Tarsus at Stifel Forum: Strategic Growth in Eye Care

On Tuesday, 27 May 2025, Tarsus Pharmaceuticals (NASDAQ:TARS) presented at the Stifel 2025 Virtual Ophthalmology Forum, detailing its strategic initiatives and financial performance. The company highlighted the successful launch of Xtampi for Demodex blepharitis, noting both impressive growth and challenges. While demand and revenue have increased, the company also faces the complexities of market expansion and recurrence rates.

Key Takeaways

• Tarsus launched Xtampi in September 2023, experiencing quarter-over-quarter growth.
• Over 90% payer coverage achieved across Medicare and commercial plans.
• Targeting 9 million patients out of 25 million with Demodex blepharitis in the U.S.
• Phase IV studies underway to generate further evidence for Xtampi.
• Gross to net discount expected to decrease to 42%-43% by Q4 2025.

Financial Results

• Tarsus ended Q1 with $4.08 million in cash reserves.
• The company anticipates these funds will support the growth of Xtampi and advance other studies into Phase two and four.
• Gross to net discount was about 47% last quarter, with expectations to reduce it to the low forties by the end of the year.

Operational Updates

• The company hired 50 additional sales representatives to enhance market reach.
• Xtampi’s six-week treatment is well-received by physicians, influencing diagnostic approaches.
• Approximately 40% of patients experience a recurrence of symptoms between six to twelve months, with expectations that 20% will return for treatment annually.

Future Outlook

• Tarsus aims to continue its educational efforts among eye care professionals and patients.
• The company is exploring treatments for other ocular conditions such as ocular rosacea and Lyme disease.
• Strategic focus on expanding market penetration and ensuring ease of access for patients.

Q&A Highlights

• Jeff Farrow, CFO and Chief Strategy Officer, emphasized the importance of payer education and the pharmacoeconomic benefits of Xtampi.
• Discussion included the operational excellence and the proactive approach in addressing unmet needs in the ophthalmology sector.

In conclusion, Tarsus Pharmaceuticals remains committed to its growth strategy in the eye care market. For more detailed insights, refer to the full transcript of the conference call.

Full transcript - Stifel 2025 Virtual Ophthalmology Forum:

Annabella, Unidentified role: Great. Good morning, everyone, and thanks for joining us for the TARSIS, fireside chat. It’s our pleasure to have Jeff Farrow with us, CFO and chief strategy officer, of Tarsus. And to kick it off, you know, you know, to start start with, you’ve had a very successful development of Xtampi, which and now commercial execution. Maybe just to get everyone on the same page, can you just start with an overview, make sure everybody knows exactly what Xtampi is, and how you’ve been so successful.

Well,

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: thanks, Annabella, and it’s great to be here, and thanks for having us here. We we are a commercial stage company as you highlighted, and we launched XtendV in September of twenty twenty three. The launch, as you said, has gone very, very well. We’ve seen increases and growth in underlying demand and corresponding revenues quarter over quarter since that launch. And importantly, you know, we’ve seen great payer coverage, you know, that was much earlier than we anticipated.

We’re about over 90% coverage across the the payer spectrum, and that includes Medicare, commercial. And, you know, I think that really goes to the value prop for the drug. I think the launch, you know, to your point, has gone well for, you know, several things. One, you know, the team did a great job about a year ahead of launch, really educating the payers and the eye care professionals on, demodex blepharitis, you know, the sort of unmet need there, the pharmacoeconomic benefit of treating. And, you know, that’s paid off right after the the fact that we we got the approval.

Were able to hit the ground running with some physicians that were aware of it. Demodex bullfried is caused by something called Demodex mites, and it’s we all have it on our face and in our hair and kind of gross, know, but some people have an overproliferation of it. And these folks that have an overproliferation, you know, see it in the eyelashes, and it’s basically these parasites getting the into the glands of the eyelashes you know, excreting waste and eggs and things like that that can lead to bacterial, you know, infections, and it’s readily seen by inflammation. You see redness in the eyes. There’s itching and burning.

The nice thing about it is it can be very easily diagnosed. Most people that have gone in to see their eye care professionals have gone into a slip lamp. It’s essentially that thing you put your chin on, and they look at the back of the eye. But if you if the ECP asks the patients to look down, you can see these colerets, which are this waxy cylindrical scruff that builds up around that, and that is pathognomonic for the disease. So it’s very easy to diagnose, and it is shown to be our drug is shown to be very efficacious.

