0001819790-24-000063 | 10-Q | XBRL Viewer | Tarsus Pharmaceuticals INC

Condensed Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized (shares)	10,000,000	10,000,000
Preferred stock, issued (shares)	0	0
Preferred stock, outstanding (shares)	0	0
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (shares)	200,000,000	200,000,000
Common stock, issued (shares)	37,749,468	34,211,190
Common stock, outstanding (shares)	37,749,468	34,211,190

Commitment & Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitment & Contingencies

COMMITMENTS & CONTINGENCIES

Lease Agreements

In the ordinary course of business, the Company enters into lease agreements with unaffiliated third parties for its facilities and office equipment. On March 20, 2024, the Company executed an amendment for an additional office suite. This amendment was accounted for as a lease modification and resulted in the recognition of an operating lease right-of-use asset valued at $0.4 million as of the execution date. As of March 31, 2024, the Company had six active leases for adjacent office and laboratory suites in Irvine, California with a lease term through January 2027.

The below table summarizes the components of total lease expense:


	Three Months Ended March 31,
	2024		2023
Operating lease expense	$	179	$	170
Variable lease expense	103		81
Total lease expense	$	282	$	251

As of March 31, 2024, the Company's facility leases had a remaining lease term of 2.8 years and a weighted-average incremental borrowing rate of 10%.

The below table summarizes the (i) minimum lease payments over the next five years and thereafter, (ii) lease arrangement imputed interest, and (iii) present value of future lease payments:


	March 31, 2024
2024 (remaining nine months)	$	660
2025	961
2026	994
2027	83
2028	—
Total future lease payments, undiscounted	2,698
(Less): Imputed interest	(343)
(Less): Tenant improvement allowance	(164)
Present value of operating lease payments	$	2,191
Operating lease liability, current	585
Operating lease liability, noncurrent	1,606
Total operating lease liability	$	2,191

In-License Agreements for Lotilaner

Elanco In-License Agreement for Skin and Eye Disease or Conditions in Humans

In January 2019, the Company executed a license agreement with Elanco Tiergesundheit AG (“Elanco”) for exclusive worldwide rights to certain intellectual property for the development and commercialization of lotilaner in the treatment or cure of any eye or skin disease or condition in humans, as amended in June 2022 (the "Eye and Derm Elanco Agreement"). The Company has sole financial responsibility for related development, regulatory, and commercialization activities.

In March 2023, a clinical milestone was triggered to Elanco under the Eye and Derm Elanco Agreement upon enrollment of the first patient in the Phase 2a Galatea trial, evaluating the potential treatment of rosacea. The related milestone payment of $1.0 million was included in research and development expense in the accompanying Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2023.

The Company has made cash payments to Elanco under the Eye and Derm Elanco Agreement comprised of $1.0 million upfront upon contract execution in January 2019 and a total of $4.0 million for three specified clinical milestone achievements in September 2020, April 2021, and March 2023, which were all recorded in research and development expense in the Condensed Statements of Operations and Comprehensive Loss. During 2023, a milestone of $4.0 million was achieved and paid to Elanco upon the first commercial sale of XDEMVY in the U.S., which was recorded as an intangible asset in the Balance Sheet as of December 31, 2023. The Company is amortizing the intangible asset to cost of sales over its useful life of 10 years from the date of the first commercial sale.

The Company is obligated to make further cash payments to Elanco of $2.0 million under the Eye and Derm Elanco Agreement upon achievement of the last clinical milestone in the treatment of human skin diseases using lotilaner and a maximum of $75.0 million for various commercial and sales threshold milestones for the treatment of human skin diseases and the treatment of blepharitis in humans using lotilaner.

In addition, the Company is obligated to pay tiered contractual royalties to Elanco in the mid to high single digits of its net sales. If the Company received certain types of payments from its sublicensees, it was obligated to pay Elanco a variable percentage in the low to mid double-digits of such proceeds, until achievement of the first applicable regulatory approval of a product covered under the license, which occurred in July 2023 with FDA approval of XDEMVY. As a result of the commercialization of XDEMVY, the Company began accruing royalties payable to Elanco during the third quarter of 2023, which are recorded to cost of sales in the accompanying Condensed Statement of Operations and Comprehensive Loss for the three months ended March 31, 2024, and accounts payable and other accrued liabilities in the accompanying Condensed Balance Sheets as of March 31, 2024. Royalty expense during the three months ended March 31, 2024 was $1.2 million.

Elanco In-License Agreement for All Other Diseases or Conditions in Humans

In September 2020, the Company executed a license agreement with Elanco granting it a worldwide license to certain intellectual property for the development and commercialization of lotilaner for the treatment, palliation, prevention, or cure of all other diseases and conditions in humans (i.e., beyond that of the eye or skin), as amended in June 2022 (the "All Human Uses Elanco Agreement"). In September 2020, the Company issued Elanco 222,460 shares of its common stock with an estimated fair value of $3.1 million ($14.0003 per share, approximating the issuance price of the Company's Series C preferred stock in September 2020).

The Company made cash payments under the All Human Uses Elanco Agreement of $0.5 million related to a clinical milestone that was triggered in December 2022 upon enrollment of the first patient in the Phase 2a Carpo trial, for the potential treatment of Lyme disease. The Company is required to make further cash payments under this agreement upon the achievement of various clinical milestones up to an aggregate maximum of $4.0 million and various commercial and sales threshold milestones for an aggregate maximum of $77.0 million. In addition, the Company will be obligated to pay contractual royalties to Elanco in the single digits of its product sales, net. If the Company receives certain types of payments from its sublicensees, it will also be obligated to pay Elanco a variable percentage in the low to mid double-digits of such proceeds, until achievement of the first applicable regulatory approval of a product covered under the license.

Employment Agreements

The Company has entered into employment agreements, including severance and change in control agreements, with six of its executive officers. These agreements provide for the payment of certain benefits upon separation of employment under specified circumstances, such as termination without cause, or termination in connection with a change in control event.

Litigation Contingencies

From time to time, the Company may be subject to various litigation and related matters arising in the ordinary course of business. The Company is currently not aware of any such matters where there is at least a reasonable probability that a material loss, if any, has been or will be incurred for financial statement recognition.

Indemnities and Guarantees

The Company has certain indemnity commitments, under which it may be required to make payments to its officers and directors in relation to certain transactions to the maximum extent permitted under applicable laws. The duration of these indemnities varies, and in certain cases, are indefinite and do not provide for any limitation of maximum payments. The Company has not been obligated to make any such payments to date and no liabilities have been recorded for this contingency in the accompanying Condensed Balance Sheets.

Credit Facility Agreement - Balances of Debt, Debt Issuance Costs, and Accumulated Accretion (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Term loan, gross	$ 30,000	$ 30,000
Debt issuance costs	(875)	(875)
Accretion of end of term charge	517	438
Accumulated amortization of debt issuance costs	291	256
Term loan, net	$ 29,933	$ 29,819

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net loss	$ (35,731)	$ (23,419)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Out-License Agreements (Details) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended		3 Months Ended		36 Months Ended
	Mar. 26, 2024	Mar. 14, 2024	Feb. 28, 2023	Sep. 30, 2020	Mar. 31, 2024	Mar. 31, 2023	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Amortized cost								$ 1,108
Research and development					$ 12,066	$ 12,356
LianBio
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Special cash dividend (usd per share)		$ 4.80
Special cash dividends paid		$ 700			700
LianBio \| License agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront payment					2,500		$ 2,500		$ 15,000
Additional cash payment									10,000
Amortized cost									1,200
Revenue recognized	$ 2,500						83,200
Days due within	15 days
Shares issued in warrant conversion (in shares)	78,373
Proceeds from warrant cancellation payment	$ 400
Upfront payment received					15,000
LianBio \| License agreement \| Milestone Determined by the Company
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Milestone payments to be achieved									$ 10,000
LianBio \| License agreement \| Development and Regulatory Milestone
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Milestone payments to be achieved					67,500		67,500
Revenue recognized			$ 2,500
Elanco \| License agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock issued for license agreement, value				$ 3,100
Maximum milestone payments					75,000		75,000
Grandpharma \| License agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Maximum milestone payments					100,000		100,000
Grandpharma \| License agreement \| Development and Regulatory Milestone
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Maximum milestone payments					$ 20,000		$ 20,000

Related Party Transactions (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		12 Months Ended
	Jan. 30, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Related Party Transaction [Line Items]
Granted (shares)		633,887
Granted (usd per share)		$ 35.09
Selling, general and administrative		$ 51,578	$ 15,096
Director
Related Party Transaction [Line Items]
Related party transaction, annual cash compensation	$ 400			$ 200
Granted (shares)	10,000			45,134
Related party transaction, termination notice, period	10 days
Director \| Minimum
Related Party Transaction [Line Items]
Granted (usd per share)				$ 2.01
Director \| Maximum
Related Party Transaction [Line Items]
Granted (usd per share)	$ 27.49			$ 34.72
Related Party
Related Party Transaction [Line Items]
Selling, general and administrative		$ 100	$ 100

Credit Facility Agreement (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Summary of Interest Expense

The Company recognized interest expense on the accompanying Condensed Statements of Operations and Comprehensive Loss in connection with the Credit Facility as follows:


	Three Months Ended March 31,
	2024		2023
Interest expense for term loan	$	869	$	602
Accretion of end of term charge	80		53
Amortization of debt issuance costs	34		29
Total interest expense related to term loan	$	983	$	684

Balances of Debt, Debt Issuance Costs, and Accumulated Accretion

The principal balance of this Credit Facility and related accretion and amortization are reported on a combined basis as term loan, net on the accompanying Condensed Balance Sheets as follows:


	March 31, 2024		December 31, 2023
Term loan, gross	$	30,000	$	30,000
Debt issuance costs	(875)		(875)
Accretion of end of term charge	517		438
Accumulated amortization of debt issuance costs	291		256
Term loan, net	$	29,933	$	29,819

Subsequent Event (Details) $ in Millions	Apr. 19, 2024 USD ($) contract	Apr. 05, 2024 USD ($)	Sep. 15, 2023 USD ($)	Mar. 15, 2023 USD ($)	Feb. 02, 2022 USD ($)	Mar. 31, 2024 USD ($)
Line of Credit
Subsequent Event [Line Items]
Draw on credit facility			$ 5.0	$ 5.0	$ 20.0
Credit facility, aggregate principal amount						$ 75.0
Subsequent Event
Subsequent Event [Line Items]
Net proceeds	$ 39.8
Preferred stock purchased		$ 3.0
Subsequent Event \| Pharmakon Credit Facility \| Line of Credit
Subsequent Event [Line Items]
Potential additional tranches \| contract	3
Tranches with minimum net sales milestones \| contract	2
Subsequent Event \| Pharmakon Credit Facility \| Line of Credit \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Subsequent Event [Line Items]
Basis spread on variable rate	6.75%
Interest rate floor	3.75%
Subsequent Event \| Pharmakon Credit Facility, Tranche One \| Line of Credit
Subsequent Event [Line Items]
Draw on credit facility	$ 75.0
Subsequent Event \| Pharmakon Credit Facility, Tranche Two \| Line of Credit
Subsequent Event [Line Items]
Credit facility, aggregate principal amount	25.0
Subsequent Event \| Pharmakon Credit Facility, Tranche Three \| Line of Credit
Subsequent Event [Line Items]
Credit facility, aggregate principal amount	50.0
Subsequent Event \| Pharmakon Credit Facility, Tranche Four \| Line of Credit
Subsequent Event [Line Items]
Credit facility, aggregate principal amount	$ 50.0

Fair Value Measurements - Financial Instruments Measured at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Assets:
Cash and cash equivalents	$ 193,705	$ 224,947
Common stock in LianBio	46	631
Equity warrants (for LianBio shares)		225
Total assets measured at fair value	298,524	228,298
Money market funds
Assets:
Cash and cash equivalents	186,744	224,947
U.S. Treasury securities
Assets:
Cash and cash equivalents	3,484
Debt securities, available for sale and cash and cash equivalents	31,812
Commercial paper
Assets:
Cash and cash equivalents	3,477
Debt securities, available for sale and cash and cash equivalents	30,828
Corporate debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	25,490
Government-related debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	23,604	2,495
Level 1
Assets:
Common stock in LianBio	46	631
Equity warrants (for LianBio shares)		0
Total assets measured at fair value	218,602	225,578
Level 1 \| Money market funds
Assets:
Cash and cash equivalents	186,744	224,947
Level 1 \| U.S. Treasury securities
Assets:
Debt securities, available for sale and cash and cash equivalents	31,812
Level 1 \| Commercial paper
Assets:
Debt securities, available for sale and cash and cash equivalents	0
Level 1 \| Corporate debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	0
Level 1 \| Government-related debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	0	0
Level 2
Assets:
Common stock in LianBio	0	0
Equity warrants (for LianBio shares)		0
Total assets measured at fair value	79,922	2,495
Level 2 \| Money market funds
Assets:
Cash and cash equivalents	0	0
Level 2 \| U.S. Treasury securities
Assets:
Debt securities, available for sale and cash and cash equivalents	0
Level 2 \| Commercial paper
Assets:
Debt securities, available for sale and cash and cash equivalents	30,828
Level 2 \| Corporate debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	25,490
Level 2 \| Government-related debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	23,604	2,495
Level 3
Assets:
Common stock in LianBio	0	0
Equity warrants (for LianBio shares)		225
Total assets measured at fair value	0	225
Level 3 \| Money market funds
Assets:
Cash and cash equivalents	0	0
Level 3 \| U.S. Treasury securities
Assets:
Debt securities, available for sale and cash and cash equivalents	0
Level 3 \| Commercial paper
Assets:
Debt securities, available for sale and cash and cash equivalents	0
Level 3 \| Corporate debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	0
Level 3 \| Government-related debt securities
Assets:
Debt securities, available for sale and cash and cash equivalents	$ 0	$ 0

