All right. Welcome everyone to H.C. Wainwright's BioConnect investor conference here at Nasdaq. My name's Matthew Caufield. I'm a Senior Biotech Analyst here at H.C. Wainwright, we're very grateful to be joined by Tarsus Pharmaceuticals. We'll be speaking with Jeff Farrow, CFO and Chief Strategy Officer, as well as David Nakasone, Head of Investor Relations. Thank you guys very much for being here.
Thank you, Matthew. Great to be here.
Excellent. maybe to kick things off, you could provide a high level view of how you've established and really defined the treatment of Demodex blepharitis mites with the approval and ongoing commercial success of topical XDEMVY.
Sure, yeah. Maybe before I answer that question, I'll just give a quick overview of the company.
Yeah, please.
Before we dive into that. We are a commercial stage company. We're located down in Southern California, in Irvine, California, and we have a commercial product for the treatment of Demodex blepharitis, which is a disease of the eye. We were approved in essentially August of 2023, so we've been on the market for about 2.5 years, and the launch has gone extremely well. We also have two pipeline products that are also based on the same active ingredient in XDEMVY. The pipeline product that we have for ocular rosacea is in a phase II study that we kicked off in December with top-line results in the first half of next year. We also have an exciting program for the prophylactic treatment of Lyme disease.
Differing diseases, but all with the same active ingredient. That's kind of what ties them all together, so. Before XDEMVY came along and was approved, there was no FDA-approved treatments for the treatment of Demodex blepharitis, and Demodex blepharitis is caused by Demodex mites, and we all have them, just some people have an overproduction of them. There's really no correlation. It's not hygiene-based. It's not based on where you live, in hotter weather, anything like that. It's just some people have a propensity to overproduce these things, and it gets into the eyelash follicles, creates sort of an itchy redness, and in worst case scenario, it can cause corneal abrasions and things like that. Before XDEMVY came along, people were using sort of homeopathic type of treatments that weren't efficacious.
When XDEMVY came online, it really changed the, the treatment paradigm. The launch has gone extremely well, you know, primarily because it's so efficacious and safe. The great job that the commercial team really sort of paving the pathway to make sure people understood Demodex blepharitis and talked to payers to understand the impact of it from a sort of medical impact and pharmacoeconomic benefit. That really helped pave the way, I think, for a successful launch.
Excellent. Well, one point that does not go unnoticed among investors is that you guys have delivered four consecutive quarters, each comfortably surpassing $100 million in net product revenues. That's quite a feat. Can you help us understand the success of that trajectory and how you currently view the DB opportunity?
Sure. David, you wanna take that?
Yeah. It's really a testament to the leadership team and I think foundational to it is our product, XDEMVY. It works in nearly every patient. It's got a very safe and tolerable profile. The other thing we've done really well, I think, and it's kinda led us to the growth you talked about is we really have, you know, our secret really is our category-creating blueprint, if you will, where we really focus on a few key tenets, one of them being evidence generation. The other one is we have really great access with over 90% coverage across commercial, Medicare, and Medicaid. Obviously, you know, we're flawlessly executing against all of those, all those tenets.
Cool. Then maybe could you just comment a little more on the progressive receptivity from eye care professionals to XDEMVY?
Sure. There's roughly 40,000 optometrists out there in the U.S. There's about 20,000 ophthalmologists. We call on about 15,000. They represent about 85% of all front-of-the-eye prescriptions. To date, we have about over 20,000 prescribing optometrists and ophthalmologists. I think from a receptivity point of view, it's gone overwhelmingly positively for us. To date, we've probably treated about 600,000 patients. There's probably a TAM of roughly 25 million. Of that, about 9 million are in these clinics that we call on. You know, things are progressing really, really well, but we still have a long road ahead of us as we, you know, march our way to the 9 million and 25 million.
Sure. I mean, I think a key point to success has been getting prescribers to kind of change their practice patterns and look for the Demodex mites. Can you tell us more about getting the ECPs on board, the relevance of Meibomian gland disease, cataracts, dry eye, contact lenses, how those factors kind of play into adoption?