We saw over 85 of patients see clinically meaningful results in our Phase III study, and it’s got a very safe safety profile as well. And I’d be remiss if I didn’t talk about our pipeline as well, so we’ve got a couple other pipeline assets that we can talk about as well. We’ve got something for ocular rosacea, again, another sort of groundbreaking potential therapeutic where there’s no proof FDA treatments for it. And then we’ve got something rather unique for Lyme disease as well.

Annabella, Unidentified role: Great. That was a great introduction. So just going back to blephar dermodex blepharitis, this is clearly a very large market. You’ve only started scratching the surface of it, and you’re targeting first, I think, only a segment of patients who are treated. I guess how do patients respond when they realize that they have this underlying condition?

And it’s not just your standard dry eye, but it’s from, like, Demodex blepharitis. It’s from these mites. I imagine uptake would be very rapid. And so from a commercial perspective, why are you just segmenting segmenting the market? I imagine you would be able to go after the entire market very quickly, but maybe you can talk about how you strategize this and how you’re staging this expansion into the market.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Sure, sure. Yeah, as you highlighted, there’s a lot of patients out there. There’s about twenty five million patients that are thought to have this disease in The United States. We’re initially going after nine million patients, and these are patients that are actively going in to see their eye care professionals for some underlying disease. About one point five million are going in for endemic pulphritis.

We have another one point five million that are seeking treatment for MGD, and as you highlighted also, dry eye, contact lens intolerance, as well as cataracts. And so those are our initial target, those nine million patients. We do think as time goes on, some of those twenty five million patients will come down and start asking their physicians about Demodex blepharitis, and that’s one of the reasons we kicked off the DTC campaign as well. But that nine million is our initial. I think the low hanging fruit for us have been the one point five million patients that have already been described Demodex blepharitis or already been diagnosed with demodex blepharitis.

So these were patients that were coming in complaining about it, probably seeking therapies that were not efficacious. So that is really kind of our probably our go to patients out of the gate. But we’ve seen more and more patients in those different segments get treated as well. You know, the way we’re continuing to sort of expand into that patient category, we call our four E’s, you know, it’s really education of the eye care professionals as well as the patient’s ease of access now that we’ve got 90% payer coverage. And we’ve got a sort of specialty pharma like channel that really sort of helps the patients through that payer process and helps remind them when things are ready for them to pick up or be shipped.

Evidence generation, we’ve got some Phase IV studies that will continue to sort of go into those different segments. And then just operational excellence, right? So just making sure that we’re really sort of playing whack a mole on all these things that kind of come up there. So that’s really kind of how we’re sort of doing our plan on that nine million patients. The patients, as you asked the question about how do patients react, I think the doctors have learned to be cautious how they describe this, making sure that people think that it’s not a hygiene issue or something that’s wrong with them that really we’re all have this on us.

It’s just one of those things that some people have more of it than others. And in fact, some people don’t even mention mites. Know, they just have this disease called dimethylphritis, and now we have therapy to help treat you. Initially we were hearing things that, you know, some patients were cutting off their eyelashes or shaving their eyebrows, you know, because of their, you know, I don’t want to have mites, but I think the doctors and the eye care professionals at Lawrence sort of really think about how to sort of treat this, a little more, you know, I think, cautiously when they talk to their patients.

Annabella, Unidentified role: Got it. Got it. So, just speaking to the segmentations you see at 1.5 for Demodex, others GED, and then cataract. You mentioned that you’re penetrating some of these other areas. Have you disclosed how much is in each of the different what kind of penetration you have in each of these different segments of the population?

And if the other segments that you’ve cited have kind of sped up based on or penetration has sped up based on the success that these physicians have been having for Demadex specifically.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Right. Yeah. We have in the fourth quarter, we disclosed that forty percent of our 15,000 targeted eye care professionals have gone into these other segments. It’s not something that we have data on sort of real time. It’s really having to go back and doing chart reviews is where we get that information and ATUs.

So that’s the last time we’ve done that, but we were encouraged, you know, a year in the launch that we were seeing these impact on those different other segments. Our sales force, we’ve got 150 sales reps that are targeting those 15,000 docs. And, you know, they’re tasked with going through the depth, you know, asking their physician contacts and optometrists to take a look at all their patients. We know there is no such thing as an asymptomatic patient. And really take a look while the patients are in the slit lamp, do they have cholera reds?

