From Tarsus Pharmaceuticals, Chief Commercial Officer, Neera Clase, and Head of IR, David Nakasone. Thank you so much for being here. You just reported the earnings last week. Neera, maybe take a minute to just walk us through what you showed, and what we should be looking forward to in the next couple months.
Yeah. Super excited about the quarter that we had in Q3. We were delivering on all cylinders, and what is really exciting is we had growth year-over-year, 64%. What drives that growth are a couple key things. One, we saw an increase in return on our DTC efforts. We saw also great impact of our Key Account Leaders or our sales team, really driving expansion of TAM and patient types. We also saw evidence release. We released 11 abstracts at the American Academy of Optometry with a lot of new data and insights, expanding patient use. Then finally, we had a nice tailwind with retreatment and refills.
Q3 is usually a little bit of a softer quarter seasonally. So, where in what you just mentioned should we expect to sort of continue into Q4 in 2027, and what was sort of a one-off or unique thing about the third quarter, if anything?
Yeah. We learned this past year that Q3 is typically very seasonal in terms of doctors being out of the office, patients being out of the office. We pulled forward some of our funds and our efforts into Q2, and what we actually found is some really good opportunities to mitigate the seasonal impact. So we saw a greater lift, and in effect, we also saw the synergies of our campaigns.
Keep in mind, this year we also rolled out not only branded and unbranded DTC, but we also had a really significant social media campaign with John Cena, and that really introduced a whole new patient type, and we're excited about that, leveraging that with the synergies of our sales force. We added 20 new KALs, and so that momentum really created some real nice tailwinds moving into the back half of this year and then coming into the new year.
Yeah, so when we think about 4Q, you raised your guidance slightly, but 4Q also has some seasonality with respect to holidays and things like that. So, how should we think about the sort of upper end and bottom end of that guidance that you gave, and sort of what could lead to that in the 4Q that we should be paying attention to—
Absolutely.
As we see the scripts?
Yeah. So, again, we're seeing really robust scripts. What we typically see in fourth quarter is, being that we are an NRx product, every quarter we reset. So, we do expect a little bit of seasonality too with doctors being out of the office, patients being out of the office, starting from Thanksgiving through the Christmas holiday. So, between now and then, a really nice, robust kind of finish, but there will be some time off and time out of the offices.
Or bad winter storms.
Or bad winter storms that we can't forecast. Always ready for that, but we feel really confident that we're going to meet the guidance.
Yeah. You mentioned the Key Account Leader team that's increased. How should we think about what impact that's already had, and then what's the timing around when that continues to have an impact in future growth?
Yeah. Think about it this way. They had their full first quarter in Q3, and as we think about moving into Q4 and into 2027, we're probably going to see a lot more efficiencies and effectiveness with this group. They're working on things like routing, frequency. They're looking at messaging. As we continue to refine that, we'll probably see greater ROI as well.
When we think about the current sort of prescriber base, you guys have characterized this in some ways as having sort of really high worth prescribers in a sense of like many per day, many per week, versus some of the sort of ones that you're still reaching out to, getting into the community setting, or just reach. When we think about the sort of lower end, but still regular prescribers that are maybe weekly, what's the effort and lift to get those into a daily prescriber that's really driving the growth that you've seen?
Yeah. A lot of this is about patient expansion and them seeing the value of the evidence that's out there. Again, we released a lot of good evidence, and now they're starting to also get into a habit in terms of understanding where they can diagnose and start to treat these patients across different patient types. So not just the patients that may provide with symptoms, but the asymptomatic patients who may need a more pristine ocular surface, as they are getting ready for things like surgery, as they are also concomitantly having other comorbidities. Now we're seeing more broadening of the patient types, or deepening, if you will.
Is that something you guys see in claims data that you can separate to see? Because I know we talked about this, Dave, early in the launch about the sort of different buckets of patients. Are you able to sort of see that you're sort of starting to penetrate the sort of non-DB patients?
Oh, absolutely. I think Neera kind of hit it on the head. We're seeing a lot of depth of prescribing, and we're also seeing it across all different types of patient segments.
One other, I think, interesting disclosure that you made last week was on the retreatment rate. Obviously, we've been talking for the last few years about where we'd expect that to come, but now that we've sort of hit that range, how do you know that's sort of the right level still, given the sort of two or three years of data that you have now. Is there a chance, or what are the sort of levers that could move that even higher than 20%?
