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Tarsus Pharmaceuticals, Inc. (TARS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net product sales reached $66.4M and GAAP EPS was $(0.60), driven by ~58,500 bottles dispensed; full-year 2024 product sales were $180.1M and cash, cash equivalents, and marketable securities ended at $291.4M .
  • Results beat Wall Street consensus: revenue beat $58.3M–$58.8M expectations and EPS beat $(0.68)–$(0.77), with multiple outlets citing positive surprises and pre-market stock strength post-print .
  • Management guided Q1 2025 bottles to ~62,000–67,000 and gross-to-net discount to 46%–49%, improving to low-40s by year-end 2025; DTC spend targeted at $60–$70M annually, with ~$15M impact in Q1 .
  • Key catalysts: expanding DTC network TV, >90% coverage, emerging Meibomian Gland Disease (MGD) data in DB patients, and pipeline advancement (TP-04 Phase 2 in 2H25; TP-05 path clarified) .

What Went Well and What Went Wrong

What Went Well

  • Category-creating launch execution: “2024 was a remarkable year…we generated more than $180 million in net product sales…delivered more than 163,000 bottles” (CEO) .
  • Commercial momentum: expanded sales force to ~150; >15,000 target ECPs prescribing; >90% commercial and Medicare coverage; gross margins ~93% (CFO) .
  • New evidence: XDEMVY showed functional improvements in MGD patients (objective disease measures and fluctuating vision) supporting broader DB patient treatment (COO) .

What Went Wrong

  • Elevated operating expenses: Q4 SG&A of $69.0M (vs. $43.0M YoY) reflecting commercial/DTC investment; gross-to-net discount ~45% in Q4 and FY, with near-term step-up expected in Q1 2025 .
  • Seasonality and near-term headwinds: Q1 headwinds from deductible resets, weather events, and conference schedules could dampen scripts; Q3/Q4 dynamics (donut hole) pressure gross-to-net .
  • Retreatment still early: current retreatment mid-single digits, trending up but below 20% steady-state target; requires time and physician behavior normalization .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Product sales, net ($USD Millions)$13.076 $40.813 $48.118 $66.408
License fees & collaboration revenue ($USD Millions)$0.000 $0.000 $0.218 $0.000
Total revenues ($USD Millions)$13.076 $40.813 $48.118 $66.408
GAAP EPS ($)$(1.31) $(0.88) $(0.61) $(0.60)
Gross Margin %——~93% ~93%
Bottles dispensed (units)~15,700 ~37,000 ~41,400 ~58,500
Gross-to-net discount %—~44% ~40% (reported); ~43% excl. accrual adj. ~45%

Actual vs Consensus – Q4 2024

MetricActual Q4 2024Consensus (Yahoo)Consensus (Nasdaq/Zacks)Consensus (Investing.com)
Revenue ($USD Millions)$66.41 $58.33 $58.80 $57.53
GAAP EPS ($)$(0.60) $(0.75) $(0.68) $(0.77)

KPIs

KPIQ2 2024Q3 2024Q4 2024
ECP adoption (cumulative prescribers)~11,000 >13,000 >15,000 target ECPs prescribing
Coverage (commercial + Medicare lives)expanding; contracts signed; targeting low-40s steady-state GTN 2025 >80% lives; secured 2 remaining large Medicare contracts >90% lives (as of Feb 25, 2025)
Sales force size~100 → deploying +50 by end Q3 ~150 deployed ~150 ongoing
DTC activationplanning Q4 launch Streaming DTC launched in Q3/Q4 Streaming continued; network TV trial in Jan; expansion in Q1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Bottles dispensedQ4 202450,000–55,000 (guidance given in Q3 call) Actual: ~58,500 Beat guidance
Gross-to-net discount %Q4 202442%–46%; expect high end due to donut hole ~45% actual In line/high end
Bottles dispensedQ1 2025—~62,000–67,000 New guidance
Gross-to-net discount %Q1 2025Steady-state low-40s by YE 2025 (framework) 46%–49% in Q1; improving to low-40s by YE 2025 Near-term higher, full-year improving
DTC spendFY 2025—$60–$70M; ~$15M in Q1 New guidance
TP-04 Phase 2 spend2H 2025–2026—$7–$10M split across 2025–2026 New program spend guidance

