Tarsus Pharmaceuticals, Inc. (TARS) Earnings Call Transcript & Summary

Thank you. Our next company is Tarsus Pharmaceuticals. From the company, we have Chairman and CEO, Bobby Azamian. Bobby, why don't you take maybe 1 or 2 minutes, just orient us what you guys are doing? What are some of the key milestones, and we go into the Q&A.

Great. Well, first, it's great to be here. I see a number of old friends and partners and meet new ones. And Tarsus Pharmaceuticals is a pretty unique story because Tarsus Pharmaceuticals is a very unique story. So we're about to launch our first product this year. We have a PDUFA date of August 25th. And briefly on my background, I'm a physician scientist, I worked at 2 leading early-stage venture firms, Third Rock and Versant, and this is the second company that I've co-founded and led. And really, the theme for me has been trying to get a drug to millions of patients as quickly as possible. And I'm really proud that we've done that at Tarsus from founding the company about 5 years ago to being on the [ cusp ] of our launch. And what we have is a drug that serve 25 million Americans, so 1 out of 12 people. So in this room, a number of us will have this disease currently, and that's blepharitis, Demodex blepharitis, actually a might infestation of the eyelid leading to itchy burnie eyes and other complications. And we have developed a drug in TP-03 that offers a cure. So we cure the majority of patients of this disease, and we have a response to nearly every patient. And that I think sets us up really well to launch the next blockbuster in eye care. And eye care has been a space where there's -- there hasn't been a lot of blockbusters for various reasons. Beyond that, we have a pipeline. We have 3 other products, all involving a unique molecule with 3 other products and 3 other indications that are in Phase 2 this year. That includes the other big eyelid disease, Meibomian gland disease, Lyme disease, prevention of Lyme disease with a tablet, a very novel approach to serving that unmet need. And then finally, a skin product for treatment of rosacea in a very targeted way. So that really characterizes Tarsus. We are well capitalized as well. We have cash through '26, our third year of launch, and we're really excited about what's to come this year.

Very good. Thanks for that intro. So what is TP-03? So I understand this is a formulation of lotilaner, how it is differentiated. And then maybe just touch a little bit on the data that you have generated and then I do have some questions on the ongoing review?

Yes. So TP-03, so it's a story [ now well ] finding the company. But when we were looking at eyelid diseases, that's why we're called Tarsus, we said, "Wow, this disease blepharitis is caused by Demodex mites. That's a recently appreciated thing in the literature as people have looked more and more at the surface. They've seen that the lid has important diseases. And so, we said we need the very best drug to go after Demodex mites in the eyelid. And so, we looked at over 100 different drugs across different antiparasitic classes. We said it had to be safe, it had to be effective, and it had to be protectable. And what we found much to our surprise is there's a whole new class of chemistry called the isoxazoline that have been developed by animal health companies because our animals get exposed to these ticks and in fact, mites, which cause mange in animals. And so, they've developed the best new chemistry. So we licensed the latest and best drug in that class. It's called lotilaner, actually from Elanco, and we formulated that in an eye drop, that's a lot like an artificial tear. So very convenient, twice-a-day dosing, very tolerated. And in fact, lotilaner is great for this because it's also very [ lipid filling ]. So when we put an eye drop on the surface, the drug goes right into the oily lands of the eyelid, which is exactly where it should act. So that's our drug, TP-03. And then what was the second part of your question?

So in terms of the data that you have generated from Saturn-1 and 2, just talk about some of the key findings there. I think the data obviously really stat sig like what are some of the key highlights from that?

