To the Jefferies Healthcare Conference. My name is Dennis Truong, Biotech and Spec Pharma Analyst here at Jefferies. I have the wonderful pleasure of having Tarsus Pharmaceuticals here. We have the CFO and CSO, Jeff Farrow, and the Chief Commercial Officer, Aziz Mottiwala. Welcome. Thank you, Dennis. Before we get into the fireside, we'd love to hand it over to you to give some opening comments around Tarsus and just where you are in terms of the business and the tremendous progress you guys have made around XDEMVY and the pipeline as well over the last few years. Sure. Yeah. Thank you, Dennis, for inviting us. We're very pleased to be here. Tarsus is a commercial pharmaceutical company based in Orange County in Irvine, California. We have a marketed product called XDEMVY for the treatment of Demodex blepharitis. It impacts about 25 million patients. It's a disease of the eye. We have been on market since September of 2023. The launch has gone extremely well, and we've recently guided to top-line revenue of about $670 million-$700 million for this year, which is about 50% growth from the prior year. We also have an exciting program in ocular rosacea that's starting a phase II study or has initiated a phase II study. This is a disease that impacts about 15 million-18 million patients in the U.S., and there's nothing out there for the treatment of these patients. We also have a really neat prophylactic potential treatment for Lyme disease. We initiated a phase II study in that program and expect to have top-line data in the first half of next year as well. Dennis, I'll turn it over to you from there. Yeah. Perfect. Would love to start off with just the fundamentals, just around XDEMVY and how it's being used. When you guys first launched into DB, it didn't seem like there was a real appreciation for how big the market can be. Ever since then, I guess, what have you done to really drive that adoption? How much room is there, how much runway is there left as you think about going into the 2030s? Yeah. The progression of the market's actually been one of the most exciting things. We built that very early on, very intentional path of education, focused on increasing awareness around the prevalence of disease, how easy it is to diagnose it, and the multiple use cases you see in an average practice. As we sit here three years into the launch, you've got more doctors prescribing this than we originally envisaged. We've got over 20,000 doctors that have put pen to pad. Half of our core audience is now writing this with a regular cadence, or at least weekly. We've really established a strong demand engine here with our physician base, and that will allow us to continue to grow the brand. The other thing we've been able to do is engage the consumer and the patient. We knew day one that this is something that was going to resonate with patients. Being able to do direct to consumer, where in one year we moved unaided awareness from 2% to 20%, really speaks to how much this resonates with patients and how motivated they are. Now you have another way of expanding the market by being able to engage the patient directly. Then the last piece, which is really exciting, is the peer -to -peer. The physician -to -physician evidence base is a really significant catalyst here. When doctors hear from their colleagues on the podium, they see new data sets, like the one we mentioned on our last earnings call around chalazion or hordeolum, they start to think about this much more broadly than they would have, say, to your point, a few years ago. The way we see this is you've got a product that's performed exceptionally well on the market. You've got a strong base of prescribers that can continue to deepen their use. You've got an activated consumer base which can expand the funnel, and you've got peer -to -peer and data that's going to support all of those efforts with good science. Sure. When you look across your prescriber base and you stratify them by. Sorry. By high prescribers, medium, low, what are some specific factors that you've identified in the high prescribers that you could use as a leading indicator for some of the later adopters of XDEMVY? The biggest indicator we see is how quickly we can get them to a threshold of utilization, meaning once they get to about 10 or 15 cases, you start to see a pretty precipitous ramp-up in their utilization. The other thing we see is that even our top doctors haven't tapped out, so we're still focused on how to get them to unlock their full potential, which is a great opportunity for us. I'd say, what have we learned? We've learned that being really thoughtful about the use cases, giving doctors specific areas, and I think that's been intentional in our education, right? If it's a surgeon focusing on that pre-cataract patient, where we've seen great traction, where doctors are saying, "Hey, I want a clean and pristine eyelid prior to doing surgery." If it's an optometrist, it's a great way to expand their practice. They're thinking about this as a way to catalyze more medical management. A lot of these doctors, optometrists, where we get about 2/3 of our business, a lot of their initial visits are for lenses and frames or contact lenses. When they identify a disease like Demodex blepharitis, they can actually convert these patients to medical, which is great for their practice. It actually increases their reimbursement and enhances patient retention. It gives them reasons to bring the patient back for multiple visits, which then helps build the practice. What we've learned is being very clear and specific about the patient type and really leveraging the unique aspects of building a category and how it improves patient outcomes, but also can improve the practice dynamics for a physician. I think another part of it is just being able to incorporate the diagnosis process into their protocol, right? Aziz, like how you have previously