It's a great point. We're entering a new field, retina. We're really excited to have now two phase III drugs. I'd kind of go back to six years ago when we were at that same stage with XDEMVY, we took a very diligent approach to understanding the eye care provider and really educating. I know we'll do that here as well. We have two drugs in phase III, one IRX-101's a little bit ahead, ALK-001, I think it positions us well, I'll pass to Neera to talk about some of the synergies she sees.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Yes. Thank you, Bobby. We believe both of these assets are a great commercial fit for Tarsus. Really helps us to build the pipeline to become that broad eye care leader. It plays exactly to what we've been doing with XDEMVY. Here are a couple of reasons why, because we're still servicing an underserved population with a high unmet need. We'll plan to deliver evidence to differentiate the science. What's different here in terms of the call points is we're talking about a more concentrated physician base. About 3,500 of the physicians out there today, and our focus will be on securing broad access and launching efficiently into a concentrated physician audience. It's a different playbook from the DB, but very similar footprint. As you know, we've proven that we can execute, and we're really excited about this opportunity.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

The other thing I'd point out.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Just on.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

There's a lot of overlap in the calling here, so about 500 doctors will be served with IRX-101 that are doing IVTs. A subset of those, actually 2,000, are prescribing, we think, or likely to prescribe over 80% of the Stargardt disease therapies here. That presents some real synergy in terms of the sales force itself that we'll be building here.

[Eddie Hickman, Analyst at Guggenheim Securities]

Got it. In terms of access, is that the same timeline as XDEMVY in terms of sort of getting payer reimbursement set up? We think about it the same as XDEMVY, or is it different for this space?

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Different in that it's rare, but very similar in terms of how we've gone about access, right? A differentiated value story, but very comparable in terms of fast access, broad access.

[Eddie Hickman, Analyst at Guggenheim Securities]

Appreciate it.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

The other thing I'll have Liz Yeu, our CMO, talk about, now we're in front of the eye company, and this is often where patients with Stargardt's present. Liz, you might speak to your experience and how you see kind of the initial assessment in the eye care provider landscape there.

[Liz Yeu, CMO at Tarsus Pharmaceuticals]

Thank you, Bobby. When we think about the patients that we're taking care of, certainly I'm taking a view of it from the patient perspective. While most of the diseases that we see as eye care providers see, they worsen with aging. What's so unique and so humbling about Stargardt disease is that almost half the patient population are actually kids and adolescents. Of those who are the fastest progressers, half of them actually go blind within seven years.

[Liz Yeu, CMO at Tarsus Pharmaceuticals]

The opportunity for us to be able to manage them together alongside a lot of the patients who are getting seen, especially those who are younger, they may complain or fail a vision test at school. It's going to be primed by those primary eye care physicians who are seeing them because of those complaints, failed vision tests, or because they're coming in for glasses, will be then diagnosed by the retina specialist. It will be a shared opportunity. There is that, yes, we have the blueprint of the education and the evidence generation, but the retina doctors, it is a small subset that we will definitely extend, leverage the relationships, educate, and certainly generate evidence.

[Eddie Hickman, Analyst at Guggenheim Securities]

Great. Thank you so much for that color.

[Operator]

Thank you. Our next question comes from Jason Gerberry of Bank of America. Your line is open.

[Jason Gerberry, Analyst at Bank of America]

Hey, guys. Thanks for taking my questions. I'm just trying to think about, A, the market opportunity here. I think you said something like 30 some thousand patients. B like talked about a pricing in the $350,000-$500,000 territory. Trying to get a sense of what proportion of these patients are actually under the care of a retinal specialist and is an addressable sort of market. Secondly, a question around how to think about the use of natural history. On BCVA changes over, say, a two-year period versus lesion growth, I think, the competitor had flagged you typically would lose one letter every two years or so. Wondering how you think about the need for longer-term follow-up and sort of the durable BCVA benefit. Thanks.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Yes. Thank you for your question. In terms of pricing, that price range that you articulated is the price range that we would consider also for this asset, around that $350,000 price point. It's really about value creation, right? Understanding the differentiated profile here. As we think about this particular asset, there is a safety and tolerability value proposition that really resonates here and differentiates from the competition. We're excited to launch in this. As you mentioned, the natural history is a good way to create that value over time and to position this for optimal dosing and durability. With that, I'll turn it over to Sesha to provide additional color.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

Yeah. Thank you, Neera. With respect to your question on long-term follow-up on the vision benefit, what we saw in the trials is that the worsening of low light visual acuity, which is actually even more of a sensitive measure than a BCVA, was statistically significant. We saw benefit within two years in those trials. That is a great measure to follow up because low light visual acuity is a precursor of BCVA loss. BCVA tends to worsen slower than LLVA. That's a great measure for the physicians to monitor and look at the progress of the vision loss. The tools are there, and they are very mature.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

[Inaudible]

[Operator]

Our next question comes from Lachlan Hanbury-Brown of William Blair. One moment.

[Lachlan Hanbury-Brown, Analyst at William Blair]

Hey, just wondering if the team is there. I think they cut out on that last question.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

We're here. We're here.