Yeah. No, the beauty about this is it's very easy to diagnose. Almost every patient will come in and go through a slit lamp examination. That's where you put your head in that little cradle, and you can look in the back of the eye. What we've asked doctors to do is to just ask the patient to look down and look at the eyelids, and you can see these collarettes. They're pathognomonic for the disease. If you've got collarettes, you've got this disease and the associated mites. You've highlighted the 9 million that are coming into the doctor's office, and as Dave highlighted, there's actually 25 million overlaying that, you know, probably aren't regularly coming into the office.
Our DTC channels have really started to see some of those patients coming in and saying, "Hey, I saw this commercial. I'd love to get, you know, to see if I could-" These mites. What we've done is really just, you know, probably the low-hanging fruit with initially out of the launch was people that were complaining of Demodex blepharitis, right? The doctors treated that, they saw how efficacious it was, how safe it was, and the patient receptivity to, you know, seeing the clearing coming up, they started to take a look at all of their patients. That's what we're really highlighting, that if you've got these collarettes, you've got this disease, and there's no such thing as an asymptomatic patient. These patients suffer from fluctuating vision, they feel it, you know, crummy in the morning, and their red, itchy eyes.
It's really just focusing, don't just look at the patients coming in complaining of Demodex blepharitis, but look at all your patients. If they've got collarettes, you know, they would benefit from the treatment of XDEMVY. That's how we're sort of targeting that. It's really about the depth of those prescribers.
Getting it into that practice routine to look in the slit lamp and see if they've got collarettes.
Very helpful. Kind of going off of David's mention of the over 600K patients treated, roughly 9 million proactively seeking DB treatment or corresponding eye conditions, Are there any other factors that you view as sort of being the top contributors to drive penetration over the near term, at least during 2026?
We do believe this is a $2 billion opportunity just in the U.S. here, just for Demodex blepharitis. The DTC campaign I've mentioned is already resonating. We went from almost zero awareness of Demodex blepharitis. I certainly never heard about it before I came to rosacea , Tarsus. Now it's 25% the last time we looked, which was around the fourth quarter, so it's gotten even better than that. We're getting patients coming in asking about whether they've got mites. We're really focused on, you know, driving education on the doctor side too. While they know how efficacious this drug is in Demodex blepharitis, giving them other reasons to treat, you know.
Having, you know, the data in Meibomian gland disease was really super helpful when the patients were complaining about this and trying it out with patients that have Demodex blepharitis and MGD. Recently we put out an abstract on the correlation of Demodex mites with hordeola and chalazia. These are those sort of bumps that you get on your eye, they're quite burdensome to the patients, the doctors hate treating them as well. You know, it's typically a surgical type procedure. It's not reimbursed well. Having a potential eye drop, you know, to help treat these patients is a big win. It's really continuing the consumer efforts, educating the physician community on this is one of the key things that we're doing to drive continued depth.
We just recently announced last week we've got a partnership with John Cena. Might have seen there was some social media outreach there. That's really started to resonate. He was on the Today Show talking about Demodex blepharitis in People Magazine. Really making it an approachable disease and making it something that people are comfortable talking about to their doctors and to their family members. You know, that's other efforts that we're doing, and we've got some other additional efforts going on in the sort of direct consumer advertising as well.
Yeah. Very constructive. I think a point with the John Cena collaboration is that a lot of patients aren't aware that they have the disease or that it hasn't even has a name. I think that can be.
Exactly.
A good outreach component.
Yeah. He didn't know. He admits he was self-diagnosing.
Right.
When he went to the eye doctor, the doctor mentioned it, and he was like, Wow, I should have been focused on this more.
Certainly. In thinking about new diagnoses, prescriber enthusiasm, what are considerations in coming years for XDEMVY as XDEMVY transitions to longer-term durable growth? Will it still be about driving new patient access? How do refills play into this dynamic? I'm thinking broader, longer term.
Yeah, man, I think a lot of it still comes down to new patient acquisition. Our strategies are really designed when you think about whether it's a monthly prescriber, weekly prescriber, or even daily prescriber, is how do we further drive depth of adoption, and how do we obtain the new potential patients? You know, whether they are diagnosed with DB, whether they're underdiagnosed, or whether they're coming in for a complementary condition. Today, you know, when we think about refills or retreatments, we're probably in the mid to high teens. Working our way towards 20% is where we think it'll end up being at steady state. Things are progressing pretty nicely. At the end of the day, we're really focused on new patient acquisition. Refills would be a nice tailwind, but our main goal is to drive depth of adoption in patients.
