Good afternoon. And welcome to the Tarsus’ Second Quarter 2024 Financial Results Conference Call. As a reminder, this call is being recorded. At this time, I would like to turn the call over to David Nakasone, Head of Investor Relations, to lead off the call. David, you may begin.

Thank you. Before we begin, I encourage everyone to go to the Investor section of the Tarsus’ website to view the earnings release and related materials we will be discussing today. 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. I am excited to share yet another quarter of impressive results as we continue to exceed launch expectations for XDEMVY, including our own. This call is particularly special as we have just surpassed the one-year mark of XDEMVY being the first and only FDA-approved therapy for the treatment of Demodex blepharitis, or DB for short. It was an important opportunity to reflect on one of the most transformative moments in Tarsus’ history, while also looking forward to redoubling our efforts in this next phase of the XDEMVY launch. With just three full launch quarters under our belt, we are well on our way to creating what we believe will be one of the largest categories in eye care, based on three key metrics: the number of patients we are serving, the speed with which eye care providers or ECPs have adopted XDEMVY, and the exceptional high-quality payer coverage we have secured to date. To further accelerate our success, we are investing in an expanded sales force that we expect will be fully deployed by the end of this quarter and the planned launch of our first-ever consumer television campaign later this year. You’ll hear more about these plans from Aziz in a moment, but first, let’s turn to our outstanding Q2 results, which include generating more than $40 million in sales. That’s a 65% increase over Q1 2024, delivering more than 37,000 bottles to patients and increasing traction among our target base of 15,000 ECPs. Currently, approximately 11,000 of these ECPs are prescribing XDEMVY, with more than 60% prescribing XDEMVY to multiple patients. And finally, recognizing an exceptional growth to net discount of approximately 44%, that reflects the unique value of XDEMVY and the dedicated efforts of our market access team. As a result, we are now recording a net price of more than $1,000 per bottle. That’s an impressive standard by any measure and one that is rarely seen with other front-of-the-eye therapeutic launches. Importantly, we expect to maintain this high value throughout the remainder of 2024, with even more improvement anticipated in early 2025 when broad Medicare coverage comes online. Our mission since our founding has been to pioneer new medicines for diseases with significant unmet needs. And while creating a new category is not easy or fast, Tarsus is doing just that. Thanks to years of research, strong clinical trial results, months of prelaunch educational efforts and the relentless work of the entire team, we are delivering on the promise of a potential blockbuster. Perhaps the most exciting element is our strong belief that we are just scratching the surface of the potential of XDEMVY. We have made significant traction in reaching the roughly 1.5 million patients already diagnosed with and seeking treatment for DB. This initial addressable segment alone represents a potential billion-dollar market opportunity. Beyond that, we are already expanding into the additional segments we believe make up the remaining 5.5 million patients who visit ECPs with complementary eye conditions, such as dry eye disease, cataracts and patients who struggle to stay in their contact lenses. Not to mention the additional 18 million patients with DB visiting ECP offices who can ultimately be served with XDEMVY. Together, they represent a multi-billion-dollar potential opportunity. Any way you look at it, the enormous market potential of XDEMVY is clear. Millions of patients are actively seeking solutions. ECPs are excited by the success stories within their practices and motivated to identify and help more patients. We are seeing increasing adoption and utilization in the additional DB patient segments of dry eye, cataracts and contact lens users. And with the support of our field teams, more and more ECPs are moving along the continuum from trialing XDEMVY to championing it as a consistent prescriber. As a physician, I really enjoy being in the field, listening and learning from our ECPs who consistently tell me about the positive impact of XDEMVY on their patients. I recently met with a father-daughter team in Denver whose practice has been around for 30 years. During my visit, the father couldn’t wait to pull me aside to say that XDEMVY has delivered the best outcomes he’s seen in his entire career, and the good news is I’m hearing that same sentiment everywhere I go. Regardless of whether the ECP is an early user or an established champion, I am uniformly hearing how well XDEMVY is working for their patients, and every day they are finding more and more people to treat. And now, with an expanded sales force entering the field and planning for our consumer television campaign underway, I am even more convinced of our ability to further accelerate the number of patients served and deliver on the promise of this novel medicine. Before I pass the call to Aziz, I want to remind you that we are simultaneously advancing a robust pipeline based on lotilaner, the same promising anti-parasitic molecule used in XDEMVY. We remain on track to bring our three programs focused on meibomian gland disease, Lyme disease prevention, and rosacea to the FDA by the end of this year, and look to continue creating and leading in eye diseases that have not yet been effectively served. With that, I’ll turn the call over to our Chief Commercial Officer, Aziz Mottiwala, for more details on our commercial progress.

