Tarsus Pharmaceuticals, Inc. Common Stock 2026 Q2 Earnings Call

Thank you. Before we begin, I encourage everyone to visit the investors section of the Tarsus website to view the press releases issued today related materials we will be discussing today. Joining me on the call are Bobby Azamián, our Chief Executive Officer and Chairman, Neera Clase, our Interim Chief Commercial Officer, Sesha Neervannan, our Chief Operating Officer, Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer. Joining us for Q&A is Dr. Liz Yue, our Chief Medical Officer. I'd like to draw your attention to slide three, which contains our forward-looking statement. 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, our actual results may differ materially. I encourage you to consult the risk factors contained in our SEC filings for additional details.

With that, I'll turn the call over to Bobby.

Hello, thank you for joining us. Today is an important day for Tarsus. We're reporting another exceptional quarter for XDEMVY announcing the acquisition of Alkeus Pharmaceuticals and gildeuretinol, or ALK-001, a late-stage investigational therapy for Stargardt disease. When we launched XDEMVY, we believed Demodex blepharitis, or DB, was one of the largest diseases in eye care, hiding in plain sight. Our ambition was never simply to commercialize a single medicine. It was to demonstrate that by identifying diseases that have been overlooked for years, creating categories, developing medicines with the potential to redefine the standard of care, executing with excellence, we could fundamentally change patient care while building a leading eye care company. XDEMVY continues to prove that thesis. Nearly three years after launch, more than 700,000 patients have been treated.

XDEMVY has generated almost $1 billion in net product sales reported to date. We are well on our way to over $2 billion in potential annual peak sales. This quarter alone, XDEMVY generated approximately $174 million in net product sales, representing more than 69% year-over-year growth. XDEMVY has never been stronger. We believe we are still in the early stages of realizing its full commercial opportunity. What's more, XDEMVY is powering innovation at Tarsus, and that's precisely why we have the confidence to make strategic investments like the one we are announcing today. We are investing in assets with novel disease-modifying approaches, compelling clinical evidence, and a clear strategic fit to build a leading eye care company. ALK-001 is exactly that, as it has the potential to preserve vision for longer and become a foundational treatment for Stargardt disease.

This devastating inherited retinal disease often affects children and young adults. Today, there are no FDA-approved treatment options. It also broadens our presence in retina, one of the largest and most important specialties in eye care. We've already begun building capabilities through our recent acquisition of IRX-101 and aim to create a distinct portfolio positioned to address serious retinal diseases over time. I would like to take a moment and thank the Alkeus team for all their passion and commitment in developing ALK-001, a truly novel medicine. To date, they have developed one of the most robust clinical data sets. We believe ALK-001 has the potential to preserve vision longer in patients suffering from Stargardt disease. XDEMVY remains the cornerstone from which we're building a leading eye care company, one with the capability, pipeline, and innovation to repeatedly bring meaningful medicines to patients.

With today's announcement, we took an important step on this journey. This acquisition is expected to build upon the commercial success of XDEMVY, and with the addition of ALK-001, creates one of the most exciting pipelines in eye care and beyond. One that is positioned to deliver multiple potential blockbuster medicines over the next several years. Before I turn the call over, I would like to welcome Neera Clase, our Interim Chief Commercial Officer, to her first earnings call. Neera has been instrumental in building our commercial organization and ensuring the ongoing success of XDEMVY. We are thrilled to apply her leadership and expertise to this new chapter. Neera, over to you. Thank you, Bobby.

I'm honored to step into this role at such an exciting time for Tarsus, and I look forward to advancing the playbook that has put XDEMVY on the path to more than $2 million in potential peak sales. As Bobby mentioned, XDEMVY is the cornerstone of our company. Across every metric that matters, eye care professional adoption, consumer activation, and commercial execution, the business has never been stronger. These three priorities are reinforcing one another, which is exactly why XDEMVY continues to outperform. The clearest evidence is the change we're seeing in ECP behavior. I recently spent time in the field hearing firsthand from doctors about how the conversation around DB has evolved. Eye care professionals, or ECPs, are no longer asking whether they should treat DB. They're asking how broadly they should be screening for it, and how many more patients can they treat.

