TARS Q2 2025: Xdemvi Prescriber Base Expands 33%, Unlocking New Eye Care Market Depth

2025-08-06 | By EarningsIQ Research

Tarsus’ Xdemvi franchise accelerated its market penetration in Q2, with a prescriber base now exceeding 20,000, reflecting both physician and patient activation from direct-to-consumer (DTC) campaigns. Robust sequential growth and deepening physician engagement signal that the addressable market for demodex blepharitis is larger than initially projected, with management raising expectations for Xdemvi’s peak potential. Investors should monitor how DTC and physician education efforts sustain momentum as the company transitions from new prescriptions to repeat treatments, while pipeline category creation efforts begin to take shape.

Summary

• DTC Campaign Accelerates Market Creation: Xdemvi’s direct-to-consumer push rapidly tripled unaided brand awareness and drove measurable patient demand.
• Prescriber Engagement Deepens: Over 20,000 eye care professionals now prescribe Xdemvi, with weekly adoption rising among core physicians.
• Pipeline Category Building Advances: TPO4 for ocular rosacea on track for Phase 2, reinforcing Tarsus’ focus on new therapeutic categories.

Performance Analysis

Tarsus delivered a record quarter, with Xdemvi net product sales exceeding $100 million and approximately 91,000 bottles dispensed to patients. This marks over 30% sequential growth, outpacing other new prescription eye drop launches and demonstrating the scalability of Tarsus’ commercial strategy. Notably, the business remains heavily driven by new prescriptions (NRx), as repeat/refill dynamics are still maturing, which is typical in the early phases of a first-in-class launch.

The rapid expansion of the prescriber base—now over 20,000 eye care professionals (ECPs) from a core target of 15,000—reflects broadening adoption and deepening engagement. Management emphasized that top prescribers are increasing utilization, and almost a third of the core audience now prescribes Xdemvi weekly. Gross margin held steady at 93%, with gross-to-net discounts improving as patient copays declined. Operating expenses, especially SG&A, rose primarily due to DTC spend and sales force expansion, but management views these as critical investments to accelerate category creation and market penetration.

• Prescription Volume Outpaces Market: Xdemvi’s sequential revenue and volume growth significantly exceeded the broader anterior segment prescription market.
• SG&A Scale Reflects Growth Investment: Higher sales, marketing, and variable costs directly supported the DTC campaign and sales force buildout.
• Gross-to-Net Discount Progresses: Discount rates improved, with further gains expected as coverage and patient cost dynamics stabilize.

With over 90% of commercial, Medicare, and Medicaid lives covered, access is now a competitive differentiator, supporting both physician and patient uptake. The company’s cash position of $381 million provides a solid foundation for both ongoing commercial execution and pipeline investment.

Executive Commentary

Strategic Positioning

1. DTC and Physician Education as Market Catalysts

Tarsus’ direct-to-consumer campaign has proven unusually effective, rapidly boosting unaided brand awareness and website engagement. Consumer actions, such as use of the symptom quiz and “Find a Doctor” tool, have translated into higher office visits and prescriptions. The company’s approach—layering DTC on top of a deeply educated prescriber base—enabled faster-than-typical impact, with unaided awareness more than tripling since campaign launch.

2. Deepening Prescriber Penetration and Practice Integration

The prescriber base now exceeds 20,000, surpassing initial targets and reflecting both optometry and ophthalmology engagement. Physician education has shifted practice behavior, with 80% of surveyed ECPs now treating across all demodex blepharitis segments, double the rate prior to DTC and sales force expansion. Nearly a third of the core 15,000 ECPs prescribe weekly, indicating Xdemvi is becoming a routine part of the eye exam workflow.

3. Expanding Addressable Market and Peak Potential

Management now believes Xdemvi’s peak opportunity exceeds prior billion-dollar estimates, driven by both new patient activation and deepening use cases. With only 350,000 patients treated to date out of a potential 9 to 25 million, and refill rates still maturing, the company sees significant runway. The overlap with related indications (dry eye, cataract, contact lens wearers) is fueling new prescriber growth and market depth.

