Good afternoon, and welcome to the Tarsus' First Quarter 2024 Financial Results Conference Call. As a reminder, this call is being recorded. At this time, I would like to turn the call over to David Nakasone, Head of Investor Relations, to lead off the call. Please go ahead.

Thank you. Before we begin, I encourage everyone to go to the Investors section of the Tarsus' website to view the earnings release and related materials we will be discussing today. 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, Sesha Neervannan, our Chief Operating Officer. I'd like to draw your attention to Slide 3, which contains our forward-looking statements. During this call, we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors contained in our SEC filings for additional detail. With that, I will turn the call over to Bobby.

Good afternoon, everyone, and thank you for joining us. 2024 is off to a great start for Tarsus, and I'm excited to share our progress with you today. We continue to build and grow a new category with exceptional commercial performance and make strides to do it again with the advancement of our pipeline. I'll start with XDEMVY, the first and only FDA-approved treatment for Demodex Blepharitis, or DB for short, which is continuing at a tremendous pace, and not just in terms of sales. We are establishing a new market, and I know we are only scratching the surface of what we can achieve with XDEMVY for DB patients and their doctors. In just the second full quarter of launch, we are seeing increased adoption amongst both existing and first-time prescribers, as well as increasing demand among patients. As a result, we reported nearly $25 million in net product sales this quarter and delivered approximately 26,000 bottles of XDEMVY to patients. As of last week, more than 8,000 eye care professionals, or ECPs for short, have started their patients on XDEMVY, and more than half are prescribing to multiple patients. These remarkable results are a testament to our category-creating approach, which centers on the clear, compelling value proposition of XDEMVY for all stakeholders; the positive impact of our educational efforts in building a new market, and finally, the expertise and commitment of our commercial and medical teams. We are only just beginning to see the impact of XDEMVY. I've been spending a lot of time in the field with our sales team and ECPs, and I see they're excited to share their early patient experiences, which illustrates the importance of our efforts and the opportunity ahead. Most recently, I was in Georgia visiting a variety of optometrists and ophthalmologists. I saw firsthand the journey each new eye care provider takes to understand, first, the sheer volume of patients in their clinics with DB; then how to prescribe and facilitate medication access for their patients; and finally, the initial experience with the first several XDEMVY prescriptions. The medicine does not disappoint, and momentum is continuing to build. As doctors gain experience, they start looking more and finding more DB patients, initially those presenting with the chief complaint, and over time, more and more diagnosed upon further examination. Whether the ECP was gaining initial experience or has become a champion of XDEMVY, I did not hear anyone who felt they had realized the full potential of patients they could serve. We have also made great strides in engaging our 15,000 target ECPs and aspiring more than half of them to action with XDEMVY so far. Other key drivers of our success are the creative and targeted educational initiatives we launched to raise awareness of DB among patients, providers, and payers. These include Mite Party, our first consumer-focused campaign launched earlier this quarter, as well as prior ECP-focused campaigns. These strong initiatives help promote the behavioral changes needed to increase awareness and diagnosis of DB. These efforts are also driving greater patient demand and utilization amongst the 1.5 million patients already diagnosed with DB. And we're beginning to see early traction among the patient segments we believe make up the remaining 5.5 million who visit the ECPs with complementary eye conditions such as dry eye disease, cataracts, and patients like myself who struggle to stay in their contact lenses. Not to mention the additional 18 million patients visiting ECP offices who we know can ultimately be served with XDEMVY. We knew this category-creating product had blockbuster potential, and it makes me so proud to see the launch of XDEMVY off to such a strong start. But as we go beyond the early adopters, we know it will take more time and more engagement to support the next group of ECPs to become routine prescribers and to reach deeper into the additional patient segments in their clinics. In my most recent visit to the field, I experienced firsthand the scale of the educational opportunity ahead. More visits by our field teams lead to more ECP engagement, or more prescriptions, which is why beginning in the third quarter, we plan to add even more fuel to the fire with the expansion of our sales force. We're also contemplating a consumer campaign in our efforts to continue the upward launch trajectory of XDEMVY and reach even more patients. We are further investing in greater capabilities and capacity now because we see the demand, positive payer feedback, and growth potential of XDEMVY. With this further investment, we believe we will be able to achieve our goals even faster, and I look forward to keeping you updated on our progress. Before I turn the call over to our Chief Commercial Officer, Aziz Mottiwala, I also want to highlight the progress we made with our pipeline this quarter with the reporting of positive clinical data from two Phase II studies, one for the treatment of Rosacea and another for the prevention of Lyme disease. We remain on track with our plans to bring these data to the FDA by the end of this year, along with the positive Phase II data for Meibomian Gland Disease we already reported. I'm so proud of the foundation we have built here at Tarsus. The strength of our first commercial product launch has put us well down the path of becoming an eye care leader. Thanks to the relentless execution of our world-class team, we have only just begun to realize the full potential of XDEMVY. We look forward to boosting this launch with additional resources while also continuing to advance the pipeline of other potential category-creating therapies. Aziz, over to you.

