Q1 2025 Tarsus Pharmaceuticals Inc Earnings Call
Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Tarsus First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Good day, ladies and gentlemen, and thank you for standing by walking to the <unk> first quarter 2025 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. If you would like to ask a question at that time. Please press star one one on your telephone keypad.
Operator: After the speaker's presentation, there will be a question and answer session. If you would like to ask a question at that time, please press star one one on your telephone keypad.
Operator: As a reminder, this conference call is being recorded.
As a reminder, this conference call is being recorded.
David Nakasone: time I would like to turn the conference over to Mr. David Nakasone. Sir, please begin. Thank you.
Speaker Change: This time I would like to turn the conference over to Mr. David Nakasone, Sir please begin.
David Nakasone: 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.
Speaker Change: Thank you before we begin I encourage everyone to go to the investors section of the Texas website to view the earnings release and related materials, we will be discussing today.
David Nakasone: 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, Jason Neervannan, our Chief Operating 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.
Speaker Change: Joining me on the call. This afternoon are Bobby as Damian <unk>, our Chief Executive Officer, and Chairman as he is one of the wallet, our chief commercial officer, Jeff Farrow, Our Chief Financial Officer, and Chief strategy Officer, and joining us for the question and answer session patient via our Chief operating officer.
Speaker Change: 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.
David Nakasone: I encourage you to consult the risk factors contained in our SEC filings for additional details.
Speaker Change: Courage you to consult the risk factors contained in our SEC filings for additional detail.
Bobby Azamian: With that, I'll turn the call over to Bobby. Thank you, Dave. Good afternoon, everyone, and thank you for joining us. 2025 is off to a tremendous start in terms of both patient impact and the exceptional sales growth of Xemvi.
Speaker Change: With that I'll turn the call over to Bobby Thank.
Bobby Thank: Thank you Dave Good afternoon, everyone and thank you for joining us.
Bobby Thank: 2025 is off to a tremendous start in terms of both patient impact and the exceptional sales growth of <unk> I am.
Bobby Azamian: I am pleased to share that in the first quarter, we generated more than $78 million in Xemvi sales, a year-over-year increase of 217%, driven by approximately 72,000 bottles that were dispensed to patients. The results we have delivered to date demonstrate the impressive executional ability of our team to establish an entirely new market and foster its growth. They also highlight the difference in positive impact we can have on the millions of patients we aim to serve on our way to becoming an eye care leader.
Bobby Thank: Pleased to share that in the first quarter, we generated more than $78 million and <unk> sales a year over year increase of 217%.
Bobby Thank: Driven by approximately 72000 barrels that were dispensed to patients.
Bobby Thank: The results we have delivered to date demonstrate the impressive execution, our ability of our team to establish an entirely new market and foster its growth.
Bobby Thank: They also highlight the difference in positive impact we can have in the millions of patients. We aim to serve on our way to becoming an eye care leader.
Aziz Mottiwala: Aziz will provide more specifics on our commercial achievements this quarter, future plans for our innovative DTC campaign, and the team's ongoing efforts to build even more momentum.
Bobby Thank: As these will provide more specifics on our commercial achievements this quarter future plans for our innovative DTC campaign and the team's ongoing efforts to build even more momentum.
Bobby Azamian: Having just come back from visiting doctors in Cincinnati, I wanted to share my personal perspective on how different it is to be in the field today versus a year ago or even a quarter ago. MDs and ODs are looking for more DB patients and beginning to prescribe Xtembe across all DB patient segments of MGD, dry eye, cataracts, and contact lenses. They are now fully empowered by the high-quality access we've secured across all payer channels and our high-touch patient services that ensure patients can receive XtemV at a reasonable cost. And patients are beginning to ask about DV after seeing our unique and action-oriented DTC camp.
Speaker Change: Having just come back from visiting doctors in Cincinnati I wanted to share my personal perspective on how different it is to be in the field today versus a year ago or even a quarter ago.
Speaker Change: <unk> and <unk> are looking for more patients and began to prescribe extend across all BB patient segment of Mgd dry eye cataracts and contact lenses.
Speaker Change: They are now fully empowered by the high quality access we secured across all payer channel and our high touch patient services that ensure patients can receive <unk> at a reasonable cost.
Speaker Change: And patients are beginning to ask about DB after seeing our unique and action oriented DTC campaign.
Bobby Azamian: I also heard from several of the ECPs I visited that Xtemvi is one of the best advances they've seen in decades and has become their new standard of care. It is clear our growth drivers are having a significant impact as our target physicians are rapidly moving from monthly to weekly to daily prescribing. And we strongly believe we are just beginning to scratch the surface on the maximum prescribing potential for all of our rifles.
Speaker Change: I also heard from several of the ECP is a visit that extend the as one of the best advance as they've seen in decades.
Speaker Change: Has become their new standard of care.
Speaker Change: It is clear our growth drivers are having a significant impact as our target physicians are rapidly moving from monthly to weekly to daily prescribing.
Speaker Change: And we strongly believe we are just beginning to scratch the surface on the maximum prescribing potential for all of our writers.
Bobby Azamian: Now, while our immediate focus remains on the U.S. launch of Xenbi, we are also continuing to explore the global potential of Xenbi and pursuing our next category creating opportunity, Ocular Rosacea. We recently presented meaningful new data at the American Society of Cataract and Refractive Surgery, or ASCRS, which showed that the high prevalence and significant impact of dementic blepharitis in Japan is on par with the U.S. That is, there are millions of people in Japan suffering from Dementic Blepharitis and in need of extending. We are confident about the potential opportunity here and look forward to meeting with regulatory authorities in the second half of this year to determine our best path forward in this region.
Speaker Change: Now while our immediate focus remains on the U S launch of <unk>. We are also continuing to explore the global potential of <unk> and pursuing our next category creating opportunity.
Speaker Change: Fuller rosacea.
Speaker Change: We recently presented meaningful new data at the American Society of cataract and refractive surgery, our Aas Crs.
Speaker Change: Which showed that the high prevalence of significant impact of <unk> in Japan is on par with the U S.
Speaker Change: That is there are millions of people in Japan suffering from debit export Friday and EMEA have extended.
Speaker Change: We are confident about the potential opportunity here.
Speaker Change: Look forward to meeting with regulatory authorities in the second half of this year to determine our best path forward in this region.
Bobby Azamian: We are also making great progress in Europe. As a reminder, due to the stellar clinical data and product profile of Xenbi, the European Medicines Agency has stated we do not need to conduct a phase three study and we remain on track for potential European regulatory approval in 2027.
Speaker Change: We are also making great progress in Europe.
Speaker Change: As a reminder, due to the stellar clinical data and product profile of <unk>. The European Medicines Agency has stated we do not need to conduct a phase III study and we remain on track for potential European regulatory approval in 2027.
Bobby Azamian: Turning to ocular rosacea, the more we learn about this pervasive and damaging eye disease, the more excited we are about its potential to be the next transformative category in eye care. We are consistently hearing from ECPs that they are seeing as much ocularization in their practices as DV and that it may be even more impactful to their patients in terms of how they look, feel, and see. Like DB, ocular rosacea is a large and underserved market that affects approximately 15 to 18 million Americans. with a majority of cases caused by an infestation of demodex mites.
Speaker Change: Turning to ocular rosacea.
Speaker Change: The more we learn about this pervasive and damaging eye disease. The more excited we are about its potential to be the next transformative category in eyecare.
Speaker Change: We're consistently hearing from ECP that they are seeing as much authorization in their practices as TV.
Speaker Change: And that it may be even more impactful to their patients in terms of how they look feel and see.
Speaker Change: Like DB ocular rosacea is a large and underserved market that.
Speaker Change: Effects of approximately 15 to 18 million Americans.
