Tarsus Pharmaceuticals, Inc. Price & Performance (TARS)

Establishing a clear path forward to becoming the next leader in eye care. In 2024, our first full calendar year of Xtampza in the market We generated more than $180,000,000 in net product sales, delivered more than 163,000 bottles of Xtampza patients. Even more exciting, we believe we are only beginning to scratch the surface of our ability to serve the millions of Americans with Demonex bupheritis or DB that could immediately benefit from XtEMBIE.

Much of our success is due to the tenacious effort of our sales force which we expanded late last year. From 100 to 150 sales representatives and leaders. With the expanded sales team activated in Q4, I am proud to say that more than 15,000 of our target eye care physicians or ECPs are now prescribing Xtendy. More importantly, and based on the positive patient outcomes our ECPs have seen within their own practices, the majority are moving more rapidly along the prescribing continuum from monthly to weekly to daily prescribing. [indiscernible] Has also been a critical success factor Thanks to the stellar work of our market access team, commercial and Medicare coverage of XENVY now extends to more than ninety percent potential patient lives. Finally, we generated seminal data among DB patients demonstrating that Xtandi delivers both profound improvements in objective measures of disease and in patient outcomes like fluctuating vision. As you know, I like to get out in the field as often as I can And during my most recent visits, I heard from ECPs again and again that Xtember continues to deliver great results for patients. There is no shortage of patients within their practices The insurance coverage we've secured makes it easier and quicker to pursue those who have seen the MGD data say it gives them yet another compelling reason to treat And remember, we are just getting started there as well.

On top of all this, we are already beginning to see the patient impact of the direct consumer or DTC advertising campaign we launched late last year. And while the launch of XtEMBI continues to accelerate, we're just as excited about what's next for Tarsus, Earlier in this quarter, we introduced the next potentially transformative category in eye care, ocular rosacea. Much like DB, ocular rosacea is a chronic progressive disease caused by mice we've learned just how pervasive this disease is from our ECPs who say they see it in their practice all the time. Leveraging the proven blueprint we've established with Xtendby, and our ability to target the root cause of disease, we believe we can bring another transformational product to the millions of patients impacted by this disease. We plan to initiate a Phase two trial of our ophthalmic gel formulation TP-four later this year. In addition to ocularization, we are also advancing our Lyme disease prevention program. The FDA recently confirmed a clear regulatory path forward for this program and we plan to initiate a Phase two study in 2026 With our established ability to create new categories, an exceptional leadership team, many opportunities ahead of us I have no doubt 2025 will be even more impactful for Tarsus and for patients.

With that, I will turn the call over to our Chief Commercial Officer, Aziz Mottawalla for more details on our commercial progress. Thanks, Bobby.

It was indeed a phenomenal year and I'm so proud of all our team has accomplished. Including setting a new standard in product launches. As noted, we've delivered what we said we would do and more.

In addition to addressing the unmet needs of hundreds of thousands of patients, we delivered on the key elements of our strategy that have been core to our success. Education, ease of access, [indiscernible] and of course execution. [indiscernible] Enabled more frequent visits to our target ECPs to reinforce the benefits of Xtendby and motivate them to look for DB in every single one of their patients. [indiscernible] More importantly, we are consistently hearing from ECPs about the quality of talent on this team. All of whom have helped reshape the practice patterns of more than 15,000 ECPEs a pretty remarkable feat in my book. And now they're focused on turning this broad base of physicians into routine prescribers. While it is still early in our journey, in the coming quarters, we expect to realize the full potential of our sales force. And our top prescribers are telling us that they are not even close to reaching maximum capacity on the number of patients within their practice can help with Xtendi. And with more than ninety percent of all commercial and Medicare lives covered, we have eliminated the majority of access hurdles enabling ease of prescribing for physicians ease of access for patients.

In particular Medicare patients who represent approximately half of the market. Finally, the trailblazing evidence that demonstrates EXEMBI improves both objective measures in meibomian gland disease and impactful patient outcomes like fluctuating vision in DV patients, is expanding the type of patients ECPs can and will treat encouraging further depth of prescribing across all patient segments. Turning now to the other half of the equation. Patient awareness and activation. We recently turned up the volume on our impactful direct to consumer TV ad campaign we launched in the fourth quarter of twenty twenty four. So much so that we've expanded into network TV. With airings on major network television events such as the Golden Globes, Grammys, and the NFL playoffs. I've worked on several successful DTC campaigns and the work our team done here is extraordinary. This unique and memorable ad is generating both terrific media attention and an incredibly encouraging response from ECPs and patients alike. Notably, ECPs are telling us their patients starting to come in unprompted, raising their hands for help with itchy crusty red eyes. And patients are responding to the ad with increased website engagement, material downloads, and utilization of our Find an Eye Doctor tool.

