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Tarsus Pharmaceuticals, Inc.

Tarsus Pharmaceuticals, Inc.TARSEarnings & Financial Report

Nasdaq · Health Care · Biological Products, (No Diagnostic Substances)

Tarsus Pharmaceuticals, Inc. is a late-stage clinical biopharmaceutical company focused on developing and commercializing innovative therapeutic candidates for unmet medical needs in ophthalmology, dermatology, and other specialty care areas. It operates primarily in the United States, with lead product candidates targeting common, underdiagnosed conditions including demodex blepharitis and rosacea.

What changed in Tarsus Pharmaceuticals, Inc.'s 10-K — 2023 vs 2024

Top changes in Tarsus Pharmaceuticals, Inc.'s 2024 10-K

639 paragraphs added · 636 removed · 505 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

157 edited+49 added−40 removed251 unchanged
Demodex mites are the most common ectoparasite found on humans and are more likely to cause infestation and disease with aging. Demodex blepharitis typically presents bilaterally in patients with the disease. There are two species of Demodex , folliculorum and brevis , that live on the skin of the face and eyelids.
Demodex mites are the most common ectoparasite found on humans and are more likely to cause infestation and disease with aging. Demodex blepharitis typically presents bilaterally in patients with the disease. There are two species of Demodex mites, folliculorum and brevis , that live on the skin of the face and eyelids.
The pre-specified primary and secondary endpoints were met, and improvement in lids (reduction of collarettes to no more than 2 collarettes per upper lid) was demonstrated in 44% of patients treated with XDEMVY. 44% of patients on XDEMVY achieved the primary endpoint of complete collarette reduction at day 43 compared to 7% on vehicle (p The secondary endpoint of complete mite eradication achieved statistically significant results by day 15, and 68% of patients on XDEMVY achieved mite eradication compared to 17% on vehicle (p For composite cure, 13.4% of patients on TP-03 achieved a complete cure based on a composite endpoint of collarette cure and erythema cure compared to 1.0% on vehicle (p In July 2021, we presented additional data from the Saturn-1 Trial at the American Society of Cataract and Refractive Surgery 2021 Annual Meeting demonstrating high treatment response rates, and reinforcing the potential of XDEMVY to be the standard of care for Demodex blepharitis patients. • 95% of XDEMVY patients showed a significant improvement in mite count, achieving ≤0.5 mites per lash • 93% of XDEMVY patients improved by at least one collarette grade We also announced results from an additional Saturn-1 safety analysis, which reinforced XDEMVY’s positive profile, revealing that XDEMVY had no clinically significant adverse effect on multiple safety measures including Corrected Distance Visual Acuity ("CDVA"), corneal staining, and intraocular pressure ("IOP"), and no significant findings from slit lamp biomicroscopy or fundus exam in the study.
The pre-specified primary and secondary endpoints were met, and improvement in lids (reduction of collarettes to no more than 2 collarettes per upper lid) was demonstrated in 44% of patients treated with XDEMVY. 44% of patients on XDEMVY achieved the primary endpoint of complete collarette reduction at day 43 compared to 7% on vehicle (p The secondary endpoint of complete mite eradication achieved statistically significant results by day 15, and 68% of patients on XDEMVY achieved mite eradication compared to 17% on vehicle (p For composite cure, 13.4% of patients on TP-03 achieved a complete cure based on a composite endpoint of collarette cure and erythema cure compared to 1.0% on vehicle (p In July 2021, we presented additional data from the Saturn-1 trial at the American Society of Cataract and Refractive Surgery 2021 Annual Meeting demonstrating high treatment response rates, and reinforcing the potential of XDEMVY to be the standard of care for Demodex blepharitis patients. • 95% of XDEMVY patients showed a significant improvement in mite count, achieving ≤0.5 mites per lash • 93% of XDEMVY patients improved by at least one collarette grade We also announced results from an additional Saturn-1 trial safety analysis, which reinforced XDEMVY’s positive profile, revealing that XDEMVY had no clinically significant adverse effect on multiple safety measures including Corrected Distance Visual Acuity ("CDVA"), corneal staining, and intraocular pressure ("IOP"), and no significant findings from slit lamp biomicroscopy or fundus exam in the study.
We owe Elanco tiered royalties during the royalty term in the mid-to-high single digits on our future net sales and those of our sublicensees.
We owe Elanco tiered royalties during the royalty term in the mid-to-high single digits on our future net sales and those of our sublicensees.
We have designated Saturn-1 as a Phase 2b/3 trial as it is both our first multi-center trial based in the U.S., and also a pivotal trial for the U.S. Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.
We have designated the Saturn-1 trial as a Phase 2b/3 trial as it is both our first multi-center trial based in the U.S., and also a pivotal trial for the U.S. Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.
Participation is required for federal funds to be available for our covered outpatient drugs under Medicaid and Medicare Part B, and under Medicare Part D, respectively.
Participation is required for federal funds to be available for our covered outpatient drugs under Medicaid and Medicare Part B ("Medicare Part B"), and under Medicare Part D, respectively.
Pharmaceutical and other healthcare companies also are subject to other federal false claims laws, including, among others, federal criminal healthcare fraud and false statement statutes that extend to non-government health benefit programs; 28 • the federal Health Insurance Portability and Accountability Act ("HIPAA"), which imposes criminal liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, or knowingly and willfully making false statements relating to healthcare matters; • HIPAA and its implementing regulations, also imposes obligations, on certain covered entity health care providers, health plans and health care clearinghouses as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices, including off-label or pre-approval promotion; • the federal Physician Payments Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to Centers for Medicare & Medicaid Services ("CMS") information regarding direct or indirect payments and other transfers of value to physicians and teaching hospitals (and certain other practitioners as of 2022), as well as information regarding ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payers, including private insurers, state laws that require pharmaceutical manufacturers to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, state laws that require pharmaceutical manufacturers to report information on the pricing of certain drug products, state and local laws that require the licensure and registration of pharmaceutical sales representatives, and state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Pharmaceutical and other healthcare companies also are subject to other federal false claims laws, including, among others, federal criminal healthcare fraud and false statement statutes that extend to non-government health benefit programs; • the federal Health Insurance Portability and Accountability Act ("HIPAA"), which imposes criminal liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, or knowingly and willfully making false statements relating to healthcare matters; • HIPAA and its implementing regulations, also imposes obligations, on certain covered entity health care providers, health plans and health care clearinghouses as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices, including off-label or pre-approval promotion; 29 • the federal Physician Payments Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to Centers for Medicare & Medicaid Services ("CMS") information regarding direct or indirect payments and other transfers of value to physicians and teaching hospitals (and certain other practitioners as of 2022), as well as information regarding ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payers, including private insurers, state laws that require pharmaceutical manufacturers to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, state laws that require pharmaceutical manufacturers to report information on the pricing of certain drug products, state and local laws that require the licensure and registration of pharmaceutical sales representatives, and state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
These laws include the following: • the federal Anti-Kickback Statute (“AKS”) which prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration (i.e., anything of value), directly or indirectly, in cash or in kind, to induce or in return either for the referral of an individual for, or for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs.
These laws include the following: 28 • the federal Anti-Kickback Statute (“AKS”) which prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration (i.e., anything of value), directly or indirectly, in cash or in kind, to induce or in return either for the referral of an individual for, or for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid or other federally financed healthcare programs.
At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified and a preliminary evaluation of efficacy is conducted. • Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the safety and effectiveness of the product for its intended use and to establish the overall benefit/risk relationship of the product to provide an adequate basis for product approval.
At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified and a preliminary evaluation of efficacy is conducted. 25 • Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the safety and effectiveness of the product for its intended use and to establish the overall benefit/risk relationship of the product to provide an adequate basis for product approval.
If we fail to meet certain dermatological milestones by the achievement deadlines set forth in the Eye and Derm Elanco Agreement for any reasons other than those outside of our reasonable control, and such milestones remain unmet for 120 days after Elanco notifies us thereof, Elanco may limit our field of use under the Eye and Derm Elanco Agreement to the treatment, palliation, prevention or cure of eye diseases or conditions in humans only.
If we fail to meet certain dermatological milestones by the achievement deadlines set forth in the Eye and Derm Elanco Agreement for any reasons other than those outside of our reasonable control, and such milestones remain unmet for 120 days after Elanco notifies us thereof, Elanco may limit our field of use under the Eye 21 and Derm Elanco Agreement to the treatment, palliation, prevention or cure of eye diseases or conditions in humans only.
If the CHMP accepts such a request, the time limit of 210 days will be reduced to 150 days, but it is possible that the CHMP may revert to the standard time limit for the Centralized Procedure if it determines that it is no longer appropriate to conduct an accelerated assessment. 31 • MAs based on the Mutual Recognition Procedure or the Decentralized Procedure are available for products not falling within the mandatory scope of the Centralized Procedure.
If the CHMP accepts such a request, the time limit of 210 days will be reduced to 150 days, but it is possible that the CHMP may revert to the standard time limit for the Centralized Procedure if it determines that it is no longer appropriate to conduct an accelerated assessment. • MAs based on the Mutual Recognition Procedure or the Decentralized Procedure are available for products not falling within the mandatory scope of the Centralized Procedure.
Lotilaner is a lipophilic molecule, which may promote its uptake in the oily sebum of the hair follicle, where the mites reside. In clinical trials, XDEMVY was topically applied to the eye BID to ensure delivery of the drug to the eyelid margin. Following mite eradication, collarettes eventually clear from the eyelid since they are composed of mite-related waste.
Lotilaner is a lipophilic molecule, which may promote its uptake in the oily sebum of the hair follicle, where the mites reside. In clinical trials, XDEMVY was topically applied to the eye BID to better ensure delivery of the drug to the eyelid margin. Following mite eradication, collarettes eventually clear from the eyelid since they are composed of mite-related waste.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies 27 or clinical studies to assess new safety risks or imposition of distribution restrictions or other restrictions under a REMS program.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks or imposition of distribution restrictions or other restrictions under a REMS program.
These approaches have significant limitations, including: • limited efficacy of over-the-counter and off-label treatments as well as device-based treatments administered in clinic by ECPs; • insufficient definitive knowledge of diagnostic criteria to guide treatment decisions; • prohibitive side effects (significant burning and stinging) from treatments that target Demodex mites (e.g. tea tree oil); • current treatments do not typically eradicate the Demodex mites, leading to a chronic and progressive disease; and • some treatments may be harmful (e.g. to meibomian gland epithelial cells). 11 According to the Titan real-world prevalence study, 75% of patients using tea tree oils and 57% of those using lid wipes were found to have a high prevalence of collarettes, indicating that current management tools for this disease are ineffective.
These approaches have significant limitations, including: • limited efficacy of over-the-counter and off-label treatments as well as device-based treatments administered in clinic by ECPs; • insufficient definitive knowledge of diagnostic criteria to guide treatment decisions; • prohibitive side effects (significant burning and stinging) from treatments that target Demodex mites (e.g. tea tree oil); • current treatments do not typically eradicate the Demodex mites, leading to a chronic and progressive disease; and • some treatments may be harmful (e.g. to meibomian gland epithelial cells). 12 According to the Titan real-world prevalence study, 75% of patients using tea tree oils and 57% of those using lid wipes were found to have a high prevalence of collarettes, indicating that current management tools for this disease are ineffective.
Clinical Trials The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCP requirements, which include the requirement that all research subjects provide their informed 24 consent for their participation in any clinical trial.
Clinical Trials The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s control, in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial.
After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.
After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the 27 establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.
Demodex blepharitis is a progressive disease that often manifests with more severe signs and symptoms if left untreated, such as blurring of vision, missing eyelashes, corneal damage and potentially, in extreme cases, blindness. Furthermore, Demodex blepharitis can negatively impact daily activities and create an emotional burden for individuals with the disease.
Demodex blepharitis is a progressive disease that often manifests with more severe signs and symptoms if left untreated, such as blurring of vision, missing eyelashes, MGD, corneal damage and potentially, in extreme cases, blindness. Furthermore, Demodex blepharitis can negatively impact daily activities and create an emotional burden for individuals with the disease.
Any agency or judicial enforcement action could have a material adverse effect on our business, market acceptance of our products, and our reputation. 23 Our product candidates are considered small molecule drugs and must be approved by the FDA through the NDA process before they may be legally marketed in the U.S.
Any agency or judicial enforcement action could have a material adverse effect on our business, market acceptance of our products, and our reputation. Our product candidates are considered small molecule drugs and must be approved by the FDA through the NDA process before they may be legally marketed in the U.S.
The IRA also creates a drug price negotiation program under which the prices for Medicare units of certain high Medicare spend drugs and biologicals without generic or biosimilar competition will be capped by reference to, among other things, a specified non-federal average manufacturer price 34 starting in 2026.
The IRA also creates a drug price negotiation program under which the prices for Medicare units of certain high Medicare spend drugs and biologicals without generic or biosimilar competition will be capped by reference to, among other things, a specified non-federal average manufacturer price starting in 2026.
Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it 26 is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
The royalty term for any licensed product in a given country commences on the date of first commercial sale of such licensed product and ends on the latest of (a) expiration of the last-to-expire of the licensed patents which has at least one valid claim, (b) the expiration of regulatory exclusivity, and (c) ten years after the first commercial sale of such licensed product in such country.
The royalty term for any licensed product in a given country commences on the date of first commercial sale of such licensed product and ends on the latest of (a) expiration of the last-to-expire of the licensed patents which has at least one valid claim, (b) the expiration of regulatory exclusivity, or (c) ten years after the first commercial sale of such licensed product in such country.
Only after 8 years have lapsed, other parties that apply for a marketing authorization (generics or biosimilars) may make reference to the dossier of the originator product. Only after another 2 years (i.e. a total of 10 years) may such generic or biosimilar medicinal product be placed on the market.
Only after 8 years have lapsed, other parties that apply for a marketing authorization (generics or biosimilars) may make reference to the dossier of the originator product. Only after another 2 years (i.e. a total of 10 years) may such 32 generic or biosimilar medicinal product be placed on the market.
Further, the Inflation Reduction Act of 2022 (addressed further in the section on “Healthcare Reform”) establishes a Medicare Part D inflation rebate schemes (the first rebate period is in fourth quarter 2022 through third quarter 2023) and a drug price negotiation program, with the first negotiated prices to take effect in 2026.
Further, the Inflation Reduction Act ("IRA") of 2022 (addressed further in the section on “Healthcare Reform”) establishes a Medicare Part D inflation rebate schemes (the first rebate period is in fourth quarter 2022 through third quarter 2023) and a drug price negotiation program, with the first negotiated prices to take effect in 2026.
Although we believe blepharitis and Demodex blepharitis are significantly under-diagnosed diseases, with limited treatment options, there are already an estimated 1.5 million annual Demodex blepharitis diagnoses in the U.S. based on the Titan study and coding for blepharitis classified per the ICD-10-CM.
Although we believe blepharitis and Demodex blepharitis are significantly under-diagnosed diseases, with limited treatment options, there are already an estimated 1.5 million Demodex blepharitis diagnoses in the U.S. based on the Titan study and coding for blepharitis classified per the ICD-10-CM.
Demodex folliculorum, which is commonly found in the follicle, is the more common sub-species of mite that causes Demodex blepharitis. 9 The pathognomonic sign of Demodex blepharitis is a specific type of eyelid debris known as the collarette, which is also sometimes referred to as cylindrical dandruff, sleeves, or waxy scurf.
Demodex folliculorum, which is commonly found in the follicle, is the more common sub-species of mite that causes Demodex blepharitis. The pathognomonic sign of Demodex blepharitis is a specific type of eyelid debris known as the collarette, which is also sometimes referred to as cylindrical dandruff, sleeves, or waxy scurf.
Manufacturing, sales, promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws. 29 The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
Manufacturing, sales, promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws. The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
Blepharitis can be challenging to manage, recurs frequently, and its progression can lead to scarring of the eyelid, loss of proper eyelid and tear-film function, eyelid and lash abnormalities, inflammation of the conjunctiva and surrounding skin, suboptimal surgical outcomes, corneal damage, and potentially in extreme cases, blindness.
Blepharitis can be challenging to manage, recurs frequently, and its progression can lead to scarring of the eyelid, loss of proper eyelid and tear-film function, eyelid and lash abnormalities, inflammation of the conjunctiva and surrounding skin, MGD, suboptimal surgical outcomes, corneal damage, and potentially in extreme cases, blindness.
The Callisto trial was a randomized, double-blind, single and multiple-ascending dose trial that evaluated the safety, tolerability, and PK of TP-05 in healthy subjects. Results from the trial showed that TP-05 was well tolerated with no dose-related or drug-related serious adverse events.
The Callisto trial was a randomized, double-blind, single and multiple-ascending dose trial that evaluated the safety, tolerability, and pharmacokinetic ("PK") of TP-05 in healthy subjects. Results from the trial showed that TP-05 was well tolerated with no dose-related or drug-related serious adverse events.
The drug product manufacturing is a compounding and aseptic filling operation that we believe could be transferred to additional CMOs as necessary. We have suppliers for TP-04 topical formulation for rosacea and TP-05 oral formulation for our Phase 1/2 trials.
The drug product manufacturing is a compounding and aseptic filling operation that we believe could be transferred to additional CMOs as necessary. We have suppliers for TP-04 topical formulation for Ocular Rosacea and TP-05 oral formulation for our Phase 1/2 trials.
An application to transition ongoing trials from the current Clinical Trials Directive to the new Clinical Trials Regulation will need to be submitted and authorized in time before the end of the transitional period. From January 31, 2023 onwards, the application for new clinical trials must be done in accordance with the new Clinical Trials Regulation.
An application to transition ongoing trials from the current Clinical Trials Directive to the new EU Clinical Trials Regulation will need to be submitted and authorized in time before the end of the transitional period. From January 31, 2023 onwards, the application for new clinical trials must be 31 done in accordance with the new EU Clinical Trials Regulation.
Under the Medicare Part D Coverage Gap Discount Program, 32 manufacturers, including us, are currently required to provide to CMS a 70% discount on brand name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries are in the coverage gap phase of the Part D benefit design.