Thanks, Bobby. The experience you shared represents what we are hearing from the field more broadly about the positive impact of XDEMVY. Knowing we can make a difference in the daily lives of patients is deeply motivating as we work to bring XDEMVY to millions of patients who are living with this pervasive and debilitating eyelid disease. As Bobby noted, we generated nearly $25 million in XDEMVY sales this quarter. That's an increase of almost 90% over last quarter. Additionally, more than half of our target 15,000 ECPs are now writing XDEMVY. And as anticipated, we maintained a consistent gross-to-net discount of approximately 55%, which was encouraging in the face of traditional first-quarter headwinds. These robust metrics highlight the success of the differentiated and disruptive approach to launch we laid out last year, as well as the commitment of our best-in-class sales force, which is continuing to raise the bar on new product launches. And as Bobby noted, we're just getting started. In the early weeks of launch, we are predominantly reaching patients already diagnosed with DB. Now, in addition to the already diagnosed patients, we're also beginning to reach into other patient segments. Those who are seeking treatment for complementary eye conditions, in particular, patients with dry eye or those presenting for cataract surgery. Likewise, we are making significant progress with ECP adoption. Our existing writers are increasingly prescribing to more patients, and we're seeing initial signs of success in moving beyond the early adopters and into the next wave of ECPs. These successes are highly attributable to the educational efforts we initiated well before launch. The visually compelling patient and physician disease awareness campaigns that have become our homework, the peer-to-peer exchanges we are facilitating, and, of course, the commitment of our team. All of this gives us great confidence in the full market potential of XDEMVY. But as we said, building a blockbuster takes time, and creating a new category requires sizable disease education efforts. So we're turning up our investment in the sales force and in the size and scope of our consumer educational efforts. Moving into the next phase of launch, we know that getting more ECPs to become prolific writers is going to take more time and more business. As part of our effort to increase demand within the current base of prescribing ECPs and to secure the next phase of recurring writers, we plan to recruit, hire, and onboard approximately 50 new sales representatives and leaders by the end of the third quarter. While that's no small feat, the success of the XDEMVY launch and the culture we've established at Tarsus has generated a high volume of interest from folks with significant sales leadership talent, and we're excited to apply their experience to positively disrupting global markets. We also believe we can grow the market directly through impactful consumer advertising and marketing efforts like our recent Mite Party campaign. This dynamic multichannel campaign is designed to elevate awareness of DB and encourage people to visit ECPs for treatment. Additionally, our most recent market research indicates that more than 80% of patients said that if they experience symptoms of DB, they would seek out their ECPs for a proper diagnosis, giving us confidence in the potential impact of an even more fullsome and broad consumer campaign on streaming TV, which we're considering launching later this year. On the payer front, I'm pleased to report that we have secured multiple payer contracts since our year-end earnings call just a couple of months ago, including two major commercial plans with approximately 18 million covered lives that have placed XDEMVY on preferred status. Payers continue to value the high unmet patient need and strong product efficacy of XDEMVY. As with accretive contracts, there's a lag before coverage begins, and we should start to see the benefits of this coverage in the second quarter of 2024. I'd like to close by acknowledging the entire Tarsus team for their efforts in helping us reach more and more patients in need of a solution. Our tremendous results this quarter speak not only to the compelling value proposition of XDEMVY and the power of category creation but also to the expertise, creativity, and tenacity of our team. With that, I will turn the call over to Jeff to discuss our financial results and provide an update on our clinical pipeline. Jeff?