Yeah. Think about retreatment also in terms of timing. In the back half of the year, a lot of patients meet their deductibles, so in that time of the season, they're probably likely to go in to see their doctor to say, "Oh, I may have this again," that type of thing. So, what we are seeing is maybe a slight uptick to about 20% in retreatment, but we feel like now that we are out for three years, we're seeing some stability. What we're also experiencing is we look at it at a 12-month basis. We're seeing a little consistency around a lot of the scripts that we get are new scripts, and then we have this base of scripts that are more on the retreatment side. Could it go up a little bit? Sure. Could it go down a little bit? Sure.
Depending on the time of the year, like Q1 is a little bit of a time where you don't see a lot of patients necessarily coming in for refills. They're coming in for new scripts. But think of it as a function of the total scripts that we have. Obviously, this is a new script business, and that's where predominantly most of the scripts come from. XDEMVY is such a powerful drug that most patients won't need a refill right away.
So, hypothetically, if I came in and got a new script in January and then needed another one in September, how would that be? Is that a retreatment for me, or would it be a retreatment if I came back the next January? Like, how do you guys think about what's a retreatment within the same year, it might be a refill, versus somebody who is actually coming back for therapy year -over -year?
Yeah. In that kind of case, it was probably more of a refill, right? Because you are coming back within a 12-month period and you are getting another script. I am assuming you would have a refill in your system. Now, some of these patients who do not have a refill, if they come back in September, like the example that you gave, that would actually be a retreatment. The doctor saw a reinfestation of the mites, decided, "Hey, I might need to retreat this for whatever reason." Might be a certain patient type that might need something in addition to what is normally occurring. So, those are some of the factors that might drive that.
Got you. So that implies that there are some patients that are getting initial prescriptions with a refill attached.
Sure. Yeah. And that happens predominantly a lot in eye care. Eye care professionals are used to writing a lot of chronic meds with refills, so it is not surprising that they might decide to do that with a drug like this as well, if a patient should need one refill in the course of a year.
You mentioned the John Cena DTC outreach, and obviously you have seen some ROI on that, but more to come. So, how should we think about how you quantify that moving forward and what the sort of go or no-go decision is on whether to sort of continue investing in that?
Yeah. We are constantly evaluating our campaigns. We are evaluating them across what we call our marketing mix, and we are evaluating the impact that we have. As we look at all of our campaigns, we look at things like fatigue. We look at things like, do they resonate? Do they resonate across audiences? How are we getting the throughput? Are they generating high-value actions in terms of activity on the website and engagement with xdemvy.com? These are the things that we are all measuring, and that is how we evaluate whether or not we extend a campaign, we renew it, or we actually think about doing something totally different.
Are you getting a lot of practices changing to using the slit lamp immediately for diagnosis, or is there still outreach related to sort of education on DB versus XDEMVY specifically?
Yeah. We do a combination of both, right? We are the category leaders in creating this category of Demodex blepharitis, and we have found that now one in three patients actually know what DB is and actually go to their doctors and really ask about, "Can you tell me more if I might have this?" The awareness is working, and what we are finding is that it is important to continue to educate both in terms of the disease state, because patients need to know, "How do I get diagnosed for this?" Which is a very simple diagnostic process. They go into the doctor's office, and most of you know when you sit, put your chin into a slit lamp, that is a microscope that actually allows you to really understand and assess.
The doctor can assess whether or not the patient has evidence of Demodex blepharitis and make a diagnosis pretty easily. This awareness about looking down and getting your lids examined is now becoming more and more routine in eye care.
Yeah. I am hearing that as well. You reiterated about $2 billion in U.S. peak sales. Where do you see sort of the biggest untapped pool of patients there? And related, how does the AAOpt data that you had sort of relate to that in terms of maybe reaching out to those sort of stye or patients as well?
Oh, that is great. Yeah. One of the evidences, papers that we released was around chalazion hordeolum, and this is recurrent styes that occur in patients, and these patients have a high degree of DB or Demodex blepharitis. What we are actually finding and hearing from doctors is when treated with XDEMVY and they have concomitant DB, these patients typically are having really tremendous outcomes. That is a whole new patient population that we really were not looking at that continues to expand that top of the funnel for us. That is one example of evidence and how we are building the evidence platform over time.
That is all included in the sort of $2 billion that you have talked about?
That is right. Yeah, in that expansion.
Before we get to some of the pipeline things, Neera, I want to ask you sort of specifically, this has been a successful franchise so far, and now you're sort of taking the lead. Any sort of changes we should expect in the way you're going to sort of run this franchise going forward?
