Q3 2023 Harrow Inc Earnings Call
Good afternoon, and welcome to <unk> third quarter 2023 earnings Conference call.
My name is Betsy and I'll be your operator for today's call.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session.
As a reminder, this conference is being recorded.
I would now like to turn the call over to Jamie Webb Director of Communications and Investor relations for hair out.
Thank you operator.
Afternoon, and welcome to hear all third quarter 2023 earnings Conference call.
Before we begin today, let me remind you that the company's remarks may include forward looking statements within the meaning of federal Securities law.
We're looking statements are subject to numerous risks and uncertainties many of which are beyond <unk> control, including risks and uncertainties described from time to time and it does he see filings.
The risk and uncertainties related to the company's ability to make commercially available its FDA approved products and compounded formulations and technologies and FDA approval of certain drug candidates in a timely manner or at all.
For a list and description of these risks and uncertainties. Please see the risk factors section of the company's most recent annual report on Form 10-K, and subsequent quarterly reports on Form 10-K filed with the Securities and Exchange Commission.
<unk> results may differ materially from those projected Harrow disclaims any intention or obligation to update or revise any financial projections or forward looking statements, whether because they're key information future events or otherwise. This conference call contains time sensitive information and is accurate only as of today.
Additionally, Harrow will refer to non-GAAP financial metrics, specifically adjusted EBITDA and our adjusted earnings as well as core result, such as core gross margin core net income and core diluted net income per share of.
A reconciliation of any non-GAAP measures with their most directly comparable GAAP measures is included in the company's earnings release and letter to stockholders both of which are available on the website.
By now you should have received a copy of the earnings press release.
<unk> not received a copy please go to the Investor Relations page at the company's web site Www Dot Harrow Dot com.
Joining me on today's call are Harris, Chief Executive Officer, Mark L Baum, and <unk>, Chief Financial Officer, Andrew Boll.
And I'd like to turn the call over to Mark to go over some prepared remarks prior to the question and answer session.
Mark.
Thanks, Jamie and thanks to everyone for joining us on today's call before I begin my prepared remarks, I want to take a minute to encourage you to review our third quarter 2023 earnings release corporate presentation and letter to stockholders all of which have been posted to the Investor Relations section of our website.
<unk> Www dot hero.
<unk> com, let's jump into it.
As you May have seen we produced record revenues and improved our adjusted gross margins meaningfully.
However, this past quarter showed that our ability to create value far exceeds what we actually delivered so let me be clear.
We could have done better.
As I have said before though we knew that our growth trajectory would not be a linear path upward. It never has been over the past 10 years, we knew that some programs with over performance somewhat underperformed.
Today, we find ourselves a few months behind our internal development timelines for some of our programs as we continue though to correct course and move our business forward. The reality for Harrow stockholders is simple we are well funded we don't need to access the public equity or debt.
Markets were making money, we're paying our bills, we're servicing our creditors and we're on track to produce another record year of growth.
And profitability.
That only isn't not bad it's a place that most companies would like to be.
I am proud of what we achieved this past quarter, including record revenues that represented a 50% year over year growth rate is.
As well as a 600 basis point improvement in our core gross margins, that's 50% revenue growth was fueled by our strategic decision to expand into branded pharmaceutical products.
And it serves as a solid testimonial and validation of that decision.
Without reservation, we could not have produced that level of year over year growth with compounded products alone.
I'm also pleased with our progress on our <unk> launch, which has been tracking ahead of our internal forecast since its may launch a proof point is the graph. We included in our third quarter letter to stockholders, which shows the significant ramp up in customer unit demand for I E. So big.
Getting in September and continuing today.
This ramp in customer demand resulted from boots on the ground learnings and strategic tweaks that yielded immediate positive results and a notable increase in our haynesville units and revenues for September.
Passing our internal targets for 2023, we are now seeing sizeable orders and Reorders from high volume users and many new accounts, both large and small who are enjoying the many benefits of I E zone, and we remain bullish about what the balance of this year will bring as well as 20.
24 <unk> Zoe.
