All right. I think we're ready to get started. Good afternoon, everyone. Welcome to the Barclays Miami Healthcare Conference. I'm Jenna Davidner. I'm one of the analysts here on the specialty pharmaceuticals team, and I'm very pleased to have Tarsus Pharmaceuticals on the stage with me this afternoon. From the company, we have Jeff Farrow, the CFO, and David Nakasone, who's the head of investor relations. Thank you both for taking the time. Well, thank you, Jenna. It's great to be here. Just to level set the conversation, you know, the company is a couple years into the launch of XDEMVY. Maybe for people that are newer to the story, can you give us an overview of Tarsus and maybe talk about the timeline of when XDEMVY was approved and launched? I'm gonna get into a couple questions about the product itself and the condition and things like that. Sure. Happy to. Tarsus Pharmaceuticals is a biopharmaceutical company that is headquartered in Southern California, in Irvine, California. We are a commercial company, as I mentioned, that has a product on the market called XDEMVY for the treatment of Demodex blepharitis. It's a disease of the eye that's caused by overproliferation of these Demodex mites. We kill the Demodex mites very efficaciously with XDEMVY. We got approval in August of 2023, so this is really our start of our third year of launch. Last year, we recorded revenues of about $450 million and treated about 500,000 patients out of the 9 million sort of available market to us. These are patients that are actively going in and seeking eye care professional assistance. Overlaying that, there's actually 25 million patients that are impacted by Demodex blepharitis, so it's a highly prevalent disease. This year we provided guidance, the annual guidance for the first time, and we guided to top line revenue of between $690 million and $700 million. From a long-term perspective, we think the peak guidance is around $2 billion in ultimate profitability or off of top line revenue. Then we also have a couple products in the pipeline as well. We've initiated two Phase 2 studies. The first one using the same active ingredient that's in XDEMVY, except in a sterile topical gel for the treatment of ocular rosacea, and then in an oral tablet, the same active ingredient for the prophylactic prevention of Lyme disease. It's another exciting program that we're gonna be kicking off here shortly as well. Awesome. Thank you for that great overview. What's interesting is you mentioned how broad the DB market opportunity is, and I remember from around the time of the launch, you know, some of the pushback. People weren't really familiar because there was no FDA-approved product to treat this. If you just think about that in combination with how strong your launch has been and this revenue trajectory in the first two full years, maybe can you talk about things like the diagnostic process and maybe from the $25 million, how do you think about what your more near/long-term addressable patient population is within that? Just anything, you know, the launch has exceeded expectations on everything from volume growth to also growth to net. Mm-hmm. Maybe just in the context of the first two years, putting together all of those before we get into the 2026 outlook and the peak sales and longer term trajectory. Sure. Yeah. No, we like to think of ourselves as being a category-creating organization, and we've really created a new category here that nobody had ever heard of Demodex blepharitis before, and even the doctors weren't very familiar with it. The treatment paradigm before was patients would come in complaining about itchy, red, burning eyes, and the only therapies that were available at the time were sort of these homeopathic therapies, including tea tree oil, which causes stinging and burning or these lid scrubs to kind of basically wipe off the scruff, neither of which got to the root cause of the disease, which is the Demodex mites. The founder and CEO, Bobby Azamian, was the one that identified this as a potential therapeutic area and took it through clinical development. As part of that clinical development pathway, it was really getting out there and educating the eye care physicians on this is really a disease that is caused by these Demodex mites, and if you kill the mites, you know, then you can cure the disease. Through that clinical process, the education paradigm was going forward. The team did a really nice job on the payer side, the market access group of going out there, educating the payers on this huge unmet need and the fact that there's a lot of off-label usage of products like dry eye that they're paying for that aren't benefiting the patients. If you had a product that could be a six-month or six-week treatment period and cure the disease for a period of time, you know, that made sense for them to cover that. We were able to, you know, get really broad payer coverage. You know, ultimately now we're at 90% prior payer coverage. That evolved over time. You know, when we got out of the gate, it was initially commercial coverage that came online over time, and the gross to nets were somewhat higher than they are now as a result of that because we're covering a lot more of the patients with free goods or co-pay assistance. In 2025, the start of 2025, we had Medicare come online, and that was really a helpful tailwind for 2025 as well. That helped us really evolve the gross to net kind of where we're at steady state. We exited Q4 at a gross to net discount of about 44%. We expect the long-term gross to net sort of be in the 43%-45% range, absent the Q1 dynamics