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01/11 18:39
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates strong growth in prescriptions and refill rates, with positive trends in doctor adoption and patient adherence. While operating expenses are expected to rise, the company's confidence in XDEMVY's potential and strategic DTC investments suggest sustainable growth. The Q&A section highlights robust market expansion and product development, despite some management hesitations on specifics. Overall, the positive momentum in prescriptions, strategic market expansion, and optimistic guidance on future growth, despite increased expenses, suggest a positive stock price movement in the near term.
Net Revenue $119 million in Q3 2025, reflecting double-digit growth from the second quarter. This growth is attributed to strong execution, increasing physician engagement, and the impact of the XDEMVY product launch.
Prescription Volumes More than 103,000 bottles of XDEMVY dispensed to patients in Q3 2025, representing double-digit growth from the second quarter. This growth occurred despite Q3 typically being a softer quarter for eye care products due to holidays and vacations.
Gross-to-Net Discount 44.7% in Q3 2025, essentially flat compared to Q2. This was driven by adjustments to the Medicare Manufacturers Discount Program and an increase in Medicare patients entering the catastrophic coverage category.
Operating Expenses Expected to increase in Q4 2025 due to variable costs tied to increased volumes and demand, as well as higher quarterly DTC investment, bringing the full-year DTC investment to the top end of the $70 million to $80 million range.
Retreatment Behavior More than 10% of weekly prescriptions are now refills, climbing to mid- to high-teens among the earliest patient cohorts. This trend is expected to stabilize around 20% over time, contributing to sustainable growth.
XDEMVY sales and adoption: XDEMVY is now one of the best-selling prescription eye drops, with over 103,000 bottles delivered and $119 million in net revenue for Q3 2025. More than 20,000 doctors have prescribed it, with increasing utilization across patient segments. The product is being integrated into daily eye care practices, supported by direct-to-consumer campaigns and clinical recognition.
Pipeline development: Tarsus plans to initiate a Phase II trial for ocular rosacea by the end of 2025, addressing a significant unmet need. Additionally, a Phase 2b study for TP-05 for Lyme disease prevention is anticipated in 2026.
Global expansion: Tarsus is exploring opportunities to expand into Europe and Japan, with regulatory discussions ongoing. A preservative-free formulation for Europe is expected to be submitted in 2026, with potential approval in 2027.
Financial performance: Tarsus achieved $118.7 million in net product sales for Q3 2025, with double-digit growth in prescription volumes and revenues. The company expects Q4 sales to reach $140-$145 million, with annual revenue projected at $440-$445 million.
Operational efficiency: Gross-to-net discount stabilized at 44.7%, reflecting broad coverage and rising demand. Distributor inventory levels remained steady at 2.5 weeks.
Strategic focus: Tarsus is focused on category creation in eye care, leveraging its success with XDEMVY to build momentum for future products like ocular rosacea and Lyme disease prevention. The company is also considering flexible commercial strategies for international markets, including partnerships and third-party distribution.
Regulatory and Medicare Dynamics: The gross-to-net discount was impacted by adjustments to the Medicare Manufacturers Discount Program (MDP) and an increase in Medicare patients entering the catastrophic coverage category, where manufacturers bear a greater share of costs. This dynamic is expected to continue through year-end, potentially affecting profitability.
Seasonal Demand Variability: The fourth quarter demand is expected to be affected by major conferences and holidays, which could lead to fluctuations in sales and prescription volumes.
Pipeline and Strategic Execution Risks: The company is planning to initiate Phase II trials for ocular rosacea and Lyme disease prevention programs, but these are still in early stages and subject to clinical and regulatory uncertainties. Additionally, international expansion plans in Europe and Japan involve regulatory discussions and potential delays.
Operational Cost Increases: Operating expenses are expected to rise in Q4 due to variable costs tied to increased volumes and demand, as well as higher investments in direct-to-consumer (DTC) campaigns.
Market Competition and Adoption: While XDEMVY has shown strong adoption, the company acknowledges that broader physician adoption and patient retreatment behavior are still evolving, which could impact long-term growth.
Revenue Expectations: For the fourth quarter, XDEMVY net product sales are expected to be in the range of $140 million to $145 million, representing annual revenue of $440 million to $445 million for 2025.
Gross-to-Net Discount: The gross-to-net discount is expected to stabilize in the range of 43% to 45% for the fourth quarter and beyond 2025.
Operating Expenses: Fourth-quarter operating expenses are expected to increase due to variable costs tied to increased volumes and demand, as well as an increase in quarterly DTC investment, bringing the full-year DTC investment to the top end of the $70 million to $80 million range.
Pipeline Development: The Phase II study for TP-04 for ocular rosacea is planned to initiate this year, with top-line data anticipated in 2026. A Phase 2b study for TP-05 for Lyme disease prevention is expected to begin in 2026.
International Expansion: Discussions with regulators in Japan are ongoing. The preservative-free formulation in Europe is on track for submission in 2026, with potential approval in 2027.
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The earnings call indicates strong growth in prescriptions and refill rates, with positive trends in doctor adoption and patient adherence. While operating expenses are expected to rise, the company's confidence in XDEMVY's potential and strategic DTC investments suggest sustainable growth. The Q&A section highlights robust market expansion and product development, despite some management hesitations on specifics. Overall, the positive momentum in prescriptions, strategic market expansion, and optimistic guidance on future growth, despite increased expenses, suggest a positive stock price movement in the near term.
The earnings call highlights strong financial performance, with a 217% YoY sales increase and stable gross margins. The DTC campaign is driving higher-than-expected patient engagement, and the company's financial position is robust with $381 million in cash. While SG&A and R&D expenses have risen, they support growth initiatives. The Q&A session reveals positive sentiment from analysts, with no erosion in prescriber base and high potential for XDEMVY. Despite some management vagueness, overall guidance and expansion plans are optimistic, suggesting a positive stock price movement in the short term.
The earnings call highlights strong financial performance with a 217% increase in XDEMVY sales and robust cash reserves. The direct-to-consumer campaign and expanded sales force are driving growth, and the company is pursuing global opportunities despite regulatory risks. While increased marketing and R&D expenses could impact profitability, the equity financing reflects market confidence. The Q&A session reveals positive feedback from doctors and no significant disruptions in regulatory meetings. Although long-range guidance is not provided, the overall sentiment is positive due to strong sales growth and strategic initiatives.
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