Mm-hmm. During the update for the quarter, there was also discussion of anticipated strong growth heading into 2Q, prescription depth, patient expansion. There was also some discussion of the key account leaders or KALs. Can you talk a little bit more about what that initiative could translate to in the near term?
Sure. We have about 20 Key Account Leaders or KALs, and they've been onboarded and are working their way through their respective territories. They'll probably be really meaningfully driving prescription volumes beginning in the second half of the year as they transition today. Their main focus is really on the high accounts, those that either write a lot and/or have a lot of potential to write. To be clear, we're not adding territories. We're really adding them within existing territories to help drive that further adoption curve if you will. You know, we had a
Tremendous amount of interest from our internal sales reps, as well as a lot of external folks, as well. Aziz, who's our Chief Commercial Officer, he interviewed all of them, and, you know, they truly are the best of the best here, and, kind of been there, done that, if you will.
Mm-hmm. Then just thinking more broadly, given the commercial success of XDEMVY and the attractiveness of the DB market opportunity, how are you thinking about the competitive landscape developing over the next few years, maybe three to five years? Do you believe or what do you believe are the most defensible aspects of the XDEMVY franchise, kind of any headwind anticipation there?
Yeah. No, we know when, with commercial success, people try to follow, right?
Sure.
We're following a couple of, you know, potential competitors there. What I would say big picture is it's really gonna be hard to beat XDEMVY and lotilaner. You know, we chose that asset because of its, you know, sort of benign safety profile. It's very targeted. It targets just the mites. There's no off-human, off-target indications. These other assets that are being explored are older assets that one of them dates back to 1890, where it was used for treatment of glaucoma. The other one is used as a pesticide.
They're You know, I think the fact that we are so efficacious, and we are so safe, and, you know, the doctors are super enthusiastic about how patients have been reacting to this and how the disease has been treated, you know, that it's gonna be challenging. It's gonna be a tough bar to beat.
Sure.
Additionally, these products are probably at least five years away from market if they move forward.
Yeah. That's very helpful. I wanted to make sure we gave a little attention to the pipeline as well, obviously. The pipeline includes expansion with the phase II core trial for TP-04. That's the lotilaner gel in the treatment of ocular rosacea. That top line is anticipated first half 2027. What points could be the most translatable from DB success kind of playing into ocular rosacea benefits?
Yeah. I can talk about it from a commercial perspective as well as from a clinical perspective, and maybe we'll start with the clinical. You know, this, we know we are very good at killing mites, right? You know, as I highlighted, it's very specific to the GABA-gated chloride channel in the mites, and it paralyzes the mites and kills it. We know we're good at killing mites. We put it into a sterile gel formulation, which is more optimal for the ocular rosacea w hich is around the eye. I think it's the experience that we've had from the clinical side, you know, both on the development of Demodex, XDEMVY for Demodex blepharitis. You might recall that we also had a phase IIa study in dermatologic rosacea.
Basically a form of rosacea called papulopustular rosacea that's also caused by Demodex mites. We showed a stat sig reduction in the redness as well as a stat sig reduction in the pustules that form on these patients. You kno w, that gives us a, you know, a lot of confidence in the probability of success for this gel-based formulation in ocular rosacea. On the commercial side, you know, really just continuing getting out there, educating the doctors on this disease well ahead of launch. At a certain point, you know, assuming we move forward, you know, we'll be having those conversations with payers as well and sort of what the impact of this is to patients as well.
All of those things really kind of help us think that this as a high probability of success. It's an unmet need. There's nothing else out there for the treatment of ocular rosacea. You know, it's another white space that, you know, would be great for us because it's also very synergistic with our call point. These patients aren't treated by dermatologists, but also Eye Care Professionals, and so it's very synergistic with our call point.
Yeah, I was gonna mention the prescriber, kind of it's the same focus.
Exactly.
They probably already going to be familiar with the DB.
Exactly. Yeah. When we talk to the doctors, they're a lot more familiar with ocular rosacea than they were, you know, five years ago with Demodex blepharitis.
Mm-hmm. Very helpful. As we think about the first half 2027 top line in ocular rosacea, the team had commented about looking for meaningful trends in impacting erythema skin redness, prominent blood vessels under the skin. Are there other important points that could help support initial lotilaner validation for rosacea?