Speaker Change: With the majority of cases caused by an infestation of <unk> Mike.
Bobby Azamian: It can also be quickly and simply diagnosed in any standard eye exam by looking for inflammation and redness. And these are just a couple of the many parallels to demonic blepharitis that give us great confidence in our ability to deliver another impactful therapeutic that targets the root cause of disease.
Speaker Change: It can also be quickly and simply diagnosed in any standard eye exam by looking for inflammation and revenue.
Speaker Change: And these are just a couple of the many parallels to diminish but for items that give us great confidence in our ability to deliver another impactful therapeutic that targets the root cause of disease.
Bobby Azamian: The potential medicine we are advancing is TPO4, a convenient, sterile, ophthalmic gel formulation of our best-in-class molecule, Lortalan. It is specifically designed to be used around the eye and the ECPs we have spoken with are excited about this approach. We are accelerating this program as quickly as possible and remain on track to initiate a phase two trial later this year.
The potential medicine, we are advancing as GPO for a convenient sterile ophthalmic gel formulation of our best in class molecule lot 11.
Speaker Change: It is specifically designed to be used around AI and the Ecp's. We have spoken with are excited about this approach.
Speaker Change: We are accelerating this program as quickly as possible and remain on track to initiate a phase II trial later this year.
Bobby Azamian: Finally, I'd like to highlight our recent equity financing, which secured approximately $135 million, no small feet in the current market environment. The significant support that our existing and new shareholders demonstrated through their participation in this upsized equity offering speaks to the confidence they have in the potential value of XtendV and our pipeline. These funds further strengthen our financial position and will enable us to continue to drive the growth of Extemvi, potentially create another new category in Ocular Rosacea, and continue to advance our pipeline.
Speaker Change: Finally, I'd like to highlight our recent equity financing, which secured approximately $135 million no small feat in the current market environment.
Speaker Change: The significant support that our existing and new shareholders demonstrated through their participation in the upside as equity offering to.
Speaker Change: For the confidence they have in the potential value of extending and our pipeline.
Speaker Change: These funds further strengthen our financial position and will enable us to continue to drive the growth of <unk> potentially created another new category and authorization and continue to advance our pipeline.
Bobby Azamian: There is clearly a lot to be excited about. We have a proven category creating blueprint for success. We are advancing a pipeline of category-creating medicines that could potentially be the standard of care. and we believe that we are well positioned to achieve substantial and sustained revenue growth for years to come.
Speaker Change: There is clearly a lot to be excited about.
Speaker Change: We have a proven category, creating blueprint for success.
Speaker Change: We are advancing a pipeline of category, creating medicines that could potentially be the standard of care.
Speaker Change: And we believe that we are well positioned to achieve substantial and sustained revenue growth for years to come.
Aziz Mottiwala: With that, I will turn the call over to Aziz. Thanks, Bobby. From the beginning, we have said category creation provides great opportunities. It also requires a tailored, custom-built strategy that delivers consistent and increasing growth through a surround-sound approach of education, ease of access, and flawless execution. all of which we are delivering. Our strong Q1 results exceeded our expectations, even in the face of the typical headwinds like the annual resetting of deductibles and the impact of holidays and medical meetings. In the first quarter, approximately 72,000 bottles of Xtemni were dispensed to patients. And we generated more than $78 million in net sales.
Steve: With that I will turn the call over to Steve.
Steve: Thanks, Bobby.
Speaker Change: The beginning we've said category creation provides great opportunity.
Speaker Change: It also requires a tailored custom built strategy that delivers consistent and increasing growth through a surround sound approach of education ease of access and flawless execution.
Speaker Change: All of which we are delivering.
Speaker Change: Our strong Q1 results exceeded our expectations even in the face of the typical headwinds like the annual resetting of deductibles and the impact of holidays and medical meetings.
Speaker Change: In the first quarter approximately 72000 bottles of <unk> were dispensed to patients and we generated more than $78 million in net sales.
Aziz Mottiwala: Quarter-over-quarter growth of 18%. These results were principally driven by our recently expanded Salesforce, which is just beginning to demonstrate their ability to reach our target universe of prescribers more frequently and more effectively. Their efforts to drive awareness and change practice patterns have led to a profound shift in monthly to weekly prescribing. At the end of the first quarter, we saw an increase of approximately 110% in the number of ECPs, which is now in the thousands, writing more than one prescription per week compared to the end of Q3 of 2020. And we saw very similar increases in daily prescribing as well.
Speaker Change: Our quarter over quarter growth of 18%.
Speaker Change: These results were principally driven by our recently expanded sales force, which is just beginning to demonstrate their ability to reach our target universe of prescribers more frequently and more effectively.
Speaker Change: Their efforts to drive awareness and change practice patterns have led to a profound shift in monthly to weekly prescribing.
Speaker Change: At the end of the first quarter, we saw an increase of approximately 110% and a number of Ecp's, which is now in the thousands.
Speaker Change: Writing more than one prescription per week compared to the end of Q3 of 2024 and.
Speaker Change: And we saw very similar increases in daily prescribing as well.
Aziz Mottiwala: This increase in routine prescribing clearly underscores the value of this first-in-class therapeutic and the importance of an optimized self-care. What's even more encouraging is knowing that while we've made remarkable progress again this quarter, we still have millions more to... Our top prescribers say they haven't even come close to reaching their limits. And there are thousands more of our target ECPs who have the capacity to prescribe Exemvi every week and every day. Our success this quarter was also driven by broad commercial and Medicare coverage and the growing impact of our direct-to-consumer advertising campaign. We began the year with more than 90% of commercial and Medicare lives.
Speaker Change: This increase in routine prescribing clearly underscores the value of this first in class therapeutic and the importance of an optimized sales force.
Speaker Change: What's even more encouraging is knowing that while we made remarkable progress again this quarter, we still have millions more to serve.
Speaker Change: Our top prescribers say, they haven't even come close to reaching our limits and there are thousands more of our target ecp's, who have the capacity to prescribed extended every week and every day.
Speaker Change: Our success. This quarter was also driven by broad commercial and Medicare coverage and the growing impact of our direct to consumer advertising campaign.
Speaker Change: We began the year with more than 90% of commercial and Medicare lives covered.
Aziz Mottiwala: This remarkable access has all but eliminated the most significant hurdle to physician adoption, and we are now seeing both an increase in ECP prescribing and patient access, particularly among Medicare patients. We are also well on our way to making Xtend be a household name, thanks to the impact of our innovative DTC campaigns, coupled with our surround sound approach to physician and patient education. In the first quarter, we expanded our effort from streaming platforms into network television, which increased the average weekly website visits by 140% in March 2025 compared to December 2021. We're also seeing thousands of patients taking the DB quiz every week.
Speaker Change: This remarkable access has all but eliminated the most significant hurdle to physician adoption and we are announcing both an increase in ETP prescribing and patient access, particularly among Medicare patients.
Speaker Change: We are also well on our way to making <unk> a household name thanks to the impact of our innovative DTC campaigns, coupled with our surround sound approach to physician and patient education.
Speaker Change: In the first quarter, we expanded our effort from streaming platforms into network television, which increased the average weekly website visits by 140% in March 2025 compared to December 2024.
Speaker Change: We're also seeing thousands of patients taking the <unk> every week.
Aziz Mottiwala: Given these strong results, we have a lot of optimism and confidence as we look to expand this effort even further through the end of the year. As Bobbie mentioned, we just came back from ASCRS and heard from several doctors that patients are starting to ask for Xtendi by name. And while this is really exciting, keep in mind that every patient journey is different, and for the vast majority of patients, they typically need to see the ad multiple times, eventually make an appointment, and then, of course, fill the prescription.
