Q1 2024 Tarsus Pharmaceuticals Inc Earnings Call

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Operator: Good afternoon, and welcome to TARS's first quarter 2024 Financial Results Conference Call. As a reminder, this call is being recorded. At this time, I would like to turn the call over to David Nakasone, Head of Investor Relations, to lead off the call.

Speaker Change: Good afternoon, and welcome to the charges first quarter 2024 financial results Conference call.

Operator: As a reminder, this call is being recorded.

Speaker Change: At this time I would like to turn the call over to David Nakasone head of Investor Relations to lead off the call.

David Nakasone: Please go ahead.

David Nakasone: Thank you. Before we begin, I encourage everyone to go to the investor section of the Tarsus website to view the earnings release and related materials we will be discussing. Joining me on the call this afternoon are Bobby Azamian, our Chief Executive Officer and Chairman, Aziz Mottiwala, our Chief Commercial Officer, Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer, and joining us for the question and answer session are Seshadri Neervannan, our Chief Operating Officer.

David Nakasone: Thank you before we begin I encourage everyone to go to the investors section of the <unk> website to view the earnings release and related materials, we will be discussing today.

David Nakasone: Joining me on the call. This afternoon are Bobbi <unk>, our Chief Executive Officer, and Chairman <unk> <unk>, our Chief Commercial Officer, Jeff Farrow, Our Chief Financial Officer, and Chief strategy Officer, and joining us for the question and answer session say sure Nirvana, our chief operating officer.

David Nakasone: I'd like to draw your attention to slide three, which contains our forward-looking statements. During this call, we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors contained in our SEC filings for additional details. With that, I will turn the call over to Bobby.

David Nakasone: I would like to draw your attention to slide three which contains our forward looking statements. During this call we will be making forward looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially.

David Nakasone: I encourage you to consult the risk factors contained in our SEC filings for additional detail with that I will turn the call over to Bobby.

Bobak R. Azamian: Good afternoon, everyone, and thank you for joining us. 2024 is off to a great start for Tarsus, and I'm excited to share our progress with you today. We continue to build and grow a new category with exceptional commercial performance and make strides to do it again with the advancement of our pipeline, starting with Xtembi, the first and only FDA-approved treatment for demonex blepharitis, or DB for short, which is progressing at a tremendous pace, and not just in terms of sales.

Bobby: Good afternoon, everyone and thank you for joining us.

Bobak R. Azamian: <unk> thousand 24 is off to a great start for <unk>.

Bobby: And I am excited to share our progress with you today.

Bobby: We continue to build and grow a new category with exceptional commercial performance and make strides to do it again with the advancement of our pipeline.

Speaker Change: Start with extending the first and only FDA approved treatment for Devin equipped variety or <unk> for short.

Speaker Change: Just continuing on a tremendous pace and not just in terms of sale.

Bobak R. Azamian: We are establishing a new market, and I know we are only scratching the surface of what we can achieve with XtendV for DV patients and their doctors. In just the second full quarter of launch, we are seeing increased adoption amongst both existing and first-time prescribers, as well as increasing demand among patients. As a result, we reported nearly $25 million in net product sales this quarter and delivered approximately 26,000 bottles of Exembi to patients.

Speaker Change: We're establishing a new market and I know, we are only scratching the surface of what we can achieve with external be for DB patients and their doctors.

Speaker Change: And just the second full quarter of launch we are seeing increased adoption amongst both existing and first time prescribers as well as increasing demand among patients.

Speaker Change: As a result, we reported nearly $25 million and net product sales this quarter and delivered approximately 26000 bottles of extended with the patients.

Bobak R. Azamian: As of last week, more than 8,000 eye care professionals, or ECPs for short, have started their patients on Exemvi, and more than half are prescribing it to multiple patients. These remarkable results are a testament to our category-creating approach, which centers on the clear, compelling value proposition of Xenbi for all stakeholders, the positive impact of our educational efforts in building a new market, and finally, the expertise and commitment of our commercial and medical teams.

Speaker Change: As of last week more than 8000 eye care professionals or <unk> for short.

Bobak R. Azamian: Their patients on <unk>.

Speaker Change: And more than half are prescribing the multiple patients.

Bobak R. Azamian: These remarkable results are a testament to our category, creating approach which centers on that.

Speaker Change: The clear compelling value proposition of extended for all stakeholders.

Bobak R. Azamian: The positive impact of our educational efforts in building a new market.

Speaker Change: And finally, the expertise and commitment of our commercial and medical teams.

Bobak R. Azamian: And we're only just beginning to see the impact of extended. I've been spending a lot of time in the field with our sales team and ACPs, and I see they're excited to share their early patient experiences, which illustrate the importance of our efforts and the opportunity ahead. Most recently, I was in Georgia visiting a variety of optometrists and ophthalmologists.

Bobak R. Azamian: And we're only just beginning to see the impact of extending.

Speaker Change: I've been spending a lot of time in the field with our sales team, adding <unk> and.

Speaker Change: And I see Theyre excited to share their early patient experiences, which illustrates the importance of our efforts and the opportunity we have.

Speaker Change: Most recently I was in Georgia, visiting a variety of optometrists and ophthalmologists.

Bobak R. Azamian: I saw firsthand the journey each new eye care provider takes to understand, first, the sheer volume of patients in their clinics with DV, then how to prescribe and facilitate medication access for their patients, and finally, the initial experience with the first several extended prescriptions. The medicine does not disappoint, and momentum is continuing to build. As doctors gain experience, they start looking for and finding more DB patients, initially those presenting the chief complaint, and over time, more and more diagnosed upon further examination, whether the ECP was gaining initial experience or has become a champion of Xembi. I did not hear anyone who felt they had realized the full potential of patients they could serve.

Speaker Change: I saw firsthand the journey, each new eyecare provider takes to understand.

Speaker Change: First the sheer volume of patients in their clinics with DB.

Bobak R. Azamian: And then 100 prescribers facilitate medication access for their patients and finally, the initial experience with the first several extempore prescriptions.

Bobak R. Azamian: The medicine does not disappoint and momentum is continuing to build.

Speaker Change: As doctors get experience they start looking more and finding more <unk> patients.

Speaker Change: Initially those presenting with chief complaint and over time more and more diagnosed upon further examination.

Speaker Change: Whether the ECP with gaining initial experience or has it become a champion of <unk>.

Speaker Change: I did not hear anyone who felt they would realize the full potential of patients that could serve.

Bobak R. Azamian: We have also made great strides in engaging our 15,000 target ECPs and inspiring more than half of them to action with Xembe so far. Other key drivers of our success are the creative and targeted educational initiatives we launched to raise awareness of DB among patients, providers, and payers. These include MyParty, our first consumer-focused campaign launched earlier this quarter, as well as prior ACP-focused campaigns.

Bobak R. Azamian: We have also made great strides in engaging our 15000 targeted.

Speaker Change: And inspiring more than half of them to action with extended so far.

Speaker Change: Other key drivers of our success are there creative and targeted educational initiatives, we launched to raise awareness of <unk> among patients providers and payers.

Speaker Change: These include my party, our first consumer focused campaign launched earlier this quarter.

Speaker Change: As well as prior ACP focused campaign.

Bobak R. Azamian: These strong initiatives help promote the behavioral changes needed to increase awareness and diagnosis of DB. These efforts are also driving greater patient demand and utilization amongst the 1.5 million patients already diagnosed with TB. And we're beginning to see early traction among the patient segments we believe make up the remaining 5.5 million who visit ECPs with complementary eye conditions, such as dry eye disease, cataracts, and patients like myself who struggle to stay in their contact lenses.

Bobak R. Azamian: His strong initiatives helped promote the behavioral changes needed to increase awareness and diagnosis of DB.

Speaker Change: These efforts are also driving greater patient demand and utilization amongst the $1 5 million patients already diagnosed with DB.

Speaker Change: And we're beginning to see early traction among the patient segment, we believe make up the remaining $5 5 million, who visit dcp's with complementary eye conditions, such as dry eye disease, cataracts and patient like myself, who struggled to stay on their contact lenses.

Bobak R. Azamian: Not to mention the additional 18 million patients visiting ECP offices who we know can ultimately be served with extended care. We knew this category-creating product had blockbuster potential, and it makes me so proud to see the launch of XtendV off to such a strong start. But as we go beyond the early adopters, we know it will take more time and more engagement to support the next group of ECPs to become routine riders and to reach deeper into the additional patient segments in their clinics. In my most recent visit to the field, I experienced firsthand the scale of the educational opportunity ahead.

Speaker Change: Not to mention the additional 18 million patients visiting ECP offices.

Bobak R. Azamian: Who we know can ultimately be served with extending.

Bobak R. Azamian: We knew this category, creating product had blockbuster potential and it makes me so proud to see the launch of extent, we after such a strong start.

Bobak R. Azamian: But as we go beyond the early adopters, we know it will take more time and more engagement to support the next group of ECP to become routine riders and to reach deeper into the additional patient segments and their clinics.

Speaker Change: And my most recent visit to the field I experienced firsthand the scale of the educational opportunity ahead.

Bobak R. Azamian: More visits by our field teams lead to more ECP engagement and more prescriptions, which is why, beginning in the third quarter, we plan to add even more fuel to the fire with the expansion of our sales. We're also contemplating a consumer campaign in our efforts to continue the upward launch trajectory of Xtendi and reach even more patients. We are further investing in greater capabilities and capacity now because we see the demand, positive payer feedback, and growth potential of XtendV.

Bobak R. Azamian: More visits by our field teams lead to more HCP engagement of our prescriptions, which is why beginning in the third quarter, we plan to add even more fuel to the fire with expansion of our sales force.

Speaker Change: We're also contemplating a consumer campaign and our efforts to continue the upward launch trajectory of <unk> and reach even more patients.

Speaker Change: We are further investing in greater capabilities and capacity now because we see the demand positive payer feedback and growth potential of <unk>.

Bobak R. Azamian: With this further investment, we believe we will be able to achieve our goals even faster, and I look forward to keeping you updated on our progress. Before I turn the call over to our Chief Commercial Officer, Aziz Mottiwala, I also want to highlight the progress we made with our pipeline this quarter with the reporting of positive clinical data from two phase two studies, one for the treatment of rosacea, and another for the prevention of Lyme disease.