Yes. So we've completed, obviously, with our PDUFA awaiting. We've completed 2 pivotal trials of over 800 patients. And what we see in that data is our primary endpoint of a cure, and that's the FDA's language, we need to cure the collarettes, which are actually the pathognomonic sign of this disease. It's a type of dandruff that the base of the eyelash used to diagnose the disease. It's also composed of dead mites and waste products that bubble up to the surface in patients that have this disease. So we're curing collarettes in 50% of patients. We're improving them significantly in nearly 90% of patients. That's our primary endpoint across 2 studies. We also are eradicating the mites, so we're able to measure mites in these studies by plucking lashes and looking at mites under the microscope. And so that occurs in 60% of patients going from 3 mites per lash to 0 mites per lash. So a really substantial effect and a cure. And then finally, and we didn't expect to see this, frankly, we're seeing the eyelid redness improved and cured, and that's a sign that the inflammation of the disease is also improving. So those are the 3 endpoints, the primary and 2 secondaries in the studies. Also on the safety front, we see that this drug is extremely well tolerated. And the only AE is about a 10% transient irritation when a drop is instilled, which is pretty typical for any eye drop.

Got it. So where you are in terms of the review process? I think you filed the NDA in September, so you should have had the mid-cycle review, just curious to hear the feedback from the FDA?

Yes. So our PDUFA is August 25th, and we're very confident in that date. We've had the typical interactions up to this point. We do not expect an adcom given the great safety profile and the history with the ophthalmology division of the FDA. Our Chief Operating Officer, this will be, I think, his 13th approved NDA, with most of those happening in eye care. So we are speeding forward to the NDA and thus preparing a lot for commercialization.

And as we think about the commercial piece, just talk about that because I think blepharitis is a known disease, but the Demodex it's not that known. So talk about, is it easy to identify or diagnose what the treatment options are, where you will fit in?

Yes. So blepharitis has been known about a long time, probably longer than dry eye, inflammation of the eyelid. And as I mentioned in the last decade or so, people have seen that there is actually mites in the follicles causing this disease. And so, groups before us said, what's actually the way you diagnose this disease, and it's actually they are collarette, that type of dandruff at the base of the eyelash. All the eye doctor has to do is have the patient look down in the slit lamp, which we all have been on, sit your chin on this slit lamp and doctor shines a light and does microscopy on your eyelid. And then, you see the collarettes. So it takes a couple of seconds. And so that's the nature of our disease campaign, it's called look at the lids, and we're seeing a great response from that. There are already 1.5 million diagnosed patients with Demodex blepharitis. So we have a great running start here. But to get to that full [ 25 million ], we will need to educate this market, and we actually think that's our opportunity, creating buzz around a disease and an easy diagnostic with a curative product on the way.

So there is a separate ICD code for it. So that's where the [ 1.5 million ] comes from?

There is. There's ICD codes for both blepharitis and for Demodex.

Okay. So in terms of once approved, how quickly you might be able to launch? And what trap you are doing? Maybe talk about the -- I think you've mentioned about the price a little bit, but talk to us about the price, how long patients will be once you cure the collarette, that's when they stop. Just talk about like how it will be used?

Yes. So I think the fundamentals of our launch are we're creating a new category, and we're doing it with a curative product. And so first off is educating the market. So we are out there with disease education campaign. I mentioned look at the lids. We've gotten 2 million impressions on that website. We've actually talked to over 10,000 eye care doctors to date, which is about 2/3 of the prescribing market, and that includes optometrists and ophthalmologists. We have booths at the major conference that are really spilling over with interested doctors. So I think we're off to a good start on educating the market. We're also educating the payers. And this disease, the average age is about 65. So it's about half Medicare, half commercial. And so, we're talking to all the top payers. And what we're hearing is, wow, you've got the only drug in this category. We like that. You treat for 6 weeks and then you don't have to treat again potentially for a year. We like that. There's real value in that. And in fact, a lot of these patients are on other drugs like dry eye drugs and maybe they're not getting the right treatment for the right disease. So there's a real health economic argument here as well. So we think that as an eye drop, we'll come out with a very attractive price and a very attractive contracting, as we get the commercial and Medicare payers onboard. And then we will launch this drug ourselves. So to target the 10,000 to 15,000 eye care providers that's half optometrists, half ophthalmologists, that will require around 100 reps to launch. So we're building the sales leadership, and we expect to have that sales force in the field when the product is available shortly after the approval.