Speaker Change: Given the strong results, we have a lot of optimism and confidence as we look to expand this effort even further through the end of the year.
As Bobby mentioned, we just came back from ASC IRS and heard from several doctors that patients who are starting to astro extending by name.
Speaker Change: And while this is really exciting keep in mind that every patient journey is different and for the vast majority of patients. They typically need to see to add multiple times eventually make an appointment and then of course fill the prescription.
Aziz Mottiwala: As we look at the second quarter and step into the next phase of the launch, we are confident we'll begin to see even more benefits from the growth drivers we implemented last year, namely. First, the Salesforce. With essentially two quarters under their belt, they are just beginning to hit their Second, the benefits of broad access. With more than 90% of all lives covered, we have eliminated a major roadblock to access and expect to see an ongoing increase in patient volume. Third, our action-oriented DTC campaign. Frequent airings on streaming and network TV supported by our digital and social efforts is meaningfully increasing website traffic and patient engagement.
Speaker Change: As we look at the second quarter and step into the next phase of the launch we are confident we'll begin to see even more benefits from the growth drivers we implemented last year.
Speaker Change: <unk>.
Speaker Change: First the sales force with essentially two quarters under their belt. They are just beginning to hit their stride.
Speaker Change: Second the benefits of broad access with more than 90% of all lives covered we have eliminated a major roadblock to access and expect to see an ongoing increase in patient volumes.
Speaker Change: Third our action oriented DTC campaign.
Speaker Change: Frequent airing on streaming and network TV supported by our digital and social efforts is meaningfully increasing website traffic and patient engagement.
Aziz Mottiwala: And finally, our ongoing evidence generation, as illustrated by the new data highlighting the global prevalence and real-world patient burden of DD, and the recently presented MGD data in DD patients, which is expected to further drive utilization across all patients. With these in place, we have the confidence that we will continue delivering consistent and increasing growth in one of the fastest growing categories and firmly establish our position as the next leader in IT.
Speaker Change: And finally, our ongoing evidence generation as illustrated by the new data highlighting the global prevalence and real world patient burden of DB and the recently presented <unk> data in PD patients, which is expected to further drive utilization across all patient segments.
Speaker Change: With these in place we have the confidence that we will continue delivering consistent and increasing growth and one of the fastest growing categories and firmly establish our position as the next leader in eye care.
Jeffrey Farrow: I'll now turn it over to Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer, to discuss our financial results. Jeff. Thanks, Aziz, and good afternoon, everybody. Tarsus's first quarter performance reflected both our executional strength and our team's unwavering dedication and commitment to Asia. Mixed Envy net product sales were $78.3 million, driven by approximately 72,000 bottles dispensed to patients and a gross net discount of approximately 47%. As a reminder, we recognize revenue when Extemvia is shipped from our warehouse to the distributors, not on bottles dispensed to patients. Additionally, we ended the quarter with approximately two and a half weeks of inventory in the channel, which is in line with previous quarters.
Speaker Change: I'll now turn it over to Jeff Farrow, our Chief Financial Officer, and Chief strategy Officer to discuss our financial results Jeff.
Jeff Farrow: Thanks, <unk> and good afternoon everybody.
Speaker Change: <unk> first quarter performance reflected both our execution strength and our team's unwavering dedication and commitment to patients.
Speaker Change: <unk> net product sales were $78 3 million.
Speaker Change: Driven by approximately 72000 bottles dispensed to patients and our gross to net discount of approximately 47%.
Speaker Change: As a reminder, we recognize revenue when <unk> is shipped from our warehouses to the distributors.
Speaker Change: On bottles dispensed to patients.
Speaker Change: Additionally, we ended the quarter with approximately two five weeks of inventory in the channel, which is in line with previous quarters.
Jeffrey Farrow: The gross net discount of approximately 47% reflects the excellent coverage we started the year with, as well as an adjustment to our estimate for the Medicare accrual for the fourth quarter of 2024. This adjustment, made in the first quarter, resulted in a reduction of the discount. of approximately 1% or approximately $1.5 million. Absent this adjustment, our gross to net discount for the first quarter would have been about 48%, which is in line with what we guided to on our previous earnings call. From a U.S. GAAP perspective, gross genetic rules in any given quarter are based upon estimates that are trued up upon subsequent invoices and data received.
Speaker Change: The gross to net discount of approximately 47% reflects the excellent coverage, we started the year with as.
Speaker Change: As well as an adjustment to our estimate for the Medicare accrual for the fourth quarter of 2024.
Speaker Change: This adjustment made in the first quarter resulted in a reduction of the discount.
Speaker Change: Of approximately 1% or approximately $1 5 million.
Speaker Change: Absent this adjustment our gross to net discount for the first quarter would have been about 48%, which is in line with what we guided to on our previous earnings call.
Speaker Change: From a U S. GAAP perspective gross to net accruals in any given quarter are based upon estimates that are queued up upon subsequent invoices and data received.
Jeffrey Farrow: Continuing through the P&L, total operating expenses were approximately $104.6 million. Increase of $14 million compared to Q4 2024 was driven primarily by Xtendi, direct-to-consumer advertising, and other related commercial and marketing costs. Gross margins remained relatively flat and were approximately 93%. While uncertain and evolving, we also believe that even if tariffs were to be implemented as currently rumored, they would have an insignificant impact to our gross margins or other expenses. For background, we have approximately two years of API in the United States and several more years in Europe. Additionally, Extempi is currently being filled and finished by a well-known contract manufacturer in Europe.
Speaker Change: Continuing to the P&L total operating expenses were approximately $104 6 million.
Speaker Change: Increase of $14 million compared to Q4, 2024 was driven primarily by extend the direct to consumer advertising and other related commercial and marketing costs.
Speaker Change: Gross margins remained relatively flat and were approximately 93%.
Speaker Change: While uncertain and evolving.
Speaker Change: We also believe that even if tariffs were to be implemented as currently rumored.
Speaker Change: It would have an insignificant impact to our gross margins or other expenses.
For background, we have approximately two years of API in United States and several more years in Europe.
Speaker Change: Additionally, <unk> is currently being filled and finished by well known contract manufacturer in Europe.
Jeffrey Farrow: And we are well into the process of bringing on a second contract manufacturer located in the United States.
Speaker Change: And we are well into the process of bringing on a second contract manufacturer located in the United States.
Jeffrey Farrow: Importantly. As I noted earlier, we have strong gross margins, and like any other small molecule therapeutic or eyedrop, extending manufacturing costs represent a very small part of our total cost of sales. Therefore, even if tariffs were imposed. We would not expect a material impact to the P&L, given our low cost of goods.
Speaker Change: Importantly.
Speaker Change: As I noted earlier, we had strong gross margins and like any other small molecule therapeutic or eyedrop extending manufacturing costs represent a very small part of our total cost of sales.
Speaker Change: Therefore, even if tariffs were imposed.
Speaker Change: Would not expect a material impact to the P&L, given our low cost of goods.
Jeffrey Farrow: Moving to the balance sheet. We ended the first quarter with $407.9 million in cash and cash equivalents. which includes the $134.8 million from our recent equity rate.
Speaker Change: Moving to the balance sheet.
Speaker Change: We ended the first quarter with $407 9 million in cash and cash equivalents, which.
Speaker Change: Which includes the $134 $8 million from our recent equity raise.
Jeffrey Farrow: Echoing Bobby's comments, this oversubscribed and upsized financing demonstrates continued shareholder appreciation for Xtendi's strong potential, and importantly, their support for Tarsus. Turning to our performance aspirations, we continue to anticipate strong annual growth of XtemV as our fully deployed sales force builds further momentum with ECPs. Our DTC campaign encourages more and more patients to visit an ECP and doctors moving from monthly to weekly to daily prescribing. Looking specifically at the second quarter and factoring in the historical second quarter headwinds of ECP conferences, holidays, and spring break, we remain confident XtemV will continue on its strong trajectory and expect the following.