As we've said before, every patient journey is different and it can take months for a patient to be inspired to action, by an ad they've seen multiple times then to schedule a visit with their physician, ultimately fill the prescription. So while we are very encouraged by these very early indicators, we are continuing to take a methodical and stepwise approach to our network television spend with an eye towards dialing up our efforts on a quarter by quarter basis. Starting in Q1. With all these foundational growth levers in place, our 2025 efforts are focused on moving ECPs to become more routine prescribers of XEMBI and driving further penetration across all patient segments. With these near and near term growth initiatives in place, we expect to see a meaningful increase in the number of prescriptions and patients we serve. I will now turn the call over to our Chief Operating Officer, Stacey Nervadden, to share key updates from our pipeline. [indiscernible] Thank you, Aziz. In addition to the great progress Aziz and the team have made with Exembi, our R and D team has been hard at work advancing our other potential category creating therapeutics within our pipeline.

And I'm incredibly proud of their work. In the past few months alone, we have produced overwhelmingly positive MGD data in DV patients identified ocular rosacea as an ex potentially impactful opportunity in eye care and secured FDA guidance on a clear path forward for the possible prevention of Lyme disease. As Bobby noted, we are extremely excited about ocular rosacea. Because like DB, is caused by dumorizmites, and can impact how you look feel and see. It can also be quickly and simply diagnosed in any standard eye exam by looking for inflammation and redness there are key clinical features of ocular rosacea. Unlike DB, ocular rosacea is a large and underserved market affects approximately fifteen million to eighteen million Americans with the majority of the cases caused by an infestation of dermatitis mites. Our strong portfolio of Loclanar based therapeutics has demonstrated statistically significant improvements in key objective measures for a range of diseases caused by dermatoxmites.

Including DB, MGD, papillopustular rosacea. And we believe we are once again poised to potentially deliver a game changing therapeutic designed to address the root cause of the disease the Deminex might.

TPO4 is a highly differentiated and uniquely tailored investigational sterile ophthalmic gel specifically designed to be applied to the eyelid and surrounding tissue. Following positive conversations with the FDA, we believe we have established a clear regulatory path forward for TP-four in ocular ocular ocular ocular ocular ocular ocular ocular o The second half of the year we plan to initiate a Phase two study looking at the hallmark objective measures of the disease including redness, prominent blood vessels. We look forward to keeping you updated as we finalize the study design and expect to report study results in 2026. Moving deeper into our pipeline, I'm also pleased to share that we now have a clear and well defined regulatory path For TP-five, for the potential prevention of Lyme disease. As you may recall, TPO5 is an investigational oral on demand solution that targets and kills infected ticks before they can transmit the bacteria that causes Lyme disease. Based on both the strong Phase IIa proof of concept study results we reported in Q1 of twenty twenty four, which demonstrated a greater than ninety percent tickle rate compared to placebo and Loclan has proven track record in animal health The FDA has outlined the following steps for regulatory approval of [indiscernible] First, a Phase two study in an enriched population of hundreds of participants and then a Phase III study designed to evaluate the potential prevention of Lyme disease in thousands of participants.

With an eye towards success in addressing a growing public health Tarsus, impacts nearly twenty seven million Americans, we plan to start the Phase II trial in 2026. This will ensure ample time to prepare and train multiple clinical sites while also allowing for potential completion of enrollment in one single TICS. With regard to the Phase three study and given the sizable enrollment in the FDA request, we reiterate our belief that this program may be best suited for a larger partner in the long term. In summary, we've got an exciting year ahead as we work to move our robust pipeline forward. And deliver meaningful data sets that have potential to change treatment landscape of some of the most pervasive conditions in The U. S. With that, I'll now turn it over to Jeff Farrell, our Chief Financial Officer and Chief Strategy Officer to discuss our financial results. [indiscernible] Thanks, Sesha. I'll reiterate the team's sentiment that 2024 was an exceptional year that exceeded even our own high expectations. For the fourth quarter and full year of 2024, we reported $66,400,000 and $180,100,000 in Xtandi net product sales respectively. Additionally, in line with our guidance, more than 58,500 bottles and 163,000 bottles were dispensed to patients respectively.