Under the Medicare Part D Coverage Gap Discount Program, manufacturers, including us, are currently required to provide to CMS a 70% discount on brand name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries are in the coverage gap phase of the Medicare Part D benefit design.
The primary endpoint was complete collarette cure (grade zero defined as - zero to two collarettes per lid) and the secondary endpoints included complete mite 13 eradication (mite density of zero mites per lash) and composite cure (the presence of zero to two collarettes on the upper eyelid and the absence of erythema (redness).
The primary endpoint was complete collarette cure (grade zero defined as - zero to two collarettes per lid) and the secondary endpoints included complete mite eradication (mite density of zero mites per lash) and composite cure (the presence of zero to two collarettes on the upper eyelid and the absence of erythema (redness).
It is also a progressive disease that often manifests with more severe symptoms if left untreated, such as blurring of vision, missing eyelashes, corneal damage and potentially, in extreme cases, blindness.
It is also a progressive disease that often manifests with more severe symptoms if left untreated, such as blurring of vision, missing eyelashes, MGD, corneal damage and potentially, in extreme cases, blindness.
In order to streamline the regulation of clinical trials across the EU, the EU legislator has adopted Regulation (EU) No 536/2014 (the "EU Clinical Trials Regulation"). The new EU Clinical Trials Regulation, which has repealed and replaced the EU Clinical Trials Directive, introduced a complete overhaul of the former regulation of clinical trials for 30 medicinal products in the EU.
In order to streamline the regulation of clinical trials across the EU, the EU legislator has adopted Regulation (EU) No 536/2014 (the "EU Clinical Trials Regulation"). The new EU Clinical Trials Regulation, which has repealed and replaced the EU Clinical Trials Directive, introduced a complete overhaul of the former regulation of clinical trials for medicinal products in the EU.
If we fail to comply with our development obligations under the All Human Uses Elanco Agreement, and fail to remedy such failure or cure such breach within 60 days, Elanco will have the right to terminate the All Human Uses Elanco Agreement.
If we fail to comply with our development obligations under the All Human Uses Elanco Agreement, and fail to remedy 22 such failure or cure such breach within 60 days, Elanco will have the right to terminate the All Human Uses Elanco Agreement.
In most cases, ticks must be attached for 36-48 hours or more before Lyme disease can be transmitted, so killing ticks within 24 hours of attachment can greatly increase the probability of disease prevention.
In most 6 cases, ticks must be attached for 36-48 hours or more before Lyme disease can be transmitted, so killing ticks within 24 hours of attachment can greatly increase the probability of disease prevention.
Dead mites and collarettes also obstruct the hair follicle opening, leading to inflammation. 2) Chemical: Mites excrete digestive enzymes as they feed and exude digestive waste when they die, resulting in inflammation, redness, irritation and epithelial hyperplasia. 3) Bacterial: Bacteria living on the mite surface or in its gut may cause inflammation of the surrounding ocular tissues. 10 As mites scratch and feed on the skin, the partially digested epithelial cells, keratin, mite waste and eggs combine to form collarettes.
Dead mites and collarettes also obstruct the hair follicle opening, leading to inflammation. 2) Chemical: Mites excrete digestive enzymes as they feed and exude digestive waste when they die, resulting in inflammation, redness, irritation and epithelial hyperplasia. 3) Bacterial: Bacteria living on the mite surface or in its gut may cause inflammation of the surrounding ocular tissues. 11 As mites scratch and feed on the skin, the partially digested epithelial cells, keratin, mite waste and eggs combine to form collarettes.
Primary Endpoint: • 55% of patients on XDEMVY achieved complete collarette cure, defined as zero to two collarettes per lid at day 43, compared to 12% on vehicle (p Secondary Endpoints: • 50% of patients on XDEMVY achieved mite eradication defined as zero mites per lash at day 43, compared to 14% on vehicle (p • 30% of patients on XDEMVY compared to 9% of patients on vehicle (p • 19% of patients on XDEMVY achieved a complete composite cure, based on achieving both complete collarette cure and complete lid erythema cure, compared to 4% on vehicle (p Safety Profile: • Consistent with the results from Saturn-1, Saturn-2 demonstrated that TP-03 was well tolerated with a safety profile similar to the vehicle group. ▪ 91% of XDEMVY patients reported that the drop comfort was neutral to very comfortable. ▪ There were no serious treatment-related adverse events nor any treatment-related adverse events leading to treatment discontinuation.
Primary Endpoint: • 55% of patients on XDEMVY achieved complete collarette cure, defined as zero to two collarettes per lid at day 43, compared to 12% on vehicle (p Secondary Endpoints: • 50% of patients on XDEMVY achieved mite eradication defined as zero mites per lash at day 43, compared to 14% on vehicle (p • 30% of patients on XDEMVY compared to 9% of patients on vehicle (p • 19% of patients on XDEMVY achieved a complete composite cure, based on achieving both complete collarette cure and complete lid erythema cure, compared to 4% on vehicle (p Safety Profile: • Consistent with the results from the Saturn-1 trial, the Saturn-2 trial demonstrated that XDEMVY was well tolerated with a safety profile similar to the vehicle group. ▪ 91% of XDEMVY patients reported that the drop comfort was neutral to very comfortable. ▪ There were no serious treatment-related adverse events nor any treatment-related adverse events leading to treatment discontinuation.
The 340B ceiling price is calculated using a statutory formula, which is based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate Program.
The 340B ceiling 33 price is calculated using a statutory formula, which is based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated under the Medicaid Drug Rebate Program.
We intend to further advance our pipeline with the lotilaner API to address several diseases in human medicine, including eye care, dermatology, and infectious disease prevention.
We intend to further advance our pipeline with the lotilaner API to address several diseases in human medicine, including eye care and infectious disease prevention.
We are aware of vaccines currently under development including a multivalent recombinant protein vaccine, VLA-15, being developed by Valneva in partnership with Pfizer for Lyme disease; mRNA-based vaccine mRNA-1982/1975, being developed by Moderna and elicits high levels of anti-OspA antibodies; and a pre-exposure prophylaxis injectable therapy being developed by MassBiologics involving a human anti-Lyme monoclonal antibody.
We are aware of vaccines currently under development including a multivalent recombinant protein vaccine, VLA-15, being developed by Valneva in partnership with Pfizer for Lyme disease; mRNA-based vaccine mRNA-1982/1975, being developed by Moderna and eliciting high levels of anti-OspA antibodies; and a pre-exposure prophylaxis injectable therapy being developed by MassBiologics involving a human anti-Lyme monoclonal antibody.
Pharmacokinetic data from the trial demonstrated rapid absorption and an extended half-life of TP-05 that potentially supports a convenient oral regiment supporting its potential as a rapid onset, prophylactic therapy for Lyme disease. Additionally, exploratory ex-vivo tick kill modeling that utilized serum from TP-05 treated subjects demonstrated potent, rapid killing of adult and nymph ticks.
PK data from the trial demonstrated rapid absorption and an extended half-life of TP-05 that potentially supports a convenient oral regiment supporting its potential as a rapid onset, prophylactic therapy for Lyme disease. Additionally, exploratory ex-vivo tick kill modeling that utilized serum from TP-05 treated subjects demonstrated potent, rapid killing of adult and nymph ticks.
Depending on the circumstances, failure to meet applicable regulatory requirements can result in significant civil, criminal and administrative penalties, including damages, fines, disgorgement, individual imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, compliance oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, injunctions, requests for recall, seizure of products, total or partial suspension of production, denial or withdrawal of product approvals or refusal to allow a firm to enter into supply contracts, including government contracts.
Depending on the circumstances, failure to meet applicable regulatory requirements can result in significant civil, criminal and administrative penalties, including damages, fines, disgorgement, individual imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, compliance oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, injunctions, requests for recall, seizure of products, total or partial suspension of production, denial or withdrawal of product approvals or refusal to allow a firm to enter into supply contracts, including government contracts. 30 U.S.
Although we believe blepharitis and Demodex blepharitis are significantly under-diagnosed diseases with limited treatment alternatives, there are already approximately 1.5 million annual Demodex blepharitis 8 diagnoses in the U.S. based on findings from the Titan study and data that show blepharitis classified per the International Classification of Diseases, Tenth Revision, Clinical Modification ("ICD-10-CM").
Although we believe blepharitis and Demodex blepharitis are significantly under-diagnosed diseases with limited treatment alternatives, there are already approximately 1.5 million Demodex blepharitis diagnoses in the U.S. based on findings from the Titan study and data that show blepharitis classified per the International Classification of Diseases, Tenth Revision, Clinical Modification ("ICD-10-CM").
To date, we have completed seven clinical trials that include a Phase 3 trial (the "Saturn-2 trial"), a Phase 2b/3 trial (the "Saturn-1 trial"), four Phase 2 trials, and a Phase 1 trial (the "Hyperion trial") for XDEMVY in Demodex blepharitis, all of which met their primary, secondary and/or certain exploratory endpoints, with the drug well tolerated throughout each trial.
To date, we have completed seven clinical trials that include a Phase 3 trial (the "Saturn-2 trial"), a Phase 2b/3 trial (the "Saturn-1 trial"), four Phase 2 trials, and a Phase 1 trial (the "Hyperion trial") for XDEMVY in Demodex blepharitis, all of which met their primary, secondary and/or certain exploratory endpoints, with the drug generally safe and well tolerated throughout each trial.
We have completed the initial preclinical studies and the Galatea Phase 1 trial for TP-04 and have selected a topical formulation for early clinical studies. We intend to leverage systemic preclinical data from our XDEMVY program such as embryofetal development studies, genotoxicity studies and safety pharmacology studies, and augment with the dermal toxicology studies.
We have completed the initial preclinical studies and a Phase 1 trial for TP-04 and have selected a topical ophthalmic formulation for early clinical studies. We intend to leverage systemic preclinical data from our XDEMVY program such as embryofetal development studies, genotoxicity studies and safety pharmacology studies, and augment with the dermal toxicology studies.
The Carpo trial is a randomized, double-blind, placebo-controlled trial that evaluated the efficacy of TP-05 in killing lab grown, non-disease carrying ticks after they have attached to the skin of healthy volunteers, as well as confirm the safety, tolerability, and blood concentration of TP-05.
The Carpo trial was a randomized, double-blind, placebo-controlled trial that evaluated the efficacy of TP-05 in killing lab grown, non-disease carrying ticks after they have attached to the skin of healthy volunteers, as well as confirm the safety, tolerability, and blood concentration of TP-05.
The process generally involves the following: • completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice ("GLP") requirements; • submission to the FDA of an IND, which must become effective before human clinical trials may begin in the U.S. and must be updated annually or when significant changes are made; • approval by an independent IRB or independent ethics committee at each clinical trial site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, GCP, requirements and other clinical trial-related regulations to establish substantial evidence of the safety and efficacy of the investigational product for each proposed indication; • submission to the FDA of an NDA; • a determination by the FDA within 60 days of its receipt of an NDA to accept the submission for review; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements, and of selected clinical investigational sites to assess compliance with GCP; • potential FDA audit of the preclinical study and/or clinical trial sites that generated the data in support of the NDA filing; • payment of user fees for FDA review of the NDA as well as annual fees after NDA approval; • FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the U.S.; and • compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Migration Strategy ("REMS") and the potential requirement to conduct post-approval studies.
The process generally involves the following: • completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice ("GLP") requirements; • submission to the FDA of an IND, which must become effective before human clinical trials may begin in the U.S. and must be updated annually or when significant changes are made; • approval by an independent IRB or independent ethics committee at each clinical trial site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practices ("GCP"), requirements and other clinical trial-related regulations to establish substantial evidence of the safety and efficacy of the investigational product for each proposed indication; • submission to the FDA of an NDA; • a determination by the FDA within 60 days of its receipt of an NDA to accept the submission for review; • satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements, and of selected clinical investigational sites to assess compliance with GCP; • potential FDA audit of the preclinical study and/or clinical trial sites that generated the data in support of the NDA filing; • payment of user fees for FDA review of the NDA as well as annual fees after NDA approval; • FDA review and approval of the NDA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the drug in the U.S.; and • compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Migration Strategy ("REMS") and the potential requirement to conduct post-approval studies. 24 The data required to support an NDA are generated in two distinct developmental stages: preclinical and clinical.
The following figures illustrate the intended paralysis of mites in the hair follicle by XDEMVY administration: Figure 5: Progression of XDEMVY Application, Mite Paralysis and Eradication Clinical Development Program To date we have completed one Phase 3 trial, one Phase 2b/3 trial, four Phase 2 trials, and one Phase 1 trial for XDEMVY in Demodex blepharitis, all of which met primary, secondary and/or certain exploratory endpoints, while demonstrating XDEMVY was well tolerated.
The following figures illustrate the intended paralysis of mites in the hair follicle by XDEMVY administration: Figure 5: Progression of XDEMVY Application, Mite Paralysis and Eradication Clinical Development Program To date we have completed seven clinical trials that include one Phase 3 trial, one Phase 2b/3 trial, four Phase 2 trials, and one Phase 1 trial for XDEMVY in Demodex blepharitis, all of which met primary, secondary and/or certain exploratory endpoints, while demonstrating XDEMVY was well tolerated.
Corporate Information We were incorporated under the laws of the State of Delaware in November 2016. Our principal executive offices are located at 15440 Laguna Canyon Road, Suite 160, Irvine, California 92618. Our telephone number is (949) 418-1801. Our website address is www.tarsusrx.com. Information contained on the website is not incorporated by reference into this Annual Report on Form 10-K.
Corporate Information We were incorporated under the laws of the State of Delaware in November 2016. Our principal executive offices are located at 15440 Laguna Canyon Road, Suite 160, Irvine, California 92618. Our telephone number is (949) 418-1801. Our website address is www.tarsusrx.com. Information contained on the website is not incorporated by reference into this Annual Report.
In accordance with the terms of the Eye and Derm Elanco Agreement, we are obligated to make further cash payments to Elanco upon our achievement of various clinical milestones up to an aggregate maximum of $2.0 million and various sales milestones up to an aggregate maximum of $75.0 million.
In accordance with the terms of the Eye and Derm Elanco Agreement, we are obligated to make further cash payments to Elanco upon our achievement of various clinical milestones up to an aggregate maximum of $2.0 million and various sales milestones up to an aggregate maximum of $70.0 million.
While lotilaner results in the paralysis and eventual death of the I. scapularis vector, it does also result in the death of B. burgdorferi , a non-free-living bacterium whose entire survival is conditional upon its living host.
While lotilaner results in the paralysis and eventual death of the I. scapularis vector, it does also result in the death of Borrelia burgdorferi , a non-free-living bacterium whose entire survival is conditional upon its living host.
It is designed to rapidly provide systemic blood levels of lotilaner, a well-characterized anti-parasitic agent that paralyzes and kills infected ticks attached to the human body through selective targeting of parasite-specific GABA-CI channels, before they can transmit the Borrelia burgdorferi infection that causes Lyme disease.
It is designed to rapidly provide systemic blood levels of lotilaner, a well-characterized anti-parasitic agent that paralyzes and kills infected ticks attached to the human body through selective targeting of parasite-specific GABA-CI channels, before they can transmit the Borrelia burgdorferi infection.
Under the PDUFA, as amended, each NDA must be accompanied by an application user fee. FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual program fee for each marketed human drug.
Under the Prescription Drug User Fee Act (the "PDUFA"), as amended, each NDA must be accompanied by an application user fee. FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual program fee for each marketed human drug.
The Clinical Trials Regulation is intended to simplify and streamline the approval of clinical trials in the EEA.
The EU Clinical Trials Regulation is intended to simplify and streamline the approval of clinical trials in the EEA.
The Affordable Care Act contains provisions that may reduce the profitability of drug products through increased rebates for drugs reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.
The ACA contains provisions that may reduce the profitability of drug products through increased rebates for drugs reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs.
There are approximately 80 million people in the U.S. at risk of Lyme disease exposure with more than 30 million of which are moderate to high risk. Further, there are approximately 400,000 reported cases in the U.S. each year, but it is believed that the actual number of cases could be much higher.
There are approximately 80 million people in the U.S. at risk of Lyme disease exposure with nearly 30 million of which are moderate to high risk. Further, there are approximately 400,000 reported cases of Lyme disease in the U.S. each year, but it is believed that the actual number of cases could be much higher.
LianBio Agreement On March 26, 2021, we entered into the China Out-License with LianBio for its exclusive development and commercialization rights of TP-03 (lotilaner ophthalmic solution, 0.25%) in The People's Republic of China, Macau, Hong Kong, and Taiwan (the "China Territory") for the treatment of Demodex blepharitis and MGD.
GrandPharma Agreement In March 2021, we entered into the China Out-License with LianBio (the "China Out-License") for its exclusive development and commercialization rights of TP-03 (lotilaner ophthalmic solution) 0.25% in The People's Republic of China, Macau, Hong Kong, and Taiwan (the "China Territory") for the treatment of Demodex blepharitis and MGD.
As a result, XDEMVY was approved by the FDA in July 2023 for the treatment of Demodex blepharitis and we began commercializing XDEMVY in August 2023. XDEMVY is the first FDA-approved therapeutic for Demodex blepharitis. XDEMVY Eye Drops – Mechanism of Action The active ingredient in XDEMVY is lotilaner, a member of a new class of anti-parasitic molecules called isoxazolines.
As a result, XDEMVY was approved by the FDA in July 2023 for the treatment of Demodex blepharitis and we began commercializing XDEMVY in August 2023. XDEMVY Eye Drops – Mechanism of Action The active ingredient in XDEMVY is lotilaner, a member of a class of anti-parasitic molecules called isoxazolines.
The following images illustrate representative eyelids with Demodex blepharitis demonstrating the characteristic sign of collarettes: Figure 2: Eyelids With Demodex Blepharitis Demodex Blepharitis Demodex infestation is a major cause of blepharitis, and we estimate that the number of Demodex blepharitis patients in the U.S. may be as high as approximately 25 million.
