Q4 2023Harrow Inc Earnings Call
Operator: Good morning, and welcome to Harrow's fourth quarter and year-end 2023 earnings conference call. My name is Drew, and I will be your operator for today's call. At this time, all participants are in a listen-only mode.
Good morning, and welcome to heroes fourth quarter and year end 2023 earnings Conference call. My name is drew and I will be your operator for today's call. At this time all participants are in a listen only mode later.
Operator: Later, we will conduct a question and answer session. As a reminder, this conference is being recorded. If you require operator assistance, please press star then zero.
We will conduct a question and answer session. As a reminder, this conference is being recorded.
If you require operator assistance. Please press Star then zero.
Jamie Webb: I would now like to turn the call over to Jamie Webb, Director of Communications and Investor Relations for Harrow. Thank you, operator. Good morning, and welcome to Harrow's fourth quarter and year-end 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 laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Harrow's control, including risks and uncertainties described from time to time in its SEC filings, such as the risks 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 those risks and uncertainties, please see Harrow's results may differ materially from those projected.
I would now like to turn the call over to Jamie Webb Director of Communications and Investor Relations for Arrow.
Thank you operator, good morning, and welcome to <unk> fourth quarter and year end 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.
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 says T. SEC filings such as the risks and uncertainties related to the company's ability to make commercially available is F. D. A approved product.
Compounded formulations and technology and FDA approval of certain drug candidates in a timely manner or at all.
For a list and description of those risks and uncertainties. Please see the risk factors section of the company's 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 of new information future events or otherwise.
Jamie Webb: Harrow disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of today. Additionally, Harrow referred to non-gap financial metrics, specifically adjusted EBITDA and or adjusted earnings, as well as core results such as core gross margin, core net income, and core diluted net income per
This conference call contains time sensitive information and is accurate only adds up to that.
Additionally, Harold referred to non-GAAP financial metrics, specifically adjusted EBITDA and our adjusted earnings as well as core result purchase core gross margin core net income and core diluted net income per share.
Jamie Webb: A reconciliation of any non-gap measures with the most correctly comparable gap measures is included in the company's earnings release and letter to stockholders, both of which are available on the website. And now you should have received a copy of the earnings press release. If you have not received a copy, please go to the investor relations page of the company's website, www.harrow.com. Joining me on today's call are Harrow's Chief Executive Officer, Mark L. Baum, and Harrow's Chief Financial Officer, Andrew Boll. With that, I'll turn the call over to Mark to go over some prepared remarks prior to the question and answer session. Thanks, Jamie.
A reconciliation of any non-GAAP measures with the 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 do you have not received a copy. Please go to the Investor Relations page at the company's website Www Dot Harrow dotcom.
Joining me on today's call are Harold Chief Executive Officer, Mark L. Baum and heroes, Chief Financial Officer, Andrew Boll with that I'll turn the call over to Mark to go over some prepared remarks prior to the question and answer session.
Thanks, Jamie and thanks to everyone for joining us on today's call.
Mark L. Baum: And thanks to everyone for joining us on today's call. I wanted to first address the change in cadence for earnings release and conference calls. We believed it was in the best interest of our analysts and investors to extend the amount of time between when we issued our earnings release and hosted our calls. We hoped this would allow more time to digest the results and read through our corporate presentation and my letter to stockholders prior to the call. We hope you have found this timing change helpful. So if you're on this call, I assume you've reviewed these materials, and I'll use this time to augment your understanding through some high-level commentary. 2023, which is now more than 75 days in the rear view mirror, was a transformative year for Harrow.
Wanted to first address the change in cadence for earnings release and conference calls we believed it was in the best interest of our analysts and investors to extend the amount of time between when we issued our earnings release and hosted our calls we hoped this would allow more time to digest the results and redo our corporate.
Resin patient in my letter to stockholders prior to the call. We hope you found this timing change helpful.
So if you're on this call I assume you've reviewed these materials and I'll use this time to augment your understanding through some high level commentary.
2023, which is now more than 75 days in the rearview mirror was a transformative year for hero was a transformation that was four years in the making all of which I pointed out in my letter to stockholders. When I quoted what I said about four years ago in 'twenty 'twenty when we we're hatching.
Mark L. Baum: It was a transformation that was four years in the making, all of which I pointed out in my letter to stockholders when I quoted what I said about four years ago, in 2020, when we were hatching our plan to become a leading North American ophthalmic pharmaceutical business. Here are a few of the 2023 fruits of that plan. Number one, we achieved record revenues with 2023 revenues increasing 47% over 2022. Additionally, adjusted EBITDA more than doubled in 2023 from 2022. 3.
