Q2 2024 Tarsus Pharmaceuticals Inc Earnings Call
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Good afternoon and welcome to the Tarsus second 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. David, you may begin.
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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 today.
Speaker Change: 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, Seshadri Neervannan, our Chief Operating Officer.
Speaker Change: I'd like to draw your attention to slide 3, 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.
Speaker Change: These statements are subject to certain risks and uncertainties, and our actual results may differ materially.
Speaker Change: I encourage you to consult the risk factors contained in our SEC filings for additional detail.
Speaker Change: With that, I will turn the call over to Bobby.
Bobby Azamian: Good afternoon, everyone, and thank you for joining us. I'm excited to share yet another quarter of impressive results as we continue to exceed launch expectations for Xtembi, including our own.
Bobby Azamian: This call is particularly special as we have just surpassed the one-year mark of XemV being the first and only FDA-approved therapy for the treatment of deminex blepharitis, or DB for short.
Bobby Azamian: It was an important opportunity to reflect on one of the most transformative moments in Tarsus history, while also looking forward to redoubling our efforts in this next phase of the Xtembe launch.
Bobby Azamian: With just three full launch quarters under our belts, we are well on our way to creating what we believe will be one of the largest categories in eye care based on three key metrics.
Bobby Azamian: The number of patients we are serving.
Bobby Azamian: The speed with which eye care providers, or ECPs, have adopted Xtembi.
Bobby Azamian: and the exceptional high-quality pear coverage we have secured to date.
Bobby Azamian: To further accelerate our success, we are investing in an expanded sales force that we expect will be fully deployed by the end of this quarter and the planned launch of our first ever consumer television campaign later this year.
Bobby Azamian: You'll hear more about these plans from Aziz in a moment.
Aziz Mottiwala: But first, let's turn to our outstanding Q2 results, which include
Aziz Mottiwala: Generating more than $40 million in sales. That's a 65% increase over Q1 2024.
Aziz Mottiwala: Delivering more than 37,000 bottles to patients.
Aziz Mottiwala: Increasing traction among our target base of 15,000 ECPs.
Aziz Mottiwala: Currently approximately 11,000 of these ETPs are prescribing Xtembi with more than 60% prescribing Xtembi to multiple patients.
Aziz Mottiwala: And finally, recognizing an exceptional gross net discount of approximately 44% that reflects the unique value of Xtembi and the dedicated efforts of our market access team.
Aziz Mottiwala: As a result, we are now recording a net price of more than $1,000 per bottle.
Aziz Mottiwala: That's an impressive standard by any measure, and one that is rarely seen with other front-of-the-eye therapeutic launches.
Aziz Mottiwala: Importantly, we expect to maintain this high value throughout the remainder of 2024, with even more improvement anticipated in early 2025 when broad Medicare coverage comes online.
Aziz Mottiwala: Our mission since our founding has been to pioneer new medicines for diseases with significant unmet need.
Aziz Mottiwala: And while creating a new category is not easy or fast, Tarsus is doing just that.
Aziz Mottiwala: Thanks to years of research, strong clinical trial results, months of pre-launch educational efforts, and the relentless work of the entire team, we are delivering on the promise of a potential blockbuster.
Aziz Mottiwala: Perhaps the most exciting element is our strong belief that we are just scratching the surface of the potential of Xtembe.
Aziz Mottiwala: We have made significant traction in reaching the roughly 1.5 million patients already diagnosed with and seeking treatment for DB.
Aziz Mottiwala: This initial addressable segment alone represents a potential billion-dollar market opportunity.
Aziz Mottiwala: Beyond that, we are already expanding into the additional segments we believe make up the remaining 5.5 million patients who visit ECPs with complementary eye conditions, such as dry eye disease, cataracts, and patients who struggle to stay in their contact lenses.
Aziz Mottiwala: Not to mention the additional 18 million patients with DV visiting ECP offices who can ultimately be served with XtemD.
Aziz Mottiwala: Together, they represent a multi-billion dollar potential opportunity.
Aziz Mottiwala: Any way you look at it, the enormous market potential of Xtemvi is clear.
Aziz Mottiwala: Millions of patients are actively seeking solutions.
Aziz Mottiwala: ECPs are excited by the success stories within their practices and motivated to identify and help more patients.
Aziz Mottiwala: We are seeing increasing adoption and utilization in the additional DB patient segments of dry eye, cataracts, and contact lens users.
Aziz Mottiwala: And with the support of our field teams, more and more ECPs are moving along the continuum from trialing Xtembi to championing it as a consistent prescriber.
Speaker Change: As a physician, I really enjoy being in the field, listening and learning from our ECPs who consistently tell me about the positive impact of Xtembe on their patients.
Speaker Change: I recently met with a father-daughter team in Denver whose practice has been around for 30 years.
Speaker Change: During my visit, the father couldn't wait to pull me aside to say that Xtemvi has delivered the best outcomes he's seen in his entire career.
Speaker Change: and the good news is I'm hearing that same sentiment everywhere I go.
Speaker Change: Regardless of whether the ECP is an early user or an established champion, I am uniformly hearing how well Xtemvi is working for their patients and every day they are finding more and more people to treat.
Speaker Change: And now, with an expanded sales force entering the field and planning for our consumer television campaign underway, I am even more convinced of our ability to further accelerate the number of patients served and deliver on the promise of this novel medicine.
Speaker Change: Before I pass the call to Aziz, I want to remind you that we are simultaneously advancing a robust pipeline based on Lodolaner, the same promising anti-parasitic molecule used in XtemB.
Speaker Change: We remain on track to bring our three programs focused on meibomian gland disease, Lyme disease prevention, and rosacea to the FDA by the end of this year.
Aziz Mottiwala: and look to continue creating and leading in eye diseases that have not yet been effectively served.
Speaker Change: With that, I'll turn the call over to our Chief Commercial Officer, Aziz Mottiwala, for more details on our commercial progress.
Aziz Mottiwala: Well, echoing everything Bobby just said, what a phenomenal quarter.
Aziz Mottiwala: We're obviously very pleased with the launch to date and our ability to continue delivering Xtemdi to more patients in need. We're also delighted with the significant improvement in gross net discounts this quarter, which as Bobby said, reflects payer recognition of the significant value of Xtemdi.
Speaker Change: This exciting development is primarily the result of contracts we secured with two of the three big commercial payers and one of the largest Medicare payers, which is now covering Constambi without a prior authorization.
Speaker Change: The quality of coverage we've secured in such a brief period of time is truly remarkable and rarely seen in eye care.
Speaker Change: As a result, we expect the gross discount rate to remain relatively stable within the mid-40s through the end of the year.
Speaker Change: Another incredible outcome is the rapid level of adoption among our target ECPs that is happening much more quickly than we anticipated.
Speaker Change: As of August 7th, approximately 11,000 ECPs have started patients on XtemB, with more than 60% prescribing XtemB to multiple patients.
Speaker Change: What those numbers mean is that on average, each sales rep has changed the behavior of more than 100 ECPs, all of whom are now prescribing Xtempi.
Speaker Change: This is a remarkable metric, but also a stark reminder of the importance of frequent and quality ECP interactions.
Speaker Change: I'm incredibly proud of the strides we've made so far with our current target of 15,000 physicians, but we know it can take an average of 5 to 10 visits to move an ECP from trialist to champion.
Speaker Change: Our current sales team is already maximizing both their time and their interactions with ECPs at a level of intensity and intentionality I've never seen before.
Speaker Change: But time is a finite resource, so we need more people in the field calling on our ECPs more often.
Speaker Change: This is going to allow us to realize the full potential of Xtempi.