For the full year 2024, we reported broad commercial and Medicare coverage now extending to more than 90% of our covered lives and a gross to net discount of approximately 45% in line with our guidance. As a reminder, we recognize revenue when we ship Xtampi from our warehouse to the distributors, not on bottles received by patients. Turning to our 2024 P and L, and in line with our expectations, total operating expenses were approximately $303,500,000 driven primarily by the commercial and marketing costs related to the launch of Xtampi Gross margins were approximately 93% which includes the royalty and the amortization of milestones to Elanco And finally, we ended 2024 with $291,400,000 in cash and cash equivalents. In 2025, we anticipate strong annual growth of Xtampvia as our expanded sales force continues to build momentum with the ECPs Our DPC campaign drives even more potential DB patients to the ECP offices and we motivate ECPs to move from monthly to weekly to daily prescribing. Further, this growth in sales is not expected to be linear throughout 2025. Like we saw in 2024, we expect modest growth in the first and third quarters due to the typical sector dynamics, and strong growth the second and fourth quarters.

Looking specifically at the first quarter, we expect to again see the typical headwinds on scripts and net sales including higher patient out of pocket costs due to the annual resetting of deductibles, the impact of the holidays, winter storms across the country and localized natural disasters, and the out of office impact of medical conferences as well as other potential patient dynamics. All of which could impact prescriptions. As such, we expect bottles dispensed in the first quarter to be in the range of approximately 62,000 to 67,000 with more robust growth expected in the second quarter as patients begin to return to the doctor's office. I also want to note that in the first quarter, similar to the fourth quarter, third party reporting of bottles dispensed continues to be higher than actuals by a similar margin. Moving to gross to net discount, we expect the discount to be slightly higher and in the range of 46% to 49% in the first quarter and then improving to our expected steady state of the low 40s by year end 2025. The slight increase expected in the first quarter driven by the typical sector dynamics including, as I just touched on, higher out of pocket patient costs due to the resetting of planned deductibles and many patients switching to new plans.

Continuing through the P and L, we expect to see an increase in operating expenses in the first quarter and throughout 2025 with the continued expansion of our DTC campaign and other XtEMV related marketing costs, As noted earlier, we are seeing really strong signals that the campaign is beginning to drive action. This gives us confidence to increase our consumer efforts and to expand it to broad network TV which is expected to be in the annual range of $60,000,000 to $70,000,000 with a first quarter impact of approximately $15,000,000 Additionally, the Phase two study of TP-four in ocular rosacea which we plan to start in the second half of this year, is an expected cost between 7 and $10,000,000 and will be split across twenty twenty five, and 2026. In summary, we entered 2025 in a position of strength and expect to see continued growth throughout the year. We look forward to sharing more updates with you in the coming quarters And I will now turn the call back to Bobby for final remarks. Thank you, Jeff. And thank you all for making time to join us today.

What you heard today bears repeating 2024 was a remarkable year for Tarsus by any standard as we moved from category creation to potential blockbuster growth served hundreds of thousands of patients in need established a category creating blueprint that is powering our pipeline and define what it looks like to be the next leader in eye care.

Operator, please open the line for questions. Thank you. Our first question comes from the line of Francois Brisebois.

With Oppenheimer. Your line is now open. Hey, thanks guys for the question and congrats on a great quarter. I think the main question and you guys touched on this, but I just wanted to see if you can add a little color on how do you motivate prescribers to go from month monthly to weekly to daily And what are the biggest challenges? And maybe kind of what are you seeing as you're trying to do that? Just to give some confidence because in your answer, if you can touch on on whether or not this still remains an NRx Tarsus, or is turning a little more like a TRx? Just how do we get more comfort that, physicians will be comfortable increasing from monthly to weekly to daily prescribing for their patients. Hey, BrancaDisease. I'm happy to speak a little bit to this. I think first off, we've been really pleased with the trajectory feedback we've gotten from physicians and patients alike. I think that's the ultimate driver here, right, how well the product works With that said, we've been very thoughtful about implementing several strategies to ensure continuous growth to drive that depth of prescribing you're alluding to.

