Going here with our next company presenter at the Bank of America Annual Healthcare Conference in Nevada. We've got Tarsus Pharmaceuticals, Jeff Farrow, CFO, and Aziz Mottiwala, Chief Commercial Officer. I'm Jason Gerberry, I cover biotech and pharma at the Bank of America. We've been covering you guys for a couple of years now. You're, you're kinda hitting a real inflection point with the commercial launch of XDEMVY for Demodex blepharitis, and by all signs, there's a lot of growth runway still in front of you, and some pipeline in the story as well that is gonna be coming more apparent to investors over the next year. I think we have a lot to talk about. Maybe we can just start with maybe, Jeff, just post Q1, XDEMVY takeaways, where any soft performance, you know, any surprises as you think about that in the context of the full year outlook? Sure. Happy to answer that. Jason, thanks for having us. It's great to be here. Maybe just the big picture to you alluded to some of our pipeline, I'll just quickly give an overview of Tarsus. We are a commercial stage company. Our lead product is XDEMVY for the treatment of Demodex blepharitis. It's a disease of the eye. We've got an exciting pipeline, two assets in phase II, one for ocular rosacea. It's a type of rosacea that's around the ocular area. We also have a phase II program for the prophylactic treatment of Lyme disease, and we can talk a little bit more about that later. In terms of the Tarsus, you know, expectations for the year, we're really excited and pleased with how the tempo of growth has been. Q1 came in much like we had anticipated. We knew that with the deductibles resetting, there would be probably less patients visiting their offices until they get through that deductible reset. It came in line with our expectations. The one unusual aspect was we had some more heavy winter than what we were anticipating, but I think that impacted a lot of other therapeutics in the first quarter. We firmly believe that our guidance of $678 million- $700 million for the year is still valid and achievable. Our revenues of $145 million for the quarter really are showing strong indicators of continued growth. All the underlying facts that's beyond that in that quarter continue to grow, including depth of prescribing, employee engagement, and then we also had some really interesting phase IV data that came out. We feel really good about the tempo for Q1, and as we lead into Q2, we've had some nice all-time highs that we've seen in terms of the script data. As we look ahead, you seem like you have an established quarterly cadence, in terms of some of the seasonality factors, and, you know, you called out a few things in Q1. As I think ahead to the next three quarters, similar quarterly cadence, any catch up that comes with maybe some of the headwinds that you experienced in Q1? Yeah. Yeah, no. You highlighted our seasonality that we typically see. We still are primarily an NRX business, we're impacted by, you know, quarterly issues like holidays, vacations, conferences and things like that. Typically Q1, we see the deductibles reset, we see a little bit of less visits to the eye care professionals, and we saw that in this quarter. Q2, we expect to see a nice step up in growth. Q3, while we expect to see continued growth, it's a little more tempered than what we see between Q1 and Q2. Q4 tends to be one of our biggest or one of the biggest quarters from a pure model perspective. We saw that in the fourth quarter. That's kind of how we see things play out. We might get a little bit of tailwinds, as you highlighted, because of some of the snow days and some of the weather impact, you know, with those people being rescheduled into the second quarter as well. Okay. What do you see as the catalyst for growth from here? What kind of ROI do you see from DTC? You know, if you do see good ROI, does that sort of imply that maybe you should be doing more of it in subsequent years? This is a really great time for us in terms of, as Jeff Farrow mentioned, once we work through this Q1 seasonality, the underlying business, all the factors here look really positive and progressed nicely in Q1. Everything around depth of prescribing our consumers and physician response to the evidence we're generating. Those are really three catalysts that I think can continue to expand the impact of the business. Let's talk about depth of prescribing. We have more and more doctors writing this with heavy frequency. They're looking for incremental patient types. They're opening up their aperture. To help accelerate that, we're employing a key account leader position. We expanded by about 10% with very high-level talent in the industry, experienced folks that are gonna focus on the most valuable physicians and most valuable targets out there for us. They're being trained right now and will be out in the field and having impact in the back half of the year. That's a catalyst that will help accelerate that depth of prescribing. DTC, we do a lot of work in modeling. To answer your