On the other hand, there is no denying that to date 2023 has presented new challenges. One example is lower than expected Q3 revenues from the fab five products and our compounded products, even though we completed the transfer of four of the five fab five products that we.
Wired earlier this year, namely Max index level never Nag and vigor marks we were delayed in beginning marketing and sales detailing efforts those efforts, though have begun and we are seeing positive data from our awareness campaign reminding prescribers of the avail.
The ability of these products and a strong reimbursement support from third party payers once again I touched on this in our letter to stockholders.
We continue to believe in the high utility of these products and their importance to our branded portfolio for not only our customer base, but also for Harrow stockholders, because we believe they will provide a reliable stream of income for many years to come.
Another Q3 challenge was our compounding business, which underperformed as we invested in improving efficiencies and compliance related to manufacturing quality systems and makeup of our sales team and our analytical testing capabilities as well as our customer care infrastructure.
We have had to invest in efficiency and compliance in the past and importantly, we have a 100% success record.
Making these investments and returning the business to historical growth levels.
I am 100% confident that this will happen again.
Best thing in the required systems processes and protocols to reliably serve our national market requires adherence to a standard and a level of complexity that we comply with but which few competitors can achieve.
I'd also like to update you on the fifth product in the fab five that's try Essex, which I view as the diamond of this group.
We had reported last quarter, but demo batches had been completed and that we were awaiting results from the first of three process performance qualification batches or P. P Q batches for short.
While we were not naive about the fact that try essence is a tricky product to manufacture which contributes to its out of stock status for most of the last five years, we will nevertheless disappointed.
But our first P. P. Q batch did not meet all specifications, but this is not the end of the story.
And frankly this was not entirely unexpected.
That said, we are working diligently with our contract manufacturer and we are still committed to heavy try essence available next year.
We are also making excellent progress on the transfer of the Tri F N b, a or a new drug application and we expect to have that completed soon which will allow us to reasonably adjusts the triad since pricing for the first time in more than 12 years.
Thus keeping it in stock and available for eye care professionals and their patients who are awaiting its return.
Regarding triad since market availability frankly in our view it is not a matter of if but when and we think that win will be next year. We continue to believe that heralds largest future annual market opportunity is V. By the recently FDA approved patented.
Semi fluorinated al King or S. S. A that contains 0.1% cyclosporin well.
We're gonna be launching it in a few weeks Levi is a water free product, it's a topical medication and once again, it's F. D. A approved to treat both the signs and symptoms of dry eye disease. We believe eye care professionals have long awaited a product like Dubai, a dry eye disease product that can deliver effective.
Batched and sustained clinical results for patients without the negative adverse event profiles associated with many of the current pharmaceutical choices and.
In preparing for the upcoming launch of the bi it has become evident that most ophthalmologists and optometrists believes strongly in the clinical power of cyclosporin as a therapeutic agent.
This should not be surprising given the tens of millions of U S patients who had been prescribed cyclosporin during the past 20 years. However.
Levi is different from the currently available cyclosporin based products not only because of the comfort and the many benefits of its patented delivery vehicle only the second water free product in the U S market, but also because it offers the highest available concentration of cyclosporin. This puts me by a nickel.
Lastly, with Joan and I really can't wait to get V VI into the hands of the ophthalmic community and their patients.
And that day is fast approaching.
Before opening the call for questions I wanted to discuss our financial guidance and our expectations for the remainder of 2023 and 2024.
Many of you know, we've never been big fans of giving public revenue or profitability guidance, but as our partners. In this journey, we believe we need a reasonable level of visibility into what we expect to achieve next year at least as a base case, therefore, we're updating our guy.
<unk> for the remainder of 2023, and giving you some direction for what we expect in 2024.
The progress of our business is about 60 days behind we're adjusting our 2023 revenue guidance to $129 million to $136 million.
If we continue to be successful in the execution of a few opened 2023 objectives, including night. He's those sales growing outside the bounds we had anticipated at this stage of a launch as well as the timing of future milestones unfolding in our favor we could land toward the higher end of the range.
