Great. Good afternoon, everyone. Welcome back to the second annual Guggenheim Healthcare Innovation Conference. My name is Eddie Hickman, one of the Biotech Analysts here. This afternoon, I'm welcomed by Tarsus Pharmaceuticals, Jeff Farrow, and Dave Nakasone are here with me. Gentlemen, thank you. Maybe before we get started with the Q&A, you reported earnings last week. So maybe, Jeff, if you just want to spend two minutes or so just reviewing what you saw and what we should look forward to for 2026. Sure. So maybe a little bit of background, too. And thanks for having us here, Eddie. It's great to be here. We are a commercial stage company. Our most advanced product is XDEMVY for a disease called demodex blepharitis. And then we also have a pipeline of also category-creating assets, as we like to say, similar to demodex blepharitis or XDEMVY for demodex blepharitis. And the pipeline assets include something for ocular rosacea. And then we have a potential prophylactic treatment for the treatment of lyme disease. On the quarter, we had a really nice quarter for the 3rd quarter. Typically, in the eye care space, you tend to see sort of a flat to even declining revenue growth. But we saw an increase in growth and recorded almost $119 million in revenue and dispensed about 103,000 bottles. A really strong quarter, coming off a nice quarter where Q2 we had over $100 million in revenue. We guided to the 4th quarter for the first time revenue. We're expecting revenue guidance or expecting revenue of between $140 million-$145 million for Q4, which would indicate that for the year, our second full year of launch, we would have revenues between $440 million-$445 million in revenues. Overall, very pleased. The DTC campaign has been hitting on all cylinders. Our expanded sales force has done really well in terms of driving depth of prescribing. We continue to be moving forward with our pipeline. Yeah, no, really impressive year so far. I want to go back to 3Q. I think you were a bit above where the street was and where you had previously guided. Can you just sort of walk us through some of the things that you really thought you outperformed on in 3Q that led to that overperformance? Sure. I'll start. And then maybe, David, if you've got anything to add. Generally, as I highlighted, this tends to be one of the flatter quarters, if not a declining quarter in terms of scripts. I think some of the key levers that really had us exceed our peers as well as our own internal expectations is kind of multifactorial. One, the message that the sales reps that are getting out there and telling eye care professionals to look at all your patients, have them look down as part of the slit lamp process, and see if they've got collarettes. If they've got collarettes, that's the hallmark for the disease. There's no such thing as an asymptomatic patient. Don't just look at your patients that come in complaining that they've got demodex blepharitis. If you look at your contact lens patients, if they've got collarettes, they're probably not able to wear their contacts for as long as they should be. That message seems to be resonating. I think we're seeing the aggregate effect of the DTC campaign that we really kicked off in earnest in the first quarter. That is really surround sound DTC. It includes network TV, streaming TV, but also social media, as well as in-office marketing efforts there. That is continuing to pay off. Finally, our payer dynamics have been quite extraordinary since the get-go. We now have over 90% coverage across all payer segments. Medicare came online in the first part of this year in January. We've started to see those patients flow through at a higher rate than what we initially anticipated. Really pleased with all those factors driving nice growth between Q2 and Q3. Yeah. So you mentioned when you were starting the launch that you were initially targeting 15,000 eye care professionals for launch. And I think you disclosed that now over 20,000 have prescribed. Now that you sort of reached that over-guided number, what is sort of the next step of paying or of physician engagement to try to increase usage among those 20,000 that have now written at least one script for XDEMVY? Yeah, I think Jeff touched on it pretty nicely there. It's really focusing on the fundamentals of our category-creating strategy, which is having the sales force execute with surgical-like precision, constantly generating new evidence to help potentiate use among all the patient segments. He mentioned the DTC. All those things are really driving from taking that 20,000, let's say, prescribing basis and getting them to write a little bit more frequently. We talk about numbers, talking about a monthly writer and then transitioning that monthly writer into a weekly writer. We saw a really nice uptake in weekly writers this past quarter. A lot of it just has to do with us focusing on those fundamentals and them all working in concert together. Yeah. Is there any significant pushback that you get from a certain segment of docs that try it and