Guggenheim has reiterated its Buy rating on shares of Tarsus Pharmaceuticals (NASDAQ: TARS), maintaining a positive outlook on the company's recent product launch.
Tarsus Pharmaceuticals has been closely watched following the release of Xdemvy, its treatment for Demodex blepharitis (DB), which is the first approved product for this eye condition.
The analyst from Guggenheim highlighted that for the week of October 4, total prescriptions (TRx) of Xdemvy reached approximately 4,104, marking a slight increase of around 1% and setting the record for the best week since the launch. This also represented the second occasion that weekly prescriptions surpassed the 4,000 mark.
The third quarter of 2024 saw more than 42,600 total prescriptions for Xdemvy, which aligns with the company's management guidance of roughly a 10% increase from the second quarter's figure of around 41,000 TRx. The analyst estimates that with a gross-to-net (GTN) discount of about 43%, third-quarter sales would be close to $43 million, matching the current consensus among Wall Street analysts.
The firm's expectations for continued growth in prescription numbers are supported by the recent expansion of the Tarsus sales force, with an additional 50 representatives now fully deployed. Furthermore, the company has plans to roll out a direct-to-consumer (DTC) advertising campaign in the fourth quarter of 2024 and the first quarter of 2025.
In other recent news, Guggenheim maintained a Buy rating on Tarsus shares, following the successful launch of Xdemvy, which saw total prescriptions (TRx) numbers reach approximately 4,071, marking a roughly 9% increase from the previous week.
The company's second-quarter financial results for 2024 showed sales exceeding $40 million, a 65% increase from the previous quarter, largely due to Xdemvy's success. Oppenheimer also maintained a positive outlook for Tarsus, reiterating an Outperform rating, based on growing recognition of Demodex Blepharitis among Eye Care Professionals, leading to an uptick in prescriptions for Xdemvy.
In addition to these developments, Tarsus has plans to expand the sales force and launch a consumer television campaign later in the year. The company anticipates broad Medicare coverage in early 2025 and aims to expand into additional market segments.
Despite potential challenges, including a possible slump in new prescriptions during the third quarter and slightly increased gross net discounts due to the Medicare donut hole issue, Tarsus remains optimistic about its growth trajectory.
InvestingPro Insights
Tarsus Pharmaceuticals' recent product launch and positive outlook are reflected in some key financial metrics and insights from InvestingPro. The company's revenue growth is particularly noteworthy, with InvestingPro data showing a remarkable 566.99% increase in the last twelve months as of Q2 2024. This aligns well with the analyst's expectations for continued growth in Xdemvy prescriptions and potential sales increase.
An InvestingPro Tip highlights that analysts anticipate sales growth in the current year, which supports the positive sentiment surrounding the Xdemvy launch and the company's expansion plans. Additionally, Tarsus holds more cash than debt on its balance sheet, indicating a strong financial position to support its growth initiatives, including the planned direct-to-consumer advertising campaign.
However, it's important to note that despite the impressive revenue growth, Tarsus is not currently profitable. The company's operating income margin stands at -187.55% for the last twelve months as of Q2 2024, reflecting the significant investments being made in product development and market expansion.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Tarsus Pharmaceuticals, providing a deeper understanding of the company's financial health and market position.
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