And the way to think about this is there's really four key drivers we've identified. One is the sales force expansion we put in place at the end of last year. Two is the increased coverage, having 90% of lives covered across the large books of business of managed care, Those two I think are very near term drivers. We've already seen some positive momentum from sales force And we heard to your point, one of the biggest barriers had been access particularly when you think about Medicare being almost half the market. So these two levers, the ability to get in front of the doctors more frequently, the ability to open up [indiscernible] are really key in driving that depth of prescribing in the near term. When we look a little further out in the mid term to long term over the next several quarters, the next two drivers we think about are DTC and the really compelling MGD data we spoke to earlier.

We know that consumers are very much motivated by the mess [indiscernible] We just know that takes a little bit of time. They have to see the ad a few times over, make an appointment, see the doctor doctor. So we think that's something that will drive results. In the mid to long term. Similarly, the MGD data is really compelling. Doctor. Seidus has an opportunity to expand the types of patients they think about and they also see this as a reason to treat across all the patient segments we've discussed in the past. And again, that's just a matter of the doctors hearing about the data, seeing it a few times and then implementing new behaviors and practice and seeing the benefits across this patient type. So really feel good about not just where we ended last year, but the momentum carrying us into '25 and these four drivers that will affect not just the near term, but also the next several quarters to come.

And then Frank, I'll just add a couple contextual points. So on your point of NRx versus TRx, we're it's early days there. We are We are seeing that mid single digit rate, but we expect that over the course of '25 as patients come back and then in subsequent years, we'll get to a steady state around twenty percent. So that's how we see the long term. And just being in the field, I think what gives me a lot of confidence about the progression from monthly to daily is just that the product works so well. You hear in every clinic obviously, we're generating more evidence and we're educating around that. But every doctor goes through that journey of try it in one or two, see the great response, try it more and then the cycle that Aziz described will I think confidently get us through that progression.

Okay, great. And maybe if I could just quick follow-up here. You talked about MGD and it seems like this field that medical conferences are very important for doctors talk about their experience and what they think of data. What medical conference, if you just remind us which ones could be important for Tarsis and sharing? Is it kind of the classic ophthalmology conferences? And then if maybe Jess could touch on, you talked about whether in the first quarter and stuff. Any impact on the LA fires? And just is this something that's affecting your guys' forecast? Just how to think about that?

Thank you. Yes, I'll speak to the conferences. I think in the eye care community, particular, both across ophthalmology and optometry, the conferences tend to be a very impactful platform for us to reach a large numbers of physicians all at once.

Some of the big conferences, as you can imagine, are the academy meetings, the Academy of Ophthalmology, Academy of Optometry, those are later in the year. There's a large optometry conference several of us are headed to later this week called the CECO Conference. And then you've got the ASCRS conference in the spring, which is an ophthalmology conference. So [indiscernible] conferences pretty routinely almost every quarter, large and small and we've got a great presence obviously leveraging our large commercial and medical teams here to have a strong presence at those meetings as part of our strategy. And and really engaging with doctors very purposefully. And one of the fun things about this if you come to these meetings, the line around the booth still continues to be pretty robust. So there's lots of people still interested and engaged and hearing more about Xtandi and the great results we're seeing out there.

Good morning, Frank. It's Jeff.

To your point, we did see some localized impact particularly in the LA area as you highlighted given the fires So we did include that in our guidance for Q1 models. And then also you guys had pretty rough winter out there on the East Coast, so we've seen some disruption there. Primarily due to shipping and timing there. So we have factored that into our Q1 guidance on the bottles as well.

Perfect. All right. Well, thank you. That's just Trimy. Congrats on a great quarter. Thank you. Thank you, Trey.

Our next question comes from the line of Cory Jubinville with LifeSci Capital. Your line is now open.

Congrats on these great outcomes and thanks for taking our questions. Building off that MGD question, what has really been the initial receptivity in the field in how should we be thinking about when we should start seeing MGD impacting Xtendbe revenues Is there an education component required here where you anticipate ECPs will trial before increasing prescription rates or have you seen this more plug and play? [indiscernible] So the MGD data when you think about this, the most compelling parts are the fact that for the first time you've got a therapeutic that shows objective benefits in the measure [indiscernible] And also the fact that it leads us to see outcomes in patients that are very specific to some of the important things that these patients talk about. So for instance, fluctuating vision, And when you think about the physician receptivity here, one, they've got another objective measure, but two, they can really hone in on how the patient's feeling. So if you can imagine a cataract surgeon that's doing a great surgery, all of a sudden sees data that says, treating Demodex mites can improve fluctuating vision that's a pretty significant incentive to think about diagnosing and treating these patients.