characterized it is just look through the slit lamp and then tell them to look down. Right? Are optometrists starting to do that more? Or if not, what's preventing them? At what point should that just become part of their every new patient workup or follow-up? It's a really good point, Dennis. It's one of the most fascinating things about this launch is you've got a built-in diagnostic, and it doesn't require any specific equipment. It doesn't require any training. It only takes a few seconds during a normal eye exam for a physician to make a definitive diagnosis. If they see the collarettes or the crusties on the lid, if you will, they know for sure that this is a Demodex blepharitis patient, a good qualifier for XDEMVY. The bar is not very high. We're seeing more and more doctors do this routinely. They're screening all their patients. Some of our top prescribers, for instance, are cataract surgeons that screen every patient that's coming in for surgery. We hear optometrists that have now built this into their program. Even personally, I had an experience. My mom just had cataract surgery about a month ago, and when we walked into the university where she had surgery, they have a protocol sheet that all the staff members use, and it's a checklist. Did you check the vision? Did you ask for concomitant medications? Did you check for Demodex blepharitis? We are seeing this standardized more and more. It's a new thing. It's only been out for three years. I think, what's the hold up? I think it's just time and changing behaviors. To your point, it's such an easy behavior to shift. We are seeing it shift very quickly and in a meaningful way. Yeah. It sounds like a no-brainer to me, especially if you do get some form of diagnosis, and then just the reimbursement aspect of it and the follow-through makes a lot of financial sense, especially for optometrists. Where do you think we are in that process of incorporating that diagnostics into their workflow? Are we 10% of the way there or 30%? Just would love to hear how you're thinking about that. Yeah, I'd say we've made a lot of progress, but I think there's still a lot of opportunity here. When you think about the fact that we've had over 20,000 doctors write this, that's a lot of behaviors to change. To me, that's exciting. To be at a point where our guidance for this year is $670 million-$700 million, and to say, I'd say we've made great progress, but we still have a lot more education to be able to do. I think it's really predicated on a couple things. One is just changing that diagnostic behavior, but having the doctors think about this in the broader swath of patients. That's another thing to your point. Our high adopters, our heavy users are seeing this across every patient type now. They're not discriminating. They're screening every single patient in the door. Maybe a doctor starts with cataract surgery, but a real high adopter is saying, "I don't care what you're here for, I'm going to screen you no matter what." That's the opportunity. I think everyone's doing it in some subset of patients. It's can they do it in every single patient? Yeah. That's really the vision of getting to the peak potential of the product. Okay. Speaking of peak potential, you guys recently raised your peak sales guidance to $2 billion+. I guess, can you just comment on when do you expect to get there? That's important because it also helps us understand the trajectory from where it is today to that $2 billion number. Any color there and just potentially also even how IRA could impact that. Sure. Happy to address that, Dennis. Yeah, we've been pretty intentional about our peak guidance over the years. You might recall we started out thinking at the time of launch that this was a billion-dollar opportunity. Then about a year later, we mentioned that based on the data, we thought it was $1 billion-dollar plus, blockbuster plus. Most recently on the call, we said we think this is a $2 billion + opportunity, and it's really based on the data we've been able to gather and generate. We are seeing the impact of the DTC campaign really driving patients in at the top of the funnel. We're really getting the eyeballs, so to speak, no pun intended, on the commercial, which drives them to the website to find a doctor. As a result of that, we're actually seeing organically the number of prescribers increase from the 15,000 that we were targeting to 20,000. Likely because they saw the commercial, and they're coming in and seeing their physicians at that point. The DTC campaign is very effective. You might have noticed that we had a recent initiative with John Cena, who described his experience with Demodex blepharitis and the success that he had with XDEMVY, and that has really resonated with the social media efforts as well in driving people to the website looking to take the quiz or find a doctor on the website. That's been very successful to date. That continues to drive top of the funnel. In terms of driving broader adoption above the 15,000 ECPs that we're targeting, which right about 85% of the scripts, as Aziz highlighted, it's really just continuing to have our sales reps and the key account leaders that we've recently hired to drive further depth within those prescribers and look at all eyelids, to your point, Dennis. Look at the collarettes, very easy to diagnose, don't just focus on the patients that are coming in complaining of Demodex blepharitis. Finally, we're adding continued phase IV studies that will generate additional evidence and provide additional reasons for these doctors to treat. We recently had an abstract that came out related to hordeola and chalazion, which shows a high degree of prevalence of patients that have Demodex blepharitis and have these type of things. Almost 70% of the patients that have hordeola or chalazion have Demodex blepharitis. Another reason for these doctors to treat, they were not initially in