Earnings Call Themes & Trends

TopicQ2 2024 (prior-2)Q3 2024 (prior-1)Q4 2024 (current)Trend
Sales force expansionPlanned +50 by end Q3; foundational to growth +50 deployed; ~150 total; increased weekly/daily prescribing Expanded team “activated in Q4”; depth focus Strengthening coverage and cadence
Payer coverage & GTNContracts adding; aim low-40s GTN steady-state >80% lives; GTN ~40% (43% underlying) >90% lives; Q4/FY GTN ~45%; Q1 GTN 46–49% then improve Coverage rising; GTN normalizing by YE 2025
DTC campaignPlanned launch Streaming DTC launched; network TV contemplated Streaming continues; network TV trial in Jan; broader Q1 expansion Scaling consumer activation
MGD evidence in DBPipeline evidence generation ongoing Ersa/Rhea data show objective MGD benefits and symptoms improvement Reinforced functional improvements; KOL enthusiasm; FDA label covers DB in MGD Expanding physician rationale to treat
SeasonalityNoted industry dynamics Q4 guidance cited holidays/conferences; donut hole impact Q1 headwinds (deductibles, storms, conferences) Predictable cadence Q1/Q3 softer
RetreatmentEarly days; targeting ~20% steady-state longer-term Single-digit retreatment; expected to rise over time Mid-single digits; aiming ~20% steady-state based on SATURN follow-up Gradual build
InternationalEMA: no extra Phase 3 for EU; pursue 2H27 EU approval Same as Q3 China NDA accepted; EU preservative-free by 2027; Japan prevalence study in 1H25 Global optionality building
Pipeline (TP-04/TP-05)Engaging FDA by YE 2024 Update at FY call; TP-05 interest; partnering likely TP-04 Phase 2 in 2H25; TP-05 Phase II in 2026; Phase III field study in thousands Clearer regulatory paths

Management Commentary

  • CEO: “2024 was a remarkable year…we generated more than $180 million in net product sales…we are only beginning to scratch the surface” .
  • CCO: “We recently turned up the volume on our impactful direct‑to‑consumer TV ad…expanded into network TV…ECPs are telling us their patients are starting to come in unprompted” .
  • COO: “XDEMVY delivers both profound improvements in objective measures of disease and in patient outcomes like fluctuating vision” .
  • CFO: “Gross margins were approximately 93%…we ended 2024 with $291.4 million in cash…bottles dispensed in Q1 to be ~62,000–67,000…GTN 46%–49% in Q1, improving to low‑40s by year‑end” .

Q&A Highlights

  • Depth of prescribing: Path from monthly→weekly→daily driven by coverage, sales contacts, DTC, and compelling MGD evidence; TRx share growing from early days, aiming toward steady-state retreatments (~20%) over time .
  • DTC cadence/ROI: Streaming provides robust metrics; network TV scaling methodically; annual DTC modeled at $60–$70M with ~$15M in Q1 .
  • Q1 headwinds: Deductible resets, winter storms, fires (LA), and conference schedules incorporated into guidance .
  • Inventory/channel: No unusual wholesaler stocking; ~2.5 weeks inventory consistent; no expected Q1 work-down impact .
  • TP‑05 “on‑demand” prevention: Fast‑acting oral; contemplated use before outdoor exposure or seasonally; Phase II in 2026; Phase III field study in thousands; consider partner for GP call point .

Estimates Context

  • S&P Global consensus data was unavailable due to API limits; values below sourced from public outlets. Revenue consensus ranged ~$57.5M–$58.8M and EPS consensus ranged ~$(0.68)–$(0.77); actual revenue $66.41M and EPS $(0.60) constituted clear beats, implying upward bias to near‑term revenue expectations while EPS benefited from strong gross margin and scale .

Key Takeaways for Investors

  • Momentum: Strong Q4 demand with ~58.5k bottles dispensed and ~93% gross margin; >90% coverage supports continued uptake despite Q1 seasonality .
  • Near-term setup: Expect softer Q1 (62k–67k bottles; GTN 46%–49%) followed by stronger Q2/Q4 as DTC scales and patients return to offices; model step-down in GTN toward low-40s exiting 2025 .
  • Demand drivers: DTC expansion to network TV, compelling MGD evidence in DB, and sales-force cadence should deepen prescribing and expand patient segments .
  • Profit trajectory: Elevated SG&A from DTC and ramp persists near term; operating leverage improves with volume and GTN normalization; balance sheet remains robust ($291.4M cash/securities) .
  • Retreatment optionality: Mid‑single‑digit retreatment rates today with pathway to ~20% steady‑state over time (based on SATURN recurrence and physician behavior), offering incremental volume tailwind .
  • Global optionality: Europe preservative‑free formulation (potential approval 2027), China NDA accepted, Japan prevalence study progressing—medium-term catalysts to watch .
  • Pipeline catalysts: TP‑04 Phase 2 (Ocular Rosacea) initiation in 2H25 ($7–$10M cost); TP‑05 Phase II in 2026 with eventual Phase III field study—partnering likely for commercial scale .

Appendix: Other Relevant Press Releases (Q4 timeframe)

  • Jan 13, 2025: Company 2025 update—accelerating XDEMVY launch, TP‑04 plans, global paths (EU/JP/CN) .