Speaker Change: As you know, we'd always plan on a Salesforce expansion, and the timing for executing on that plan was very well considered.
Speaker Change: We wanted to have a couple of strong revenue quarters under our feet, which we've now done. And we wanted to begin the expansion during a time that would be least disruptive to the business.
Speaker Change: We knew it would be a heavy lift for the sales team because we needed to take them out of the field to interview, hire, train, and onboard approximately 50 new employees, all while continuing to call in their target list ECPs.
Speaker Change: I've been there before and it's really no easy feat.
Speaker Change: That's why we made the very deliberate decision to begin the hiring process in the summer when ECPs, their staff, and their patients typically take vacations and things generally slow down.
Speaker Change: To be clear, there's never a good time to pull your sales team out of the field, particularly with such a promotionally sensitive product. And you'll see some of those lost days reflected in the Q3 numbers, alongside the general ECP office slowdown you see each summer.
Speaker Change: But I'm confident that once the expanded Salesforce is fully deployed, our strong upward trajectory will continue alongside the increasing ECP adoption of Xtendi.
Speaker Change: And with our plans to turn up the dial on our marketing efforts in Q4, we are truly pouring fuel on the fire.
Speaker Change: DB patients are highly motivated by and responsive to the visual aspects of this disease. So we're planning a hard-hitting, action-oriented DTC TV campaign that will be key to driving in more patients to their doctors to get screened for DB.
Speaker Change: In closing, our tremendous results this quarter speak to the compelling value proposition of Xtembi and the power of category creation.
Speaker Change: With our expanded sales force preparing to enter the field, our anticipated consumer advertising campaign, and ongoing strong payer coverage, we expect a rapid acceleration of our current momentum, a strong close to the year, and continued opportunities for growth for years to come.
Speaker Change: As always, thank you so much for your time and interest. I will now turn the call over to Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer, to discuss our second quarter financial results and outlook for the third quarter.
Jeff Farrow: Thanks, Aziz.
Jeff Farrow: As highlighted by the team, Q2 marked yet another exceptional quarter of strong commercial execution that generated $40.8 million in XtemV net product sales, driven by more than 37,000 bottles dispensed to patients.
Speaker Change: Several new and impactful payer contracts, the results of which we expect to be reflected in the growth net discount beginning next quarter, and a substantial improvement in growth net discount of 44% compared with 55% in Q1.
Jeff Farrow: Demonstrating a strong understanding of the disease burdened by payers and their recognition of Xtemvi as the only FDA-approved therapeutic for disease with high unmet need.
Jeff Farrow: That improved gross net discount, which evolved much more quickly than we anticipated.
Jeff Farrow: primarily reflects the significant commercial coverage we gained during the second quarter, as well as a lower estimated impact for the Medicare donut hole in this quarter.
Jeff Farrow: Given the general characteristics of our patient population, most of whom appear not to have as many comorbid diseases, we now expect to see more of an impact related to the donut hole in the second half of the year.
Jeff Farrow: Accordingly, with further commercial and Medicare coverage to come, we now anticipate our gross net discount to range from approximately 42% to 46%, exiting 2025 at the lower end of the range.
Jeff Farrow: Due to the Medicare donut hole dynamic I mentioned earlier, we expect to see the potential for a 1 to 2 point increase in the gross net discount from Q2 in the second half of this year. In other words, at the higher end of the range provided.
Speaker Change: Turning to our PML.
Jeff Farrow: Our total operating expenses were approximately $74.8 million for the second quarter of 2024.
Jeff Farrow: A sequential increase in operating expenses of approximately $9.5 million.
Jeff Farrow: was primarily driven by increases in the cost of sales of Xtemvi due to the growing number of bottles sold and increases in selling, general, and administrative expenses due to sales and marketing costs.
Jeff Farrow: The expanded sales force to further support the launch of XtemV and other corporate expenses.
Jeff Farrow: Gross margins for the second quarter remain flat at approximately 93%, which includes the royalty and the amortization of any milestones we pay to Alonco.
Jeff Farrow: Finally, we ended the quarter with approximately $323.6 million dollars in cash and marketable securities, inclusive of the approximately $40 million dollar net drawdown from the Pharmacon credit facility signed in April 2024.
Jeff Farrow: Looking ahead to the third quarter, we do anticipate inventory levels will be similar to what we saw in the second quarter.
Jeff Farrow: And we expect operating expenses to increase incrementally due to the Salesforce expansion and other Xtemv-related marketing efforts.
Jeff Farrow: Additionally, and as Aziz mentioned, there are some specific dynamics in play that will likely impact our bottles dispensed.
Aziz Yis: Namely, a very deliberate and strategic decision we made to begin the sales force expansion process during the summer.
Aziz Yis: We understood that there would be some disruption as we trained and prepared these new sales representatives and leaders.
Jeff Farrow: And we did this to ensure we were on the ground and ready to go during some of the most productive months of the year.
Jeff Farrow: This resulted in us pulling some team members from the field to interview, hire, and onboard the new sales force.
Jeff Farrow: We also anticipate the following factors could further impact our expectations for bottles dispensed.
Jeff Farrow: First, the traditional summer slowdown that occurs at ECP offices.
Jeff Farrow: Over the last several years, we have seen this result in a decrease in new patient bottles dispensed for eye care products, in general, during the third quarter.
Jeff Farrow: Second, summer vacations and holidays such as the 4th of July and Labor Day.
Jeff Farrow: With that in mind, we expect the number of bottles dispensed to patients in the third quarter to grow at a relatively modest rate of approximately 10% over Q2.
Jeff Farrow: Meaning, we expect approximately 41,000 bottles to be delivered to patients in the third quarter.
Jeff Farrow: The vast majority of these bottles will be to new patients as we are not yet seeing the benefits of meaningful retreatment volumes.
Jeff Farrow: Now, looking ahead to the fourth quarter, we expect to see a much stronger growth trajectory in bottle suspense.
Jeff Farrow: resulting from our fully expanded sales team out in the field and patients making multiple ECP visits to maximize their insurance plan benefits before they reset in 2025.
Jeff Farrow: And finally, with the planned launch of our first direct-to-consumer television campaign, we expect our momentum to continue accelerating into 2025, when we will see the first fruits of those marketing efforts realized.
Jeff Farrow: In summary, we are pleased with both our ongoing launch performance and financial metrics.
Jeff Farrow: And look forward to sharing more updates with you next quarter as we embark on the next phase of launch.
Jeff Farrow: I will now turn the call back to Bobby for final remarks.
Bobby Azamian: Thank you, Jeff.
Bobby Azamian: A couple of key messages about our launch.
Bobby Azamian: First, I am more confident than ever in Xtemvi's growth because I hear from doctors every week, including this week where I met with several who stressed how they've never seen a medicine this effective.
Bobby Azamian: and also describe their own prescribing journey and how they see no limit on patients to diagnose and treat in their clinics.
Bobby Azamian: Second, I am excited about the near-term acceleration in serving DB patients.
Farrow: Tarsugulta, David Nakasone, David Nakasone, David Nakasone,
Speaker Change: of course, he's Go-
Speaker Change: and Rick Epstein, similar.
Speaker Change: We expect to see an impact on prescriptions starting at Incept Building through Q3.
Speaker Change: Dr. Hart, T.V. Kim, Crane, Rick States, all ready.
Speaker Change: hope you have a great week and.
Speaker Change: I know we are just scratching the surface with it.
Bobby Azamian: Odee. Dr. Prasad, Dr. Prasadri Neervann, David Nakasone, [inaudible]
Speaker Change: Ramaladam, Good Questions.