Plan to become a leading north American ophthalmic pharmaceutical business here or a few of the 2023 fruits of that plan.
But one.
We achieved record revenues with 2023 revenues, increasing 47% over 2022 revenues.
To adjusted EBITDA more than doubled in 2023 from 2022.
Mark L. Baum: The addition of numerous high-utility ophthalmic pharmaceutical products to our portfolio. Four, beginning to generate cash flow from our big three products, iHESO, VIVI, and Triessence, which make up our most significant short-term and long-term financial drivers. And finally, delivering $8.7 million in cash from operating activities in the fourth quarter of last year and delivering our second consecutive year of positive cash flow from operations. You see, we strengthened our balance sheet last year, especially our cash position, ending the year with $83 million in cash and cash equivalents.
Sorry.
I shouldn't have numerous high utility ophthalmic pharmaceutical products to our portfolio.
Before beginning to generate cash flow from our big three products I E. Zoe V VI and Troy essence, which made up our most significant short term and long term financial drivers.
And finally, delivering $8 $7 million in cash from operating activities in the fourth quarter of last year and delivering our second consecutive year of positive cash flow from operations you see we strengthened our balance sheet last year, especially our cash position ending the year with.
$83 million in cash and cash equivalents and this includes our position in pharmaceuticals, we expect our cash pile to continue to grow over the coming years.
Mark L. Baum: And this includes our position in pharmaceuticals. We expect our cash pile to continue to grow over the coming years. Equally important, we fortified our talent, adding new members to the Harrow family, professionals with the experience, commercial relationships, and fresh perspectives to further enhance our transformation. I have highlighted the names of a few of these folks in both the letter to stockholders and the new Harrow Corp. Our stockholders have been asking us for more granularity around our quarterly results. They want to know why we're so bullish on our company and the growth trajectory we see in front of us. This cycle, I've tried to provide more granularity. This detailed information highlights, among other things, the amazing success we've had with our V-virus. Based on our success to date,
Really important we fortified our talent base, adding new members to the hero Sandler.
Professional fees with the experienced commercial relationships and fresh perspectives to further enhance our transformation I have highlighted the names of a few of these folks in both the letter to stockholders and the new Carroll corporate deck.
Our stockholders have been asking us for more granularity around our quarterly results. They want to know why we're so bullish on our company and the growth trajectory, we see in front of US This cycle I've tried to provide more granularity.
This detailed information highlights among other things.
Amazing success, we've had with our be buy and watch.
Just on our success to date.
Mark L. Baum: I am convinced that VIVI has the potential to dominate the large U.S. chronic dry disease market as the leading cyclosporine and anti-inflammatory product. The V by Adoption, driven by our small but mighty sales force, speaks volumes, as does the positive feedback about VIVI from actual patients on social media. I would encourage you to think about the size of the cyclosporine market alone in the United States, which is about 8 million units. Without question, cyclosporine is the number one most trusted active ingredient for U.S. dry disease patients.
I am convinced that Veeva has the potential to dominate the large U S. Chronic dry eye disease market as the leading cyclosporin, an anti inflammatory product the V by adoption curve driven by our small, but mighty Salesforce speaks volumes as does the positive.
Back about revive from actual patients on social media.
I would encourage you to think about the size of the cyclosporin market alone in the United States was about 8 million units last year without question cyclosporin as the number one most trusted active ingredient for U S dry disease patients eye care professionals Trust cyclosporin pay.
Mark L. Baum: Eye care professionals trust cyclosporine, and payers trust cyclosporine. Patients Trust Cycle. You see, the VIVI train is rolling, with all of our key performance metrics moving in the right direction. In fact, the CEO of PhilRx, our specialty pharmacy partner, recently told me that Vivi has been one of, if not the most, successful launches. Mark my word, VVI will significantly benefit millions of U.S. tri-disease patients and generate substantial value for Harrow stockholders over a very long period of time. I also discuss our progress in manufacturing triacinamide, including a production batch which is set for next month. This is a PPQ batch, and to the extent that we're successful in meeting all the parameters, it would become a commercial batch.
Here's truss cyclosporin.
Patients Trust Cyclosporin, you see the V by train is rolling with all of our key performance metrics moving in the right direction. In fact, the CEO of <unk>, our specialty pharmacy partner recently told me that the bi has been one of if not the most successful launches.
His seat.
Ark by word V by will significantly benefit millions of U S y disease patients and generate substantial value for hero stockholders over a very long period.
I also discuss our progress in manufacturing try essence.
