On Friday, H.C. Wainwright adjusted its outlook on shares of Tarsus Pharmaceuticals (NASDAQ:TARS), increasing the price target to $73.00 from $61.00, while maintaining a Buy rating on the stock. The firm cited robust sales performance of the company's product XDEMVY as the primary reason for the uplift.
Tarsus Pharmaceuticals has exhibited consistent outperformance in both top and bottom-line financial results, prompting the firm to revise its estimates and price target upward. The company's XDEMVY has achieved approximately $250 million in annualized sales in just over a year since its launch. This success has led to the firm's decision to adjust its sales forecasts for the product upwards by double-digit percentages, surpassing previous estimates for the first quarter of 2024.
The revised sales projections for XDEMVY in 2025 now stand at $334 million, which is 14% higher than the consensus estimate of $293 million. According to H.C. Wainwright, the prescription trends and Gross-to-Net (GTN) guidance support this optimistic outlook.
The firm also highlighted several factors that could further bolster sales, such as Medicare coverage starting in 2025, a 50% expansion of the sales force, the launch of a direct-to-consumer campaign, and the potential for clinical data to expand the product's use into meibomian gland disease (MGD).
In a strategic move, Tarsus has decided against pursuing a formal MGD indication, despite the product's demonstrated efficacy in treating the condition. This decision is viewed positively by the firm, as it allows Tarsus to focus on generating post-market data and enhancing commercial support without the costs and risks associated with a separate MGD clinical program.
The firm believes that this approach will facilitate significant uptake in MGD patients with the product already being on label.
The firm anticipates that Tarsus will end 2024 with a run-rate of approximately $280 million, with further growth expected from the treatment of various patient segments, including those with refractory dry eye, post-cataract surgery, and contact lens intolerance.
These segments are currently underpenetrated, offering additional potential for the company's growth. The price target increase to $73 reflects the firm's confidence in Tarsus's continued success and market expansion.
In other recent news, Tarsus Pharmaceuticals, Inc. reported a record-breaking $48 million in net product sales for XDEMVY in Q3 2024. The company also dispensed over 41,000 bottles of the eye care treatment, marking a strong financial quarter with net sales of $48.1 million and a cash reserve of $317 million.
Tarsus expanded its sales force from 100 to 150, leading to higher prescription rates among eye care professionals and securing over 80% coverage through commercial and Medicare contracts.
The company is also making strides in securing FDA approval for two additional treatments by the end of 2024 and expects European approval for XDEMVY by the second half of 2027. Despite seasonal headwinds, Tarsus anticipates dispensing up to 55,000 bottles in Q4 2024 and remains optimistic about continued growth. However, operating expenses remain high at approximately $73.3 million.
Tarsus has strategically shifted towards enhancing patient access to XDEMVY, which is expected to increase the patient population by over 20%. The company is also optimistic about capturing a larger market share as it navigates market dynamics. These recent developments reflect the company's commitment to expanding its offerings while maintaining a strong focus on XDEMVY's growth and market presence.
InvestingPro Insights
Recent data from InvestingPro adds weight to H.C. Wainwright's optimistic outlook on Tarsus Pharmaceuticals (NASDAQ:TARS). The company's market cap stands at $1.78 billion, reflecting investor confidence in its growth potential. Tarsus has demonstrated impressive revenue growth, with a staggering 801.96% increase over the last twelve months as of Q3 2024, aligning with the strong sales performance of XDEMVY noted in the article.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, supporting H.C. Wainwright's revised sales projections. Moreover, Tarsus holds more cash than debt on its balance sheet, providing financial flexibility to support its expansion plans, including the 50% increase in sales force mentioned in the article.
It's worth noting that while Tarsus has shown strong returns over various timeframes, including a 160.18% return over the past year, the company is not yet profitable. This aligns with the article's focus on sales growth and market expansion rather than immediate profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Tarsus Pharmaceuticals, providing deeper insights into the company's financial health and market position.
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