Speaker Change: Great. We will now conduct the question and answer session.
Speaker Change: In the next episode, we'll see you in the next episode.
Speaker Change: Episode 2
Speaker Change: The first question comes from Tim Lugo with William Blair. Tim, go ahead. Your line is open.
Tim Lugo: Thanks for taking the question, and congratulations on a great quarter. You know, given the strong performance in the quarter and all the clarity around GTA and bottle suspense,
Tim Lugo: Expected in Q3. I'd just love to hear your thoughts around what I see as consensus of about $38.8 million or $39 million for Q3. You don't need to give exact guidance, obviously, but I'd love to hear your thoughts around consensus.
Tim Lugo: in Q3 and maybe even how it looks for Q4 as well.
Bobby Azamian: [inaudible]
Bobak Azamian: I'll wait. Go on, first of all. Okay. And if you have Boba Lided, we'd expect some effects for the last two, for three to two, for given the introduction of the stale, let's see, Timothy can start.
Bobby Azamian: and Larry Berman. Thank you all for coming. And thank you all for listening. And thank you all for listening. So we'll see you next time. Thank you. Take care. Bye bye. Bye bye. Bye bye. Take care. Bye bye. Bye bye. Bye bye. Bye bye. Bye bye.
Speaker Change: That's fine. I understand. Maybe also, can you just broadly talk about when Medicare kicks in in 2025, given all the granularity on GTN in 2024?
Speaker Change: Directionally, is it, you know, probably going, GTN maybe takes a hit due to Medicare, but obviously the volumes should be at a much higher level. Can you just directionally speak to that?
Bobby Azamian: Sure, Tim, it's Aziz. Thanks for that question.
Speaker Change: We're going to start to see some of that negative coverage.
Speaker Change: This year, the remaining ones we do expect to kick in in 2025. I think what you can expect based on that is essentially a stable growth to net between now and the end of the year, and then we'll have an improvement in the discount into next year.
Bobby Azamian: i
Speaker Change: Thank you. Standby for our next question.
Samurai: Dr. Prasadri Neervann, Dr. Prasadri Neervann, David Nakasone
Speaker Change: The next question comes from Pavan Patel with Biavec. Please go ahead, your line is open.
Speaker Change: Hey guys, this is Bhaven Anfor, Jason Gerberry. Two questions from us. Firstly, appreciate the commentary for full year.
Speaker Change: 2020 for gross tenant discounts.
Speaker Change: I was wondering if the longer term gross net discounts...
Speaker Change: You expect to be a steady state here at the low 40s, or is it likely to evolve as payer mix changes?
Speaker Change: and you gain further coverage in 2025 and beyond.
Speaker Change: And then my second question is regarding your DTC efforts. So when do you kick those off and how soon would you expect to see benefit from that inpatient uptake? Thank you.
Speaker Change: Happy to take the first part of the question over to Aziz to talk about the DTC.
Aziz: So what we anticipate is a slight increase in the gross to net discount, as I had mentioned, given the donut hole issue, where we're seeing essentially more patients coming in in Q3 and we anticipate that to be in Q4.
Speaker Change: Of course, in Q1 of every year, you get copays reset, and so frequently, there's a larger growth than a discount.
Speaker Change: in that Q1 period, and then subsequent to that.
Speaker Change: In 2025, we expect that to improve sequentially to be sort of at, say, 42-ish percent, the low end of the range we provided. And that should be pretty consistent with our long-term gross net discount beyond 2025.
Speaker Change: Right, and then in terms of the DTC question, so we anticipate launching sometime in the fourth quarter. You'll see some impact of that this year, but as you can imagine, it takes a few repetitions for the patients to see the ad a couple times. And we think you'll start to see some impact this year, but you'll really start to see that really take hold as we scale that effort into next year.
Speaker Change: www.mooji.org
Speaker Change: Thank you. Stand by for our next question.
Speaker Change: The next question comes from Cory Jubinville with Life Science Capital. Go ahead, your line is open.
Speaker Change: Hey, this is Dennis on for Cory. Congrats on the quarter and thank you for taking our question.
Speaker Change: Um...
Speaker Change: You know.
Speaker Change: As we near 2025 and we start to think about kind of the re-treatment dynamics here.
Speaker Change: Do you have any indication as to which patient profile is more likely to experience a re-infestation that calls for re-treatment? And in your view, kind of what percent of DB patients will ultimately require one or more courses of Xtend be long term?
Speaker Change: [inaudible] early 2020.
Speaker Change: Any thoughts or suggestions you'd like to put a little bit more color into to which types of patients get treated again sooner, and which types of patients may have more durability with the drug? In terms of what we expect to see long-term,
Speaker Change: If you go back to our phase three studies and the follow up we did, about 40% of the patients recur at month 12.
Speaker Change: So you can expect, you know, some proportion of those patients will get retreated over time. And again, that that's something that will scale over time. I don't think about it as a step up, but essentially something that scales over time as patients get more, or sorry, as physicians get more and more experienced with the drug.
Speaker Change: The patients come back and then doctors will get their groove of how they want to retreat. So I think the short answer is it's still very early. We expect to see retreatment volumes start to be more meaningful in 2025. And once we start to see that, we'll be able to dig in and really understand the dynamics there.
Speaker Change: Standby for our next question.
Speaker Change: Next question comes from the line of Andrea Tan with Goldman Sachs. Go ahead. Your line is open.
Speaker Change: Hi all, this is Talani on for Andrea. Congrats on the quarter and thanks for taking our questions. A couple from us here. The first, wondering if you could characterize a little bit more about the quarterly growth and the number of the ECPs to date, especially in the context of penetrating the more the eager adopters and the new to DB segments. And could you share the feedback that you've been getting on the disease education efforts from those providers?
Speaker Change: Sure. Thanks, Talani, for that question.
Speaker Change: When you look at the performance to date, I think one of the highlights has really been the performance of Xtendi. It's very unique in terms of the wow effect it has for patients, and I think that's something that's
Speaker Change: really gotten the physician community very excited. I think that's one of the reasons we've seen a continuing scaling in our ECD adoption with over approximately 11,000 doctors writing prescriptions at this point. So it really speaks to the broad appeal of the drug and the utility it has in practice.
Speaker Change: In terms of getting...
Speaker Change: Beyond from early treaters to those different segments.
Speaker Change: I think there's two factors that really drive this.
Speaker Change: One is physicians getting their experience right as they continue to get experience seeing that wow effect in their practice They start to think about you using the product more broadly So they typically start with a typical demonex plethoritis patient. They see a handful of cases. They see the results
Speaker Change: And then they start to think about other patient segments that really expand the utilization in the practice. So you can think about, for say, a recalcitrant dry eye patient or proactively screening their cataract patients.
Speaker Change: So that's an...
Speaker Change: A level of experience that the doctor gets that really potentiates further use.
Speaker Change: Repeat visits from the Salesforce.
Speaker Change: Hearing that message again and again, and to your point, the feedback on the education has been very positive, and the physicians are very receptive, and we have so many of them that want to hear it, and our sales force can only get to them so many times.
Speaker Change: And that's why we're really excited about the Salesforce expansion. This is really going to create some capacity for our team.
Speaker Change: to see these doctors more often.
Speaker Change: repeat that message, be that constant reminder, and provide that staff support to really facilitate that broadening utilization in the practice. So there's a few factors I think that are key here are getting those doctors multiple shots on goal and seeing that consistent
Speaker Change: As to say Hey, make sure you look for an even slit lamp on every patient or is it more of a progressive let's wait and see on the patient feedback and it's more of a patient starting the conversation just what are the dynamics there. Thank you.