then aren't impressed or don't want to use it? Is this more just a matter of trying to convince them to use it more and finding more patients to use it? Are you getting any sort of negative pushback from any physicians? It's funny. I was just talking to somebody outside in the hallway here that I've known for a while. I've done multiple. This is my 4th commercial launch. I've never seen such extraordinary feedback from physicians and patients. It's highly efficacious. We saw 85% of the patients really see clinically meaningful benefit. I think in real world, we'll actually see more better than that. Almost every doc that comes up to us says, "This works for all my patients. It's really great to see these patients benefit from it." We haven't seen any pushback. As awareness continues to grow and you're continuing to find patients who maybe were previously misdiagnosed or undiagnosed, do you expect that engagement to change at all? Do you think the way that payers will think about this new disease will change at all as sort of familiarity becomes higher? In terms of payer pushback? Yeah, exactly. Yeah. No, we do not think so. We really made a strong effort from the get-go, even before commercial launch, to educate the payers on this disease, that there is pharmacoeconomic benefit to treating them. Because frequently, they used off-label products, tea tree oil, lid wipes, or even dry eye products that just were not efficacious. These patients are coming back into the office multiple times a year trying multiple branded therapeutics that just are not working. Given that, we got very good payer coverage from the launch, from the get-go of the launch. Do not anticipate any kind of increased payer pressure there. Got it. You mentioned the DTC a few times. I want to just double-click on that a little bit more in terms of what metrics you're using that really show that that's sort of worth the return on investment that you're seeing and sort of how you think about continuing or not continuing that spend. Yeah. We look at a whole host of metrics, things like website visits, what they're doing on the websites. For example, things like find a doctor or take a quiz. Ultimately, it's going to come down to prescriptions. We look at a whole host, but the most important one for us is, is this really generating a positive return? We reported on the last quarter that we are generating that nice return, and it's continued to grow. I think over time, you're going to see it even evolve and improve as people get more reps, if you will, with the commercial. Yeah, plan currently is to continue that spend. Absolutely. While it's working. Great. You mentioned on the call a little bit of increased focus on the increasing retreatment rates. Can you sort of remind everyone what you said in terms of what you're seeing in terms of the retreatment rates across some of the more seasoned patients and the newer patients? And then how we should expect that to evolve in 2026 and how that may influence the sort of estimates for 2026 as well. Sure. Just going back to our clinical study, we saw about 40% of the patients saw increased collarettes after six months. Between six months and 12 months, we saw the mites coming back, essentially. We discounted that thinking about real world where these patients were not probably going to come into the office right within six months or 12 months. We guided to 20% as being sort of the baseline expected retreatment rate. What we have been seeing is, if you look at the older cohorts, the patients that started right out of the get-go from the launch, we are starting to see a mid-teen retreatment rate, which would indicate that we are on the pathway to 20%. We feel pretty good about that. Just to clarify, that's like an annual retreatment rate. Is that within the year? I was sort of curious how we should think about patients that may require two to three within a year versus then coming back at the next year to get another prescription. How should we sort of dissect those? Yeah. That was from the prior year. Coming back, what we're seeing in, if you take a look at IQVIA, which is imperfect data, you'll see that within a particular week, 10% of the patients that get scripts are retreatments as opposed to what we're seeing from a cohort basis. Gotcha. OK, so we'll continue to track that going forward. You mentioned Medicare coming on board at the beginning of the year, which is obviously a positive cross for patients' outreach and payers. You also, there was a little bit of nuance there related to the gross-to-net this year. You had previously sort of guided for lower 40s gross-to-net, and that came in a little bit high. How should we think about that going forward, given that Medicare backdrop that you spoke about, in terms of how often or sort of how long it will take to sort of see continued improvement in gross-to-net and moving forward? Sure. So fundamentally, when you estimate gross-to-net, you're making estimates at the beginning of the year. And we do not have a long history here. It turned out that