The following images illustrate representative eyelids with Demodex blepharitis demonstrating the characteristic sign of collarettes: 9 Figure 2: Eyelids With Demodex Blepharitis Demodex Blepharitis Demodex infestation is a major cause of blepharitis, and we estimate that the number of Demodex blepharitis patients in the U.S. may be as many as approximately 25 million.
We have conducted epidemiology and market research on the prevalence of blepharitis and potential adoption of XDEMVY. Our research indicates approximately 58% of patients presenting to ECP offices have collarettes and, based on the Gao study, all patients with collarettes were also found to have Demodex mites.
We have conducted epidemiology and market research on the prevalence of blepharitis and potential adoption of XDEMVY. Our research indicates approximately 58% of patients presenting to ECP offices have collarettes and, based on the Gao et al 2005 study (the "Gao study"), all patients with collarettes were also found to have Demodex mites.
Under PDUFA, the FDA has agreed to certain performance goals in the review of NDAs through a two-tiered classification system, standard review and priority review.
Under PDUFA, the FDA has agreed to certain performance goals in the review of NDAs through a two-tiered classification system, (i) standard review; and (ii) priority review.
There may be especially significant delays in obtaining coverage and reimbursement for newly approved drugs as several large payers have implemented new to market blocks that can last anywhere between six to twelve months.
There may be especially significant delays in obtaining coverage and reimbursement for newly approved drugs or new indications for products as several large payers have implemented new to market blocks that can last anywhere between six to twelve months.
Demodex blepharitis may affect as many as 25 million Americans based on an extrapolation from the Titan study indicating 58% of patients presenting to U.S. eye care clinics have collarettes, a pathognomonic sign of Demodex infestation, and that at least 45 million people annually visit an eye care clinic.
Demodex blepharitis may affect approximately 25 million Americans based on an extrapolation from the Titan study (as defined below) indicating 58% of patients presenting to U.S. eye care clinics have collarettes, a pathognomonic sign of Demodex infestation, and that at least 45 million people annually visit an eye care clinic.
Additional Analysis: • 89% of patients on XDEMVY achieved a clinically meaningful collarette reduction, defined as zero to ten collarettes per lid at day 43 compared to 33% of those on vehicle (p The Saturn-1 Trial The Saturn-1 trial was a randomized, controlled, multicenter, double-masked Phase 2b/3 trial that evaluated the safety and efficacy of XDEMVY in adults with Demodex blepharitis.
Additional Analysis: • 89% of patients on XDEMVY achieved a clinically meaningful collarette reduction, defined as zero to ten collarettes per lid at day 43 compared to 33% of those on vehicle (p The Saturn-1 Trial In September 2020, we commenced the Saturn-1 trial; a randomized, controlled, multicenter, double-masked Phase 2b/3 trial that evaluated the safety and efficacy of XDEMVY in adults with Demodex blepharitis.
A proposed theory suggests that the B acillus oleronius bacteria has a pathogenic role, contributing to skin inflammation and the signs and symptoms of rosacea; these bacteria are also known to be sensitive to the antibiotics typically prescribed to treat rosacea.
A proposed theory suggests that the Bacillus oleronius bacteria has a pathogenic role, contributing to skin inflammation and the signs and symptoms of rosacea; these bacteria are also known to be sensitive to the antibiotics typically prescribed to treat rosacea.
Meanwhile, Demodex mites have been shown to carry B acillus oleronius in their digestive tracts, suggesting that Demodex may contribute to rosacea by being a transporter for the bacteria that causes the disease.
Meanwhile, Demodex mites have been shown to carry Bacillus oleronius in their digestive tracts, suggesting that Demodex may contribute to rosacea by being a transporter for the bacteria that causes the disease.
Further, the Inflation Reduction Act of 2022 ("IRA") introduces several changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs and a change in manufacturer liability under the program which could negatively affect the profitability of our product candidates.
Further, the IRA introduces several changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs and a change in manufacturer liability under the program which could negatively affect the profitability of our product candidates.
Any reduction in reimbursement or restriction on coverage under Medicare or other government programs may result in a similar reduction or restriction by private payers. Other legislative changes have been proposed and adopted in the U.S. since the Affordable Care Act was enacted.
Any reduction in reimbursement or restriction on coverage under Medicare or other government programs may result in a similar reduction or restriction by private payers. Other legislative changes have been proposed and adopted in the U.S. since the ACA was enacted.
We believe that this space will be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available on commercially reasonable terms. 35 Legal Proceedings We are not currently a party to any material legal proceedings.
We believe that these spaces will be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available on commercially reasonable terms. Legal Proceedings We are not currently a party to any material legal proceedings.
Finally, some states have established Prescription Drug Affordability Boards (or similar entities) to review high-cost drugs and, in some cases, set upper payment limits. Human Capital Resources Human Capital As of December 31, 2023, we had 244 employees, all of which were full-time employees.
Finally, some states have established Prescription Drug Affordability Boards (or similar entities) to review high-cost drugs and, in some cases, set upper payment limits. Human Capital Resources 35 Human Capital As of December 31, 2024, we had 323 employees, all of which were full-time employees.
We believe we can improve upon existing treatments in the market, with an API that is potentially more effective (longer half-life, more lipophilic, greater therapeutic window).
We believe we can improve upon existing treatments with an API that is potentially more effective (longer half-life, more lipophilic, greater therapeutic window).
There are an estimated 25 million people in the U.S. who suffer from Demodex blepharitis, however, we are initially targeting the approximately 7 million people who are proactively seeking treatment for Demodex blepharitis or seeking treatment for complementary eye conditions or treatments.
There are approximately 25 million people in the U.S. who suffer from Demodex blepharitis, however, we are initially targeting the approximately 9 million people who are proactively seeking treatment for Demodex blepharitis or seeking treatment for complementary eye conditions or treatments.
We are investigating the development of our product candidates to address targeted diseases with high unmet medical needs, which currently include TP-03 for the potential treatment of MGD, TP-04, a novel gel formulation of lotilaner for the potential treatment of rosacea, and TP-05, a novel investigative oral formulation of lotilaner, for potential Lyme disease prophylaxis and community malaria reduction.
We are investigating the development of our product candidates to address targeted diseases with high unmet medical needs, which currently include TP-04, a novel ophthalmic gel formulation of lotilaner for the potential treatment of Ocular Rosacea, and TP-05, a novel investigational oral formulation of lotilaner, for potential Lyme disease prophylaxis and community malaria reduction.
These patents and patent applications relate to lotilaner and are issued or pending in, for example, the U.S., Argentina, Australia, Brazil, Canada, Chile, China, 19 Columbia, several European territories, India, Japan, South Korea, Mexico, New Zealand, the Russian Federation, South Africa and Taiwan.
These patents and patent applications relate to lotilaner and are issued or pending in, for example, the U.S., Argentina, Australia, Brazil, Canada, Chile, China, Columbia, several European territories, India, Japan, South Korea, Mexico, New Zealand, the Russian Federation, South Africa and Taiwan. The issued patents include composition of matter claims.
The slit lamp examination is routinely performed by ECPs as part of standard practice during a customary eye examination, so diagnosing Demodex blepharitis via presence of collarettes would not involve any additional equipment, training or workflow alterations on the part of the ECP.
Demodex blepharitis can be diagnosed by ECPs with a slit lamp examination, by confirming the presence of collarettes. The slit lamp examination is routinely performed by ECPs as part of standard practice during a customary eye examination, so diagnosing Demodex blepharitis via presence of collarettes would not involve any additional equipment or workflow alterations on the part of the ECP.
As a result of the commercialization of XDEMVY in August 2023, we began accruing royalties payable, which were recorded to cost of sales in the accompanying Statement of Operations and Comprehensive Loss for the year ended December 31, 2023.
As a result of the commercialization of XDEMVY in August 2023, we began accruing royalties payable, which were recorded to cost of sales in the accompanying Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023.
Approximately 44 of our owned patents and pending patent applications include treatment and composition of matter claims which relate to XDEMVY with respect to our lead indication (e.g., isoxazoline parasiticides for the treatment of Demodex blepharitis), as well as other conditions.
Approximately 76 of our owned material patents and pending patent applications include treatment and composition of matter claims which relate to XDEMVY or TP-03 with respect to our lead indication (e.g., isoxazoline parasiticides for the treatment of Demodex blepharitis), as well as other conditions.
There have been judicial challenges to certain aspects of the Affordable Care Act, as well as efforts by Congress to modify, and by agencies to alter the implementation of, certain aspects of the Affordable Care Act. For example, Congress eliminated the tax penalty for not complying with the Affordable Care Act’s individual mandate to carry health insurance.
There have been judicial challenges to certain aspects of the ACA, as well as efforts by Congress to modify, and by agencies to alter the implementation of, certain aspects of the ACA. For example, Congress eliminated the tax penalty for not complying with the ACA’s individual mandate to carry health insurance.
All 55 patients were seen at one location and may not be representative of the U.S. population. However, subsequent studies including the two TP-03 pivotal Saturn studies that had >800 patients, consistently demonstrated a correlation between the presence of collarettes and Demodex mites.
All 55 patients were seen at one location and may not be representative of the U.S. population. However, subsequent studies, including the XDEMVY pivotal Saturn-1 and Saturn-2 trials, that had >800 patients, consistently demonstrated a correlation between the presence of collarettes and Demodex mites.
The Carpo trial is a randomized, double-blind, placebo-controlled trial that evaluated the efficacy of TP-05 in killing lab grown, non-disease carrying ticks after they have attached to the skin of healthy volunteers, as well as confirm the safety, tolerability, and blood concentration of TP-05.
The Carpo trial is a randomized, double-blind, placebo-controlled trial that evaluated the efficacy of TP-05 in killing lab grown, non-disease carrying ticks after they have attached to the skin of healthy volunteers, as well as confirm the safety, tolerability, and blood concentration of TP-05. In February 2024 we announced positive topline results from the Carpo trial.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Under the Medicaid Drug Rebate program, a participating manufacturer is required to pay a rebate to each state Medicaid program for its covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by the state Medicaid program as a condition of having federal funds being made available for drugs under Medicaid and Medicare Part B.
Under the Medicaid Drug Rebate Program, a participating manufacturer is required to pay a rebate to each state Medicaid program for its covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by the state Medicaid program as a condition of having federal funds being made available for drugs under Medicaid and Medicare Part B ("Medicare Part B").
Collaborations pose a number of risks, including the following: • collaborators have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations; • collaborators may not perform their obligations as expected; • collaborators may not pursue development of our product candidates or may elect not to continue or renew development programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition or business combination, that divert resources or create competing priorities; • collaborators may not pursue commercialization of any product or product candidates that achieve marketing approval or may elect not to continue or renew commercialization programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition or business combination, that may divert resources or create competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • we may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates on a discretionary basis; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with XDEMVY or our product candidates and products if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • a collaborator may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product; • a collaborator may seek to renegotiate or terminate their relationship with us due to unsatisfactory clinical results, manufacturing issues, a change in business strategy, a change of control or other reasons; • a collaborator with marketing and distribution rights to one or more of our product candidates that achieve marketing approval may not commit sufficient resources to the marketing and distribution of such product or products; • disagreements with collaborators, including disagreements over intellectual property or proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; • collaborators may not properly obtain, maintain, enforce, defend or protect our intellectual property or proprietary rights or may use our proprietary information in such a way as to potentially lead to disputes or legal proceedings that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations; 71 • collaborators may infringe, misappropriate or otherwise violate the intellectual property or proprietary rights of third parties, which may expose us to litigation and potential liability; and • collaborations may be terminated for the convenience of the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
Collaborations pose a number of risks, including the following: • collaborators have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations; • collaborators may not perform their obligations as expected; • collaborators may not pursue development of our product candidates or may elect not to continue or renew development programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition or business combination, that divert resources or create competing priorities; • collaborators may not pursue commercialization of any product or product candidates that achieve marketing approval or may elect not to continue or renew commercialization programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition or business combination, that may divert resources or create competing priorities; 71 • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • we may not have access to, or may be restricted from disclosing, certain information regarding product candidates being developed or commercialized under a collaboration and, consequently, may have limited ability to inform our stockholders about the status of such product candidates on a discretionary basis; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with XDEMVY or our product candidates and products if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; • product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • a collaborator may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product; • a collaborator may seek to renegotiate or terminate their relationship with us due to unsatisfactory clinical results, manufacturing issues, a change in business strategy, a change of control or other reasons; • a collaborator with marketing and distribution rights to one or more of our product candidates that achieve marketing approval may not commit sufficient resources to the marketing and distribution of such product or products; • disagreements with collaborators, including disagreements over intellectual property or proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; • collaborators may not properly obtain, maintain, enforce, defend or protect our intellectual property or proprietary rights or may use our proprietary information in such a way as to potentially lead to disputes or legal proceedings that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; • disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations; • collaborators may infringe, misappropriate or otherwise violate the intellectual property or proprietary rights of third parties, which may expose us to litigation and potential liability; and • collaborations may be terminated for the convenience of the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
After March 2013, under the Leahy-Smith Act, the U.S. transitioned to a first inventor to file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
After March 2013, under the Leahy-Smith Act, the U.S. transitioned to a first inventor to file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. The U.S.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. The U.S.
Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Depending on future actions by the U.S.
Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Depending on future actions by the U.S.
In addition, the IRA establishes a Medicare Part B inflation rebate scheme and a Medicare Part D inflation rebate scheme, under which, generally speaking, manufacturers will owe rebates if the price of a Part B or Part D drug increases faster than the pace of inflation.
In addition, the IRA establishes a Medicare Part B inflation rebate scheme and a Medicare Part D inflation rebate scheme, under which, generally speaking, manufacturers will owe rebates if the price of a Medicare Part B or Part D drug increases faster than the pace of inflation.
Enforcement by EU and UK regulators is generally active, and failure to comply with the GDPR or applicable Member State/UK local law may result in substantial fines, amongst other things (such as notices requiring compliance within a certain timeframe).
Enforcement by EU and UK regulators is generally active, and failure to comply with the GDPR or applicable EU Member State/UK local law may result in substantial fines, amongst other things (such as notices requiring compliance within a certain timeframe).
The GDPR provides different transfer mechanisms we can use to lawfully transfer personal data from the EU to countries outside the EU. An example is relying on adequacy decisions of the European Commission, such as the EU-U.S. Data Privacy Framework which was adopted by the European Commission in 2023.
The GDPR provides different transfer mechanisms we can use to lawfully transfer personal data from the EU to countries outside the EU. An example is relying on adequacy decisions of the European Commission, such as the EU-U.S. Data Privacy Framework which was adopted by the European Commission in 2023 ("EU-U.S. Data Privacy Framework").
Any of our present and future clinical trials may be delayed, halted, not authorized, or approval of any of our products may be delayed or may not be obtained due to any of the following: • any preclinical study or clinical trial may fail to produce safety and efficacy results satisfactory to the FDA or comparable foreign regulatory authorities; • preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent marketing approval; • negative or inconclusive results from a preclinical study or clinical trial or adverse events during a clinical trial could cause a preclinical study or clinical trial to be repeated or a development program to be terminated, even if other studies or trials relating to the development program are ongoing or have been completed and were successful; • the FDA or comparable foreign regulatory authorities can place a clinical hold on a trial if, among other reasons, it finds that subjects enrolled in the trial are or would be exposed to an unreasonable and significant risk of illness or injury; 79 • the facilities that we utilize, or the processes or facilities of third-party vendors, including without limitation the contract manufacturers who are or will be manufacturing drug substance and drug product for us or any potential collaborators, may not satisfactorily complete inspections by the FDA or comparable foreign regulatory authorities; and • we may encounter delays or rejections based on changes in FDA regulations, standards or policies or the regulations, standards or policies of comparable foreign regulatory authorities during the period in which we develop a product candidate or the period required for review of any final marketing approval before we are able to market any product candidate.
Any of our present and future clinical trials may be delayed, halted, not authorized, or approval of any of our products may be delayed or may not be obtained due to any of the following: • any preclinical study or clinical trial may fail to produce safety and efficacy results satisfactory to the FDA or comparable foreign regulatory authorities; • preclinical and clinical data can be interpreted in different ways, which could delay, limit or prevent marketing approval; • negative or inconclusive results from a preclinical study or clinical trial or adverse events during a clinical trial could cause a preclinical study or clinical trial to be repeated or a development program to be terminated, even if other studies or trials relating to the development program are ongoing or have been completed and were successful; • the FDA or comparable foreign regulatory authorities can place a clinical hold on a trial if, among other reasons, it finds that subjects enrolled in the trial are or would be exposed to an unreasonable and significant risk of illness or injury; • the facilities that we utilize, or the processes or facilities of third-party vendors, including without limitation the contract manufacturers who are or will be manufacturing drug substance and drug product for us or any potential collaborators, may not satisfactorily complete inspections by the FDA or comparable foreign regulatory authorities; and • we may encounter delays or rejections based on changes in FDA regulations, standards or policies or the regulations, standards or policies of comparable foreign regulatory authorities during the period in which we develop a product candidate or the period required for review of any final marketing approval before we are able to market any product candidate.
In addition, there are risks inherent in conducting clinical trials in multiple jurisdictions, inside and outside of the U.S. and if we conduct trials outside of the U.S., we may face risks, such as: • regulatory and administrative requirements of the jurisdiction where the trial is conducted that could burden or limit our ability to conduct our clinical trials; • foreign exchange rate fluctuations; • manufacturing, customs, shipment and storage requirements; • cultural or legal differences in the standards for medical practice and clinical research; • diminished protection of intellectual property in some countries; • different cultural attitudes to self-reported adverse events (such as burning, stinging, blurry vision) leading to a different safety profile; and • the risk that the patient populations in such trials are not considered representative as compared to the patient population in the target markets where approval is being sought.