Speaker Change: Hey, Brexit disease, yes, it's a great question, one we see a lot of them are in the field.
Speaker Change: And when we dig into a lot as well.
Speaker Change: I think what you see is that physicians are very curious the drivers obviously getting a lot of attention in the space. So you do get doctors that want to write those first few cases I think.
Speaker Change: It varies by Doctor CSM doctors that get those first few cases, they see the results they see that consistency and predictability and to implement it in their practice I would say even with those doctors in many cases, we're just scratching the surface because theyre looking for it in certain areas, but they could be looking for in other areas and that's where our sales team plays a key role you do have some doctors that take a look.
Speaker Change: A bit more time as you can imagine and in those cases, they want to see a handful more cases and typically it's about 10 cases, or so where they really hit that tipping point and then what I think happens as they start to look by segments. So I think the average physician doesn't just say, okay net wholesale change the practice over they say, okay I'm, having great results with these patients who.
Speaker Change: Who is the next patient okay, a recasting of dry patient I've got dry patients that are in the packages that are cycling through meds, let me look at their lids, Okay. Great got great success. There Alright, now let me look at my cataract patients and maybe start with premium cataract and then broaden it. So there is definitely a stepwise approach in which physicians adopt and as we mentioned earlier.
Bob: How can we facilitate that happening more quickly and that's really getting in front of the doctor more often with the salesforce that constant education that reminder, to look forward in the different segments really enhances that and I know I know Bob you've added the field, maybe some observations here as well, yes just to echo.
Bob: What I hear time and again his doctors to your point Frank They get experience with the medicine and then there are just amazed I have not heard a doctor say you know it didn't work on this one or two patients and Thats just wind in our sales and obviously when a doctor is able to deliver that to other patients that gives them.
Bob: Even more confidence and then the other thing I hear time and again is the.
Bob: The diagnosis becomes easier the conversation becomes easier doctors start looking for other patients with different reasons to treat than perhaps the first few.
Bob: Those additional segments that as David described so I think we are in this very positive look of doctors getting great experience and theyre looking for more and more of their patients and very notably not finding that they have reached the limit and finding patients in their own clinics, they conserve and thats high volume practices that are.
David Nakasone: Early adopters, but also more rural single practices that are not typically the early adopters.
Speaker Change: To get to 11000 or 15000 at this point it means that we have had.
Speaker Change: A very meaningful impact on educating a broad swath of this community.
Speaker Change: Are you getting any doctors that are admitting that maybe they werent looking correctly in the past.
Speaker Change: Or is that not coming up.
Speaker Change: With the physicians.
Speaker Change: We hear that all the time.
Speaker Change: Yes, absolutely.
Speaker Change: On parts of the job right as doctors.
Speaker Change: This value of category creation right as you hear that we're solving a problem that was being missed and I think that's a really compelling piece of it I think it's obviously very rewarding for us to hear that we are able to change how things are being practice change the outcomes for these patients, but I think it's also very compelling when doctors here that from their colleagues at conferences and on the podium and that's <unk>.
Speaker Change: One of the most compelling parts of the story is Hey did you know we were missing this and now we have a very clear and impactful solution that gets consistent and predictable results and I always say, that's sort of the invisible hand on this launch is the physician testimonial doctors getting up on podium and talking about their positive.
Speaker Change: Experienced of August point this drug doesn't disappoint. The results are almost always consistent and patients come back with clear healthy way it becomes a very compelling story for us to hear about more importantly becomes a compelling story for other doctors to hear from their colleagues.
Speaker Change: That's a really exciting part of the launch that does underpin the rapid adoption, we've seen and we're doing the right disease across so many of our efforts whether its.
Speaker Change: Marketing or medical affairs.
Speaker Change: The peer to peer engagement here is another power powerful amplifier of spreading the word.
Speaker Change: That's it for me. Thank you very much and congrats on a great quarter.
Speaker Change: One moment for our next question.
Speaker Change: The next question comes from the line of Blotchy Prasad with Barclays. Go ahead. Your line is open.
Speaker Change: Hi, This is <unk> on for <unk>, thanks for taking our questions.
Speaker Change: Just wondering of the 11000 prescribers you called out are you able to actually quantify the portion the proportion that fall into the three buckets you called out so how looking looking to understand how many are early adopters versus newer to television at this point. Thanks.
Speaker Change: Yes. Thanks for the question. So obviously, we got the data lots of ways as you can imagine it's very dynamic. So we don't go into that level of detail in this forum, but I think our focus is to say okay for each of these doctors, we've gotten to 11000 of the 15 that <unk> gotten to the vast majority of our focus is really going.
Speaker Change: Now how do we start to pull those doctors shrimp books that are just getting that early experience.
Speaker Change: Talked about earlier, which is becoming routine writers routine prescribers and how do we increase our frequency with our salesforce expansion to facilitate that so I think the way we think about this going forward is we've got a great prescriber base established and now the focus is going to be on that depth of prescribing that enhanced utilization within the practice and Atlas.
Speaker Change: Scriber basis so.
Speaker Change: The segmentation of the Doctor becomes a little less important in terms of where they came from but more important on where we think they're going to go in the future and how we can continue to move the needle there.
Speaker Change: Okay, one moment for our next question.
Speaker Change: The next question comes from Eddie Hickman with Guggenheim Securities Go ahead. Your line is open hey.
Eddie Hickman: Good afternoon, and congrats on the great quarter. Thanks for taking my question. So I appreciate the added color on the third and fourth quarter dynamics in terms of bottle growth, but I'm wondering if you could help us think about 2025 and what the bottle growth should look like with a fully deployed sales force and DTC. It sounds like <unk> is going to be pretty strong. So I'm wondering like how many quarters beyond that do you expect that level of growth before it studies out.
Speaker Change: And then on the summer holiday slowdown like is that unique to this early part of the launch or do you think that to be an annual pattern.
Jeff Farrow: It's Jeff.
Speaker Change: Maybe I'll answer your first question or second question first.
Speaker Change: It's a little early for us to know if it's specific to us annually, but we did note in general for Eyecare products that there was a slump in new Rx is during the third quarter. So it's probably likely we will see a similar effect in the third quarter, but again, we don't have a whole lot of history for <unk> at this point.
Speaker Change: In terms of your question in 2025, I think Theres a couple of dynamics that we will continue to see impressive growth beyond the fourth quarter.
Speaker Change: One will be the full deployment and we will see some of the impact of the direct to consumer campaign, meaning streaming TV potentially network television should continue and should help drive patients into go see their docs.
Speaker Change: And then secondly, as the sales force incremental sales force begins to continue to get online.
Speaker Change: Ads continue to have those frequency of visits we expect that growth to continue as a result of that so we continue to see quarter over quarter growth through throughout 2025.
Speaker Change: Yeah.
Speaker Change: I'm showing no further questions at this time.
Speaker Change: For your participation in today's conference. This does conclude the program you may now disconnect.
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Speaker Change: Good afternoon, and welcome to the <unk> second quarter 2024 financial results Conference call.
Speaker Change: 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 you may begin.
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.
Speaker Change: Turning me on the call. This afternoon are <unk>, our Chief Executive Officer, and Chairman as these Motorola our Chief Commercial Officer, Jeff Farrow, Our Chief Financial Officer, and Chief strategy Officer, and joining us for the question and answer session Stationer Van <unk>, our Chief operating officer.
Speaker Change: 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.
Speaker Change: These statements are subject to certain risks and uncertainties and our actual results may differ materially.
Speaker Change: I encourage you to consult the risk factors contained in our SEC filings for additional detail.