4. Pipeline Category Creation: TPO4 for Ocular Rosacea

The company is leveraging its proven launch playbook to build new therapeutic categories, with TPO4 for ocular rosacea (OR) set to enter Phase 2 in late 2025. This program targets another unaddressed segment, with regulatory buy-in and clinical infrastructure already in place. Management sees this as validation of its ability to replicate Xdemvi’s success in adjacent markets.

Key Considerations

This quarter marks a strategic inflection for Tarsus, as Xdemvi’s market-building efforts transition from initial adoption to deeper, more durable integration among prescribers and patients. The company’s ability to sustain this momentum while scaling pipeline efforts will define its competitive position in eye care.

Key Considerations:

• DTC Efficiency Unlocks Market: Early, measurable impact from consumer campaigns is rare in specialty pharma, suggesting a replicable playbook for future launches.
• Prescriber Engagement Drives Habit Formation: Weekly prescribing among a growing base signals durable integration into routine care and supports long-term volume growth.
• Category Creation Extends TAM: By targeting related indications and new segments, Tarsus is expanding the total addressable market (TAM) beyond initial estimates.
• Refill Rate Maturation Remains a Watchpoint: Current retreatment rates are below long-term targets, but are trending positively as cohorts mature; ultimate steady state could provide a durable revenue tailwind.

Risks

Key risks include the possibility of DTC campaign fatigue, slower-than-expected maturation of refill rates, and payer environment pressures that could limit gross-to-net improvement. Additionally, as Tarsus seeks to create new categories, execution risk in clinical development and regulatory approval for pipeline assets like TPO4 is elevated. Investors should also monitor SG&A discipline as launch investments continue at scale.

Forward Outlook

For Q3 2025, Tarsus guided to:

• Dispensed bottles in the range of 95,000 to 100,000
• Gross-to-net discount improving to 43–45%, with further gains into the low 40s by year end

For full-year 2025, management maintained guidance:

• SG&A to remain consistent, with annual DTC spend of $70–$80 million

Management highlighted:

• “Accelerating impact of our direct-to-consumer campaign, motivated sales force, and positive reimbursement dynamics” as primary growth drivers
• R&D expense to increase in H2 2025 as TPO4 Phase 2 study initiates

Takeaways

Tarsus’ Q2 results demonstrate that early investments in DTC and physician education are paying off, with Xdemvi’s prescriber base and patient demand both expanding ahead of schedule. The company’s ability to deepen market penetration, convert new prescribers into habitual users, and extend its playbook to pipeline assets will be critical to sustaining its growth trajectory.

• Market Penetration Surpasses Expectations: The prescriber base and patient volume growth both point to a larger and more durable market than initially estimated, with DTC and access as key enablers.
• Pipeline Execution Will Define Next Phase: TPO4’s Phase 2 launch and continued evidence generation across use cases are crucial for maintaining category leadership and TAM expansion.
• Refill and Retreatment Rates Need Monitoring: As the business transitions from NRx to repeat scripts, tracking cohort behavior and steady-state retreatment will be a critical metric for long-term durability.

Conclusion

Tarsus’ Q2 marked a true inflection, with Xdemvi’s market creation efforts yielding tangible results in both prescriber and patient activation. Sustained investment in DTC, education, and access is redefining the addressable market, while the pipeline offers additional upside if the company can replicate its launch discipline in new categories.

Industry Read-Through

Tarsus’ rapid prescriber base expansion and unusually fast DTC traction highlight the power of layered physician education and consumer activation in specialty pharma. The company’s success in building a new category for demodex blepharitis suggests that other ophthalmology and specialty drug launches may benefit from earlier, integrated DTC efforts, especially when paired with strong access and physician buy-in. Competitors in eye care and adjacent therapeutic areas should note the importance of habit formation among prescribers and the potential for market expansion via patient overlap across related indications. As refill rates and pipeline launches mature, Tarsus’ approach may become a template for future specialty launches aiming to redefine standard of care.

TARS Healthcare Ophthalmology DTC Prescription Market Access Category Creation