Speaker Change: Echoing Bob's comments this oversubscribed and Upsized financing demonstrates continued shareholder appreciation for extending strong potential and importantly, their support for <unk>.
Speaker Change: Turning to our performance aspirations, we continue to anticipate strong annual growth of extending as our fully deployed sales force build further momentum with ecp's.
Speaker Change: Our DTC campaign encourages more and more patients to visit and ECP.
Speaker Change: Doctors moving from monthly to weekly daily prescribing.
Speaker Change: Looking specifically at the second quarter and factoring in the historical second quarter headwinds of ECP conferences holidays and spring break we remain confident extending will continue on its strong trajectory and expect the following.
Jeffrey Farrow: Bottles dispensed to meaningfully increase compared to the first quarter and in the range of $85,000 to $90,000. and the gross net discount is expected in the range of 45 to 47 percent. We also reiterate our expectation that we will likely see more modest revenue growth in the third quarter due to typical sector summer dynamics, with stronger growth returning in the fourth quarter. Moving to operating expenses, given the early positive signals of our DTC advertising and Surround SAM campaign. We've made the strategic decision to broaden our advertising efforts and increase our network spend even more. As a result, we now anticipate an increase in SG&A Xenbi-related marketing costs of approximately $5 to $10 million compared to the first quarter of 2025, as we amp up our DTC activities and spend with the goal of boosting this launch even further.
Speaker Change: Bottles dispensed to meaningfully increase compared to the first quarter and in the range of 85000 to 90000.
Speaker Change: And the gross to net discount is expected in the range of 45% to 47%.
Speaker Change: We also reiterate our expectation that we will likely see more modest revenue growth in the third quarter due to typical sector summer dynamics with stronger growth returning in the fourth quarter.
Speaker Change: Moving to operating expenses given the early positive signals of our DTC advertising and surround Sam campaigns.
Speaker Change: We've made the strategic decision to broaden our advertising efforts and increase our network spend even more.
Speaker Change: As a result.
Speaker Change: We now anticipate an increase in SG&A extend <unk> related marketing costs of approximately $5 million to $10 million <unk>.
Speaker Change: Compared to the first quarter of 2025, as we amp up our DTC activities and spend with the goal of boosting this launch even further.
Jeffrey Farrow: We expect full year 2025 DTC costs to be in the range of $70 to $80 million, with the potential to add even more in the second half of the year if we continue to see strong signals the campaign is resonating with ECPs and For more information visit www.fema.gov Additionally, as we noted on last quarter's call, in the second half of this year, we expect R&D expenses to increase with the planned initiation of the Phase 2 study of TP04 inocular rosacea. We continue to expect the study to cost between $7 and $10 million, and the cost should be split between 2025 and 2026.
Speaker Change: We expect full year 2025, DTC costs to be in the range of $70 million to $80 million.
Speaker Change: With the potential to add even more in the second half of the year. If we continue to see strong signals that campaign is resonating with ecp's and patients.
Speaker Change: Additionally, as we noted on last quarter's call in the second half of this year, we expect R&D expenses to increase with the planned initiation of the phase II study of <unk>, four and ocular rosacea.
Speaker Change: We continue to expect this study to cost between seven and $10 million and the cost should be split between 2025 and 2026.
Jeffrey Farrow: In closing, we enter the second quarter of 2025 with a tremendous amount of momentum and strength. both operationally and fiscally. and we look forward to sharing more updates with you in the coming.
Speaker Change: In closing, we enter the second quarter of 2025, with a tremendous amount of momentum and strength.
Speaker Change: Both operationally in fiscal <unk>.
Speaker Change: And we look forward to sharing more updates with you in the coming quarters.
Bobby Azamian: I will now turn the call back to Bobby for final remarks. Thank you, Jeff. And thank you all for making the time to join us today. As I said at the beginning, we have a lot to be excited about. We have a proven blueprint for success.
Bobby Thank: I will now turn the call back to Bobby for final remarks. Thank.
Jeff Farrow: Thank you Jeff.
Jeff Farrow: Thank you all for making the time to join us today.
Jeff Farrow: As I said at the beginning we have a lot to be excited about.
Jeff Farrow: We have a proven blueprint for success.
Bobby Azamian: Xtemvi is setting a new standard for product launches, and we have a strong financial position that enables us to continue driving the growth of Xtemvi and continue advancing a robust pipeline of other potential category-creating medicine.
Jeff Farrow: <unk> is setting a new standard for product launches and.
Jeff Farrow: And we have a strong financial position that enables us to continue driving the growth of <unk>.
Jeff Farrow: And continue advancing a robust pipeline of other potential category, creating medicines.
Operator: Operator, please open the line for questions. Yes, sir. Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star 1 1 again. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster.
Operator, please open the line for questions.
Speaker Change: Yes, Sir ladies and gentlemen, if you have a question or comment at this time. Please press star one one on your telephone keypad.
Speaker Change: If your question has been answered or you wish to remove yourself from the queue simply press star one again.
Speaker Change: Again, if you have a question or comment at this time. Please press star one one on your telephone keypad. Please.
Speaker Change: Please standby, while we compile the Q&A roster.
Lachlan Hanbury: Our first question or comment comes from the line of Lachlan Hanbury Brown from William Blair. Your line is open. Hey guys, thanks for the questions and congrats on the strong quarter. A couple of questions. I guess first, you know, you were talking about, we have spoken in the past about meeting with the FDA to align on study design for both pipeline product I just wanted to check if you've seen any disruptions. If you've been able to have those meetings, I'll schedule them as you expected. and then second, Onyx Dembe in this past quarter. Yeah, with Medicare coming online, can you give a sense of how much of the volume or the prescribing is going to commercial versus Medicare patients at the moment?
Speaker Change: Our first question or comment comes from the line of Lachlan Hanbury Brown from William Blair. Your line is open.
Speaker Change: Hey, guys. Thanks for the questions and congrats on the strong quarter.
Speaker Change: Questions I guess first you were talking about we have spoken in the past about meeting with the FDA to align on study design.
Speaker Change: Both pipeline products.
Speaker Change: I just wanted to check can be seen any disruptions UBB Napa is made haynesville schedule and as you expected.
Speaker Change: And then second on <unk>.
Speaker Change: <unk> cost quarter.
Speaker Change: Yes, with Medicare coming online can you give a sense of how much of the volume of the prescribing is going to commercial versus Medicare patients at the moment.
Bobby Azamian: Thank you, Lachlan, for the question. I'll take the first part of the first question with the pipeline. We are, as you know, we are creating a new paradigm with our programs, especially with ocular rosacea, with our blueprint of developing the new disease, new endpoints. And we are well on track to starting the trial in the second half of the year. And we are proceeding with with every sense of urgency as well as looking at the patient population and learning a lot from the physicians in the field of both the disease and the patients themselves.
Speaker Change: Thank you.
Speaker Change: For the question I'll take the first part of the first question with the pipeline.
Speaker Change: As you know we are creating a new paradigm with with our programs, especially with ocular rosacea.
Speaker Change: The blueprint of developing the new disease, new endpoints and we are well on track to starting the trial.
Speaker Change: In the second half of the year.
Speaker Change: And we are proceeding with that.
Speaker Change: With every.
Speaker Change: Sense of urgency as well as looking at the patient population.
Speaker Change: Learning a lot from the physicians and the feedback with a disease in the patients as well.