And if they do have cholera reds, that’s pathognomonic for the disease, and so you should consider treating them with Xtampi as a result of that. And so that’s really some of the effort that we’ve been seeing in the growth. We started we hired an incremental 50 sales reps right after Labor Day, and that is that’s we’re seeing some nice room at the depth as a result of that rollout of the incremental sales reps.

Annabella, Unidentified role: Okay. What just on that point, why did you feel like you had to hire 50 more sales reps? Is it because of a rapid adoption, or was it was there difficulty in education difficulty in education? And how did you determine the right size for the market?

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Yeah. When when you launch, you always wanna be thoughtful about how we roll out, you know, certain initiatives in in the in the and what we wanted to do is make sure, you know, we had the a good number of reps. So we started with a hundred. As time went on and because of the payer coverage coming on much more quickly, we realized that it was a good time to pull in our incremental 50 hires. We had originally planned on bringing them in in 2025, but instead brought them in in the summer, you know, 2024 is when we started recruiting for it.

And it really was to reduce what we call windshield time. You know, we had some reps that for example, there’s one rep that covered Phoenix, but also covered San Diego. Right? And so it’s probably not the best use of this individual’s time to be on a flight or driving around that territory. So it essentially reduced the territory size in half and made it much more efficient for these sales reps to detail the eye care professionals as a result of that.

And again, sort of drive that message about looking at all your patients, and if they’ve got the tolerance, you should consider treating them.

Annabella, Unidentified role: Okay. And has that education have physicians been rapid to change their, I guess, diagnostic approach to these patients?

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: It has. Or is it Yeah.

Annabella, Unidentified role: Because physicians get stuck in their ways for a while, so I’m just curious

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: how Yeah. They’ve adopted. No, I think that’s exactly right. You know, it’s a little bit of a journey, right? We had some physicians and eye care professionals that were ready out of the gate and knew about Xtampi, knew about Demodex Poultryitis.

And then there were some that weren’t, that were just, you know, that we had to educate them. And, you know, did that with literature and further evidence. What the, you know, the plan now is we’ve gotten essentially scripts from all 15,000 of our targeted sales reps, and that represents about 85% of all eye care professionals that write scripts for the front of the eye. So it’s really a targeted, you know, group of ECPs that we’re doing. You know, there and there’s some that are writing daily, but then there’s some that are writing, you know, monthly.

And we wanna get them going from monthly to weekly to daily. And so that really is the plan here. It’s not, you know, expanding the to beyond the 15,000. It’s really just getting into the depth of the 15,000 that we’re targeting. Mhmm.

Annabella, Unidentified role: Okay. And they’re finding their patients readily there are in in the screening, or they’ve all had a handful of patients, that have been sort of the low hanging fruit for them?

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: I think initially it was some of the ones that were probably previously diagnosed with demonic pluriphyretis and maybe had a lot of choleraeTs and were complaining a lot. But as time went on, they’ve been sort of, identifying other patients. One of the things we did early on was you hear some pushback, it’s like, well, yeah, I know about the disease, but we don’t, I don’t have a lot of patients that have this. And then we challenged them and said, okay, well, here’s a little stamp pad that you can sort of stamp every time you see a patient that has Cholorettes, one and two stamp. And that was really sort of a light bulb going on with some of these ECPs.

It’s like, wow, I really do as much as fifty percent of the patients coming in daily have these cholera’s. And so, you know, that kind of observational effort really did seem to help. And so as a result of that, I think people are realizing how prevalent this disease is.

Annabella, Unidentified role: Right. And this is a I guess this is an eradication type of treatment. So how should we think about the dynamic where you’re treating to a potential eradication? Do you see retreatment of these patients at all? Do they have recurrence of it?

Or is it it’s a one treatment and done, and then most of them are pretty good going forward?

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: No, the treatment is a six week treatment. It’s an eye drop that you take in the morning and once in the evening for a period of six weeks. And what we saw in the clinical study is subsequent to them stopping between month six and month twelve, we saw about forty percent of the patients start to see recurrence of the choleraepts in the disease. So that’s our best evidence at this point that, you know, expect these patients to see some recurrence. What we guided the Street to think about is not all forty percent of those patients are going to come back, you know, the following year.

So we said, you know, think about twenty percent of those coming back in the subsequent year. We’re collecting real world evidence as we speak. And at that point, think we can give some better guidance on what the recurrence rate is. We do know patients are coming back for retreatment. I would say there’s been no pushback on the payer front as it relates to that.