<unk> a production batch, which was set for next month. This is a P. P to batch and to the extent that we're successful meeting all the parameters would become a commercial batch I talk about the number of units. We expect to have available for sale. When try essence is eventually reintroduced in the market I also.
Mark L. Baum: I talk about the number of units we expect to have available for sale when triessence is eventually reintroduced into the market. I also lay out the expected addressable market in terms of unit volume and our new pricing, which combined make clear why we believe triessence should be a multi-nine-figure revenue product, and hopefully soon. I hit on the continued uptake of iHESO since its May 2023 launch and news about the recent publication by CMS of the iHESO ASP, or Average Selling Price, in the Physician's ASP file, something that we had previously requested from CMS and that was not acted upon until soon after we met with them on January 9th of this year. I also talk about the return of IMPROMIS-Rx to its previous growth trajectory, fulfilling I also included quotes from actual users of our products. You see, in recent conversations with fellow stockholders, I've noted the reliance on the opinions of so-called key opinion leaders, KOLs, who, upon my further investigation, have actually not used our products. I thought it was important for you to hear from ophthalmologists and optometrists who, with 100% certainty, have actually used them.
At the expected addressable market in terms of unit volume and our new pricing, which combined make clear why we believe Trey essence should be a multi nine figure revenue product and hopefully soon.
I hit on the continued uptake of by he's though since its may 2023 launch and news about the recent publication by CMS of the eye, He's though a S P or average selling price in the physician a S. P. File. This is something that we had previously run.
Question from CMS and that was not acted upon until soon after we met with them on January 19th of this year.
I also talk about the return of Imprimis Rx to its previous growth trajectory.
To filling our performance promise that I made in our last stockholders' letter I also included quotes from actual users of our products.
You see in recent conversations with fellow stockholders I've noted the reliance on opinions of so called key opinion leaders Kols, who Paul My further investigation it actually not used our products I thought it was important for beauty here from ophthalmologists and optometrists, who with 100%.
<unk> is actually used our products.
Mark L. Baum: I also want to mention that it's never been a better time to be a Harrow. I say this because of the amazing progress we have made and because of what is right in front of us, right in front of our eyes. A clear pathway to achieving our goals, including significant revenue and profitability growth, ultimately making us a leading strategic North American ophthalmic pharmacy. Finally, as both a Harrow stockholder and a senior executive at this company, I continue to be perfectly fine eating my own cooking.
I also want to mention that has never been a better time to be a hero stockholder I say this because of the amazing progress we made in 2023.
And because of what is right in front of US right in front of our eyes, a clear pathway to achieving our goals, including significant revenue and profitability growth ultimately, making us a leading strategic north American ophthalmic pharmaceutical company fine <unk>.
As both a Harrow stockholder and the senior executive at this company I continue to be perfectly fine eating my own cooking I have never sold a share of Herald stock and I do not plan to do so in fact recently I purchased Taro shares.
Operator: I have never sold a share of Harrow stock, and I do not plan to. In fact, recently, I purchased Harrow shares three times in the past 12 months, precisely because I believe in Harrow's long-term value and because the shares have been available at an attractive price. We're now happy to answer your questions. I will pause to have our operator pull. Operator. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.
Three times in the past 12 months precisely because I believe and heroes long term value and because the shares have been available at an attractive price. We're now happy to answer your questions I will pause to have our operator poll for questions operator.
We will now begin the question and answer session.
You ask a question you May press Star then one on your telephone keypad, 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 will pause woven.
Mayank Mamtani: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Mayank Mamtani with B. Riley Security. Please go ahead.
Surely to assemble our roster.
The first question comes from my own on Tommy with B Riley Securities. Please go ahead.
Mark L. Baum: Good morning, team. Thanks for taking our questions. I appreciate the granularity provided to both 4Q results and the forward-looking outlook. Maybe just on the 2024 guide and also the longer-term 2027 number that you put out, are you able to give some breakdown on the incremental contribution between your three growth drivers, AHISO, TRIAS, and VY? And also, relatedly, notice you didn't give data guidance that is forward-looking. It would help to understand how you're thinking of spending in 2024. And then I have a couple of quick follow-ups. Thank you, Mayank. Yeah, so look, we're standing behind the better than $180 million in revenue guidance that we put out for 2024. We don't guide you by product.
Good morning team. Thanks for taking our questions and appreciate the granularity provided to our board for giving those in the forward looking outlook and we've just done that way 24 guide and also the longer term.
And when he seven number that you put out you do give some breakdown on the incremental contribution yet will be in there between the three growth drivers that easily.