In addition, there are risks inherent in conducting clinical trials in multiple jurisdictions, inside and outside of the U.S. and if we conduct trials outside of the U.S., we may face risks, such as: 58 • regulatory and administrative requirements of the jurisdiction where the trial is conducted that could burden or limit our ability to conduct our clinical trials; • foreign exchange rate fluctuations; • manufacturing, customs, shipment and storage requirements; • cultural or legal differences in the standards for medical practice and clinical research; • diminished protection of intellectual property in some countries; • different cultural attitudes to self-reported adverse events (such as burning, stinging, blurry vision) leading to a different safety profile; and • the risk that the patient populations in such trials are not considered representative as compared to the patient population in the target markets where approval is being sought.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, if there are safety concerns or if we determine that the observed safety or efficacy profile would not be competitive in the marketplace, we may: • incur unplanned costs; • be delayed in obtaining marketing approval for our product candidates; • not obtain marketing approval at all; • obtain marketing approval in some countries and not in others; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; 53 • be subject to additional post-marketing testing requirements; or • have the product removed from the market after obtaining marketing approval.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, if there are safety concerns or if we determine that the observed safety or efficacy profile would not be competitive in the marketplace, we may: • incur unplanned costs; • be delayed in obtaining marketing approval for our product candidates; • not obtain marketing approval at all; • obtain marketing approval in some countries and not in others; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be subject to additional post-marketing testing requirements; or • have the product removed from the market after obtaining marketing approval.
Although we have pending U.S. and foreign patent applications in our portfolio, we cannot predict: • if and when patents may issue based on our patent applications; • the scope of protection of any patent issuing based on our patent applications; • whether the claims of any patent issuing based on our patent applications will provide protection against competitors; • whether or not third parties will find ways to invalidate or circumvent our patent rights; • whether or not others will obtain patents claiming aspects similar to those claimed in our patents and patent applications; • whether we will need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose; and/or 73 • whether the patent applications that we own or in-license will result in issued patents with claims that cover our products or product candidates or uses thereof in the U.S. or in other foreign countries.
Although we have pending U.S. and foreign patent applications in our portfolio, we cannot predict: • if and when patents may issue based on our patent applications; • the scope of protection of any patent issuing based on our patent applications; • whether the claims of any patent issuing based on our patent applications will provide protection against competitors; • whether or not third parties will find ways to invalidate or circumvent our patent rights; • whether or not others will obtain patents claiming aspects similar to those claimed in our patents and patent applications; • whether we will need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose; and/or • whether the patent applications that we own or in-license will result in issued patents with claims that cover our products or product candidates or uses thereof in the U.S. or in other foreign countries.
For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our clinical trial subjects or employees, could harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, including private lawsuits or class actions under the California Consumer Privacy Act, which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.
For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our clinical trial subjects or employees, could harm our reputation directly, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information, including private lawsuits or class actions under the California Consumer Privacy Act "CCPA"), which could result in significant legal and financial exposure and reputational damages that could potentially have an adverse effect on our business.
The GDPR imposes a broad range of obligations and restrictions relating to the processing and protection of personal data, including obligatoins to having a legal basis for processing personal data (which may result in some instances in obtaining the consent of the individuals to whom the personal data relates), providing detailed information about the processing activities disclosed to the individuals, dealing with restrictions on sharing of personal data with third parties, and the transferring of personal data out of the EU, having contractual arrangements in place where required (such as with clinical trial sites and vendors), reporting in certain instances personal data breaches to data protection authorities and/or affected individuals, appointing data protection officers, conducting data protection impact assessments, responding to privacy rights requests, and keeping records of processing activities.
The GDPR imposes a broad range of obligations and restrictions relating to the processing and protection of personal data, including obligations to having a legal basis for processing personal data (which may result in some instances in obtaining the consent of the individuals to whom the personal data relates), providing detailed information about the processing activities disclosed to the individuals, dealing with restrictions on sharing of personal data with third parties, and the transferring of personal data out of the EU, having contractual arrangements in place where required (such as with clinical trial sites and vendors), reporting in certain instances personal data breaches to data protection authorities and/or affected individuals, appointing data protection officers, conducting data protection impact assessments, responding to privacy rights requests, and keeping records of processing activities.
Our or a third party’s failure to execute on our manufacturing requirements, to do so on commercially reasonable terms and comply with cGMP could adversely affect our business in a number of ways, including: • an inability to meet commercial demands for XDEMVY or any other future product that is approved; • requirements to cease development or to recall batches of XDEMVY or our product candidates; • an inability to initiate or continue clinical trials of our product candidates under development; • delay in submitting regulatory applications, or receiving marketing approvals, for our product candidates; • loss of the cooperation of an existing or future collaborator, including by Elanco under the license agreements with Elanco; and • subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities.
Our or a third party’s failure to execute on our manufacturing requirements, to do so on commercially reasonable terms and comply with cGMP could adversely affect our business in a number of ways, including: • an inability to meet commercial demands for XDEMVY or any other future product that is approved; • requirements to cease development or to recall batches of XDEMVY or our product candidates; • an inability to initiate or continue clinical trials of our product candidates under development; • delay in submitting regulatory applications, or receiving marketing approvals, for our product candidates; • loss of the cooperation of an existing or future collaborator, including by Elanco and under the Elanco Agreements; and • subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities.
Our operating results may fluctuate due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following: • the cost of manufacturing XDEMVY or our other product candidates, which may vary depending on the quantity of production and the terms of our agreements with manufacturers; • the level of demand for XDEMVY or our product candidates should they receive approval, which may vary significantly; • the risk/benefit profile, cost and reimbursement policies with respect to XDEMVY or our product candidates, if approved, and existing and potential future drugs that compete with our product candidates; • the gross-to-net yields for XDEMVY or our other product candidates, if approved; 91 • the timing and success or failure of clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners; • our ability to successfully recruit patients for preclinical studies and clinical trials, and any delays caused by difficulties in such recruitment efforts; • our ability to obtain regulatory approval for our product candidates, and the timing and scope of any such approvals we may receive; • the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time; • our ability to attract, hire and retain qualified personnel; • expenditures that we will or may incur to develop additional product candidates; • the changing and volatile U.S., European and global economic environments, including the impact of current or future health pandemics; and • future accounting pronouncements or changes in our accounting policies.
Our operating results may fluctuate due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following: • the cost of manufacturing XDEMVY or our other product candidates, which may vary depending on the quantity of production and the terms of our agreements with manufacturers; • the level of demand for XDEMVY or our product candidates should they receive approval, which may vary significantly; • the risk/benefit profile, cost and reimbursement policies with respect to XDEMVY or our product candidates, if approved, and existing and potential future drugs that compete with our product candidates; • the gross-to-net yields for XDEMVY or our other product candidates, if approved; 91 • the timing and success or failure of clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners; • our ability to successfully recruit patients for preclinical studies and clinical trials, and any delays caused by difficulties in such recruitment efforts; • our ability to obtain regulatory approval for our product candidates, and the timing and scope of any such approvals we may receive; • the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time; • our ability to attract, hire and retain qualified personnel; • expenditures that we will or may incur to develop additional product candidates; • the changing and volatile U.S., EU and global economic environments, including the impact of current or future health pandemics; and • future accounting pronouncements or changes in our accounting policies.
Disputes may arise regarding intellectual property subject to a licensing agreement, including: • the scope of rights granted under the license agreement and other interpretation related issues; • the extent to which our technology and processes infringe intellectual property of the licensor that is not subject to the licensing agreement; • the sublicensing of patent and other rights; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and • the priority of invention of patented technology.
Disputes may arise regarding intellectual property subject to a licensing agreement, including: • the scope of rights granted under the license agreement and other interpretation related issues; • the extent to which our technology and processes infringe intellectual property of the licensor that is not subject to the licensing agreement; • the sublicensing of patent and other rights; • our diligence obligations under the license agreement and what activities satisfy those diligence obligations; 73 • the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and • the priority of invention of patented technology.
Finally, in order to be eligible to have its products paid for with federal funds under the Medicaid and Medicare programs and purchased by the Department of Veterans Affairs (“VA”), Department of Defense (“DoD”), Public Health Service, and Coast Guard (the “Big Four agencies”) and certain federal grantees, a manufacturer is required to participate in the VA Federal Supply Schedule (“FSS”) pricing program, established under Section 603 of the Veterans Health Care Act of 1992.
Finally, in order to be eligible to have its products paid for with federal funds under the Medicaid and Medicare programs and purchased by the Department of Veterans Affairs (“VA”), Department of Defense (“DoD”), Public Health Service, and Coast Guard (collectively, the “Big Four agencies”) and certain federal grantees, a manufacturer is required to participate in the VA Federal Supply Schedule (“FSS”) pricing program, established under Section 603 of the Veterans Health Care Act of 1992.
Although we seek to protect our ownership of intellectual property rights by ensuring that our agreements with our employees, collaborators, and other third parties with whom we do business include provisions requiring 77 such parties to assign rights in inventions to us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties.
Although we seek to protect our ownership of intellectual property rights by ensuring that our agreements with our employees, collaborators, and other third parties with whom we do business include provisions requiring such parties to assign rights in inventions to us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties.
Our Credit Facility also contains a negative covenant that prohibits us from paying dividends subject to limited exceptions. Consequently, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. We could be subject to securities class action litigation.
Our 2024 Credit Facility also contains a negative covenant that prohibits us from paying dividends subject to limited exceptions. Consequently, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. We could be subject to securities class action litigation.
There may be shortages in the raw materials used in the manufacturing of our product candidates or laboratory supplies for our preclinical studies and clinical trials, in each case, because of ongoing efforts to address the outbreak. 40 We cannot assure that the inability to collect such clinical data would not have an adverse impact on our clinical trial results.
There may be shortages in the raw materials used in the manufacturing of our product candidates or laboratory supplies for our preclinical studies and clinical trials, in each case, because of ongoing efforts to address the outbreak. We cannot assure that the inability to collect such clinical data would not have an adverse impact on our clinical trial results.
If XDEMVY or any of our product candidates that are approved for marketing are found to have been improperly promoted for off-label uses by us, or if ECPs misuse our products or use our products off-label, we may become subject to prohibitions on the sale or marketing of our products, product liability claims and significant fines, penalties and sanctions, and our brand and reputation could be harmed.
If XDEMVY or any of our product candidates that are approved for marketing are found to have been improperly promoted for off-label uses by us, or if ECPs misuse our products or use our products off-label, we may become subject to prohibitions 51 on the sale or marketing of our products, product liability claims and significant fines, penalties and sanctions, and our brand and reputation could be harmed.
If we obtain approval of our product candidates and ultimately commercialize our product candidates in foreign markets, we would be subject to additional risks and uncertainties, including: • our customers’ ability to obtain reimbursement for our product candidates in foreign markets; • our inability to directly control commercial activities if we are relying on third parties; • the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements; 56 • different medical practices and customs in foreign countries affecting acceptance in the marketplace; • import or export licensing requirements; • longer accounts receivable collection times; • longer lead times for shipping; • language barriers for technical training and the need for language translations; • reduced protection of intellectual property rights in some foreign countries; • the existence of additional potentially relevant third-party intellectual property rights; • foreign currency exchange rate fluctuations; and • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
If we obtain approval of our product candidates and ultimately commercialize our product candidates in foreign markets, we would be subject to additional risks and uncertainties, including: • our customers’ ability to obtain reimbursement for our product candidates in foreign markets; • our inability to directly control commercial activities if we are relying on third parties; • the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements; • different medical practices and customs in foreign countries affecting acceptance in the marketplace; • import or export licensing requirements; • longer accounts receivable collection times; • longer lead times for shipping; 57 • language barriers for technical training and the need for language translations; • reduced protection of intellectual property rights in some foreign countries; • the existence of additional potentially relevant third-party intellectual property rights; • foreign currency exchange rate fluctuations; and • the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
If we, or our manufacturing partners, are unable to successfully scale up the manufacture of XDEMVY or our product candidates in sufficient quality and quantity, the commercialization of XDEMVY or the development, testing and clinical trials of that product candidate may be delayed or become infeasible, and commercialization of XDEMVY or marketing approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.
If we, or our manufacturing partners, are unable to successfully scale up the manufacture of XDEMVY or our product candidates in sufficient quality and quantity, the commercialization of XDEMVY or the development, testing and clinical trials of that 66 product candidate may be delayed or become infeasible, and commercialization of XDEMVY or marketing approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders.
Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law ("DGCL") may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders.
The enrollment of patients depends on many factors, including: • the patient eligibility criteria defined in the protocol; • size of the patient population required for analysis of the trial’s primary endpoints; 54 • the proximity of patients to study sites; • the design of the trial; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating; • our ability to obtain and maintain patient consents; • costs to, or lack of adequate compensation for, prospective patients; • difficulties of enrolling patients or patients continuing to participate in follow-up visits due to ongoing or new health epidemics; and • the risk that patients enrolled in clinical trials will drop out of the trials before completion.
The enrollment of patients depends on many factors, including: • the patient eligibility criteria defined in the protocol; • size of the patient population required for analysis of the trial’s primary endpoints; • the proximity of patients to study sites; • the design of the trial; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; 55 • clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating; • our ability to obtain and maintain patient consents; • costs to, or lack of adequate compensation for, prospective patients; • difficulties of enrolling patients or patients continuing to participate in follow-up visits due to ongoing or new health epidemics; and • the risk that patients enrolled in clinical trials will drop out of the trials before completion.
In addition, given the amount of time required for the development, testing and regulatory review of 68 new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. Furthermore, our competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.
In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. Furthermore, our competitors may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.
If we are unsuccessful in accomplishing our objectives and executing on our business plan, or if the commercialization of XDEMVY or any future approved products does not develop as planned, we may require significant additional capital and financial resources, we may not become profitable, and we may not be able to compete against more established companies in our industry.
If we are unsuccessful in accomplishing our objectives and executing on our business plan, or if the commercialization of XDEMVY or any future approved products does not develop as 46 planned, we may require significant additional capital and financial resources, we may not become profitable, and we may not be able to compete against more established companies in our industry.
We also make assumptions, estimations, 58 calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully evaluate all data. Preliminary or top-line results also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.
We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully evaluate all data. Preliminary or top-line results also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.
In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution. Changes in patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution. 76 Changes in patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.
The rules dealing with U.S. federal, state, and local income taxation are complex and are constantly under review by legislators, the U.S. Treasury Department, and the Internal Revenue Service. Changes to tax laws (which may have retroactive application) have occurred and are likely to continue to occur in the future, which could adversely affect our shareholders.
The rules dealing with U.S. federal, state, and local income taxation are complex and are constantly under review by legislators, the U.S. Department of Treasury, and the Internal Revenue Service. Changes to tax laws (which may have retroactive application) have occurred and are likely to continue to occur in the future, which could adversely affect our shareholders.
Even if we were able to obtain a license, it could be non-exclusive, thereby giving our 74 competitors access to the same technologies licensed to us and could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or product.
Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us and could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or product.
Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in 75 question.
Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question.
We 87 cannot assure you that our contractual measures and our own privacy and security- related safeguards will protect us from the risks associated with the third-party processing, storage and transmission of such information. Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly.
We cannot assure you that our contractual measures and our own privacy and security-related safeguards will protect us from the risks associated with the third-party processing, storage and transmission of such information. Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly.
Regardless of merit or eventual outcome, product liability claims may result in: • the inability or delay of our efforts to commercialize XDEMVY or any products that we may develop; • decreased demand for XDEMVY or any product candidates or products that we may develop; • withdrawal of regulatory approval, recall, restriction on the approval or a black box warning or contraindication for XDEMVY or any future product candidates, if approved; • delay, variation or termination of clinical trials; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial subjects or challenges with clinical trial enrollment; 39 • initiation of investigations by regulators; • significant costs to defend the related litigation and diversion of management’s time and our resources; • substantial monetary awards to study subjects or patients; • product recalls, withdrawals or new labeling requirements, marketing or promotional restrictions; and • loss of revenue.
Regardless of merit or eventual outcome, product liability claims may result in: • the inability or delay of our efforts to commercialize XDEMVY or any products that we may develop; • decreased demand for XDEMVY or any product candidates or products that we may develop; • withdrawal of regulatory approval, recall, restriction on the approval or a black box warning or contraindication for XDEMVY or any future product candidates, if approved; • delay, variation or termination of clinical trials; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial subjects or challenges with clinical trial enrollment; • initiation of investigations by regulators; • significant costs to defend the related litigation and diversion of management’s time and our resources; 40 • substantial monetary awards to study subjects or patients; • product recalls, withdrawals or new labeling requirements, marketing or promotional restrictions; or • loss of revenue.
Before we can initiate clinical trials in the U.S. for our product candidates, we must submit the results of preclinical testing and any previous clinical studies to the FDA along with other information, including information about product candidate chemistry, manufacturing and controls (“CMC”) and our proposed clinical trial protocol, as part of an IND.
Before we can initiate clinical trials in the U.S. for our product candidates, we must submit the results of preclinical testing and any previous clinical studies to the FDA along with other information, including information about product candidate chemistry, manufacturing and controls and our proposed clinical trial protocol, as part of an IND.
In addition, our product candidates, if approved, may not achieve 60 adequate product sales or commercial success. Although we initiated commercialization of XDEMVY for the treatment of Demodex blepharitis in August 2023, we will need to continue to sustain our existing capital resources to fund our future operating expenses and capital expenditure requirements.
In addition, our product candidates, if approved, may not achieve adequate product sales or commercial success. Although we initiated commercialization of XDEMVY for the treatment of Demodex blepharitis in August 2023, we will need to continue to sustain our existing capital resources to fund our future operating expenses and capital expenditure requirements.
These third parties are not our employees, and except for remedies available to us under our agreements with such third party, we have limited ability to control the amount or timing of resources that any such third party will devote to our clinical trials. Some of these third parties may terminate their 63 engagements with us at any time.
These third parties are not our employees, and except for remedies available to us under our agreements with such third party, we have limited ability to control the amount or timing of resources that any such third party will devote to our clinical trials. Some of these third parties may terminate their engagements with us at any time.
We rely upon a combination of patents, trademarks, trade secret protection, and confidentiality agreements to protect the intellectual property related to XDEMVY, our development programs and product candidates. Our success depends 67 in large part on our ability to obtain and maintain patent protection in the U.S. and other countries with respect to XDEMVY, our product candidates and research programs.