I think, you know, the nice thing is the conversation we had with the agency. They said that you don't need to show a cure in these patients. You just need to show an improvement in either of those scales, and it doesn't have to be both, just one or the other. I think, you know, that if you talk to the eye care professionals, they will also say that any kind of improvement on these patients is a win because there's just nothing else out there.
I do think, you know, having the strong clinical data, you know, showing a nice data card, it will be very helpful as we think about having those discussions with the agency down the road as well too. I think the other thing that the commercial and manufacturing team did a nice job was developing a palatable gel. This is a, you know, gel formulation that dries quickly, so it won't interfere with makeup or things like that. As you think about the commercial impact, you wanna make this as favorable package as you can, they've done that nicely.
Sure. You've also initiated the phase II Calliope trial for TP-05 oral tablet, lotilaner, as a preventative therapy in Lyme disease with potential for future partnering. With Pfizer's Lyme vaccine candidate VLA15 phase III data showing a roughly 73%-75% efficacy after the fourth dose, what are your current considerations just overall landscape? Obviously different MOAs.
Right. Right. Yeah, no, Based on our market research, there's room for both, right?
Yeah.
You know, you can imagine perhaps an on-demand oral version might be even more attractive to a lot of people, right?
This, the way this looks and works is you could take a pill the night before you go out on a hike because it gets to therapeutic levels within eight hours, and it's durable for 30 days. You could think about, you know, if you're going to, you know, suddenly we're gonna go vacation in Cape Cod, right? You could take it the night before and have, you know, protection by the next morning and have durability for that entire month. The way we're kind of viewing this is an oral prophylactic that, you know, if you live in an endemic area, you maybe take one pill for four months during the, well, the tick season.
If you're traveling in some place, you might, you know, pick up a maybe one or two pills 'cause you're gonna be in that area for that particular time. I think, especially as you think about, you know, maybe pediatrics and younger kids, I think the attractiveness of having an oral versus a vaccine, which would require three doses before you get to antibody t iters that are therapeutic and annual boosters, you know, this could be something that's very attractive to parents.
Excellent. Well, I know we only have a minute or so left here, just turning back to XDEMVY's ongoing global expansion efforts, European, Japan, Greater China DB markets, what are your views on the overall ex-U.S. receptivity for incorporating routine DB evaluation into the eye care practices and just the overall commercial opportunities there?
The success of XDEMVY here in the U.S. has really been noticed by particularly the European prescribers. They would love to be able to have access to this drug. We are exploring, you know, moving forward or, you know, to be determined, you know, is it a partnership? Are we doing it alone? I think the confounding thing that we need to be thoughtful about is the MFN issues, the Most Favored Nation pricing. You know, I think all of us as single product companies are thinking about does it make sense for us to potentially launch a drug in Europe? We're evaluating that. We're monitoring how things move forward from a policy perspective. Stay tuned for that, you know, but we're doing everything we can up to the point of filing. We're getting everything ready.
We've got the manufacturing, you know, complete. It does require, you know, single use dosage forms. We do wanna see the policy sort of evolve and see if it makes sense for us to move there. You know, maybe not in the near term if that turns out to be the case, but at some point down the road. That's goes for the same thing with Japan as well too.
Sure. I mean, maybe just as we wind down here, just considering the commercial and pipeline progress, what, if anything, do you feel could be underappreciated by investors currently, and what are kind of your top takeaways as we to the rest of the year?
You know, I think there's a couple things. One, I think the opportunity for XDEMVY is somewhat underappreciated, right? You know, we do have the seasonality pattern that you had highlighted and David talked about, and it's consistent, right? It's not really anything to do with seasonality of the disease, but really sort of the commercial aspect.
Right.
Because we are a new Rx business generally. I think it's a, it's an underappreciation of the U.S. market opportunity. I think the pipeline opportunity with rosacea in particular is completely synergistic. I think there's a high probability of success because of the past studies that we've done, and our success in Demodex blepharitis. You know, finally, I think a Lyme disease program is a huge unmet need from a healthcare perspective, but also if we partner something like that, you know, we could see some nice dilutive, non-dilutive cash come into the company as well.
Absolutely. Excellent. Well, it was a short conversation, but with that, thank you very much to the Tarsus team, and really looking forward to the lotilaner progress this year. Thank you.
Great to be here.
Thanks, man. Thank you, guys. Thanks.