that 9 million TAM that we had, and that's about 1 million-2 million patients incremental on top of that. All of that data, and the impact of the broad payer coverage lead us to believe that we are able to achieve $2 billion+ in this market. What proportion of your revenue right now comes from Medicare? It's about 45% of our patients are Medicare, and another 45% are commercial, and then the rest are Medicaid and other governmental. Okay. Like Department of Defense. Do you have an estimate as to when you think you guys will be included into the IRA? Don't know at this point. We're monitoring it. Our revenues are quite robust, but there are some other companies out there that have higher revenues that have a high Medicare patient population as well. Yeah. It's honestly incredibly difficult to figure out because every year it's a different sort of inclusion criteria. That's right. Right. Okay. When you gave your $2 billion + peak sales guidance, do you think you can accomplish that with the existing sales force? Maybe also remind us how big that sales force is. Our current sales force size, after we added our key account leaders, is about 175 all in. We can get to the peak potential. I think that's about the right size. The adding of the key account leaders are opportunistic to untap even more potential and even some of our top accounts, our biggest opportunity accounts. To put it in perspective, that 175 is probably the second-largest anterior segment sales force in eye care. We've got a really strong footprint. I think more so than the number, the quality of the people we have is phenomenal. We get the best talent in the space by far. To me, we've got the right number, the right people, and we're in front of the right doctors. We feel really good about our commercial structure and infrastructure to be able to continue to grow the brand and achieve that peak potential. On DTC, you guys have spent, I think, $70 million-$80 million a year or somewhere in that ballpark. At what point do you sort of reevaluate that, and what sort of metrics are you looking at to make that decision? We evaluate the DTC my team will probably laugh, probably on a daily basis I'm asking for something. We're looking at are we moving the needle? As we shared, right, are we changing consumer perception? Unaided awareness, continue to drive that awareness and likelihood to go see your doctor. We focus a lot acutely on the action metrics. Are people going to the website? We shared those metrics on the last quarterly call where we're seeing continued growth in engagement on the website. As Jeff mentioned earlier, we say, "Okay, what are they doing when they go to the website? Are they just looking for information, or are they actually doing things that would lead us to believe they're going to get a prescription?" Something like taking a quiz or finding a doctor. We refer to those as high-value actions, meaning they have a high propensity then to follow on and get a prescription. We're looking at that sort of funnel of patients. Do they go to the site? What do they do on the site? What happens after they visit the site? That's in acute, and then obviously we go back and do all the statistical modeling to measure ROI, which is why we were able to share that we are getting a strong and positive ROI that's continuing to scale. We'll continue to evaluate that. I think for this year we're in a good place with that approximately $80 million in spend. Long term, I think we look at what that potential is, right? If it's such a great ROI, do we add a little bit? Vice versa, if we're seeing strong resonance, can we even pulse it on and off and maybe get some efficiencies out of that? I think all those things are on the table, but I think the most important thing here is that this is a very powerful lever that's working extremely well, and as Jeff mentioned, we've uncorked some additional things with that same cost base. Right? We've got John Cena on board now. We've got a new version of the commercial that just hit this week. This is going to expand the lens of the types of patients we're able to reach. This is a real way to expand the market potential. We see that as probably the most compelling part of this, right, is opportunity to expand that market potential. The last thing I'd say is the other thing we're able to do is really execute even better. Right. We've got a year of experience. That $80 million actually punches much harder, because now we know which ads, which days, which times to put the money to where we get the best ROI. The efficiency in our investment actually improves, and that's also another reason we expect the ROI to continue to scale. Sure. Okay. What is unaided awareness right now for XDEMVY? The last report we gave is just over 20%. 20%, okay. I'm assuming that's not a number that you guys are happy with. I won't be happy until it's 100 and something. 100%. Yeah. Okay. Got it. I guess big picture, just your thoughts around profitability. Is that a priority for you guys? Just help us think about when that could happen, either in a single quarter or perhaps you guys are focused on sustainable profitability, even going through some of the Q1 seasonalities that we see. Yeah, we haven't given specific guidance on timing of profitability, but if you look at our guidance that we provided for the year, if you take the top end of the revenue and then maybe the bellies of them or middle part of the OpEx, there is a scenario where we could go profitable this year. I think the dynamic that we're trying to emphasize is that we do want to become an eye care leader, and that means making some investments in the pipeline and continuing to develop the pipeline products that we have. We have some earlier-stage assets that we are hoping to move into the clinic as well. Fundamentally, we're also looking at BD as an opportunity to bring more products into the bag of our sales reps and create