We rely upon a combination of patents, trademarks, trade secret protection, and confidentiality agreements to protect the intellectual property related to XDEMVY, our development programs and product candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the U.S. and other countries with respect to XDEMVY, our product candidates and research programs.
If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue. 70 Collaborations that we have entered into and may enter in the future may not be successful, and any success will depend heavily on the efforts and activities of such collaborators.
If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue. Collaborations that we have entered into and may enter in the future may not be successful, and any success will depend heavily on the efforts and activities of such collaborators.
We may not be granted patent term extension either in the U.S. or in any foreign country because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements.
We may not be granted patent term extension either in the U.S. or in any foreign country because of, for example, failing to exercise due diligence during the 75 testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements.
Net prices for products may be reduced by mandatory 84 discounts or rebates required by government healthcare programs or private payers, by any future laws limiting drug prices and by any future relaxation of laws that presently restrict imports of product from countries where they may be sold at lower prices than in the U.S.
Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payers, by any future laws limiting drug prices and by any future relaxation of laws that presently restrict imports of product from countries where they may be sold at lower prices than in the U.S.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, or any other product candidates that we may develop, including: • we may experience delays in or failure to reach agreement on acceptable terms with prospective CROs, vendors and clinical sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs, vendors and trial sites; • we may fail to obtain sufficient enrollment in our clinical trials, our enrollment needs may grow larger than we anticipate, or participants may fail to complete our clinical trials at a higher rate than we anticipate; • clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • we may decide, or regulators or IRBs or ethics committees may require us, to suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; 52 • regulators or IRBs or ethics committees may not authorize us or our investigators to commence a clinical trial at a prospective clinical trial site or at all or may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing requirements to maintain regulatory approval; • regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate; • the cost of clinical trials of our product candidates may be greater than we anticipate, and we may need to delay or suspend one or more trials until we complete additional financing transactions or otherwise receive adequate funding; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate or may be delayed; • our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs or ethics committees to suspend or terminate trials; • regulatory authorities may determine that the planned design of our clinical trials is flawed or inadequate; • regulatory authorities may suspend or withdraw their approval of a product or impose restrictions on its distribution; • we may not be able to timely or at all obtain INDs for a product candidate; • we may modify a preclinical study or clinical trial protocol; • third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we may be unable to establish clinical endpoints that applicable regulatory authorities consider clinically meaningful, or, if we seek accelerated approval, biomarker efficacy endpoints that applicable regulatory authorities consider likely to predict clinical benefit; • we may experience delays due to the outbreak of health epidemics, including with respect to the conduct of ongoing clinical trials, receipt of product candidates or other materials, submission of NDAs, filing of INDs, and starting any clinical trials for other indications or programs; and • we may experience manufacturing delays due to health epidemics in our supply chain caused by a shortage of raw materials, a lack of employees on site at our suppliers due to illness, or a lack of productivity at our suppliers due to local or national government quarantine restrictions on coming to the workplace.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, or any other product candidates that we may develop, including: • we may experience delays in or failure to reach agreement on acceptable terms with prospective CROs, vendors and clinical sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs, vendors and trial sites; • we may fail to obtain sufficient enrollment in our clinical trials, our enrollment needs may grow larger than we anticipate, or participants may fail to complete our clinical trials at a higher rate than we anticipate; • clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • we may decide, or regulators or Institutional Review Boards ("IRBs") or ethics committees may require us, to suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; • regulators or IRBs or ethics committees may not authorize us or our investigators to commence a clinical trial at a prospective clinical trial site or at all or may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing requirements to maintain regulatory approval; • regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate; 53 • the cost of clinical trials of our product candidates may be greater than we anticipate, and we may need to delay or suspend one or more trials until we complete additional financing transactions or otherwise receive adequate funding; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate or may be delayed; • our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs or ethics committees to suspend or terminate trials; • regulatory authorities may determine that the planned design of our clinical trials is flawed or inadequate; • regulatory authorities may suspend or withdraw their approval of a product or impose restrictions on its distribution; • we may not be able to timely or at all obtain INDs for a product candidate; • we may modify a preclinical study or clinical trial protocol; • third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we may be unable to establish clinical endpoints that applicable regulatory authorities consider clinically meaningful, or, if we seek accelerated approval, biomarker efficacy endpoints that applicable regulatory authorities consider likely to predict clinical benefit; • we may experience delays due to the outbreak of health epidemics, including with respect to the conduct of ongoing clinical trials, receipt of product candidates or other materials, submission of NDAs, filing of INDs, and starting any clinical trials for other indications or programs; and • we may experience manufacturing delays due to health epidemics in our supply chain caused by a shortage of raw materials, a lack of employees on site at our suppliers due to illness, or a lack of productivity at our suppliers due to local or national government quarantine restrictions on coming to the workplace.
Further, entering into such 72 license agreements could impose various diligence, commercialization, royalty or other obligations on us. Future licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license, which could adversely affect our competitive business position and harm our business prospects.
Further, entering into such license agreements could impose various diligence, commercialization, royalty or other obligations on us. Future licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license, which could adversely affect our competitive business position and harm our business prospects.
The loss of the license from Elanco would prevent us from developing and commercializing TP-03, TP-04 and TP-05 in any country where the license is terminated and could subject us to claims of breach of contract and patent infringement by Elanco if any continued research, development, manufacture or commercialization of TP-03, TP-04 or TP-05 is covered by the affected patents.
The loss of the license from Elanco would prevent us from developing and commercializing XDEMVY, TP-03, TP-04 and TP-05 in any country where the license is terminated and could subject us to claims of breach of contract and patent infringement by Elanco if any continued research, development, manufacture or commercialization of XDEMVY, TP-03, TP-04 or TP-05 is covered by the affected patents.
In addition, the scope of patent protection outside of the U.S. is uncertain and laws of foreign countries may not protect our rights to the same extent as the laws of the U.S., or vice versa. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does.
In addition, the scope of patent protection outside of the U.S. is uncertain and laws of foreign countries may not protect 68 our rights to the same extent as the laws of the U.S., or vice versa. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does.
At times, competitors may adopt trademarks and trade names similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. During trademark registration proceedings, we may receive rejections. Although we would be given an opportunity to respond to those rejections, we may be unable to overcome such rejections.
At times, competitors may adopt trademarks and trade names similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. During trademark registration proceedings, we may receive rejections. Although we would be given an opportunity to respond to those rejections, 69 we may be unable to overcome such rejections.
Litigation or other legal proceedings relating to intellectual property claims, with or without merit, are unpredictable and generally expensive and time consuming and, even if resolved in our favor, are likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities.
Litigation or other 74 legal proceedings relating to intellectual property claims, with or without merit, are unpredictable and generally expensive and time consuming and, even if resolved in our favor, are likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities.
For example, in California, the CCPA, as amended by the CPRA, creates transparency requirements, grants to California consumers (as that term is broadly defined) several rights with regard to their personal information, and places increased privacy and security obligations on entities handling personal data of consumers or households.
For example, in California, the CCPA, as amended by the California Privacy Rights Act ("CPRA"), creates transparency requirements, grants to California consumers (as that term is broadly defined) several rights with regard to their personal information, and places increased privacy and security obligations on entities handling personal data of consumers or households.
The GDPR may increase our responsibility and liability in relation to personal data that we process and we may be required to expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data security laws, to 86 protect against security breaches and hackers, or to alleviate problems caused by such breaches.
The GDPR may increase our responsibility and liability in relation to personal data that we process and we may be required to expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data security laws, to protect against security breaches and hackers, or to alleviate problems caused by such breaches.
If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, or are unable to achieve clinical endpoints due to unforeseen events, such as health epidemics, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed.
If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, or are unable to achieve clinical endpoints due to unforeseen events, such as health epidemics, the 54 commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our 61 product development or continued and future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or continued and future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in 81 payments from private payers. The implementation of cost containment measures or other healthcare reforms may hinder us in generating revenue, attaining profitability or commercializing our drugs, once marketing approval is obtained.
Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payers. The implementation of cost containment measures or other healthcare reforms may hinder us in generating revenue, attaining profitability or commercializing our drugs, once marketing approval is obtained.
We, and the third parties with whom we share our facilities, are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and 82 disposal of hazardous materials and wastes. Each of our operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials.
We, and the third parties with whom we share our facilities, are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Each of our operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials.
Our CMOs and other suppliers are subject to inspection by the FDA and may receive observations that they may not be able to resolve in a timely or effective manner, which could impact whether our products can be approved on a timely basis, if at all.
Our 65 CMOs and other suppliers are subject to inspection by the FDA and may receive observations that they may not be able to resolve in a timely or effective manner, which could impact whether our products can be approved on a timely basis, if at all.
The adequacy decision concludes that the U.S. ensures an adequate level of protection (compared to that of the EU) for personal data transferred from the EU to U.S. companies participating in the EU-U.S. Data Privacy Framework. The adequacy decisions of the European Commission are subject to periodic reviews and may be amended or withdrawn.
The adequacy decision concludes that the U.S. ensures an adequate level of protection (compared to that of the EU) for personal data transferred from the EU to U.S. companies participating in the EU-U.S. Data Privacy Framework. The adequacy decisions of 87 the European Commission are subject to periodic reviews and may be amended or withdrawn.
Manufacturers may be subject to civil monetary penalties for certain violations of the negotiation and inflation rebate provisions and an excise tax during a noncompliance period under the negotiation program. Drug manufacturers may also be subject to civil monetary penalties with respect to their compliance with the new Part D manufacturer drug discount program.
Manufacturers may be subject to civil monetary penalties for certain violations of the negotiation and inflation rebate provisions and an excise tax during a noncompliance period under the negotiation program. Drug manufacturers may also be subject to civil monetary penalties with respect to their compliance with the new Medicare Part D manufacturer drug discount program.
Under this program, the manufacturer is obligated to make its covered drugs available for procurement on an FSS contract and charge a price to the Big Four agencies that is no higher than the Federal Ceiling Price (“FCP”), which is a price calculated pursuant to a statutory formula.
Under this program, the manufacturer is obligated to make its covered drugs available for procurement on an 50 FSS contract and charge a price to the Big Four agencies that is no higher than the Federal Ceiling Price (“FCP”), which is a price calculated pursuant to a statutory formula.
As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could be material and could significantly harm our reputation and business prospects and may cause the trading price of our common stock to fluctuate significantly.
As a result, interim and preliminary 59 data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could be material and could significantly harm our reputation and business prospects and may cause the trading price of our common stock to fluctuate significantly.
If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, limit, reduce or eliminate our research and development programs or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, limit, reduce or eliminate our research and 61 development programs or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Elements of our product candidate, including processes for their preparation and manufacture, may involve proprietary know-how, information, or technology that is not covered by patents, and thus for these aspects we may consider trade secrets and know-how to be our primary intellectual property.
Elements of our product candidate, including processes for their preparation and manufacture, may involve proprietary know-how, 77 information, or technology that is not covered by patents, and thus for these aspects we may consider trade secrets and know-how to be our primary intellectual property.
Our future profitability may depend, in part, on our ability to commercialize our product candidates in foreign markets for which we may rely on collaboration with third parties, such as our China Out-License with LianBio. We are evaluating the opportunities for the development and commercialization of our product candidates in other foreign markets.
Our future profitability may depend, in part, on our ability to commercialize our product candidates in foreign markets for which we may rely on collaboration with third parties, such as our China Out-License. We are evaluating the opportunities for the development and commercialization of our product candidates in other foreign markets.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. We have incurred substantial losses during our history which we expect to continue, we do not expect to become profitable in the near future, and we may never achieve profitability.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. 63 We have incurred substantial losses during our history which we expect to continue, we do not expect to become profitable in the near future, and we may never achieve profitability.
The American Taxpayer Relief Act of 2012 ("ATRA") among other things, also reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
The American Taxpayer Relief Act of 2012 among other things, also reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Before the approval of XDEMVY, there was no approved prescription therapeutic for Demodex blepharitis and the only other current treatments include over-the-counter and off-label remedies such as tea tree oil, lid wipes and artificial tears, as well as off-label prescription products.
Before the approval of XDEMVY, there was no FDA-approved prescription therapeutic for Demodex blepharitis and the only other current treatments include over-the-counter and off-label remedies such as tea tree oil, lid wipes and artificial tears, as well as off-label prescription products.
Restatements and recalculations increase the costs for complying with the laws and policies governing the Medicaid Drug Rebate program and could result in an overage or 49 underage in our rebate liability for past quarters. They also may affect the 340B ceiling price and therefore liability under the 340B program.
Restatements and recalculations increase the costs for complying with the laws and policies governing the Medicaid Drug Rebate program and could result in an overage or underage in our rebate liability for past quarters. They also may affect the 340B ceiling price and therefore liability under the 340B program.
Even if we diligently search third-party patents for potential infringement by our products, including XDEMVY, or product candidates, we may not successfully find patents that our 69 products or product candidates may infringe. If we are unable to confirm that our products, including XDEMVY, do not infringe third-party patents, others could preclude us from commercializing XDEMVY or our product candidates.
Even if we diligently search third-party patents for potential infringement by our products, including XDEMVY, or product candidates, we may not successfully find patents that our products or product candidates may infringe. If we are unable to confirm that our products, including XDEMVY, do not infringe third-party patents, others could preclude us from commercializing XDEMVY or our product candidates.
Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business. 83 Efforts to ensure that our collaborations or business arrangements with third parties, and our business generally, comply with applicable healthcare laws and regulations will likely be costly.
Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business. Efforts to ensure that our collaborations or business arrangements with third parties, and our business generally, comply with applicable healthcare laws and regulations will likely be costly.
The CCPA and other state laws could impact our business activities depending on how they are interpreted and exemplify the vulnerability of our business to not only cyber threats but also the evolving regulatory environment related to personal data and protected health information.
The 86 CCPA and other state laws could impact our business activities depending on how they are interpreted and exemplify the vulnerability of our business to not only cyber threats but also the evolving regulatory environment related to personal data and protected health information.
Another example of the changing regulatory requirements is that in the EU, the European Commission has presented a proposal to reform the current EU pharmaceutical legislation. The proposal intends to reduce the regulatory data protection period and orphan market exclusivity period for new medicinal products.
Another example of the changing regulatory requirements is that in the European Union ("EU"), the European Commission has presented a proposal to reform the current EU pharmaceutical legislation. The proposal intends to reduce the regulatory data protection period and orphan market exclusivity period for new medicinal products.
Until such time we can generate substantial revenue from product sales, including from XDEMVY, our only approved product, we expect to finance our cash needs through possible combinations of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.
Until such time as we can generate substantial revenue from product sales, including from XDEMVY, our only approved product, we expect to finance our cash needs through possible combinations of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.
In order to market any products, including XDEMVY, outside of the U.S., we will need to comply with additional onerous but varying regulatory requirements of other countries regarding safety and efficacy on a country-by-country basis.
In order to market any products, including XDEMVY, outside of the U.S., we will need to comply with additional onerous and varying regulatory requirements of other countries regarding safety and efficacy on a country-by-country basis.
In addition, our failure to obtain regulatory approval in any country may delay or have negative effects on 47 the process for regulatory approval in other countries. We do not have any product candidates approved for sale in international markets, and we do not have experience in obtaining regulatory approval in international markets.
In addition, our failure to obtain regulatory approval in any country may delay or have negative effects on the process for regulatory approval in other countries. We do not have any product candidates approved for sale in international markets, and we do not have experience in obtaining regulatory approval in international markets.
Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize product 51 candidates. We currently generate revenue from product sales for one product, and we may never be able to develop or commercialize additional marketable products.
Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize product candidates. We currently generate revenue from product sales for one product, and we may never be able to develop or commercialize additional marketable products.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA or comparable foreign regulatory authorities placing the clinical trial on hold; • subjects failing to enroll or remain in our trial at the rate we expect; • subjects choosing an alternative treatment or other product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • failure to demonstrate efficacy of the product; • any interruptions or delays in the supply of our product candidates for our clinical trials; 55 • a facility manufacturing any of our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; • any failure or delay in reaching an agreement with CROs, vendors and clinical trial sites; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices ("GCP") or regulatory requirements or other third parties not performing data collection or analysis in a timely or accurate manner; • third-party contractors becoming debarred, disqualified or suspended or otherwise penalized by the FDA or other comparable foreign regulatory authorities for violations of applicable regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications; • one or more Institutional Review Boards ("IRBs"), other ethics committees refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing its approval of the trial; or • changes in regulatory requirements and policies, which may require us to amend clinical trial protocols to comply with these changes and resubmit our clinical trial protocols to IRBs or ethics committees for reexamination.
The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to: • the FDA or comparable foreign regulatory authorities placing the clinical trial on hold; • subjects failing to enroll or remain in our trial at the rate we expect; • subjects choosing an alternative treatment or other product candidates, or participating in competing clinical trials; • lack of adequate funding to continue the clinical trial; • subjects experiencing severe or unexpected drug-related adverse effects; • failure to demonstrate efficacy of the product; • any interruptions or delays in the supply of our product candidates for our clinical trials; • a facility manufacturing any of our product candidates or any of their components being ordered by the FDA or comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of cGMP regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the manufacturing process; • any changes to our manufacturing process that may be necessary or desired; 56 • any failure or delay in reaching an agreement with CROs, vendors and clinical trial sites; • third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices ("GCP") or regulatory requirements or other third parties not performing data collection or analysis in a timely or accurate manner; • third-party contractors becoming debarred, disqualified or suspended or otherwise penalized by the FDA or other comparable foreign regulatory authorities for violations of applicable regulatory requirements, in which case we may need to find a substitute contractor, and we may not be able to use some or all of the data produced by such contractors in support of our marketing applications; • one or more IRBs, other ethics committees refusing to approve, suspending or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing its approval of the trial; or • changes in regulatory requirements and policies, which may require us to amend clinical trial protocols to comply with these changes and resubmit our clinical trial protocols to IRBs or ethics committees for reexamination.