Let me weigh in also needed me notice you didn't get.
It would be the guidance forward looking.
And can help to understand how you're thinking about spend.
And in 2024, and then I have a couple of quick follow ups.
Thank you Mike.
Yeah, So look where we were.
Standing behind the better than $180 million in revenue guidance that we put out for 2024.
Uh huh.
We don't guide by product.
Mark L. Baum: The one comment that I'll make is, you know, what I think is the 800-pound animal in the room, and that is what we put out today in our Form 8K filing. And the confirmation from CMS that, in fact, IHESA will be paid for separately in the physician's office setting is, without question, the most positive consequence event that has happened to our company, you know, since I founded it with Andrew back in 2011. So this is a very big event.
The one comment that I'll make is you know what I think is the <unk>.
800 pound.
You know animal in the room and that is what we put out today and our form 8-K filing.
And the confirmation from CMS that in fact, I E. Zoe will be paid for separately in the physician's office setting is without question.
The most positive consequential event I think that has happened to our company.
Since I founded it with Andrew back in 2011. So this is a very big event. It certainly.
Mark L. Baum: It certainly supports our confidence in our guidance, which is a number greater than $180 million. You know, but once again, we're not going to guide by product. But we're very excited about what we put out today in the Form 8K. It's something that happened yesterday afternoon at about two o'clock central. It kind of hit us with a very, very positive surprise, but it certainly gives us far greater confidence in our guidance. In terms of our spend in 2024, Andrew, do you want to kind of talk about our approach to some of the spend in the fourth quarter, maybe 2023, and how we're thinking about 2024, especially in light of what we put out in the 8K this morning? Yeah, thanks, Mark. Mayank, thanks for the question.
<unk> supports our confidence in our guidance, which is a number greater than $180 million.
But once again, we're not going to guide by product.
But we're very excited about what we put out today and in the form 8-K, it's something that happened yesterday afternoon about.
Sure.
Two o'clock central it kind of hit us with a very very positive surprise, but it certainly gives us far greater confidence in our guidance.
In terms of our spend in 2020 for Andrew do you want to kind of talk about our approach with.
Some of the spend in the fourth quarter, maybe 2023, and how we're thinking about 2020 for especially in light of what we've put out an 8-K. This morning.
Yeah. Thanks, Mark Thanks for the question.
Andrew R. Boll: And you can kind of see some of the expense infrastructure changing in the Q4 numbers. You know, in November, we decided to make a shift in our plans for rebuying at launch. This resulted in a much heavier spend on sales and marketing efforts than we initially planned for.
And you can kind of see some of the expense infrastructure changing in the Q4 numbers.
In November we decided to make a shift in our our plans are rebounding blanch. This.
This resulted in a much heavier spend on the sales and marketing efforts than we initially planned for.
Andrew R. Boll: In the K, you can kind of read year over year, we added about 100 new employees; a vast majority of those were coming in or came in during the fourth quarter and were really tied to the V by Launch on the commercial side. And so a lot of that expense is going to obviously continue into 2024. One of the reasons we're not giving specific EBITDA guidance is that as revenues grow, we'll invest in operating expenses. We'll invest in sales and marketing efforts to further revenue growth. That said, we have a leverage ratio number that we want to get to, which is having a leverage ratio less than five times. And so we're focused on that, but at the same time, we're going to be focused on growing revenues and accelerating revenue growth in these product areas where we see an opportunity to invest further on the sales and marketing side. Like Mark said, Aheez is a great example of where we've got this great outcome with CMS.
In the K, you can kind of read year over year, we added about 200 about 100 new employees.
Well vast majority of those were coming or came in during the fourth quarter and were really tied to the V by launch on the commercial side.
And so a lot of that expense is going to obviously continue into <unk>.
Into 2024.
One of the reasons, we're not giving specific EBITDA guidance as revenues grow we will invest in the operating expense or investment in sales and marketing efforts to further revenue growth.
That said, we have a leverage ratio number that we want to we want to get too.
Which is being having a leverage ratio of less than five times.
So we're focused on that but at the same time, we're going to be focused on growing revenues and accelerating revenue growth in these product areas, where we see.
An opportunity to invest further in the sales and marketing side like Mark said. He is a great example, where we're now we've accomplished a great outcome with CMS.