our great Medicare coverage came into play in the second half of this year. What we saw is more Medicare patients coming online than what we anticipated. The mix between commercial and Medicare changed a little bit from our estimate. We had under-accrued a little bit in the first half of the year by 0.7% of that 44.7%. When we got the invoice in the third quarter, we made that adjustment. That is why it ended up being 44.7%. Absent that adjustment, it would have been 44%, which was in the middle of our guide. Because of that different payer mix than we anticipated, we adjusted our sort of long-term thinking on what that gross-to-net might be. Instead of being in the low 40s, like we said, 42%-43%, we now expect it to be somewhere in the 43%-45%, so slightly higher gross-to-net discount. Is that sort of a steady state? Or are there other things you can do within the 2nd, 3rd, 4th year of launch or from now to continue improving that further? That will likely be our steady state. Absent the Q1 dynamics with deductibles resetting and seeing a slightly higher gross-to-net discount. Yeah. And speaking about that seasonality, obviously, we're used to talking about seasonality from a quarterly perspective related to what you said. You guys see a different type of seasonality where it's more weeks that offices are closed or that there are eye care conferences. How should we think about those for looking even at IQVIA or the script data from year over year? Should that abate at all as the launch continues, as people are getting more familiar with refills and having patients be able to, or as you sort of penetrate this new population, should we continue to see that for the next, at least in 2026, I'd say? Yeah. I'd say, Eddie, we still expect that to continue. XDEMVY is a highly promotionally sensitive product. If the ECPs and/or the patients are outside of the office, it's really hard to get a prescription. There are factors that you saw really come to fruition in the 3rd quarter this year where we were able to have a really strong quarter and traditionally a softer quarter, if you will. Holidays like the ones that are coming up, Thanksgiving, I think of the Christmas holidays, you're going to see a little less in terms of prescriptions, all really due to the fact that they're out of the office. Does that change? I mean, I know you have optometrists and ophthalmologists that are both prescribing. Can you talk about that split currently and sort of how you expect that to evolve or not as the launch continues as well? Yeah. So we call on about 20,000 now, ECPs. And it's split pretty evenly, meaning there's roughly 50% optometrists and 50% ophthalmologists of that 20,000. On the terms of a prescription basis, it's a little bit more heavier weighted towards the optometry side of the house. Let's say around 60% are coming from the optometrists and about 40% are coming from. Why is that? A lot of it just has to do with practice dynamics. Oftentimes, let's say an optometrist and an ophthalmologist might be in a shared practice. The optometrist might get the initial script because they do the initial screening. I think the other thing just to keep in mind is optometrists really have more of an economic incentive versus an ophthalmologist who's really trying to prioritize or she's really trying to prioritize surgeries and spend more time in the OR versus the clinic. Right. There is the sort of medical office visit dynamic as well. Could you sort of explain to our audience that? Sure. In a typical optometry world, like we'll use our VSP plan as an example, it might reimburse the eye doctor maybe $50-$75 for that initial visit to check your prescription and whatnot. If they diagnose a medical condition, a.k.a. demodex blepharitis, then they can switch from your VSP to your medical insurance card. Medical insurance will reimburse basically 2x, so call it somewhere in the neighborhood of $100-$150 for that visit. When they bring the patient back for follow-up to ensure that the collarettes have been cleared, to make sure they're feeling OK, let's say in six months, that office visit is also reimbursed at a higher rate. Each potential patient, you can see the value for an optometrist. You're getting patients in multiple times a year, which you normally wouldn't. That's correct. For an optometrist. Yeah. Very helpful. You mentioned for the first time in the 4th quarter, you provided revenue guidance as opposed to just sort of the bottle and gross-to-net guidance. What led to that decision internally? And then how should we think about either quarterly or yearly going forward? Will you provide guidance to the street? Yeah. No, we took a look at it on a quarter-by-quarter basis and really want to make sure when we give guidance, we're giving good guidance. One of the big uncertain factors of our launch, given the fact that there's never been a launch in demodex blepharitis, was the impact of DTC. Now we've got, say, four quarters under our belt. We felt we had a good handle on what we can expect from the spend and what that might