Jeffrey Farrow: And I'll just reiterate, Lachlan, to your question, we have not had any delays in our meeting schedule, so we have not seen the impact on our pipeline for your question. Great, and then for the second part of that question, when you think about our script volume in the first quarter, it's a relatively equal split between Medicare and commercial prescriptions. I think the one thing to keep in mind is the Medicare coverage, the bulk of that came in activated in the first quarter. So, when you look at it versus, say, the fourth quarter, we definitely saw an increase in Medicare prescriptions.
Speaker Change: And I will just reiterate laughlin to your question, we have not had any delays in our meeting schedules. So we have not seen the impact on our pipeline for your question.
Speaker Change: Great and then for the second part of that question. When you think about our script volume in the first quarter, it's a relatively equal split between Medicare and commercial prescriptions I think one thing to keep in mind is the Medicare coverage the bulk of that came in after.
Speaker Change: Activated in the first quarter. So when you look at it versus say the fourth quarter, we definitely saw an increase in Medicare prescriptions, but as we look at the total volume of scripts, it's about equally split and that's what we expected to see and the only other thing I'd add there is getting that coverage is a huge catalyst for us and I think it's been a tremendous growth driver. If you look back that's probably the one piece of feedback we received from <unk>.
Lachlan Hanbury: But as we look at the total volume of scripts, it's about equally split, and that's what we expected to see. And the only other thing I'd add there is getting that coverage is a huge catalyst for us. And I think it's been a tremendous growth driver. If you look back, that's probably the one piece of feedback we received from physicians that that was one of the key barriers. And now that that's out of the way, I think we'd anticipate to see continued volume growth based on that great coverage. Got it. Thanks for the questions. Thank you.
Speaker Change: <unk> debt that was one of the key barriers and thats out of the way.
Speaker Change: I think we would anticipate to see continued volume growth based on that great coverage.
Speaker Change: Got it thanks for the questions.
Speaker Change: Thank you our next question or comment comes from the line of <unk>.
Andrea Newkirk: Our next question or comment comes from the line of Andrea Newkirk. From Goldman Sachs, Ms. Newkirk, your line is open. Thank you. Good afternoon. Thanks for taking the questions.
Andrea Newkirk: Andrea Newkirk.
Andrea Newkirk: From Goldman Sachs. Your line is open.
Speaker Change: Thank you good afternoon, and thanks for taking the questions.
Andrea Newkirk: I was just wondering if you could discuss the pushes and pulls that you're seeing to repeat prescribing, more specifically around your comments around the prescribers who are writing daily versus weekly versus monthly scripts. Absolutely. And that's been one of the great things to see as we continue to accelerate this launch at the beginning of the year, that progression of doctors writing the product more frequently. And when I look at what the key drivers are there, I think there's a couple that are in the near term that have really impacted, particularly in the first quarter. First would be the expanded sales force.
Speaker Change: I was just wondering if you could discuss the pushes and pulls that youre.
Speaker Change: Seem to repeat prescribing.
Speaker Change: More specifically around your comments around the prescribers, who are writing daily versus weekly versus monthly scripts.
Speaker Change: Absolutely and Thats been one of the great things to see as we continue to accelerate this launch at the beginning of the year that progression of doctors, writing the product more frequently and when I look at what the key drivers are there I think theres a couple that are in the near term that have really impacted particularly in the first quarter.
Speaker Change: Would be the extended sales force everyone recalls that we expanded the sales force late last year. They are off to a great start they've done a phenomenal job and with that said I think having those repeat visits in front of the new customers for that extended team is really starting to have that impact and I think those repeat visits are resulting in further education encouraging doctors to look across the <unk>.
Aziz Mottiwala: Everyone recalls that we expanded the sales force late last year. They got off to a great start. They've done a phenomenal job. And with that said, I think having those repeat visits in front of those new customers for that expanded team is really starting to have that impact. And I think those repeat visits are resulting in further education, encouraging doctors to look across the different patient segments and expand their utilization. So that's going very well.
Speaker Change: Arent patient segments and expand their utilization so that's going very well the second one as I mentioned earlier is the coverage that was probably the biggest barrier we earned to deepening adoption. When the doctor can differentiate you had coverage and you didn't know with over 90% of lives covered doctors can be a little bit more open in terms of who theyre thinking about treating.
Aziz Mottiwala: The second one, as I mentioned earlier, is the coverage. That was probably the biggest barrier we heard to deepening adoption when the doctor couldn't differentiate who had coverage and who didn't. Now with over 90% of lives covered, doctors can be a little bit more open in terms of who they're thinking about treating. And if you think about a particular segment, say your cataract patient, that's a heavy Part B patient, and we're able to address that segment more effectively now. So that's a real tangible example where we're hearing qualitatively doctors are starting to utilize Exambi more and more.
Speaker Change: And if you think about our particular segments of your cataract patients. That's a heavy part D patient and we're able to address that segment more effectively now so thats a grill tangible example, where we're hearing qualitatively doctors are starting to utilize <unk> be more and more so I think the key two near term drivers have been the salesforce and DT and sorry, the coverage and then I think when we look at what is going to continue that.
Aziz Mottiwala: So I think the two near term drivers have been the sales force and the coverage. And then I think when we look at what's going to continue that going forward, I think there's still a lot more room for the sales force to continue to make amplification. I think that the coverage is going to be a key driver, but also we're seeing early indicators that DTC is having a positive effect. And also, as we mentioned earlier, we just came back from a major conference and doctors are also there responding very nicely to the MGD data and other evidence that's out there.
Speaker Change: Going forward I think there's still a lot more room for the sales force to continue to make amplification I think that the coverage is going to be a key driver. But also we're seeing early indicators that DTC is having a positive effect and also as we mentioned earlier. We just came back from a major conference and doctors are also responding very nicely to the MPD data and other evidence that's out there so real short way to <unk>.
Bobby Azamian: So a real short way to think about this is near term, it's been the sales force and coverage. That's going to continue to ramp. And on the back of that, we've got DTC and new data.
Speaker Change: About this is near term it's been the Salesforce and coverage that's going to continue to ramp and on the back of that we've got DTC and new data as well.
Bobby Azamian: Yeah, and Andrea, I just give you some color from my interactions with doctors. I mean, they can't stress how amazed they are by the effect and overall profile of the medicine. I think that really drives them to look more and more because they see how well it works. And really, every patient they prescribe it to is what they tell us, and that motivates them to look more. And as Aziz mentioned, the evidence that we're going to generate will help them look even more. So we see only opportunity ahead in terms of that progression.
Speaker Change: Yes, Andrew.
Andrew: Just give you some color from my interactions with doctors.
Speaker Change: They can't stress how amazed they are by the.
Speaker Change: The effect and overall profile of the medicine, and I think that really drives them to.
Speaker Change: Look more and more because they see how well it works in really every patient that prescribe. It too is what they tell us that motivates them to look more and as Ive mentioned the evidence that we're going to generate we will help them look even more so so we see only opportunity ahead in terms of the progression that as we've described.
Speaker Change: Yeah.
Bobby Azamian: And Bobby, maybe I could ask a follow-up there then, just given the efficacy that the physicians are recognizing and observing here, to what extent are you then seeing retreatments happening? Has that started coming in in a more meaningful way than in previous quarters? Yeah, we're definitely hearing about it more and more. You know, when I was in the field, I heard it from a lot of the offices that, you know, they're asking about when and how should I think about retreatment. Our sales force is able to talk them through the data that shows that by a year, about 40% of patients recur in the phase three follow up we had.
Speaker Change: Got it and Bob maybe I can ask a follow up there then just given the efficacy that the physicians are rare.
Speaker Change: Recognizing and observing here to onex.
Speaker Change: Are you seeing re treatments happening.
Speaker Change: Has that started coming in in a more meaningful way than in previous quarters.