question, all the data and analytics support our approximate $80 million spend, which is in line with what we did last year. The difference this year is the ROI continues to scale, so we're getting even better ROI now as we've gotten time on this. It's ahead of our expectations as well as on the high end of benchmarks. That gives us a lot of confidence that we can execute differently with DTC. We've got some big plans in the coming weeks to refresh the campaign, accelerate some of the noise around the business that I think will really open up a lot of eyes and create a lot of attention, which is gonna be great. The other factor that the team is able to do is because we've been doing this for a year, we're smarter, right? We know where to put the ads to get the best bang for the buck. To your question, could we do more? I believe that with the $80 million we're spending, we're gonna be able to do more just because of the way we're executing the knowledge we're applying and then some of the creative things we're gonna be doing in the coming weeks. DTC, I think, is going to continue to be a very impactful lever, and we would anticipate the ROI to continue to scale in a positive way. The last catalyst, as Jeff mentioned, is some of the data generation and Q1 was actually one of the record-breaking quarters for us in terms of the number of podium presentations and posters, including ones that really open up the TAM, give doctors new patients to think about. We highlighted on our call, the idea of like hordeolum and chalazia, which is a area that patients come in all the time. They get lumps and bumps on their eyelids. Doctors don't like treating this. Sometimes it involves invasive procedures, and there's a high correlation of Demodex in these patients, and there may be benefit for those patients. Those doctors are hearing that from the podium. When you look at where we are today, overall great underlying mechanics on the business and then really clear and actionable catalyst to continue the growth as we go through the rest of the year to achieve the guidance that Jeff Farrow alluded to. Okay. You upped the peak sales guide to greater than $2 billion. Maybe can you talk about, is your expectation around the TAM proved? Is that an underlying factor there? You know, you were involved with RESTASIS in creating dry eye category. You know, it may be a similar point in time. How do you see the evolution of Demodex blepharitis as a condition where doctors are focusing on it and sort of the metrics there, how do they stack up? We were really excited when we talked about the potential of this product. To be clear, you know, the $2 billion peak is U.S. sales for XDEMVY only. It's actually very impactful to think about that. I look historically, right, RESTASIS is a good example, and why is this different? Well, this is even more impactful because it's not just how patients feel. It's a visible disease, right? They get the redness, the crusting and impact. Patients are more motivated here, particularly with the mechanism of knowing it's mites. That's different. The diagnostic criteria is really easy for doctors to employ. It's a simple slit lamp exam. They just need to check your eyelids for crusting. They can make a definitive diagnosis. These are things that we believe allow XDEMVY to be an even bigger impact in the eye care market, i.e., a $2 billion peak versus, you know, say, dry eye products, I think is a $1 billion, $1.5 billion. What are the underlying assumptions there? One is, as you alluded to, Jason, the expanding TAM. We started and said, "Hey, there's 25 million Americans out there." We started with about nine million. What we're hearing from doctors very clearly is that there's far more use cases for this product. They're having really good success. They're contemplating different patient types. We talked about hordeolum and chalazia. There's several other use cases. Beyond just the obvious, right? We talked about dry eye, cataract surgery, meibomian gland disease. These become very obvious cases, but there's even more. We think an expanding TAM is one factor. The other factor, which is really exciting, is a broadening prescriber base. When we started, we thought about 15,000 or so doctors, a couple of quarters ago we said, Hey, we had over 20,000 doctors writing this product. We have more doctors. You're actually accessing the other part of the funnel, not just the TAM, but actually the ability to convert because you have a larger landing pad for these patients with over 20,000 doctors writing. When you look at the most recent quarter, we actually saw a good step up in terms of depth of prescribing. This audience of 20,000 doctors is actually continuing to progress how they're activating patients in their practice. Expanding TAM and expanding depth of prescribing are the two levers that we believe are gonna untap the full potential. Okay. This is, you know, somewhat of a promotion sensitive category. You know, as we think about how you're resourcing the brand today, do you feel like the incremental