TARS — Tarsus Pharmaceuticals, Inc.

TARS Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Tarsus reported $119 million in net revenue for Q3 2025, driven by the sale of over 103,000 bottles of XDEMVY, marking a 147% year-over-year growth.
• The gross-to-net discount was 44.7%, consistent with previous guidance, influenced by Medicare dynamics.
• For Q4 2025, the company expects net product sales to range between $140 million to $145 million, projecting an annual revenue of $440 million to $445 million.
• Inventory levels remained stable at approximately 2.5 weeks.

2. Strategic Updates and Business Highlights:

• XDEMVY is recognized as one of the best-selling prescription eye drops, with over 20,000 doctors prescribing it, and a significant increase in weekly prescribers.
• The company is seeing a shift in physician practice patterns, with increased utilization of XDEMVY for various conditions, particularly Demodex blepharitis.
• Tarsus plans to initiate a Phase II trial for ocular rosacea by the end of 2025 and is exploring international expansion opportunities in Europe and Japan.
• Direct-to-consumer (DTC) marketing efforts have resulted in a 90% increase in website traffic and a 42% rise in unaided awareness since last quarter.

3. Forward Guidance and Outlook:

• Tarsus anticipates continued momentum into 2026, with expectations of sustained growth driven by deeper adoption of XDEMVY and ongoing DTC campaigns.
• The company is maintaining its operational spending guidance for 2026, projecting $70 million to $80 million in DTC investments, with potential increases tied to sales growth.

4. Bad News, Challenges, or Points of Concern:

• The gross-to-net discount is expected to remain high due to an increase in Medicare patients entering the catastrophic coverage category, which could pressure margins.
• There are inherent risks associated with the launch of new products, including the potential for slower-than-expected adoption or competitive pressures in the eye care market.
• The company has not yet quantified peak sales estimates for XDEMVY, indicating uncertainty in long-term revenue projections.

5. Notable Q&A Insights:

• Management highlighted that the refill rates for XDEMVY are progressing positively, with over 10% of weekly prescriptions being refills, and expectations of stabilizing around 20% over time.
• The company is optimistic about the potential for XDEMVY to become a staple in long-term patient management, with physicians increasingly recognizing its efficacy.
• Discussions during the Q&A emphasized the growing role of optometrists in prescribing XDEMVY, which currently accounts for about 65% of prescriptions, and the importance of educating both optometrists and ophthalmologists on its benefits.
• Management reiterated confidence in the pipeline, particularly for ocular rosacea, citing previous successes in related studies as a basis for optimism.

Overall, Tarsus is experiencing robust growth driven by XDEMVY's market performance, with a clear strategy for future expansion and product development, despite facing some challenges related to pricing dynamics and market competition.