While echoing everything Bobby just said, what a phenomenal quarter. We’re obviously very pleased with the launch to date and our ability to continue delivering XDEMVY to more patients in need. We’re also delighted with the significant improvement in gross net discounts this quarter, which, as Bobby said, reflects payer recognition of the significant value of XDEMVY. This exciting development is primarily a result of contracts we secured with two of the three big commercial payers and one of the largest Medicare payers, which is now covering XDEMVY without a prior authorization. The quality of coverage we’ve secured in such a brief period of time is truly remarkable and rarely seen in eye care. As a result, we expect the gross net discount rate to remain relatively stable within the mid-40s through the end of the year. Another incredible outcome is the rapid level of adoption among our target ECPs that is happening much more quickly than we anticipated. As of August 7th, approximately 11,000 ECPs have started patients on XDEMVY, with more than 60% prescribing XDEMVY to multiple patients. What those numbers mean is that on average, each sales rep has changed the behavior of more than 100 ECPs, all of whom are now prescribing XDEMVY. This is a remarkable metric, but also a stark reminder of the importance of frequent and quality ECP interactions. I’m incredibly proud of the strides we’ve made so far with our current target of 15,000 physicians, but we know it can take an average of five to 10 visits to move an ECP from trialist to champion. Our current sales team is already maximizing both their time and their interactions with ECPs at a level of intensity and intentionality I’ve never seen before. But time is a finite resource, so we need more people in the field calling on our ECPs more often. This is going to allow us to realize the full potential of XDEMVY. As you know, we had always planned on a sales force expansion and the timing for executing on that plan was very well considered. We wanted to have a couple of strong revenue quarters under our feet, which we’ve now done, and we wanted to begin the expansion during a time that would be least disruptive to the business. We knew it would be a heavy lift for the sales team because we needed to take them out of the field to interview, hire, train, and onboard approximately 50 new employees, all while continuing to call on their target list of ECPs. I’ve been there before and it’s really no easy feat. That’s why we made the very deliberate decision to begin the hiring process in the summer when ECPs, their staff, and their patients typically take vacations and things generally slow down. To be clear, there’s never a good time to pull your sales team out of the field, particularly with such a promotionally sensitive product. And you’ll see some of those lost days reflected in the Q3 numbers alongside the general ECP office slowdown you see each summer. But I’m confident that once the expanded sales force is fully deployed, our strong upward trajectory will continue alongside the increasing ECP adoption of XDEMVY. And with our plan to turn up the dial on our marketing efforts in Q4, we are truly pouring fuel on the fire. DB patients are highly motivated by and responsive to the visual aspects of this disease. So we’re planning a hard-hitting, action-oriented DTC TV campaign that will be key to driving in more patients to their doctors to get screened for DB. In closing, our tremendous results this quarter speak to the compelling value proposition of XDEMVY and the power of category creation. With our expanded sales force preparing to enter the field, our anticipated consumer advertising campaign, and ongoing strong payer coverage, we expect a rapid acceleration of our current momentum, a strong close to the year, and continued opportunities for growth for years to come. As always, thank you so much for your time and interest. I will now turn the call over to Jeff Farrow, our Chief Financial Officer and Chief Strategy Officer, to discuss our second quarter financial results and outlook for the third quarter.