There was no nothing in our payer contracts that limits refills. What the data shows in IQVIA is it’s a high single percentage retreatment rate. But if you go back to the actual cohort data, so go back a year from now and see which patients are being retreated, we’re seeing a higher number, even the low teens. And so I think we’re well on our way to getting to that 20% steady state, and it could even be higher beyond that.

Annabella, Unidentified role: Got it. I guess while we’re talking about reimbursement, you know, maybe we can talk about obviously, was a very rapid uptake from the payers. You said 90% commercial. Just maybe you can talk about how these patients were clinically treated before that, you know, I guess motivated the the payers to take this up so quickly. I mean, people tend to stay away from these specialty pharma drugs because of, you know, payer pushback, reimbursement restrictions, but this seems to have picked up very nicely.

So maybe you can talk about what the the the pharmacoeconomic benefit was to to the payers given that I think most people were treated with tea tree oil or compresses really at no cost to them. So, maybe you can put it in that context a little bit.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Sure. Yeah. No. You’re exactly right. Previously, they were treated with tea tree oil, which is stinging and, you know, not patients don’t like it, or lid wipes or or compresses, neither of which were were efficacious.

So what the really, the the benefit of our beneficolfran, our access team was getting out there early and educating, you know, ahead of a launch on the disease. And the fact that, you know, these patients were likely coming back, you know, multiple times a year to their eye care professionals to seek treatment because there’s no efficacious treatment. There’s no FDA approved treatments. This was the only thing you could use. Ours gets to the root cause of the disease, which is killing the mites.

And it does that very efficaciously at Stapley. So it was basically showing the payers that, look, you’re getting these multiple visits to the eye care professionals and it’s not helping them. And we also saw off label usage of dry eye medications as well, which are not inexpensive, and they frequently switched. They would maybe try for three months and didn’t see anything happening there, so they switched to another dry eye drug. So it was really showing them that this was a situation that you treat them for a period of six weeks, you know, in essence, that would be, you know, good for a course of a year.

Annabella, Unidentified role: Okay. Excellent. And there’s no other there’s there’s no, I don’t know, restrictions, step throughs. You don’t need to show that you’ve been treating off label with dry eye meds. You don’t need to show that you’ve been using compresses.

They they are not causing any, giving you any restrictions here.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: That’s right. That’s right. Prior auth, you know, in any sort of like, you know, drug like this that’s not generic nowadays is prior auth the label. We’ve got a very broad label for the treatment of demodex blepharitis. So basically, there’s an attestation that the patient has choleraepts, which we know are pathognomonic.

And in some cases, it has to be treated by a non care professional, either an optometrist or an ophthalmologist. But that’s been the the general PAs. And in fact, in a couple, payers, we have zero PAs, so they can they can directly do that. And we do things to help out, you know, in terms of making it easy for the physicians. You don’t want this to be a burden on the back office for the physicians.

And so we utilize something called CoverMyMeds, which, you is very specific for the insurance company. So they can just say, alright. Blue Cross Blue Shield requires this. They print it out and then sign it and fax it off. So we and then we also have this sort of specialty light program where we have folks in the pharmacies help go through this payer adjudication process for them as well.

Annabella, Unidentified role: Okay. Got it. Have you you laid out any guidance with regard to gross to net? How much sampling are you able to do? What how much have you had to do, and do you do you have a gross to net expectation that’s that’s been laid out?

I think I remember it’s been pretty moderate for this day and age, especially Exactly.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Yeah. No. You’re exactly right. We’re we’re very pleased with how things have gone. And we had in the last quarter a gross to net discount about 47%.

And as you know, that there’s usually Q1 dynamics with opacities resetting and things like that. So we expect it to decrease quarter over quarter throughout this year to get into the low forties by q four. So we expect to exit in the low forties there, say, 42 to 43%. And that should be more or less our steady state gross to discount, absent that q one dynamics that you typically see there. So so to your point, it’s much better than typical eye care products.

In dry eyes, you can see, you know, 80% gross to net discount. So we’re we’re pleased where we landed there.

Annabella, Unidentified role: Okay. And did you say you had sampling or no sampling?

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: We have very limited sampling. You know, there are some doctors that, you know, wanna try it out, but we don’t really have much sampling as as Most of the doctors have tried it already. They’ve gotten good feedback from their patients, and so we really don’t see a need to do much sampling there.

Annabella, Unidentified role: Okay. Great. Maybe we can talk about other segments of the market you’re looking at outside of Demodex. Do you need to generate any additional data for, say, my booming, gland dysfunction, for dry eye? What kind of phase fours are we looking at here?