growth from here is with a high degree of favorable operating leverage? Meaning, you know, have you kinda reached a high point in terms of resourcing? Is the incremental dollar, you know, spent in OpEx, is it something that you can allocate to R&D and different clinical programs or make an acquisition and place funding towards that? Do you feel like investment in OpEx still has to scale with the growth of the brand? So- I mean supportive sales and marketing dollars to support the brand as opposed to other things that could drive alternative sources of growth. Yes, I'll talk about the commercial and then I'll let Jeff Farrow speak to where else we could deploy capital. From a commercial perspective, we're in a really good spot. We have one of the largest sales forces in the eye care space, so we're well-resourced there. We talked about DTC. All of our analytics and data support the level of spending we're at today. Again, we're looking for ways to get even more impact out of that investment. I think the only area we will continue to scale is there's always variable fees that go along with our business, right? Pharmacy fees, co-pay fees, et cetera. The more bottles you sell, those fees will go up in commensurate levels. We see that as the only thing that scales, but implied there is to continue to generate operating leverage on the base commercial business. We're starting to show that in 2026, and I've committed to Jeff that I'm gonna continue to do that going forward, and that hopefully frees up capital to do other exciting things to grow the company, which Jeff can speak to. Yeah. No, I think right now the XDEMVY business is a profitable business if you think about it from a product P&L perspective. That leverage is gonna continue as the revenues grow. We are really priority number one on capital allocation is continuing the growth of XDEMVY, but we're also really excited about our pipeline and investing in the ocular rosacea and Lyme programs as well. BD, we wanna be an eye care leader, and that means, you know, really focusing on the anterior segment, bringing more things into the bag for our sales team, and then, at some point as we continue to grow, thinking about moving into the back of the eye as well. Okay. Maybe just thinking about sources of the business and uptake, be it either, is there a patient profile or patients with comorbidities more likely to get treatment? From a prescriber's perspective, I'm just curious why ophthalmologists maybe lag ODs at this point. I think, at the time when you guys IPO'd, it was an expectation it'd be more of a 50/50 balance. I think it's a little bit more skewed to ODs. I'm just kind of curious if your thoughts around maybe why ODs have gravitated to the product more so than MDs. Yeah, I think to clarify, the products have performed really well across both segments. Ophthalmology, you know, as mentioned, like it's actually now some of our top prescribers are ophthalmologists. It really has to do with practice dynamics more than a bias towards whether or not they see success with the product. Ophthalmologists, keep in mind that they spend a good proportion of their time outside the clinic. They're in the OR. They have inherently less clinic days to treat these patients. With that said, some of the most prolific prescribers of the product are ophthalmologists who are doing cataract surgery and are pre-treating these patients that are seeing a high preponderance of Demodex blepharitis. We see a real value there. Optometry being, you know, say 2/3 of the business is really predicated, one, they're in the clinic all the time. Two, a lot of optometrists are actually in clinic with ophthalmologists. It's hiding the fact that, you know, going back to what the 50/50 was, well, a lot of that prescribing that's happening in ophthalmology clinics is done by the OD, the optometrist. The surgeon is saying, "I'm gonna do the surgery," and the optometrist is gonna manage that. You have co-management that's a factor there. Third, for your standalone optometrists, this is a huge practice builder. They see this as a way to expand the practice. More and more optometrists are practicing medically. Those visits tend to reimburse significantly better than just a standard vision exam. With this type of drug or, sorry, this type of disease where we know there's a potential for recurrence, there's a dynamic output where they can see the palpable impact of the drug, there's a desire to bring these patients back. They're coming in for a follow-up visit to see the impact of this of the treatment and also to see recurrence down the line. For an optometrist, this becomes a great way to retain patients in the practice, bring them back and really create value for the practice. All of those factors would tell you it's right where it should be. If anything, we continue to see great response in both specialties. Right. Can you maybe just outline for optometrists, I know that there's an opportunity to sort of get a greater value capture for the medical diagnosis versus the