Mark L. Baum: It's time to invest more heavily in the sales and marketing efforts there and really kind of put the foot to the metal and try to grow revenue. I'll add one further comment to that, you know, and we said this in our Form 10-K, which we filed, you obviously know, and this kind of hits on one of the points Andrew made related to Oak Tree, who is our senior lender. And you probably know that they can receive warrants if our leverage ratio exceeds five times in 2024. And I think both Andrew and I have a far greater confidence that, as a result of the Form 8K that was filed this morning, we sincerely doubt that our friends at Oak Tree will be receiving any warrants under our agreement.
It's time to invest more heavily on the sales and marketing efforts there.
And really kind of put the FERC for the metal and try to grow revenues.
Yeah.
And add one further comment to that.
And we said this in our Form 10-K, which we filed you obviously know and this is this kind of hits on one of the points Andrew made related to Oaktree, who is our senior lender in.
You you probably know that they can receive warrants.
If our leverage ratio exceeds five times in 2024.
And I think both Andrew and I have a.
Far greater confidence.
But as a result of the form 8-K that was filed this morning, we sincerely doubt that.
Our friends at Oaktree will be receiving any warrants under our agreement with them.
Mayank Mamtani: Yep, that's very helpful, Kallur. Thank you. And on the cyber attack issue in February, could you just clarify if that is unique to Harrow and also what visibility you have on the utility of AHISO and Retinacline Xe at the date and expectation for that segment to expand, including, I think you make some reference to the bilateral IVT procedures. Is that sort of organic demand you're getting from these retina specialists as they're using more injections on both eyes that you can have separate And maybe one final question, I wouldn't be right. What was the first part, Mayank?
Yes, that's very helpful color. Thank you and on the cyber attack issue in February can you just clarify that is you need to have low end and also what what visibility you have one utility of Haynesville.
And that's not going to be a debate and expectation for that segment to expand including I think you made some reference for the bilateral IV deep listen he does it.
Is that sort of organic demand you are getting subsidies that.
Our specialist.
And they are using more and.
More more injections on both eyes that you can have separate.
Billing for them.
Two units versus one yet so.
And maybe one final question I wouldn't be right.
What was the first part Mike I missed it.
Mark L. Baum: I missed it. The cyber attack, the cyber attack issue, whether that is unique to Harrow or that's a broader pharma-wide issue of processing claims, right? Sure, yeah. So the issue with changing health care has affected numerous companies, including us, that sell not only Part D as in David products but also Part B as in Bravo products. So the system is still sort of being unclogged.
Did I read that.
But a DUC issue.
It is unique to handle that.
The broad other five mile wide issue of processing claims right now.
Yes.
The issue with change healthcare is affected numerous companies including us.
That sell not only part D as in David products, but also part b as in Bravo product. So the system is still sort of being unclogging.
Mark L. Baum: And the change in health care issue has affected payments to our customers from the government. And, you know, this has affected our sales temporarily in the first quarter, but we are seeing evidence that the system's beginning to be unclogged. We expect, you know, recovery and full normalization in the second quarter. But this is an issue, the cyber attack that has affected us, but it has affected many, many companies who sell into the pharma market.
And the change healthcare issue has affected payments to our customers from the government and.
This has affected our sales temporarily in the first quarter, but we are seeing evidence of the systems beginning to be Unclothed, we expect recovery in full normalization in the second quarter, but.
This is an issue the cyber attack that.
Fact at us, but it has affected many many companies.
And selling to the.
The pharma market.
Mark L. Baum: In terms of retina, the reason why we went to CMS and I talked about this in our last letter to stockholders is because there was an uptake in the retina market. The retina market, in the form of the intravitreal injection market specifically, is a very large market exceeding 10 million unit opportunities per year. We saw uptake in that market, and we were seeing reimbursement happen in that market around the country. But the market is unique in that it is highly concentrated.
In terms of retina.
Uh huh.
The reason why we went to CMS and I talked about this in R. R.
Our last letter to stockholders is because there was uptake in the retina market the retina market.
Is and in the form of the <unk> injection market, specifically is a very large market exceeding 10 million unit opportunities per year, we saw uptake in that market, we were seeing reimbursement happen in that market around the country.
But the market is unique in that it is highly concentrated they're very large groups of potential buyers.
Mark L. Baum: There are very large groups of potential buyers for these products. And so, in the face of those sorts of opportunities in front of us, we thought it was prudent to confirm with CMS that, in fact, our J code, which is a product-specific permanent J code, would, in fact, be separately reimbursable in the physician's office setting. And so, as we promised in the last letter to stockholders, we requested a meeting with CMS
For these these products.
So in the face of.
Those sorts of opportunities in front of US we thought it was prudent to confirm with CMS that in fact.
Our J code, which is a product specific permanent J code would in fact be separately reimbursable in the physician's office setting and so as we promised in the last letter to stockholders.