Speaker Change: With that I will turn the call over to Bobby.
Bobby Azamian: Good afternoon, everyone and thank you for joining us.
Bobby Azamian: Im excited to share yet another quarter of impressive results as we continue to exceed launch expectations for <unk>, including our own.
Bobby Azamian: This call is particularly special as we have just surpassed the one year mark of <unk> being the first and only FDA approved therapy for the treatment of <unk> or <unk> for short.
Speaker Change: It was an important opportunity to reflect on one of the most transformative moments intarsist history. While also looking forward to redoubling our efforts in this next phase of the <unk> launch.
Speaker Change: With just three full launch quarters under our belt, we are well on our way to creating what we believe will be one of the largest categories in eyecare based on three key metrics.
Speaker Change: The number of patients we are serving.
Bobby Azamian: The speed with which I care providers or <unk> have adopted <unk>.
Bobby Azamian: And the exceptional high quality payer coverage, we have secured to date.
Speaker Change: To further accelerate our success, we are investing in an expanded sales force that we expect will be fully deployed by the end of this quarter.
Speaker Change: And the planned launch of our first ever consumer TV campaign later this year.
Z: Youll hear more about these plans from a Z as in a moment.
Z: But first let's turn to our outstanding Q2 results which include.
Z: Generating more than $40 million in sales.
Z: The 65% increase over Q1 2024.
Z: Delivering more than 37000 bottles to patients.
Z: Increasing traction among our target base of 15000 Ecp's <unk>.
Speaker Change: Currently approximately 11000 of these etp's are prescribing <unk> with more than 60% prescribing extended to multiple patients.
Z: And finally, recognizing an exceptional gross to net discount of approximately 44% that reflects the unique value of <unk> and the dedicated efforts of our market access team.
Z: As a result, we are now recording a net price of more than $1000 per bottle.
Z: That's an impressive standard by any measure and one that is rarely seen with other front of the eye therapeutic launches.
Z: Importantly, we expect to maintain this high value throughout the remainder of 2024 with even more improvement anticipated in early 2025, when broad Medicare coverage comes online.
Z: Our mission since our founding has been to pioneer new medicines for diseases with significant unmet need.
Z: And while creating a new category is not easy or fast <unk> is doing just that.
Z: Thanks to years of research strong clinical trial results months of prelaunch educational efforts and the relentless work of the entire team we are delivering on the promise of a potential blockbuster.
Z: Perhaps the most exciting element is our strong belief that we are just scratching the surface of the potential of <unk>.
Z: We have made significant traction in reaching the roughly $1 5 million patients already diagnosed with and seeking treatment for DB. This.
Z: This initial address them both segment alone represents a potential $1 billion market opportunity.
Z: Beyond that we are already expanding into the additional segments. We believe make up the remaining $5 5 million patients who visit ecp's with complementary eye conditions, such as dry eye disease, cataract and patients who struggled to stay on their contact lenses.
Z: As I mentioned, the additional 18 million patients with DB visiting ECP offices, who can ultimately be served with extended.
Z: Together, they represent a multibillion dollar potential opportunity.
Z: Any way you look at it the enormous market potential of <unk> is clear.
Z: Millions of patients who are actively seeking solutions.
Z: Ecp's are excited by the success stories within their practices and motivated to identify and help more patients.
Z: We are seeing increasing adoption and utilization in the additional DB patient segments of dry eye cataracts and contact lens users.
Z: And with the support of our field teams more and more ecp's are moving along the continuum from Trialing <unk> to championing it as a consistent prescriber.
Speaker Change: As a physician I really enjoy being in the field.
Z: Listening and learning from our Ecp's, who consistently tell me about the positive impact of <unk> on their patients.
Speaker Change: I recently met with the father, daughter team in Denver, whose practice has been around for 30 years.
Speaker Change: During my visit the father Couldnt wait to pull me aside to say that <unk> has delivered the best outcomes. He's seen in his entire career.
Speaker Change: And the good news is I'm hearing that same sentiment everywhere I go.
Z: Regardless of whether the ECP is an early user or an established champion.
Z: Uniformly hearing how well <unk> is working for their patients and everyday they are finding more and more people to treat.
Z: And now with an expanded sales force entering the field and planning for our consumer TV campaign underway I am even more convinced of our ability to further accelerate the number of patient serve and deliver on the promise of this novel Medicine.
Speaker Change: Before I pass the call to disease I want to remind you that we are simultaneously advancing our robust pipeline based on low to enter the same promising anti parasitic molecule used in <unk>.
Speaker Change: We remain on track to bring our three programs focused on my Boming gland disease, Lyme disease prevention, and rosacea to the FDA by the end of this year.
Z: And look to continue creating and leading in diseases that have not yet been effectively served.
Speaker Change: With that I'll turn the call over to our Chief commercial Officer Aziz Mato <unk> for more details on our commercial progress.
Z: While aggregate everything Bobby just said, what a phenomenal quarter.
Aziz Mato: We're obviously very pleased with the launch to date and our ability to continue delivering extended to more patients in need.
Speaker Change: We're also delighted with the significant improvement in gross to net discount this quarter, which as Bobby said reflects payer recognition of the significant value of extending.
Aziz Mato: This exciting development is primarily a result of contracts we secured with two of the three big commercial payers and one of the largest Medicare Payors, which is now covering <unk> without prior authorization the.
Speaker Change: The quality of coverage, we secured in such a brief period of time is truly remarkable and rarely seen in eyecare.
Aziz Mato: As a result, we expect the gross to net discount rate to remain relatively stable within the mid 40 <unk> through the end of the year.
Aziz Mato: Another incredible outcome is the rapid level of adoption among our target ecp's that is happening much more quickly than we anticipated as of August 7th approximately 11000, Ecp's have started patients on <unk> with more than 60% prescribing extended multiple patients.
Aziz Mato: What those numbers mean is that on average each sales rep has changed the behavior of more than 100, Ecp's all of whom are now prescribing extending.
Aziz Mato: This is a remarkable metric, but also a stark reminder of the importance of frequent and quality ECP interactions.
Aziz Mato: I'm incredibly proud of the strides we've made so far with our current target of 15000 physicians, but we know it can take an average of five to 10 visits to move an ETP from trial to champion.
Aziz Mato: Our current sales team is already maximizing both their time and their interactions with ECP is at a level of intensity and intentionality I've never seen before.
Aziz Mato: But time is a finite resource so we need more people in the field, calling on our ecp's more often.
Aziz Mato: This is going to allow us to realize the full potential of <unk>.
Speaker Change: As you know we would always plan on our sales force expansion and the timing for executing on that plan with very well considered.
Aziz Mato: We wanted to have a couple of strong revenue quarters under our feet, which we've now done.
Aziz Mato: And we wanted to begin the expansion during a time that would be least disruptive to the business.
Aziz Mato: We knew would be a heavy lift for the sales team because we needed to take them out of the field to interview hire train and onboard approximately 50 new employees.
Aziz Mato: All while continuing to call on their target list Ecp's I've been there before and it's really no easy feat.
Aziz Mato: That's why we made the very deliberate decision to begin the hiring process in the summer when ecp's their staff and their patients typically take vacations and things generally slow down.
Aziz Mato: To be clear, there's never a good time to put your sales team out of the field, particularly with such a promotional <unk> sensitive product and you'll see some of those lost as reflected in the Q3 numbers alongside the general ECP office slowdown you see each summer.
Aziz Mato: But I am confident that once the expanded sales force is fully deployed our strong upward trajectory will continue alongside the increasing ECP adoption of extending.