Speaker Change: Yes, we're definitely hearing about more and more.
Speaker Change: When I was in the field.
Speaker Change: <unk> heard it from a lot of the offices that they are asking about when and how should I think about re treatment.
Speaker Change: Our sales force is able to talk them through the data.
Speaker Change: Shows that by year about 40% of patients recur.
Speaker Change: In the phase III follow up we've had.
Bobby Azamian: And they're starting to see that themselves.
Speaker Change: And they are starting to see that themselves. So.
Bobby Azamian: So, you know, I'll pass to Aziz to talk a little bit about how we see that going forward. But I do think that it's exactly as we suspected so far. And we do expect that to be a meaningful, long term growth driver.
Speaker Change: And I'll pass to <unk> to talk a little bit about how we see that going forward, but I do think that it's exactly as we suspected so far and we do expect that to be a meaningful.
Speaker Change: Long term growth driver for us.
Aziz Mottiwala: Yeah, I can add a little bit more color. I think the first thing I always remind folks of is, you know, with any product, even chronic medications, adherence is pretty low. So, to be successful, it's all about driving new patients. And we've got 25 million patients out there that we want to continue to drive diagnosis and treatment for those patients. That's really the core emphasis. To Bobbi's point, we do contemplate re-treatments as a tailwind for us. And when you look at the IQVIA data today, you're seeing a high single-digit refill rate. And if you start to do a little bit of math and you impute patients that were treated, say, a year ago relative to the volumes today, you can assume that the actual re-treatment rate is probably leading that or even higher than what you're seeing in the refill rate in IQVIA.
Speaker Change: Yes, I can add a little bit more color I think I think the first thing I would remind folks out there as with any product, even even chronic medications adherence is pretty large.
Speaker Change: To be successful, it's all about driving new patients and we've got 25 million patients out there that we want to continue to drive diagnosis and treatment for those patients. That's really the core emphasis to <unk> point, when you contemplate retreat and intact as a tailwind for us and when you look at the IQ via data today, Youre seeing a high single digit refill rate and if you start to go.
Speaker Change: A little bit of math and European patients that were treated to a year ago relative to the volumes today you can assume that the actual re treatment rate is probably leading that are even higher than what youre seeing in the repo rate in IQ VSO, a very positive trend and I think that trend is what gives us confidence in reaffirming our estimate of about 20% annualized re treatment rates that we have.
Aziz Mottiwala: So, a very positive trend, and I think that trend is what gives us confidence in reaffirming our estimate of about 20% annualized re-treatment rates that we talked about before. And again, it looks really good, and it's trending in the right direction.
Speaker Change: <unk> talked about before and then again it looks really good and it's trending in the right direction.
Operator: Okay, thank you guys. Thank you.
Speaker Change: Okay. Thank you guys.
Pavan Patel: Our next question or comment comes from the line of Pavan Patel from Bank of America. Your line is open. Hey guys, this is Thalayan for Jason Gerberry.
Speaker Change: Thank you. Our next question or comment comes from the line of Pavan <unk> from Bank of America. Your line is open.
Speaker Change: Hey, guys. This is dialing on for adjacent their very.
Pavan Patel: First question is how is the feedback from the Orion Registry and the combined IHRSA, RIA, MGD data being received by eye care professionals? Are you seeing evidence that this new data is influencing prescribers' behavior or expanding use into specific patient segments such as dry eye?
Speaker Change: First question, how is the feedback from the Oregon registry and the combined or so.
Speaker Change: <unk> data is being received by eye care professionals are you seeing evidence that this data is also important.
Speaker Change: Prescribers in the whole world right.
Speaker Change: This includes patient segments such as.
Seshadri Neervannan: And then the second question is regarding the upcoming phase 2 trial for TPO4 and ocular rosacea, can you share any details on the study design, primary endpoints, and patient population? Thank you. Yeah, thanks for the question.
Speaker Change: Coastal dry eye.
Speaker Change: Then the second question.
Speaker Change: Regarding the upcoming phase two trial for <unk> and authorization commercial or any details on the study design primary endpoints in patient population. Thank you.
Speaker Change: Sure.
Speaker Change: Yes, the answer to your question I'll speak a little bit to the receptivity on the new data and since you could speak to the pipeline developments here I'd say that.
Aziz Mottiwala: I'll speak a little bit to the receptivity on the new data, and Seshadri can speak to the pipeline developments here. I'd say that, you know, coming fresh off a conference, it's really exciting to see how doctors respond to the increasing base of evidence around the disease state and the product. I think when you look at the Orion registry, the real key takeaway there is that the vast majority, over 90% of patients are symptomatic, and that's really prompting doctors to want to look more, look at the lids more, and help identify more patients. And then I think when you look at the Ursa Rea data, what we're hearing very clearly is that there's evidence now that shows that Xtambi has impact on a constellation of symptoms, as well as improving the oil secretions that are really important for eye health.
Speaker Change: Coming fresh off the conference, it's really exciting to see how doctors respond to the increasing base of evidence around the disease state and the product.
Speaker Change: When you look at the Orion registry that the real key takeaway there is that the vast majority over 90% of patients are symptomatic and that's really pumping doctors to want to look more look at the lids more and help identify more patients and then I think when you look at the <unk> data. What we're hearing very clearly is that there's evidence now that shows that extent has impact on our constellation of.
Speaker Change: Symptoms as well as improving the oil secretions that are really important for IHOP and these two things combined really do two things. They helped the doctor Warner diagnosed more but then they start thinking about the types of patients and they are not just thinking about the traditional DB patient. They are thinking about our dry eye patients. They are thinking about the impact of fluctuating vision Tanner cataract patient contact.
Aziz Mottiwala: And these two things combined really do two things. They help the doctor want to diagnose more, but then they start thinking about the types of patients. And they're not just thinking about the traditional DB patient. They're thinking about a dry eye patient. They're thinking about the impact of fluctuating vision, say, on a cataract patient or a contact lens intolerant patient. And they're also thinking about how they can incorporate this in their daily routine. So the data is being received very well. It's still early data dissemination takes time. They have to see it and hear it multiple times.
Speaker Change: And intolerant patient and they're also thinking about how they can incorporate this in their daily routines. So the data is being received very well. It's still early data dissemination takes time to have to see it and hear it multiple times, but the initial response is really positive and in particular with the doctors that have really increased our frequency of prescribing. They do look back and say, hey, I'm, having multiple <unk>.
Aziz Mottiwala: But the initial response is really positive, and in particular with the doctors that have really increased their frequency of prescribing, they do look back and say, hey, I'm having multiple repeat visits with the rep and I'm hearing more and more about this great data. And that's really prompting.
Speaker Change: Visits with a rapid I'm hearing more and more about this great data and Thats really pumping unit.
Seshadri Neervannan: Sesh, you want to talk about the pipeline? Yes, thanks, Aziz. Great question, Pavan. In terms of the ocular rosacea, as Bobby alluded to earlier, ocular rosacea is a highly prevalent disease, and more than 50% of those patients of the disease is actually caused by demodex mites. So this is a great opportunity for us to create another category, and we have the potential to pioneer a standard of care for ocular rosacea. And the key features of ocular rosacea are prominent blood vessels on the eye, on the lid and area surrounding the eye, and then erythema surrounding the eye.
Speaker Change: So she went to about the pipeline yes. Thanks.
Speaker Change: Great question Bhavan in terms of the outlet rosacea as Bob alluded to earlier.
Speaker Change: Authorization is a highly prevalent disease and.
Speaker Change: More than 50% of those patients.
Speaker Change: Patients.
Speaker Change: The disease is actually caused by dominates might so this is this is a great opportunity for us to create another category and we have the potential to buy any of the standard of care for authorization.