<unk>.
Requested a meeting with CMS, we had that meeting on January 9th and we have been waiting patiently.
Mark L. Baum: We had that meeting on January 9th, and we have been waiting patiently to hear from them. You know, as we said in the prepared remarks, we were added to the ASP file, the physician's ASP file, recently, but we did not know whether or not that confirmed separate payment in the physician's office.
To hear from them.
As we said in the Oh.
The prepared remarks, we were added to the a S. P file the physicians I S. P file.
Recently, but we did not know whether or not that can firm separate payment.
The physician's office and that happened just yesterday afternoon, which as I said, it's a very important event for the company.
Mark L. Baum: And that happened just yesterday afternoon, which, as I said, is a very important event for the company. Our expectation now is that, with this news, we will be able to, with this news, open up the market for intravitreal injections that can benefit from the unique attributes of iHESO, and that that is going to start here very, very soon, and that it will significantly change, I think, the trajectory for iHESO and also, I think, for our company. But iHESO is a fantastic product for that application.
Our expectation now is that we will be able to with this news open up the market for interdigital injections.
That that can benefit from the unique.
Attributes of biodiesel and but that is going to start here very very soon and that it will go up significantly.
Significantly change I think the trajectory for <unk> and also I think for our company, but those.
Those are fantastic products for that application is also obviously Houston numerous other ophthalmic.
Mark L. Baum: It's also obviously used in numerous other ophthalmic interventions, and it's a very, very exciting opportunity. And thank you. And lastly, on VY, you put out some good launch metrics, yet you say it could take up to 18 months for VY to ramp up. So just curious what the dynamics in play are here, you know, to follow to get visibility and what peak sales could be. And with that, I'll hop back in the queue. Thanks for taking the time to answer.
Interventions.
And yes it.
It's a very very exciting opportunity for us.
And thank you and lastly on the why you put out some good launch metrics, yet you say it could take up to 18 months for a ramp up so just curious what dynamics in play out here.
Followed to get visibility in what peak sales could be.
Ill hop back into queue. Thanks for taking my question.
Mark L. Baum: Thank you, Mike. First of all, with respect to VIVI, I want to mention a person because VIVI, the team, the commercial effort is being led by a woman named Maria Lloyd, and she is extraordinary, and the effort that she has put into this project is just amazing. So I'm really grateful for everything that she has done. She is very experienced.
Thank you Mike.
First of all with respect to V VI.
I want to mention.
Because levi.
Team the commercial effort is being led by a woman named Maria Lloyd and she is.
Strong generic.
The effort that she has put into this project is just amazing.
So I'm really grateful to everything that she has done he is very experienced she was involved in the launch of Restasis. He knows the dry eye market extremely well.
Mark L. Baum: She was involved in the launch of Restasis. She knows the dry market extremely well, and she's brought a lot of wonderful people into our organization that are working on her team. But, as you saw in our recent corporate presentation, all of the numbers, all of the metrics with respect to the VIVI launch are up and to the right, which is fantastic. Importantly, the product is performing extremely well in the market. I referenced social media, information that's out there and publicly available.
And she's brought a lot of wonderful people.
Into our organization that are working on her team, but as you saw in our recent corporate presentation.
All of the numbers all of the metrics with respect to the V. VI launch are up into the right.
Which is fantastic.
Importantly, the product is performing extremely well in the market I referenced the social media.
Information that's out there publicly available.
Mark L. Baum: And so we have very high hopes for that product. As I've said, for several years, we've studied the dry market. We know it very well.
And so we have very high hopes for that product as I've said for several years.
We've studied the dry eye market, we know it very well, we've compounded 0.1% cyclosporin with our imprimis Rx business now for over five years.
Mark L. Baum: We've compounded 0.1% cyclosporine with our ImprimisRx business now for over five years, and what Vivi presents to the market is really a complete shift in the cyclosporine market, which is 8 million units strong last year in the U.S. market. So we think we have a product that can dominate the category. And, you know, in terms of what the opportunity is, there are so many patients that have failed other cyclosporine products, whether it's the 0.05% branded version of cyclosporine or its generic version, or even the 0.09% cyclosporine product that is branded and available. The tolerability profile of those products is very different from the tolerability profile of Vivi.
And would be buy presents to the market is really a complete shift in the cyclosporin market, which is 8 million units strong last year in the U S market. So we think we have a product that can dominate the category.
And you know in terms of what what the opportunity is there. So many patients that have failed other cyclosporin products, whether it's the.