Bobak R. Azamian: With this further investment we believe we will be able to achieve our goals, even faster and I look forward to keeping you updated on our progress.

Speaker Change: Before I turn the call over to our Chief commercial officer is Motorola.

Motorola: Also want to highlight the progress we've made with our pipeline this quarter with the reporting of positive clinical data from two phase II studies.

Speaker Change: One for the treatment of rosacea and another for the prevention of Lyme disease.

Bobak R. Azamian: We remain on track with our plans to bring these data to the FDA by the end of this year, along with the positive phase two data for myeloma and gland disease we have already reported. I'm so proud of the foundation we have built here at Tarsus. The strength of our first commercial product launch has put us well down the path of becoming an eye care leader. Thanks to the relentless execution of our world-class team, we have only just begun to realize the full potential of Xtend. We look forward to boosting this launch with additional resources while also continuing to advance the pipeline of other potential category-creating therapies. Adi, over to you.

Speaker Change: We remain on track with our plans to bring these data the FDA by the end of this year, along with a positive phase II data for by BOMA and Gwen disease, we already reported.

Speaker Change: I am so proud of the foundation, we have built here at cars to the strength of our first commercial product launch has put us well down the path of becoming an <unk> leader.

Adi: Thanks to the relentless execution of our World class team, we have only just begun to realize the full potential of extending.

Speaker Change: We look forward to boosting this launched with additional resources, while also continuing to advance the pipeline of other potential category, creating therapies.

Adi: Over to you.

Aziz Mottiwala: Thanks, Bobby. The experience you shared represents what we are hearing from the field more broadly about the positive impact of extending. Knowing we can make a difference in the daily lives of patients is deeply motivating, as we work to bring extended to millions of patients who are living with this pervasive and debilitating eye lesion. As Bobby noted, we generated nearly $25 million in extended sales.

Speaker Change: Thanks, Bobby.

Speaker Change: Terrence you shared represents we are hearing from the field more broadly about the positive impact of extending.

Speaker Change: No one can make a difference in the daily lives of patients is deeply motivated as we work to bring extending millions of patients who are living with this pervasive and debilitating disease.

Speaker Change: As Bobby noted, we generated nearly $25 million in <unk> sales this quarter, that's an increase of almost 90% over last quarter.

Aziz Mottiwala: That's an increase of almost 90% over last year. Additionally, more than half of our target 15,000 ECPs are now writing exams. And, as anticipated, we maintain a consistent growth-to-net discount of approximately 55%, which is encouraging in the face of traditional first quarter headwinds. These robust metrics highlight the success of the differentiated and disruptive approach to launch we laid out last year, as well as the commitment of our best-in-class sales force, which is continuing to raise the bar on new product launches.

Speaker Change: Additionally, more than half of our target 15, the Ecb's are now riding Academy.

Speaker Change: And as anticipated, we maintain a consistent gross to net discount of approximately 55%.

Speaker Change: Which was encouraging in the face of traditional first quarter headwinds.

Speaker Change: These robust metrics highlight the success the differentiated and disruptive approach to launch we laid out last year as well as the commitment of our best in class sales force, which is continuing to raise the bar on new product launches.

Aziz Mottiwala: And as Bobby noted, we're just getting started. In the early weeks of launch, we predominantly reached patients already diagnosed with the condition. Now, in addition to the already diagnosed patients, we're also beginning to reach other patients, those who are seeking treatment for complementary eye conditions, in particular patients with dry eye or those presenting for cataract surgery.

Speaker Change: As Bobby noted, we're just getting started.

Speaker Change: In the early weeks of launch we are predominantly reaching patients already diagnosed with DB.

Speaker Change: Now in addition to the already diagnosed patients. We're also beginning to reach into the other patient segments.

Speaker Change: Those who are seeking treatment for complementary conditions in particular patients with dry eye or those presenting for cataract surgery.

Aziz Mottiwala: Likewise, we're making significant progress with eCPA. Our existing writers are increasingly prescribing to more patients, and we're seeing initial signs of success in moving beyond the early adopters and into the next wave of e-cigarette users. These successes are highly attributable to the educational efforts we initiated well before launch, the visually compelling patient and physician disease awareness campaigns that have become our hallmark, the peer-to-peer exchanges we are facilitating, and, of course, the commitment of our. All of this gives us great confidence in the full market potential of a. But, as we said, building a blockbuster takes time, and creating a new category requires sizable disease education.

Aziz Mottiwala: Likewise, we are making significant progress with ECP adoption, our existing writers are increasingly prescribing to more patients and we're seeing initial signs of success in moving beyond the early adopters and into the next wave of <unk>.

Speaker Change: These successes are highly attributable to the educational efforts negotiated well before launch the visually compelling patient and physician disease awareness campaigns that have become our hallmark.

Speaker Change: Peer to peer exchanges, we are facilitating and of course the commitment of our team.

Speaker Change: All of this gives us great confidence in the full market potential of extending.

Speaker Change: But as we've said building a blockbuster takes time and creating a new category require sizeable disease education effort.

Aziz Mottiwala: So we're turning up the downer investment in the salesforce and in the size and scope of our consumer education. Moving into the next phase of launch, we know that getting more ECPs to become prolific riders is going to take more time and more. As part of our effort to increase demand within the current base of prescribing ECPs and to secure the next base of recurring riders, we plan to recruit, hire, and onboard approximately 50 new sales representatives and While that's no small feat, the success of the Xtenbi launch and the culture we've established at Tarsus has generated a high volume of interest from folks with significant sales leadership talent, and we're excited to apply their experience to positively disrupt and grow the market.

Speaker Change: So we're turning up the down our investment in the sales force and in our size and scope of our consumer educational efforts.

Speaker Change: Moving into the next phase of launch we know that getting more ecp's to become prolific writers is going to take more time and more business.

Speaker Change: As part of our efforts to increase demand within the current base of prescribing ECP.

Speaker Change: And to secure the next base of recurring riders, we plan to recruit hire and onboard approximately 50, new sales representatives and leaders by the end of the third quarter.

Aziz Mottiwala: While thats no small feat the success of <unk> launch and the culture. We have established at <unk> has generated a high volumes interest from folks with significant sales leadership talent and we are excited to apply their experience that positively disrupt and greater market.

Aziz Mottiwala: We also believe we can grow the market directly through impactful consumer advertising and marketing, like our recent Mike Party campaign. This dynamic multi-channel campaign is designed to elevate awareness of DV and encourage people to visit the ECP for services. Additionally, our most recent market research indicates that more than 80% of patients said that if they experienced symptoms of TB, they would seek out their ECPs for a proper diagnosis, giving us confidence in the potential impact of an even more fulsome and broad consumer campaign on streaming TV, which we're thinking about launching later this year.

Speaker Change: We also believe we can grow the market directly through impactful consumer advertising and marketing efforts like our recent might party campaign. This.

Speaker Change: This dynamic multichannel campaign is designed to elevate awareness of BD and encourage people to visit ETP per screen.

Aziz Mottiwala: Additionally, our most recent market research indicates that more than 80% of patient said that they experienced symptoms of DB. They would seek after ecp's for a proper diagnosis, giving us confidence in the potential impact with an even more fulsome and broad consumer campaign on streaming TV, which we're thinking about launching later this year.

Aziz Mottiwala: On the payer front, I'm pleased to report that we have secured multiple payer contracts since our year-end earnings call just a couple of months ago, including two major commercial plans with approximately 18 million covered lives that have placed Xtendi on preferred status. Payers continue to value the high-end patient need and strong product efficacy. As with the previous contract, there is a lag before coverage begins, and we should start to see the benefits of this coverage in the second quarter of 2020.

Speaker Change: On the payer front I'm pleased to report that we have secured multiple payer contracts since our year end earnings call just a couple of months ago.

Aziz Mottiwala: <unk> two major commercial plans with approximately 18 million covered lives that are placed extending on preferred status.

Speaker Change: Payers continue to value the high unmet patient need and strong product efficacy of exactly.

Aziz Mottiwala: As with the previous contracts, there's a lag before coverage begins and we should start to see the benefits of this coverage in the second quarter of 2024.

Aziz Mottiwala: I'd like to close by acknowledging the entire Tarsus team for their efforts in helping us reach more and more patients in need of a solution. Our tremendous results this quarter speak not only to the compelling value proposition of Xtendi and the power category creation, but also to the expertise, creativity, and tenacity of our team, and we're continuing to invest in both. With that, I'll turn the call over to Jeff to discuss our financial results and provide an update on our clinical trials. (inaudible)

Speaker Change: I'd like to close by acknowledging the entire <unk> team for their efforts in helping us reach more and more patients in need of a solution are tremendous results. This quarter speak not only to the compelling value proposition of extending and the power category creation, but also to the expertise creativity and tenacity of our team and we're continuing to.

Jeff: Invest in both.

Speaker Change: With that I will turn the call over to Jeff to discuss our financial results and provide an update on our clinical pipeline.

Speaker Change: Jeff.

Jeff: Thanks disease.

Jeffrey S. Farrow: The first quarter of 2024 was another example of how we are continuing to raise the bar for eye care products. Among the key highlights, we generated $27.6 million in total revenues comprised of approximately $24.7 million in Xtendi Net Products and approximately $2.9 million in license fees and collaboration revenue from the signing of a new China L license agreement with Grand Pharma for TPO3. As part of this agreement, Leanne Baio, our previous partner, made a one-time payment of $2.5 million and an equity warrant cancellation payment of approximately $400,000.

Jeff: The first quarter of 2024 was another example of how we are continuing to raise the bar for eyecare product launches.

Jeff: Among the key highlights.

Jeffrey S. Farrow: We generated $27 6 billion and total revenues comprised of approximately $24 $7 million and extend the net product sales.

Jeffrey S. Farrow: And approximately $2 9 million and license fees and collaboration revenue from the signing of a new China out license agreement with grant pharma for <unk> III.