Thanks, Aziz. As highlighted by the team, Q2 marked yet another exceptional quarter of strong commercial execution that generated $40.8 million in XDEMVY net product sales, driven by more than 37,000 bottles dispensed to patients. Several new and impactful payer contracts, the results of which we expect to be reflected in the growth to net discount beginning next quarter, and a substantial improvement in growth to net discount of 44% compared with 55% in Q1, demonstrating a strong understanding of the disease burden by payers and their recognition of XDEMVY as the only FDA-approved therapeutic for a disease with high unmet need. The improved growth to net discount, which evolved much more quickly than we anticipated, primarily reflects the significant commercial coverage we gained during the second quarter, as well as the lower estimated impact for the Medicare donut hole in this quarter. Given the general characteristics of our patient population, most of whom appear not to have as many comorbid diseases, we now expect to see more of an impact related to the donut hole in the second half of the year. Accordingly, with further commercial and Medicare coverage to come, we now anticipate our growth to net discount to range from approximately 42% to 46%, exiting 2025 at the lower end of the range. Due to the Medicare donut hole dynamic I mentioned earlier, we expect to see the potential for a 1-point to 2-point increase in the growth to net discount from Q2 in the second half of this year, in other words, at the higher end of the range provided. Turning to our P&L, our total operating expenses were approximately $74.8 million for the second quarter of 2024. The sequential increase in operating expenses of approximately $9.5 million was primarily driven by increases in the cost of sales at XDEMVY due to the growing number of bottles sold, and increases in selling, general and administrative expenses due to the sales and marketing costs, the expanded sales force to further support the launch of XDEMVY, and other corporate expenses. Gross margins for the second quarter remained flat at approximately 93%, which includes the royalty and the amortization of any milestones we pay to Elanco. Finally, we ended the quarter with approximately $323.6 million in cash and marketable securities, inclusive of the approximately $40 million net drawdown from the Pharmakon credit facility signed in April 2024. Looking ahead to the third quarter, we do anticipate inventory levels will be similar to what we saw in the second quarter and we expect operating expenses to increase incrementally due to the sales force expansion and other XDEMVY-related marketing efforts. Additionally, and as Aziz mentioned, there are some specific dynamics in play that will likely impact our bottles to spend, namely the very deliberate and strategic decision we made to begin the sales force expansion process during the summer. We understood that there would be some disruption as we trained and prepared these new sales representatives and leaders, and we did this to ensure we were on the ground and ready to go during some of the most productive months of the year. This resulted in us pulling some team members from the field to interview, hire, and onboard the new sales force. We also anticipate the following factors could further impact our expectations for bottles to spend. First, the traditional summer slowdown that occurs at ECP offices. Over the last several years, we have seen this result in a decrease in new patient bottles dispensed for eye care products, in general during the third quarter. Second, summer vacations and holidays such as the 4th of July and Labor Day. With that in mind, we expect the number of bottles dispensed to patients in the third quarter to grow at a relatively modest rate of approximately 10% over Q2, meaning we expect approximately 41,000 bottles to be delivered to patients in the third quarter. The vast majority of these bottles will be to new patients as we are not yet seeing the benefits of meaningful retreatment volumes. Now, looking ahead to the fourth quarter, we expect to see a much stronger growth trajectory in bottles dispensed, resulting from our fully expanded sales team out in the field and patients making multiple ECP visits to maximize their insurance plan benefits before they reset in 2025. And finally, with the planned launch of our first direct-to-consumer television campaign, we expect our momentum to continue accelerating into 2025 when we will see the first fruits of those marketing efforts realized. In summary, we are pleased with both our ongoing launch performance and financial metrics and look forward to sharing more updates with you next quarter as we embark on the next phase of the launch. I will now turn the call back to Bobby for final remarks.

Thank you, Jeff. A couple of key messages about our launch. First, I am more confident than ever in XDEMVY’s growth because I hear from doctors every week, including this week where I met with several who stressed how they have never seen a medicine this effective and also described their own prescribing journey and how they see no limit on patients to diagnose and treat in their clinics. Second, I am excited about the near-term acceleration in serving DB patients as a result of XDEMVY. We expect to see an impact on prescriptions starting at an upcoming TV campaign. I know we are just scratching the surface with XDEMVY. Now, I’ll turn it over to questions.

Great. Operator instructions. The first question comes from Tim Lugo with William Blair. Tim, go ahead. Your line is open.