Thanks, Aziz. The first quarter of 2024 was another example of how we are continuing to raise the bar for eye care product launches. Among the key highlights, we generated $27.6 million in total revenues, comprised of approximately $24.7 million in XDEMVY net product sales and approximately $2.9 million in license fees and collaboration revenue from the signing of a new China Out-License agreement with Grand Pharma for TP-O3. As part of this agreement, LianBio, our previous partner, made a one-time payment of $2.5 million and an equity warrant cancellation payment of approximately $400,000. We also completed an equity raise of nearly $108 million and strengthened our financial position with a $200 million non-dilutive financing commitment from Pharmakon Advisors, a leading life science investor. We are encouraged by the increasing number of eye care professionals and patients benefiting from XDEMVY. We are also pleased with the progress we're making with payers, as evidenced by the additional payer contracts we secured since our year-end earnings call, as Aziz mentioned earlier. And to be clear, the benefits of these new major commercial plans we secured are not reflected in the first-quarter gross-to-net numbers we're reporting today but are expected to benefit the second quarter and beyond. As expected, we saw a steady gross-to-net discount of approximately 55% despite the impact of typical first-quarter dynamics, including higher patient out-of-pocket costs due to plans reset in deductibles and the Medicare coverage gap. Looking ahead, we remain on track for broad commercial coverage by the end of the year and Medicare coverage beginning in 2025. While we continue to work with the payers to establish commercial coverage, there's always a chance that payers could decide to implement short-term additional requirements and/or hurdles potentially impacting XDEMVY's near-term progress. Further, we expect to see similar dynamics in second-quarter scripts, consistent with what we've seen over the last two quarters, including holidays and vacations, the out-of-office time due to medical conferences, as well as other patient dynamics, all of which could impact net sales. As a reminder, we recognize revenue when we ship XDEMVY from our warehouse to the distributors, not on the bottles dispensed to patients. In the first quarter, due to strong demand coming off the initial launch, our distributors increased their extended purchases, resulting in approximately one additional week of days on-hand inventory at the end of the first quarter versus the fourth quarter of 2023. We do not expect to see this incremental stocking in the second quarter. We further expect for the second quarter days on-hand inventory to remain consistent with the first quarter and an increase in the number of bottles dispensed to patients to be in line with the increase in the number of bottles dispensed to patients we saw in the first quarter. We also expect gross-to-net discounts to improve incrementally in the second quarter and continue to improve quarter-over-quarter on our expected steady state of 50% in 2025. We ended the quarter with a strong balance sheet of approximately $298 million in cash and marketable securities, inclusive of the $108 million equity raise. Additionally, in April, we refinanced our existing term loan with a new $200 million credit facility from Pharmakon Advisors, which enables us to borrow a larger sum on more flexible terms compared to our previous credit facility. We elected to draw $75 million at the close, providing us with a net of approximately $40 million after the repayment of the previous facility in full. This will further enable our ongoing efforts to expand our pipeline as we progress towards our goal of becoming a leader in eye care. Based on the health of the business and the success we are seeing in the early days of the launch, we plan to deploy a portion of this capital to support the following key launch initiatives that Aziz highlighted earlier: hiring an incremental 50 sales representatives and leaders, ensuring we're continuing to increase the depth and breadth of adoption as we begin to engage with the next wave of target ECPs, and potentially increasing our investment in direct-to-consumer advertising, including streaming TV, to encourage more patients to see their eye care providers. Turning to our P&L, our total operating expenses were approximately $65.3 million. The increase in operating expenses quarter-over-quarter was primarily driven by increases in cost of sales from the launch of XDEMVY and increases in selling, general, and administrative expenses due to the addition of commercial infrastructure, marketing and education efforts, and the sales force to support the launch of XDEMVY. Gross margins for the first quarter were approximately 93%, which includes the royalty we pay to Elanco. Looking at the second quarter, we expect total operating expenses to be in line with the first quarter of 2024. As we move into the second half of 2024 and based on our current plan, we expect total operating expenses to increase due to the sales force expansion, which we expect to be fully deployed by the end of the third quarter, and potential DTC efforts in the fourth quarter. Turning now to a quick review of our pipeline, we recently reported three positive top-line data sets for all of our Phase II programs: TP-03 in Meibomian Gland Disease, TP-04 in Papulopustular Rosacea, and TP-05 for the prevention of Lyme disease. All three programs target the underlying cause of the disease, address high unmet needs, and are based on lotilaner, the same active ingredient found in XDEMVY. The next steps for advancing all three programs include completing full data analysis of the Phase II studies and engaging with the FDA by the end of the year. We look forward to providing updates on each of these programs as they progress. Finally, we plan to continue strategically investing in XDEMVY and our pipeline that is designed to create other new categories of medicines. With that, I will turn the call back to Bobby for final remarks.

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

The first question comes from Eddie Hickman with Guggenheim Securities.