Jeff: As part of this agreement <unk> bio our previous partner made a onetime payment of $2 $5 million in an equity warrant cancellation payments of approximately $400000.

Jeffrey S. Farrow: We also completed an equity raise of nearly $108 million to strengthen our financial position with a $200 million non-dilutive financing commitment from Pharmacon Advisors, a leading life science investor. We are encouraged by the increasing number of eye care professionals and patients benefiting from our extension. We are also pleased with the progress we're making with payers as evidenced by the additional payer contracts we secured since our year-end earnings call, as Aziz mentioned earlier.

Jeff: We also completed an equity raise at nearly $108 million and strengthen our financial position with a $200 million non dilutive financing commitment from Pharmacon advisors.

Jeff: A leading life science investments.

Jeff: We are encouraged by the increasing number of eye care professionals and patients benefit from <unk>.

Jeff: We are also pleased with the progress, we're making with payers as evidenced by the additional payer contracts, we secured since our year end earnings call as <unk> mentioned earlier.

Jeff: And to be clear.

Jeffrey S. Farrow: The benefits of these new major commercial plans we secured are not reflected in the first quarter growth net numbers we're reporting today, but are expected to benefit the second quarter and beyond. As expected, we saw a steady growth to a net discount of approximately 55%, despite the impact of typical first quarter dynamics, including higher patient out-of-pocket costs due to plans resetting deductibles and the Medicare coverage gap. Looking ahead, we remain on track for broad commercial coverage by the end of the year, and Medicare coverage beginning in 2025. While we continue to work with payers to establish commercial coverage, there is always a chance that payers could decide to implement short-term additional requirements, or hurdles potentially impacting the extended near-term progress.

Jeffrey S. Farrow: The benefits of these new major commercial plans, we secured are not reflected in the first quarter gross to net numbers, we're reporting today, but.

Jeffrey S. Farrow: But are expected to benefit the second quarter and beyond.

Jeffrey S. Farrow: As expected we saw a steady gross to net discounts of approximately 55%.

Jeff: Might the impact of first quarter dynamics, including <unk>.

Jeff: Higher patient out of pocket costs due to plans, we set in deductibles and the Medicare coverage gap.

Jeff: Looking ahead, we remain on track for broad commercial coverage by the end of the year.

Jeff: Medicare coverage beginning in 2025.

Jeff: While we continue to work with the payers to establish commercial coverage. There is always a chance that payers could decide to implement short term additional requirements and hurdles potentially impacting extend these near term progress.

Jeffrey S. Farrow: Further, we expect to see similar dynamics on second quarter scripts consistent with what we've seen over the last two quarters, including holidays and vacations, out-of-office time because of medical conferences, as well as other patient dynamics, all of which could impact net sale. As a reminder, we recognize revenue when we ship Xtendi from our warehouse to the distributors, not on the bottles dispensed to the patient. In the first quarter, due to strong demand coming off the initial launch, our distributors increased their extended purchases, resulting in approximately one additional week of days on hand inventory at the end of the first quarter versus the fourth quarter of 2023. We do not expect to see this incremental stocking in the second quarter.

Jeff: Further we expect to see similar dynamics on second quarter, Scripps consistent with what we've seen over the last few quarters, including holidays and vacations.

Jeffrey S. Farrow: The out of office time, because of medical conferences as well as other patient dynamics.

Jeff: All of which could impact net sales.

Jeff: As a reminder, we recognize revenue when we ship extending from our warehouse to the distributors not on the bottles dispensed to patients.

Jeff: In the first quarter due to strong demand coming off the initial launch our distributors increased their extensive purchases, resulting in approximately one additional week of days on hand inventory at the end of the first quarter versus the fourth quarter of 2023.

Jeff: We do not expect to see this incremental stocking in the second quarter.

Jeffrey S. Farrow: We further expect for the second quarter the days on hand inventory to remain consistent with the first quarter, and an increase in the number of bottles dispensed to patients to be in line with the increase in the number of bottles dispensed to patients we saw in the first quarter. We also expect gross net discounts to improve incrementally in the second quarter and continue to improve quarter over quarter to our expected steady state of 50% in 2025.

Jeff: We further expect for the second quarter days.

Jeff: Days on hand inventory to remain consistent with the first quarter.

Jeff: And an increase in the number of bottles dispensed to patients to be in line with the increase in the number of bottles dispensed to patients we saw in the first quarter.

Jeffrey S. Farrow: We also expect gross to net discounts to improve incrementally in the second quarter and continue to improve quarter over quarter or expected steady state of 50% in 2025.

Jeffrey S. Farrow: We ended the quarter with a strong balance sheet of approximately $298 million in cash and marketable securities, inclusive of the $108 million equity rate. Additionally, in April, we refinanced our existing term loan with a new $200 million credit facility from Pharmacon Advisors, which enables us to borrow a larger sum on more flexible terms compared to our previous credit facility. We elected to draw $75 million at the close, providing us with a net of approximately $40 million after the repayment of the previous facility in full.

Jeff: We ended the quarter with a strong balance sheet of approximately $298 million in cash and marketable securities inclusive of the $108 million equity raise.

Jeff: Additionally in April we refinanced our existing term loan with a new $200 million.

Jeffrey S. Farrow: Credit facility from Pharmacon advisors, which enables us to borrow larger sub on more flexible terms compared to our previous credit facility.

Jeff: We elected to draw of $75 million at the close providing us with a net of approximately $40 million. After the repayment of the previous facility in full.

Jeffrey S. Farrow: This will further enable our ongoing efforts to expand our pipeline as we progress towards our goal of becoming a leader in eye care, based on the health of the business and the success we are seeing in the early days of the law.

Jeffrey S. Farrow: This will further enable our ongoing efforts to expand our pipeline as we progress towards our goal of becoming a leader in eyecare.

Jeff: Based on the health of the business and the success we are seeing in the early days of launch we.

Jeffrey S. Farrow: We plan to deploy a portion of this capital to support the following key launch initiatives that Aziz highlighted earlier. Hiring an incremental 50 sales representatives and leaders, ensuring we're continuing to increase the depth and breadth of adoption as we begin to engage with the next wave of customers, and potentially increasing our investment in direct-to-consumer advertising, including streaming TV, to encourage more patients to see their eye care provider. Now turning to our P&L.

Jeffrey S. Farrow: We plan to deploy a portion of this capital to support the following key launch initiatives as these highlighted earlier.

Jeffrey S. Farrow: Hiring an incremental 50 sales representatives and leaders.

Jeffrey S. Farrow: Ensuring we're continuing to increase the depth and breadth of adoption as we begin to engage with the next wave of target Ecp's.

Jeff: And potentially increasing our investment in direct to consumer advertising, including streaming TV.

Jeff: To encourage more patients to see their eye care providers.

Jeffrey S. Farrow: Our total operating expenses were approximately $65.3 million. The increase in operating expenses quarter over quarter was primarily driven by increases in cost of sales from the launch of Xtend and increases in selling, general, and administrative expenses. Due to the addition of commercial infrastructure, marketing, and education efforts, and the Salesforce Oracle Launch Next step. Gross margins for the first quarter were approximately 93%, which included the royalty we paid to a long-term fund.

Jeff: Turning to our P&L are.

Jeff: Our total operating expenses were approximately $65 3 million.

Jeff: The increase in operating expenses quarter over quarter was primarily driven by increases in cost of sales from the launch of extending.

Jeff: And increases in selling general and administrative expenses due to the addition of commercial infrastructure.

Jeff: Marketing and education efforts.

Jeff: And the Salesforce portable launch externally.

Jeff: Gross margins for the first quarter were approximately 93%, which includes the royalty we pay to long term.

Jeffrey S. Farrow: Looking at the second quarter, we expect total operating expenses to be in line with the first quarter of 2024. As we move into the second half of 2024, and based on our current plan, we expect total operating expenses to increase due to the Salesforce expansion, which we expect to be fully deployed by the end of the third quarter, and potential DTC efforts in the fourth quarter. Turning now to a quick review of our pipeline, we recently reported three positive top-line data sets for all of our Phase II programs, TPO3 in meibomian gland disease, TPO4 in papular pustular rosacea, and TPO5 for the prevention of Lyme disease.

Jeffrey S. Farrow: Looking at the second quarter, we expect total operating expenses to be in line with the first quarter of 2024.

Jeff: As we move into the second half of 2024 and based on our current plan. We expect total operating expenses to increase due to the sales force expansion.

Jeff: We expect to be fully deployed by the end of the third quarter.

Jeff: And potential DTC efforts in the fourth quarter.

Jeff: Turning now to a quick review of our pipeline. We recently reported three positive top line data sets for all of our phase III programs.

Jeff: <unk> three in my Bowman gland disease.

Jeffrey S. Farrow: <unk> four and popular Pustular organization.

Jeffrey S. Farrow: <unk> <unk> five for the prevention of Lyme disease.

Jeffrey S. Farrow: All three programs target the underlying cause of the disease, address high unmet need, and are based on Lodolaner, the same active ingredient found in ex-demi. And the next steps for advancing all three programs include completing full data analysis of the Phase 2 study and engaging with the FDA by the end of the year. We look forward to providing updates on each of these programs as they progress. [inaudible] We plan to continue strategically investing in Xtemvi and our pipeline, which is designed to create other new categories of medicine. With that, I will turn the call back to Bobby for final remarks.

Jeff: All three programs target the underlying cause of the disease.

Jeff: Dress high unmet needs.

Jeff: And are based on <unk> the same active ingredient found an extended.

Jeff: And the next steps for advancing all three programs include.

Jeff: Cleaning full data analysis of the phase II studies and engaging with the FDA by the end of the year.

Jeff: We look forward to providing updates on each of these programs as they progress.

Jeff: Finally.

Jeff: We plan to continue strategically investing in extending and our pipeline that is designed to create other new categories in medicine.

Jeff: With that I will turn the call back to Bob for final remarks.

Bob: Thank you Jeff.

Bobak R. Azamian: What a tremendous start to the year, and with so much more to come. Our foundational elements are strong, and we believe we are only just beginning to unlock the full potential of Tarsus, Extensi, and our pipeline. We look forward to investing even further in the launch of Xtemvi and to advancing three more candidates with category-creating potential. We appreciate your time and engagement today and look forward to speaking with you soon. Operator, please open the line for questions. Thank you.