Thanks for taking the question and congratulations on a great quarter. Given the strong performance in the quarter and all the clarity around GTN and bottle dispense expected in Q3, I would just love to hear your thoughts around what I see as consensus of about $38.8 million or $39 million for Q3. You don’t need to give exact guidance, obviously, but I would love to hear your thoughts around consensus in Q3 and maybe even how it looks for Q4 as well?

Okay. Tim, it’s Bobby. Yeah. We do not explicitly provide guidance on that because we would be providing guidance on that based on an incomplete picture. However, if you do the math, we expect some trends and productivity improvements as we head into Q4 given the introduction of the sales force expansion.

That’s fine. I understand. Maybe also can you just broadly talk about when Medicare kicks in in 2025, given all the granularity around GTN in 2024, directionally is it, probably going GTN maybe takes a hit due to Medicare, but obviously the volumes should be at a much higher level. Can you just directionally speak to that?

Sure, Tim. This is Aziz. Thanks for that question. We have great coverage and we’re really pleased with that. That’s been one of the levers that’s gotten us to where we are today. We also mentioned on the call earlier that we signed one large Medicare payer and that will go into effect later this year, so we’re going to start to see some of that Medicare coverage this year. The remaining ones we do expect to kick in in 2025. I think what you can expect based on that is essentially stable growth to net between now and the end of the year.

Thank you so much.

Thank you. Stand by for our next question. The next question comes from Pavan Patel with BofA. Please go ahead. Your line is open.

Hey, guys. This is Pavan on for Jason Gerberry. Two questions from us. Firstly, appreciate the commentary for full year 2024 gross net discounts. I was wondering if the longer-term gross net discounts you expect to be a steady state here at the low 40s or is it likely to evolve as payer mix changes and you gain further coverage in 2025 and beyond? And then my second question is regarding your DTC efforts. So when do you kick those off, and how soon would you expect to see benefit from that in patient uptake? Thank you.

Happy to take the first part of the question and turn over to Sesha to talk about the DTC. So what we anticipate is a slight increase in the gross net discount, as I had mentioned, given the donut hole issue, where we’re seeing essentially more patients coming in in Q3 and we anticipate that to be in Q4. Of course, in Q1 of every year, you get copays reset, and so frequently there’s a larger gross net discount in that Q1 period. And then subsequent to that, in 2025, we expect that to improve sequentially to be sort of at, say, 42%-ish, the low end of the range we provided. And that should be pretty consistent with our long-term gross net discount beyond 2025.

Great. And then in terms of the DTC question, so we anticipate launching sometime in the fourth quarter. You’ll see some impact of that this year, but as you can imagine, it takes a few repetitions for the patients to see the ad a couple of times, and we think you’ll start to see some impact this year, but you’ll really start to see that take hold as we scale that effort into next year.

Thank you. Standby for our next question. The next question comes from the line of Cory Jubinville with LifeSci Capital. Go ahead. Your line is open.

Hey. This is Dennis on for Cory. Congrats on the quarter and thank you for taking our question. As we near 2025 and we start to think about the retreatment dynamics here, do you have any indication as to which patient profile is more likely to experience reinfestation that calls for retreatment? And in your view, kind of what percent of DB patients will ultimately require one or more courses of extended long-term treatment?

Yeah. Thanks for that question. So, as you can imagine, it’s still relatively early in terms of the retreatment volume. So I think if you look at the IQVIA data, you can see that patients get treated again sooner, and which types of patients may have more durability with the drug. In terms of what we expect to see long-term, if you go back to our Phase 3 studies and the follow-up we did, about 40% of the patients recur at month 12. So you can expect some proportion of those patients will get retreated. Over time, and again, that’s something that will scale over time. I don’t think about it as a step up, but essentially something that scales over time as patients get more experience with the drug.

Standby for our next question. The next question comes from the line of Andrea Tan with Goldman Sachs. Go ahead. Your line is open.