Speaker Change: And the key features of authors ratio or a prominent blood vessels.
Speaker Change: On the on the eye on the area surrounding the <unk> and then added PMO surrounding the.
Seshadri Neervannan: So those are the two features of ocular rosacea which the physicians use to diagnose the disease, and those are some of the objective measures that we are planning to look at in our trial. The size of the trial and how we're going to be looking at and all the details will come later this year as we get closer to starting the trial, but the end points and the measures that we are contemplating are also something that the FDA are in alignment with, so we are on a good track.
Speaker Change: So those are the two features of ocular rosacea, which which are physicians used to diagnose the disease and those are the some of the objective measures that we are planning to look at trial.
Speaker Change: The size of the trial and how we are going to be looking at in all of the details will come later this year as we get closer to starting the trial, but the endpoints and the measures that we are contemplating are also something that the FDA are in alignment with so we are on a good run here.
Bobby Azamian: Yeah, and I just, I just highlight two, two points on ocular rosacea from some of the interactions we had in recent weeks with doctors. You know, one is this is new. There's never been a medicine developed or trialed for ocular rosacea. So, you know, under Seshadri's leadership, our team is diligently translating some of those important clinical findings into a robust clinical plan. And the other thing that I am just so encouraged about, the doctors, the ECPs, both MDs and ODs, are so enthusiastic about ocular rosacea. They are seeing it more and more now that they're looking at islands.
Speaker Change: Yeah, and I'll just I'll just highlight two two points on authorization from some of the interactions we've had in recent weeks with doctors.
Speaker Change: One is this is new there's never been a medicine.
Speaker Change: Developed or Trialed for ocular rosacea so.
Speaker Change: Under <unk> leadership, our team is diligently.
Speaker Change: Translating some of those important clinical findings into.
Speaker Change: Our robust clinical plan.
Speaker Change: And the other thing that I am just so encouraged about.
Speaker Change: The doctors the Ecp's, both MTS and <unk> are so enthusiastic about the realization of that.
Speaker Change: They are seeing it more and more now that theyre looking at island and <unk>.
Bobby Azamian: And, you know, my assessment is that they're even more familiarized with ocular rosacea than they were with DB when we were at a similar stage. So I think this is an opportunity that really is a compelling one. It's hard to really state how big that is until we get out there and get data. But the, you know, as Seshadri said, this looks and feels a lot like demogliferatis, and it's another example, we think, of how Tarsus can pioneer a new category of medicine.
Speaker Change: The assessment is that they are even more familiarized with ocular rosacea than they were with DB. When we were at a similar stage so.
Speaker Change: I think this is an opportunity that.
Speaker Change: Really is compelling one it's hard to really state how big that is until we get out there and get data, but the.
Speaker Change: As social said this looks and feels a lot like terminix with writers and it's another example, we think of how <unk> can pioneer a new category of medicine.
Operator: Thank you.
Operator: Again, ladies and gentlemen, if you have a question or comment at this time, please press star 11 on your telephone keypad.
Speaker Change: Thank you again.
Speaker Change: Again, ladies and gentlemen, if you have a question or comment at this time. Please press star one one on your telephone keypad.
Eddie Hickman: Our next question or comment comes from the line of Eddie Hickman from Guggenheim. Your line is Thanks for the questions, and congrats on the quarter.
Speaker Change: Next question or comment comes from the line of Eddie Hickman from Guggenheim. Your line is open.
Speaker Change: Great. Thanks for the questions and congrats on the quarter. When you think about providing guidance going forward what are the potential factors I guess beyond the summer bumping S, where you have less visibility right now that might prevent you from accurately and extrapolating volumes and price going forward and then maybe I missed this but you noted previously that you had already reached the target 15000 docs.
Eddie Hickman: When you think about providing guidance going forward, what are the potential factors, I guess, beyond the summer bumpiness where you have less visibility right now that might prevent you from accurately extrapolating volumes and price going forward? And maybe I missed this, but you noted previously that you had already reached the target 15,000 docs and they are increasing their frequency of prescribing, but do you know how many more ECPs beyond that target have been reached? Thanks.
Speaker Change: They are increasingly increasing their frequency of prescribing, but do you know how many more ecp's beyond that target had been reached.
Jeffrey Farrow: Hey Eddie, it's Jeff. I'll take the first part of that question and pass it over to Aziz. We look at the potential to provide guidance on a quarter-by-quarter basis. I think the two factors that are really causing us pause and preventing us providing long-range guidance is, one, some of the impact of the DTC campaign, particularly the expanded network campaign. We want to make sure we get our arms around that and see what the impact of that is in the back of this year. Secondly, there's a lot of macro events going on as we speak, and we're keeping an eye on that.
Jeff Farrow: Hey, Andy its Jeff ill take the first part of that question and then pass it over to <unk> disease.
Jeff Farrow: We look at the potential to provide guidance on a quarter by quarter basis, I think the two factors that are really.
Jeff Farrow: Causing us pause and providing us providing long range guidance is.
Jeff Farrow: One some of the impact of the DTC campaign, particularly the expanded network campaign, we want to make sure we get our arms around that and see what the impact of that is in the back half of this year.
Jeff Farrow: Secondly, there is a lot of macro events going on as we speak and we're keeping an eye on that and we want to be thoughtful as we think about moving forward on that front as well, but we do make an assessment on a quarterly.
Aziz Mottiwala: We want to be thoughtful as we think about moving forward on that front as well, but we do make an assessment on a quarterly basis whether we are going to move forward on the revenue guidance. Yeah, and then when it comes to the target prescribing base, certainly it's grown beyond 15,000 in terms of the number of doctors that have utilized the product. With that said, we know that the vast majority of prescriptions, over 85%, are likely going to come from that core 15,000. So we focus the efforts there and really focus our efforts on deepening the prescribing.
Jeff Farrow: Orderly basis, whether we are going to move forward on the revenue guidance.
Speaker Change: Yes, and then when it comes to UBS target prescribing base certainly it's grown beyond 15000 in terms of the number of doctors that have utilized the product.
Speaker Change: That said, we know that the vast majority of prescriptions over 85% are likely going to come from that core 15000. So we focused our efforts there and really focus our efforts on deepening the prescribing and obviously if it continues to grow we have other mechanisms in which we can address that broader base, but when it comes to the sales force and the vast majority of our strategic effort that's on that core 15000 audience.
Jeffrey Farrow: And obviously, if it continues to grow, we have other mechanisms in which we can address that broader base. But when it comes to the sales force and the vast majority of our strategic efforts, it's on that core 15,000 audience and really moving the needle from that monthly to weekly, weekly to daily prescribing. Great.
Speaker Change: And really moving the needle from that monthly to weekly weekly to daily prescribing.
Jeffrey Farrow: And as that increases, do you expect the level of stocking that you have in the channel to change at all? We don't anticipate that, Eddie. You know, it's been hovering around two to two and a half weeks consistently over the last five quarters. I think the pharmacies and distributors don't like to hold a large amount of inventory just given the pricing dynamics and managing their balance sheet. So we don't anticipate from a sort of weekly basis that really evolving much beyond that two and a half weeks. Great, thanks. Thank you.
Speaker Change: Great and as that increases do you expect.
Speaker Change: Level of stocking that you have in the channel the change at all.
Speaker Change: Okay.
Speaker Change: We don't anticipate that Eddie it's been hovering around two to two five weeks consistently over the last five quarters I think the pharmacies and distributors don't like to hold a large amount of inventory just given the pricing dynamics in managing their balance sheet. So we don't anticipate from a sort of weekly basis that really evolving much beyond that too.
Speaker Change: And a half weeks.
Speaker Change: Alright, thanks, guys.