Bob: When a tremendous start to the year and with so much more to come.

Bob: Our foundational elements are strong and we believe we are only just beginning to unlock the full potential of <unk> <unk> and our pipeline.

Bob: We look forward to investing even further in the launch of <unk> and to advancing three more candidates with category creating potential.

Bobak R. Azamian: We appreciate your time and engagement today and look forward to speaking with you soon.

Bobak R. Azamian: Operator, please open the line for questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list. The first question comes from Eddie Hickman with Guggenheim Securities. Eddie, go ahead; your line is open.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Speaker Change: Hey, withdraw your question. Please press star one again.

Operator: Please standby, while we compile the Q&A roster.

Eddie Hickman: The first question comes from Eddie Heckman with Guggenheim Securities I think go ahead. Your line is open.

Eddie Hickman: Hey guys, thanks for taking my question and congrats on a great quarter. Just a few from me. You noted that your prescribers increased from 8,000 to or from 6,000, but only 50% have written a second script. I'm just wondering if you could comment on how much of the volume is concentrated in a small group of prescribers and why those other 50% aren't writing more. And then, Aziz, you commented on the penetration sort of going outside those initially diagnosed patients. I'm wondering if you're starting to see that in the claims data that you quoted previously. Thanks.

Eddie Hickman: Hey, guys. Thanks for taking my question and congrats on the great quarter. Just a few from me you noted that your prescribers increased from $8.

Eddie Hickman: From 6000, but only 50% of written a second script I'm. Just wondering if you could comment on how much of the volume is concentrated to a small group of prescribers and why those other sort of 50% aren't writing more.

Speaker Change: And then as you commented on the penetration you sort of going outside those initially diagnosed patients I am wondering if youre starting to see that in the claims data that you've quoted previously.

Bobak R. Azamian: Thank you, Eddie. Before I pass to Aziz, this is Bobby.

Speaker Change: Thank you Eddie before I pass to disease. This is Bobby I, just want to make a couple comments so.

Bobak R. Azamian: I just want to make a couple of comments. So, you know, to your question, we are seeing our category of creating medicine taking hold and taking hold with patients, doctors, and payers. And really, that's why the time is now to double down on education, education involving the Salesforce, DTC, potentially, and other efforts. And, you know, we look forward to building this market and ultimately serving more patients. And I'll pass to Aziz to address the prescribing dynamics and the patient dynamics that you asked about. Yeah, thank you.

Bobak R. Azamian: To your question, we are seeing our category, creating medicine, taking hold and is taking hold with patients doctors and payers and really thats why the time is now to double down on education education involving the Salesforce DTC potentially in other efforts.

Speaker Change: And.

Speaker Change: We look forward to building this market and ultimately serving more patients as disease to address the.

Speaker Change: The prescribing dynamics in the payer and the patient dynamics that you asked about.

Aziz Mottiwala: Yeah, thanks Bobby and Eddie. Great question. Thanks for that. I think the two things we're really delighted by are the continued progress and momentum we're seeing on that new prescriber adoption. We've consistently added about 2,000 prescribers per quarter, so we haven't slowed at all, and that 50% metric has been maintained through the course of the launch so far, right? So I think there are a couple of things you can extra

Speaker Change: Yes, Thanks, Bobby and Eddie Great question, Thanks for that.

Speaker Change: I think the two things we're really delighted by the continued progress and momentum we're seeing on that new prescriber adoption.

Speaker Change: We've consistently added about 2000 prescribers per quarter. So we haven't slowed at all in that 50% metric.

Speaker Change: Endured through the course of the launch so far right. So I think theres a couple of things you can extrapolate from that one is we're continuing to build new prescribers coming in the question of why haven't more of them written a second script.

Aziz Mottiwala: One is we're continuing to build new prescribers coming in. The question of why haven't more of them written a second script? Well, a lot of them just started a couple of weeks ago, right? So that number is up to date, right?

Speaker Change: While a lot of them just started a couple of weeks ago right. So that number is contemporary brand. That's not just for the first quarter that is the most recent week of data that we have so a large proportion of these physicians just haven't had the chance to write that second script, yet and thats consistent with what we saw last quarter as well.

Aziz Mottiwala: That's not just for the first quarter; that's as of the most recent week of data that we have. So a large proportion of these physicians just haven't had the chance to write that second script yet. And that's consistent with what we saw last quarter as well.

Aziz Mottiwala: In terms of how concentrated it is, I think as you add more prescribers, that concentration continues to broaden. And I think that's driven really, as we talked about in the comments earlier, by doctors who say once they get to about five to 10 scripts, they really start to get sick. to make sure these patients have a good outcome overall. So I think what you're seeing is that as we continue to add new prescribers, the core base of prescribers continues to expand as well.

Speaker Change: In terms of how concentrated it is I think as you add more prescribers that concentration continues to broaden and I think thats driven really as we talked about in the comments earlier by doctors that once they get to about five to 10 scripts, they really start to get.

Speaker Change: The sort of routine with extended they start to look forward more routinely they've seen the benefits of the product and what happens is they start to think about this and more patient types. So beyond the traditional demodex blepharitis patient. They are starting to think about Oh, here's a dry eye patients that failed that therapy or to let me take a beat and let me look at their lids sure enough. They have Colorado I can treat them in six weeks.

Speaker Change: Later I can resolve that problem. If that works then let me think about my pre surgical patients and in my pre op evaluation, let me scan all the lids to make sure. These patients have a holistic good outcome. So I think what youre seeing is that as we continue to add new prescribers. The core base of prescribers continues to expand as well so utilization across the prescribing base expands and as we talk.

Aziz Mottiwala: So utilization across the prescribing base is expanding, and as we talked about, our goal is to maintain this momentum of adding new prescribers. And, of course, increasing the depth of prescribing, which is really one of the reasons we're thinking about expanding the sales force, right? So, in short, we're really pleased with that momentum. I think it's a great sign of health that we've continued at that clip. We haven't seen any slowing of new prescriber adoption yet. And I think that speaks to the work we're doing as well as the value.

Aziz Mottiwala: About our goal is to maintain this momentum of adding new prescribers and of course, then increasing the depth of prescribing, which is really one of the reasons, we're thinking about expanding the sales force right. So in short we're really pleased with that momentum I think it's a great sign of health that we've continued at that clip, we haven't seen any slowing of new prescriber adoption, yet and I think that speaks to.

Speaker Change: The work, we're doing as well as the value of the product.

Aziz Mottiwala: Great, thank you guys so much. Congratulations again. Thank you.

Speaker Change: Great. Thank you so much congrats again.

Balaji V. Prasad: Thank you. One moment for our next question. Our next question comes from Balaji with Barclays. Balaji, go ahead. Your line is open.

Speaker Change: Thank you one moment our next question.

Balaji: Our next question comes from velocity with Barclays. Please go ahead. Your line is open.

Balaji V. Prasad: Good evening, everyone, and congratulations on the quarter. A couple of questions from me. As I think about the dynamics between an ECP, listening to your sales force, detailing it, and writing a prescription, what have you seen with regard to those EGPs who are not as prescribed? What is it that's still holding them back? Are they looking for additional data? And how do the dynamics work there?

Balaji V. Prasad: Hi.

Velocity: Good evening, everyone and congratulations on the quarter.

Balaji V. Prasad: Questions from me as I think about the dynamics between an ECP listening to your sales force detailing it in writing a prescription.

Velocity: What have you seen anything onto those e&ps will not prescribe what is it that's holding them back are they asking for additional data.

Velocity: How did the dynamics won't add thats, one to looking at the data provided metrics that we track.

Aziz Mottiwala: That's one. Two, looking at the data provider metrics that we track, I mean, I did see around 27,000 bottles and $34 million in primary sales. And if I had to extrapolate this to previous quarters, we would have looked at around 17 to $20 million, but clearly, you're reporting substantially higher numbers. Is this all due to the fact that you report sales as the ship out of your warehouse and not primary sales? Thanks.

Aziz Mottiwala: Did see around 27000 bottles and $34 million of primary sales.

Velocity: And in fact extrapolate this to previous quarters, with our electrode around $17 million to $20 million, but.

Velocity: When reporting substantially higher number is this all due to the fact that June import sales as they ship out of <unk> and our primary sales. Thanks.

Aziz Mottiwala: So I'll take the first part and then I'll pass it to Jeff to speak to revenue booking. In terms of adoption, we're seeing, you know, your question of what might be holding back the other remaining 15, you know, 7000 doctors that comprise our 15000 audience that they've 8000 written so far. And we don't see a lot of pushback in the data. It's a function of some doctors being just late adopters. They want to see how other doctors do. They want to see how the product performs. They want to hear the experiences of other doctors.

Speaker Change: And so I'll take the first part and then I'll pass it to Jeff to speak to the revenue booking in terms of the adoption. We're seeing your question of what might be holding back. The other remaining 15 7000 doctors that comprise our 15000 audience of 8000 have written so far and we don't see a lot of pushback in the data.

Jeff: Function of some doctors are just late adopters they want to see how other doctors do they want to see how the product performs they want to adhere the experience of other doctors.

Aziz Mottiwala: And that's a critical thing that we've seen. And some of this also takes repeat visits from the sales force. Right? It's a new category.

Jeff: A critical thing that we've seen and some of this also takes repeat visits from the Salesforce right. It's a new category. It takes time its a new habit. We're building so sometimes it's repetition thats required from the sales force.

Aziz Mottiwala: It takes time. It's a new habit we're building. So sometimes it's repetition that's required from the sales force. And then lastly, you know, of course, some doctors are a little bit more averse to working through new products and market access. Right. They're a little bit hesitant to do the PA process, et cetera.

Velocity: And then lastly of course, some doctors are a little bit more averse to working through new products and market access right, there a little bit hesitant.

Aziz Mottiwala: Hesitant to do the PPA process et cetera, and again that is resolved when we get repeat visits and because our process is actually really good we've done a great job with our pharmacies, our payer coverage continues to improve and the reps have done a great job of being able to get in there and educate the practice holistically on how to manage that process, it's actually a lot easier than most new products.