Summary of Significant Accounting Policies and Use of Estimates (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Line Items]
Amortization of intangible assets	$ 100	$ 0
Fair market value of common stock	100.00%
Expected term (in years)	6 years 3 months	6 years 3 months
Total revenues	$ 27,614	$ 2,500
Dividend yield rate	0.00%	0.00%
License And Collaboration, Other
Property, Plant and Equipment [Line Items]
Total revenues	$ 0	$ 0
Accounts Receivable \| Customer Concentration Risk \| Five Customers
Property, Plant and Equipment [Line Items]
Concentration risk	100.00%
2016 Plan
Property, Plant and Equipment [Line Items]
Expected term (in years)	10 years
Minimum
Property, Plant and Equipment [Line Items]
Useful lives of assets	3 years
Minimum \| 2016 Plan
Property, Plant and Equipment [Line Items]
Service condition period for full vesting	1 year
Maximum
Property, Plant and Equipment [Line Items]
Useful lives of assets	5 years
Maximum \| 2016 Plan
Property, Plant and Equipment [Line Items]
Service condition period for full vesting	4 years

Balance Sheet Account Detail - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Trade accounts payable and other	$ 19,142	$ 18,149
Accrued product sales deductions	16,382	4,867
Accrued clinical studies	461	277
Operating lease liability, current	585	398
Accounts payable and other accrued liabilities	$ 36,570	$ 23,691

Subsequent Event	3 Months Ended
Subsequent Event	Mar. 31, 2024
Subsequent Events [Abstract]
Subsequent Event	SUBSEQUENT EVENTS Credit Facility with Pharmakon Advisors, LP On April 19, 2024, the Company executed a loan and security agreement (the "Pharmakon Credit Facility") with funds associated with Pharmakon Advisors, LP. The Company drew $75.0 million in the initial tranche of the term loan in April 2024, a portion of which was utilized to repay all outstanding indebtedness on the existing Credit Facility term loan, resulting in total net proceeds of $39.8 million. The agreement provides for three potential additional term loan tranches in principal amounts up to $25.0 million, $50.0 million, and $50.0 million, respectively, subject to customary conditions to funding and, in the case of the last two tranches, achieving minimum net sales milestones. The three potential additional term loan tranches may be requested on or prior to December 31, 2024, June 30, 2025 and December 31, 2025, respectively. The Pharmakon Credit Facility matures on April 19, 2029. The loan bears interest at a floating rate based upon the secured overnight financing rate ("SOFR"), plus a margin of 6.75% per annum, and the SOFR is subject to a 3.75% floor. The agreement contains representations and warranties, and affirmative and negative covenants in each case. There is also no warrant coverage to the lenders and no financial covenants associated with the financing. Equity Investment in Privately-held Eye Care Company On April 5, 2024, the Company participated in an equity round of an early clinical-stage private eye care company. Pursuant to the terms of a Preferred Stock Purchase Agreement the Company purchased $3.0 million of preferred stock. Drs. Azamian and Link are board members and the Company's former director, Michael Ackermann, is an executive and board member of this private company. The Company owns a small minority of this private company.

Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenues:
Total revenues	$ 27,614	$ 2,500
Operating expenses:
Research and development	12,066	12,356
Selling, general and administrative	51,578	15,096
Total operating expenses	65,298	27,452
Loss from operations before other income (expense)	(37,684)	(24,952)
Other income (expense):
Interest income	3,117	2,293
Interest expense	(983)	(684)
Other income, net	605	6
Unrealized loss on equity investments	(585)	(65)
Change in fair value of equity warrants issued by licensee	(201)	(17)
Total other income, net	1,953	1,533
Net (loss) income	(35,731)	(23,419)
Other comprehensive loss:
Unrealized (loss) gain on marketable securities and cash equivalents	(61)	4
Comprehensive loss	$ (35,792)	$ (23,415)
Earnings Per Share [Abstract]
Net loss per share, basic (usd per share)	$ (1.01)	$ (0.88)
Net loss per share, diluted (usd per share)	$ (1.01)	$ (0.88)
Weighted Average Number of Shares Outstanding, Diluted [Abstract]
Weighted-average shares outstanding, basic (shares)	35,300,655	26,742,023
Weighted-average shares outstanding, diluted (shares)	35,300,655	26,742,023
Product
Revenues:
Total revenues	$ 24,720	$ 0
Operating expenses:
Cost of sales	1,654	0
License fees and Collaboration
Revenues:
Total revenues	$ 2,894	$ 2,500

Stock-Based Compensation - Additional Information (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2024 USD ($) vote shares	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, outstanding (shares) \| shares	37,749,468		34,211,190
Pre-funded warrants reserved for future issuance (shares) \| shares	312,500
Common stock, issued (shares) \| shares	37,749,468		34,211,190
Common stock votes \| vote	1
Unrecognized compensation expense	$ 33,000
Total stock-based compensation	$ 5,519	$ 3,906
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, weighted average period of recognition	2 years 7 months 6 days
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, weighted average period of recognition	3 years 6 months
Unrecognized compensation expense	$ 41,000
Employee stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 200		$ 100

Commitment & Contingencies - In-License Agreement for Lotilaner (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended			3 Months Ended		12 Months Ended	31 Months Ended
	Dec. 31, 2022	Sep. 30, 2020	Jan. 31, 2019	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Mar. 31, 2023
Intangible Assets, Milestone Payment
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Useful life				10 years
License agreement \| Elanco
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront payment received			$ 1.0
Future cash payments				$ 2.0
Maximum milestone payments				75.0
Royalty expense				1.2
Common stock issued for license agreement (shares)		222,460
Common stock issued for license agreement, value		$ 3.1
Common stock issued for license agreement, share price (usd per share)		$ 14.0003
License agreement \| Clinical milestones \| Elanco
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contractual milestone payment	$ 0.5				$ 1.0		$ 4.0
Maximum milestone payments				4.0
License agreement \| Commercial and sales milestones
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Maximum milestone payments				$ 77.0
License agreement \| Commercial and sales milestones \| Elanco
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Contractual milestone payment						$ 4.0

Out-License Agreements	3 Months Ended
Out-License Agreements	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Out-License Agreements	OUT-LICENSE AGREEMENTS Out-License of TP-03 Commercial Rights in the China Territory in March 2021 In March 2021, the Company entered into the China Out-License agreement with LianBio for its exclusive development and commercialization rights of TP-03 (lotilaner ophthalmic solution, 0.25%) in the China Territory for the treatment of Demodex blepharitis and Meibomian Gland Disease. LianBio was contractually responsible for all clinical development and commercialization activities and costs within the China Territory. The Company assessed this arrangement and identified the following material promises under the arrangement: (i) the exclusive license to research, develop, manufacture, commercialize, make, offer for sale, sell, and import TP-03 in the China Territory; and (ii) the research and development services in the form of clinical study materials for the respective Phase 2b/3 trial ("Saturn-1") and Phase 3 ("Saturn-2") TP-03 trials. The promises to provide research and development services for Saturn-1 and Saturn-2 clinical trials were evaluated and determined to be distinct promises in the contract and each of the two clinical trials are separate performance obligations apart from the promise to provide the license. The assessment of the initial transaction price for the China Out-License agreement included an analysis of amounts the Company expected to receive, which at contract inception consisted of: (i) the upfront cash payment of $15.0 million; (ii) a second cash payment of $10.0 million; (iii) a $10.0 million milestone that was determined to be within the control of the Company; and (iv) $1.2 million representing the initial fair value of the equity warrant. The Company accounted for each performance obligation as follows: Out-License The Company determined that this license was distinct based on an evaluation of the delivery of the functional license that was in the later stages of development, and it met the criteria for being distinct from the research and development services required under the China Out-License agreement. The Company determined the standalone selling price of this license using a discounted projected sales model and recognized as license fees and collaboration revenue the total allocated transaction price at contract inception, upon delivery of the license. Research and Development Services The standalone selling price of these performance obligations was determined using the adjusted market assessment approach. The Company analyzed costs expected to be incurred for each of the clinical trials through completion to estimate the price that a customer would be willing to pay for these services in order to benefit from the clinical trials. The Company determined that LianBio simultaneously benefited from the research and development services that are satisfied over time, as they were able to request and access the clinical trial data at any point through the trial completion. Therefore, the Company recognized the amounts allocated to the respective research and development performance obligations for Saturn-1 and Saturn-2 within license fees and collaboration revenue as the research and development services were provided using an input method, based on the costs incurred for each clinical trial and the total costs expected to be incurred to satisfy each performance obligation. The Company believes this method most faithfully depicted its performance in transferring the promised services during the expected period of time that each clinical trial was ongoing. The Company monitored the expected completion dates for each clinical trial and updated its estimated time to completion at each reporting period, as necessary. In February 2023, a specified milestone event was triggered based upon the signing of an agreement for which the Company has no ongoing obligations, resulting in $2.5 million recognized as license fees and collaboration revenue in the accompanying Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2023. On February 13, 2024, LianBio announced its plan to wind down its operations and on March 14, 2024 made a special cash dividend payment to the Company for $0.7 million (equivalent to $4.80 per share - see Note 3). On March 26, 2024, the Company executed an agreement with Xi An Grand Chang An Pharmaceutical Co., Ltd. ("GrandPharma"), a subsidiary of Grand Pharmaceutical Group Limited, and LianBio to transition the rights to develop and commercialize TP-03 in China for the treatment of Demodex blepharitis from LianBio to GrandPharma (the "Novation Agreement"). Upon execution of the Novation Agreement, the China Out-License agreement with LianBio was assigned to GrandPharma and a one-time payment of $2.5 million (the "Termination Payment) was triggered and due to the Company from LianBio within fifteen days. This Termination Payment was recorded to license fees and collaboration revenue in the Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and to other receivables in the Condensed Balance Sheets as of March 31, 2024, as the $2.5 million cash payment was not yet received by the Company until April 5, 2024. The Novation Agreement amended the $15.0 million future development milestone payable on China regulatory approval of the China Out-License agreement with a combined condition of patent issuance related to TP-03 in China. Simultaneous with the execution of the Novation Agreement, the Company entered into an agreement with LianBio to terminate the unvested third tranche of the equity warrants related to the purchase of 78,373 shares of LianBio common stock for a total cancellation payment of $0.4 million (the "Warrant Cancellation Payment"). This Warrant Cancellation Payment was recorded to license fees and collaboration revenue in the Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and other receivables in the Condensed Balance Sheets as of March 31, 2024. Through March 31, 2024, the Company received aggregate payments from LianBio totaling $83.2 million, comprised of (i) initial consideration of $15.0 million, (ii) $67.5 million for the achievement of specified milestones, and (iii) $0.7 million related to a special cash dividend. As of March 31, 2024 the Company is eligible to receive further consideration from GrandPharma upon the achievement of additional TP-03 events, including: (i) additional regulatory and/or patent milestones of up to an aggregate of $20.0 million; (ii) China-based TP-03 sales threshold milestone payments of up to an aggregate of $100.0 million; and (iii) tiered low-to-high-teen royalties for China Territory TP-03 product sales.