The 0.05% branded version of cyclosporin or its generic version.
Or even the 0.09% cyclosporin product that is branded and available.
The Tolerability profile of those products is very different from the Tolerability profile of V VI and so.
Mark L. Baum: And so there are a lot of people that have failed on those products, and those are candidates to benefit from Vivi. And in terms of what the size of the market can be, you know, this is a product that gives me far greater confidence that the number that I wrote about in a couple of letters to stockholders ago, which was a billion dollars in revenue in the aggregate for our product portfolio, can actually be met. I mean, that is a real target for us now.
There are a lot of people that have failed those products and those are candidates to benefit from Dubai and in terms of what the size of the market can be.
You know this this is a product that gives me.
Far greater confidence that.
The number that I wrote about a.
A couple of letters to stockholders ago, which was $1 billion in revenue.
In the aggregate for our product portfolio that can actually be met I mean that is a that is a.
Real target for Us now.
Mark L. Baum: The uptake in VIVI, and certainly this Form 8K that was filed this morning, this puts us in the zone of where we wanted to be. I talked about our revenue getting to a billion dollars or more with our product portfolio if certain things went our way. Well, Yeah.
The uptake in V. VI certainly this form 8-K that was filed this morning.
Puts us in the zone of where we wanted to be I talked about our revenue getting to $1 billion or more with our product portfolio of certain things went our way well.
The.
Operator: The things that we announced today certainly qualify as something going our way, so we're really excited about that and what Maria and her amazing team are doing with eBay. The next question comes from Aaron Wookmeyer with Lake Street Capital Market. Please go ahead. Hey, good morning guys. This is Aaron on the line for Brooks.
The things that we announced today that certainly qualifies as something going our way, but we're really excited about that and what Maria and her amazing team are doing with anybody.
The next question comes from Aaron Meyer with Lake Street Capital markets. Please go ahead.
Hey, Good morning, guys. This is Dan on the line for Brooks.
Aaron Wookmeyer: Appreciate all the color so far. I guess related to tri-essence, have there been any more setbacks there? I know you had a few comments in the prepared remarks, but I guess if you could just provide a bit more color on sort of inventory timing and how you're thinking about that and maybe just your confidence there to get that before year end, that'd be helpful. Sure. Thank you, Aaron.
I appreciate all the color so far.
I guess related to Tri essence has there been any more setbacks or you know I know you had a few comments in the prepared remarks, but I guess, if you could just provide a bit more color on sort of inventory timing and how you're thinking about that and maybe just your confidence there to get that before before year end that'd be helpful.
Sure. Thank you Erinn.
Mark L. Baum: So, look, as I said in the letter to stockholders, TriEssence was not really being made for more than five years by our manufacturing partner, and the people and the processes that are involved in making that product were kind of dormant, and because they weren't practicing, that knowledge wasn't being produced. The progress that we've made, in the last six months, in particular, has given everyone in our organization a very high degree of confidence that we're going to have success meeting all of the required parameters to make a presence here very soon. There were people in our organization, by the way, that were somewhat doubtful.
So look as I've said in the letter to stockholders try essence was not really being made for more than five years by our manufacturing partner.
And.
The people and the processes that are involved in making that product we're kind of dormant.
And because they weren't practicing that knowledge wasn't being produced.
We knew that it was going to be a challenge.
Reintroducing the product into the market in terms of manufacturing it but what I can tell you is is that.
The progress that we've made.
In the last six months in particular is giving everyone in our organization.
A very high degree of confidence that we're going to have success meeting all of the required parameters to make try essence here very soon.
There are people in our organization by the way.
That we're somewhat doubtful.
Mark L. Baum: But what I can tell you is, at this point, because of the progress that we've made, there is no one in our organization, whether they're an employee or a consultant, who does not have a high degree of confidence that we're going to have triessence made successfully and very soon. We have a batch being produced, a PPQ batch, which is effectively a commercial batch that meets the production parameters, the performance, specifications that's going to happen as I said in the middle of middle of April so we'll produce two more batches if that first one is successful and then within you know a period of a couple of months we should be able to be back on track there's quite a bit more information as I said in the letter to stockholders and also in our corporate presentation about triessence but it is a very high utility product it's an unusual product with an unusual label and the physician community I can tell you is is very interested in seeing it back in the market and we think it's going to happen very soon we I can't predict whether it's going to happen you know by June or or by August what I can tell you is that we're getting very strong help from our manufacturing partner and our manufacturing partner as you can see on the box for the product is a very sophisticated organization. And we, as I said, have a high degree of confidence we'll have triacin back here very, very soon. Great. That's super helpful commentary. Thanks for taking the questions, guys. H.R.