Regardless, our business remains solidly in a growth mode for the balance of our five year planning cycle, which includes not only the remainder of this year, but 2024 and it will continue through 2027. We're also adjusting our previously issued 2023 adjusted EBITDA guidance to a range of.
36 million to $41 million, primarily because of lower revenue estimates coupled with increased costs associated with recent acquisitions needed investments in the preparation for the launch of V. VI and one time integration costs associated with the Santa acquisition.
As for 2024, excluding any contribution from triad since we expect our 2020 for revenues to be north of $180 million. The magnitude of revenue growth beyond the $180 million will depend on many factors, including when we restore try essence inventory.
The acceleration of <unk> zone sales and how the V. VI launch goes beginning in the first quarter of 2024, we expect moderate revenue growth from our recently acquired FDA approved products, including the fab five and the recovery of our compounding business to historical growth levels from a.
A cost structure perspective, we expect our operating cost to increase incrementally.
As we scale our business to grow revenues and invest in the V. VI launch we expect to continue investing in our commercial infrastructure, while maintaining our leverage ratio that's debt over adjusted EBITDA and that should be below five times, we expect to close 2024 with a strong balance sheet.
With cash increasing significantly during the period, we remain confident in meeting our obligations to heroes creditors, and we do not expect to dilute our stockholders unless we find a transformative transaction, but candidly given where our stock prices were less inclined to use equity as occur.
We are happy to answer your questions I will pause to have our operator poll for questions operator.
We will now begin the question answer session.
To ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we'll pause momentarily to assemble our roster.
Okay.
The first question today comes from Brooks O'neil with Lake Street Capital markets. Please go ahead.
Good afternoon, Mark and thanks for all your comments I have to confess.
That completed a detailed really note the stockholder letter so I might ask you about some things that are.
Highlighted in the letter and we'll just have to deal with it but I'd like to start by asking you about the <unk> launch one of the things.
That scene.
<unk> is important is that you have made some adjustments to your planned that have yielded.
Some noticeable improvement in I E. Though response in the marketplace.
And I'm, hoping maybe you could at least give us some qualitative color about some of the things that you change there and what you saw as a result.
Thanks Brooks.
Did make some strategic amendments to the strategy of the launch strategy.
Late August and things kind of were implemented.
Bye bye.
By September I can't go into the specific tactical details of our strategy.
Really to our stockholders, but also to potential competitors.
You know the I think the important thing is is that we did in fact see this.
Major ramp when we made these changes and that's important I know I spoke to a lot of stockholders after the last.
<unk> earnings call and they wanted to see some numbers.
We're accurate and so we provided them and all I can tell you is that we not only provided numbers.
I think validate the success of the changes that we made but importantly, we provided numbers that get us into the fourth quarter. So we've seen a continuation of that ramp.
And we don't expect that to yield.
We think that will continue through the balance of this quarter and we do expect meaningful growth and I Hugo unit demand in 2024 and beyond.
Right.
Let me switch gears and just ask you a little bit about the weakness in the compounding business.
And a little bit about the fab five but I know historically you know I haven't followed your company for four or five years now.
Seen some variability in the compounding business that it's all of it to come back.
Is there anything that you would describe as materially different this time or anything that gives you pause.
About believing that that the compounding business remains durable and that the growth opportunity is still there.
Sure.
The compounding business discussion that I referred to in this stockholder letter and the issues. We were we were addressing are not dissimilar from other issues that we've addressed of of a similar kind in the past so.
We were able to overcome those challenges we made those investments and as an organization. We improved our compounding business is strategically important it allows us to meet our mission to make products that are accessible and affordable ease of cash pay products.
And by far were the National leader, there's not even a question.
It also gives us credibility when we walk into our customers' offices and they get those hubs instead of a weird looks because we're making their lives more difficult. It is not an easy business. So regulations change and they are generally getting stricter and as a result of that we have to be prepared.
<unk> to absorb those changes and we do.
We have the people the processes and the resources to handle these things it is as I referred to in the stockholder letter, it's sort of a superpower that we have that many smaller players do not have.
But the reality is is that as we move into branded products, we are going to strategically cannibalized a compounding units.
And that creates a challenge for the overall growth picture of that business, we want to take cash pay non.