Fair Value Measurements - Estimated Value of Cash, Cash Equivalents, Marketable Securities, and Equity Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Mar. 31, 2024
Cash equivalents:
Amortized cost	$ 224,947	$ 193,706
Cash and cash equivalents	224,947	193,705
Marketable securities:
Amortized cost	2,496	105,945
Unrealized gains	0	4
Unrealized losses	(1)	(1,130)
Corporate debt securities	2,495	104,819
Long-term investments:
Amortized cost	1,108
Unrealized gains	0
Unrealized losses	(477)
Estimated fair value	631	46
Cash Equivalents
Marketable securities:
Unrealized gains		0
Unrealized losses		(1)
Money market funds
Cash equivalents:
Amortized cost	224,947	186,744
Cash and cash equivalents	224,947	186,744
U.S. Treasury securities
Cash equivalents:
Amortized cost		3,484
Cash and cash equivalents		3,484
Marketable securities:
Amortized cost		28,341
Unrealized gains		0
Unrealized losses		(13)
Corporate debt securities		28,328
Commercial paper
Cash equivalents:
Amortized cost		3,478
Cash and cash equivalents		3,477
Marketable securities:
Amortized cost		27,374
Unrealized gains		0
Unrealized losses		(23)
Corporate debt securities		27,351
Commercial paper \| Cash Equivalents
Marketable securities:
Unrealized gains		0
Unrealized losses		(1)
Corporate debt securities
Marketable securities:
Amortized cost		25,509
Unrealized gains		0
Unrealized losses		(19)
Corporate debt securities		25,490
Government-related debt securities
Marketable securities:
Amortized cost	2,496	23,613
Unrealized gains	0	4
Unrealized losses	(1)	(13)
Corporate debt securities	$ 2,495	23,604
Common stock in LianBio
Marketable securities:
Amortized cost		1,108
Unrealized gains		0
Unrealized losses		(1,062)
Corporate debt securities		$ 46

Condensed Statements of Stockholders' Equity (Parenthetical) $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($)
Statement of Stockholders' Equity [Abstract]
Issuance costs	$ 6.7
Issuance costs, warrants	$ 0.6

Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share, Basic [Abstract]
Net loss	$ (35,731)	$ (23,419)
Weighted-average shares outstanding, basic (shares)	35,300,655	26,742,023
Weighted-average shares outstanding, diluted (shares)	35,300,655	26,742,023
Net loss per share, basic (usd per share)	$ (1.01)	$ (0.88)
Net loss per share, diluted (usd per share)	$ (1.01)	$ (0.88)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(23))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483586/944-220-S99-1

Reference 15: http://www.xbrl.org/2003/role/exampleRef
-Topic 260
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 52
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482635/260-10-55-52

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 260
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 7
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482689/260-10-45-7

+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Summary of Significant Accounting Policies and Use of Estimates (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Schedule of Expected Future Amortization Expense

As of March 31, 2024, the expected future amortization expense for the Company's intangible assets is as follows:


	Amounts
2024 (remaining nine months)	$	300
2025	400
2026	400
2027	400
2028	400
Thereafter	1,867
Total future amortization	$	3,767

Product Sales from Each of our Largest Customers

The following table summarizes the percentage of the Company's product sales from its largest customers:


	Three Months Ended March 31, 2024
Customer A	27	%
Customer B	25	%
Customer C	24	%
Customer D	14	%
Customer E	11	%

Summary of Significant Accounting Policies and Use of Estimates - Intangible Assets, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Intangible assets, net	$ 3,767		$ 3,867
Impairments of intangible assets	0	$ 0
Intangible Assets, Milestone Payment
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Intangible assets, net	$ 4,000
Useful life	10 years

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 2024 shares
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Terminated	false
Bobak Azamian [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	In May 2023, Bobak Azamian, Chief Executive Officer, adopted a Rule 10b5-1 trading plan to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The plan provided for the sale of up to 291,000 shares of common stock held by Dr. Azamian between August 23, 2023 and July 24, 2024. Dr. Azamian terminated the trading plan effective January 8, 2024.
Name	Bobak Azamian
Title	Chief Executive Officer
Rule 10b5-1 Arrangement Terminated	true
Termination Date	January 8, 2024
Aggregate Available	291,000
Jose Trevejo [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	In May 2023, Jose Trevejo, former Chief Medical Officer, adopted a Rule 10b5-1 trading plan to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The plan provided for the sale of up to 6,107 shares of common stock held by Dr. Trevejo between August 17, 2023 and May 16, 2024. Dr. Trevejo terminated the trading plan effective January 12, 2024.
Name	Jose Trevejo
Title	former Chief Medical Officer
Rule 10b5-1 Arrangement Terminated	true
Termination Date	January 12, 2024
Aggregate Available	6,107

Summary of Significant Accounting Policies and Use of Estimates

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Use of Estimates

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

Basis of Presentation

The accompanying Condensed Financial Statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in the U.S. for interim financial information pursuant to Form 10-Q and with the rules and regulations of the SEC. Accordingly, the accompanying Condensed Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited financial statements and the related notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 27, 2024.

The interim Condensed Balance Sheet as of March 31, 2024, the Condensed Statements of Operations and Comprehensive Loss, and the Condensed Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023, and the Condensed Statements of Cash Flows for the three months ended March 31, 2024 and 2023 are unaudited. These unaudited interim financial statements have been prepared on the same basis as the Company’s annual financial statements and,

in the opinion of management, reflect all adjustments, which consist of only normal and recurring adjustments for the fair presentation of its financial information.

The financial data and other information disclosed in these notes related to the three-month periods are also unaudited. The Condensed Balance Sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all information and footnotes required by GAAP for annual financial statements. The condensed interim operating results for three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024 or any other interim or annual period.

Use of Estimates

The preparation of financial statements in conformity with GAAP and with the rules and regulations of the SEC requires management to make informed estimates and assumptions that affect the amounts reported in these Condensed Financial Statements and Notes. These estimates and assumptions are based upon historical experience, knowledge of current events and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources and involve judgments with respect to numerous factors that are difficult to predict and may materially differ from the amounts ultimately realized and reported due to the inherent uncertainty of any estimate or assumption. On an ongoing basis, management evaluates its estimates, including those related to recognition of revenue, clinical trial accruals, contract manufacturing accruals, expected demand for inventory, fair value of assets and liabilities, income taxes and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ materially from those estimates and assumptions used in the preparation of the accompanying Condensed Financial Statements under different assumptions and conditions.

The Company’s Condensed Financial Statements as of and for the three months ended March 31, 2024, reflect the Company’s estimates of the impact of the macroeconomic and geopolitical environment, including the impact of inflation, higher interest rates, and foreign exchange rate fluctuations. The duration and the scope of these conditions cannot be predicted; therefore, the extent to which these conditions will directly or indirectly impact the Company’s business, results of operations and financial condition, is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates, judgments and assumptions or a revision of the carrying value of the Company’s assets or liabilities as of the issuance date of the accompanying Condensed Financial Statements.

The accounting policies and estimates that most significantly impact the presented amounts within these accompanying Condensed Financial Statements are further described below:

Cash and Cash Equivalents

Cash and cash equivalents consist of bank deposits and highly liquid investments, including money market fund accounts, that are readily convertible into cash without penalty, with original maturities of three months or less from the purchase date. The carrying amounts reported in the accompanying Condensed Balance Sheets for cash and cash equivalents are valued at cost, which approximate their fair value.

Marketable Securities and Long-Term Investments

Marketable securities consist primarily of short-term fixed income investments carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities (see Note 3). Management determines the appropriate classification of its investments in fixed income securities at the time of purchase. Available-for-sale securities with original maturities beyond three months at the date of purchase, including those that have maturity dates beyond one year from the balance sheet date, are classified as current assets on the accompanying Condensed Balance Sheets due to their highly liquid nature and availability for use in current operations.

Marketable securities are recorded at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive loss within the accompanying Condensed Statements of Stockholders' Equity until realized.

The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, as well as interest and dividends, are included in interest income. Realized gains and losses as well as credit losses, if any, on marketable securities identified on a specific identification basis are included in other income (expense) on the accompanying Condensed Statements of Operations and Comprehensive Loss. The Company evaluated the underlying credit quality and credit ratings of the issuers during the period. To date, the Company has not identified any other-than-temporary declines in fair value of its investments and no credit losses associated with credit risk have occurred or have been recorded. Interest earned on marketable securities is included in interest income within the accompanying Condensed Statements of Operations and Comprehensive Loss.

As of March 31, 2024, the Company's holdings of common stock in the parent company of LianBio was included as marketable securities. As of December 31, 2023, this LianBio common stock was classified as long-term investments due to the Company's intent at that time to hold these shares for longer than one year. These equity securities are designated as available-for-sale with associated unrealized gains or losses reported in other income (expense) within the Condensed Statements of Operations and Comprehensive Loss for each reported period.

Accounts Receivable, Net

Accounts receivable generally consists of amounts due from the Company's customers, which includes pharmaceutical wholesalers and specialty pharmacy providers related to product sales of XDEMVY in the U.S. Payment terms are typically 30-60 days following delivery to customers. Accounts receivable are recorded net of discounts, chargebacks, allowances and other adjustments. The Company monitors the financial performance and creditworthiness of its customers so it can properly assess and respond to changes in their credit profile. The Company estimates the allowance for credit losses based on existing contractual payment terms, actual payment patterns of customers and individual customer circumstances. Amounts determined to be uncollectible are written off against the reserve when it is probable that the receivable will not be collected. The Company did not record a reserve for estimated credit losses during the three months ended March 31, 2024.

Inventory

Inventory is valued at the lower-of-cost or net realizable value, with cost determined on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and adjusts the value for any excess and obsolete inventory to net realizable value in the period in which the impairment is first identified and such charges are recorded as a component of cost of sales in the Condensed Statements of Operations and Comprehensive Loss. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. Product that may be used in clinical development programs are excluded from inventory and the costs are charged to research and development expense in the Condensed Statements of Operations and Comprehensive Loss as incurred, as long as they do not have an alternative use. Prior to FDA approval of XDEMVY in July 2023, costs related to the production of inventory were recorded as research and development expense on the Condensed Statements of Operations and Comprehensive Loss in the period incurred.

Intangible Assets, Net

Intangible assets are measured at fair value as of the acquisition date or, in the case of commercial milestone payments, the date they become due. The evaluation of intangible assets includes assessing the amortization period for which the asset is expected to contribute to the future cash flows of the Company. Intangible assets with finite useful lives are amortized over their estimated useful lives, primarily on a straight-line basis when the Company is unable to reliably estimate the pattern of cash flow. The carrying value of intangible assets as a result of achieving certain commercial milestones was $4.0 million as of March 31, 2024, and are amortized to cost of sales over their useful life of 10 years from the date of first commercial sale (see Note 7). Amortization expense for the three months ended March 31, 2024 was $0.1 million; no amortization expense was recorded for the three months ended March 31, 2023.

As of March 31, 2024, the expected future amortization expense for the Company's intangible assets is as follows:


	Amounts
2024 (remaining nine months)	$	300
2025	400
2026	400
2027	400
2028	400
Thereafter	1,867
Total future amortization	$	3,767

Long-lived assets, including intangibles, are evaluated for impairment whenever events or changes in circumstance indicate that the carrying value of an asset might not be fully recoverable. To do so, the Company compares the carrying value of the intangible asset to the undiscounted net cash flows over its remaining useful life, and if not recoverable, will estimate the fair value of the asset. If the fair value is less than the carrying amount, an impairment loss is recognized in the Condensed Statements of Operations and Comprehensive Loss. There have been no impairments of intangible assets for the three months ended March 31, 2024 and 2023.

Fair Value Measurements

Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

•Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are publicly accessible at the measurement date.

•Level 2: Observable prices that are based on inputs not quoted on active markets, but that are corroborated by market data. These inputs may include quoted prices for similar assets or liabilities or quoted market prices in markets that are not active to the general public.

•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts for financial instruments consisting of cash, cash equivalents, accounts receivable, net, accounts payable and accrued liabilities approximate fair value due to the short maturities for each. The Company's equity warrant holdings disclosed as other assets are carried at fair value based on unobservable market inputs (see Note 3).

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value hierarchy during the years presented.

Property and Equipment, Net

Property and equipment, net are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets that range from three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful lives of related improvements. The Company evaluates the recoverability of its property and equipment, net whenever events or

changes in circumstances of the business indicate that the asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the sum of the future undiscounted cash flows the assets are expected to generate over the remaining useful lives of the assets. If a long-lived asset fails a recoverability test, the Company measures the amount by which the carrying value of the asset exceeds its fair value. There were no impairments recognized during the three months ended March 31, 2024 and 2023.

Leases

The Company determines if an arrangement is or contains a lease at inception. Right-of-Use assets (“ROU assets”) represent the Company’s right to control an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the initial non-cancelable lease term, unless there is a renewal option that is reasonably certain to be exercised. The Company uses its incremental borrowing rate at the lease commencement date in determining the discount rate utilized to present value the future minimum lease payments since an implicit interest rate in each at-market lease agreement was not determinable. The Company has lease agreements with both lease and non-lease components, which are accounted for as a single component for all asset classes. Lease expense for the Company's operating leases are recognized on a straight-line basis over the lease term.

The Company's variable lease costs, consisting primarily of real estate taxes, insurance costs, and common area maintenance, are expensed as incurred and excluded from the reported ROU assets and lease liabilities amounts presented in the accompanying Condensed Balance Sheets. The current and noncurrent portion of the operating lease liability are included in accounts payable and other accrued liabilities and other long-term liabilities, respectively, in the accompanying Condensed Balance Sheets. Rent expense is allocated to research and development and general and administrative expenses in the accompanying Condensed Statements of Operations and Comprehensive Loss.

Concentration Risk

Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, marketable securities and accounts receivable. The Company maintains cash held on deposit at financial institutions in the U.S., including SVB. These deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") in an amount up to $250,000 for any depositor. To the extent the Company holds cash deposits in amounts that exceed the FDIC insurance limitation, it may incur a loss in the event of a failure of any of the financial institutions where it maintains deposits. The Company invests its excess cash in highly liquid investments, including money market fund accounts, that are readily convertible into cash without penalty.

Management believes the Company is not exposed to significant credit risk due to the financial position of the depository institution, but 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. The Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. To date, the Company has not experienced any losses associated with this credit risk and continues to assess that this exposure is not significant.