where the deductibles typically reset. There's usually more payer assist or copay assistance and other programs that we might implement. It's going to be slightly higher in Q1, but it'll evolve over time there. Awesome. It's just kind of fascinating to think of even doctors being less familiar with DB at the start of your launch and approval, and in year two you're nearing $500 million, year three you're approaching $700 million. It just really speaks to how prevalent this condition is and how well the drug works. On top of that, you have a very strong commercial team within Tarsus that's done a great job. I wanted to focus on that because it's played a huge role in the launch. Maybe from the beginning, can you talk about the sales infrastructure you started with, and along the way, where have you added and maybe where do we stand currently? Yeah. Thanks, Jenna. We started with about 100-person sales force, and it was really targeted. About a year into the launch, we added about 50% more. We knew the size of the market are roughly 15,000 prescribing eye care professionals, half of them being optometrists and half being ophthalmologists. To your earlier point, we really saw the sales starting to take off. Most recently, earlier this year, we announced that we're adding about 15-20 key account leaders. The expectation here is they're gonna be inputted into the highest producing territories. These are the best of the best that we have and really gonna expand and drive depth amongst our current prescribers. Since you brought up the prescriber base, it's interesting how it's very targeted. There's, you know, maybe you can talk about the group that you're targeting and why, how many of them are currently prescribing and maybe how you think about the frequency of these prescribers and maybe increasing that utilization over time. We have about, I'd say, a little over 20,000 who are prescribing today, prescribing XDEMVY today. About 15,000 represent about 85% of all prescriptions in the eye. Like I said earlier, half are optometrists and half are ophthalmologists. When you look at that landscape, we have about 40% who are writing weekly. Our daily prescribers or those that write five or more per week has grown 20% since the last quarter. Our focus is on that core audience of prescribers and really driving depth of utilization in the practice. You know, providing them with evidence, providing them with further education, it's a segue into the direct-to-consumer advertising as well to help drive even more patients. Ideally, we want to get as many of those 15,000 to write weekly and eventually daily. Yeah, it's interesting because we've talked to some eye care professionals that are writing daily, and they tell us, "We see these patients all the time." It just, with the 40% you mentioned and the very well-known target population, it's just there's still such way to keep increasing the utilization within the group you already have your touch points with. You also mentioned DTC, so I wanted to go there next. I don't know in the audience who else has seen the commercial, but it's a great commercial, and it's very motivating next time you go to the eye doctor to have them check and, you know, look down in the slit lamp. Can you talk about the DTC campaign when you kick that off and maybe, you know, what impact if or what impact it might be having now or could in the future, just given maybe more of a delayed response as you target the consumers and they kind of fall through the funnel? Yeah. No, I'll start, and Dave, feel free to chime in. It is a very impactful commercial. One of the byproducts of it is actually it sort of destigmatized the fact that people you know, one of the challenges that doctors had at one point was like, how do you bring up to a patient that they've got mites in their eyes without freaking them out? This helps sort of destigmatize it a little bit. It's been very impactful. We started the program last year, and it's a combination of, you know, the streaming TV, where you can get very targeted, very good data. Actually, when a commercial airs to when a patient picks it up, it's scary how much information you could actually garner from those smart TVs. Then the network TV we initiated shortly thereafter, and there's more eyeballs on the ad there. You know, it's a little bit less targeted there. It helps us have a broad reach, you know, between sort of the commercial consumer as well as the older Medicare patients as well by sort of having those different targets. We learned a lot last year. We're going to spend the same amount this year in 2026. We because of the learnings we had, we know which programs seem to resonate and drive the most utilization, and what time slots, and so we're able to target it even more efficiently. Those dollars have even a greater ROI. This is sort of an aggregate type of thing. The more you have it out there with a good commercial, the more impact it has. We've already, you know, surpassed our cost to do this commercial, and it's continuing to grow, and we're looking at a multiple on return at this point, so. Awesome. Maybe can we also just differentiate between the 25 million TAM, the 9 million, because then when we tie the DTC, I think it's, you know, the 25 million patients is a massive opportunity. Having more of them fall into that more realistic or addressable near-term population, just can you break those and give the difference for investors? Yeah. Jenna, the 9 million are essentially those that are immediately addressable. They're either diagnosed already with Demodex blepharitis, or they're coming in for