Non FDA approved.
We compound that we have to manufacture and over time, we will.
Would like to.
Exchange those units for our FDA approved products that we don't have to manufacture that are reimbursable and so that that shift is taking place that said, we do have confidence that beginning in 2024 in the first quarter, we will resume our growth in the compounding business.
Okay. That's good for me ask you two questions about that.
We're a little bit different but.
First is I guess there are some concerns in the marketplace about.
About B Riley.
Debt.
Sure.
I don't know what the right term it but any comment.
Your.
Operations related to your relationship with.
With B Riley financial as a lender to your business.
With the shortfall here in the quarter and outlook for the year can you just comment a little bit about your outlook for accounts receivable cash flow and cash is.
We get towards the fourth quarter.
So I'll take the first part of the question and Andrew if you'll take the second part that would be great, but b Riley to be clear.
Is not a lender to the company.
Okay.
They bank to a several transactions forests successfully I might add.
<unk> produced phenomenal results for us.
And it's because of that that I can say with confidence we have plenty of cash we have over $68 million in the bank and as I said in the stockholder letter, we expect that cash pile to grow.
During 2024.
So we're grateful for the work to be while it did for us.
And they are not a direct lender to us at all they simply bank the transaction Andrew do you want to comment on.
The second part of the question.
Sure Hey, Brooks.
Hi, Andrew on the cash flow on the cash flow side and more so just talking about a are in particular because.
We introduced these branded products.
A different type of a R and receivables cycle than we have seen on the comp side.
And we've also on yeah. He's a particular for our customers by now he's though we've been able to extend an additional terms and that just helps them with their rent.
Recycle and cash management cycle.
For us what that means is our collections on the branded side are a little bit lengthened out compared to other companies under which we've historically seen but just kind of looking out at Q4 and an amazing report in particular, I am seeing $16 million or $60 million and they are on the branded side that we should be able to collect this quarter.
And then that would be in addition to the E R and cash receipts were receiving on the company business and so.
We've gotten through this sort of initial term or on the launch with <unk> with <unk>.
These branded products and we should 13 sort of the.
Or what's the branded products turn a little bit more more cash receipts coming in and less of a larger.
Spread on a compared to revenue going forward.
Great. That's very helpful. Let me just say a Q2 more and I apologize for asking too many but it is.
Thank God for you and for investors.
My first question is can you give us any estimate of the sort of the peak.
Peak.
Sales potential of the buy I know, it's a it's a unique drug I know it.
Uh huh.
Certain clinical characteristics better than the competition.
What do you see as the opportunity with V VI.
Yeah.
Sure. The look we've said in the past that we believe that the bias should generate north of $100 million annually in revenues.
And you know it should and could be much higher it's.
It's not going to happen overnight, it's going to take a few years to play out though the fact is that the cyclosporin category. If you look at the prescription.
Counts for Cyclosporin based products, we have the opportunity I believe to dominate the cyclosporin category, but more than that we have the opportunity to expand the overall market.
When Restasis was the only product in the market and <unk> came into the market you had a a new in some peoples view better product.
Relative to Restasis.
The overall market actually expanded and we believe that a product like Dubai. The features that it offers the fact that it works so fast and it provides sustained release of both signs and symptoms now going out 56 weeks I mean look at the.
The data that I provided actually in our stockholder letter. It's extraordinary so we think that we buy is going to extend and expand the market and as a result.
You know this product should definitely be a nine figure revenue.
Product annually and I believe that it could be much higher than that as as we.
Get further into the launch.
Great I'll ask you more about that offline, but let me just ask one last one then I appreciate your patience with me.
I have some sense that allowed ROE and Nab in a cab.
Had some improving sales in the past month or two can you comment on what you're seeing from those two products, specifically and again, thanks for taking my questions.
Thank you Brooks right. So we've said in the stockholder letter that.
Like a.
Mission critical victory for our company was the <unk> launch we needed to provide a.
Our stockholders with evidence that we could execute on the <unk> launch I Hope if you look at the line graph provided in the letter to stockholders.
That you will agree that we have in fact changed markedly.