Aziz Mottiwala: And again, that is resolved when we get repeat visits and because our process is actually really good. We've done a great job with our four pharmacies. Our payer coverage continues to improve, and the reps have done a great job of being able to get in there and educate the practice holistically on how to manage that process. It's actually a lot easier than most new products. So I think, in short, it takes multiple visits. Right? And I think that's, again, why we are thinking about expanding the sales force. Two, they love to hear the experiences of other doctors.

Velocity: So I think in short it takes multiple visits right and I think that's again why we are thinking about expanding the sales force.

Aziz Mottiwala: They love to hear the experience of other doctors and now as we're getting more and more doctors with experience at peer to peer impact is starting to take hold and I think that's why we're continuing to see that ramp in new prescribers and then lastly, it is just getting into the office and really educating that whole office component and you can imagine longer term as we mentioned in the comments.

Jeffrey S. Farrow: And now that we're getting more and more doctors with experience, that peer-to-peer impact is starting to take hold. And I think that's why we're continuing to see that ramp in new prescribers. And then lastly, it's just getting into the office and really educating that whole office component. And you can imagine, longer term, as we mentioned in the comments, potentially even empowering the consumer, right? And if the consumer is asking, that's certainly gonna persuade the physician to reconsider and write the product.

Jeffrey S. Farrow: Centrally even empowering the consumer and the consumers asking that's certainly going to potentiate the physician to reconsider and write the product. So I think it's a matter of time, it's a new category you have to build these new habits you have to show the success, we've been doing that consistently over the last couple of quarters and we've got some great plans in place to continue that momentum.

Jeffrey S. Farrow: So I think it's a matter of time. It's a new category. You have to build these new habits. You have to show success. We've been doing that consistently over the last couple of quarters, and we've got some great plans in place to continue that momentum. Jeff, do you wanna comment on the revenue piece? Sure, hi Balaji.

Jeffrey S. Farrow: Jeff you want to comment on the the revenue share <unk>.

Jeffrey S. Farrow: You're right. In essence, we do, as do most manufacturers, recognize revenue when they ship from our warehouse to our distributor or pharmacy. So there's going to be a delta. For this one, we had an extra week of inventory that was built as well. The other thing that could potentially be a delta on the revenue side is maybe a difference in the gross to net that you're modeling versus what we actually recorded here as well.

Jeff: Youre right in essence, we do as do most manufacturers recognize revenue when they ship from our warehouse to.

Jeffrey S. Farrow: Our distributor or pharmacy, so there's going to be a delta. This one it was we had an extra week of inventory that was built as well.

Jeffrey S. Farrow: Other thing that could potentially being a delta on the revenue side is maybe a difference in the gross to net that you are modeling versus what we actually recorded here as well.

Balaji V. Prasad: Got it. That's helpful. And could I just add a follow-up question on the Salesforce expansion? You did comment on this in our recent fireside conference. Good to see that this is being actioned, and that signals confidence on your part. How should I think about the incremental costs and the revenue contribution from Salesforce towards the end of the year?

Speaker Change: Got it that's helpful and can I just had a follow up question on the sales force expansion unique comment upon does and our recent five side at the conference.

Balaji V. Prasad: Good to see that this is being action then that signals the confidence on your part.

Balaji V. Prasad: Should I think about the incremental costs on the revenue contribution from the sales force towards the end of the year.

Jeffrey S. Farrow: Alaji, it's Jeff again. You know, we had guided that we expected them to be hitting the field sometime late in Q3. So I would model it out about, you know, 300,000 fully burdened costs per sales rep times 50 sales reps. And from a revenue perspective, we think it'll be net neutral essentially. So from a P&L perspective, net neutral, so probably the same incremental revenue will be generated in 2024, but obviously seeing much more of an upside in 2025. Thank you.

Balaji V. Prasad: Yep.

Balaji V. Prasad: It's Jeff again, we had guided that we expect them to be hitting the field sometime late in Q3, So I would model. It out about 300000 fully burdened cost per sales reps types of 50 sales reps and from a revenue perspective, we think it'll be net net neutral essentially so for.

Jeffrey S. Farrow: P&L perspective, net neutral so probably the same incremental revenue will be generated in 2024, but obviously seeing much more of an upside in 2025.

Speaker Change: Thank you.

Jeffrey S. Farrow: Sure.

Speaker Change: Thank you one moment, while we prepare our next question.

Operator: Thank you. One moment while we prepare our next question. The next question comes from Francois Brisebois with Oppenheimer. Frank, go ahead. Your line is open.

Speaker Change: Next question comes from Francois Francois.

Francois Brisebois: Oppenheimer. Frank go ahead your line is open.

Franois Daniel Brisebois: Hi, thanks for the questions and congrats on the quarter. So I was just wondering if you had talked about DTC. You know, I think it was maybe waiting to see the impact of Medicare, which is obviously important with this patient population. So can you just talk maybe a little bit about the strategic move to maybe do the DTC campaign earlier, like before Medicare, and you know, the pluses and maybe minuses of that if there are

Francois Brisebois: Hi, Thanks for the questions and congrats on the quarter. So I was just wondering you had talked about DTC.

Franois Daniel Brisebois: I think it was may be waiting to see the impact of Medicare, which is obviously important.

Francois Oppenheimer: <unk> population. So can you just talk maybe a little bit about the strategic move to.

Franois Daniel Brisebois: Maybe do the DTC campaign earlier, it was a pre Medicare and the pluses and minuses of that if there is any.

Aziz Mottiwala: Sure. Hey, Frank, it's Aziz.

Speaker Change: Sure Hey, Frank its disease and.

Frank: Yes, I think we are starting to see some real great momentum here right and that's really what's potentially it is to think about this a little earlier and the way to think about this is really two things. We're doing right. We really wanted to establish a core base of prescribers as we've continued to do we think we can accelerate the depth of prescribing with the Salesforce expansion. So that's really the first step in accelerating the launch of <unk>.

Aziz Mottiwala: And yeah, I think we are starting to see some really great momentum here, right? And that's really what's prompted us to think about this a little earlier. And the way to think about this is really two things we're doing, right?

Aziz Mottiwala: We really want to establish a core base of prescribers, as we've continued to do. We think we can accelerate the depth of prescribing with the Salesforce expansion. So that's really the first step in accelerating the launch. The consumer piece is then something we're contemplating potentially in Q4, and you're spot on, right?

Aziz Mottiwala: Consumer pieces and something we are contemplating potentially in Q4 and you are spot on right. The two things we're going to look for is making sure that that incremental sales forces out there that hit the ground they've got good momentum and then secondly, we want to make sure that we're delivering on our goals in terms of market access and have a clear line of sight to part D. In 2025, clearly, we're really pleased with how that's going.

Aziz Mottiwala: The two things we're going to look for are making sure that that incremental sales force is out there, they've hit the ground, and they've got good momentum. And then, secondly, we want to make sure that we're delivering on our goals in terms of market access and have a clear line of sight to Part D in 2024. Clearly, we're really pleased with how that's going, and we feel confident, which is why we're communicating the intention to do this in Q4.

Aziz Mottiwala: And we feel confident which is why we're communicating the contemplation to do this in Q4, but for any reason if the market conditions Werent right certainly we push back and likewise, if we saw opportunities we can.

Aziz Mottiwala: But for any reason, if the market conditions weren't right, certainly we'd push it back. And likewise, if we saw opportunities, we could solidify that plan to launch in Q4. So I think we're still watching the launch progress, but we feel very confident in the trajectory we're on. We're very clear in the plan we have in terms of the sales force, building market access, and then DTC. That's been very consistent with our plan. And if those things are hitting sooner, why wouldn't we go out there sooner and start to empower the patient and drive incremental volumes here?

Aziz Mottiwala: Defy that plan to launch in Q4, So I think we're still watching the launch progress, but we feel very confident in the trajectory. We're on we're very clear in the plan. We have in terms of the sales force both market access and then DTC thats been very consistent with our plan and if those things are hitting sooner why would.

Aziz Mottiwala: We go out there sooner and start to empower the patient and drive incremental volumes here.

Aziz Mottiwala: Okay. And then can you give us a little color on the ophthalmologist versus optometrist reception of the product? And then, you know, that's from the doctor side, maybe from the patient side, can you help us? Have you learned anything that maybe surprised you or just any learnings from the launch in terms of symptomatic versus asymptomatic patients? I guess, sorry, I'll lob in a last one on that.

Speaker Change: Understood and then can you give us a little color on the ophthalmologists versus optometrists reception to the product.

Frank: And then that's from the dark side and maybe from the patient side can you help US have you learned anything that maybe surprised you or against any learnings from the launch in terms of symptomatic versus asymptomatic patients.

Aziz Mottiwala: It seems to me like a lot of docs, you know, maybe thought they were looking for these. But is it fair to say that some doctors actually take a second look now that there's a product out there and say, "Oh, my goodness, I didn't realize I wasn't looking the right way, maybe through the slit lamp? Or is it very obvious? And if you're looking, you're looking right?

Frank: And I guess, sorry, a lot of in a last one on that it seems to me like a lot of docs maybe.

Aziz Mottiwala: Maybe they were looking for these.

Aziz Mottiwala: But is it is it fair to say that some doctors actually take a second look now that there's a product out there and say Oh my goodness I didn't realize I wasn't looking to right way maybe through the slit lamp or is it very obvious and if youre looking youre looking at the right way. Thank you.

Aziz Mottiwala: Yeah, so I think there are a couple of things there, right? From an optometry and ophthalmology standpoint, very consistent, right? About two-thirds optometry, about a third ophthalmology. We see deep utilization across both segments. We were at the ASCRIS conference in Boston a few weeks ago.

Aziz Mottiwala: Yeah. So I think Theres, a couple of things from an optimum optometry and ophthalmology standpoint, very consistent right about two thirds optometry about a third of ophthalmology, we see deep utilization across both segments. We were at the <unk> conference in Boston, a few weeks back receptivity in ophthalmology is really great in fact, youre starting to hear more organically from the <unk>.