To your point, it is an educational process. The data needs to be presented multiple times. We've done that at medical conferences. We have a MediFERENCE team obviously our sales team all these levers will get that data out there in front of the doctors over the next several quarters. And I think it does take time. To Bobby's point earlier, the doctors hear about the data, they're going to trial it in different patient types, they're going to see the results and then they'll expand the usage. So we expect that to build over time. But everybody that we've talked to so far that seen the data has been very positive and have all told us that this should increase their proclivity to diagnose and prescribe the patients. And I know, Bobby, you're out the field recently, maybe you have something to add here too?

Yes.

Thanks, Aziz.

Early days as Aziz mentioned, but seeing firsthand doctors learning about the data in different settings it's just striking to me. I mean, it's all different Optometrists, the message that I hear is, okay, I should be looking for Coloratz more in my patients because of this data and that's exactly what we hope to see more and more of over time. Got it. That's helpful. And if I could have a follow-up. In the same theme of talking about pipeline expansion into different indications, earlier in the year you shared plans of bringing TP-four into ocular rosacea. Now we're talking about bringing TP-five TP-five forward in line. You provide some context on the impact of these programs as it relates to R and D spend and CapEx? I know with the Phase II ocular rosacea study, you mentioned a $7,000,000 to $10,000,000 figure, which seems pretty reasonable to me. But what factors have kind of driven those internal go no go decisions here? And how are you thinking about your strategy as it relates to balancing investment in Xtembe's commercial ramp with pipeline development particularly as we're kind of approaching cash flow positive timelines to cash flow positivity here in relation to all of the updates.

Sure, Corey. This is Jeff and great question. Really, our focus on capital allocation is ensuring the the success of the launch, the continued success of the launch. And as we highlighted, we're making further TV as well. In addition to that, we are really excited about the opportunity in ocular rosacea Again, something that's a category creating opportunity. And a white space, an opportunity really to help patients that don't have any other kind of therapeutic out there. So we think that is completely synergistic with our programs. And as you highlighted, that's about $7,000,000 to $10,000,000 in that Phase two study spread across 2025 and 2026. As we think about the Lyme disease program, there's continued interest here from investors. What we don't expect in the long term is really to take this to market ourselves We think this is probably better suited for the patients to have a bigger partner take this, but given the call point being a GP call point, we want to be an eye care leader and focus on that. So So we're evaluating what a Phase two study might look like, but none of those costs will be incurred in 2025 and stay tuned once we get a better sense of what that clinical study might look like and whether we decide to take that on our own or partner that is to be determined.

Excellent. Thank you and congrats, Kim.

Thank you. Our next question comes from the line of Balaji Prasad with Barclays. Your line is now open.

Hi, good morning everyone. This is Mikaela on for Bilaji and Circling back, as it relates to ocular rosacea, can you just help us better understand the overlap with DB and just the opportunity that you believe this represents. And then on the commercial side, I guess just what more will be needed for a gel versus an eye drop? Thank you. This is Seshia. I'll take that first part of it. So as we outlined early in the year, we are very excited about Ocular OZEA as a new category creating disease. And as Bobby alluded to earlier, this is really taking the blueprint from our ex MB development and there's so many parallels to how we developed XMV4DB in that This is also caused by mites. This is all this has a very clear diagnosis that ECP can do very simple diagnosis and it's highly prevalent as as our own ECPs have told us. So just from the standpoint of link to Demodex Causation, there is going to be some overlap between these two patients. But the treatment for ocular ossacea is very distinct. It's a distinct disease. And we have a tailored product that's a applied differently.

It's the objective measures are going to be different. And so this is a distinctly different disease and indication that will will be looked at as an independent treatment. So that's how we look at it. And in terms of the commercial impact of gel versus our XmV, This is again, like I said, this is a distinct application. It's applied in different areas. Exemvie, as you know, is a topical eye drop designed to get to the follicles where and then the and three DB, which is more of an eyelid indication. But ocular rosacea application is on the eyelid and the perioperative region, perioocular region, So its application is different and the indication is significantly different. Thanks so much. Thank you. Our next question comes from the line of Jason Gerberry with Bank of America. Your line is now open.