Aziz Mato: And with our plans to turn up the DAU on our marketing efforts in Q4, we are truly pouring fuel on the fire <unk> patients are highly motivated by and responsive to the visual aspects of this disease. So we are planning a hard hitting action oriented DTC television campaign that will be key to driving in more patients to their doctors to get screened for DB.
Aziz Mato: In closing our tremendous results this quarter speak to the compelling value proposition of extending and the power of category creation.
Aziz Mato: With our expanded salesforce preparing to enter the field are anticipated consumer advertising campaign and ongoing strong payer coverage, we expect a rapid acceleration of our current momentum our strong close to the year and continued opportunities for growth for years to come.
Aziz Mato: And as always thank you so much for your time and interest I will now turn the call over to Jeff Farrow, Our Chief Financial Officer, and Chief strategy Officer to discuss our second quarter financial results and outlook for the third quarter.
Jeff Farrow: Thanks This is.
Jeff Farrow: As highlighted by the team Q2 marked yet another exceptional quarter strong commercial execution that generated.
Jeff Farrow: $48 million and extend the net product sales driven by more than 37000 model suspense to patients.
Jeff Farrow: Several new and impactful payer contracts the results of which we expect to be reflected in the gross to net discount beginning next quarter.
Jeff Farrow: And a substantial improvement in gross to net discount of 44% compared with 55% in Q1.
Jeff Farrow: Demonstrating a strong understanding of the disease burden by payers and their recognition of <unk> as the only FDA approved therapeutic for disease with high unmet need.
Jeff Farrow: The improved gross to net discount, which evolve much more quickly than we anticipated.
Jeff Farrow: Primarily reflects the significant commercial coverage we gained during the second quarter.
Jeff Farrow: As well as a lower estimated impact for the Medicare Donut hole in this quarter.
Jeff Farrow: Given the general characteristics of our patient population most of whom appear not to have as many co morbid diseases. We now expect to see more of an impact related to the donut hole in the second half of the year.
Jeff Farrow: Accordingly with.
Jeff Farrow: With further commercial and Medicare coverage to come we now anticipate our gross to net discount to range from approximately 42% to 46% exiting 2025 at the lower end of the range.
Jeff Farrow: Due to the Medicare Donut hole dynamic I mentioned earlier, we expect to see the potential for one to two point increase in the gross to net discount from Q2 in the second half of this year in other words at the higher end of the range provided.
Jeff Farrow: Turning to our P&L.
Jeff Farrow: Our total operating expenses were approximately $74 8 million for the second quarter of 2024.
Jeff Farrow: The sequential increase in operating expenses of approximately $9 $5 million was primarily driven by increases in the cost of sales of extended due to the growing number of bottles sold and increases in selling general and administrative expenses due to sales and marketing costs.
Jeff Farrow: The expanded sales force to further support the launch of <unk> and other corporate expenses.
Jeff Farrow: Gross margins for the second quarter remained flat at approximately 93%, which includes the royalty and the amortization of any milestones we pay to alarm com.
Jeff Farrow: Finally, we ended the quarter with approximately $323 $6 million in cash and marketable securities inclusive of the approximately $40 million net drawdown from the former Con credit facility signed in April 2024.
Jeff Farrow: Looking ahead to the third quarter.
Jeff Farrow: We do anticipate inventory levels will be similar to what we saw in the second quarter.
Jeff Farrow: And we expect operating expenses to increase incrementally due to the sales force expansion and other extended <unk> related marketing efforts.
Speaker Change: Additionally, and as <unk> mentioned, there are some specific dynamics in play that will likely impact our bottles dispensed name.
Jeff Farrow: Namely the very deliberate and strategic decision we made to begin the sales force expansion process during the summer.
Jeff Farrow: We understood that there would be some disruption as we trained and prepared these new sales representatives and leaders.
Jeff Farrow: And we did this to ensure we were on the ground and ready to go during some of the most productive months of the year.
Jeff Farrow: This resulted in us pulling some team members from the field to interview hire and onboard the new Salesforce.
Jeff Farrow: We also anticipate the following factors could further impact our expectations for bottles dispensed.
Jeff Farrow: The traditional summer slowdown that occurs at ECP offices.
Jeff Farrow: Over the last several years, we have seen this result in a decrease in new patient model suspense for eyecare products in general during the third quarter.
Jeff Farrow: Second summer vacations and holidays, such as the fourth of July and Labor day.
Jeff Farrow: With that in mind.
Jeff Farrow: We expect the number of models dispense to patients in the third quarter to grow at a relatively modest rate of approximately 10% over Q2.
Jeff Farrow: Meaning we expect approximately 41000 models to be delivered to patients in the third quarter.
Jeff Farrow: The vast majority of these models will be to new patients as we are not yet seeing the benefits of meaningful treatment volumes.
Jeff Farrow: Now looking ahead to the fourth quarter, we expect to see a much stronger growth trajectory models dispense.
Jeff Farrow: Resulting from our fully expanded sales team out in the field and patients, making multiple ECP visits to maximize their insurance plan benefits before they reset in 2025.
Jeff Farrow: And finally with the planned launch of our first direct to consumer TV campaign, we expect our momentum to continue accelerating into 2025, when we will see the first fruits of those marketing efforts realized.
Jeff Farrow: In summary, we are pleased with both our ongoing launch performance and financial metrics.
Jeff Farrow: And look forward to sharing more updates with you next quarter as we embark on the next phase of launch.
Jeff Farrow: I will now turn the call back to Bobby for final remarks.
Bobby Azamian: Thank you Jeff.
Bobby Azamian: So it's a critical key messages about our launch.
Jeff Farrow: Yes.
Speaker Change: Im more confident than ever and extend these growth because I hear from doctors every week, including this week, where I met with several who stressed how they've never seen a medicine that's effective.
Speaker Change: And also describe their own prescribing journey and how they see no limit on patients to diagnose and treat and their clinics.
Speaker Change: Second I am excited about the near term acceleration and serving DB pace.
Jeff Farrow: Sorry.
Jeff Farrow: Of course this is Kurt.
Jeff Farrow: Okay.
Jeff Farrow: Similar.
Jeff Farrow: Okay.
Jeff Farrow: The reality is in the <unk> of <unk>.
Jeff Farrow: We expect to see.
Jeff Farrow: On prescription starting at.
Jeff Farrow: That ends up to building through Q.
Jeff Farrow: Sure.
Jeff Farrow: So our TV Kim.
Jeff Farrow: Great.
Jeff Farrow: The accelerating.
Jeff Farrow: Ex FX tour.
Jeff Farrow: I know, we are just scratching the surface surface with it.
Jeff Farrow: Yes.
Jeff Farrow: Two quick questions.
Speaker Change: We will now conduct a question and answer session at.
Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.
Jeff Farrow: Your question. Please press Star one again, please stand by while.
Jeff Farrow: While we compile the question.
Speaker Change: The first question comes from Tim Lugo with William Blair. Tim Go ahead. Your line is open.
Tim Lugo: Thanks for taking my question and congratulations on a great quarter.
Tim Lugo: Given the strong performance in the quarter and all of the clarity around GTA and bulk expense expected in Q3, I would just love to hear your thoughts around what I see a consensus of about $38 8 million or 39 million for Q3.
Speaker Change: Yes, we'll be give exact.
Speaker Change: Guidance, obviously, but I'd love to hear your thoughts around consensus.
Speaker Change: Q3 and maybe.
Tim Lugo: Even.
Speaker Change: How it looks for Q4 as well.
Tim Lugo: Yes.
Mitch: Hi, Mitch.
Mitch: Yes.