optical. Is that something that's realized just upon the initial script and the use of the slit lamp, or is it also a confirmatory follow-up visit to make sure that the therapy has accomplished the goal of clinical cure? It's both, right? A lot of times they'll initiate the therapy in the first visit, and if they can code an ICD-10, then they can bill because they're now treating a medical condition versus just doing a vision exam. They're essentially converting this to a medical visit. Then the vast majority of optometrists will then bring the patient back a couple of months later. It's a six-week course of therapy, so they'll bring them back in two months to see the response. And actually that's a real driver of patient satisfaction. "Hey, I found a problem that's been bugging you for a long time. I gave you a targeted solution." They bring them back and say, "Look how great the outcomes were. Isn't this wonderful." It's a great way to retain the patient as well as drive value for the practice. Yeah. Okay. We were getting more questions from investors about competitor phase II Glaukos data and, you know, any insights you guys have in terms of the antiparasitic API that they use in their therapy and how that may work as well or maybe doesn't work as well as lotilaner. Yeah, no, we have a very good competitive intelligence group, we're aware of this and monitoring it as well. What we understand is they've got a clinical study that they are looking at it's a part of their gel-based formulation that they plan on putting in the, on the eyelid, and I guess they're doing it BID, which is twice a day, and then they also are trying it out once a day as well. I do think, you know, we did to explore a method of application when we thought about lotilaner and, you know, based on our work, the preferred method was via eye drops. I think patients are more familiar with eye drops for, you know, those type of things, that's the route we chose. I do think it's gonna, from a competitive perspective, it's gonna be a high bar to really exceed what XDEMVY's been able to accomplish, right? In terms of very good efficacy. You know, I think in real world, you're probably hearing nine out of 10 patients are extremely satisfied. Extraordinary safe. There's a great deal of, you know, patient satisfaction in being able to see, you know, those collarettes disappear. I think it's gonna be challenging for anybody to come in and exceed that. I would also say our mechanism is very specific, and it's targeted at the mite. It targets the GABA-gated chloride channel of the mites, and there's no off-target human implications of that. It's very specific to the parasite and, you know, kills the parasite directly. Okay. As XDEMVY grows and expands, usually there's a target on any drugs back with payers as you get above a billion-dollar threshold. Just curious how you're thinking about the net pricing dynamics evolving as you get bigger? Are you seeing coverage, restrictions around coverage getting more difficult or status quo, you know, over the past year to two For coverage, this has been an area of strength for the business. We have over 90% of lives covered across both commercial and Part D. Reminding folks, it's about an equal split, about 45% of the business commercial, 45% of the business Part D, and the rest other government channels. We've got great coverage across both, and that continues to persist. We don't anticipate any major changes to that because this is such a great value to patients. When we sit across from payers, we talk about high rate of effectiveness, as Jeff outlined, super safe. This is not something that people have to take every single month. They take one, maybe two treatments a year. You know, we talked about a 20% retreatment rate, which is a great value. Sit across from a payer and say, "How many drugs do you pay for today that almost every single patient has a really robust response that can get you a durability of effect for almost a year?" They'll say, "Okay, well, we pay for a lot of things that don't work very well, but we do it because it's there." This is a very differentiated offering when it comes to the payer. We've got a really great team that's established a really strong value proposition. I think the other thing we'll continue to do is generate more data. Generate more use cases of how this can positively impact patient outcomes for patients that would otherwise make multiple visits, get unnecessary procedures, use unnecessary medications. Those are all cost savings for the payer that as XDEMVY grows is actually an offset. The more we can model that through pharmacoeconomic modeling, that'll be a great value offering. We don't see any risk of significant price erosion over time. I think we've said that, you know, we're in that kind of target gross net range, and we're gonna be really diligent with our relationships with the payers to maintain that. Okay. let's shift to pipeline in the last 10 minutes. We've got phase II ocular rosacea data, first half 2027. This is the same API in XDEMVY