Major Customers

The Company entered into agreements with certain limited specialty pharmacies and specialty distributors for the sale of XDEMVY in the U.S. The following table summarizes the percentage of the Company's product sales from its largest customers:


	Three Months Ended March 31, 2024
Customer A	27	%
Customer B	25	%
Customer C	24	%
Customer D	14	%
Customer E	11	%

As of March 31, 2024, amounts due from these five customers each exceeded 10% of gross accounts receivable and accounted for approximately 100% of the accounts receivable balance on a combined basis.

Major Suppliers

The Company does not currently own manufacturing facilities and depends on an outsourced manufacturing strategy for the production of XDEMVY for commercial use and for the production of its other product candidates for clinical trials. The Company enters into agreements with third-party manufacturers that are approved for the commercial production of XDEMVY and third-party suppliers that are approved for XDEMVY's active pharmaceutical ingredient. Although there are potential sources of supply other than the Company's existing manufacturers and suppliers, any new supplier would be required to qualify under applicable regulatory requirements. The loss of certain manufacturers and third-party suppliers could result in a temporary disruption of the Company’s commercialization efforts.

Revenue Recognition

(i) Product Sales, Net

The Company recognizes 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. The Company records the amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or services. The Company applies 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.

The Company sells XDEMVY to customers in the U.S., which became available for commercial sale during the third quarter of 2023. The Company sells XDEMVY to a limited number of specialty pharmacies and distributors (i.e., its customers) who in turn sell it directly to clinics, hospitals, pharmacies and federal healthcare programs. Revenue from product sales is primarily recognized upon physical delivery of the product (when the customer obtains control of the product), in return for agreed-upon consideration. Shipping and handling activities are considered to be fulfillment activities rather than a separate performance obligation and are recorded within selling, general and administrative expenses in the accompanying Condensed Statements of Operations and Comprehensive Loss.

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. Estimates of variable consideration are calculated based on the actual product sales each reporting period and the nature of the variable consideration related to those sales. Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as the current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. 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. These estimates reflect the Company’s best estimate of the amount of consideration to which the Company expects to be entitled based on the terms of the contract. Actual amounts of consideration ultimately received may differ materially from

estimates. If actual results in the future vary from estimates, the Company will adjust these estimates, which would affect product sales, net and earnings in the period such variances are adjusted. The Company categorizes product sales deduction estimates as follows:

Distribution Service Fees: The Company engages with wholesalers and specialty pharmacies to distribute its products to end customers. The Company pays the wholesalers and certain specialty pharmacies a fee for services such as: inventory management, chargeback administration, and service level commitments. The Company estimates the amount of distribution services fees to be paid to the customers and adjusts the transaction price with the amount of such estimate at the time of sale to the customer. An accrued liability is recorded for unpaid distribution service fees.

Prompt Pay Discounts: The Company provides its customers with a percentage discount on their invoice if the customers pay within the agreed upon timeframe. The Company expects that its customers will earn prompt pay discounts. The Company estimates 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.

Product Returns: The Company's customers are contractually permitted to return the product within the contractual allowable time before and after the applicable expiration date. In the initial sales period, the Company estimates its provision for returns based on industry data and adjusts the transaction price at the time of the product sale to the customer. Once sufficient history has been collected for product returns, the Company 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 the Company's invoice price to the wholesaler and the wholesaler’s customer's contract price. The wholesaler tracks these sales and charges back the Company for the difference between the negotiated prices paid between the wholesaler's customers and wholesaler's acquisition cost. The Company estimates the percentage of goods sold that are eligible for chargeback and adjusts the transaction price and accounts receivable at the time of sale of the product to the customer.

Co-payment Assistance: Patients who meet certain eligibility requirements may receive co-payment assistance. The Company records 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.

Rebates and Discounts: The Company accrues 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. The Company's estimates for expected utilization of commercial insurance rebates are based on data received from its customers. The Company's estimates for rebates under government programs are based on statutory discount rates and expected utilization as well as historical data it has accumulated since product launch. The Company’s 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 Company updates its estimates and assumptions on a quarterly basis and records 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. If actual rebates vary from estimates, the Company may need to adjust accruals, which would affect product sales, net in the period of adjustment. An accrued liability is recorded for unpaid rebates related to product for which control has transferred to the customer.

(ii) License Fees and Collaboration Revenue

China Out-License

License fees and collaboration revenue in the accompanying Condensed Statements of Operations and Comprehensive Loss has historically primarily related to the China Out-License that allows the third-party licensee to market the Company's TP-03 product candidate (representing functional intellectual property) in the People's Republic of China, Hong

Kong, Macau, and Taiwan (the "China Territory")— see Note 8. The accounting and reporting of revenue for out-license arrangements requires significant judgment for: (a) identification of the number of performance obligations within the contract; (b) the contract’s transaction price for allocation (including variable consideration); (c) the stand-alone selling price for each identified performance obligation; and (d) the timing and amount of revenue recognition in each period.

The China Out-License was analyzed under GAAP to determine whether the promised goods or services are distinct or must be accounted for as part of a combined performance obligation. In making these assessments, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own, and/or whether the required expertise is readily available. If the license is not distinct, the license is combined with other promised goods or services as a combined performance obligation for revenue recognition.

The China Out-License arrangement included the following forms of consideration: (i) non-refundable upfront license payment; (ii) equity-based consideration; (iii) sales-based royalties; (iv) sales-based threshold milestones; (v) one-time payment for executing a drug supply agreement; (vi) development milestone payments; (vii) regulatory milestone payments; and (viii) a one-time termination payment to transition the rights to develop and commercialize TP-03 in China for the treatment of Demodex blepharitis to Xi An Grand Chang An Pharmaceutical Co., Ltd ("GrandPharma"). Revenue is recognized in proportion to the allocated transaction price when (or as) the respective performance obligation is satisfied. The Company evaluates the progress related to each milestone at each reporting period and, if necessary, adjusts the probability of achievement and related revenue recognition. The measure of progress, and thereby periods over which revenue is recognized, is subject to estimates by management and may change over the course of the agreement.

Contractual Terms for Receipt of Payments

A performance obligation is a promise in a contract to transfer a distinct good or service and is the unit of accounting. A contract’s transaction price is allocated among each distinct performance obligation based on relative standalone selling price and recognized when, or as, the applicable performance obligation is satisfied.

The contractual terms that establish the Company’s right to collect specified amounts from its customers and that require contemporaneous evaluation and documentation under GAAP for the corresponding timing and amount of revenue recognition, are as follows:

Upfront License Fees: The Company determines whether non-refundable license fee consideration is recognized at the time of contract execution (i.e., when the license is transferred to the customer and the customer is able to use and benefit from the license) or over the actual (or implied) contractual period of the China Out-License. The Company also evaluates whether it has any other requirements to provide substantive services that are inseparable from the performance obligation of the license transfer to determine whether any combined performance obligation is satisfied over time or at a point in time. Upfront payments may require deferral of revenue recognition to a future period until the Company performs obligations under these arrangements.

Development Milestones: The Company utilizes the most likely amount method to estimate the amount of consideration to which it will be entitled for achievement of development milestones as these represent variable consideration. For those payments based on development milestones (e.g., patient dosing in a clinical study or the achievement of statistically significant clinical results), the Company assesses the probability that the milestone will be achieved, including its ability to control the timing or likelihood of achievement, and any associated revenue constraint. Given the high degree of uncertainty around the occurrence of these events, the Company determines the milestone and other contingent amounts to be constrained until the uncertainty associated with these payments is resolved. At each reporting period, the Company re-evaluates this associated revenue recognition constraint. Any resulting adjustments are recorded to revenue on a cumulative catch-up basis, and reflected in the financial statements in the period of adjustment.

Regulatory Milestones: The Company utilizes the most likely amount method to estimate the consideration to which it will be entitled and recognizes revenue in the period regulatory approval occurs (the performance obligation is satisfied) as these represent variable consideration. Amounts constrained as variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will

not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company evaluates whether the milestones are considered probable of being reached and not otherwise constrained. Accordingly, due to the inherent uncertainty of achieving regulatory approval, associated milestones are deemed constrained for revenue recognition until achievement.

Royalties: Under the sales-or-usage-based royalty exception the Company recognizes revenue based on the contractual percentage of the licensee’s sale of products to its customers at the later of (i) the occurrence of the related product sales or (ii) the date upon which the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue from the China Out-License.

Sales Threshold Milestones: Similar to royalties, applying the sales-or-usage-based royalty exception, the Company recognizes revenue from sales threshold milestones at the later of (i) the period the licensee achieves the one-time annual product sales levels in their territories for which the Company is contractually entitled to a specified lump-sum receipt, or (ii) the date upon which the performance obligation to which some or all of the milestone has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any sales threshold milestone revenue from the China Out-License.

The Company re-evaluates the measure of progress to each performance obligation in each reporting period as uncertain events are resolved and other changes in circumstances occur.

Other License Fees and Collaboration Revenue

License fees and collaboration revenue also includes revenue recognized from satisfaction of performance obligations under an existing clinical supply agreement. The Company recognizes revenue when a customer obtains control of the promised good or service. There was no revenue recognized under this arrangement for the three months ended March 31, 2024 and 2023, respectively.

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, third-party royalties payable on the Company’s product sales, net and amortization of capitalized intangible assets associated with XDEMVY. Cost of sales may also include period costs related to certain inventory warehouse and distribution operations and inventory adjustment charges. The Company began capitalizing inventory costs upon FDA approval of XDEMVY in July 2023. Prior to FDA approval of XDEMVY, manufacturing and other inventory costs were recorded to research and development expenses in the Condensed Statements of Operations and Comprehensive Loss. Therefore, cost of sales of XDEMVY will reflect a lower average per unit cost until the related inventory is sold.

Selling, General and Administrative

Selling, general and administrative costs consist of salaries, benefits, stock-based compensation and other personnel-related costs for the Company's executive, finance, sales and marketing, and other administrative functions. Selling, general and administrative expenses also 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. Advertising costs are expensed as incurred.

Research and Development Costs

Research and development costs are expensed as incurred or as certain upfront or milestone payments become contractually due to licensors upon the achievement of clinical or regulatory events. Research and development expenses include internal costs directly attributable to in-development programs, including the costs of salaries, payroll taxes, employee benefit and other employee-related costs (including stock-based compensation expense), license fees, materials, supplies and the cost of services provided by outside contractors to conduct nonclinical studies, clinical trials and contract manufacturing activities. All costs associated with research and development are expensed as incurred. The Company accrues these costs based on factors such as estimates of the work completed and in accordance with agreements established with third-party service

providers under the service agreements. As it relates to clinical trials, the financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Such payments are evaluated for current or long-term classification based on when they will be realized. The Company's objective is to reflect the appropriate expense in its financial statements by matching those expenses with the period in which the services and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial taking into consideration discussions with applicable personnel and outside service providers. The clinical trial accrual is dependent in part upon the timely and accurate reporting of progress and efforts incurred from contract research organizations ("CROs"), contract manufacturers and other third-party vendors. Although estimates are expected to be materially consistent with actual amounts incurred, the Company's understanding of the status and timing of services performed relative to the actual status and timing of services performed can vary and may result in changes in estimates in any particular period. The Company makes significant judgments and estimates in determining the accrued liabilities balance at each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred.

The Company has entered into, and may continue to enter into, license agreements to access and utilize certain technology. In each case, the Company evaluates if the license agreement results in the acquisition of an asset or a business. To date, none of the Company's license agreements have been considered an acquisition of a business. For asset acquisitions, the upfront payments to acquire such licenses, as well as any future milestone payments made before product approval that do not meet the definition of a derivative, are immediately recognized as research and development expense in the Condensed Statements of Operations and Comprehensive Loss when paid or become payable, provided there is no alternative future use of rights in other research and development projects.

Stock-Based Compensation

The Company recognizes stock-based compensation expense for equity awards granted to employees, consultants, and members of its Board of Directors. Stock option awards are at an exercise price of not less than 100% of the fair market value of common stock on the respective date of grant. The grant date is the date the terms of the award are formally approved by the Company’s Board of Directors or its designee. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards as of the date of grant. The fair value of restricted stock units is representative of the closing market price of the Company's common stock on the date preceding the award grant date.

Stock awards granted typically have one to four-year service conditions and a contractual term of 10 years. Any performance conditions for vesting are explicitly stated in each award agreement and are associated with clinical, business development, or operational milestones. For stock-based awards that vest subject to the satisfaction of a service requirement, the related expense is recognized on a straight-line basis over each award’s actual or implied vesting period. For stock-based awards that vest subject to a performance condition, the Company recognizes related expense on an accelerated attribution method, if and when it concludes that it is highly probable that the performance condition will be achieved. At each reporting period, the Company reassesses the probability of the achievement of the performance vesting conditions. As applicable, the Company reverses previously recognized expense for unvested awards in the same period of forfeiture.