Hey, guys.

Thanks for taking my questions. Just another one online.

I'm just trying to get a sense of How Too early to say because the Phase two would inform study sizing. And that's why I'm asking about a range. Trying to understand the size of investment, you mentioned this is like a GP call point, but for a strategic partners perspective, just wondering how large and costly a pivotal program might be there? And then on XtEMBI, can you break out for the ECPs what percentage at this point would you say are low prescribers? I'm just trying to get a sense of how the I guess the call universe of 15,000 ECPs net out between low prescribers and say high prescribers. It could be directional, just trying to get a sense of what that mix is?

Thanks, Jason. This is Saisha. I'll take the first part of the question on the line. And then pass it on to Aziz for the commercial question. So as you rightly pointed out, we we got a very clear feedback, very engaged FDA on providing us the feedback needed to understand how we want to develop TPO5 for Lyme disease prevention As we alluded to earlier, this is an oral tablet on demand and the mechanism is to fill the ticks before you can transfer the bacteria that causes Lyme disease. So very distinctly different from other potential treatments that are in And also as you pointed out, the Phase two study is really going to be the driver on how the Phase three design is going to look like. Because of its distinct mechanism and because of being an oral preventative, really it's the design, the Phase two study that we are we are thinking about at the FDA discussed with the FDA in enrich patients and designing it in a specific [indiscernible] is going to give us a lot of data as well as clues to how well and how do we design the Phase III, what type of patient population and all of that is yet to be decided.

What we know is that for Phase three, FDA clearly guided us to a field study that will be in thousands of patients. And we just have to layer all of the other information to then design the right study that is going to drive the cost. So more to come, but we are really focused on looking at the Phase two first. Great. And then Jason, I'll speak to your question on the prescribers.

I think it's generally pretty early. If you think about 2024, it was the year of getting the broad base of prescribers to trial the product. And even in the fourth quarter, we're adding significant new numbers of sorry, significant number of new prescribers to the base. For those doctors, we don't know where their long term prescribing habits are going to lie. They're just getting their initial experiences. And quite frankly, toward the end of the year, one of the rate limiting steps we saw was our sales force being able to get to these doctors. So we did expand the sales team. And then obviously now with full coverage, we really open up the funnel to different types of patients and ultimately different types of practices. So I think as we've got the sales force out there making more calls, getting in front of the doctor, those doctors try to get those initial patients and then start to see additional types of patients they can add to, we'll see that deeper adoption. And I think as we get into 2025 and drive that depth of prescribing, have a much better sense over time of the true distribution But I think we put the levers in place to be able to drive that depth of prescribing and see that over time.

Thank you.

Our next question comes from the line of Orin Livnat with H. C. Wainwright. Your line is now open. Thanks for taking my questions and pardon I've got this cough going around. So wasn't planning on asking about TP-five since that's still a ways off, but I did catch my notice that you've repeatedly said on demand for this therapy, which I guess in my mind begged the question, are you contemplating potentially people taking this product after a tick bite or exposure that they've noticed or is this fundamentally a prophylactic treatment maybe taken seasonally or before outdoor activities? And then I actually have more pertinent modeling questions. Thanks.

Thanks, Oren. Yes, when we say on demand, the way the drug works as an oral drug as as we mentioned, the drug is rapidly absorbed and it gets to a level that is protective within hours. And so it can be so the way we are is all the things that you said, which is as a prophylactic for any planned outdoor activities for for those outdoor enthusiasts or vacationers for and then there's also on a seasonal basis for those who live in the endemic areas to take it more prophylactically We haven't really what we will know from the data when we do the studies is how quickly can they take after a potential tick bite But it's really a very fast acting drug that can prevent the patients within hours. And that's how we define on demand.

Okay. Thanks. And just to get to the more nitty gritty stuff, fourth quarter, if I'm math right, it looked like there was pretty meaningful channel stocking I assume wholesaler activity ahead of price increases and just maybe ahead of DTC. Can you maybe quantify that or if not, can you at least talk about as we prepare for Q1 and not wanting to get that wrong, is it possible we'll actually see some work through of inventory in Q1 following the sort of ramp up at the end of the Sure, Orin. I'll take that. This is Jeff.