just given in a different dosage format. Maybe just how much confidence can you derive from what you've seen in Demodex blepharitis to that study result? Sure. A little background on ocular rosacea. It impacts about 15 million-18 million patients, and there is no other approved FDA therapeutic out there for it. Of those 15 million-18 million patients, the vast majority of ocular rosacea is caused by Demodex mites. We knew with XDEMVY we're very good at killing the mites, and so we've created this sterile gel formulation, which is better suited for around the orbital area and are moving forward with the phase II study. We initiated the clinical study in December of last year and are enrolling it with top-line data in the first half of 2027. The objective here, based on discussions with the FDA, is to show improvement in two of the hallmarks of the disease. One is, of course, the redness that you typically see in ocular rosacea or any type of rosacea, and the second is a reduction in these pronounced vessels that are one of the hallmarks of the disease on the upper eyelid and the lower eyelid. Importantly, we don't have to show a cure, but just an improvement is based on that feedback. We've developed a proprietary scale that we've developed and trained all the clinical sites on, and the goal here is to show, you know, a one-level improvement in either the redness reduction or in the reduction in vessels. What gives us confidence is, you might recall, Jason, that we had a phase II study in papulopustular rosacea, which is also caused by Demodex mites. In that study, we showed a stat sig reduction in the redness, but also a stat sig reduction in the pustules that are caused by these Demodex mites. That gives us some, you know, good confidence that we will be, you know, successful in this study as well. Can you talk a little bit about the patients you'll be enrolling in this study, the severity of the rosacea, the phenotype of these patients, and just trying to get a sense of how that might compare to the supportive phase II study that you cited there in rosacea? Yeah. In general, you know, we're taking, you know, a fairly broad patient population that have ocular rosacea because we wanna get some data there. They, you know, generally will be, you know, present with a certain form of, you know, both the redness as well as the vessels that we see there. What do you see as the biggest risks then to this trial? I think it's really the, you know, the execution on the scale, right? In making sure that the sites are consistently reading, Dr. A is reading a one-point reduction as is Dr. B at a different site. Continuing to sort of read that scale of improvement. Yep. Your FDA interactions so far and how that informs the data that we see, if that's going to be a repeatable registrational type study? The feedback we've gotten is either one of those endpoints would be something that would be an approvable endpoint in a phase III. How much overlap is there with Demodex blepharitis? We think about this marketplace and that 15 million or so patients, how much general overlap do you have? Are you gonna be getting both of these therapies potentially to have a more holistic strategy to eradicate the mite? Yeah. We're doing a lot of work now to really understand that prevalence and overlap. It's thought to be a decent amount, but keep in mind this is a distinct disease and a distinct therapy for that disease. There's gonna be patients that have Demodex blepharitis that will get XDEMVY. There's gonna be patients that have ocular rosacea that will get TP-04. There's a cohort of patients that are gonna have both manifestations, both diseases, and they would get potentially both to target each disease. Yeah. This is actually something we even heard even in early days when we're exploring this as an opportunity. A lot of doctors were telling us that they saw these overlapping patients that were treating the blepharitis with XDEMVY, and almost the contrast was very notable, that the eyelid margin was clear, but there was still a lot of periocular redness or telangiectasias. They said, "Wow, if you had something that would fix this." We said, "Okay, we might have something up our sleeve," which kind of helped prompted us to accelerate and move this program into phase II. We think that it's a really unique opportunity. Again, it's the exact same call point, so there's tremendous commercial synergy. We're already talking about it. Doctors are spending more time looking at the lids, because of Demodex blepharitis. There's an opportunity to treat each of these diseases with a unique and tailored therapy. Talk about the work you've done to profile who the prescriber is and you know, are eye care professionals thinking about treating a dermatologic, you know, manifestation, and what role will Demodex blepharitis ultimately play? You know, ultimately, would you need to perhaps expand the field for do you see Demodex blepharitis playing a role at all in the treatment of ocular rosacea? Potentially. We see this as really as