Hi all. This is Talani on for Andrea. Congrats on the quarter and thanks for taking our questions. A couple from us here. The first, wondering if you could characterize a little bit more about the quarterly growth and the number of the ECPs to date, especially in the context of penetrating the more eager adopters and the new-to-DB segments. And could you share the feedback that you’ve been getting on the disease education efforts from those providers?

Sure. Thanks, Talani, for that question. And when you look at the performance to date, I think one of the highlights has really been the performance of XDEMVY. It’s very unique in terms of the wow effect it has for patients, and I think that’s something that’s really gotten the physician community very excited. I think that’s one of the reasons we’ve seen a continuing scaling in our ECP adoption with over approximately 11,000 doctors writing prescriptions at this point. So it really speaks to the broad appeal of the drug and the utility it has in practice. In terms of getting beyond from early treaters to those different segments, I think there are two factors that really drive this. One is physicians getting their experience right. As they continue to get experience, seeing that wow effect in their practice, they start to think about using the product more broadly. So they typically start with a typical Demodex blepharitis patient. They see a handful of cases. They see the results. And then they start to think about other patient segments that really expand the utilization in the practice. The other factor is repeat visits from the sales force. Hearing that message again and again, and to your point, the feedback on the education has been very positive, and the physicians are very receptive. And we have so many of them that want to hear it, and our sales force can only get to them so many times. And that’s why we’re really excited about the sales force expansion. This is really going to create some capacity for our team to see these doctors more often, repeat that message, and provide that staff support to really facilitate that broadening utilization in the practice.

One moment for our next question. The next question comes from Frank Brisebois with Oppenheimer. Please go ahead. Your line is open.

Thanks for the question and congrats on the quarter. I was just wondering, in terms of practices, is it a question of, I’m sure at first there’s some practices where physicians were a little more skeptical at first, and then so maybe they try one patient or two patients and see how it works. Is it one of those situations where all of a sudden they are convinced that this is working and they just switch the entire practice to say, hey, make sure you look for these in the foot lamp on every patient, or is it more of a progressive, let’s wait and see on, the patient feedback and it’s more the patient starting the conversation? Just what are the dynamics there? Thank you.

Hey, Frank. It’s Aziz. Yeah. No. It’s a great question. One we see a lot of when we’re in the field and one we dig into a lot as well. I think what you see is that physicians are very curious. The drug is obviously getting a lot of attention in the space. So you do get doctors that want to write those first few cases. I think it varies by doctor. Some doctors get those first few cases, they see the results, they see the consistency and predictability, and they implement it in their practice. I would say even with those doctors, in many cases we’re just scratching the surface because they’re looking for it in certain areas, but they could be looking for it in other areas, and that’s where our sales team plays a key role. You do have some doctors that take a little bit more time, as you can imagine. In those cases, they want to see a handful more cases, typically about 10 cases or so where they really hit that tipping point. And then I think what happens is they start to look by segment. So I think the average physician doesn’t just say, okay, I’m going to wholesale change the practice over. They say, okay, I’m having great results with these patients. Who’s the next patient? Okay, a recalcitrant dry patient. I’ve got dry patients that are in the practice that are cycling through meds. Let me look at their lids. Okay, I’ve got great success there. All right, now let me look at my cataract patients and maybe start with premium cataracts and then broaden it. So there’s definitely a step-wise approach in which physicians adopt. And as we mentioned earlier, how can we facilitate that happening more quickly and that’s really getting in front of the doctor more often with the sales force. That constant education, that reminder to look forward in the different segments really enhances that. And I know, Bobby, you’ve been out in the field. Maybe you have some observations here as well.

Yeah. Just to echo, what I hear time and again is doctors, to your point, Frank, they get experience with the medicine and then they’re just amazed. I have not heard a doctor say, it didn’t work on this one or two patients and that’s just wind in our sails. And obviously when a doctor is able to deliver that to one of their patients, that gives them even more confidence. And then the other thing I hear time and again is the diagnosis becomes easier. The conversation becomes easier. Doctors start looking for other patients with different reasons to treat than perhaps the first few and that’s those additional segments that Aziz described. So I think we’re in this very positive loop of doctors getting great experience and then looking for more and more of the patients and very notably, not finding that they have reached the limit in finding patients in their own clinics they can serve. And that’s high-volume practices that are early adopters, but also more rural single practices that are not typically the early adopters. And to get 11,000 or 15,000 at this point means that we’ve had a very meaningful impact on educating a broad swath of this community.