The measurement of the fair value of stock option awards and recognition of stock-based compensation expense requires assumptions to be estimated by management that involve inherent uncertainties and the application of management’s judgment, including (a) the fair value of the Company’s common stock on the date of the option grant for all awards granted prior to the IPO, (b) the expected term of the stock option until its exercise by the recipient, (c) stock price volatility over the expected term, (d) the prevailing risk-free interest rate over the expected term, and (e) expected dividend payments over the expected term.

All stock-based compensation expense is reported in the accompanying Condensed Statements of Operations and Comprehensive Loss within cost of sales, research and development expense or selling, general and administrative expense, based upon the assigned department of the award recipient. The measurement of the fair value of stock option awards and recognition of stock-based compensation expense requires assumptions to be estimated by management that involve inherent uncertainties and the application of management’s judgment, including:

Fair Value of Common Stock — The fair value of the Company’s common stock is based on the closing quoted market price of its common stock as reported by the Nasdaq Global Select Market on the date of the option grant.

Expected Term — The Company’s expected term represents the period that the Company’s stock option awards are expected to be outstanding. Management estimates the expected term of awarded stock options utilizing the simplified method (based on the mid-point between the vesting date and the end of the contractual term) to determine the expected term since the Company does not yet have sufficient exercise history.

Expected Volatility — Prior to 2023, the Company did not have sufficient trading history for its common stock to use its own historical volatility. Management estimated the expected volatility based on a designated peer-group of publicly-traded companies for a look-back period (from the date of grant) that corresponded with the expected term of the awarded stock option. Beginning in January 2023, the Company began using its own historical stock price for expected volatility.

Risk-Free Interest Rate — The Company estimates the risk-free interest rate based upon the U.S. Department of Treasury yield curve in effect at award grant date for the time period that corresponds with the expected term of the awarded stock option.

Dividend Yield — The Company’s expected dividend yield is zero because it has never paid cash dividends and does not expect to for the foreseeable future.

Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recorded based on the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the financial statements, as well as operating losses and tax credit carry forwards using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain due to the Company’s historical operating performance and recorded cumulative net losses in prior fiscal periods. A valuation allowance is recorded to reduce deferred tax assets, because based upon a weighting of positive and negative factors, it is more likely than not that these deferred tax assets will not be realized. If/when the Company were to determine that deferred tax assets are realizable, an adjustment to the corresponding valuation allowance would increase the net income in the period that such determination was made.

The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.

Interest and penalties related to unrecognized tax benefits, if any, are recorded as a component of income tax expense.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Diluted net loss per share

is computed by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method and if-converted method as applicable.

Due to net losses in all periods presented, all otherwise potentially dilutive securities are antidilutive, and accordingly, the reported basic net loss per share equals diluted net loss per share.

Comprehensive Loss

Comprehensive loss represents (i) net loss for the periods presented, and (ii) unrealized gains or losses on the Company's reported available-for-sale debt securities.

Recently Issued or Effective Accounting Standards

Recently issued or effective accounting pronouncements that impact, or may have an impact, on the Company’s financial statements have been discussed within the footnote to which each relates. Outside of the pronouncement below, other recent accounting pronouncements not disclosed in these Condensed Financial Statements have been determined by the Company’s management to have no impact, or an immaterial impact, on its current financial position, results of operations, or cash flows.

In December 2023, the FASB issued Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosure ("ASU 2023-09"). ASU 2023-09 requires annual disclosures of specific categories in the rate reconciliation, additional information for reconciling items that meet a quantitative threshold and a disaggregation of income taxes paid, net of refunds. The standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities and is effective for the Company beginning with the 2025 Annual Report on Form 10-K. Early adoption is permitted. ASU 2023-09 should be applied prospectively. Retrospective adoption is permitted. The Company is currently assessing the impact this standard will have on the Company's financial statements.

Credit Facility Agreement

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Credit Facility Agreement

CREDIT FACILITY AGREEMENT

On February 2, 2022, the Company executed the Credit Facility with Hercules and SVB that expires on February 2, 2027. As security for the obligations under the agreement, the Company granted a continuing security interest in substantially all of the Company's assets, excluding intellectual property on which there is a negative pledge. Concurrent with the execution of the Credit Facility, the Company made a $20.0 million draw.

On January 5, 2023, the Company entered into an amendment to the loan and security agreement (the "First Amendment"). The First Amendment set a maximum interest rate, and updated the terms of prepayment under the Credit Facility and other certain specific conditions, including an extended period for the Company to drawdown the $25.0 million tranche associated with the New Drug Application ("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 Company did not incur any lender fees as part of this First Amendment.

On August 23, 2023, the Company entered into a second amendment to the loan and security agreement (the "Second Amendment"). The Second Amendment updated the terms of the amount and proportion of the Company’s cash required to be maintained at SVB or affiliates of SVB. The Company did not incur any lender fees as part of this Second Amendment.

On March 15, 2023 and September 15, 2023, respectively, the Company made separate draws of $5.0 million (including SVB's commitment of $1.25 million) from the $25.0 million tranche that became available upon submission of the NDA. On March 15, 2024, the $15.0 million tranche related to the Company's NDA submission with the FDA for TP-03 in September 2022 and the $35.0 million tranche related to the FDA approval of XDEMVY in July 2023 both expired and were no longer available to be drawn as of period end. As of March 31, 2024, the Credit Facility provides for a remaining aggregate principal amount of up to $75.0 million with tranched availability as follows: $50.0 million available upon achievement of product sales, net thresholds; and $25.0 million available upon lender approval.

Each of these tranches may be drawn down in $5.0 million increments at the Company's election. The Credit Facility requires interest-only payments through February 1, 2026, followed by 12 months of principal amortization, unless extended for one year to its maturity, upon meeting certain contractual conditions. All unpaid amounts under the Credit Facility become due on its February 2, 2027 expiry.

Under the First Amendment, the outstanding principal draws accrue interest at a floating interest rate per annum equal to the greater of either (i) The Wall Street Journal ("WSJ") prime rate plus 4.45% with an aggregate cap of 11.45%, or (ii) 8.45%. At the execution date of the Credit Facility, the WSJ prime rate was 3.25% and increased to 8.50% as of March 31, 2024.

The Company is required to pay a specified fee upon the earlier of (i) February 2, 2027 or (ii) the date the Company prepays, in full or in part, the outstanding principal balance of the Credit Facility ("End of Term Charge"). The current End of Term Charge of $1.4 million was derived by multiplying 4.75% by the $30.0 million outstanding principal balance as of March 31, 2024 and is accreted to interest expense through maturity.

As of March 31, 2024 and 2023, the effective interest rate for the full term of the Credit Facility was 11.96% and 12.12%, respectively. The Company recognized interest expense on the accompanying Condensed Statements of Operations and Comprehensive Loss in connection with the Credit Facility as follows:


	Three Months Ended March 31,
	2024		2023
Interest expense for term loan	$	869	$	602
Accretion of end of term charge	80		53
Amortization of debt issuance costs	34		29
Total interest expense related to term loan	$	983	$	684

The carrying value of the Credit Facility consists of principal outstanding less legal and administrative issuance costs that were recorded as a debt discount to the term loan, net and will continue to be accreted to interest expense using the effective interest method during its term. The principal balance of this Credit Facility and related accretion and amortization are reported on a combined basis as term loan, net on the accompanying Condensed Balance Sheets as follows:


	March 31, 2024		December 31, 2023
Term loan, gross	$	30,000	$	30,000
Debt issuance costs	(875)		(875)
Accretion of end of term charge	517		438
Accumulated amortization of debt issuance costs	291		256
Term loan, net	$	29,933	$	29,819

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Financial instruments measured at fair value

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type are presented in the following table:


	March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	186,744	$	—	$	—	$	186,744
U.S. Treasury securities	31,812		—		—		31,812
Commercial paper	—		30,828		—		30,828
Corporate debt securities	—		25,490		—		25,490
Government-related debt securities	—		23,604		—		23,604
Common stock in LianBio	46		—		—		46

Total assets measured at fair value	$	218,602	$	79,922	$	—	$	298,524
(1) This balance includes cash requirements settled on a nightly basis.


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	224,947	$	—	$	—	$	224,947



Government-related debt securities	—		2,495		—		2,495
Common stock in LianBio	631		—		—		631
Equity warrants (for LianBio shares)	—		—		225		225
Total assets measured at fair value	$	225,578	$	2,495	$	225	$	228,298
(1) This balance includes cash requirements settled on a nightly basis.

Changes in fair value of equity warrants

The estimated fair value of the equity warrants were remeasured each reporting period with adjustments reported within other income (expense) on the accompanying Condensed Statements of Operations and Comprehensive Loss, until exercised, expired or terminated. These equity warrants are valued in the accompanying Condensed Financial Statements as follows:


	Value of equity warrants
Fair value as of December 31, 2023	$	225
Remeasurement of equity warrants prior to termination	(201)
Termination of equity warrants	(24)
Fair value as of March 31, 2024	$	—


	Value of equity warrants
Fair value as of December 31, 2022	$	108

Remeasurement of equity warrants	(17)
Fair value as of March 31, 2023	$	91

Summary of estimated value of cash, cash equivalents, marketable securities, and equity securities

The fair value and amortized cost of cash equivalents and available-for-sale investments by major security type are presented in the following table:


	March 31, 2024
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds(1)	$	186,744	$	—	$	—	$	186,744
U.S. Treasury securities	3,484		—		—		3,484

Commercial paper	3,478		—		(1)		3,477
Total cash equivalents	$	193,706	$	—	$	(1)	$	193,705

Marketable securities:
U.S. Treasury securities	$	28,341	$	—	$	(13)	$	28,328
Commercial paper	27,374		—		(23)		27,351
Corporate debt securities	25,509		—		(19)		25,490
Government-related debt securities	23,613		4		(13)		23,604
Common stock in LianBio	1,108		—		(1,062)		46
Total marketable securities	$	105,945	$	4	$	(1,130)	$	104,819

(1) This balance includes cash requirements settled on a nightly basis.


	December 31, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds(1)	$	224,947	$	—	$	—	$	224,947


Total cash equivalents	$	224,947	$	—	$	—	$	224,947

Marketable securities:



Government-related debt securities	$	2,496	$	—	$	(1)	$	2,495
Total marketable securities	$	2,496	$	—	$	(1)	$	2,495

Long-term investments:
Common stock in LianBio	$	1,108	$	—	$	(477)	$	631
Total long-term investments	$	1,108	$	—	$	(477)	$	631

(1 ) This balance includes cash requirements settled on a nightly basis.

Credit Facility Agreement (Details) - USD ($) $ in Thousands				3 Months Ended
	Sep. 15, 2023	Mar. 15, 2023	Feb. 02, 2022	Mar. 31, 2024	Mar. 14, 2024	Dec. 31, 2023	Mar. 31, 2023	Jan. 05, 2023
Debt Instrument [Line Items]
Principal outstanding				$ 30,000		$ 30,000
Line of Credit
Debt Instrument [Line Items]
Draw on credit facility	$ 5,000	$ 5,000	$ 20,000
Credit facility, aggregate principal amount				$ 75,000
Increments to draw on credit facility at company's election			$ 5,000
Interest rate			8.45%
Interest rate			3.25%	8.50%
End of term charge				$ 1,400
End of term charge, interest rate			4.75%
Effective interest rate				11.96%			12.12%
Line of Credit \| Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate			4.45%
Line of Credit \| Prime Rate \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate			11.45%
Line of Credit \| Credit Facility, Tranche One
Debt Instrument [Line Items]
Credit facility, aggregate principal amount					$ 15,000			$ 25,000
Line of Credit \| Credit Facility, Tranche Two
Debt Instrument [Line Items]
Credit facility, aggregate principal amount					$ 35,000
Line of Credit \| Credit Facility, Tranche Three
Debt Instrument [Line Items]
Credit facility, aggregate principal amount				$ 50,000
Line of Credit \| Credit Facility, Tranche Four
Debt Instrument [Line Items]
Credit facility, aggregate principal amount				$ 25,000
Line of Credit \| Credit Facility, First Amendment, Tranche Two
Debt Instrument [Line Items]
Increments to draw on credit facility at company's election								$ 5,000
Line of Credit, SVB
Debt Instrument [Line Items]
Draw on credit facility	$ 1,250	$ 1,250

Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

Common Stock Outstanding and Reserves for Future Issuance

As of March 31, 2024, the Company had 37,749,468 shares of common stock issued and outstanding, which excludes 312,500 of pre-funded warrants that remain exercisable at period end and are reserved for future issuance. As of December 31, 2023 the Company had 34,211,190 shares of common stock issued and outstanding, respectively. Each share of common stock is entitled to one vote.

