Amid a terrible stretch for Wall Street, Tarsus Pharmaceuticals Inc. is still finding investor interest.
On May 2, the Irvine-based development-stage drugmaker (Nasdaq: TARS) with an initial focus on eyecare, announced it wanted to raise $50 million in a secondary offering.
The following day, the company increased the amount to $75.6 million, due to strong investor interest. It’s among the largest fundraising deals in Orange County this year for either a public or private company.
Tarsus raised about $101 million in proceeds from its 2020 initial public. It went public at $16, and the secondary offering was priced at $13.50.
Shares in the company fell after news of the secondary offering, and amid overall stock market weakness. The company’s shares were trading around the secondary offering price as of late last week, giving Tarsus a market valuation of about $285 million.
Bridge to Profitability
“These proceeds, along with our other cash resources and expected commercialization of TP-03, are anticipated to bridge our company into profitability,” Tarsus’ Chief Executive Bobak Azamian said following the latest fund raise.
On May 10, the company reported a first-quarter loss of $20.2 million, or 98 cents a share versus a Zacks consensus estimate for an 87-cent loss a share. Analysts are predicting a $3.62 a share loss this year will rise to $4.85 a share in 2023, as the company works to bring its product to the U.S. market. It already has a licensing deal in Asia.
The company says it now has $175 million in cash and its “cash runway” is expected until at least 2026.
The company, which employs 46 people, is developing the TP-03, a novel, topical therapeutic to treat Demodex blepharitis, an ocular disease that occurs when Demodex mites—the most common ectoparasite found on humans—infest the eyelid.
The TP-03 contains lotilaner, an anti-parasitic agent that paralyzes and eradicates mites in the hair follicle, according to Tarsus officials.
The disease affects some 25 million Americans and currently has no FDA-approved treatment.
Earlier this month, Tarsus released results from its Saturn-2, Phase 3 trial, which showed the TP-03 cured 56% of patients with the condition.
The company aims to submit a New Drug Application to the FDA for the TP-03 by the second half of this year, which would make it the first FDA-cleared treatment for the disease.
“This milestone enables a first potential treatment for Demodex blepharitis and most importantly, provides hope to the millions of patients suffering from this disease,” Azamian said. “As we direct our focus toward NDA filing and commercialization, we are one step closer to providing a solution to eye care professionals and patients that can resolve this disease.”
In addition to Demodex blepharitis, Tarsus has several therapeutics in its pipeline for other common diseases that typically don’t have treatments.
For example, the TP-03 may not only treat Demodex blepharitis, but possibly also meibomian gland disease, a common condition that causes dry eyes that are sensitive to light, officials said.
In addition, Tarsus is developing the TP-05, an oral, non-vaccine treatment for Lyme disease, which is currently being studied in a clinical trial.
BofA Securities, Jefferies, Barclays and Raymond James acted as the offering’s joint book-runners, while LifeSci Capital acted as its lead manager.