I have a couple of questions. You mentioned that your prescribers increased from 6,000 to 8,000, but only 50% have written the second prescription. Can you provide insight into how much of the volume is coming from a small group of prescribers and why the remaining 50% are not writing more? Additionally, Aziz, you mentioned the penetration extending beyond those initially diagnosed patients. Are you starting to see evidence of that in the claims data you referenced earlier?

Thank you, Eddie. Before I pass to Aziz, this is Bobby. I just want to make a couple of comments. So to your question, we are seeing our category-creating medicine taking hold. And it's taking all the patients, doctors, and payers, and really, that's why the time is now to double down on education; education involving the sales force, DTC potentially, and other efforts. We look forward to building this market and ultimately serving more patients, and I'll ask Aziz to address the prescribing dynamics and the patient dynamics that you've asked about.

Yes. Thanks, Bobby. And Eddie, great question. Thanks for that. I think the two things we're really delighted by are the continued progress and momentum we're seeing on that new prescriber adoption. We've consistently added about 2,000 prescribers per quarter. So we haven't slowed at all, and that 50% metric has endured through the course of the launch so far, right? So I think there's a couple of things you can extrapolate from that. One is we're continuing to build new prescribers coming in; the question of why haven't more of them written a second script. Well, a lot of them just started a couple of weeks ago, right? So that number is contemporary. Right? That's not just for the first quarter. That's as of the most recent week of data that we have. So a large proportion of these physicians just haven't had the chance to write that second script yet, and that's consistent with what we saw last quarter as well. In terms of how concentrated it is, I think as we add more prescribers, that concentration continues to broaden. And I think that's driven really, as we talked about in the comments earlier, by doctors that once they get to about 5 to 10 scripts, they really start to get into a routine with XDEMVY. They start to look for it more routinely. They've seen the benefits of the product. What happens is they start to think about this in more patient types. So beyond the traditional Demodex Blepharitis patient, they're starting to think about, 'oh, here's a dry eye patient that failed a therapy or two. Let me take a beat and let me look at their lids. Sure enough, if they have cataract, I can treat them, and six weeks later, I can resolve that problem.' If that works, then let me think about my presurgical patients and in my pre-op evaluation, let me scan all the lids to make sure these patients have a holistic good outcome. So I think what you're seeing is that as we continue to add new prescribers, the core base of prescribers continues to expand as well. So utilization across the prescribing base expands. And as we talked about, our goal is to maintain this momentum of adding new prescribers and, of course, then increasing the depth of prescribing, which is really one of the reasons we're thinking about expanding the sales force. So, in short, we're really pleased with that momentum. I think it's a great sign of health that we've continued at that clip. We haven't seen any slowing of new prescriber adoption yet, and I think that speaks to the work we're doing, as well as the value of the product.

Our next question comes from Balaji with Barclays.

So, a couple of questions from me. As I think about the dynamics between an ECPs listening to your sales force detailing it and writing a prescription, what have you seen with regard to those ECPs, who are not yet prescribed, what is it that's still holding them back? Are they looking for additional data? How do the dynamics work there? That's one. Two, looking at the data provider metrics that we track, I mean, I did see around 27,000 bottles and $34 million of primary sales. And if I had to extrapolate this to previous quarters, we would have looked to around $17 million to $20 million. But clearly, you're reporting a substantially higher number; is this all due to the fact that you report sales as they ship out of your warehouse and not primary sales?

So I'll take the first part, and then I'll pass it to Jeff to speak to the revenue bookings. In terms of the adoption we're seeing your question of what might be holding back the other remaining 7,000 doctors that comprise our 15,000 audience, if they have 8,000 unwritten so far? And we don't see a lot of pushback in the data. It's a function of some doctors being just late adopters. They want to see how other doctors do. They want to see how the product performs. They want to hear the experience of other doctors. And that's a critical thing that we've seen. Some of this also takes repeat visits from the sales force, right? It's a new category. It takes time. It's a new habit we're building. So sometimes it's a repetition that's required from the sales force. And then lastly, of course, some doctors are a little bit more averse to working through new products and market access, right? They're a little bit hesitant to do the prior authorization process, etc. And again, that is resolved when we get repeat visits in because our process is actually really good. We've done a great job with our four pharmacies. Our payer coverage continues to improve. And the reps have done a great job of being able to get in there and educate the practice holistically on how to manage that process. It's actually a lot easier than most new products. So I think in short, it takes multiple visits, right? And I think that's again why we are thinking about expanding the sales force. Two, they love to hear the experience of other doctors. And now as we're getting more and more doctors with experience, that peer-to-peer impact is starting to take hold. And I think that's why we're continuing to see that ramp in new prescribers. And then lastly, it's just getting into the office and really educating that whole office component. And you can imagine longer term, as we mentioned in the comments, potentially even empowering the consumer. If the consumer is asking that's certainly going to potentiate the position to reconsider and write the product. So I think it's a matter of time. It's a new category. You have to build these new habits, you have to show the success. We've been doing that consistently over the last couple of quarters, and we've got some great plans in place to continue that momentum. Jeff, do you want to comment on the revenue piece?