The Company's outstanding equity awards and shares reserved for future issuance under its 2020 and 2016 Equity Incentive Plans and 2020 Employee Stock Purchase Plan are summarized below:


	March 31, 2024	December 31, 2023
Common stock awards reserved for future issuance under 2020 and 2016 Equity Incentive Plans	7,435,442	7,054,222
Common stock awards reserved for future issuance under the 2020 Employee Stock Purchase Plan	2,859,434	2,859,434
Stock options issued and outstanding (unvested and vested) under 2020 and 2016 Equity Incentive Plans	5,217,617	4,760,366
Restricted stock units issued and outstanding (unvested) under 2020 Equity Incentive Plan	1,981,673	1,708,725
Total shares of common stock reserved	17,494,166	16,382,747

Stock-Based Compensation Expense

Stock-based compensation expense was recognized in the accompanying Condensed Statements of Operations and Comprehensive Loss as follows:


	Three Months Ended March 31,
	2024		2023
Cost of sales	$	135	$	—
Research and development	1,465		1,163
Selling, general and administrative	3,919		2,743
Total stock-based compensation	$	5,519	$	3,906

The fair value of granted stock options was estimated as of the date of grant using the Black-Scholes option-pricing model, based on the following inputs:


	Three Months Ended March 31,
	2024			2023
Expected term (in years)	6.25			6.25
Weighted average risk-free interest rate	4.08		%	4.20		%
Weighted average volatility	71.23		%	71.9		%
Dividend yield rate	—		%	—		%
Weighted-average grant-date fair value per stock option	$	35.09		$	15.07

Stock Option Activity

Stock option activity during the three months ended March 31, 2024 was as follows:


	Number of Shares	Weighted- Average Exercise Price/Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value(1)
Outstanding - December 31, 2023	4,760,366	$	16.62	7.53	$	34,128
Granted	633,887	$	35.09
Exercised	(49,310)	$	16.21
Forfeited	(127,326)	$	18.03
Expired	—	—
Outstanding— March 31, 2024	5,217,617	$	18.83	7.46	$	96,254








Exercisable— March 31, 2024	2,972,207	$	15.51	6.41	$	65,826
Unvested—March 31, 2024	2,245,410	$	23.22	8.86	$	30,428

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of March 31, 2024.

As of March 31, 2024, there was approximately $33.0 million of unrecognized compensation expense related to unvested stock options, which the Company expects to recognize over a weighted average period of 2.6 years.

Restricted Stock Unit Activity

Restricted stock unit activity during the three months ended March 31, 2024 was as follows:


	Number of Shares	Weighted- Average Exercise Price/Share
Outstanding - December 31, 2023	1,708,725	$	16.31
Granted	596,726	$	36.03
Vested	(207,718)	$	16.11
Forfeited	(116,060)	$	17.62
Outstanding— March 31, 2024	1,981,673	$	22.19

As of March 31, 2024, there was approximately $41.0 million of unrecognized compensation expense related to unvested restricted stock units, which the Company expects to recognize over a weighted average period of 3.5 years.

Employee Stock Purchase Plan ("ESPP")

Stock-based compensation expense related to the ESPP was $0.2 million and $0.1 million, respectively, for the three months ended March 31, 2024 and 2023.

Stock-Based Compensation - Valuation Assumptions of Stock Options (Details) - $ / shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Expected term (in years)	6 years 3 months	6 years 3 months
Weighted average risk-free interest rate	4.08%	4.20%
Weighted average volatility	71.23%	71.90%
Dividend yield rate	0.00%	0.00%
Weighted-average grant-date fair value per stock option (usd per share)	$ 35.09	$ 15.07

Credit Facility Agreement - Summary of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Debt Disclosure [Abstract]
Interest expense for term loan	$ 869	$ 602
Accretion of end of term charge	80	53
Amortization of debt issuance costs	34	29
Total interest expense related to term loan	$ 983	$ 684

Balance Sheet Account Detail - Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 2,533	$ 2,533
Work in process	677	392
Finished goods	826	182
Inventory	$ 4,036	$ 3,107

Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Restricted stock	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Number of Shares
Outstanding, beginning balance (shares) \| shares	1,708,725
Granted (shares) \| shares	596,726
Vested (shares) \| shares	(207,718)
Forfeited (shares) \| shares	(116,060)
Outstanding, ending balance (shares) \| shares	1,981,673
Weighted Average Value per Share
Outstanding, beginning balance (usd per share) \| $ / shares	$ 16.31
Granted (usd per share) \| $ / shares	36.03
Vested (usd per share) \| $ / shares	16.11
Forfeited (usd per share) \| $ / shares	17.62
Outstanding, ending balance (usd per share) \| $ / shares	$ 22.19

Description of Business and Presentation of Financial Statements (Details) $ / shares in Units, $ in Millions			1 Months Ended			3 Months Ended
	Mar. 05, 2024 USD ($) $ / shares shares	Nov. 21, 2023 USD ($)	Dec. 31, 2023 USD ($) $ / shares shares	Sep. 30, 2023 USD ($) $ / shares shares	Aug. 31, 2023 $ / shares shares	Mar. 31, 2024 segment $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, par value (usd per share) \| $ / shares	$ 0.0001		$ 0.0001			$ 0.0001
Pre-funded warrants reserved for future issuance (shares) \| shares						312,500
Number of reportable segments \| segment						1
Number of operating segments \| segment						1
Follow-On Public Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (shares) \| shares	2,812,500				5,714,285
Original issue price (usd per share) \| $ / shares	$ 32.00				$ 17.50
Price per warrant (usd per share) \| $ / shares	31.9999
Exercise price per warrant (usd per share) \| $ / shares	$ 0.0001
Stock issued, net proceeds \| $	$ 107.7
Shares issued in warrant conversion (in shares) \| shares	312,500
Underwriters' option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (shares) \| shares	468,750			355,164
Original issue price (usd per share) \| $ / shares	$ 32.00			$ 17.50
Stock issued, net proceeds \| $				$ 99.3
2023 Shelf Registration Statement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized consideration \| $		$ 300.0
2023 ATM Prospectus
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (shares) \| shares			1,000,000
Stock issued, net proceeds \| $			$ 19.2
Agent fee percentage		3.00%
Authorized consideration \| $		$ 100.0

Balance Sheet Account Detail (Tables)

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventories

Inventory consists of the following:


	March 31, 2024		December 31, 2023
Raw materials	$	2,533	$	2,533
Work in process	677		392
Finished goods	826		182
Inventory	$	4,036	$	3,107

Property and equipment, net of accumulated depreciation

Property and equipment, net consists of the following:


	March 31, 2024		December 31, 2023
Furniture and fixtures	$	1,269	$	1,251
Office equipment	681		660
Laboratory equipment	168		167
Leasehold improvements	680		680
Property and equipment, at cost	2,798		2,758
(Less): Accumulated depreciation and amortization	(1,460)		(1,290)
Property and equipment, net	$	1,338	$	1,468

Accounts payable and accrued liabilities

Accounts payable and other accrued liabilities consists of the following:


	March 31, 2024		December 31, 2023
Trade accounts payable and other	$	19,142	$	18,149
Accrued product sales deductions	16,382		4,867
Accrued clinical studies	461		277
Operating lease liability, current	585		398
Accounts payable and other accrued liabilities	$	36,570	$	23,691

Summary of Significant Accounting Policies and Use of Estimates (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Operating Segment

The Company operates one reportable operating segment focused on the development and commercialization of therapeutics. To date, the Company has operated, managed and organized its business and financial information on an aggregate basis for the purpose of evaluating financial performance and the allocation of capital and personnel resources. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance.

Basis of Presentation

in the opinion of management, reflect all adjustments, which consist of only normal and recurring adjustments for the fair presentation of its financial information.

Use of Estimates

The accounting policies and estimates that most significantly impact the presented amounts within these accompanying Condensed Financial Statements are further described below:

Cash and Cash Equivalents

Marketable Securities and Long-Term Investments

Accounts Receivable, Net

Inventory

Intangible Assets, Net

Fair Value Measurements

•Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are publicly accessible at the measurement date.

•Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Property and Equipment, Net

Leases

Concentration Risk

Credit Risk

Major Customers


	Three Months Ended March 31, 2024
Customer A	27	%
Customer B	25	%
Customer C	24	%
Customer D	14	%
Customer E	11	%

As of March 31, 2024, amounts due from these five customers each exceeded 10% of gross accounts receivable and accounted for approximately 100% of the accounts receivable balance on a combined basis.

Major Suppliers

Revenue Recognition

(i) Product Sales, Net

(ii) License Fees and Collaboration Revenue

China Out-License

Contractual Terms for Receipt of Payments

The Company re-evaluates the measure of progress to each performance obligation in each reporting period as uncertain events are resolved and other changes in circumstances occur.

Other License Fees and Collaboration Revenue

Cost of Sales

Selling, General and Administrative

Research and Development Costs

Stock-Based Compensation

Dividend Yield — The Company’s expected dividend yield is zero because it has never paid cash dividends and does not expect to for the foreseeable future.

Income Taxes

Interest and penalties related to unrecognized tax benefits, if any, are recorded as a component of income tax expense.

Net Loss per Share

Due to net losses in all periods presented, all otherwise potentially dilutive securities are antidilutive, and accordingly, the reported basic net loss per share equals diluted net loss per share.

Comprehensive Loss

Comprehensive loss represents (i) net loss for the periods presented, and (ii) unrealized gains or losses on the Company's reported available-for-sale debt securities.

Recently Issued or Effective Accounting Standards

Net Loss Per Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Net Loss Per Share

NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share:


	Three Months Ended March 31,
	2024		2023
Net loss	$	(35,731)	$	(23,419)
Weighted-average shares outstanding—basic and diluted(1)	35,300,655		26,742,023
Net loss per share—basic and diluted	$	(1.01)	$	(0.88)
(1) Weighted-average shares outstanding includes pre-funded warrants issued on March 5, 2024.

The following outstanding and potentially dilutive securities were excluded from the calculation of diluted net loss per share because their impact under the treasury stock method and if-converted method would have been anti-dilutive for each period presented:


	As of March 31,
	2024	2023
Stock options, unexercised—vested and unvested	5,217,617	4,596,414
Restricted stock units—unvested	1,981,673	1,128,373
Total	7,199,290	5,724,787

Stock-Based Compensation - Shares Reserved for Issuance (Details) - shares	Mar. 31, 2024	Dec. 31, 2023
Equity [Abstract]
Stock options reserved for future grant (shares)	7,435,442	7,054,222
Common stock awards reserved for future issuance under the 2020 Employee Stock Purchase Plan	2,859,434	2,859,434
Stock options issued and outstanding (shares)	5,217,617	4,760,366
Restricted stock units issued and outstanding (unvested) under 2020 Equity Incentive Plan	1,981,673	1,708,725
Total shares of common stock reserved (shares)	17,494,166	16,382,747

Summary of Significant Accounting Policies and Use of Estimates - Product Sales from Each of our Largest Customers (Details) - Revenue Benchmark - Customer Concentration Risk	3 Months Ended
	Mar. 31, 2024
Customer A
Concentration Risk [Line Items]
Concentration risk	27.00%
Customer B
Concentration Risk [Line Items]
Concentration risk	25.00%
Customer C
Concentration Risk [Line Items]
Concentration risk	24.00%
Customer D
Concentration Risk [Line Items]
Concentration risk	14.00%
Customer E
Concentration Risk [Line Items]
Concentration risk	11.00%