The playbook has really worked for us, and we're extremely pleased with what we're seeing. Every metric is up, and we want to continue that. I think what you'll see is maybe a slight refinement. We're always looking for ways of how do we better optimize, how do we become more efficient, how do we implement things like AI in the future, and then how do we get more throughput. Those are the things that you'll probably see, but there's no big changes expected.
I want to move to the pipeline, because obviously this year was exciting add to the pipeline, but you also had sort of two other products. So, growing pipeline. How do you see the Alkeus product and IRX-101 sort of fitting into what Tarsus has already built out? Where are the synergies, and where are there places where you may need to build out further?
So if we think about this, we are so excited about our portfolio and these two acquisitions. I'll start with Stargardt or gildeuretinol, a potential asset for that. This is a category-creating area where there's no FDA-approved product, so right in the wheelhouse of sort of Tarsus, what we've done with XDEMVY, creating a new category, building a marketplace. Whether we're first or second to market, I think is going to be something that we're excited about either way. There's no treatment, and this is vision-preserving. What we also like is the asset and the science of the product. This product is a differentiated mechanism of action and has a potential of really offering a value proposition that's very strong to patients. So that's on the Alkeus front with gildeuretinol.
The other asset that we acquired recently was iRenix, and this is an ocular antiseptic also for the back of the eye. These are two areas that are expanding our footprint into eye care, and overarching, this asset also allows us to become a premier eye care company and leader as we start to evolve towards the future. What we like about this particular asset is that there hasn't been any innovation in a long time. No innovation in 40 years. The current standard of care is Betadine. It is a product that patients use, and doctors use it prior to surgery, right, to keep the surface area clean, and it has a lot of pain associated with it. It has corneal toxicity associated with it.
The offering potential that this asset will offer is an advantage of reducing pain, reducing the corneal toxicity, and potentially becoming a new standard of care in how these patients are treated. There's something like 11 million of these procedures that happen, and oftentimes patients are coming back every four to eight weeks. These patients don't want the pain and often are verbalizing to their doctors, "It would be great to have some kind of alternative." We're super excited to bring these two drugs, if approved.
Yeah, it seems like moving into the retinal specialists, in addition to the optometrists too, is where they're doing those injections. When we think about the trial, the NORTHSTAR trial for gildeuretinol, can you talk about the differences in what you're looking for in that trial that may be commercially differentiating, if successful, talking about the LLVA endpoint, and sort of how important that is for experts and KOLs that you speak to that treat Stargardt?
Yeah, it's a great question. There are two oral formulation products potentially that are vying for approval, and our product, gildeuretinol, if approved, will have two endpoints. One's a structural endpoint in terms of reducing the lesion size and improving that, and then the second one is a functional endpoint, which actually improves the visual acuity. What's really exciting about the mechanism of action is this actually uses a vitamin A pathway, and what's different about this particular product is that it will preserve vision while also minimizing tolerability and potential safety issues if and when approved. It's really a differentiated product, and we're super excited about just the value proposition it offers patients, payers, and these patients can go blind within seven years if not treated.
What are the timelines? Sorry, what are the timelines for NORTHSTAR in terms of when we might see data, and have you interacted with the FDA since the acquisition on acceptable path forward and NDA, things like that?
Sure, Eddie. The NORTHSTAR study started actually in the summer, in the June, July timeframe. Our expectation is to have data in the second half of 2029. If you recall, it's a two-year endpoint, so you figure enrollment's probably about a year, plus or minus, and then you got the two-year data endpoint that you're looking at. We've aligned with the FDA, or rather Alkeus did before they started the phase III study, so we're not making any changes to the phase III study design. We feel like it's going to meet all the requirements by the FDA.
Preliminarily, what can you sort of say about how you size that market, and maybe at the same time sort of talk about what might happen if one of the competitor products is approved next year? Obviously a very different profile than gildeuretinol, but I'm sort of curious, like, what we can learn about what that market looks like early in the year, yeah.
Yeah, so the market, as we are thinking about it, is roughly about 36,000 or so patients that are probably out there diagnosed with Stargardt today, but has a potential, there's probably a lot of undiagnosed patients, up to maybe 86,000 or so patients. That kind of range you can expect to see. A lot of patients haven't been properly diagnosed. What we're excited about is whether if we're first or second to market is, it's going to take a while to build this market. There are going to be a couple things that are going to be important. One is establishing sort of how these patients get diagnosed and treated.
Genetic testing is probably going to be required. That requires a lot of market development and education. In addition to that, there are probably going to be some opportunities to educate payers. We are excited if we are second to kind of leverage some of those learnings and hopefully continue to build a market together with another product.