We expect that our expenses will increase substantially if and as we: • continue to commercialize XDEMVY and any other products for which we may obtain marketing approval; • enhance our product development and planned future commercialization efforts of our product candidates, including through hiring additional clinical, regulatory, quality control and scientific personnel; • seek marketing approvals and reimbursement for our product candidates; • prepare for and initiate additional preclinical, clinical and other studies for our product candidates; • change or add additional manufacturers or suppliers, some of which may require additional permits or other governmental approvals; • create additional infrastructure to support our operations as a public company, including adding operational, financial and management information systems and personnel; • seek to identify, assess, acquire or develop additional product candidates; 36 • acquire or in-license other product candidates and technologies; • make milestone or other payments in connection with the development or approval of our product candidates; • maintain, protect, enforce and expand our intellectual property portfolio; and • experience any delays or encounter issues with any of the above.
We expect that our expenses will increase substantially as we: • continue to commercialize XDEMVY and any other products for which we may obtain marketing approval; • enhance our product development and planned future commercialization efforts of our product candidates, including through hiring additional clinical, regulatory, quality control and scientific personnel; • seek marketing approvals and reimbursement for our product candidates; • prepare for and initiate additional preclinical, clinical and other studies for our product candidates; • change or add additional manufacturers or suppliers, some of which may require additional permits or other governmental approvals; • create additional infrastructure to support our operations as a public company, including adding operational, financial and management information systems and personnel; • seek to identify, assess, acquire or develop additional product candidates; • acquire or in-license other product candidates and technologies; • make milestone or other payments in connection with the development or approval of our product candidates; • maintain, protect, enforce and expand our intellectual property portfolio; and 37 • experience any delays or encounter issues with any of the above.
Accordingly, we and our contract manufacturers will continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control for XDEMVY and any 50 other approved products.
Accordingly, we and our contract manufacturers will continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance, and quality control for XDEMVY and any other approved products.
The success of our business, including our ability to generate revenue from product sales in the future, will primarily depend on the successful commercialization of XDEMVY and the successful development, regulatory approvals and commercialization of our product candidates in one or more jurisdictions.
The success of our business, including our ability to generate revenue from product sales in the future, will primarily depend on the continued successful commercialization of XDEMVY and the successful development, regulatory approvals and commercialization of our product candidates in one or more jurisdictions.
The potential market opportunities for the treatment of Demodex blepharitis and for the treatment of MGD is difficult to precisely estimate, because patients often have multiple ocular surface diseases and the symptoms have significant overlap, leading to frequent misdiagnosis of the various conditions.
The potential market opportunities for the treatment of Demodex blepharitis is difficult to precisely estimate, because patients often have multiple ocular surface diseases and the symptoms have significant overlap, leading to frequent misdiagnosis of the various conditions.
The IRA sunsets the current Part D coverage gap discount program starting in 2025 and replaces it with a new manufacturer discount program. Failure to pay a discount under this new program will be subject to a civil monetary penalty.
The IRA sunsets the current Medicare Part D coverage gap discount program starting in 2025 and replaces it with a new manufacturer discount program. Failure to pay a discount under this new program will be subject to a civil monetary penalty.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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We also perform cybersecurity assessments of all our third-party providers who have access to our information technology systems and data. Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the Head of IT who reports to our Chief Financial Officer, to manage the risk assessment and mitigation process.
We also perform cybersecurity assessments of all our third-party providers who have access to our information technology systems and data. Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the Head of Information Technology ("IT") who reports to our Chief Financial Officer, to manage the risk assessment and mitigation process.
Our Audit Committee regularly meets with our Chief Financial Officer and Head of IT about the Company’s ongoing compliance and risk management and reports to the Board regularly. Cybersecurity Threat Disclosure To date, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
Our Audit Committee regularly meets with our Chief Financial Officer and Head of IT about the Company’s ongoing compliance and risk management and reports to the Board of Directors regularly. Cybersecurity Threat Disclosure To date, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
Our cybersecurity risks, and the controls designed to mitigate those risks, are integrated into our overall risk management governance and are reviewed quarterly by our Board of Directors. 93 Risk Management and Strategy As of December 31, 2023, we've implemented a set of comprehensive cybersecurity and data protection policies and procedures.
Our cybersecurity risks, and the controls designed to mitigate those risks, are integrated into our overall risk management governance and are reviewed quarterly by our Board of Directors. 93 Risk Management and Strategy As of December 31, 2024, we've implemented a set of comprehensive cybersecurity and data protection policies and procedures.
Governance Our Board of Directors and Audit Committee are responsible for overseeing our cyber security risk management and strategy. Our Head of IT provides periodic briefings to the Audit Committee including our cybersecurity risks and activities, any potential cybersecurity incidents and related responses, cybersecurity systems testing and, activities of third parties.
Governance Our Board of Directors and Audit Committee are responsible for overseeing our cybersecurity risk management and strategy. Our Head of IT provides periodic briefings to the Audit Committee including our cybersecurity risks and activities, any potential cybersecurity incidents and related responses, cybersecurity systems testing and, activities of third parties.
We invest in advanced technologies for continuous cybersecurity monitoring across our information technology environment which are designed to prevent, detect, and minimize cybersecurity attacks, as well as alert management of such attacks. Our ITGCs are firmly established based on recognized industry standards and cover areas such as risk management, data backup, and disaster recovery.
We invest in advanced technologies for continuous cybersecurity monitoring across our information technology environment which are designed to prevent, detect, and minimize cybersecurity attacks, as well as alert management of such attacks. Our information technology general controls are established based on recognized industry standards and cover areas such as risk management, data backup, and disaster recovery.

Item 2. Properties

Properties — owned and leased real estate

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We believe that this space will be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available on commercially reasonable terms.
We believe that this space will be sufficient to meet our needs for the foreseeable future and that any additional space we may require will be available on commercially reasonable terms (see Note 9 ).
Item 2. Properties. We currently lease approximately 32,145 square feet of office and laboratory space in Irvine, California under certain leases that expire in January 2027, with a renewal option for a term of three years.
Item 2. Properties. We currently lease approximately 39,181 square feet of office and laboratory space in Irvine, California. In December 2024, we entered into a new lease agreement for 59,626 square feet of office space located in Irvine, California for a 10-year lease term.
Added
The lease payments are expected to commence in late 2025 following the earlier of: (i) eleven months following the lease execution date, or (ii) the date the Company commences its regular business activities at the premises following completion of tenant improvements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. 94 Item 4. Mine Safety Disclosures. None. 95 PART II
Regardless of outcome, litigation can have an adverse impact 94 on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. Item 4. Mine Safety Disclosures. None. 95 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Securities Authorized for Issuance under Equity Compensation Plans The information required by this item will be contained in our definitive proxy statement to be filed with the SEC in connection with our Annual Meeting of Stockholders within 120 days after December 31, 2023 and is incorporated in this Annual Report on Form 10-K by reference.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item will be contained in our definitive proxy statement to be filed with the SEC in connection with our Annual Meeting of Stockholders within 120 days after December 31, 2024 and is incorporated in this Annual Report on Form 10-K by reference.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock has been publicly traded on the Nasdaq under the symbol “TARS” since our IPO on October 15, 2020. Prior to this date, there was no public market for our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock has been publicly traded on the Nasdaq Global Market LLC under the symbol “TARS” since our IPO on October 15, 2020. Prior to this date, there was no public market for our common stock.
Holders of Common Stock As of February 21, 2024, the closing price of our common stock on the Nasdaq was $30.13 per share, and there were approximately 32 holders of record of our common stock.
Holders of Common Stock As of February 19, 2025, the closing price of our common stock on the Nasdaq was $49.55 per share, and there were approximately 27 holders of record of our common stock.
Purchases of Equity Securities by the Issuer and Affiliated Purchases None.
Purchases of Equity Securities by the Issuer and Affiliated Purchases None. Other Information None. Item 6. [Reserved] 97 Table of Content
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Recent Sales of Unregistered Securities None. Use of Proceeds from Initial Public Offering On October 16, 2020, our Registration Statement on Form S-1 (File No. 333-249076) (the "Registration Statement") relating to the initial public offering of our common stock was declared effective by the SEC.
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Stock Performance Graph This graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of Tarsus Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Exchange Act.
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Pursuant to such Registration Statement, we sold an aggregate of 6,325,000 shares of our common stock, which included 825,000 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares, at a price of $16.00 per share. The aggregate offering price for shares sold in the offering was $101.2 million.
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The following graph illustrates a comparison of the total cumulative stockholder return on our common stock since the date of the IPO on October 19, 2020, compared to two indices for each fiscal year end thereafter: the Nasdaq Composite Index and the Nasdaq Biotechnology Index.
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On October 20, 2020, we closed the sale of such shares, resulting in aggregate cash proceeds to us of $91.7 million, net of underwriting discounts, commissions and offering expenses paid or payable by us.
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The graph assumes an initial investment of $100 on the date of the IPO, both in our common stock and each index. Historical stockholder return shown is not necessarily indicative of future performance, and we do not make or endorse any predictions as to future stockholder returns. 96 Recent Sales of Unregistered Securities None.
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No offering expenses were paid or are payable, directly or indirectly, to our directors or officers, to persons owning 10% or more of any class of our equity securities or to any of our affiliates. BofA Securities, Inc., Jefferies LLC and Raymond James & Associates, Inc., LifeSci Capital LLC and Ledenburg Thalman & Co.
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Inc., acted as the joint book-running managers of the offering. There has been no material change in the planned use of proceeds from our initial public offering as described in the final prospectus, dated October 15, 2020, filed with the SEC on October 16, 2020, pursuant to Rule 424(b) of the Securities Act.
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Other Information As disclosed in our Current Report on Form 8-K filed with the SEC on January 18, 2024, we announced that Jose Trevejo, M.D., Ph.D. would be leaving his role as the Company’s Chief Medical Officer (the “Transition”), effective as of January 18, 2024 (the “Transition Date”) and leaving his employment with the Company on February 17, 2024 (the “Separation Date”). 96 In connection with the Transition and Dr.
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Trevejo’s termination of employment, on February 21, 2024, we entered into a separation and severance agreement with Dr.
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Trevejo, which provides for the following benefits effective upon and after the Separation Date: severance payments equal to twelve months of base salary and twelve months of company-paid continued benefits coverage, a lump sum bonus payment payable in 2024 equal to his 2023 annual target bonus adjusted based in part on the 2023 Company performance score and Company discretion, accelerated vesting of options for 13,789 shares of our common stock, and an option exercise period extension for certain options, in exchange for a release and waiver of claims and continued compliance with his confidentiality obligations.
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The foregoing summary of the terms of the Separation Agreement is qualified in its entirety by reference to the complete text of the Separation Agreement, a copy of which will be filed with our Quarterly Report on 10-Q for the quarter ending March 30, 2024. Item 6. Reserved 97 Table of Content

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The wholesaler tracks these sales and charges us back for the difference between the negotiated prices paid between the wholesaler's customers and wholesaler's acquisition cost. We estimate the percentage of goods sold that are eligible for chargeback and adjust the transaction price and accounts receivable at the time of sale of the product to the customer.
The wholesaler tracks these sales and charges us back for the difference between the negotiated prices paid between the wholesaler's customers and the wholesaler's acquisition cost. We estimate the percentage of goods sold that are eligible for chargeback and adjust the transaction price and accounts receivable at the time of sale of the product to the customer.
On November 1, 2021, we filed a shelf registration statement on Form S-3 that was declared effective by the SEC on November 5, 2021 (the “2021 Shelf Registration Statement”), which permitted us to offer up to $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time.
In November 2021, we filed a shelf registration statement on Form S-3 that was declared effective by the SEC on November 5, 2021 (the “2021 Shelf Registration Statement”), which permitted us to offer up to $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time.
We believe the Company is not exposed to significant credit risk due to the financial position of the depository institution and the types of accounts we hold, but we will continue to monitor regularly and adjust, if needed, to mitigate risk, including any ongoing or new events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions.
We believe the Company is not exposed to significant credit risk due to the financial position of the depository institutions and the types of accounts we hold, but we will continue to monitor regularly and adjust, if needed, to mitigate risk, including any ongoing or new events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions.
We will recognize additional license fees and collaboration revenue under the China Out-License to the extent other events occur, specifically related to (i) milestone achievement of an additional drug supply agreement execution, (ii) milestone achievement of regulatory events in the China Territory, and (iii) royalties and milestones from our licensee's product sales of TP-03 in the China Territory.
We will recognize additional license fees and collaboration revenue under the China Out-License to the extent other events occur, specifically related to (i) milestone achievement of an additional drug supply agreement execution, (ii) milestone achievement of certain regulatory events in the China Territory, and (iii) royalties and milestones from our licensee's product sales of TP-03 in the China Territory.
Once sufficient history has been collected for product returns, we will utilize that history to inform its returns estimate. Once the product is returned, it is destroyed since it cannot be resold. Chargebacks: A chargeback is the difference between our invoice price to the wholesaler and the wholesaler’s customer's contract price.
Once sufficient history has been collected for product returns, we will utilize that history to inform our returns estimate. Once the product is returned, it is destroyed since it cannot be resold. Chargebacks: A chargeback is the difference between our invoice price to the wholesaler and the wholesaler’s customer's contract price.
We have incurred significant net operating losses in every year since our inception and expect to continue to incur significant operating expenses as we commercialize XDEMVY for Demodex blepharitis, and, as we advance our other product candidates through clinical trials, regulatory submissions, and potential commercialization.
We have incurred significant net operating losses ("NOLs") in every year since our inception and expect to continue to incur significant operating expenses as we commercialize XDEMVY for Demodex blepharitis, and, as we advance our other product candidates through clinical trials, regulatory submissions, and potential commercialization.
Our requirements of a future capital raise will depend on many factors, including: • the amount of revenue received from commercial sales of XDEMVY or our product candidates, should any of our product candidates receive marketing approval; • the cost and timing associated with commercializing XDEMVY or our product candidates, if they receive marketing approval; • the scope, timing, rate of progress and costs of our drug discovery efforts, preclinical development activities, laboratory testing and clinical trials for our product candidates; • the number and scope of clinical programs we decide to pursue; • the cost, timing and outcome of preparing for and undergoing regulatory review of our product candidates; • the scope and costs of development and commercial manufacturing activities; 108 Table of Content • the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we might have at such time and availability of our Credit Facility; • the extent to which we acquire or in-license other product candidates and technologies; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our ability to establish and maintain collaborations on favorable terms, if at all; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates and, ultimately, the sale of our products, following FDA approval; • our implementation of various computerized information systems; • impact of health epidemics on our clinical development or operations; and • the costs associated with being a public company.
Our requirements of a future capital raise will depend on many factors, including: • the amount of revenue received from commercial sales of XDEMVY or our product candidates, should any of our product candidates receive marketing approval; • the cost and timing associated with commercializing XDEMVY or our product candidates, if they receive marketing approval; • the scope, timing, rate of progress and costs of our drug discovery efforts, preclinical development activities, laboratory testing and clinical trials for our product candidates; • the number and scope of clinical programs we decide to pursue; • the cost, timing and outcome of preparing for and undergoing regulatory review of our product candidates; • the scope and costs of development and commercial manufacturing activities; • the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we might have at such time; • the availability of our 2024 Credit Facility; • the extent to which we acquire or in-license other product candidates and technologies; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our ability to establish and maintain collaborations on favorable terms, if at all; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates and, ultimately, the sale of our products, following FDA approval; • our implementation of various computerized information systems; • impact of health epidemics on our clinical development or operations; and • the costs associated with being a public company.
Components of our Results of Operations Product Sales, Net We recognize product sales, net of XDEMVY when a customer obtains control of promised goods or services, which occurs at a point in time, typically upon delivery of the Company's product to the customer.
Components of our Results of Operations Product Sales, Net We recognize product sales, net when a customer obtains control of promised goods or services, which occurs at a point in time, typically upon delivery of the Company's product to the customer.
These allocated amounts represented the satisfaction of the transfer of license rights to LianBio and the completion of related performance obligations. License fees and collaboration revenue also includes the satisfaction of performance obligations under an existing clinical supply agreement.
These allocated amounts represented the satisfaction of the transfer of license rights to LianBio and GrandPharma and the completion of related performance obligations. License fees and collaboration revenue also includes the satisfaction of performance obligations under an existing clinical supply agreement.
Shelf Registration Statements On November 9, 2023, we filed a shelf registration statement on Form S-3 that was declared effective by the SEC on November 21, 2023, (the "2023 Shelf Registration Statement"), which replaced the November 2021 Shelf Registration Statement, as defined below, and permits us to offer up to $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time.
In November 2023, we filed a shelf registration statement on Form S-3 that was declared effective by the SEC on November 21, 2023, (the "2023 Shelf Registration Statement"), which replaced the November 2021 Shelf Registration Statement, as defined below, and permits us to offer up to $300.0 million of common stock, preferred stock, debt securities and warrants in one or more offerings and in any combination, including in units from time to time.
See the section titled Risk Factors for further discussion of the potential adverse impact of unfavorable global and geopolitical economic conditions on our business, results of operations and financial condition.
See the section titled " Risk Factors " for a further discussion of the potential adverse impact of unfavorable global and geopolitical economic conditions on our business, results of operations and financial condition.
Co-payment Assistance: Patients who meet certain eligibility requirements may receive co-payment assistance. We record contra-revenue for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators. An accrued liability is recorded on unredeemed co-payment assistance related to products for which control has been transferred to the customer.
Co-payment Assistance: Patients who meet certain eligibility requirements may receive co-payment assistance funded by the Company. We record contra-revenue for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators. An accrued liability is recorded on unredeemed co-payment assistance related to products for which control has been transferred to the customer.
We estimate the probability of customers paying promptly based on the percentage of discount outlined in the purchase agreement between the two parties, and deducts the full amount of these discounts from gross product sales and accounts receivable at the time revenue is recognized.
We estimate the probability of customers paying promptly based on the percentage of discount outlined in the purchase agreement between the two parties, and deduct the full amount of these discounts from gross product sales and accounts receivable at the time revenue is recognized.