Markedly improved the outlook for I.
Zoe sales.
So that was a critical.
Victory that we had to achieve and I think that we are on our way.
And things are going in the right direction as a result, we did decide to not deploy commercial assets.
You know right away for boats elaborate whenever an act.
And so the question is did we in fact deploy those resources and we did about.
About six weeks ago seven weeks ago, we began to do exactly what we said we would do we.
Divided information to prescribers reminding them not only of the existence of the product, but the incredible insurance coverage for.
For these products and in the letter to stockholders once again I actually provided one of our marketing pieces that we use on the market access side of things and the good news is that nearly immediately once again immediately as we began to execute on our strategy.
<unk>.
We saw.
Improvement in the prescription volumes as well as an overall share of the topical NSAID market or non steroidal anti inflammatory market in the U S and so if you look at the trailing four week data I think.
We're up on both products.
In the mid to high single digits over the last four weeks.
Look it's early but this is very positive and so we may be a little bit late but what we said that we were going to do seems to be working and I do believe it will continue as we continue to execute the strategy.
Great. Thank you for all that color I appreciate it very much thanks Brooks.
The next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.
Oh, Hi, Mark and Andrew how are you.
Good Jeff good to speak with you.
So a few questions on her and I guess, firstly talk a little bit about without getting too much into the weeds pricing strategy on the fever.
But do you see in your shareholder letter, calling out some of the the holes that folks are mentor identify and value.
Sure.
We have not announced.
The pricing for.
For Veeva, what I can tell you is that it will be sort of competitively priced with the other.
Water free product in the market, which is mimo and.
And so we'll have more information about the WAC pricing for for V. VI here in the coming weeks as we approach the launch in terms of the product itself.
You know it is a it is an extraordinary product cyclosporin is known to work we've got the highest concentration of cyclosporin if.
If you put our product in your eye. If you are prescribed it and you have put restasis or other cyclosporin based products and you're right. You will see that they are product feels completely different veeva is very different from these other products.
And the data is extraordinary so we have 56 week data that I provided in our letter to stockholders I would encourage anyone who understands anything about the.
Dry eye disease market to look at that data.
It is extraordinary so we've got great clinical data, we're going to have a bang up market access strategy and commercialization strategy, that's going to begin in a couple of weeks and we're.
We're going to generate our first revenues for Veeva.
<unk> in the fourth quarter, so in a few weeks.
Okay got it and then maybe could you chartered into questions learned on launches more recently and perhaps some plus some lessons learned on.
She showed that may carryover to Veeva, and then kind of carry that forward as well too.
Fab five sounded like a couple of months of a.
Marketing of delayed efforts their reserve.
Potential as a result of our spend parameters from the past quarter or was it somewhat extra that own and which how it came out.
Yeah. So first of all I you know I use those are buy and bill product. So the strategy the market access strategy of the commercialization strategy with <unk> is very different than than the buy.
And frankly, they're both different from <unk>.
Our approach to the fab five and the sand tin products. So the strategy with the fab five in Sandton was to incrementally grow those revenues.
And to produce streams of cash that would that would grow over many years and so as I said.
Brooks, it's it appears that our strategy of just simply doing a little bit of marketing and some sales detailing around those products is working for the fab five and we think the same will be true for the same 10 products.
But in terms of creating significant stockholder value over the long term its I E. Though it is V VI and.
And.
The one product that is similar to Zoe is Triassic, so theyre, both buy and bill products to both J coated products and so the strategy there.
You know, although they are buy and bill products I E.
There's a new product in.
And try essence is not and so we probably will not need very many resources to get the word out about <unk>, but they're all sort of different Andrew do you want to add to that.
No look I think.
Okay.
Got it Okay, and then a couple more quick ones.
Can you talk about 'twenty 'twenty four for luxury in the trash and.
After some of the work is done any.
Any narrowing of that you're thinking about first half versus second half.
Yeah.
You know.
What I can tell you is that our purchase price for <unk>.
Trey essence, you know is $45 million and it slides down over time.
As we do not have inventory in the purchase price is only triggered the payment is only triggered once we have inventory.