Description of Business and Presentation of Financial Statements	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business and Presentation of Financial Statements	DESCRIPTION OF BUSINESS AND PRESENTATION OF FINANCIAL STATEMENTS Description of Business Tarsus Pharmaceuticals, Inc. (“Tarsus” or the “Company”) is a commercial stage biopharmaceutical company focused on the development and commercialization of therapeutics, starting with eye care. The Company launched XDEMVY® (lotilaner ophthalmic solution) 0.25%, formerly known as TP-03, for the treatment of Demodex blepharitis, in August 2023, after receiving United States ("U.S.") Food and Drug Administration ("FDA") approval in July 2023. Follow-On Public Offerings In August 2023, the Company completed a follow-on public offering under its shelf registration statement on Form S-3 (the "2021 Shelf Registration Statement") of 5,714,285 shares of common stock at a public offering price of $17.50 per share. In September 2023, the underwriters partially exercised the underwriters option to purchase additional shares resulting in the Company's issuance of an additional 355,164 shares of common stock at the public offering price of $17.50 per share. The aggregate net proceeds received by the Company were $99.3 million, after deducting underwriting discounts, commissions, and other offering-related expenses. In November 2023, the Company filed a shelf registration statement on Form S-3 that was declared effective by the Securities and Exchange Commission ("SEC") on November 21, 2023, (the "2023 Shelf Registration Statement"), which replaced the 2021 Shelf Registration Statement, and permits the Company 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 February 2024, the Company filed an automatic shelf registration on Form S-3 ASR (the "2024 Shelf Registration Statement"). On March 5, 2024 the Company completed an underwritten follow-on public offering under the 2024 Shelf Registration Statement of 2,812,500 shares of the Company’s common stock, par value $0.0001 per share, and, in lieu of common stock to a certain investor, pre-funded warrants to purchase 312,500 shares of its common stock (the “March 2024 Public Offering”). The price to the public was $32.00 per share and $31.9999 per pre-funded warrant, which was the price to the public of each share of common stock sold in the March 2024 Public Offering, minus the $0.0001 exercise price per pre-funded warrant. The pre-funded warrants are exercisable, subject to certain beneficial ownership restrictions, at any time after their original issuance and will not expire; as of March 31, 2024, 312,500 of pre-funded warrants are exercisable. The Company 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 and was completed on March 5, 2024. The aggregate net proceeds received by the Company were $107.7 million, after deducting underwriting discounts, commissions, and other estimated offering-related expenses. Open Market Sales Agreement As part of the 2023 Shelf Registration Statement, the Company concurrently filed a sales agreement prospectus covering the sale of up to $100.0 million of common stock pursuant to an Open Market Sale Agreement (the "2023 ATM Prospectus") with Jefferies LLC ("Jefferies"), which replaced the November 1, 2021 Open Market Sale AgreementTM (the "2021 ATM Prospectus"). 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. During the three months ended March 31, 2024, there were no sales of the Company's common stock pursuant to the 2023 ATM Prospectus. During the year ended December 31, 2023, the Company sold 1,000,000 shares of common stock under the 2023 ATM Prospectus for net proceeds of $19.2 million, after deducting broker commissions and offering-related expenses. Liquidity The Company has a limited operating history, limited history of product sales and has accumulated losses and negative cash flows from operations since inception. The Company has funded its inception-to-date operations through its Initial Public Offering ("IPO"), subsequent follow-on public offerings, and the 2023 ATM Prospectus, as well as from proceeds from product sales, the development and license agreement (the "China Out-License") with LianBio Ophthalmology Limited ("LianBio"), and draws on the loan and security agreements with Hercules Capital, Inc. ("Hercules") and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company ("SVB") (the "Credit Facility"). The Company estimates that its existing capital resources will be sufficient to meet projected operating expense requirements for at least 12 months from the issuance date of the accompanying Condensed Financial Statements that have been prepared on a going-concern basis. The Company plans to fund its operations, capital funding and other liquidity needs using existing cash and investments and, to the extent available, cash generated from commercial operations. Management expects the Company to continue to incur operating losses for the foreseeable future and may be required to raise additional capital to fund its ongoing operations. However, no assurance can be given as to whether financing will be available on terms acceptable to the Company, or at all. If the Company is unable to raise additional funds as required, it may need to delay, reduce, or terminate some or all of its development programs and clinical trials. The Company may also be required to sell or license its rights to product candidates in certain territories or indications that it would otherwise prefer to develop and commercialize on its own and/or enter into collaborations and other arrangements to address its liquidity needs, which could materially and adversely affect its business and financial prospects, or even its ability to remain a going concern. Operating Segment The Company operates one reportable operating segment focused on the development and commercialization of therapeutics. To date, the Company has operated, managed and organized its business and financial information on an aggregate basis for the purpose of evaluating financial performance and the allocation of capital and personnel resources. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has irrevocably elected to not take this exemption. As a result, it will adopt new or revised accounting standards on the relevant effective dates on which adoption of such standards is required for other public companies that are not emerging growth companies.

Balance Sheet Account Detail

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Account Detail

BALANCE SHEET ACCOUNT DETAIL

The composition of selected captions within the accompanying Condensed Balance Sheets are summarized below:

Inventory

Inventory consists of the following:


	March 31, 2024		December 31, 2023
Raw materials	$	2,533	$	2,533
Work in process	677		392
Finished goods	826		182
Inventory	$	4,036	$	3,107

Property and Equipment, Net

Property and equipment, net consists of the following:


	March 31, 2024		December 31, 2023
Furniture and fixtures	$	1,269	$	1,251
Office equipment	681		660
Laboratory equipment	168		167
Leasehold improvements	680		680
Property and equipment, at cost	2,798		2,758
(Less): Accumulated depreciation and amortization	(1,460)		(1,290)
Property and equipment, net	$	1,338	$	1,468

Depreciation expense for the three months ended March 31, 2024 and 2023 was $0.2 million and $0.1 million, respectively.

Accounts Payable and Other Accrued Liabilities

Accounts payable and other accrued liabilities consists of the following:


	March 31, 2024		December 31, 2023
Trade accounts payable and other	$	19,142	$	18,149
Accrued product sales deductions	16,382		4,867
Accrued clinical studies	461		277
Operating lease liability, current	585		398
Accounts payable and other accrued liabilities	$	36,570	$	23,691

Condensed Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
Condensed Statements of Cash Flows - USD ($) $ in Thousands	Mar. 31, 2024	Mar. 31, 2023
Cash Flows From Operating Activities:
Net loss	$ (35,731)	$ (23,419)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	170	104
Amortization of intangible assets	100	0
Accretion of term loan-related costs	114	81
Stock-based compensation	5,519	3,906
Non-cash lease expense	132	151
Unrealized loss on equity investments	585	65
Net amortization/accretion on marketable securities	(290)	(1,484)
Change in fair value of equity warrants issued by licensee	201	17
Unrealized gain from transactions denominated in a foreign currency	0	16
Changes in operating assets and liabilities:
Accounts receivable, net	(13,264)	(2,500)
Inventory	(929)	0
Other receivables	(383)	3,165
Prepaid expenses	1,065	257
Other non-current assets	106	38
Accounts payable and other accrued liabilities	12,335	(1,046)
Accrued payroll and benefits	(7,287)	(1,313)
Other long-term liabilities	(232)	(8)
Net cash used in operating activities	(37,789)	(21,970)
Cash Flows From Investing Activities:
Proceeds from maturities of marketable securities	2,500	40,301
Purchases of marketable securities	(104,550)	(28,667)
Purchases of property and equipment	(174)	(340)
Net cash (used in) provided by investing activities	(102,224)	11,294
Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net of paid issuance costs	98,604	0
Proceeds from issuance of pre-funded warrants, net of paid issuance costs	9,365	0
Proceeds from exercise of equity awards	802	13
Proceeds from term loan	0	5,000
Net cash provided by financing activities	108,771	5,013
Net decrease in cash and cash equivalents	(31,242)	(5,663)
Cash and cash equivalents — beginning of period	224,947	71,660
Cash and cash equivalents — end of period	193,705	65,997
Supplemental Disclosures Noncash Investing and Financing Activities:
Operating lease right-of-use asset obtained in exchange for operating lease liability	384	116
Interest expense paid in cash	868	593
Offering costs included within accounts payable and accrued liabilities	$ 275	$ 0

Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Net (loss) income per share, basis and diluted

The following table sets forth the computation of basic and diluted net loss per share:


	Three Months Ended March 31,
	2024		2023
Net loss	$	(35,731)	$	(23,419)
Weighted-average shares outstanding—basic and diluted(1)	35,300,655		26,742,023
Net loss per share—basic and diluted	$	(1.01)	$	(0.88)
(1) Weighted-average shares outstanding includes pre-funded warrants issued on March 5, 2024.

Outstanding potentially dilutive securities


	As of March 31,
	2024	2023
Stock options, unexercised—vested and unvested	5,217,617	4,596,414
Restricted stock units—unvested	1,981,673	1,128,373
Total	7,199,290	5,724,787

Commitment & Contingencies (Tables)

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Components of lease cost

The below table summarizes the components of total lease expense:


	Three Months Ended March 31,
	2024		2023
Operating lease expense	$	179	$	170
Variable lease expense	103		81
Total lease expense	$	282	$	251

Future contractual lease payments

The below table summarizes the (i) minimum lease payments over the next five years and thereafter, (ii) lease arrangement imputed interest, and (iii) present value of future lease payments:


	March 31, 2024
2024 (remaining nine months)	$	660
2025	961
2026	994
2027	83
2028	—
Total future lease payments, undiscounted	2,698
(Less): Imputed interest	(343)
(Less): Tenant improvement allowance	(164)
Present value of operating lease payments	$	2,191
Operating lease liability, current	585
Operating lease liability, noncurrent	1,606
Total operating lease liability	$	2,191

Fair Value Measurements - Changes in Fair Value of Equity Warrants (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Sep. 30, 2023	Mar. 31, 2023
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, beginning of period	$ 225		$ 108
Remeasurement of equity warrants prior to termination		$ (201)	(17)
Termination of equity warrants	(24)
Fair value, end of period	$ 0		$ 91

Balance Sheet Account Detail - Property and Equipment, Net of Accumulated Depreciation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 2,798		$ 2,758
(Less): Accumulated depreciation and amortization	(1,460)		(1,290)
Property and equipment, net	1,338		1,468
Depreciation	170	$ 104
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	1,269		1,251
Office equipment
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	681		660
Laboratory equipment
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	168		167
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 680		$ 680

Condensed Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance (shares) at Dec. 31, 2022		26,727,458
Beginning balance at Dec. 31, 2022	$ 192,900	$ 5	$ 301,732	$ (74)	$ (108,763)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(23,419)				(23,419)
Recognition of stock-based compensation expense	3,906		3,906
Exercise of vested stock options (shares)		6,443
Exercise of vested stock options	13		13
Issuance of common stock upon the vesting of restricted stock units (shares)		66,611
Other comprehensive loss	4			4
Ending balance (shares) at Mar. 31, 2023		26,800,512
Ending balance at Mar. 31, 2023	$ 173,404	$ 5	305,651	(70)	(132,182)
Beginning balance (shares) at Dec. 31, 2023	34,211,190	34,211,190
Beginning balance at Dec. 31, 2023	$ 196,988	$ 5	441,641	(2)	(244,656)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(35,731)				(35,731)
Recognition of stock-based compensation expense	5,519		5,519
Issuance of common stock, net of issuance costs (shares)		3,281,250
Issuance of common stock, net of issuance costs of $6.7 million	98,329	$ 1	98,328
Issuance of pre-funded warrants, net of issuance costs of $0.6 million	$ 9,365		9,365
Exercise of vested stock options (shares)	49,310	49,310
Exercise of vested stock options	$ 802		802
Issuance of common stock upon the vesting of restricted stock units (shares)		207,718
Other comprehensive loss	$ (61)			(61)
Ending balance (shares) at Mar. 31, 2024	37,749,468	37,749,468
Ending balance at Mar. 31, 2024	$ 275,211	$ 6	$ 555,655	$ (63)	$ (280,387)

Summary of Significant Accounting Policies and Use of Estimates - Expected Future Amortization Expense (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Accounting Policies [Abstract]
2024 (remaining nine months)	$ 300
2025	400
2026	400
2027	400
2028	400
Thereafter	1,867
Total future amortization	$ 3,767

Related Party Transactions	3 Months Ended
Related Party Transactions	Mar. 31, 2024
Related Party Transactions [Abstract]
Related Party Transactions	RELATED PARTY TRANSACTIONS Consulting Agreements The Company has a preexisting consulting agreement with a board member who was appointed in December 2021. During the year ended December 31, 2023, this consulting agreement provided for annual cash compensation of approximately $0.2 million and option grants to purchase 45,134 shares of the Company’s common stock, with exercise prices ranging from $2.01 to $34.72 per share. On January 30, 2024, this consulting agreement with the board member was amended to provide for annual cash compensation of approximately $0.4 million and an additional option grant to purchase 10,000 shares of the Company’s common stock, with exercise price of $27.49 per share. This amended consulting agreement may be terminated by either party with ten days' notice and contains standard confidentiality, indemnification, and intellectual property assignment provisions in favor of the Company. During the three months ended March 31, 2024 and 2023, the Company recorded $0.1 million and $0.1 million, respectively, of selling, general and administrative expenses in the accompanying Condensed Statements of Operations and Comprehensive Loss related to this amended consulting agreement. Sponsorship Activities In May 2023, a board member of the Company was appointed president of the American Society of Cataract and Refractive Surgery ("ASCRS"), a society dedicated to meeting the needs of anterior segment ophthalmic surgeons. During the three months ended March 31, 2024, the Company recorded $0.1 million of selling, general and administrative expenses in the accompanying Condensed Statement of Operations and Comprehensive Loss for sponsorship and event-related activities associated with ASCRS.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
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+ Details

Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 5,519	$ 3,906
Cost of sales
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	135	0
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	1,465	1,163
Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 3,919	$ 2,743

Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type are presented in the following table:


	March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	186,744	$	—	$	—	$	186,744
U.S. Treasury securities	31,812		—		—		31,812
Commercial paper	—		30,828		—		30,828
Corporate debt securities	—		25,490		—		25,490
Government-related debt securities	—		23,604		—		23,604
Common stock in LianBio	46		—		—		46

Total assets measured at fair value	$	218,602	$	79,922	$	—	$	298,524
(1) This balance includes cash requirements settled on a nightly basis.


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds(1)	$	224,947	$	—	$	—	$	224,947



Government-related debt securities	—		2,495		—		2,495
Common stock in LianBio	631		—		—		631
Equity warrants (for LianBio shares)	—		—		225		225
Total assets measured at fair value	$	225,578	$	2,495	$	225	$	228,298
(1) This balance includes cash requirements settled on a nightly basis.

Money Market Funds and U.S. Treasury Securities

Money market funds and U.S. Treasury securities are highly liquid investments and are actively traded with readily-available market prices that are publicly observable and independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

Commercial Paper, Corporate Debt Securities and Government-related Debt Securities

Commercial paper, corporate debt securities and government-related debt securities were valued using Level 2 inputs that utilized industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. The Company reviews trading activity and pricing for these investments as of each measurement date.