an eye care focused play, though. This is the same call point. This is optometrists and ophthalmologists that are essentially anterior segment focused. They focus on front of the eye diseases like dry eye, like Demodex blepharitis, and they see this all the time. They don't really think about this as treating a dermatological disease. They think about this as treating an eye disease. They've been, for a long time, looking for solutions for ocular rosacea. There's nothing today. You know, some of these folks are trying to use IPLs. There's a precedent that people are trying to solve this problem, this conundrum, and that gives us even more confidence in the potential of this. You know, if this gets across the line, this is gonna have a high utility for these doctors. They see these patients all the time. Okay. Maybe we'll go to Lyme disease. This is also lotilaner but in an oral dosage format. That's right. Maybe just, you know, the initial learnings from the I'm trying to forget how, it was like a tick kill study. Right. Right? To the differences in the phase II that you're running, and how that could provide additional learnings and de-risk the program more fulsome. Sure. Yeah, no, we gotten a lot of interest in that since we announced the study starting. We talked a lot about it here. There's a lot of interest in it, a huge unmet need, as you know. Just as a reminder, that tick kill study was basically a bunch of college students that were exposed to non-Lyme-infected ticks. Lucky them. Pardon me? Lucky them. Yeah, they were paid, so. Good beer money. What we did is, we exposed them to the ticks and then they, you know, took an oral dose, and then we measured the number of ticks that were killed within 24 hours. Then we reintroduced the ticks within 30 days, and within 24 hours we killed about 98% of the ticks, and 30 days later, with that same dose, it killed about over 95% of the ticks. It's fast-acting, within eight hours, and it's durable. Based on that data, you know, we've decided to move forward in this phase II b study. It's about 700 patients that we're gonna be enrolling in this one tick season, and very similar in terms of design. It'll be a once monthly dose that these patients will be taking. What we'll be measuring, since it is essentially a prophylactic, safety's gonna be critical, so safety's the primary endpoint. We'll also be measuring PK levels, drug levels, knowing what we saw in the phase IIa study, in the tick kill study, what was required in terms of drug levels to kill the ticks, will be one of the other endpoints that we'll be looking at. We're looking at some other biomarkers to potentially identify Lyme disease as well too. Of course, we'll be measuring the number of patients that get Lyme versus don't get Lyme, but you know, in all reality, we're not gonna likely see a statistic signal there. You know, we'll be measuring, 'cause it's gonna be a very small N. What will be the N roughly? What will be the N? Yes. About 700 patients. 700 patients. Yeah. Okay. you know, confidence that you can get this done in one season, I think Pfizer had a trial and there was lower incidents. Yeah I guess this won't be incidence driven. Not driven, yeah. be just driven by enrollment factors. Yeah. That's right. We are doing it in high endemic areas because, you know, we did learn, you know, from, I think, Tarsus or from Pfizer's enrollment. We're going into some of those areas and really seeing if there's an opportunity to maybe pull something from the biomarkers, you know, as well. How do you see this competitively? I don't know if you have a view on if Pfizer's gonna be able to get through FDA with its result? Right on the pre and then the second specified analysis. You know, if it is approved, ultimately it's a four-dose. That's right. vaccination. Yeah. I guess there's a question, A, of how does it competitively stack up against that? B, you know, what would be a regulatory development pathway for an oral agent like this that's taken, presumably, less onerous they're, you know, scheduled than a four injection vaccine schedule. Yeah. Great questions. I think, you know, it's hard to say on, you know, the Pfizer regulatory pathway. I do note that there's a huge unmet need, and this administration has highlighted this as being an important criteria for them to be focused on, you know, they could see approval. I think we have had discussions with the agency about a phase III study. They have sort of reverted to the clinical study that the Pfizer team did in Lyme disease prevention study, it would be of similar magnitude in terms of size. However, given the LymeX program that the FDA has pushed forward, Kennedy's pushing on, you know, getting more therapies out there, we are having some discussions, with, you know, parties within the FDA and other government agencies to see if there's a more abbreviated pathway in which to see approval more quickly. Okay. Well, we're out of time. I'll have to cut it off there. Thank you guys so much for joining us. Thank you, Jason, appreciate it.