Tarsus Pharmaceuticals: Eyeing Growth with XDEMVY’s Q2 Dispensing Outlook

Tarsus Pharmaceuticals (TSRX) stands at a pivotal moment as its lead product, XDEMVY (lotilaner ophthalmic solution), enters its third year on the market. With a Q2 2025 dispensing forecast of 85,000–90,000 bottles, the company is betting on aggressive direct-to-consumer (DTC) marketing and expanding clinical adoption to drive growth. But can this vision overcome mounting financial pressures and operational costs?

XDEMVY’s Market Position: A Monopoly with Momentum

XDEMVY holds a unique position as the only FDA-approved therapy for Demodex blepharitis, a chronic eyelid condition affecting millions but often misdiagnosed. Launched in July 2023, it has already captured significant traction, with $113 million in net sales through Q3 2024 and over 104,000 bottles dispensed. By Q1 2025, sales surged to $78.3 million, a 217% year-over-year increase, driven by a 23% sequential rise in prescriptions to 72,000 bottles. This momentum positions XDEMVY to become one of the fastest-growing anterior segment eye treatments, as highlighted by CEO Bobak Azamian.

The DTC campaign launched in early 2025—including TV ads during the Golden Globes and NFL playoffs—has been a catalyst. Website traffic spiked by 140% in March 2025 versus December 2024, signaling heightened patient awareness. With over 90% of U.S. patients now covered by insurance, including Medicare and Medicaid, XDEMVY faces minimal access barriers. Clinically, real-world data from the Orion registry and Ersa/Rhea studies reinforce its efficacy in reducing collarettes (waxy debris) and eradicating Demodex mites.

Growth Drivers: DTC, Prescribers, and Global Ambitions

The Q2 forecast hinges on several levers:
1. Expanded DTC Reach: The Q1 campaign’s success suggests further growth in patient demand. Tarsus plans to scale these efforts, which could boost prescriptions by 10–15% sequentially.
2. Broadening Prescriber Adoption: The number of eye care professionals (ECPs) writing >1 XDEMVY prescription weekly rose by 110% from Q3 2024 to Q1 2025. With 13,000 ECPs already on board, there’s room for deeper penetration into the estimated 25,000 U.S. ECPs.
3. Global Expansion: While not impacting U.S. sales in Q2, progress toward European approval (targeting 2027) and a Chinese NDA submission (decision expected by 2027) signal long-term opportunities.

Headwinds: Costs, Margins, and Profitability

Despite robust sales, Tarsus faces significant challenges:
- High Gross-to-Net Discounts: XDEMVY’s 47% discount rate (Q1 2025) eats into revenue, reflecting rebates, co-pays, and insurance adjustments. Management aims to reduce this to the “low 40s” by optimizing payer contracts, but progress has been uneven.
- Escalating Operational Costs: Selling, general, and administrative (SG&A) expenses jumped to $85 million in Q1 2025, up from $51.6 million in 2024. A staggering $25.6 million was spent on commercialization, reflecting the cost of scaling marketing and sales teams.
- Net Losses: Even with strong sales, Tarsus reported a Q1 2025 net loss of $25.1 million, highlighting cash burn risks. While its $408 million cash balance provides runway, sustained losses could deter investors.

Pipeline and Competitive Landscape

While XDEMVY dominates its niche, Tarsus is diversifying. Its pipeline includes:
- TP-04 (Ocular Rosacea): A Phase 2 trial for this lotilaner gel is planned for late 2025, targeting another underserved condition.
- TP-05 (Lyme Disease Prevention): In Phase 2, this could expand the company’s reach into infectious disease.

Competition remains limited for XDEMVY, as no FDA-approved alternatives exist for Demodex blepharitis. However, broader eye care markets are crowded, and patient education will be critical to differentiate XDEMVY from over-the-counter treatments like artificial tears.

Conclusion: Can Tarsus Deliver on Q2 and Beyond?

XDEMVY’s Q2 2025 forecast of 85,000–90,000 bottles is achievable, given Q1’s 72,000 dispensed and the DTC-driven demand surge. The 23% sequential growth from Q4 to Q1 suggests a path to ~85,000 bottles by June, with upside if prescriber adoption and marketing momentum accelerate.

However, profitability remains elusive. Reducing the gross-to-net discount to the “low 40s” and curbing SG&A growth will be critical. With $408 million in cash, Tarsus has time to refine its strategy, but investors will demand progress.

For now, the stock (TSRX) trades at a $62 median price target based on buy ratings from analysts like Jefferies and Barclays, reflecting confidence in XDEMVY’s dominance. Yet, until margins improve and TP-04/TP-05 deliver, Tarsus’s journey from growth to profitability will remain a tightrope walk.

In the end, XDEMVY’s unique positioning and expanding reach make it a compelling story—but execution in cost management and global markets will determine whether this “category-creating” drug can truly shine.