Mitch: Explicitly provide guidance on that because we would be providing guidance on that.
Tim Lugo: Dave.
Tim Lugo: Do the math.
Speaker Change: It is.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Bobby lighted weeks.
Speaker Change: Last from three to Q4, given the introduction.
Speaker Change: The sales force.
Tim Lugo: Next you can start.
Tim Lugo: Before.
Tim Lugo: Okay.
Speaker Change: That's fine I understand maybe.
Speaker Change: Also can you just broadly talk about where Medicare can't stay there in 2025, given all the granularity around GPS in 2024.
Speaker Change: Directionally is that.
Speaker Change: Product line GTS global clinical hook into medical but obviously the volumes should be at a much higher level can you just directionally speak to that.
Tim Lugo: Sure Ken Xie, Thanks for that question.
Jacob: Thanks Jacob.
Speaker Change: And it does look great coverage and we're really pleased with that that's been one of the levers that's gotten us to where we are today.
Speaker Change: We also mentioned on the call earlier that we signed one large Medicare payer and that will go into effect. Later this year. So we're going to start to see some of that Medicare coverage. This year. The remaining ones. We do expect to kick in in 2025, I think what you can expect based on that is essentially stable gross to net between now and the end of the year.
Tim Lugo: Okay.
Speaker Change: The discount.
Speaker Change: Discount into next.
Speaker Change: Alright, thank you so much.
Speaker Change: Right.
Tim Lugo: Okay. Thank you standby for our next question.
Speaker Change: The next question comes from Pavan <unk> with Bofa. Please go ahead. Your line is open.
Pavan Patel: Hey, guys. This is on.
Jason Barry: On for Jason <unk> Barry.
Pavan Patel: Two questions from us Firstly I appreciate the commentary for full year 2024 gross to net discounts I was wondering if the longer term gross to net discounts.
Speaker Change: You expect to be a steady state here at the low <unk>.
Speaker Change: Or is that likely to evolve as payer mix changes and you gain further coverage in 2025 and beyond.
Tim Lugo: Then my second question is regarding <unk>.
Speaker Change: Your DTC efforts.
Speaker Change: When do you when do you think those off and how soon would you expect to see benefit from that patient uptake.
Speaker Change: <unk>.
Speaker Change: Happy to take the first part.
Speaker Change: Question over to <unk> to talk about the DTC. So what we anticipate is a slight increase in the gross to net discount as I had mentioned given the donut hole issue.
Speaker Change: We're seeing essentially more patients coming in in Q3, and we anticipate that to be in Q4 of course in Q1 of every year, you get copays reset and so frequently theres a larger gross to net discount in that Q1 period and then subsequent to that in 2025, we expect that to improve sequentially to be sort of that.
Speaker Change: 42 ish percent.
Speaker Change: The low end of the range, we provided and that should be pretty consistent with our long term gross to net discount beyond 2025.
Speaker Change: Great and then in terms of the DTC question. So we anticipate that launching sometime in the fourth quarter.
Speaker Change: You'll see some impact of that this year, but as you can imagine it takes a few repetitions for their patients with the add a couple of times.
Speaker Change: And we think youll start to see some impact this year, but you really start to see that really take hold as we scale that effort into next year.
Speaker Change: Okay.
Speaker Change: Thank you <unk> next question.
Speaker Change: The next question comes from Cory <unk> with <unk> Capital go ahead. Your line is open.
Speaker Change: Hey, this is Dennis on for Cory Congrats on the quarter and thank you for taking our question.
Speaker Change: Yes.
Speaker Change: As we near 2025 items start to think about kind of the re treatment dynamics here.
Speaker Change: Do you have any indication as to which patient profile is more likely to experience.
Speaker Change: Reinvestigation calls for re treatment.
Speaker Change: And in your view kind of what percent of DB patients will ultimately require one or more courses of extending long term.
Speaker Change: Yes. Thanks for that question. So as you can imagine it's still relatively early in terms of the re treatment volumes I think if you look at the <unk> data.
Joseph: Hello, Joseph right.
Joseph: Okay.
Speaker Change: Okay.
Joseph: In early 2025.
Speaker Change: Sure Michael develop a bit more color.
Speaker Change: And to do.
Speaker Change: With the patients get treated again sooner and which types of patients may have more durability with the drive in terms of what we expect to see long term. If you go back to our phase III studies in the follow up we did about 40% of the patients recur.
Speaker Change: <unk> 12, so you can expect some proportion of those patients will get retreated.
Speaker Change: Over time and again, that's something that will scale over time, I don't think about it as a step up but essentially something that scales over time as patients get more and more as far as physicians get more and more experience with the drug to patients come back and then doctors will bear group of how they want to retreat. So I think the short answer is it's still very early we expect to see re treatment volumes start to be.
Speaker Change: More meaningful in 2025, and once we start to see that we'll be able to dig in and really understand the dynamics there.
Speaker Change: Standby for our next question.
Andrew <unk>: Next question comes from the line of Andrew <unk> with Goldman Sachs. Go ahead. Your line is open.
Andrew <unk>: Hi, all this is Tony on for Andrea Congrats on the quarter and thanks for taking our questions.
Tony: First I'm wondering if you can characterize a little bit more about the quarterly growth in the number of the ECP today, especially in the context of penetrating the more the eager adopters and the <unk> segments and can you share the feedback that you've been getting on the disease education efforts from those providers.
Speaker Change: Sure. Thanks, Toni for that question Ed.
Speaker Change: When you look at the performance to date I think one of the highlights has really been the performance of extending its very unique in terms of the Wow effect that has for patients and I think thats something thats really gotten the physician community very excited I think thats one of the reasons, we've seen a continuing scaling in our ECP adoption with over approximately 11000 doctors writing prescriptions at this.
Speaker Change: So really speaks to the broad appeal of the drug in the utility. It has in practice in terms of getting beyond from early treaters to those different segments I think theres two factors that really drive. This one is physicians getting their experience right as they continue to get experienced seeing that while affecting their practice they start to think about using the product more.
Andrew <unk>: Broadly so they typically start with a typical <unk> brightest patient they see a handful of cases, they see the results and then they start to think about other patient segments that really expand the utilization and the practice. So you can think about per se, a recalcitrant drive patient or proactively screening their cataract patients.
Andrew <unk>: So that's a level of.
Andrew <unk>: A experienced that the doctor gets that really potentiate further use.
Andrew <unk>: In fact it.
Andrew <unk>: Got it.
Speaker Change: <unk> <unk> from the sales force hearing that message again, and again and to your point the feedback on the education Thats been very positive and the physicians are very receptive.
Speaker Change: And we have so many of them that want to hear it and our salesforce can only get to them. So many times and Thats why were really excited about the sales force expansion and this is really going to create some capacity for our team to see these doctors more often repeat that message be that constant reminder, and provide SaaS supports to really facilitate that broadening utilization of the practice. So.
Speaker Change: The two factors I think that our key here getting those doctors multiple shots on goal and seeing that consistent response in the patient and then hearing that message and disease education on a consistent basis from our team. The first one is happening and then I think with our Salesforce expansion youre going to see that happen at a even higher velocity not that our team can get to these options.
Speaker Change: Our off net and the last piece I'll add is the role of DTC here empowering the patient and having the patient sort of raised their hand, if you will and proactively bring this up while further enhanced this dynamic as well.
Speaker Change: One moment for our next question.
Frank <unk>: The next question comes from Frank <unk> with Oppenheimer. Please go ahead. Your line is open.
Frank: Alright, Thanks for the question and congrats on the quarter.
Frank <unk>: I was just wondering in terms of.