Actually, we did not have any stocking inventory above and beyond what we'd been seeing over the last couple of quarters. Been primarily hovering around two point five weeks. Of inventory and that was consistent for fourth quarter. So we donate expect any impact of that trickling over into the first quarter.

Okay. I guess I was just doing some simple math of your bottles, obviously times gross to nets coming out with a closer to $62,000,000 number. I do recognize you don't book revenue on prescriptions.

And then also on DTC, you mentioned the $15,000,000 impact in Q1 and I gave us a nice big headline number for that. Is that all incremental to Q4 or is some of that already baked into the Q4 number as that is activated before the end of the year? Thanks. Some of that is included in the number. I would think about it more of like $8,000,000 that we spent on the DTC in the fourth quarter. So you would need to take the incremental amount $15,000,000 less the $8,000,000 Perfect. And just free treatments, a couple of people have touched on it. I know we're still early days here. But do you get any feedback in the field from with regards to what rates of patients are coming in, might be mid single digits overall or low single digits overall. But for these high prescribers that have been early adopters and are way ahead of the curve here, What are their patients that are having really great results? Doing with regards to coming back to retreatments? Is that at twenty percent, hence your steady state number? Or is that twenty percent still speculation at this point? Yes. So I think what we're seeing generally speaking as we said is sort of that mid single digit retreatment rate overall.

If you start to break it up by the physician groups, it varies by doctors. So it's very early to tell and it's hard to quantify it exactly. Right? So it's very qualitative. There's a couple of different metrics you think about over time is there are some doctors that are going to actively retreat these patients. They're going to say come back in six months.

I know it's I come back? [indiscernible] And then there's doctors that are going to say, hey, let's wait till it gets to a certain level or threshold and then we'll retreat. So it's more of that qualitative and doctors fall in both camps.

So I think we really want to lean on the objective data here over time And right now what we're seeing is a mid single digit rate.

We are seeing that start to trickle up a little bit.

I think it's going to take some time to really get to that steady state 20% that we're guiding to.

Okay. Thanks.

Appreciate the answers.

And then the 20%, Orange, just to remind us based on actually the one year follow-up from our SADR1 Phase III trial where we actually showed about a 40% recurrent. So we're taking more of a real world view of that, and estimating the twenty percent.

Right. Thanks for the reminder.

Thank you.

Our next question comes from the line of Eddie Hickman with Guggenheim Securities.

Your line is now open. Good morning. Thanks for taking my question.

You've given 1Q bottle guidance and are speaking with some confidence in the quarter over quarter dynamics when it comes to both volume and gross to net. I'm wondering what more you have to see before providing full year guidance? And are there areas of the launch where you still don't have good clarity And then on the DTC impact, how accurate are those website visits, clicks and surveys to predicting new patient starts? Do you see some sort of steady state capture right there? Thanks.

Sure, Eddie. I'll be happy to take the first part of the question. So on the guidance part, we evaluate on a quarter by quarter basis in terms of giving longer term guidance beyond sort of the one quarter guidance that we're giving at this point.

I think the unknowns right now are related to the direct to consumer campaign. Both on sort of the streaming platform and then more importantly as we think about moving into network here. So I think probably something that we would most definitely prefer to be able to do at some point.

But given some of those uncertainties, we feel it's a little premature to be doing but we will evaluate that on a quarter to quarter basis.

Yes.

And then Eddie, your question around the DTC metrics, I think that we've seen really good directional correlation here between those website metrics and the proclivity to get a prescription over time. Particularly when we think about streaming where you get a lot more robust data at the patient level. I think to Jeff's point, that he just made, be able to see that scale network is going to take a little bit more time. So we feel good about the next you're looking at, but to say there's a direct correlation or what that coefficient would be, I think it's going to take us a little bit more time. But I think the strategy here is to build, see the results and then scale as we see those results. And that's Thanks. So you're still seeing like a a three to six months sort of delayed impact potentially on those DTC Yes. I don't think we've gotten as specific as the number of months. I think over the next several quarters, you're going to start to see that trickle in. And again, it's just a function that patients need to see the ad multiple times. Need to go find a doctor, make an appointment and then eventually get script.