January 20th our purchase price goes from 45 million to $37 million.
I can tell you.
That our partner is working diligently to ensure that the purchase price was $45 million and about $37 million. So they are actively working to create inventory for us.
Which is a very good thing, we would frankly love to pay $45 million because once we do we'll have sufficient inventory assuming.
Assuming we have the NDA.
To recover substantially all of our purchase price and perhaps even more depending on how much inventory. We have so we are really excited about having try essence sooner rather than later, we don't mind paying more for it because we are highly confident in the market research that we've done around that product and.
The as I said, our expectation, though is right now that will have it in 2024.
And our partner would like for us to have it before January 20th of 2024, but what we've said publicly is that we expect to have inventory sometime during the year I don't want to be more specific right now, but we're working diligently to to make this happen.
Okay, Great and one more brief one you had mentioned some backend systems are you currently using one ERP system or is that being consolidated as part of the Bakken and what's going on as far as leveraging up the the size of the business on the back end with regard to our.
True mostly building.
On the compounding side or on the branded side or boats across the board.
Yes, I don't know that we can discuss specific.
Software platforms or Erp's, Andrew do you want to tackle that one.
And Jeff Bird So we're boring we're on a single ERP.
We are going through some some uptake on the from a CRM perspective, just implementing that.
Additional pieces to the ERP like within quality and.
Supply chain for example, and bringing that bringing that in on the component side and on the branded side.
For the most part that infrastructure is in place.
And we're just kind of scaling up.
Got it Okay, Chicago was basically which is scaling up exercise sufficient shortage.
That's right.
Perfect.
That does it for us thanks for taking the questions.
Thank you Jeff.
The next question comes from my Ink Connelly with B Riley. Please go ahead.
Good afternoon, and thanks for taking our question will try to keep it short so two quick ones on <unk>.
When you say your internal revenue targets for <unk> 2023.
Could you just clarify that and help me understand the company and so on.
Q guide.
The new range of 35 4 million and for granted when he quoted about 118 million.
What I do I haynesville versus maybe some accretion that you might be expecting from this downturn transaction. If you could break down some of those elements and then I have a quick follow up on items.
Andrew do you want to cover Q3 confidence 2023 in Q4 and.
Also the projections in 2024, I think that was it.
Yes, I can I can try.
Hey, Matt Thanks for the question. So just in regards the confidence.
We put up a new range. It is fairly large we realize that.
And as Mark kind of mentioned in the letter there's a couple of things that we're working on that you know if they go our way we're going to end up on the higher end of the range. Thank.
They get pushed into Q1.
We're gonna have to capture in 2024.
But we feel pretty confident about the numbers anything can happen, obviously, where we're halfway through the quarter.
But we feel good about the first half and feel good about the potential for the second half.
In regards to that.
I'm, just sort of break down between her contribution between products from Santander I E.
We're we're expecting.
That's the intent portfolio to continue to perform well I can kind of talk let mark talk about the strategic rationale for that transaction.
It's not going to be a big big driver of revenue in the future.
It's going to be it's going to have incremental impact on the financials. This year and next year.
It's gonna be positive when it's going to be accretive.
So as we kind of as Mark talked about a lot on the call today and in the shareholder letter that that ramp Racine.
At the end of last quarter.
Should see continue in Q4, and we expect it to continue to increase in 2024 until contribution from my email is a major product should just continue.
Next year, as we grow revenues or John comment a little bit more.
Yeah, you know look the same 10, a basket, we paid $8 million upfront is very low risk.
It was really connected to rounding out our branded portfolio, allowing us to play a larger role in the prescribers office and it's going to produce a great ROI.
We paid 8 million for it but we also paid 8 million for V by upfront V by in terms of affecting the overall value of the company is going to far exceed.
Well, what we paid for Santana and what the what we expect from the Santana assets. So.
You know.
That should give you some scale.
We're going to invest significantly in veeva, because the market opportunity is much much larger for us and you know I think.
That's that's a great place to to invest resources.
Maybe I can throw my two questions together, so it's a number one on a real quickly on the <unk>.