[Lachlan Hanbury-Brown, Analyst at William Blair]

All right, great. Thanks for the questions. Congrats on the deal, I guess. Maybe a couple quick ones. Just first, you've been talking a lot about the Stargardt program with gildeuretinol, but I know that Alkeus, at least until recently, I'm not sure if it's still going, but looking at geographic atrophy. Wondering if you're thinking there's an opportunity there, if you've ascribed any value to that, or if this is really just about Stargardts? Maybe a second question. You said you're thinking about a potential second phase III for approval. I just wanted to clarify, are you expecting a second phase III would be needed, or is that more of a, you're thinking about that maybe for commercial purposes to add a different data set or a different layer of data, a different population, that kind of thing?

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

Thank you, Lachlan. I'll take the first part of that. Sesha will take the second part. We really looked at this in terms of the acquisition as far as Stargardt. We see that there's been a 400 patients treated, including the GA, that provides a really strong foundation. While we're acquiring the entire company, our focus is really on Stargardts in terms of the value ascribed here. Sesha, I'll pass it to you.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

Thank you, Bobby. Yeah. As I mentioned, our current phase III trial, NORTHSTAR, is a very robustly designed trial in a large set of patients. In fact, it's potentially the largest progressive prospective trial that are being conducted in Stargardt disease. It's powered very conservatively and very robustly for meeting both the primary and secondary endpoints. We are very confident about this trial providing a very robust clinical package along with the very strong phase II data as well. That is our primary approach. We are very confident that it will be a very compelling evidence for registration and approval. The way we think about the second trial is really proactively thinking about any of this medication if we need it. Also any potential upside where we could enhance the data, enhance the exercise with the progressors or other ways to enhance it.

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

It's really more of a risk mitigation and potential upside strategy. We still need to talk to the FDA about how that study may look like. Stay tuned for how that progresses.

[Operator]

Thank you.

[Lachlan Hanbury-Brown, Analyst at William Blair]

Thanks.

[Operator]

Our next question comes from Mazahir Alimohamed of Oppenheimer. Your line is open.

[Mazahir Alimohamed, Analyst at Oppenheimer]

Thank you. Thanks, Bobby, and thanks for taking the question. I think one for us is that when we were looking, it sounds like Alkeus has previously mentioned that the cleanest signal in Stargardt disease came from the pre-symptomatic and early-stage patients, but we noticed that NORTHSTAR is enrolling advanced disease. How do we square the pivotal population with the mechanism? Is the expectation just at a slower atrophy front at the lesion margin? If that's the case, what reduction there do you consider clinically meaningful?

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

Thank you, Mazahir, for the question. The NORTHSTAR trial is designed for advanced patients but also includes younger and progressive patients. As I mentioned, it includes patients from age of 8-45, and we're really capturing those patients in their disease state. The atrophic lesion, or growth of atrophic lesion, which is very well known and precedented endpoint by the FDA for approval. That's how it is designed. The phase data showed that there's a very robust reduction of that atrophic lesions in the trials. We saw about 29% reduction compared to placebo. I think the study is designed to hit on the primary endpoints and secondary endpoint of visual acuity that is precedented with the FDA. Really it's positioned to win on those endpoints.

[Bobby Azamian, CEO and Chairman at Tarsus Pharmaceuticals]

I'll just add when we looked at the data package here, we saw really good signals throughout multiple phase II studies, in both moderate disease, advanced disease, and in some early patients. We got confident across the spectrum of disease that Sesha is describing here in NORTHSTAR.

[Mazahir Alimohamed, Analyst at Oppenheimer]

Got it. Thank you. If tinlarebant is approved, how could that affect trial enrollment going forward?

[Sesha Neervannan, COO at Tarsus Pharmaceuticals]

We don't think so. The NORTHSTAR trial is being conducted globally at many sites. The trial is already enrolling. We started the trial two months ago. Alkeus started the trial two months ago, and it's enrolling as expected. We anticipate that by the time other products could be approved and launched, we'll be well underway in terms of our enrollment. Also, as I mentioned, we have many non-placebo sites that we can also leverage.

[Mazahir Alimohamed, Analyst at Oppenheimer]

Got it. Okay. Thank you for taking our questions.

[Operator]

Thank you. Our next question comes from François Brisebois of LifeSci Capital. Your line is open.