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

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

Balaji, it's Jeff again. We had guided that we expect them to be hitting the field sometime late in Q3. So I would model it out about $300,000 fully burdened cost per sales rep times 50 sales reps. And from a revenue perspective, we think it will be net neutral essentially. So from a P&L perspective, net neutral. So probably the same incremental revenue will be generated in 2024, but obviously seeing much more of an upside in 2025.

Next question comes from François Brisebois with Oppenheimer.

So I was just wondering, you had talked about DTC. I think it was maybe waiting to see the impact of Medicare, which is obviously important with this patient population. So can you just talk maybe a little bit about the strategic move to maybe do the DTC campaign earlier, if that’s something you're contemplating? What are the pluses and minuses of that, if any?

Sure. Frank, it's Aziz. I think we are starting to see some real great momentum here, right? And that's really what's potentially justifying to think about this a little earlier. And the way to think about this is really two things we're doing, right? We really want to establish a core base of prescribers as we've continued to do. We think we can accelerate the depth of prescribing with the sales force expansion. So that's really the first step in accelerating the launch. The consumer piece is something we're contemplating potentially in Q4, and you're spot on, right? The two things we're going to look for are making sure that, that incremental sales force is out there that hit the ground, they've got good momentum. And then secondly, we want to make sure that we're delivering on our goals in terms of market access and have a clear line of sight to Part D in 2025. Clearly, we're really pleased with how that's going and we feel confident, which is why we're communicating the contemplation to do this in Q4. But for any reasons, if the market conditions weren't right, certainly, we push it back. And likewise, if we saw opportunities, we could solidify that plan to launch in Q4. So I think we're still watching the launch of progress, but we feel very confident in the trajectory we're on. We're very clear in the plan we have in terms of the sales force build, market access, and then DTC, that's been very consistent with our plan. And if those things are hitting sooner, why wouldn't we go out there sooner and start to empower the patient and drive incremental volumes here.

Understood. Can you provide some insight into how ophthalmologists and optometrists have received the product? From the doctor's perspective, and from the patient perspective, have you come across any surprising insights or confirmations regarding symptomatic versus asymptomatic patients following the launch? Additionally, it seems like some doctors may have assumed they were already looking for these issues, but do you think some are now reevaluating their approach? Are they realizing that they may not have been examining patients correctly, possibly missing something noticeable through the slit lamp?

Yes. So I think there's a couple of things there, right? From an optometry and ophthalmology standpoint, very consistent, right? About two-thirds optometry, about one-third ophthalmology. We see deep utilization across both segments. We were at the ASCRS conference in Boston a few weeks back. Receptivity in ophthalmology is really great. In fact, you're starting to hear more organically from the podium right at ASCRS, the American Society of Cataract and Refractive Surgeons, right? That's cataract surgeons, and they're starting to say, 'Hey, some of the top thought leaders are starting to implement this as a routine habit in their presurgical evaluations.' And I think that speaks to even though a little bit more volume is coming out of optometry that there's some real critical opportunity here in ophthalmology. So we're seeing that progress across both segments really nicely. You asked a little bit about the patients. I think what happens is initially the doctors probably start with the patient that's got a chief complaint with a really clear collarette. They treat those patients, and then two things happen. One is they do start looking a little bit more closely, right? It's that positive feedback, 'Hey, that worked really well. Let me take a closer look. Let me make sure I'm not missing this because this is a problem I can solve.' And then secondly, they're less and less waiting for the patient to initiate that dialogue. They're actively asking the patient, 'How are you feeling? Do you have any trouble wearing contact lenses? Your eyes still tired in the morning or at night?' and they're actually eliciting the feedback from the patients. So as the doctors gain that confidence, we talk about that 5% to 10%, that's really what happens, right? The two elements are that the doctor starts to look a little bit more closely, and they start to question the patient a little bit more. So this idea of a symptomatic versus asymptomatic patient really is not a factor. Most of these patients are symptomatic, 90% plus are symptomatic. It's just a matter of the doctor taking that extra effort to look and ask, and we're seeing that as the physicians get experience, they're doing just that.