Stockholder letter you can save them, there that youre planning to meet with CMS to Gladys lab billing policy that has historically not allowed for.
Wrapping billing in a physician's office or could you just guidance wise that's related to gas.
Cataract surgery offices, specifically in also.
And anything specific to your recent absolutely dead analysis is that that is worthy of sharing what sort of sales metrics you're tracking there.
You have seen now translate into unit benign in revenues and then lastly, what you just said about.
Levi the excitement there anything.
I know, it's early when LIBOR launch with Boston loan, but they seem to be allocating a lot of resources. There. So could you just.
Sure.
I have an opportunity to run from from what they are doing going second and I believe you also show some 12 months data out there in the stockholder letter could you could you just put in context.
The clinical relevance of that.
But you have got any other stockholder nabors born by the way and then thankfully no question.
That's a I think that's a three or a four port a partner so I'm going to try and tackle it Andrew Let me know where I fall short.
As far as CMS goes or let me be clear our pass through.
Is 100% intact.
And the ASC in the hospital outpatient Department, we are as I said in the stockholder letter. We are actively working to ensure that we can extend that pass through that decision will not be up to us it will be up to.
CMS, but there are other products in this category in the ophthalmic pharma category that are buy and bill, but had been able to extend their pass through.
The meeting that we have with CMS is coming up fairly soon we expect I can't really comment on the.
The specifics of that meeting.
But we do seek to just clarify the use of J 2403.
In the in the physician's office that said, we are selling into that market.
And reimbursements are happening and you know.
This I think will depending on the outcome of the meeting I think you know have a significant upward potential.
Value impact on on that that asset and that's why we're going to be meeting with CMS. So once.
Once again, we don't control that decision, making but we're excited to meet with CMS in the fairly near term.
In terms of the buy and what we can learn from the <unk> launch obviously <unk> is the other SFA or semi fluorinated alkene product a water free product to hit the market I think if.
You may have even I believe.
Put it in your eye, you have experienced and its a great product.
And be an L. I think has had.
A fairly successful launch so.
We can learn a lot from that experience.
The we think that there will be many many prescribers that will want to have cyclosporin onboard for their patients.
The other product has been sort of marketed for evaporative dry eye.
Whereas the concept is that <unk> would be used for aqueous dry eye and I would submit to you that if you're a physician and youre seeing a patient.
Have to make a prescribing decision most physicians if not all of them do not know whether a patient is experiencing evaporative or aqueous dry eye and so our hope is is that all things being equal they will choose to have a product on board.
That can perform as our product performs that also contains cyclosporin the highest concentration in the market.
In terms of the dataset that we presented.
If you look at the 12 month sign and symptom improvement data, you're talking about corneal staining data.
The improvement that is significant out of the gate.
Certainly within four weeks within one month, you get a total.
Corneal fluorescein staining data improving massively.
And tear production also improving significantly as well as the symptoms for the patients.
Are there theyre dryness scores and so if you look overall at this data set and your prescriber.
You can prescribe the highest concentration of cyclosporin.
And a product that not only works rapidly, but has an extraordinary adverse event profile and importantly will last a long time in terms of the the ability to improve signs and symptoms over.
A 50.
52 week period so.
We think we're going to get quite a bit of those those prescription certainly the cyclosporin category, but our overall goal is as I said earlier to expand the market.
And we think there are a lot of patience and a lot of prescribers that have wanted a product that can perform like Levi and they will soon have it.
Got it thanks for taking our question.
Thank you Mike.
I will now turn the call back over to Mark Baum for closing remarks.
Sure. Thank you Betsy.
<unk> been more confident in our prospects.
I think the value of our company is far greater today.
Than it ever has been and we remain on track with a well structured disciplined plan that is going to lead to the accomplishment of our goals, even though we may be a few months behind the goals will be accomplished we will get there. This is going to benefit not only our customers the prescribers, but patients our employees and our <unk>.
<unk> stockholders. So thanks to everyone for attending today's call and your interest in Harold If you have any investor related questions. Please email Jamie Webb at J W. E. B B at Harrow, Inc. Dot Com this will conclude our call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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Okay.
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