a complementary condition, dry eye, Meibomian gland dysfunction, contact lens intolerance, or they're coming in for cataract procedures. Essentially, about 60% of everybody walking through the eye doctor probably has Demodex blepharitis. That's how you get to that 9 million. DTC is really helping to drive those above the 9 million or essentially in that 25 million and helping to grow the addressable market. Because patients are coming in asking for XDEMVY by name or asking the doctor to check for collarettes. We see this also in our unaided awareness. Before we started the campaign, you know, I'm sure like many of you probably never heard of Demodex blepharitis. Now we have essentially one in four patients coming into the doctor's office and asking for it by name. Awesome. You know, we talked about the launch trajectory today. We talked a lot about the commercial. Now let's focus a little bit on guidance, which, Jeff, you mentioned in the beginning. Very strong, you know, 50%+ growth expected this year. You're investing, still, you know, potential for positive EBITDA. Can you just help us understand what gives you the most confidence in that outlook for this year and maybe refresh us on the spending outlook and maybe what some of the drivers are on that side? Sure. Yeah. Our philosophy on guidance has always been we're not gonna give guidance until we can give good guidance. As you highlighted, there really wasn't a good analog out there before Tarsus came along. There was nothing we could sort of say, "Well, let's take a look at this launch trajectory." We wanted to get some history, and now we have about two years of historical data that we can draw upon. That includes, you know, kind of where we exited in the fourth quarter on scripts. We know we have a stable payer base now, so we know what the gross to nets are within, you know, patient mixes. We have a good sense of the seasonality. There's no seasonality of the disease, but we do know since we're primarily an NRX product or new, you know, script product as opposed to a chronic disease that gets refills. Whenever there's a doctor not in the office, you know, we see a drop in scripts. It usually recovers, you know, subsequent to the doctor coming back. Whenever there's a vacation or a big conference or bad weather, we'll see a drop in the scripts as a result of that. Based on that, we made some assumptions on, you know, sort of out of offices, gross to net assumptions, and continued growth as it relates to our DTC campaign that got us to the $670 million-$700 million range there. We feel really good about where we're gonna land and that's basically how we came up with the assumptions there. Perfect. Then just to double-click on the cadence question, can you just remind us, obviously you were pretty explicit about one Q, but then can you remind us of which quarters kind of maybe step up or down through the rest of the year? Sure, yeah. Over the last two years, you know, we've seen a familiar pattern, and we've looked at this in other companies in the eye care space too, so it's not really isolated just to Tarsus. If you look at the NRX pattern on some of these other eye cares, you'll see the same thing. In Q1, you'll typically see patients deferring doctor visits because they have their deductibles reset, and so they'll usually come back, you know, at a later stage once they've kind of gotten through those deductibles. We'll also see some erosion on the gross to net discount, which we talked about. It usually will come down a couple points as a result of deductibles resetting, us providing more co-pay assistance. So we'll see a drop in scripts as well as, you know, maybe an impact to the top line revenue because of the gross to net impact. Then in Q2, we'll see a nice ramp-up again in growth. In the summertime, in the third quarter, we'll see a little bit of a tempering of growth. We'll continue to see growth, but it'll be not at the same pace as between Q1 and Q2. Then over the last couple years, we've seen a nice rocket ship in the fourth quarter where, you know, patients have gotten through their deductible, they wanna use up their FSAs, and so that tends to be our best quarter, quite frankly. Awesome. Okay. Let's shift gears a little bit into your peak sales and total opportunity here. You know, I think in the beginning, as we've touched on multiple times, this opportunity was maybe a little bit underappreciated or misunderstood. Then, you know, you've done so well with this launch trajectory. Approaching $700 million in just year three. Sometimes what we hear a little bit of pushback on is the overall runway in this product, just given how big it already is. You know, we're still very early, and I think you also mentioned this in the beginning, but just remind us really how early we are in terms of the patients that you've treated to date. It helps people also frame, you know, you're generating over $1,000 per script. I think sometimes that gets a little bit lost in translation as well. We'll get into the numbers on the peak sales. Yeah. I think one of the most profound stats is, you know, launch to date, we've treated about 500,000 patients, and it's a really great start and but that's what it is. There's still 25 million out there that we're looking to serve. When you think about how much runway there really is, there's a long way to go. When we talk to ECPs, you know, nobody's said they've reached their limits. They're not even close. You see it on the podiums, you see it in medical meetings, you see it in field rides. For us, it's really about driving home that message. You really need to