And I'll just add one personal anecdote. So I'm a physician. Being in the field, it really struck me that patients are either coming in with a chief complaint or they're being asked on history or being examined in the physical. And that's when you see collarettes in those patients that don't necessarily have DB as a prior diagnosis. And so the asymptomatic and symptomatic, I think when you get in the field and talk to doctors, it's a lot more about what's the patient presenting with if there's a chief complaint. I was talking to a Key Opinion Leader who's been one of our big prescribers this morning, and he reaffirmed that to me that he's seeing more and more patients and looking for more and more. This KOL has over 20 years of experience treating DB with some of the prior options that weren't as effective. So it really crystallizes for me that market education and the physician journey that Aziz has described.

The next question comes from Jason Gerberry with Bank of America.

Just a couple on Medicare actually. So does Part D redesign impact any of your operating assumptions around sort of steady take gross to net? And then how should we think about the addition of Part D next year? Does it open the floodgates to half the market? Or do you feel like you're already getting patients who are Medicare patients but maybe they're getting covered through some medical exceptions or something like that? Just curious if you can sort of frame how the impact of half the market opening up to you next year from an insurance perspective how that potentially impacts 2025 volumes?

Yes, there are a few points to consider. First, regarding gross-to-net, we are approaching a steady-state of 50%, which includes all factors related to Part D. We have incorporated this into our goals. As we look ahead to 2025, we are already witnessing an influx of Medicare prescriptions, particularly through exceptions or prior authorizations. This volume appears to be stable, and we expect it to grow as we attain greater coverage. However, it’s important to note that at the start of the year, while we gain formulary access, we also face typical first-quarter challenges, which means it will take some time to navigate through that initial period. This volume growth won’t happen overnight; achieving coverage can trigger growth quickly, but realizing that potential will require several months to reach a steady state. Ultimately, the key to achieving that 50% gross-to-net target is our ability to optimize coverage, which will mean less reliance on providing free products. In conclusion, we have accounted for all factors in our gross-to-net modeling, and reaching a steady state of 50% hinges on our presence in Medicare. Volumes will gradually increase as we capitalize on this opportunity.

The next question comes from Andrea Tan with Goldman Sachs.

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

Yes. So we don't get into the specific breakdown. But what I can tell you is that clearly at 8,000, we're beyond 50% of our prescribing base. So clearly, we've gotten most of the early adopters or the vast majority of them. We're really deep in our eager treaters, and we're really starting to bring in those new to DB. And when you think about the sales force expansion, it's not as much of a reach play. We're very confident in our current sales force's ability to reach all these segments. We've been calling on all of them, but it's really an opportunity to be able to increase frequency and go deeper, right? So the early adopters have a higher prescribing pattern right now. They've really adopted this in their practice. The eager treaters are getting to that threshold, and the new to DB doctors are the ones that are just starting early prescribing and they're looking to get that second, third, eventually a fifth and tenth prescription to become routine. So while we don't get into quantitatively breaking those down, what I can tell you is that we've got the vast majority of early adopters. We've really made great progress in the early treaters. Now that there's new-to-DB doctors, we're working on getting them on board. The other things we can do beyond the sales force is really potentiate the success that early adopters have had and share that with the eager treaters and the new-to-DB. That's been one of the most compelling things, particularly when you go to conferences, you hear personal experience off the podium where doctors say, 'I wasn't even looking for this before; I started looking for this. I can't believe I was missing this, and I'm having great success. I've now implemented this across the practice, whether it be in my cataract patients, or if it's an optometrist, I'm starting to look at this when people complain about contact lenses or dry eye.' That compelling peer-to-peer education is something that we think is going to help unlock that new-to-DB doctor, in addition to our sales force. The third leg of that would be, obviously, the consumer; empowering the consumer really does resonate with the doctor. If the patient is coming in actively asking for a product, that is certainly going to potentiate the position to reconsider and write the product. So I think those are the waves we think about, and we've made great progress so far. The sales force expansion, continued sharing of success stories from the early adopters, and eventually, a consumer effort is what's going to allow us to deepen the prescribing across all these segments.

Got it. And maybe one quick question, if I may. Just recognize it may be a bit early, but curious if you're hearing anything yet on retreatments.

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

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