value for our shareholders as we turn over those data cards. We're looking at aspects of anything in the anterior segment right now. That's really kind of our synergistic call point. At some point, as our balance sheet grows and things evolve, we'd like to get back into the back of the eye as well and become an overall eye care leader. Long story short, Dennis, I think we're not opposed to going profitable, but there could be periods of time where we do make investments that we think will drive value that could take us out of profitability for a period of time. Sure. We think will create overall value for the organization. Yeah. Okay, makes sense. Would love to ask a couple questions just around just the quarterly cadence of XDEMVY, right? Like Q1, $145 million was a strong number, right? You guys reiterated full year guidance. You guys made some qualitative comments in terms of how to think about Q2, Q3, and Q4. Is there an opportunity for Tarsus? What sort of initiatives can you guys do to kind of break out of that seasonality in terms of Q3 and the summer months kind of being a little bit soft? Is there anything that can be done? Yeah. Maybe I'll start with the guidance perspective and turn it over to Aziz about some of the initiatives in the back half of the year. Yeah, we firmly believe that our guidance is going to be hit. We had provided guidance of $670 million-$700 million. As you highlighted, we generated about $145 million in revenue in the first quarter, and we typically see strong growth going from Q1 to Q2. Q3, there tends to be, because we're still primarily an NRX product, with some of the holidays that happen in the summer, eye care professionals taking time out of the office. We'll see growth, but it'll be a little bit more tempered growth when you, say, compare between Q1 to Q2. Following the summer season in the fourth quarter, that tends to be one of our highest bottles dispensed in terms of bottle growth there. We anticipate that being the case here for this year as well. All of that went into our analysis of giving guidance in terms of that. Really feel that the seasonality that we've seen in prior years is probably going to be what we see in the future. I'd highlight, it's not just Tarsus, but it's eye care in general sees this impact. We know some of our peers also see some of the impact in the first quarter and the summer quarters as well too. Aziz, maybe you want to talk about some of the initiatives. The two things I'd highlight, I think, Jeff, you mentioned it really well. I don't think we'll be immune to seasonality. I think that's a real factor. I think, one, we've outperformed in those seasonal times. When you look at Q1, for instance, we outperformed the market significantly. I think most anterior segment products were down in the mid-teens. We were in the low single digits. I think there's ways to perform better than the market in those dynamics. What are we doing now to help catalyze that for the back half? We highlighted some of these. The deployment of our key account leaders, they're on board, they're being trained. They'll be out there and fully functional in the back half of the year. I think you're going to start to see the impact of that happen over the summer. The incremental work we're doing on DTC with John Cena. The new ad versions that are hitting the market right now are all ways to get enhanced interest and action through those time periods. The last part that we mentioned earlier is that continued flow of data and generation. There's lots of conferences that happen through the back half of the year, having doctors on podium talking about broader use cases, to the point you mentioned earlier, Dennis. These doctors that have had good experience, what's going to get them to that next tier? It's likely a combination of these things, right? Patients coming in, raising their hand, going to a conference, hearing their colleagues say, "Hey, I'm starting to think about this in patients that have chalazion and hordeola. I'm starting to think about maybe my glaucoma patients, not just the ones that I initially thought of. I think those three things are real ways to catalyze continued growth despite the typical seasonality we'd expect to see some impact from. Overall, I think you're hearing from us a high degree of confidence in the engine that we have to power through the next couple of quarters and beyond. Sure. Okay. Would love to ask a little bit about competition. I think there's two that at least we are following. Aperta, which, they were supposed to read out in April, but I guess they updated ct.gov, now it's June. Of course, Glaukos's GLK-321 in the fall. I believe both are phase II studies. Would love to hear how you are framing those readouts before they happen and just why you're not necessarily worried for XDEMVY. Mm-hmm. Yeah. Not surprising that competition came looking for Demodex blepharitis. We've been really successful with the launch, and we've guided to $2 billion peak potential, and we're within spitting distance of $1 billion now. It's not surprising that when you have a market that large, that some competition's going to come in. That said, it's really going to be a challenging bar to exceed XDEMVY. If you think about the clinical efficacy, it's 85% clinically meaningful improvement, very safe. It targets, from a mechanistic perspective, the mite's GABA chloride channel and essentially paralyzes the mites and kills them. No off-target human interaction, and we've treated over 600,000 patients successfully and very safely. A high bar from an efficacy perspective as well as a safety perspective. I'd also say that we looked at different formulations, including the eye drop as well as a potential cream formulation, and chose the eye drop very deliberately just because that is the preferred method that patients typically like to utilize. It's easy to use. There's no interaction with the makeup that