Are you getting any doctors that are admitting that maybe they weren’t looking correctly in the past or is that not coming up with the physicians?

We hear that all the time. It’s actually one of the most fun parts of the job, right? It’s doctors. And I think it’s this value of category creation, right? As you hear that we’re solving a problem that was being missed and I think that’s a really compelling piece of it. I think it’s obviously very rewarding for us to hear that we’re able to change how things are being practiced and change the outcomes for these patients. But I think it’s also very compelling when doctors hear that from their colleagues at the conferences and on the podium. And that’s one of the most compelling parts of the story is, hey, did you know we were missing this and now we have a very clear and impactful solution that gets consistent and predictable results. And I always say that’s sort of the invisible hand on this launch is the physician testimonial. The doctors getting up on the podium and talking about their positive experience. To Bobby’s point, this drug doesn’t disappoint. The results are almost always consistent and patients come back with clear, healthy lids and becomes a very compelling story for us to hear. But more importantly, it becomes a compelling story for other doctors to hear from their colleagues. So that’s a really exciting part of the launch that does underpin the rapid adoption we’ve seen.

And we’re doing that right as these across so many of our efforts, whether it’s marketing or medical affairs. The peer-to-peer engagement here is another powerful amplifier of spreading the word.

That’s it for me. Thank you very much and congrats on a great quarter.

One moment for our next question. The next question comes from the line of Balaji Prasad with Barclays. Go ahead. Your line is open.

Hi. This is Michaela on behalf of Balaji. Thank you for taking our questions. I would like to know, from the 11,000 prescribers you mentioned, can you provide the breakdown of how many fall into the three groups you specified? I am interested in understanding how many are early adopters compared to those who are newer to DB at this time. Thank you.

Yeah. Thanks for the question, Michaela. So obviously we cut the data lots of ways. As you can imagine, it’s very dynamic. So we don’t go into that level of detail in this forum. But I think our focus is to say, okay, for each of these doctors, we’ve gotten to 11,000 of the 15,000. So we’ve gotten to the vast majority. Our focus is really going to be now. How do we start to pull those doctors from folks that are just getting that early experience? So we talked about earlier, which is becoming routine writers, routine prescribers. And how do we increase our frequency with our sales force expansion to facilitate that? So I think the way we think about this going forward is we’ve got a great prescriber base established and now the focus is going to be on that depth of prescribing, that enhanced utilization within the practice and that prescriber base.

Great. One moment for our next question. The next question comes from Eddie Hickman with Guggenheim Securities. Go ahead. Your line is open.

Good afternoon and congrats on the great quarter. Thanks for taking my question. So I appreciate the added color on the third quarter and fourth quarter dynamics in terms of bottle growth. But I’m wondering if you could help us think about 2025 and what the bottle growth should look like with the fully deployed sales force and DTC. It sounds like 4Q is going to be pretty strong. So I’m wondering, like, how many quarters beyond that do you expect that level of growth before it steadies out? And then on the summer holiday slowdown, like, is that unique to this early part of the launch or do you think that will be an annual pattern?

Hi, Eddie. It’s Jeff. Let me address your questions about growth and the launch. It's still too early for us to determine if the decline in new prescriptions is specific to us annually. However, we did notice a general decrease in new prescriptions for eye care products during the third quarter, so it's likely we'll see a similar trend in that period. We don’t have extensive historical data for XDEMVY at this stage. Regarding your question about 2025, I believe several factors will contribute to continued impressive growth beyond the fourth quarter. These include the full deployment of our sales force and the impact of our direct-to-consumer campaign, which involves streaming and potentially network TV, encouraging patients to visit their doctors. Additionally, as the incremental sales force becomes fully operational and maintains regular visits, we anticipate that this growth will persist. Therefore, we expect to see growth from quarter to quarter throughout 2025.

I’m showing no further questions at this time. Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.