[Analyst at LifeSci Capital]

Hi. Thanks for taking our questions. This is Dan on for Francois. Congrats on all the progress. I guess firstly on the XDEMVY retreatment rates, reaching high teens, could you give us some color on what you're seeing, in terms of XDEMVY's durability of treatment response and physician retreatment behavior? As you think about, I believe you have previously mentioned that rate kind of stabilizing around 20%, and your confidence there. Secondly, in terms of the DTC efforts, could you give us some color on how that kind of, in terms of website engagement, what that conversion rate is into sort of treated patients? Thank you.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

Sure. In terms of retreatment, it's maturing just as we've described in the past. It continues to advance into the high teens, and we see it stabilizing at about a 20% steady state. The why really matters here when we think about retreatment. DB is a recurring condition, and only ECPs can make that decision to retreat. We're seeing exactly what we want. Patients who actually have good experience with XDEMVY to begin with come back when their symptoms recur.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

This is still very much a new prescription story as it relates to retreatment. The second part of your story was around, or your question was around the DTC piece. Our consumer engine is really performing ahead of our own expectations. What we've seen is increasing awareness through branded, unbranded, and our celebrity campaign with Cena. The unaided awareness is now up to 30%.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

If you think about it, where we started, we were at 2%. Now one in every three patients can recognize XDEMVY by name. That's really quite exceptional velocity for a disease that most people really never heard of. Our website engagement is also up by up to 30%. Patients are, as we mentioned, asking for XDEMVY by name. On spend, you could think about it as it being very efficient and very disciplined, and the returns continue to support the continued investment.

[Analyst at LifeSci Capital]

Thank you.

[Operator]

Thank you. Our next question comes from Matthew Caufield of H.C. Wainwright. Your line is open.

[Matthew Caufield, Analyst at H.C. Wainwright]

Good morning, guys. Really great to see the range of updates this morning. Two questions from us. With the evolving pipeline now with data catalysts across the coming years, is there any shift to the prioritization of programs other than the partnership potential for Lyme disease? Separately, regarding the Alkeus acquisition, what milestones would define success over the next 12-24 months considering the phase III NORTHSTAR top line are expected later into second half 2029? Just in terms of judging whether the acquisition is tracking kind of above or below your near-term expectations. Thanks a lot.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

Good morning, Matthew. This is Jeff. Happy to answer those questions. No pipeline shift. We have a robust balance sheet that will continue to allow us to focus on the existing pipeline. We are really excited about the ocular rosacea program. You highlighted the Lyme, which our baseline assumption is to partner with a phase-ready package. Also the iRenix product is something that we are really excited about getting into the market here in the next couple, three years. We are fully committed to the pipeline, including the Alkeus phase III study. On sort of the data flow on the Alkeus, the ALK-001. In that sense, one of the things we will obviously be tracking is with patient enrollment, and so that'll be something key. There is a design within the study that would allow for an interim analysis.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

That is something that we are going to be discussing internally and see if it makes sense to do, but that is a potential option for us to do. Of course, there'll be the data, top line data, which we expect to be sometime in the second half of 2029.

[Matthew Caufield, Analyst at H.C. Wainwright]

Excellent. Thank you, guys. Really exciting to see all the updates.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

Thank you.

[Operator]

Thank you. Our next question comes from Anthea Lee of Jefferies. Your line is open.

[Anthea Lee, Analyst at Jefferies]

Hi, this is Anthea on for Dennis. Thank you for taking our questions. Just two questions from us. On the XDEMVY guidance, the implied script trajectory looks fairly conservative, even accounting for holidays and seasonality. Is there anything we're missing in terms of script acceleration in the second half outside of seasonality? Secondly, how are you thinking about profitability now that you need to probably ramp up R&D spend for these two new assets and also expand the sales force? I think consensus has Tarsus becoming EBITDA positive in 2027. Do you still think that's fair? Thank you.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

Sure. Happy to take that question. We believe the guidance that we gave is appropriate guidance based on what we've historically seen in terms of seasonality, and the expectations for various meetings and holidays. We stand by that guidance. Of course, we always have an opportunity to update that in subsequent quarters, but right now we're pleased how we've moved that up. I think it shows robust growth. On the profitability, we haven't commented on profitability yet.

[Jeff Farrow, CFO and Chief Strategy Officer at Tarsus Pharmaceuticals]

That said, if you take a look at the guidance that we have provided, take the top end of the revenue and the bottom end of the OpEx, you could see us going profitable sometime in 2027. Even with the incremental spend on iRenix and the Alkeus in the timeframe of when those data will turn over, shift our ability to go profitable maybe perhaps by a quarter or two.

[Neera Clase, Interim Chief Commercial Officer at Tarsus Pharmaceuticals]

The last part of that question was the sales force piece, and I'll take that. In terms of as we think about sales force with the new assets, you can think about a different sales force of between 50-75 complete team.

[Anthea Lee, Analyst at Jefferies]

Okay, great. Thank you so much.

[Operator]

Thank you. This concludes our question and answer session and today's conference call. Thank you for participating, and you may now disconnect.

Participants

Executives

• Sarah Nives, Investor Relations
• Bobby Azamian, CEO and Chairman
• Neera Clase, Interim Chief Commercial Officer
• Sesha Neervannan, COO
• Jeff Farrow, CFO and Chief Strategy Officer
• Liz Yeu, CMO

Analysts

• Ryan Rieth, Analyst at Mizuho
• Eddie Hickman, Analyst at Guggenheim Securities
• Jason Gerberry, Analyst at Bank of America
• Lachlan Hanbury-Brown, Analyst at William Blair
• Mazahir Alimohamed, Analyst at Oppenheimer
• Analyst at LifeSci Capital
• Matthew Caufield, Analyst at H.C. Wainwright
• Anthea Lee, Analyst at Jefferies