maybe some women wear. Generally, we think that's a preferred method of application. Secondly, I would say the lotilaner chemistry, beyond being efficacious and safe, is the most recent form of the chemistry and we feel the best chemistry, quite frankly. We did take a look at both of those products as part of our screening and chose to go forward with lotilaner for those particular reasons. In terms of potential safety and tolerability issues with those two products, and you just said you took a look, so I'm curious if there had to be some tolerability issues in the clinic, what would those be exactly? It's really tough to have us talk to that just because we don't have access to that data. The Glaukos is an acetylcholinesterase inhibitor, so there could be some off-target impact there. The other thing we would note is it does cause pupil restrictions at a certain concentration. It was used primarily as a glaucoma drug, and the pupil restrictions supposedly helped reduce intraocular pressure. So there could be some issues related to nighttime vision or something like that, but we just don't know at these concentrations that they're utilizing it at, whether there will be any of those type of things. Have you been reading our notes? Maybe a little bit. Yeah, our view is that you guys do have a high bar on both efficacy and safety, right? Yeah. Just given the mechanism of action, having an acetylcholinesterase inhibitor might cause some vision changes, which in my opinion is probably a non-starter within ophthalmology. That's right. Especially for such a broad product. I think the other part is when you hear feedback from clinicians, right? There's very little room for improvement here. Doctors tell us how great the drug is. No one comes and tells us they wish the drug did something else, right? They say this is one of the best products that they've had in the clinic, right? As Jeff mentioned, high efficacy mark, almost every single patient responds, and extremely safe and tolerated. It's actually one of the best-tolerated drugs in eye care. Very little room for improvement, and the clinical community is saying that to us, too. It's not just our perspective. Sure. Let's move on to the pipeline. Ocular rosacea, first half 2027 phase II data. Can you just comment on just enrollment and where we are in that process? As well as what are you hoping to show in phase II in terms of what's clinically meaningful? Sure. We're really excited about this program. It's another white space opportunity, much like Demodex blepharitis was. It's about 15 million - 18 million patients that are thought to be impacted by this disease, and the hallmarks are really the redness that you see, the rosacea around the periorbital area. The other hallmark of the disease is these elevated and more dilated blood vessels that occur on the upper and the lower eyelid. The interesting fact about this is this disease is also thought to be caused largely by Demodex mites, and we know we're very effective at killing mites. What we've done is formulated a version of the active ingredient in XDEMVY into a sterile gel formulation. The thought here is you would basically rub this on the periorbital region. It's a 16-week study. We're enrolling about 150 patients in this study, and the key outputs that we'll be looking at is obviously safety, but we'll also be looking at those two hallmarks of the disease that I mentioned, both the redness reduction as well as the reduction in the dilated vessels. Sounds good. In terms of powering, it's not powered to hit statistical significance. That's correct. Yeah. You guys are looking for a trend. That's right. Okay. I might remind you, Dennis, that we did have a phase II study in dermatologic rosacea. It's a form of rosacea called PPR, papulopustular rosacea, which is also caused by demodex. In that study, we showed a stat sig reduction in the redness, as well as a reduction in the pustules as well. That helped us inform some of the sizing of the study as well. That was a smaller study, I believe. That was. Right. Yeah. Okay. What about Lyme? That's starting phase II, and you're trying to capture the tick season right now. What are we looking for once you disclose the data next year? Sure. No, it's another really exciting program. There's been a lot of press recently about Lyme disease. It's a huge unmet need. We have initiated a study. It's about 700 patients that will be enrolled, as you highlighted during the tick season here, which started around April and ends sometime in the late summertime. Key endpoints will be safety because this will be prophylactic. The theory here is you kill the ticks before it transmits the bacteria that causes Lyme. It's not an immediate transmission. It takes about 24 hours. Since it is a prophylactic, safety will be key. We're also measuring blood levels of TP-05 within the subject's blood system because we know based on the phase II-A study, the tick kill study, what we need to accomplish in order to kill those ticks within 24 hours. In that phase II-A study, we killed 95% of the ticks within 24 hours. Very efficacious in terms of killing the ticks. We'll be measuring the blood levels, and then there'll be some biomarkers that we are studying as well, too, that were similar to what Pfizer looked at when they did their vaccine study. That will be the primary impetus of potentially partnering. We expect to have with that data, plus the phase II-A data that we had, plus incremental data that we have in animals, to be a nice phase III-ready package that the plan would be to partner with a larger company that has perhaps a GP call point. That's our baseline assumptions on the next steps beyond the phase II-B study. Perfect. Well, I think that's all the time that we have today, but thank you guys so much for being here and hanging out with us. I hope you have a great conference. Great. Thanks, Dennis. Thank you, Dennis. Thank you.