do to revenues. We also felt pretty good about where we were on the gross-to-net side of the house as well. Given that, we decided to change to revenue guidance versus the bottles and GTN description. On a go-forward basis, yeah, our baseline assumption is we'll be providing annual guidance for 2026 absence of major change in the business. Yeah. You obviously haven't given that guidance yet. What are the things, like once you do give the guidance, that you would be most concerned about throughout the year that may have to force you to sort of alter that guidance that you maybe not foresee currently? Yeah. No, great question. I think the key thing is really the impact Q1, right, with the deductibles resetting, getting an understanding of that. I think the fortunate thing is if we choose to do it on the fourth quarter call, that'll be towards the end of February. So we'll be pretty far into the first quarter to be able to do that. That, I think, would be the biggest uncertainty for us at this point. Would you continue to sort of give your understanding besides what we can see in IQVIA but like your metrics of the retreatment rates going forward? Or is that something that will just be baked into the guidance as we move forward? I think if we are going to give revenue guidance, we'll probably back away from some of the other benchmarks that we've provided. Absent, we understand the street keeps a keen eye on these numbers. If it gets out of whack, we might consider either updating it on a quarterly basis or just saying, hey, it's off by this percentage point. Same with gross-to-net. Like if it's not within the guidance that you previously said, you could sort of give us a collarette or what was. Exactly. Great. The last piece here, I want to move to ocular rosacea because you've sort of provided some timelines for that study. Before we get into the phase II that you're running, just sort of remind us what this program is and sort of what led to the development of TP-04. Sure. No, it's a really exciting program where it's another category creating potential asset here that we are really excited about. We had originally, you might remember, had a phase II derm study that we did in something called papular pustular rosacea or PPR. We hit the primary or we hit our endpoints there, which is a reduction in the pustules, a reduction in the redness. Our initial thought was to partner this in the derm space because we're an eye care company and that's our preference to stay in that space. When we shared this data with the eye care professionals, they brought to our attention that they see ocular rosacea all the time. It's a common part of their practice. There's nothing out there to treat this from an FDA-approved perspective. As we dug into it, we saw, wow, this is a big opportunity, huge unmet need. There is something like 15 million-18 million patients that have it. Over 50%, as a conservative estimate, are thought to be caused by demodex mites. What was attractive to us is, one, we know we are very good at killing mites. Secondly, it is the same call point that we are currently calling on eye care professionals. There is an unmet need here. Really being able to get out there and help these patients is something that we really strive to be able to do. Yeah. Are those eye care professionals that do see it now, are they using anything off-label currently that sort of would be a good sort of benchmark for what you'd like to see in an efficacy study? Not really. So there's nothing out there like tea tree oil or lid scrapes. IPL or intense pulse light is utilized, but it's not reimbursed and it's not very efficacious. So it's probably not a good analog for what we're looking for. What do you know from obviously, if you're creating a category here, you have to sort of decide what endpoints and the size and scope of a trial. What feedback have you gotten from the FDA, if any, and sort of how are you thinking currently about what that phase II proof of concept would be? Sure. It's actually the same division that we've worked with in the past. It's the eye care division, which is good since we know them well. The feedback they gave us is focus on really the major complaints of the patients and what the doctors are hearing as complaints. The major areas of focus are obviously the redness and seeing a reduction in redness. Also, the hallmark of the disease is the development of these vessels, these prominent vessels on the upper eyelid and along the lid margin. If you can show improvement in either of those endpoints, that would be a win. Importantly, they said you don't have to show cure. You just need to show improvement here. That's what we're focused on. We're developing a scale or have been developing a scale to measure each of those particular endpoints. There's never been a study done in ocular rosacea before, so we are treading new ground here. We really want to make sure we're thoughtful about developing the right scale and the fact that Dr. A sees a two-point reduction, the same thing that Dr. B does. Yeah. I