Is there an opportunity for an interim look? You said it was a two-year study. Is there a potential that you could get some information prior to that? I do not know how Stargardt works in terms of that development piece, but could you see an effect in two years?
Yes, there is a possibility of an interim readout. We will currently have to kind of assess what we find, but absolutely, that is something that is on the docket.
Great. Very exciting to hear more about that. I want to move to rosacea in the last little bit here. You have some newly developed endpoints that you discussed with the FDA. Talk about what led to that discussion and sort of how you ended up on those as being the sort of representative endpoints for this new indication, another new indication for you.
I'll let you talk to the two endpoints, and then I'll add any color.
Sure. So, Eddie, if you recall, this disease state really came from the doctors we call on for XDEMVY. What happened was patients were coming back, their lids were nice and clear, there was no more redness, but the doctors started seeing this erythema and telangiectasias around the eyes. If Jeff were here, he would say, "Are these just noisy KOLs, or is there really a there there?" We did the homework, and clearly there's a there there. So, we're looking at those two things as really the hallmarks of the disease, and those will be the endpoints, or those are the endpoints in the ongoing Phase II study. So, our expectation is we'll read it out first half of next year. Any sort of improvement there would be viewed as a win.
If you think about the disease state, there's nothing out there for it. Patients have been suffering with this disease for a really long time, so any sort of improvement would be a win. The other kind of subtlety here is you don't have to hit both. It's one or the other.
When you were studying XDEMVY at the time, there was some sort of questions about whether just having better hygiene, even with a placebo product, is helpful here. Is this a situation where we could see that in a clinical trial that may underwhelm than what you'd see in the real world because people are using some placebo lotion or something that would be similar? How should we think about that going forward of just people paying attention to having some irritation versus actually treating the mites associated with and potentially causing that?
Go ahead.
I would say it's a little too early to tell. Obviously, in the Demodex blepharitis studies, there was a placebo effect, but obviously XDEMVY performed rather nicely. Our expectation is, I'm sure there's going to be on some level. It's natural, hence the terminology. But look, we've got a proprietary sterile ophthalmic gel that we feel really good about. But again, you really need to see the data before we can make those sorts of assessments.
This is phase II, so presumably you'll have some decisions to make after these data on what to move forward. Do you anticipate that you could use these same endpoints and just sort of a larger phase III program, or are there differences when you head to a pivotal registrational study in here? I know it's all sort of uncharted territory, so I'm just curious how you're thinking.
Yeah, I think we could probably use those endpoints as we pursue additional studies. That's something we would definitely look at. They tend to be the main things that these patients suffer with. You see, in terms of the grading of the scales that are used to assess their levels of improvement, you definitely can see that that's something that's important to these patients. So, that would certainly inform any additional studies that we are pursuing, and we can kind of go from there.
And then, finally on Lyme, any updates you want to give on the timelines there and any updates on partnership discussions or things like that?
Yeah, so we completed enrollment a little bit earlier this year. As a reminder, it is a 700 participant study. We are really looking at safety here, and our expectation has not changed. We see data first half of next year. Then, sorry, on the partnership front.
Yeah.
I think most partners are going to want to see data before making any sort of decision.
Yeah.
As are we. We would like to see the data as well.
Yeah. Increasing DTC, increasing sales force for pipeline programs.
Yeah.
How should we think about spend going forward? Where's the most leverage that you have as we think about 2027 and beyond?
Yeah. I think when you think about spend, I think one clarifying point here is, when we brought on Alkeus, there are certain integration costs and acquisition fees, et cetera, that you've got to account for. If you were to take those out, meaning if we didn't acquire Alkeus, our SG&A spend actually would have gone down. As we think about how we move forward, you're right, Eddie, you're going to have some additional pipeline programs, you're going to start a couple of new studies next year. Your R&D expense is obviously going to go up a little bit. On the SG&A side of the house, the way we see it today is, there's no expectation that we're going to add to the sales force in any material way.
We really like what we're seeing in terms of DTC, but again, a lot of our decisions are going to be driven by data. What does the data tell us in terms of, let's say, DTC spend or other campaigns that we may want to launch? But as we sit today, we feel kind of good where everything is at.
Great. Thanks. Anything you would like to add? I think that is all the time we have, but if there is anything else?
No, I think Dave said it perfectly, and I think we are super excited as we move into 2027 and beyond.
Great. Good luck, and look forward to seeing you next.