Cory Jubinville: Our next question or comment comes from the line of Cory Jubinville from Lifesci Capital. Your line is open. Thanks for taking our questions and congrats on these numbers.
Speaker Change: Thank you. Our next question or comment comes from the line of Cory <unk> from lifestyle capital. Your line is open.
Cory: Thanks for taking our questions and congrats on these numbers.
Jeffrey Farrow: You know, quick from us, based off the Q1 numbers that we're seeing today, we're now looking at a run rate over 300 million and growing for XtemV, which is greater than 2024 OPEX. Yeah, Cory, this is Jeff. You know, we are anticipating OpEx to, you know, continue to grow as we talked about in terms of the DTC investment. And of course, there are certain variable costs as revenues go up. So do some of those costs, including cost of goods sold, obviously.
Speaker Change: Quick from us.
Speaker Change: First off the Q1 numbers that we're seeing today, we're now looking at a run rate over $300 million and growing for <unk>, which is greater than 2020 for opex.
Speaker Change: Obviously spend is going to increase in 2020 fives do you increase that marketing spend against some of these additional clinical programs, but curious if you could add some commentary on total projected 2025 spend beyond that DTC campaign, and maybe add some color about the potential to bridge to cash flow positivity following that.
Speaker Change: Equity raise.
Speaker Change: From your projections can you can you achieve profitability with the current balance sheet.
Jeff Farrow: Yeah Cory this is Jeff.
Jeff Farrow: We are anticipating opex to continue to grow as we talked about in terms of the DTC investment and of course, there are certain variable costs as revenues go up so do some of those costs, including cost of goods sold obviously.
Jeffrey Farrow: We have not provided, you know, long range guidance in terms of when we might go cash flow positive. I'll highlight we're not opposed to going cash flow positive. But we are, you know, including investments in ocular rosacea, and such there.
Jeff Farrow: We have not provided long range guidance in terms of when we might go cash flow positive all highlight we're not opposed to going cash flow positive.
Jeff Farrow: But we are thinking about investments in the pipeline, including investments in ocular rosacea and such there. So I think until we have.
Aziz Mottiwala: So I think until we have in a position to provide top line revenue group guidance, we're probably not going to provide any type of cash flow positive guidance. Got it.
In a position to provide topline revenue.
Jeff Farrow: <unk>, we're probably not going to provide any type of cash flow positive guidance either.
Cory Jubinville: It may be one for Aziz. So in the targeted streaming service DTC campaign that you had last year, you mentioned that there's potential to get some really powerful analytics regarding the conversion rates on certain profiles of patients, but it still seemed a bit too early at the time to start seeing those impacts. And today, you mentioned that the DTC campaign is driving that 140% increase to site traffic. I guess at this point, do you have a good sense of who the most responsive patients are to DTC campaigns? And if so, what does that patient profile look?
Speaker Change: Got it and maybe one for Aziz so in the targeted streaming service DTC campaign that you had last year, you mentioned that there is potential to get some really powerful analytics regarding the conversion rates on certain profiles of patients, but it still seemed a bit too early at the time to start seeing those impacts today.
Speaker Change: Today, you mentioned that the DTC campaign is driving that 140% increase to site traffic I guess at this point do you have a good sense of.
Speaker Change: Who the most responsive patients are to DTC campaigns and.
Speaker Change: If so what does that patient profile look like.
Aziz Mottiwala: Yeah, it's a great question, Cory. So I think when we did the streaming, we got, we did get a lot of great insights. And, you know, an example or two of that is, we got a good understanding of who our demo, what our demographic likes to watch, what sort of programs they respond well to, when's the ideal time to run an ad, for instance, we also learned which of the activities really lead to eventual prescription. So we highlighted earlier on our prepared comments, increasing the number of website visits and quizzes, those correlate nicely to prescription volume.
Speaker Change: Yes, it's a great question of course, so I think when we did the streaming we got we did get a lot of great insights.
Speaker Change: Example, or two of that is we got a good understanding of who our demo our demographic likes to watch what sort of programs. They respond well to win the ideal time to run an AD for instance, we also learn which of the activities really lead to eventual prescription. So we highlighted earlier on our prepared comments, increasing the number of website visits and quizzes those correlate nicely.
Aziz Mottiwala: So it gave us a lot of insights on where to place our bets. And when you think about the typical patient, as you can imagine, it's going to mirror sort of how we saw the coverage of all. So there's your sort of, you know, mid 40s patient that's got commercial coverage, that's active, their eyesight is integral to their day to day activities, they're going to want to make an appointment because they want perfect vision, they're going in there, they want to have the ability to wear their contact lenses, be able to be at work, and be able to have clear vision during the day.
Speaker Change: Prescription volume so it gave us a lot of impact on where to place our bets and when you think about the typical patient as you can imagine it's going to mirror or sort of how we saw the coverage of all so there's your sort of mid forty's patient that got commercial coverage that active their eyesight is integral to their day to day activities, they're going to want to make it a point because they want perfect vision.
Speaker Change: They are going in there they want to have the ability to wear contact lenses to be able to be at work and be able to have clear vision during the day and things like blepharitis, obviously getting away and then the other demo that's really opened up with Medicare coverage is that 60 plus percent potentially go after cataract surgery, and really wants to enjoy high quality vision and our great quality lifestyle.
Aziz Mottiwala: And, you know, things like bufferitis obviously get in the way. And then the other demo that's really opened up with Medicare coverage is that 60 plus person who is potentially going in for cataract surgery and really wants to enjoy high quality vision and a great quality lifestyle. And, of course, we know that increases as you age in terms of the prevalence. So those are the 2 patients types we think are the 2 consumer types we think about. And with the learnings we've had, we've really been able to tailor our programming choices specifically to those demographics.
Speaker Change: And of course, we know that <unk> by price increases as you age in terms of prevalence. So those are the two patient types. We think are the two consumer types, we think about and with the learnings. We've had we've really been able to tailor our programming choices specifically to those demographics. So I think thats performing well and that's really informed our approach to deploying.
Aziz Mottiwala: So, I think that's performing well, and that's really informed our approach to deploying the money. We are into.
Speaker Change: The money, we arent to DTC.
Bobby Azamian: Yeah, and Cory, this is Bobby, just one other, you know, bit of feedback that's beyond the analytics. I know our team is going to be very data driven and looking for great return on investment here, as we're seeing. But when we got in front of doctors, I heard something, I think, powerful that when doctors started now talking to patients about XtendV and DB, they said, I've heard of And that's a change. That's a real educational change that we've seen and heard over the last few months with this ad now playing. So we're creating a new category and patient education is a key growth driver, as we've mentioned.
Bob: Yeah. Cory this is Bob just one other.
Speaker Change: Bit of feedback.
Speaker Change: Beyond the analytics I know our team is going to be very.
Speaker Change: Driven and looked at for a great return on investment here as we're seeing but when we got in front of doctors I heard.
Speaker Change: Something I think powerful but.
When doctors started now talking to patients about <unk> said I've heard of this.
Speaker Change: And that's a change that's the real educational change that we've seen.
Speaker Change: <unk> heard over the last few months with this AD now playing so.
Speaker Change: So we're creating a new category in patient indication as a key growth driver as we've mentioned.
Cory Jubinville: Excellent. That's helpful. Thanks and congrats again. Thank you. I'm showing no additional questions in the queue at this time. Ladies and gentlemen, this concludes the program. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
Speaker Change: Excellent that's helpful. Thanks, and congrats again.
Speaker Change: Thank you.
Speaker Change: Showing no additional questions in the queue at this time, ladies and gentlemen. This concludes the program. Thank you for your participation.
Speaker Change: You may now disconnect everyone have a wonderful day.
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