Cost of Sales Cost of sales consists of direct and indirect costs related to the manufacturing and distribution of XDEMVY, including raw materials, third-party manufacturing costs, packaging services, and freight-in, as well as third-party royalties payable on our product sales, net and amortization of capitalized intangible assets associated with XDEMVY.
Cost of Sales Cost of sales consists of direct and indirect costs related to the manufacturing and distribution of XDEMVY, including raw materials, third-party manufacturing costs, packaging services, freight-in, third-party royalties payable on our product sales, net and amortization of capitalized intangible assets associated with XDEMVY.
We apply the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are capable of being distinct; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue as each performance obligation is satisfied.
We apply the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are capable of being distinct; (iii) measurement of the transaction 101 Table of Content price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue as each performance obligation is satisfied.
Revenues from product sales are recorded at the net sales price, or the transaction price, which may include fixed or variable consideration for (i) invoice discounts for prompt payment and distribution service fees, (ii) government and private payer rebates, chargebacks, discounts and fees, (iii) product returns and (iv) costs of co-pay assistance programs for patients, as well as other incentives.
Revenues from product sales are recorded at the net sales price, or the transaction price, which may include fixed or variable consideration for (i) invoice discounts for prompt payment and distribution service fees, (ii) commercial and government rebates, chargebacks, discounts and fees, (iii) product returns and (iv) costs of co-pay assistance programs for patients, as well as other incentives.
Since our inception, we have devoted substantially all of our resources to organizing and staffing our company, acquiring intellectual property, clinical development of our product candidates, building our research and development capabilities, raising capital, and enhancing our corporate infrastructure.
Since our inception, we have devoted substantially all of our resources to organizing and staffing our company, acquiring intellectual property, clinical development of our product candidates, commercializing XDEMVY, building our research and development capabilities, raising capital, and enhancing our corporate infrastructure.
We did not sell any shares of our common stock under the 2021 ATM Prospectus. On July 31, 2023, in connection with the August 2023 Public Offering, we terminated the sales agreement prospectus relating to the 2021 ATM Prospectus.
We did not sell any shares of our common stock under the 2021 ATM Prospectus. In July 2023, in connection with the August 2023 Public Offering, we terminated the sales agreement prospectus relating to the 2021 ATM Prospectus.
Historically, revisions to our estimates have not resulted in a material change to the financial statements. While our significant accounting policies are described in the notes to our financial statements also included in this Annual Report on Form 10-K, we believe these critical accounting policies are the most important to understanding and evaluating our reported financial results.
Historically, revisions to our estimates have not resulted in a material change to the financial statements. While our significant accounting policies are described in the notes to our financial statements also included in this Annual Report on Form 10-K, we believe this critical accounting policy is the most important to understanding and evaluating our reported financial results.
The amount of variable consideration that is included in the transaction price may be constrained and is included in product sales, net only to the extent that it is probable that a significant reversal in the amount of the cumulative 101 Table of Content revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The amount of variable consideration that is included in the transaction price may be constrained and is included in product sales, net only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
We anticipate that our operating expenses will increase significantly as we: • commercialize XDEMVY and our other products for which we obtain regulatory approvals; • maintain regulatory approval for XDEMVY and seek regulatory approval for our other product candidates that successfully complete clinical development, if any; • advance the clinical development of TP-03 for the potential treatment of MGD, TP-04 for the potential treatment of rosacea and TP-05 for the potential Lyme disease prophylaxis; • engage with contract manufacturers to ensure a sufficient supply chain capacity to provide commercial quantities of XDEMVY and any other products for which we may obtain marketing approval; • maintain, expand and protect our intellectual property portfolio; • hire additional staff, including clinical, scientific, technical, regulatory, marketing, operations, financial, and other support personnel, to execute our business plan; and • add information systems and personnel to support our product development and commercialization efforts, and to enable us to operate as a public company.
We anticipate that our operating expenses will increase significantly as we: • continue to commercialize XDEMVY and our other product candidates for which we obtain regulatory approvals; • maintain regulatory approval for XDEMVY and seek regulatory approval for our other product candidates that successfully complete clinical development, if any; • advance the clinical development of TP-04 for the potential treatment of Ocular Rosacea and TP-05 for the potential Lyme disease prophylaxis; • engage with contract manufacturers to ensure a sufficient supply chain capacity to provide commercial quantities of XDEMVY and any other products for which we may obtain marketing approval; • maintain, expand and protect our intellectual property portfolio; 100 Table of Content • hire additional staff, including clinical, scientific, technical, regulatory, marketing, sales, operations, financial, and other support personnel, to execute our business plan; and • add information systems and personnel to support our product development and commercialization efforts, and to enable us to operate as a public company.
Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments or engage in certain merger, consolidation or asset sale transactions.
Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay 109 Table of Content dividends, repurchase our common stock, make certain investments or engage in certain merger, consolidation or asset sale transactions.
In December 2023, we sold 1,000,000 shares of our common stock for $20.00 per share under a sales agreement prospectus filed in November 2023, pursuant to the 2023 Shelf Registration Statement (defined below) covering the sale of up to $100.0 million of our common stock pursuant to an Open Market Sale Agreement TM (the "2023 ATM Prospectus") with Jefferies LLC ("Jefferies").
Open Market Sales Agreement During the year ended December 31, 2023, we sold 1,000,000 shares of our common stock for $20.00 per share under a sales agreement prospectus filed in November 2023, pursuant to the 2023 Shelf Registration Statement (defined below) covering the sale of up to $100.0 million of our common stock pursuant to the 2023 ATM Prospectus with Jefferies LLC ("Jefferies").
As of December 31, 2023, our aggregate cash, cash equivalents and marketable securities was $227.4 million – see the section below titled " Management's Discussion and Analysis of Financial Condition and Results of operations — Liquidity and Capital Resources.
As of December 31, 2024, our aggregate cash, cash equivalents and marketable securities was $291.4 million – see the section below titled " Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.
Rebates and Discounts: We accrue rebates for contractually agreed-upon discounts with commercial insurance companies and mandated discounts under government programs such as the Medicaid Drug Rebate Program, Medicare Part D Prescription Drug Program, and other government health care programs in the U.S. We estimate for expected utilization of commercial insurance rebates based on data received from our customers.
Rebates: We accrue rebates for contractually agreed-upon discounts with commercial payers and mandated discounts under government programs such as the Medicaid Drug Rebate Program, Medicare Part D Prescription Drug Program, and other government health care programs in the U.S. Our estimates for expected utilization of commercial payer rebates based on data received from our customers.
The amount and timing of such obligations are unknown or uncertain as of December 31, 2023.
The amount and timing of such obligations are unknown or uncertain as of December 31, 2024.
The active pharmaceutical ingredient ("API") of XDEMVY, lotilaner, paralyzes and eradicates mites and other parasites through the inhibition of parasite-specific gamma-aminobutyric acid-gated chloride ("GABA-Cl") channels.
The active pharmaceutical ingredient ("API") of XDEMVY, lotilaner, paralyzes and eradicates mites and other parasites through the inhibition of parasite-specific gamma-aminobutyric acid-gated chloride ("GABA-Cl") channels with no GABA-Cl inhibition in humans.
To date we have financed our operations through private placements of preferred stock, convertible promissory notes, net proceeds from issuance of common stock in our Initial Public Offering ("IPO"), our subsequent follow-on public offerings in May 2022 (the "May 2022 Public Offering") and August 2023 (the "August 2023 Public Offering", collectively the "Follow-On Public Offerings"), and our sales agreement prospectus (the "2023 ATM Prospectus"), as well as proceeds from product sales, net, our China Out-License, and drawdowns from the Credit Facility.
To date we have financed our operations through private placements of preferred stock, convertible promissory notes, net proceeds from issuance of common stock in our Initial Public Offering ("IPO"), our subsequent follow-on public offerings in May 2022 (the "May 2022 Public Offering"), August 2023 (the "August 2023 Public Offering"), and March 2024 (the "March 2024 Public Offering", collectively the "Follow-On Public Offerings"), and our Open Market Sale Agreement TM (the "2023 ATM Prospectus"), as well as proceeds from net product sales, our China Out-License, and drawdowns from the Credit Facilities.
The 2023 Shelf Registration Statement replaced the 2021 Shelf Registration Statement. Also, as part of the 2021 Shelf Registration Statement, we concurrently filed a sales agreement prospectus covering the sale of up to $100.0 million of our common stock pursuant to an Open Market Sale Agreement TM (the “2021 ATM Prospectus”) with Jefferies LLC.
The 2023 Shelf Registration Statement replaced the 2021 Shelf Registration Statement. 108 Table of Content Also, as part of the 2021 Shelf Registration Statement, we concurrently filed a sales agreement prospectus (the “2021 ATM Prospectus”) covering the sale of up to $100.0 million of our common stock pursuant to an Open Market Sale Agreement TM .
We are investigating the development of our product candidates to address targeted diseases with high unmet medical needs, which currently include TP-03 for the potential treatment of meibomian gland disease ("MGD"), TP-04, a novel gel formulation of lotilaner for the potential treatment of rosacea, and TP-05, a novel investigative oral formulation of lotilaner, for potential Lyme disease prophylaxis and community malaria reduction.
We are investigating the development of our product candidates to address targeted diseases with high unmet medical needs, which currently include TP-04, a novel gel formulation of lotilaner for the potential treatment of Ocular Rosacea, and TP-05, a novel investigational oral formulation of lotilaner, for potential Lyme disease prophylaxis and community malaria reduction.
Cost of sales may also include period costs related to certain inventory warehouse and distribution operations and inventory adjustment charges. Prior to FDA approval of XDEMVY, manufacturing and other inventory costs were recorded to research and development expenses.
Cost of sales may also include period costs related to certain inventory warehouse and distribution operations and inventory adjustment charges. Prior to FDA approval of XDEMVY, manufacturing and other inventory costs were recorded to research and development expenses in the Statements of Operations and Comprehensive Loss.
Our net loss was $135.9 million and $62.1 million for the years ended December 31, 2023 and 2022, respectively. Our net losses may fluctuate significantly from quarter to quarter and year to year and could be substantial.
Our net losses were $115.6 million, $135.9 million and $62.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. Our net losses may fluctuate significantly from quarter to quarter and year to year and could be substantial.
In December 2023, we sold 1,000,000 shares of our common stock under the 2023 ATM Prospectus for $20.00 per share and received net proceeds of $19.2 million, after deducting broker commission and offering-related expenses.
We have not sold any shares of our common stock under the 2023 ATM Prospectus during the year ended December 31, 2024. In December 2023, we sold 1,000,000 shares of our common stock under the 2023 ATM Prospectus for $20.00 per share and received net proceeds of $19.2 million, after deducting broker commission and offering-related expenses.
The net non-cash and other charges were primarily related to stock-based compensation expense of $19.8 million.
The increase in net non-cash and other charges primarily related to stock-based compensation of $19.8 million.
In addition, we may be exposed to credit risk on deposits at financial institutions to the extent our account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). We maintain cash held in deposit at financial institutions in the U.S., including SVB, a division of First Citizens Bank.
In addition, we may be exposed to credit risk on deposits at financial institutions to the extent our account balances exceed the amount insured by the Federal Deposit Insurance Corporation (“FDIC”). We maintain cash held in deposit at financial institutions in the U.S.
TP-03 demonstrated statistically significant and clinically meaningful improvements compared to baseline in two objective measures of the disease – the presence and quality of liquid secretion as measured by the Meibomian Gland Secretion Score ("MGSS") and the number of glands secreting normal (clear) liquid and was well tolerated.
XDEMVY demonstrated statistically significant and clinically meaningful improvements compared to baseline in two objective measures of the disease: the presence and quality of liquid secretion as measured by the Meibomian Gland Secretion Score; and the number of glands secreting normal or clear liquid.
As of December 31, 2023, our contractual commitments for our leases were $2.4 million, which will be paid over the remaining lease term of 3.1 years. Purchase Obligations As of December 31, 2023, we have entered into manufacturing supply agreements for the commercial supply of XDEMVY.
As of December 31, 2024, our contractual commitments for our leases were $0.8 million, which will be paid over the remaining lease term of 0.8 years. Purchase Obligations As of December 31, 2024, we have entered into manufacturing supply agreements for the commercial supply of XDEMVY.
As part of the 2023 Shelf Registration Statement, we concurrently filed the 2023 ATM Prospectus with Jefferies. Under the terms of the 2023 ATM Prospectus, Jefferies will act as the Company's sales agent and is entitled to compensation for its services equal to 3% of the gross proceeds of any shares of common stock sold.
Under the terms of the 2023 ATM Prospectus and ATM Sales Agreement, Jefferies will act as the Company's sales agent and is entitled to compensation for its services equal to 3% of the gross proceeds of any shares of common stock sold.
See the section titled “Special Note Regarding Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K. Overview Our Business We are a commercial stage biopharmaceutical company focused on the development and commercialization of therapeutics, starting with eye care. Our lead product, XDEMVY ® was approved by the U.S.
See the section titled “Note Regarding Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K. Overview Our Business We are a commercial stage biopharmaceutical company focused on the development and commercialization of therapeutics, starting with eye care.
To date, actual amounts have not differed materially from our estimates. Recent Accounting Pronouncements A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in the notes to which they relate within our financial statements.
Recent Accounting Pronouncements A description of recent accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in the notes to which they relate within our financial statements.
We will recognize additional license fees and collaboration revenue under the China Out-License to the extent other events occur, specifically related to (i) milestone achievement of an additional drug supply agreement execution, (ii) milestone achievement of certain regulatory events in the China Territory, and (iii) royalties and milestones from our licensee's 102 Table of Content product sales of TP-03 in the China Territory.
We will recognize additional license fees and collaboration revenue under the China Out-License to the extent other events occur, specifically related to (i) milestone achievement of regulatory events and/or patent issuance in the China Territory, and (ii) royalties and milestones from our licensee's product sales of TP-03 in the China Territory.
This cash used in investing activities was offset by $5.3 million of proceeds received from maturities of investments. 110 Table of Content Net Cash Provided by Financing Activities Net cash provided by financing activities was $130.2 million for the year ended December 31, 2023 which consisted of (i) $99.4 million of net proceeds from the issuance of common stock from our August 2023 Public Offering, (ii) $19.2 million of net proceeds from common stock sold under the 2023 ATM Prospectus, (iii) $10.0 million of proceeds from our Credit Facility, (iv) $1.0 million of proceeds from our employee stock purchase plan, and (v) $0.6 million of proceeds from the exercise of vested employee stock options.
Net cash provided by financing activities was $130.2 million for the year ended December 31, 2023, and consisted of (i) $99.4 million of net proceeds from the issuance of common stock from our August 2023 Public Offering, (ii) $19.2 million of net proceeds from common stock sold under the 2023 ATM Prospectus, (iii) $10.0 million of proceeds from our 2022 Credit Facility, (iv) $1.0 million of proceeds from our ESPP, and (v) $0.6 million of proceeds from the exercise of vested employee stock options.
Other selling, general and administrative expenses include sales and marketing costs to support our commercial launch, consulting fees, legal services, rent and other facilities costs, patient assistance donations, and other general operating expenses, not otherwise classified as research and development expenses. 103 Table of Content We expect that our selling, general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, continued commercialization of XDEMVY, preparing for potential commercialization of our other product candidates, and additional facility occupancy costs, as well as various incremental costs associated with being a public company, including: increased legal and accounting fees, regulatory costs associated with maintaining compliance with the rules of the Nasdaq Stock Market and SEC regulations, investor relations activities, directors and officers liability insurance premiums, and other accompanying compliance and governance costs.
We expect that our selling, general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, continued commercialization of XDEMVY, preparing for potential commercialization of our other product candidates, and additional facility occupancy costs, as well as various incremental costs associated with being a public company, including: increased legal and accounting fees, regulatory costs associated with maintaining compliance with the rules of Nasdaq and SEC regulations, investor relations activities, directors and officers liability insurance premiums, and other accompanying compliance and governance costs.
The change in net operating assets and liabilities was primarily due to an increase in accounts receivable of $16.6 million and an increase in prepaid expenses of $2.9 million, partially offset by an increase in accounts payable and other accrued liabilities of $13.2 million and an increase in accrued payroll and benefits of $7.7 million.
The increase in net operating assets and liabilities was primarily due to cash increases in accounts payable and other accrued liabilities of $13.2 million, accrued payroll and benefits of $7.7 million, partially offset by cash decreases including $16.6 million of account receivables, $2.9 million of prepaid expenses, and $0.7 million of other non-current assets.
After giving effect to the exercise of the underwriters' option, we sold a total of 6,069,449 shares and received aggregate net proceeds of $99.3 million, after deducting underwriting discounts, commissions, and other offering-related expenses.
After giving effect to the exercise of the underwriters' option, we sold a total of 6,069,449 shares and received aggregate net proceeds of $99.3 million, after deducting underwriting discounts, commissions, and other offering-related expenses. In February 2024, we filed an automatic shelf registration statement on Form S-3 ASR (the "2024 Shelf Registration Statement").
Even if we are able to generate significant revenue from product sales, net we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels.
If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels.
Net cash used in operating activities was $49.0 million for the year ended December 31, 2022, which primarily consisted of our net loss of $62.1 million and a change in net operating assets and liabilities of $1.0 million, partially offset by net non-cash and other charges of $14.0 million.
Net cash used in operating activities was $117.5 million for the year ended December 31, 2023, which primarily consisted of our net loss of $135.9 million, partially offset by net increases in non-cash and other charges of $18.1 million and net operating assets and liabilities of $0.3 million.
We plan to discuss and determine the potential regulatory path with the FDA. TP-04 Rosacea, Galatea Trial : In March 2023, we initiated the Galatea trial, a Phase 2a trial evaluating TP-04, a novel gel formulation of lotilaner, for the treatment of rosacea.
TP-04 Rosacea, Galatea Trial In March 2023, we initiated the Galatea trial, a Phase 2a trial evaluating TP-04, a novel gel formulation of lotilaner, for the treatment of rosacea.
It is designed to rapidly and durably provide systemic blood levels of lotilaner potentially sufficient to kill infected ticks attached to the human body before they can transmit the Borrelia bacteria that causes Lyme disease.