have every patient look down in the slit lamp because there's a really good chance they have Demodex blepharitis. Now focusing on the numbers. At the time of launch, the peak sales was $1 billion+. You recently just doubled that to $2 billion+. I mean, what gives, what gave you the confidence to increase that peak sales estimate? You know, I would just love to hear your thoughts on that. Yeah. We knew it's been tracking higher and the launch has even exceeded our high expectations, you know, which is nice to see. It's been sort of multifactorial. One of the things that we have seen is doctors, even better than what we saw in the clinical study, are saying, "This is helping all my patients," right? There's a lot of doctor talk within this community, the eye care community, in terms of, "Have you heard about XDEMVY?" "Oh, yeah. It's been great." That's been super helpful. As Dave highlighted, there's doctors, our most written prescribers say they have still tons more patients that they could write for. It's a big unmet opportunity there. Then the DTC, the activation of the consumers has been really impactful. We see that this has been something that really resonates in the consumer side, and so that's been driving in patients that we weren't really initially modeling for. The trajectory of the launch is a little bit steeper than what we anticipated. All of those things and the fact that we're just sort of scratching the surface on the opportunity here make us, you know, think that the $2 billion is an achievable number. Awesome. Even beyond that, as we think about the pipeline, you have two programs in development. Maybe as we're starting to run out of time here, can you touch on these programs, what the opportunity is, and maybe what the next catalysts are for those? Yeah. We're really excited about these programs. It's all, you know, sort of cliché, but it's a pipeline in a product, all the same active ingredient. Ocular rosacea is probably the nearest term one. This is a type of rosacea that's around the orbital eye area. The KOLs tell us they see this all the time. It's much more awareness out there than, say, of Demodex blepharitis at the same time. What we are doing is we've developed a sterile gel formulation of the same active ingredient that's in XDEMVY. We know XDEMVY is very good at killing the mites. The theory here is this ocular rosacea is about 15-18 million patients. It's caused by Demodex mites for the most part. If we can kill the mites, we should see a reduction in the rosacea or the redness. There's also another hallmark of the disease, which is this pronounced vessels on the eyelids. What we're doing is designed a study that could show a reduction in the redness or a reduction in the vessels. Based on the FDA discussion, either of those would be valid endpoints for a pivotal study. We've kicked that study off here in December, and we'll have top-line readout in the first half of next year. Lyme disease. You want to touch on Lyme disease? Yeah. We're excited to get the Phase 2 study for Lyme disease prevention. It's an oral tablet. It's probably gonna be about 700 patients. We plan to enroll it in one tick season. You know, as many of you folks know, Lyme disease is a pretty prevalent disease. It costs the U.S. healthcare system well over $1 billion. We should have data similar to ocular rosacea in the first half of next year. Awesome. Just to wrap things up, and I also wanted to make a comment on your balance sheet, which I think is underappreciated. You know, this is a newer launch company. You have such a very strong balance sheet with over $400 million in cash and equivalents, very little debt, and you're on the cusp of profitability. As I mentioned, these scripts generate over a thousand dollars per script. It just feels like you have such high financial flexibility here and just a very strong operating model and future outlook. With those things in mind and with the way the launch trajectory has gone with the new peak sales, the 2026 guidance and your new peak sales, which is double what you had before, you know, help us in your mind, what do you think is the most dislocated in terms of maybe how the stock has responded? We've talked about this throughout the year. You know, people follow the weekly scrip trends, and you have been very clear about one Q seasonality. Just all of that mumbo jumbo that I just said, like, maybe put into context for people what you think is the most underappreciated right now. I think you highlighted it in terms of the opportunity here in XDEMVY itself, right? I think there's been always a skepticism, nobody heard about this disease. We've demonstrated a strong launch, but people focus on, you know, the weekly scripts despite us telling them that there's going to be weakness. You know, we told people that Q1 is gonna be flat to down, right? But nevertheless, people were sort of reacting to some of the decrease in IQVIA scripts there. We view this as a buying opportunity, knowing that we've given very strong guidance for six, you know, from $670 million-$700 million. you know, I think that's one of the big misses here is just listen to the guidance, take a look at the big opportunity that we're just scratching the surface here, and that this is a big multi-billion dollar opportunity. Awesome. You know, hopefully with having the full year guidance out, it helps provide an anchor for people to maybe not need to focus as much on those weekly scripts. Thank you guys so much for attending the conference and, congratulations on a great launch so far. Thank you, Jenna. It's great to be here. Thanks, Jenna.