Frank <unk>: And in terms of practices is it a question of I'm sure. There's some practices where physicians were a little more skeptical at first and then so maybe they try one patient and acute patients and see how it works is it one of those situations where.
Frank: All of a sudden they are convinced that this was working and they just switch the entire practice to say hey make sure you look for these and slit lamp on every patient or is it more of a progressive let's wait and see on the patient feedback and it's more of a patient starting the conversation just what are the dynamics there.
Speaker Change: Thank you.
Speaker Change: Hey, Brexit disease, yes. It is.
Speaker Change: Question, one we see a lot of them were in the field.
Speaker Change: And when we dig into a lot as well.
Speaker Change: I think what you see is that physicians are very curious the drivers obviously getting a lot of attention in the space. So you do get doctors that want to write those first few cases I think.
Speaker Change: It varies by Doctor CSM doctors that get those first few cases, they see the results they see that consistency and predictability and they implement it in their practice I would say even with those doctors in many cases, we're just scratching the surface because theyre looking for it in certain areas, but they could be looking for it in other areas and that's where our sales team plays a key role you do have some doctors that take a look.
Speaker Change: A bit more time as you can imagine and in those cases, they want to see a handful more cases and typically it's about 10 cases, or so where they really hit that tipping point and then what I think happens as they start to look by segments. So I think the average physician doesn't just say, okay net wholesale change the practice over they say, okay I'm, having great results with these patients.
Speaker Change: Who is the next patient okay, a recasting of dry patient dry patients that are in the past is that our cycling <unk>. Let me look at their lids, Okay. Great got great success. There Alright now let me look at my cataract patients that may be start with premium cataract and then broaden it. So there is definitely a step wise approach in which physicians adopt and as we mentioned earlier.
Andrew <unk>: How can we facilitate that happening more quickly and that's really getting in front of the doctor more often with the salesforce that constant education that reminder, to look forward in the different segments really enhances that and I know I know, Bob maybe some observations here as well, yes just to echo.
Bob: What I hear time and again his doctors to your point Frank They get experience with the medicine and then there are just amazed.
Bob: Not heard a doctor say it didn't work on this one or two patients and Thats just wind in our sales and obviously when a doctor is able to deliver that to other patients.
Speaker Change: Even more confidence and then the other thing I hear time and again is the.
Speaker Change: The diagnosis becomes easier the conversation becomes easier doctors start looking for other patients with different reasons to treat than perhaps the first few.
Speaker Change: Those additional segments that as these described so I think we are in this very positive look of doctors getting great experience and they are looking for more and more of their patients and very notably not finding that they have reached the limit and finding patients in their own clinics, they conserve and Thats <unk>.
Speaker Change #100: High volume practices that are early adopters, but also more rural single practices that are not typically the early adopters.
Speaker Change #101: To get to 11000 or 15000 at this point it means that we've had.
Speaker Change #104: Meaningful impact on educating a broad swath of this community.
Speaker Change #101: Are you getting any doctors that are admitting that maybe they werent looking correctly in the past.
Speaker Change: <unk>.
Speaker Change #103: Or is that not coming up.
Speaker Change: With the physicians.
Speaker Change #101: We hear that all the time.
Speaker Change: It's actually both.
Speaker Change #100: Parts of the job right as doctors and I think it's this value of category creation right. As you hear that we're solving a problem that was being missed and I think that's a really compelling piece of it I think it's obviously very rewarding for us to hear that we are able to change how things are being practice.
Speaker Change: Sanjay how can some of these patients, but I think it's also very compelling with doctors here that from their colleagues at the conferences and on the podium and Thats one of the most compelling parts of the store is Hey did you know we were missing this and now we have a very clear and impactful solution that gets consistent and predictable results and I always say that's sort of the invisible.
Speaker Change: Hand on this launch is the physician testimonial doctors getting up on podium and talking about their positive experience to Bob's point. This drug doesn't disappoint. The results are almost always consistent and patients come back with clear healthy way it becomes a very compelling story for us to hear but more importantly, it becomes a compelling story for other doctors to hear from.
Speaker Change: Our colleagues.
Speaker Change: That's a really exciting part of the launch that does underpin the rapid adoption, we've seen and we're doing the right disease across so many of our efforts whether its.
Speaker Change: Marketing or medical affairs.
Speaker Change: The peer to peer engagement here is another powerful powerful amplifier of spreading the word.
Andrew <unk>: Okay.
Speaker Change: That's it for me. Thank you very much and congrats on a great quarter.
Speaker Change: One moment for our next question.
<unk> Prasad: The next question comes from the line of <unk> Prasad with Barclays. Go ahead. Your line is open.
Speaker Change: Hi, This is <unk> on for <unk>, thanks for taking our questions.
Speaker Change: Just wondering of the 11000 prescriber you called Al are you able to actually quantify the portion the proportion that fall into the three buckets you called out so how looking looking to understand how many are early adopters versus newer to television at this point. Thanks.
Speaker Change: Yes. Thanks for the question. So obviously, we cut the data lots of ways as you can imagine it's very dynamic. So we do go into that level of detail in this forum, but I think our focus is to say okay for each of these doctors we've gotten to 11000 at the 15th so we've gotten to the vast majority of our focus is really going.
Andrew <unk>: Now how do we start to pull those doctors shrimp books that are just getting that early experience. So are we.
Andrew <unk>: Talked about earlier, which is becoming routine writers routine prescribers and how do we increase our frequency with our salesforce expansion to facilitate that so I think the way we think about this going forward is we've got a great prescriber base established and now the focus is going to be on that depth of prescribing that enhanced utilization within the practice and at <unk>.
Andrew <unk>: Scriber basis so.
Andrew <unk>: The segmentation of the Doctor becomes a little less important in terms of where they came from but more important on where we think they're going to go in the future and how we can continue to move the needle there.
Speaker Change: Okay, one moment for our next question.
Speaker Change: The next question comes from Eddie Hickman with Guggenheim Securities Go ahead. Your line is open.
Eddie Hickman: Good afternoon, and congrats on the great quarter. Thanks for taking my question. So I appreciate the added color on the third and fourth quarter dynamics in terms of bottle growth, but I'm wondering if you could help us think about 2025 and what the bottle growth should look like with the fully deployed sales force and DTC. It sounds like <unk> is going to be pretty strong. So I'm wondering how many quarters beyond that do you expect that level of growth before it studies out.
Speaker Change: And then on the summer holiday slowdown like is that unique to this early part of the launch or do you think that to be an annual pattern.
Jeff Farrow: It's Jeff.
Speaker Change: Maybe I'll answer your first question or second question first.
Speaker Change #107: It's a little early for us to know if it's specific to us annually, but we did note in general for Eyecare products that there was a slump in new Rx is during the third quarter. So it's probably likely we will see a similar effect in the third quarter, but again, we don't have a whole lot of history for <unk> at this point.
Speaker Change: In terms of your question in 2025, I think Theres a couple of dynamics that we will continue to see impressive growth beyond the fourth quarter.
Speaker Change: One will be the full deployment and we will see some of the impact of the direct to consumer campaign, meaning streaming TV potentially network television should continue and should help drive patients into go see their docs.
Jeff Farrow: And then secondly, as the sales force incremental sales force begins to continue to get online.
Jeff Farrow: Ads continue to have those frequency of visits we expect that growth to continue as a result of that so we continue to see quarter over quarter growth through throughout 2025.
Andrew <unk>: Okay.
Speaker Change: I'm showing no further questions at this time.
Speaker Change #106: For your participation in today's conference. This does conclude the program you may now disconnect.