It is designed to rapidly and durably provide systemic blood levels of lotilaner potentially sufficient to kill infected ticks attached to the human body before they can transmit the Borrelia bacteria that causes Lyme disease. Officer and Board Appointments We expanded and strengthened our eye care leadership with two key appointments to our executive team and Board of Directors.
We also granted the underwriters a 30-day option to purchase up to 857,142 additional shares of our common stock at the public offering price. In September 2023, the underwriters partially exercised this option and the sale of an additional 355,164 shares of common stock at the public offering price of $17.50 per share.
In September 2023, the underwriters partially exercised an option to purchase an additional 355,164 shares of common stock at the public offering price of $17.50 per share.
We recognize external research and development costs based on an evaluation of the progress-to-completion of (i) specific tasks performed or deliverables provided by CROs and CMOs and (ii) patient visits for dosing or other follow-up. To estimate period expense for recognition, we use information provided to us by our service providers and we then apply the corresponding fee schedule.
We recognize external research and development costs based on an evaluation of the progress-to-completion of (i) specific tasks performed or 103 Table of Content deliverables provided by CROs and CMOs and (ii) patient visits for dosing or other follow-up.
We have incurred significant losses and negative cash flows from operations since our inception and had an accumulated deficit of $244.7 million as of December 31, 2023. 107 Table of Content We believe that our cash, cash equivalents and marketable securities of $227.4 million as of December 31, 2023 is sufficient to fund our current and planned operations for at least the next twelve months from the date of filing this Annual Report on Form 10-K.
We believe that our cash, cash equivalents and marketable securities of $291.4 million as of December 31, 2024 is sufficient to fund our current and planned operations for at least the next twelve months from the date of filing this Annual Report on Form 10-K.
Summary Statement of Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below: Year Ended December 31, 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ (117,493) $ (49,030) Investing activities 140,604 (144,629) Financing activities 130,176 93,987 Net increase (decrease) in cash and cash equivalents $ 153,287 $ (99,672) Net Cash Used in Operating Activities Net cash used in operating activities was $117.5 million for the year ended December 31, 2023, which primarily consisted of a net loss of $135.9 million and a change in net operating assets and liabilities of $0.3 million, partially offset by net non-cash and other charges of $18.1 million.
Summary Statement of Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below: 110 Table of Content Year Ended December 31, 2024 2023 (in thousands) Net cash (used in) provided by: Operating activities $ (83,027) $ (117,493) Investing activities (199,195) 140,604 Financing activities 154,656 130,176 Net (decrease) increase in cash and cash equivalents $ (127,566) $ 153,287 Net Cash Used in Operating Activities Net cash used in operating activities was $83.0 million for the year ended December 31, 2024, which primarily consisted of our net loss of $115.6 million, partially offset by net increases in non-cash and other charges of $28.7 million and net operating assets and liabilities of $3.8 million.
These amounts do not represent all of our anticipated purchases, but instead represent the contractually obligated minimum purchases or firm commitments of non-cancelable minimum amounts, as follows: 109 Table of Content December 31, 2023 2024 $ 2,962 2025 2,829 2026 3,379 2027 3,798 2028 4,500 Thereafter 4,590 Total $ 22,058 Milestone Obligations The terms of our Eye and Derm Elanco Agreement and All Human Uses Elanco Agreement require us to make future development milestone payments aggregating up to $6.0 million and future commercial and sales-based milestone payments aggregating up to $152.0 million upon our achievement of the specified milestones.
These amounts do not represent all of our anticipated purchases, but instead represent the contractually obligated minimum purchases or firm commitments of non-cancelable minimum amounts, as follows: Amounts 2025 $ 1,943 2026 4,072 2027 3,744 2028 4,445 2029 4,534 Thereafter — Total $ 18,738 Milestone Obligations The terms of our Eye and Derm Elanco Agreement, All Human Uses Elanco Agreement, and Other In-License Agreement requires us to make future development milestone payments aggregating up to $9.0 million and future commercial and sales-based milestone payments aggregating up to $249.0 million upon our achievement of the specified milestones.
Such arrangements include those related to the contractual obligations described below: Lease Commitments Our operating lease commitments reflect payments due for our active lease agreements in Irvine, California, for adjacent office and laboratory suites which expire on January 31, 2027.
Such arrangements include those related to the contractual obligations described below: Lease Commitments Our operating lease commitments reflect payments due for our active lease agreements in Irvine, California, for adjacent office and laboratory suites. In December 2024, we entered into a lease agreement for office space located in Irvine, California for a 10-year lease term.
If we are unable to raise additional capital or enter into such agreements as and when needed, we could be forced to significantly delay, scale back, or discontinue our product development and/or commercialization plans, which would negatively and adversely affect our financial condition. 100 Table of Content Because of the numerous risks and uncertainties associated with drug product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.
If we are unable to raise additional capital or enter into such agreements as and when needed, we could be forced to significantly delay, scale back, or discontinue our product development and/or commercialization plans, which would negatively and adversely affect our financial condition.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $63.8 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $128.6 million for the year ended December 31, 2024, to $237.3 million as compared to the prior year period.
On December 11, 2023, we announced positive topline results of the Ersa Phase 2a clinical trial evaluating TP-03 (lotilaner ophthalmic solution, 0.25%) administered twice daily or three times a day for 12 weeks for the treatment of MGD in patients with Demodex mites.
TP-03 Demodex blepharitis in patients with Meibomian Gland Disease, Ersa and Rhea Trials In December 2023, we announced positive topline results of the Ersa trial evaluating XDEMVY administered twice daily ("BID") or three times a day ("TID") for 6 weeks and 12 weeks for the treatment of MGD in patients with Demodex mites.
We update our estimates and assumptions on a quarterly basis and record any necessary adjustments to revenue in the period identified. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters’ unpaid rebates.
Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current period's activity, plus an accrual balance for known prior periods’ unpaid rebates.
Net cash provided by financing activities was $94.0 million for the year ended December 31, 2022 which consisted of (i) $74.4 million of net proceeds from the issuance of common stock from our May 2022 Public Offering, (ii) $20.0 million of proceeds from our Credit Facility, partially offset by $0.9 million of issuance costs, (iii) $0.5 million of proceeds from our employee stock purchase plan, and (iv) $0.1 million of proceeds from the exercise of vested employee stock options.
Net Cash Provided by Financing Activities Net cash provided by financing activities was $154.7 million for the year ended December 31, 2024, and consisted of (i) $98.3 million of net proceeds from the issuance of common stock from our March 2024 Public Offering, (ii) $9.4 million from the issuance of pre-funded warrants related to the March 2024 Public Offering, (iii) $75.0 million of proceeds from an initial draw against our 2024 Credit Facility, (iv) $5.6 million of proceeds from the exercise of vested employee stock options, and (v) $1.8 million of proceeds from our Employee Stock Purchase Plan ("ESPP").
Capital draws are at our election and are in $5.0 million increments. Concurrent with the execution of the Credit Facility we drew $20.0 million. This Credit Facility was amended in January 2023 and August 2023.
Credit Facilities In February 2022, we executed the Credit Facility with Hercules Capital, Inc. and SVB (the "2022 Credit Facility"). Concurrent with the execution of the 2022 Credit Facility we drew $20.0 million. The 2022 Credit Facility was amended in January 2023 and August 2023.
We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs, and research laboratories in connection with our pre-clinical development, process development, manufacturing and clinical development activities. However, we do not currently track employee time on a program-by-program basis.
To estimate period expense for recognition, we use information provided to us by our service providers and we then apply the corresponding fee schedule. We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs, and research laboratories in connection with our pre-clinical development, process development, manufacturing and clinical development activities.
We have also completed, and/or have ongoing clinical trials for TP-03 for the potential treatment of MGD, TP-04 for the potential treatment of rosacea and TP-05 for potential Lyme disease prophylaxis. We intend to further advance our pipeline with the lotilaner API to address several diseases in human medicine, including eye care, dermatology, and infectious disease prevention.
We intend to further advance our pipeline with the lotilaner API to address several diseases in human medicine, including eye care, and infectious disease prevention.
For the year ended December 31, 2023, we recognized $0.2 million of other license fees and collaboration revenue from the satisfaction of performance obligations under an existing clinical supply agreement. No revenue was recognized under such arrangement for the year ended December 31, 2022.
For the year ended December 31, 2023, we recognized $2.7 million related to (i) the achievement of a $2.5 million contractual milestone under the China Out-License, and (ii) $0.2 million from the satisfaction of performance obligations under an existing clinical supply agreement.
The increase was primarily due to (i) $27.7 million of increased payroll and personnel-related costs (including increased stock-based compensation expense of $4.1 million) for 157 employee additions year-over-year to support our business growth and commercial leadership hires for our recent commercial launch of XDEMVY, (ii) $0.9 million of severance costs related to our former Chief Financial Officer's separation from the Company in June 2023, (iii) $22.3 million of increased commercial costs as we continued our commercial expansion and prepared for the recent commercial launch of XDEMVY, (iv) $6.2 million of increased IT applications, legal and other professional expenses to support the continued growth and expansion of our corporate infrastructure and (v) $6.5 million of increased facilities and office and administrative expenses.
The increase was primarily due to (i) $39.7 million of increased payroll and personnel-related costs (including increased stock-based compensation expense of $6.6 million) for commercial and corporate employee additions to support our business growth and commercial leadership hires for XDEMVY, (ii) $52.0 million of increased commercial and marketing costs as we continued our commercial expansion of XDEMVY, (iii) $36.8 million of increased information technology applications, legal, professional and other corporate expenses.
Other Liquidity Risks We expect to incur significant operating losses for the foreseeable future, and for these losses to further increase, as we expand our clinical development programs for our other product candidates and given the recent commercial launch of XDEMVY.
Other Liquidity Risks We expect to incur significant operating losses for the foreseeable future, and for these losses to further increase, as we expand our clinical development programs for our other product candidates and continue to commercialize XDEMVY. We may also encounter unforeseen expenses, difficulties, complications, delays and other currently unknown factors that could adversely affect our business.
On February 27, 2024, we announced positive topline results from the Galatea trial evaluating TP-04 for the treatment of rosacea which demonstrated statistically significant improvements (p TP-05 Lyme Disease, Callisto and Carpo Trials : In December 2022, we announced positive topline results from the completed Phase 1 Callisto trial and enrollment of the first patient in the Phase 2a Carpo trial.
In February 2024, we announced positive topline results from the Galatea trial evaluating TP-04 for the treatment of rosacea which demonstrated statistically significant improvements (p TP-05 Lyme Disease, Carpo Trial In February 2024, we announced positive topline results from the Carpo trial, which demonstrated statistical significance in the mortality of ticks compared to vehicle (p In December 2024, we met with the FDA about our Lyme disease program.
The increase was primarily due to (i) $10.6 million of increased payroll and personnel- 105 Table of Content related costs (including increased stock-based compensation expense of $2.1 million), for 25 employee additions year-over-year to drive our product development initiatives, (ii) $0.6 million of increased other indirect expenses, (iii) $1.0 million of milestone expense related to our in-license agreement with Elanco, (iv) $2.1 million of increased TP-05 program expenses primarily related to the Carpo trial initiated in December 2022 and the new food effect study initiated during the first quarter of 2023, and (v) $0.6 million of increased spend related to other early-stage programs.
The increase was primarily due to (i) $3.5 million of increased indirect expenses related to payroll and personnel-related costs (including increased stock-based compensation expense of $1.0 million) for employee additions to drive our product development initiatives, (ii) $0.7 million of increased other indirect expenses, (iii) a $1.5 million increase in milestone expense related to our in-license agreements (see Note 9 ), and (iv) $1.2 million of increased TP-03 program expenses.
Liquidity and Capital Resources Sources of Liquidity Overview Since our inception, we have financed our operations substantially through private placements of preferred stock, net proceeds from the issuance of common stock through our IPO, Follow-on Public Offerings, and the 2023 ATM Prospectus, as well as proceeds from product sales, net, the China Out-License, and drawdowns from the Credit Facility.
Comparison of the Years Ended December 31, 2023 and 2022 For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024. 106 Table of Content Liquidity and Capital Resources Sources of Liquidity Overview Since our inception, we have financed our operations substantially through private placements of preferred stock, net proceeds from the issuance of common stock through our IPO, Follow-on Public Offerings, and the 2023 ATM Prospectus, as well as proceeds from product sales, net, the China Out-License, and drawdowns from our Credit Facilities.
Critical Accounting Policies, Significant Judgments and Use of Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP").
For a discussion of the statement of cash flows for the year ended December 31, 2022, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024. 111 Table of Content Critical Accounting Policies, Significant Judgments and Use of Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP").
The estimates for rebates under government programs are based on statutory discount rates and expected utilization as well as historical data we have accumulated since product launch. Our rebate calculations may require estimates, including estimates of customer mix, to determine which product sales will be subject to rebates and the amount of such rebates.
The estimates for rebates under government programs are based on statutory discount rates and expected utilization as well as historical data we have accumulated since product launch. We calculate the accruals for commercial and government rebates based on various assumptions, including payer mix, with actual rebates potentially requiring accrual adjustments affecting product sales, net.
Cost of License Fees and Collaboration Revenue Cost of license fees and collaboration revenue includes the proportion of expense recognized under the terms of the China Out-License payable under the terms of our in-license agreement for lotilaner.
As of December 31, 2024, we have sold materially all inventory that was recorded to research and development expense prior to FDA approval of XDEMVY. Cost of License Fees and Collaboration Revenue Cost of license fees and collaboration revenue includes the expense recognized under the terms of the China Out-License payable under the terms of our in-license agreement for lotilaner.
These amounts represent the contractual milestones achieved or allocated under the China Out-License that have been fully or partially completed by the period ends. These allocated amounts represented the satisfaction of the transfer of license rights to LianBio and the completion of related performance obligations.
These allocated amounts represented the satisfaction of the transfer of license rights to LianBio and the completion of related performance obligations.
We may also encounter unforeseen expenses, difficulties, complications, delays and other currently unknown factors that could adversely affect our business. We may require additional capital to fully develop our product candidates and to execute our business strategy.
We may require additional capital to fully develop our product candidates and to execute our business strategy.
In August 2023, we completed the August 2023 Public Offering in which 5,714,285 shares of our common stock were sold at a public offering price of $17.50 per share for aggregate net proceeds received of approximately $93.5 million, after deducting underwriting discounts, commissions, and other offering-related expenses.
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $291.4 million. Follow-On Public Offerings In August 2023, we completed the August 2023 Public Offering in which 5,714,285 shares of our common stock were sold at a public offering price of $17.50 per share.
The change in net operating assets and liabilities was primarily due to an increase in other receivables of $3.5 million partially offset by an increase in accrued payroll and benefits of $2.7 million. The net non-cash and other charges were primarily related to stock-based compensation expense of $13.5 million.
The increase in net operating assets and liabilities was primarily due to cash increases in accounts payable and other accrued liabilities of $40.3 million and $2.6 million of accrued payroll and benefits, partially offset by cash decreases including $30.1 million of accounts receivable, $7.0 million of prepaid expenses, and $2.0 million of inventory.
Net Cash Provided by (Used in) Investing Activities Net cash provided by investing activities was $140.6 million for the year ended December 31, 2023, and relates to $174.8 million of proceeds from maturities of investments.
Net cash provided by investing activities was $140.6 million for the year ended December 31, 2023, and consisted of $174.8 million of proceeds from maturities of marketable securities, partially offset by (i) $28.7 million of purchased marketable securities, (ii) $4.0 million of intangible asset additions, and (iii) $1.5 million of purchased property, plant and equipment.
The Credit Facility, as amended, set a maximum interest rate, updated the terms of prepayment under the Credit facility and includes an extended period to drawdown the tranche associated with the NDA submission, from March 15, 2023 to March 15, 2024 provided at least $5.0 million was drawn on or before March 15, 2023 and at least an additional $5.0 million was drawn on or before September 15, 2023.
The Credit Facility, as amended, set a maximum interest rate, updated the terms of prepayment and included an extended period to drawdown the tranche associated with the NDA submission. During 2023, we made two 107 Table of Content separate draws for an aggregate of $10.0 million from the $25.0 million tranche associated with the NDA submission of TP-03.
We also granted the underwriters a 30-day option to purchase up to 840,000 additional shares of common stock at the public offering price, less underwriting discounts and commissions.
We also granted the underwriters a 30-day option to purchase up to 468,750 additional shares of its common stock at the public offering price of $32.00 per share, which the underwriters exercised in full in March 2024. We received $107.7 million in aggregate net proceeds, after deducting underwriting discounts, commissions, and other estimated offering-related expenses.
Prior to commercialization of XDEMVY, for the years ended December 31, 2023 and 2022, the vast majority of our external and internal research and development expenses were attributable to the development of XDEMVY.
However, we do not currently track employee time on a program-by-program basis. Prior to commercialization of XDEMVY, the vast majority of our external and internal research and development expenses were attributable to the development of XDEMVY.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. 113 Table of Content
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates.
Added
As of December 31, 2024, we had cash, cash equivalents and marketable securities of $291.4 million, consisting of interest-bearing money market accounts, for which the fair market value would be affected by changes in the general level of United States interest rates.
Added
However, due to the short-term maturities and the low-risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash, cash equivalents and marketable securities. As of December 31, 2024, we had $75.0 million of debt principal outstanding.
Added
Our 2024 Credit Facility accrues interest at a floating rate based upon the secured overnight financing rate (“SOFR”), plus a margin of 6.75% per annum. The SOFR is subject to a 3.75% floor. As a result, we are exposed to risks related to our indebtedness from changes in interest rates.
Added
We do not believe that a hypothetical 100 basis point increase or decrease in the applicable interest rate would have had a significant impact on our interest expense for the year ended December 31, 2024.
Added
Inflation, interest rate changes, and foreign currency exchange rate fluctuations did not have a significant impact on our results of operations for any periods presented herein. However, with further inflationary pressures, certain significant increased costs could have an adverse impact on the results of our operations. 113 Table of Content

Other TARS 10-K year-over-year comparisons