Are there sensitivity around price? Have you talked about what the range could be -- and then for what course of duration?

We have. Yes. So that's a lot of the feedback we're getting right now from the payers. And we're hearing a lot of positive things. We're not starting the conversation with this is the price for a dry eye drug. We're starting the conversation with this is the cure that we offer patients durably. So we're not disclosing price yet, but we do think that there will be some upside there that the market isn't currently factoring in.

And you'll be able to launch immediately after approvals? Or you take -- where you are on the manufacturing front?

Yes. So we have both drug product and obviously, a drug substance partners, and we'll have product in the channel within weeks after got approval.

And how would the label look like? Like what would it say given that it's a new category?

Yes. So the FDA has been very clear about this. I approached Wiley Chambers, and we were just founding the company, "hey, we're thinking about Demodex blepharitis, what do you think. And so, they've been very clear about treatment of Demodex blepharitis being the indication, which is pretty broad. And then, of course, the collarettes [ here ], as the primary endpoint. That's what we know we'll need to hit and have hit for approval and then a 6-week BID treatment. So we expect that label to be very consistent with those [ facts ].

Okay. And then in terms of the reimbursement, is it going to be tied to the -- a certain threshold of collarette that you come at baseline? I think it was about [ 3 ] in your study. So that's how it will be reimbursed above [ 3 ] you get it, below [ 3 ], you probably don't need it.

A little simpler than that. So it will be -- a patient has to have collarettes. So the doctor will look at the patient in the silt lamp and mark collarettes and if there's any sort of prior approval, that will be in.

Got it. I think you're expanding the use or other indications. So can you talk about the Meibomian gland study that you're running, what you're trying to show when we would expect data?

Yes. So blepharitis is inflammation of the front of the eyelid. We also have glands in the back of our eye line called the Meibomian glands that actually secrete the lipid layer that keeps the surface of the eye hydrated, and there are mites also. There are second species of mite in those Meibomian glands. And MGD, Meibomian gland disease is known to be the major cause of dry eye. So clearly, there's a connection between the lids and the surface. What we're doing in Phase 2 is really exploring that effect. So we're looking at patients with collarettes, so we know they have Demodex blepharitis, but they also have MGD. So they're highly likely to have mites in their Meibomian glands. It's really hard to look at mites in the Meibomian glands unlike the lashes. And so, in that overlapping population, we're looking at a longer dosing, so 3 months instead of 6 weeks, and twice-a-day versus 3 times a day dosing. And so, we will look at both the Meibomian gland endpoints, the architecture of the glands, measures of dry eye and the collarettes, and we'll see could this have an even broader effect and an even broader population than just Demodex blepharitis.

Okay. Final question. How is the IP for 03?

Yes. So I mentioned that was a key factor in selecting our drug. So in the molecule itself, there's a composition of matter through 2030, 2032, with Hatch-Waxman, which Elanco is pursuing. And then on the drop -- on the eye drop methods and formulations, we have multiple patents issued now that cover this through 2038. And those are typically very strong patents for an eye drop.

Got it. And then beyond 03, any major catalysts from the pipeline this year?

So the other one I'd call out is Lyme disease. So we do aspire to be an eye care company, and I think we're seeing other opportunities to add products to our commercial force. But we have this very compelling drug that I think a lot of us would think about taking a tablet that could act for 2 months and protect us against Lyme disease. When the ticks bid us, the ticks would fall off before they transmit the Lyme disease. So that's in Phase 2. We have a Phase 2a study going on right now, and then we'll be in Phase 2b later this year.

All right. Very good, Bobby. Thank you so much.

Appreciate the opportunity and thank you.

Thank you,

Thank you.