So you can think about every patient might be a little different. So there's a build over time, but we do think that we are seeing some initial good response and that as we scale this, we'll continue to see that and if we do, then we'll continue to scale the effort.

All right. Thank you. Congrats on the launch. Thank you. Our next question comes from the line of Andrea Newkirk with Goldman Sachs. Your line is now open.

Good morning, guys. Thanks for taking our question. Maybe a follow-up there on the DTC campaign. Aziz, maybe just given your comments that it can take patients months or maybe even repeated exposure to these ads to be inspired to act, Curious how you're thinking about the anticipated duration of the DTC campaign and Jeff, for you, should we think that that $60,000,000 to $70,000,000 annual expense should be occurring on an annual basis from here on out? Thanks so much.

Yes. So I think the goal here is to understand and really dig deep into how the patient responds to be able to say what the long term Certainly, it's a new Tarsus. Right?

And we're the ones that are driving the education in the market to the consumer. So that speaks to the lift in terms of having to see the ad multiple times. They're not going to see the messaging anywhere else but from us, right? So that effort is something we want to build on certainly, if we continue to see positive response and a positive ROI, that's something we'll work to continue to feed patients into practices because we see there's so many patients. We've just scratched the surface here. So knowing that there's 25,000,000 Americans out there, there's a lot of people to educate and a lot of people to ultimately drive into the physician's offices. So we see opportunity, but clearly we're going to do that based on metrics and positive ROI. And Jeff, you can speak to how we think about that investment. Sure. And just pivoting off of Aziz's comments, Andre, I think from a modeling perspective, we are we would recommend sort of putting that into the model on an annual basis, if you just take a look at what other companies do typically. Bottom line though is if we don't see a positive return here on this investment that would be something we'd reevaluate.

But I think for modeling purposes, I would include that.

On an annual basis.

Okay. Thank you so much. Thank you. Our next question comes from the line of Lachlan Hanberry Brown with William Blair. Your line is now open.

Hey, guys. Thanks for taking the question. Yes, I guess Aziz, I'm curious how the sort of interaction or messaging with ECPs changes as they move sort of along that continuum from monthly to weekly to multiple times a week or day. Sort of how your approach to them and the messaging that changes And then maybe for Jeff, I know last year you were sort of surprised a few times with where gross to nets ended up. Just curious with the broad coverage now, do you have better visibility into what they should be of on a quarter by quarter basis Yes. If I could start talking about that physician dynamic of adoption. There's a couple of factors we think about. One is, if you're out in the field today with our sales team, they're obviously touting the great coverage we have because that opens up the funnel for broad base of patients across commercial Medicare and Medicaid.

So that's part of the discussion. Hey, Doctor, you've had great experience with this.

Now we've got great coverage. You can treat more and more of your patients. As that experience builds, then we start to focus on the different patient types. So you can imagine hey, doctor, you've identified a handful of arthritis patients in your practice. Did you know that a large percentage of your cataract patients have buprenitis and you can be screening these patients for Gamma Knife's buprenitis and those could be patients that can benefit. Likewise, you can think about you're in front of an optometrist, are you having patients that are having a hard time staying in their contact lens? Let's think about this. So you can think about over the course of months that conversation can evolve to each patient type where the ultimate goal really allow the physician to cast the broadest net to identify these patients in the practice. So we've got a great sales team out there that's trained and really good at driving this conversation over time and building on positive experience, great. Let's talk about the next patient type, let's see success there. Let's talk about the next patient type, etcetera. So there's a real thought approach we baked into our training with our sales team, and I think that's going to help accelerate the adoption as we go through the quarters this year.

And Lachlan, on your question on the gross to net evolution. Now that we do have contracting, I think we do have better visibility. We do anticipate pressure on the gross to net discount in the Q1 period as we highlighted somewhere in the high 40s, 47% to 49% just given the typical dynamics. And then we do expect it to come down sequentially quarter over quarter to get to that low 40% -ish range on a steady state perspective. So sort of exiting Q4 there, Now on the step down, we don't have a lot of visibility at this point. We'll probably have some better history following this year. I would sort of think about it as stepping down quarter in quarter getting to that that ending balance of 42% to 43% on a steady state basis.

Got it. Thanks.

Thank you. And I'm currently showing no further questions at this time.

This does conclude today's conference call. Thank you for your participation. You may now disconnect.