know in the early XDEMVY studies, you did show the mite counts, right? You had to show that the mites that were living in these eyelashes were reduced. Is that something that you can or would have to do in ocular rosacea to show that the mites that your lotilaner product is actually sort of killing the mites around the eye? No. Yeah. The feedback we got from the agency was that wasn't required and it would be very difficult to do. We did do it on our derm study. And it was a very crude measure. You basically take a slide, put some super glue on, put it on the skin for a minute, and then pull it off and then look under the microscope. So not really conducive for the ocular. Gotcha. You said you're going to start that study by the end of this year? That's correct. How long do you expect or what's your base case for how long you'd expect to see that before we have data? We're currently expecting top-line data in the second half of next year, 2026. Okay. I would assume that that's a phase II. Is there any different doses that you have to decide? I assume you would need two phase III similar studies to move forward to filing. That's right. Our baseline expectation is to do two phase III studies. This phase II study will certainly help us think about what those phase three studies might look like. Gotcha. Any sort of early, I was going to say, pricing comps, but maybe too early to talk about sort of how you'd think about pricing something like this, given that these docs are eye care professionals. They may not be used to prescribing a dermatology-type product. If there's anything you can. Yeah. I think it's a little early for us to think about that. The one thing I would say is we will certainly not need to do the same market development that we did in demodex blepharitis. There seems to be a lot more awareness on the ECP side of this disease. They see it's much more visible than, say, demodex blepharitis. Is there a lot of overlap? Will the same doctors that are doing the slit lamp and looking at mites on the eyelashes see the sort of pustules that you were talking about or the redness around the eye at the same time? Is that sort of the goal to prescribe? 100%. Exactly. 100%. Exactly. 100%. Exactly. Yeah. I think our focus on taking a look at the slit lamp has made the attention on ocular rosacea even more pronounced, right? They are looking much more closely at the orbital area and the upper eyelid than perhaps they ever did. They are noticing ocular rosacea much more. It is a very synergistic call point. Got it. Oh, yeah. We'll look forward to those data next year. You do have a third product that you talked about a little bit. While we have another minute here, I'd love you to talk about the TP-05 in lyme disease. Sure. The status and timing of the next steps there are. Yeah. This would be an oral version of the same active ingredient that's in XDEMVY in our ocular rosacea gel formulation. The theory here is you would take this oral pill once a month. It gets to therapeutic levels overnight, so you can take it the night before. Coverage based on the PK work and what the other work we've done is it covers for 30 days. You can imagine taking one pill once a month for the tick season, maybe three or four pills. The thought is you kill the tick before it can transmit the bacteria that causes lyme disease. Think about it as an oral version of a prophylactic vaccine type of thing. You've done a tick kill study previously? We did a tick kill study that showed we killed 98% of the ticks within 24 hours. It was durable for 30 days. Gotcha. So is that something you'd probably look for partners for or given your expertise in the eye space? Fundamentally, we think it probably makes sense for somebody that has a larger salesforce call point, GP call point for them to do it. Also, a phase three study, if you think about a vaccine study like Pfizer, is about 9,000 patients. It is probably suited for a big pharma. Yeah. So with all that said, if you want to, how well capitalized are you and sort of how are you thinking about that spend going forward and how, yeah? No, no. We're very well capitalized. We have about $400 million at the end of the 3rd quarter. From a capital allocation perspective, clearly making sure we maximize the potential for XDEMVY, both here in the U.S. and potentially the rest of the world. Ocular rosacea, we'll continue to spend on and we're well capitalized for that. We might also potentially take the Lyme program into a phase two study if we think we'll get a better return on the partnership side if we take it through phase two as opposed to partnering it right now. Down the road, we have the second largest salesforce out there in the anterior segment. There is potentially an opportunity for us to drop something else in the bag there and synergize our salesforce. We're looking at potential BD opportunities from an inorganic perspective as well. Great. I think that's the time we have. Appreciate you guys both coming. Good luck on all the next steps. Great. Thank you, Eddie. Thanks for having me.