Aziz Mottiwala: Receptivity and ophthalmology are really great. In fact, you're starting to hear more organically from the podium, right? And ASCRIS, the American Study of Cataract Refractive Surgeons, right? That's cataract surgeons. And they're starting to say, hey, some of the top thought leaders are starting to implement this as a routine habit in their presurgical evaluation. And I think that speaks to even though a little bit more volume is coming out of optometry that there's some real critical opportunity here. So we're seeing progress across both segments really.

Aziz Mottiwala: Martin and accuracy of American Society of cataract refractive surgeons right, that's cataract surgeons and they're starting to say hey, some of the top thought leaders are starting to implement this as a routine habit in a pre surgical evaluations and I think that speaks to even even though a little bit more volumes coming out of optometry that theres. Some real critical opportunity here in ophthalmology, So we're seeing that progressing.

Aziz Mottiwala: Cross both segments really nicely.

Aziz Mottiwala: You asked a little bit about the patient. I think what happens is, initially, doctors probably start with a patient that's got a chief complaint with really clear colorectal tests. They treat those patients, and they're typically seeing great results. And then two things happen.

Aziz Mottiwala: You asked a little bit about the patients I think what happens is initially the doctors' probably start with the patient that has got a chief complaint with really clear Colorado.

Aziz Mottiwala: Treat those patients they are typically seeing great results and then two things happened one is they do start looking a little bit more closely right. It's a positive feedback loop that work really well, let me take a closer look let me make sure I'm not missing. This because this is a problem I can solve and then secondly, there are less and less waiting for the patient to initiate that dialogue there actively asking the patient how are you feeling.

Aziz Mottiwala: One thing is that they do start looking a little bit more closely, right? It's a positive feedback loop. Hey, that worked really well.

Aziz Mottiwala: Let me take a closer look. Let me make sure I'm not missing this because this is a problem I can solve. And then, secondly, they're less and less waiting for the patient to initiate that dialogue. They're actively asking the patient, how are you feeling? Do you have any trouble wearing contact lenses? Do your eyes feel tired in the morning or at night?

Aziz Mottiwala: Do you have any trouble wearing contact lenses.

Aziz Mottiwala: So tired in the morning or at night and they are actually eliciting the feedback from the patient so as the doctors gain that confidence we talk about that 5% to 10, that's really what happens right. The two elements as the doctor starts to look a little bit closely more closely I should say and they start to question of patients a little bit more so this idea of a symptomatic <unk>.

Aziz Mottiwala: And they're actually eliciting feedback from the patient. So as the doctors gain that confidence, you know, we talk about that five to 10, that's really what happens, right? The two elements are that the doctor starts to look a little bit closer, more closely, I should say, and they start to question the patient a little bit more. So this idea of a symptomatic versus asymptomatic patient really is not a factor. Most of these patients are symptomatic. In fact, 90% plus are symptomatic. It's just a matter of the doctor taking that extra beep to look and ask. And we're seeing that as physicians get more experienced, they're doing just that

Aziz Mottiwala: As asymptomatic patients really is not a factor in most of these patients are symptomatic, 90% plus are symptomatic.

Aziz Mottiwala: Just a matter of the doctor taking that extra fee to look and ask and we're seeing that as the physicians get experienced they are doing just that.

Bobak R. Azamian: And I'll just add one, you know, personal anecdote. So I'm a physician. And being in the field, it really struck me, you know, patients are either coming in with a chief complaint, or they're being asked for a history or being examined for a physical, and that's when you see colorectal polyps in those patients that don't necessarily have DB as a prior diagnosis. And so the asymptomatic-symptomatic, I think when you get in the field and talk to doctors, it's a lot more about, you know, what the patient is presenting with as his chief complaint.

Speaker Change: And I'll just add one.

Speaker Change: Personal anecdote, so I'm a physician.

Bobak R. Azamian: Being in the field it really struck me.

Bobak R. Azamian: Patients are either coming in with the chief complaint or they're being asked on history are being examined in the physical and Thats. When you see Colorado and those patients that don't necessarily have DB is a prior diagnosis.

Bobak R. Azamian: And so so the asymptomatic symptomatic I think when you get in the field and talk to doctors is a lot more about what the patient presenting with us as chief complaint I was talking to the Kols.

Bobak R. Azamian: I was talking to a KOL who's been one of our big prescribers this morning, and he reaffirmed to me that he's seeing more and more patients and looking for more and more. And this KOL has over 20 years of experience treating DB with some of the prior options that weren't as effective. So it really crystallizes for me the market education and the physician journey that Aziz has described.

Bobak R. Azamian: And then one of our big prescribers this morning.

Bobak R. Azamian: He reaffirm that to me.

Bobak R. Azamian: You're seeing more and more patients and looking for more and more.

Bobak R. Azamian: And <unk> has over 20 years of experience treating <unk> with some of the prior options that weren't as effective so it really crystallizes to me the <unk>.

Bobak R. Azamian: Market education, and the physician journey that is either in the script.

Franois Daniel Brisebois: Thank you and congrats again.

Speaker Change: Thank you and congrats again.

Operator: Thank you. Please stand by for our next question. The next question comes from Jason Gerberry with Bank of America. Go ahead, Jason. Your line is open.

Speaker Change: Thank you please standby for our next question.

Jason Matthew Gerberry: The next question comes from Jason <unk> with Bank of America Go ahead, Jason Your line is open.

Jason Matthew Gerberry: Hey, good evening guys. Thanks for taking the time to answer my questions. Just a couple on Medicare, actually. So, does the Part D redesign impact any of your operating assumptions around sort of steady-state gross-to-net? And then, how should we think about, like, the addition of Part D next year? Does it open the floodgates to half the market? Or do you feel like you're already getting patients who are Medicare patients, but maybe they're getting covered through some medical exceptions or something like that?

Jason Matthew Gerberry: Hey, good evening guys. Thanks for taking my questions.

Jason Matthew Gerberry: Just a couple on Medicare actually so there's part D redesign.

Jason Matthew Gerberry: Pact any of your operating assumptions around sort of steady state gross to net.

Jason Matthew Gerberry: And then how should we think about like the addition of part D. Next year does it open the floodgates to half the market or do you feel like you're already getting patients who are Medicare patients, but maybe they're getting covered through some medical exceptions or something like that just curious if you can sort of frame how the impact of <unk>.

Jason Matthew Gerberry: Just curious if you can sort of frame how the impact of half the market opening up to you next year from an insurance perspective could potentially impact 2025 volumes. Thanks. Yeah, so I think a couple of things.

Jason Matthew Gerberry: Market opening up next year from an insurance perspective, how that potentially impacts 2025 volumes. Thanks.

Aziz Mottiwala: So starting with the gross net, so all of our gross net of getting to 50% steady state, that accounts for all the factors in Part D. So we've taken that into account in our goals there. And in terms of, you know, when you get to that 2025 point, I would tell you that we're already seeing Medicare scripts come through, right? As you mentioned, through exception or through PA.

Aziz Mottiwala: Yeah. So I think about a couple of things, right?

Speaker Change: Yes, so I think a couple of things right. So starting with the gross to net so all of our gross to net of getting to 50% steady state that accounts for all the factors in part D. So we've taken that into account in our in our goals there.

Aziz Mottiwala: So we are seeing a decent amount of volume come through that. Of course, that volume should continue to grow as we get more coverage. The one thing to keep in mind is that at the beginning of the year, of course, you get on the formularies, but then you have the typical Q1 headwinds, right?

Aziz Mottiwala: And in terms of when you get to that 2025, I would tell you that we're already seeing Medicare scripts come through it right. As you mentioned through exception or <unk>. So we are seeing a decent amount of volume come through that.

Aziz Mottiwala: Where is that volume should continue to grow as we get more coverage. The one thing to keep in mind is at the beginning of the year of course, you get on the formularies, but then you have the typical Q1 Q1 headwinds right. So there is some time to get through that first period of time, so that would build over time, it's not like a light switch.

Aziz Mottiwala: So there's some time to get through that first period of time. So that would build over time. It's not like a light switch, right?

Aziz Mottiwala: You know, coverage is a light switch, but to be able to pull it through does take a few months to really get to that steady state. So it's a steady build as you get that coverage. And I think the biggest factor of getting that coverage is going to be our ability to optimize that growth net and to hit that 50% target because then we won't be giving away free product anymore under the bridge.

Aziz Mottiwala: The coverage is a light switch but to be able to pull it through does take a few months to really get to that steady state. So.

Aziz Mottiwala: Steady build as you get that coverage and I think the biggest factor of getting that coverage is going to be our ability to optimize that gross to net and hit that 50% target. Because then it will be not giving away free product anymore. In terms of the bridge that will go away. So I think the way to think about it is we factored in all of the accounts in terms of gross that modeling.

Aziz Mottiwala: That'll go away. So I think the way to think about it is that we factored in all the accounts in terms of growth net modeling. The trigger to get to that steady state 50% is getting on Medicare. And then obviously, the volumes will increase as we get that opportunity, but it's a steady build over time. Thank you.

Aziz Mottiwala: The trigger to get to that steady state, 50% is getting on Medicare and then obviously the volumes will increase as we get that opportunity, but it's a steady build over time.

Speaker Change: Got it thank you.

Operator: Thank you. One moment for our next question. The next question comes from Andrea Tan with Goldman Sachs. Go ahead. Your line is open.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Andrea R. Tan: The next question comes from Andrew <unk> with Goldman Sachs. Go ahead. Your line is open.

Andrea R. Tan: Good afternoon. Thanks for taking our questions. Aziz, maybe one question for you here. Of those 8,000 prescribers that you've talked about, could you quantify the proportion that fall into the three buckets that you've spoken about previously, maybe specifically how many of the 8,000 are early adopters versus those that are newer to DB? And then, is there anything else you think you need to do to reach the balance of those prescribers outside of the additional sales force that you're planning here?

Andrea R. Tan: Good afternoon, thanks for taking our questions maybe one for you here.

Andrea R. Tan: <unk> 8000, prescribers that you've talked about could you quantify the proportion that fall into the three buckets that you've spoken about previously.