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Yeah. We’re looking at phase four for all of those other segments. We recently demonstrated some really nice data in MGD. Mhmm. You know, something that I don’t think has been demonstrated before, actually.

Seeing patients that have Demenex Bophilitis and MGD, you know, seeing an improvement in minor big gland secretion score, and seeing a real improvement going from sort of the, you know, either completely blocked glands or the sort of toothpaste y secretion that comes out of the MGD to a nice olive oil type secretion. So we saw an improvement in the secretion scores, as well as a number of glands that actually, were able to produce this optimal secretion as well, too. So that has really resonated with the eye care professionals. They haven’t seen anything before like that, so that has been encouraging data for the patients, as well as the eye care professionals that treat MGD there. And then we’re also looking at, you know, other Phase four studies in things like contact lens intolerance, down the road maybe cataract surgery, treating patients before they go in for cataracts such that you get a better outcome subsequent to the cataract surgery.

There is some literature out there that you do tend to see a balloon in Demonex bullfritis and the Demonex mite subsequent to the surgery. So we’re gonna be looking at potential studies in cataract surgery as well.

Annabella, Unidentified role: Oh, got it. Okay. And is this part of the twenty five million that you’re talking about, or are we talking about a separate market?

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: This would be, part of that twenty five million. And so these would be patients that have, that are thought to have Demetic Bulphritis.

Annabella, Unidentified role: Okay. Got it. And maybe in the little time we have left, you can talk about the other ocular conditions that you’re branching out to. Ocular rosacea and Lyme disease is a little bit, not ocular. Right.

Perhaps you could talk about that as well.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Exactly. That was probably better suited for somebody else somebody else’s hand ultimately. But But ocular rosacea is something we’re excited about. This is something that we had a phase two study in derma rosacea. We hit our primary endpoints, but it’s a very competitive space there and we were thinking about partnering it.

But when we shared this with the eye care professionals, they said, Have you thought about ocular rosacea? Something I see in my practice all the time, and there’s just nothing out there from an FDA approved process or an FDA approved therapeutic. There’s about fifteen to eighteen million patients that have this disease. And the vast majority are caused by Demodex mites. And we know we’re very efficacious in killing these mites.

And so it was something that we did a further market research, and there really was a bear there. So we are going to be initiating a study later this year in ocular rosacea, focusing on, you know, really what right now we’re developing the the primary endpoints. This is a brand new study that nobody’s done in ocular rosacea before. In two telltale signs, one is the redness that’s around the eyes, as well as essentially these veins that build up on the upper eyelid that you typically don’t see in patients that don’t have ocular rosacea. So we’re developing a scale that can be utilized by all clinicians that are going to be in our study that can reproducibly say, okay, I see this as being a grade three.

I see this as being a grade four. Once we’ve developed that scale, we can move into that phase two study. But, you know, we think there’s a high probability of success there just given our experiments with Demodex Poulfriedis. And then on Lyme, we’re looking at an oral prophylactic for the treatment of Lyme disease. It kills the mite before it transmits the bacteria that causes Lyme.

We showed great study called the tick kill study that killed over ninety eight percent of the ticks within twenty four hours of treatment, which is the you know, prior to the window that it transmits it. So we’re looking at a phase 2b study there, but ultimately we think this should be probably better detailed with, you know, somebody else like a big pharma company.

Annabella, Unidentified role: Got it. And since you’re the CFO, I’m gonna ask you to talk about financials, cash runway to profitability, and what you might need to, what kind of sales level you need to, reach to hit breakeven.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Sure. Yeah. No, we ended Q1 with a nice balance sheet. We had about $4.00 $8,000,000 in cash, and we believe that’s sufficient to continue on this growth path that we have for Xtendvi and then also take those two studies into Phase two studies as well as the Phase four program. We haven’t guided to profitability yet because we haven’t guided to revenue yet.

This is really category creating. There’s not a good analog out there. The big unknown right now is the impact of DTC on the back half of the year. So I think until we get our arms around that, we have not provided that revenue guidance at this point, but maybe in the future.

Annabella, Unidentified role: Great. And I think we are out of time, but that was a great overview. So thank you very much, and congratulations on on such a great launch.

Jeff Farrow, CFO and Chief Strategy Officer, TARSIS: Thank you, Annabel. Appreciate it.

Annabella, Unidentified role: Thank you so much.

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