The numbers reinforce the acceleration we are seeing. Over the past year, the number of ECPs prescribing XDEMVY at a year daily cadence has doubled, and our top doctors have continued to increase prescribing month after month. That's an important shift. It signals that the market has moved beyond initial adoption and towards the standard of care. We're also seeing retreatment rates advance into the high teens, creating an increasing source of demand alongside new patient prescriptions. Combined with broader ECP adoption, that gives us even greater confidence in the long-term trajectory of the business. Our growing body of clinical evidence is also helping to deepen that conviction. Recent studies have shown that DB is common in patients with chalazia, which further reinforces XDEMVY as the standard of care over tea tree oil and highlights the potential infection risk associated with Demodex and bacterial co-infestation.

Together, these findings are encouraging ECPs to screen more consistently during routine eye exams and identify patients with DB they may not have diagnosed previously. In addition, our key account leaders, or KALs, are now fully deployed across our highest potential practices. They are helping those practices embed screening more consistently, identify more patients, and expand treatment over time. The field feedback I'm hearing was echoed in a recent survey of these same doctors. More than 80% of physicians told us that they expect to increase XDEMVY prescribing over the next year and beyond. This strongly signals continued momentum as we work to reach the estimated 25 million Americans living with DB. While ECP behavior is deepening the market, our consumer efforts are expanding the top of the funnel. Our consumer campaigns are introducing millions of people to a disease that they never heard of.

John Cena, our celebrity spokesperson, brings credibility and authenticity through his own experience with DB, while our new unbranded DTC campaign featuring Barry the Cat helps patients recognize symptoms in a way that's approachable, memorable, and easy to understand. As a result of these efforts, many patients are now asking for XDEMVY by name. We've also seen a 19% increase in high-value actions on the xdemvy.com website, including the use of our Find a Doctor tool and lastly, our AI-powered concierge, which helps patients better understand their symptoms and take the next step with their ECP. Unaided awareness of DB has also climbed to approximately 30%, which is remarkable when you think about how far we've come since we first launched our DTC campaign. The response has been powerful and clearly resonates with patients. They aren't simply hearing the message. They're becoming educated, engaged, and motivated to seek care.

Our commercial pillars are working in concert just the way we envisioned. Greater awareness brings more informed patients into eye care practices. Stronger evidence and field execution helps physicians identify and treat more patients. Positive clinical experience further reinforces confidence and adoption. When I look at the business today, I see a potential $2 billion opportunity that is unfolding exactly as we planned. That's why my confidence in XDEMVY has never been stronger. Its continued success is not only driving growth, it is creating the foundation for Tarsus to invest in programs like gildeuretinol and expand our impact for patients across eye care. With that, I'll turn it over to Sesha.

Thank you, Neera. This is a momentous day for Tarsus and our mission to serve patients. We believe ALK-001 is the most compelling program in development for Stargardt disease. As you heard from Bobby, it has the potential to become a foundational medicine for patients with no approved therapies today. Stargardt is a serious inherited retinal disease that often begins in childhood or adolescence, with more than 36,000 diagnosed patients and a total estimated 86,000 patients in the United States. Vitamin A is essential for healthy vision and is a key component of the visual cycle. Stargardt is caused by a genetic mutation that leads to formation of toxic vitamin A dimers known as bisretinoids. These toxic dimers can damage the retinal cells responsible for central vision, and over time can cause blindness. The consequences can be devastating.

Half of patients diagnosed before age of 20 are expected to become legally blind within 7 years. 7 years. That's a reality facing many children and young adults living with Stargardt disease today, and it's also the urgency for this program. ALK-001 is an investigational modified vitamin A analog designed to slow the formation of these toxic byproducts while preserving the normal visual cycle. It has the potential to address the dimensions that matter most to patients, slowing the progression of a blinding disease and preserving visual function. To date, the program has generated encouraging evidence of visual function preservation with no evidence of negative treatment-related effects on night vision, dark adaptation, or color vision. As you can see here, the TEASE studies showed ALK-001's potential to preserve the visual cycle and acuity, slow retinal atrophy, and its unmatched long-term tolerability profile.