LianBio Common Stock and Equity Warrants

In March 2021, contemporaneous with the China Out-License transaction, the Company and LianBio, executed a warrant agreement for the Company to purchase, in three tranches, common shares in LianBio at an exercise price equal to common stock par value, which converted into warrants of the parent company of LianBio (a pharmaceutical company focused on the Greater China and other Asian markets; Nasdaq: LIAN; any references to common stock or warrants of LianBio shall refer to common stock or warrants of the publicly-traded parent of LianBio) in connection with LianBio's previous Initial Public Offering. The first two tranches were vested exercised, and converted into 156,746 shares of LianBio common stock as of December 31, 2022 and are recognized at fair value within long-term investments in the Condensed Balance Sheets as of March 31, 2024 and December 31, 2023.

On February 13, 2024, LianBio announced its plan to wind down its operations. On March 14, 2024, LianBio's Board of Directors made a special cash dividend payment to the Company for $0.7 million (equivalent to $4.80 per share), which was recorded to other income (expense) in the Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024, and cash and cash equivalents in the Condensed Balance Sheets as of March 31, 2024. LianBio was delisted from NASDAQ in March 2024 and now trades on the over-the-counter markets. As of March 31, 2024 and December 31, 2023, LianBio common stock is classified within Level 1 of the fair value hierarchy, given its publicly reported price.

On March 26, 2024, the Company executed an agreement with LianBio to terminate the unvested third warrant tranche (the "Warrant Termination Agreement") for a cancellation payment of $0.4 million (see Note 8). Upon execution of the Warrant Termination Agreement the Company recorded the final change in fair value of the equity warrant to other income (expense) in the Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024, and removed the equity warrant from other assets in the Condensed Balance Sheet as of March 31, 2024. The third tranche of the equity warrant was classified as Level 3 in the fair value hierarchy and presented within other assets in the accompanying Condensed Balance Sheets as of December 31, 2023. The most significant assumptions used in the option pricing valuation model as of each balance sheet date to determine its fair value included observable and unobservable inputs: LianBio common stock volatility (based on the historical volatility of similar companies); the probability of regulatory milestone achievement for vesting; and the application of an assumed discount rate.


	Value of equity warrants
Fair value as of December 31, 2023	$	225
Remeasurement of equity warrants prior to termination	(201)
Termination of equity warrants	(24)
Fair value as of March 31, 2024	$	—


	Value of equity warrants
Fair value as of December 31, 2022	$	108

Remeasurement of equity warrants	(17)
Fair value as of March 31, 2023	$	91

The fair value and amortized cost of cash equivalents and available-for-sale investments by major security type are presented in the following table:


	March 31, 2024
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds(1)	$	186,744	$	—	$	—	$	186,744
U.S. Treasury securities	3,484		—		—		3,484

Commercial paper	3,478		—		(1)		3,477
Total cash equivalents	$	193,706	$	—	$	(1)	$	193,705

Marketable securities:
U.S. Treasury securities	$	28,341	$	—	$	(13)	$	28,328
Commercial paper	27,374		—		(23)		27,351
Corporate debt securities	25,509		—		(19)		25,490
Government-related debt securities	23,613		4		(13)		23,604
Common stock in LianBio	1,108		—		(1,062)		46
Total marketable securities	$	105,945	$	4	$	(1,130)	$	104,819

(1) This balance includes cash requirements settled on a nightly basis.


	December 31, 2023
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds(1)	$	224,947	$	—	$	—	$	224,947


Total cash equivalents	$	224,947	$	—	$	—	$	224,947

Marketable securities:



Government-related debt securities	$	2,496	$	—	$	(1)	$	2,495
Total marketable securities	$	2,496	$	—	$	(1)	$	2,495

Long-term investments:
Common stock in LianBio	$	1,108	$	—	$	(477)	$	631
Total long-term investments	$	1,108	$	—	$	(477)	$	631

(1 ) This balance includes cash requirements settled on a nightly basis.

As of March 31, 2024, substantially all available-for-sale debt securities had a maturity of 12 months or less. Four securities have a contractual maturity between one and two years, with an estimated fair market value of $20.6 million and amortized cost of $20.6 million. As of December 31, 2023, all available-for-sale debt securities had a maturity of 12 months or less. As of March 31, 2024 and December 31, 2023, the Company had twenty-six available-for-sale debt securities and one available-for-sale debt security, respectively, in a continuous gross unrealized loss position for less than one year. As of March 31, 2024 and December 31, 2023, unrealized credit losses on these securities were not material. Further, the Company does not intend to sell these investments prior to maturity and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis. Accordingly, the Company did not recognize any other-than-temporary impairment losses.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock details

The Company's outstanding equity awards and shares reserved for future issuance under its 2020 and 2016 Equity Incentive Plans and 2020 Employee Stock Purchase Plan are summarized below:


	March 31, 2024	December 31, 2023
Common stock awards reserved for future issuance under 2020 and 2016 Equity Incentive Plans	7,435,442	7,054,222
Common stock awards reserved for future issuance under the 2020 Employee Stock Purchase Plan	2,859,434	2,859,434
Stock options issued and outstanding (unvested and vested) under 2020 and 2016 Equity Incentive Plans	5,217,617	4,760,366
Restricted stock units issued and outstanding (unvested) under 2020 Equity Incentive Plan	1,981,673	1,708,725
Total shares of common stock reserved	17,494,166	16,382,747

Stock-based compensation

Stock-based compensation expense was recognized in the accompanying Condensed Statements of Operations and Comprehensive Loss as follows:


	Three Months Ended March 31,
	2024		2023
Cost of sales	$	135	$	—
Research and development	1,465		1,163
Selling, general and administrative	3,919		2,743
Total stock-based compensation	$	5,519	$	3,906

Valuation assumptions of stock options

The fair value of granted stock options was estimated as of the date of grant using the Black-Scholes option-pricing model, based on the following inputs:


	Three Months Ended March 31,
	2024			2023
Expected term (in years)	6.25			6.25
Weighted average risk-free interest rate	4.08		%	4.20		%
Weighted average volatility	71.23		%	71.9		%
Dividend yield rate	—		%	—		%
Weighted-average grant-date fair value per stock option	$	35.09		$	15.07

Stock option activity

Stock option activity during the three months ended March 31, 2024 was as follows:


	Number of Shares	Weighted- Average Exercise Price/Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value(1)
Outstanding - December 31, 2023	4,760,366	$	16.62	7.53	$	34,128
Granted	633,887	$	35.09
Exercised	(49,310)	$	16.21
Forfeited	(127,326)	$	18.03
Expired	—	—
Outstanding— March 31, 2024	5,217,617	$	18.83	7.46	$	96,254








Exercisable— March 31, 2024	2,972,207	$	15.51	6.41	$	65,826
Unvested—March 31, 2024	2,245,410	$	23.22	8.86	$	30,428

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of March 31, 2024.

Restricted stock unit activity

Restricted stock unit activity during the three months ended March 31, 2024 was as follows:


	Number of Shares	Weighted- Average Exercise Price/Share
Outstanding - December 31, 2023	1,708,725	$	16.31
Granted	596,726	$	36.03
Vested	(207,718)	$	16.11
Forfeited	(116,060)	$	17.62
Outstanding— March 31, 2024	1,981,673	$	22.19

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

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+ Details

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2024	May 02, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-39614
Entity Registrant Name	TARSUS PHARMACEUTICALS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-4717861
Entity Address, Address Line One	15440 Laguna Canyon Road, Suite 160
Entity Address, City or Town	Irvine
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92618
City Area Code	(949)
Local Phone Number	418-1801
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	TARS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Smaller Reporting Company	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		37,781,693
Amendment Flag	false
Entity Central Index Key	0001819790
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1

Commitment & Contingencies - Lease Agreements (Details) $ in Thousands		3 Months Ended
	Mar. 20, 2024 USD ($)	Mar. 31, 2024 USD ($) contract	Mar. 31, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease right-of-use asset obtained in exchange for operating lease liability \| $	$ 400	$ 384	$ 116
Number of leases \| contract		6
Weighted average remaining lease term		2 years 9 months 18 days
Estimated incremental borrowing rate		10.00%

Commitment & Contingencies - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Operating lease expense	$ 179	$ 170
Variable lease expense	103	81
Total lease expense	$ 282	$ 251

Commitment & Contingencies - Employment Arrangements (Details)	Mar. 31, 2024 contract
Commitments and Contingencies Disclosure [Abstract]
Number of employment arrangements with executive officers	6

Net Loss Per Share - Antidilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of net income (loss) per share	7,199,290	5,724,787
Stock options, unexercised—vested and unvested
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of net income (loss) per share	5,217,617	4,596,414
Restricted stock units—unvested
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of net income (loss) per share	1,981,673	1,128,373

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning balance (shares)	4,760,366
Granted (shares)	633,887
Exercised (shares)	(49,310)
Forfeited (shares)	(127,326)
Expired (shares)	0
Ending balance (shares)	5,217,617	4,760,366
Exercisable (shares)	2,972,207
Unvested (shares)	2,245,410
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Beginning balance (usd per share)	$ 16.62
Granted (usd per share)	35.09
Exercised (usd per share)	16.21
Forfeited (usd per share)	18.03
Expired (usd per share)	0
Ending balance (usd per share)	18.83	$ 16.62
Exercisable (usd per share)	15.51
Unvested (usd per share)	$ 23.22
Weighted-Average Remaining Contractual Term
Outstanding	7 years 5 months 15 days	7 years 6 months 10 days
Exercisable	6 years 4 months 28 days
Unvested	8 years 10 months 9 days
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Aggregate Intrinsic Value [Abstract]
Outstanding	$ 96,254	$ 34,128
Exercisable	65,826
Unvested	$ 30,428

Fair Value Measurements - Additional Information (Details) $ / shares in Units, $ in Thousands			1 Months Ended	3 Months Ended
	Mar. 26, 2024 USD ($)	Mar. 14, 2024 USD ($) $ / shares	Mar. 31, 2021 tranche	Mar. 31, 2024 USD ($) security contract	Dec. 31, 2023 USD ($) contract	Dec. 31, 2022 warrant shares
Debt Securities, Available-for-Sale [Line Items]
Number of tranches \| tranche			3
Number of vested warrants \| warrant						2
Equity securities (in shares) \| shares						156,746
Number of securities with contractual maturity between one and five years \| security				4
Corporate debt securities				$ 104,819	$ 2,495
Amortized cost				$ 105,945	$ 2,496
Number of available-for-sale debt securities in gross unrealized loss position for less than one year \| contract				26	1
LianBio \| License agreement
Debt Securities, Available-for-Sale [Line Items]
Proceeds from warrant cancellation payment	$ 400
LianBio
Debt Securities, Available-for-Sale [Line Items]
Special cash dividends paid		$ 700		$ 700
Special cash dividend (usd per share) \| $ / shares		$ 4.80
Available-for-sale Debt Securities, Contractual Maturity Less Than 12 Months
Debt Securities, Available-for-Sale [Line Items]
Corporate debt securities				20,600
Amortized cost				$ 20,600
Minimum \| Available-for-sale Debt Securities, Contractual Maturity Less Than 12 Months
Fair Value Disclosures [Abstract]
Contractual maturity				1 year
Debt Securities, Available-for-Sale [Line Items]
Contractual maturity				1 year
Maximum \| Available-for-sale Debt Securities, Contractual Maturity Less Than 12 Months
Fair Value Disclosures [Abstract]
Contractual maturity				2 years
Debt Securities, Available-for-Sale [Line Items]
Contractual maturity				2 years

Commitment & Contingencies - Summary of Minimum Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
2024 (remaining nine months)	$ 660
2025	961
2026	994
2027	83
2028	0
Total future lease payments, undiscounted	2,698
(Less): Imputed interest	(343)
(Less): Tenant improvement allowance	(164)
Total operating lease liability	2,191
Operating lease liability, current	585	$ 398
Operating lease liability, noncurrent	1,606
Total operating lease liability	$ 2,191

Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 193,705	$ 224,947
Marketable securities	104,819	2,495
Accounts receivable, net	29,885	16,621
Inventory	4,036	3,107
Other receivables	1,476	1,093
Prepaid expenses	6,803	7,868
Total current assets	340,724	256,131
Property and equipment, net	1,338	1,468
Intangible assets, net	3,767	3,867
Operating lease right-of-use assets	2,132	1,880
Long-term investments	0	631
Other assets	1,317	1,514
Total assets	349,278	265,491
Current liabilities:
Accounts payable and other accrued liabilities	36,570	23,691
Accrued payroll and benefits	5,958	13,245
Total current liabilities	42,528	36,936
Term loan, net	29,933	29,819
Other long-term liabilities	1,606	1,748
Total liabilities	74,067	68,503
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 authorized; no shares issued and outstanding	0	0
Common stock, $0.0001 par value; 200,000,000 shares authorized; 37,749,468 shares issued and outstanding at March 31, 2024 (unaudited); 34,211,190 shares issued and outstanding at December 31, 2023	6	5
Additional paid-in capital	555,655	441,641
Accumulated other comprehensive loss	(63)	(2)
Accumulated deficit	(280,387)	(244,656)
Total stockholders’ equity	275,211	196,988
Total liabilities and stockholders’ equity	$ 349,278	$ 265,491