Andrea R. Tan: Maybe specifically how many of the 8000 early adopters versus those that are newer to GB and then is there anything else you think you need to do to reach the balance of those prescribers outside of the additional sales force that that you are planning here.

Aziz Mottiwala: Yeah, so we don't get into the specific breakdown, but what I could tell you is that clearly, at 8,000, we're beyond 50% of our prescribing base, so clearly, we've gotten all the early adopters or the vast majority of them. We're really deep into our eager treaters, and we're really starting to bring in those new to DB. When you think about the Salesforce expansion, it's not as much of a reach.

Aziz Mottiwala: Yes, so we don't get into the specific breakdown, but what I can tell you is that clearly at 8000 were well beyond 50% of our prescribing base. So clearly we've gotten all the early adopters of the vast majority of them were really deepened our eager treaters and we're really starting to bring in those new to DB.

Aziz Mottiwala: And.

Aziz Mottiwala: When you think about the sales force expansion, it's not as much of a reach play we're very confident in our current salesforce ability to reach all of these segments. We have been calling on all of them, but it's really an opportunity to be able to increase frequency and go deeper right. So the early adopters have higher prescribing pattern right now they have really adopted this in their practice to eager treaters are getting to that threshold.

Aziz Mottiwala: We're very confident in our current Salesforce ability to reach all these segments. We've been calling on all of them, but it's really an opportunity to be able to increase frequency and go deeper, right? So the early adopters have a higher prescribing pattern. Right now, they've really adopted this in their practice. The eager treaters are getting to that threshold, and the new to DB, they're just getting the sequence, right? They're just starting that early prescribing, and they're looking to get that second, third, eventually fifth, and 10th prescription to become routine.

Aziz Mottiwala: And the new DDB Theyre, just getting our feet wet right. They are just starting that early prescribing and theyre looking to get that second third eventually fifth 10th prescription to become routine. So while we don't get into quantitatively breaking those down what I can tell you is that we've got the vast majority of early adopters, who are really made great progress in the early treaters and now that is new to didi doctors or the <unk>.

Aziz Mottiwala: While we don't get into quantitatively breaking those down, what I can tell you is that we've got the vast majority of early adopters who have really made great progress in the early adopters, and now there's something new to DB.

Aziz Mottiwala: Doctors are the ones that are coming in, and I think the other things we can do beyond Salesforce is really potentiate the success the early adopters have had and share that with the eager doctors and the new to DB. That's been one of the most compelling things, particularly when you go to conferences; you hear personal experiences off the podium where doctors say, "I wasn't even looking for this before." I started looking for it, and I can't believe I was missing it.

Aziz Mottiwala: Ones that are coming in and I think the other things we can do beyond the Salesforce is really potentiate. The success the early adopters of hand and.

Aziz Mottiwala: And share that with the eager treaters in the <unk> that's been one of the most compelling things, particularly when you go to conferences you here a personal experience off the ODM, where doctors say, hey, I wasn't even looking for this before I started looking for this I can't believe I was missing in and having great success have now implemented this across the practice, whether it be in my cataract patients or.

Aziz Mottiwala: I'm having great success. I've now implemented this across the practice, whether it be in my cataract patients or if it's an optometrist, I'm starting to look into this when people complain about contact lenses or dry eye. That compelling peer-to-peer education is something that we think is going to help unlock that new DB doctor, right? In addition to our Salesforce.

Aziz Mottiwala: If it's an optometrist and starting to look at this when people complain about contact lenses are dry eye that compelling peer to peer education is something that we think is going to help unlock that new DB Doctor and in addition to our sales force and then the third leg of that would be obviously, the consumer right empowering the consumer really does resonate with a doctor right if the patients coming in after.

Aziz Mottiwala: And then the third leg of that would be obviously the consumer, right? Empowering the consumer really does resonate with the doctor, right? The patient's coming in actively asking questions is going to prompt the doctor to take a second look and think about, okay, wait, let me understand. Let me look at your eyes. Let me understand your history and symptomatology.

Aziz Mottiwala: Are we asking a tenant pop the doctor to take a second look and think about it. Okay wait let me understand let me look at your latest let me understand your history and symptomatology. So I think those are the ways, we think about and the way I see this is that we have made great progress so far and the Salesforce expansion continued sharing of stories from the early adopters and then eventually consumer effort is really what's going on.

Aziz Mottiwala: So I think those are the waves we think about. And the way I see this is that we've made great progress so far with the Salesforce expansion and continued sharing of stories from the early adopters. And then, eventually, a consumer effort is really what's going to allow us to deepen prescribing across all these sectors.

Aziz Mottiwala: How us to deepen the prescribing across all the segments.

Andrea R. Tan: Got it, and maybe one quick question if I may just recognize it may be a bit early, but I'm curious if you're hearing anything yet on re-treatments.

Speaker Change: Got it and maybe one quick question. If I may just recognize there may be a bit early but curious if you're hearing anything yet on re treatments.

Aziz Mottiwala: Yeah, it's still pretty early. We are starting to see this, right? We've been several months in the launch, and you're starting to see this. And I would say it's too early to draw any massive conclusions here. I think you're going to really start to be able to see that more meaningfully in 2025. But right now, what you're hearing is some patients coming back for that second treatment in some really rare one-off cases. Perhaps the doctors you're shooting for perfection, they saw a great response, and they maybe did a second treatment just to get complete clearance. But those are anecdotal and really one-off. I think to get any meaningful insights here, it's probably going to be early 25 when we really start to see that launch.

Speaker Change: Yes, it's still pretty early we are starting to see this right. We've been several months in the launch are you starting to see this and I would say it's too early to draw any massive conclusion here I think youre going to really start to be able to see that more meaningfully in 2025.

Aziz Mottiwala: But right now what youre hearing in some patients coming back for that second treatment and some really rare one off cases, perhaps the doctors youre shooting for perfection. They saw a great response and they may be do a second treatment just to get complete clearance.

Aziz Mottiwala: But those are anecdotal and really one offs I think to get any meaningful insights here, it's probably going to be an early 25, when we really start to see that volume.

Andrea R. Tan: Okay, thank you so much. Thank you.

Speaker Change: Okay. Thank you so much thank.

Speaker Change: Thank you.

Operator: Thank you. Please hold for our next question. The next question comes from Talani Uthman with Goldman Sachs.

Speaker Change: Thank you ladies helps our next question.

Omotolani A Uthman: The next question comes from Gilenya Mcmahon with Goldman Sachs Go ahead. Your line is.

Operator: Okay.

Omotolani A Uthman: <unk> are you there.

Omotolani A Uthman: Operator, I think Tulani works with Andrea. Hi, I work for Andrea.

Omotolani A Uthman: Operator, I think to Lonnie works with Andreas.

Omotolani A Uthman: Welcome to Andriy ASO questions have been answered. Thank you great. Thank you.

Omotolani A Uthman: Our next question.

Omotolani A Uthman: Come from Tim Lugo with William Blair Go ahead. The line is open.

Omotolani A Uthman: So questions have been answered. Thank you. Great. Thank you.

Operator: Our next question will come from Tim Lugo with William Blair. Go ahead, the line is open.

Omotolani A Uthman: Hey, guys. This is lachlan on for Tim Congrats on the strong quarter. So I was wondering on gross to net I think you've previously said you expect to get to about mid <unk> by the end of this year.

Timothy Francis Lugo: Hey guys, this is Lachlan on behalf of Tim, congrats on the strong quarter. So I was wondering on gross to net. I think you've previously said you expect to get to about mid-fifties by the end of this year. But you're obviously already there and talking about some incremental improvement over the end of the year. So can you maybe just sort of update us on how we should be thinking about the next few quarters into the end of the year on gross to net?

Timothy Francis Lugo: But you are obviously already there and talking about some incremental improvement over the end of the year. So can you maybe just sort of update us on how we should be thinking about that.

Timothy Francis Lugo: Next few quarters sort of into the end of the year on gross to net.

Timothy Francis Lugo: And, you know, related to some of your comments about payers, can you give any color on how much or how much volume at the moment is through covered scripts that are on formulary versus those that are not yet there?

Timothy Francis Lugo: And related to some of your comments around the payers can.

Timothy Francis Lugo: Can you give any color on how many how much volume at the moment what proportion is through.

Timothy Francis Lugo: Scripts that are on formulary versus.

Speaker Change: I don't know yet.

Jeffrey S. Farrow: Chairperson. I'll go ahead and start on the gross to net question and a great question. Ultimately, just sort of realigning with what Aziz said earlier, we expect incremental growth as we get more of the commercial payers on. So, you know, small increases in gross to net yields, one to two percent per quarter upward, but it'll get much closer to 50 percent once we cross the threshold with Medicare patients in 2025.

Speaker Change: Sure I'll go head start on the gross to net question.

Jeffrey S. Farrow: Great question, ultimately that to sort of re aligning with what <unk> said it earlier, we expect incremental growth.

Jeffrey S. Farrow: As we get more of the commercial payers on so small increases in gross to net yields 1% to 2% per quarter upwards, but it will get much closer to 50% once we crossed the threshold with the Medicare patients in 2025, and as <unk> alluded to it won't be a light switch, but we will start.

Jeffrey S. Farrow: And as Aziz alluded to, it won't be a light switch, but you know, we'll start to see more improvement in the early part of 2025 and then get that broad coverage sometime in the middle of 2025.

Jeffrey S. Farrow: C.

Jeffrey S. Farrow: More improvement in the early part of 'twenty, five and then getting that broad coverage sometime in the middle of 'twenty five.

Aziz Mottiwala: Yeah, and then in terms of, you know, the covered scripts, I would say that we don't get into the gory details there, but obviously, we've got some really big commercial plans last quarter and this quarter that we've announced, so those are obviously covered. The vast majority of those have been preferred, so that's really great in terms of our ability to drive utilization and optimize our growth to net. One of the prior questions, we mentioned that we are seeing Part B scripts go through through medical necessity or exception, so those are obviously getting covered as well.

Jeffrey S. Farrow: Yes, and then in terms of the <unk>.

Aziz Mottiwala: Scripps I would say that we don't get into the gory detail there, but obviously, we've got some really big commercial plans last quarter and this quarter that we've announced so those are obviously covered the vast majority of those have been preferred so that's really great in terms of our ability to to drive utilization and optimize our gross to net.

Aziz Mottiwala: One of the prior questions. We mentioned that we are seeing part D scripts go through through medical necessity or exception. So those are obviously getting covered as well and then as we continue to build that commercial coverage, reaching critical mass at the end of the year and then the remainder of part D really kicking in in 2025, I think then you'd start to see the sort of the bridging product go away to a very minimal less.

Aziz Mottiwala: And then as we continue to build that commercial coverage, reaching critical mass at the end of the year, and then the remainder of Part D really kicks in in 2025, I think then you'd start to see sort of the bridging product go away to a very minimal level. So I think that's the way to think about it, right? Every quarter that should improve, and that ties back to what Jeff's talking about, those incremental improvements quarter over quarter, is really as coverage comes in, that's going to allow us to reduce the growth to net discount and optimize to that 50% growth to net at steady state.

Aziz Mottiwala: <unk>.

Aziz Mottiwala: So I think that's the way to think about it right every quarter that should improve and that ties back to what Geoff is talking about those incremental improvements quarter over quarter is really as coverage comes in that's going to allow us to reduce the gross to net discount and optimize to that 50% gross to net at steady state.

Aziz Mottiwala: Thanks. And I guess quickly on the sales floor, should we expect any disruption as you sort of add more reps and realign territories there? We've done a really good job here.

Speaker Change: Got it thanks, and I guess quickly on the sales force should we expect any disruption as you sort of.

Aziz Mottiwala: Add more reps and realigned territories.

Aziz Mottiwala: So, we've done a really good job here of mapping this out. I think one of the great things about expanding a few quarters into the launch is we've got some great learnings from the launch. We've got some great insights from our sales force. We've got great data. So, I think there are a few things that work in our favor. One, the launch has gone well, and word's gotten out.

Aziz Mottiwala: So we've done a really good job here of mapping this out I think one of the great things about expanding a few quarters into the launches we've got some great learnings from the launch.

Aziz Mottiwala: We've got some great insights from our sales force, we've got great data. So I think theres a few things that work in our favor won the launch has gone well and the word has gotten out so we've gotten a lot of great talent that wants to join the team. So it's really nice to see the volume and quality of paper, that's coming across our desk in terms of folks wanting to join the team. So we're going to be able to get some really high quality talent into the <unk>.

Aziz Mottiwala: We've got a lot of great talent that wants to join the team. So, it's really nice to see the volume and quality of paper that's coming across our desk in terms of folks wanting to join the team. So, we're going to be able to get some really high-quality talent into the Tarsus organization, which I'm delighted about. Secondly, we have the data that's going to inform exactly where to put this incremental effort to get the best. Right, we've done a lot of analysis. So, sure, there's always going to be a little disruption anytime you change territories.

Aziz Mottiwala: <unk> organization, which I'm delighted by it.

Aziz Mottiwala: Secondly, we've got the data that's going to inform exactly where to put this incremental effort to get the best return right. We've done a lot of in analytics. So.

Aziz Mottiwala: But I think that's going to be offset by the ability to optimize and place the incremental effort in a targeted fashion that's going to allow us to see a ramp up in a really reasonable timeframe. And then lastly, we've got great learnings in terms of what resonates with the doctors in terms of messaging, etc. So these these reps are actually going to be able to be trained a little bit more effectively and efficiently than our first class, if you will, because they're going to be able to learn from the experience of the current teams.

Aziz Mottiwala: Theres always going to be a little disruption anytime you change territories, but I think that's going to be offset by the ability to optimize and place the incremental effort and targeted fashion, that's going to allow us to see a ramp up in a really reasonable timeframe and then lastly, we've got great learnings in terms of what resonates with the doctors in terms of messaging et cetera. So these these reps are actually going to be able to be trained a little.

Aziz Mottiwala: More effectively and efficiently than even our first class if you will because they're going to be able to learn from the experience of the current team. So we expect them to hit the ground running be able to make impact and get up to speed and like I said I'm really pleased with the quality of people that we're looking at so I think this is going to really strengthen our team and we're doing all we can to manage any disruption, but I think the plan in place.

Aziz Mottiwala: So we expect them to hit the ground running, be able to make an impact, and get up to speed. And like I said, I'm really pleased with the quality of people that we're looking at. So I think this is going to really strengthen our team. And we're doing all we can to manage any disruption. But I think the plan in place will offset any of that temporary disruption you'd see.

Aziz Mottiwala: Offset any of that temporary disruption you'd say.

Aziz Mottiwala: Thanks.

Timothy Francis Lugo: Thank you. One moment while we queue up our final question. This question comes from Cory Jubinville with Lifesci Capital. Go ahead. Your line is open.

Speaker Change: Thank you.

Speaker Change: One moment, please queue up our final question.

Cory Jubinville: Next question comes from Cory <unk> with lifestyle capital go ahead. Your line is open.

Operator: Congratulations on the numbers and thanks for taking our question. You mentioned potential seasonality due to ECP practices, holidays, vacations, etc. Curious if you have any indication that there might also be seasonality in DB that might dictate sales, you know, similar to how there might be seasonality in the incidence or severity of rosacea or allergies.

Cory Jubinville: Congrats on the numbers and thanks for taking our question.

Operator: You mentioned potential seasonality due to ECP practices holidays vacations et cetera.

Operator: Curious if you have any indication that there might also be seasonality in DB.

Operator: It might take take sales similar to how they might be seasonality and the incidence and severity of rosacea or allergies.

Cory Jubinville: Yeah, so it's a good question, Cory. I think it's still early to tell, you know, sort of market seasonality, right? What we can look at is other product proxies, and we see the impact of holidays, you know, the doctors being out of the office. I think keeping in mind also that this is a NRX product, right? The vast majority of the volume comes from NRXs, right?

Speaker Change: Yes, it's a good question Corey I think it's still early to tell sort of market seasonality right, where we can where we can look at is other product proxies and that we see the impact of holidays. The doctors being out of the office I think keeping in mind also that this is a an rx product right. The vast majority of the volume comes through <unk> right. So it's going to be even more.

Cory Jubinville: Sensitive to those swings when the doctors are out or when people are on vacation I think in terms of the seasonality of the disease. Historically, we haven't seen anything in the literature and all the work we've done prior but that's probably something we'll see a year or two into the launch when we've got a few more quarters under our belt to see if theres any additional seasonality that impacts it right.

Aziz Mottiwala: So it's going to be even more sensitive to those swings, when the doctors are out or when people are on vacation. I think in terms of the seasonality of the disease, historically, we haven't seen anything in the literature and all the work we've done prior. But, you know, that's probably something we'll see a year or two into the launch, when we've got a few more quarters under our belt, to see if there's any additional seasonality that impacts it, right?

Aziz Mottiwala: Only other things I would indicate are typically we know that Q1 is always a challenging quarter. There's always headwinds in Q1, and we know that Q4s tend to be a little bit better as people try to come in and get them before their deductible resets and then people are visiting the doctor a little bit more often and that's that's not specific to <unk> blepharitis, that's something we see pretty pretty much across the board.

Speaker Change: And how should we think about R&D spend moving forward.

Aziz Mottiwala: These two studies for amortization line market.

Aziz Mottiwala: I know, we're awaiting regulatory regulator feedback, but when you're thinking about taking either of these programs into phase II phase III studies and curious if you can speak on how discussions around potential partnership opportunities have progressed so far.

Aziz Mottiwala: The only other things I would indicate are typically, you know, we know that Q1 is always a challenging quarter; there's always headwinds in Q1. And we know that Q4s tend to be a little bit better as people try to come in and get in before their deductible resets, and then people are visiting the doctor a little bit more often. And that's, that's not specific to extambia or demodex blepharitis. That's something we see pretty, pretty much across the board.

Aziz Mottiwala: Hey, Cory it's Jeff Yeah, I think for the R&D, we expect it to be relatively flat throughout the year compared to this quarter.

Aziz Mottiwala: Still closing down sites and interrogating the data. So there is still some definite work that's going on there.

Speaker Change: And I'll turn it over to <unk> for further discussion on the plans forward.

Cory Jubinville: And how should we think about R&D spend moving forward now that the Phase 2 studies for Rosacea and Lyme are complete? I know we're awaiting regulatory feedback, but are you thinking about taking either of these programs into Phase 2B or Phase 3 studies? And I'm curious if you could speak about how discussions around potential partnership opportunities have progressed so far.

Jeffrey S. Farrow: Cory, it's Jeff. Yeah, I think for R&D, we expect it to be relatively flat throughout the year compared to this quarter. We are still, you know, closing down sites and interrogating the data. So there's still some definite work that's going on there. And I'll turn it over to Seshadri for further discussion on the plans forward. Thank you.

Speaker Change: Thanks, Jeff.

Jeffrey S. Farrow: Thanks, Jeff. A great question, Cory.

Aziz Mottiwala: Great question Cory in terms of the pipeline progress we are tracking really well as we mentioned previously we are continuing to do additional analysis on all of our phase II trials.

Seshadri Neervannan: In terms of pipeline progress, we are tracking really well. As we mentioned previously, we are continuing to do additional analysis on all of our Phase II trials. And once we have those analyses, our plan is to go to the agency by the end of this year. And the pipeline is progressing really well. We are collecting all of the data. And we'll be pleased to report any progress as we move forward.

Seshadri Neervannan: And once we have those analysis are banished devoted the agency by end of this year.

Seshadri Neervannan: And the progress is progressing really well we are collecting all of the data and in the <unk>.

Seshadri Neervannan: Accordingly progress as we as we move forward.

Cory Jubinville: Excellent. That's very helpful. Thank you.

Speaker Change: Excellent that's helpful. Thank you.

Great, thank you. I am seeing no further questions at this time. Thank you for your participation in today's conference, and this does conclude the program. You may now disconnect.

Speaker Change: Great. Thank you I am showing no further questions at this time.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

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Speaker Change: Thank you.

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Speaker Change: Thank you.

Speaker Change: Thank you.

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