But what I can tell you is at this point because of the progress that we've made.
There is no one in our organization, whether they are an employee or a consultant who does not have a high degree of confidence that we're going to have Trey essence made successfully in very soon.
We have a batch being produced a P. P to batch, which is effectively a commercial batch if it meets the.
Production parameters.
Performance specifications, that's going to happen as I said in the middle of.
Middle of April so we'll produce to more batches if that first one is successful.
And then within a period of a couple of months, we should be able to be back on track.
There's quite a bit more information as I said in the letter to stockholders and also in our corporate presentation about <unk>, but it is a very high utility product. It's an unusual product with an unusual label and the physician community I can tell you is very.
Interested in seeing it back in the market.
And we think it's going to happen very soon we I can't predict whether it's going to happen.
By June or or by August what I can tell you is that we're getting very strong health.
Our manufacturing partner.
And our manufacturing partner as you can see on the box for the product is a very sophisticated organization.
And we as I said have a high degree of confidence we'll have kras, it's back here very very soon.
Yeah.
Great. That's super helpful commentary, Thanks for taking the question says.
Thank you Sir.
Operator: And before we take our next question, just a reminder, if you'd like to ask a question, please press star, then 1. The next question comes from Jeffrey Cohen with Lattinburg, Duluth. Please go ahead. Oh, hi there. Good morning.
And before we take our next question just a reminder, if you'd like to ask a question. Please press Star then one.
The next question comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.
Oh, Hi, there good morning, thanks for taking our questions so true.
Jeffrey Scott Cohen: Thanks for taking our questions, Mark and Andrew. Firstly, could you talk about perhaps the... Anticipated cadence on the top line for the year, should we expect something somewhat linearly increasing as we did last year? And then, secondly, could you touch upon anticipated margins for the year, inclusive of transits? Andrew, do you want to try and tackle that?
For Marc and Andrew first of all could you talk about perhaps the.
Anticipated cadence on the topline for the year should we expect something somewhat linearly increasing as we did last year and then secondly.
Could you touch upon.
Anticipated margins for the year inclusive of a trip.
Andrew do you want to try and tackle that I think we're going to keep our numbers, where we are which is.
Mark L. Baum: I think we're going to keep our numbers where we are, which is over 180 million. And I think with, as I said, the news this morning, our margins should increase, not decrease. But Andrew, do you want to add anything?
And over $180 million and I think with that said the news of this morning.
Our margins should.
Increase not decrease but Andrew do you want to anything.
Andrew R. Boll: Yeah, Jeff, just to reiterate what Mark said, from a revenue perspective, we're sticking with what we said, which is more than 180 million this year. We feel that's strongly intact. And then on EBITDA margins, or operating margins, the approach is going to be kind of. You know, dependent upon revenue opportunity. And so we're going to kind of temper that.
Yes, Jeff just to reiterate what Mark said from a revenue perspective, we're sticking with what we say which is more than $180 million. This year.
We feel that strongly intact, and then on EBITDA margins or operating margins.
Sure.
The approach is going to be kind of.
Dependent upon revenue opportunity.
So we're gonna kind of temper.
Andrew R. Boll: Temporary revenue growth with EBITDA expectations. We mentioned the leverage ratio, so we want to be sure we're coming in under four times levered at the end of the year, but outside of that, we'll continue. If we see opportunities to invest in that revenue growth for the next years, especially thinking about VVI, thinking about IESO, and tryingsence to an extent, we'll do it. And so the actual margin percent may be different depending on the revenue numbers of the year, but certainly we'll keep the leverage ratio in mind as we make investments. Okay, I got it.
Temper revenue growth with EBITDA EBIT expectations, we mentioned the leverage ratio. So we want to be sure were coming in.
Under four times Levered at the end of the year.
But outside of that we'll continue if we see opportunities to invest in that revenue grows.
On the out years, especially.
Thinking about V VI could give out I E though.
Traffic to an extent.
We'll do it.
So that the actual margin percent may be different depending on the revenue number for the year, but certainly we'll keep the leverage ratio in mind as we make investments in.
Planning for the future.
Jeffrey Scott Cohen: And lastly, folks, could you talk about pricing at all? Did you take any pricing in for 23? Is there any anticipated pricing for 24? And in the comments, I would appreciate it.
Okay got it and lastly could you talk about personally at all did you check in your pricing in 'twenty three is there any anticipated pricing for 'twenty four.
Any comments there would be appreciated thank you.
Mark L. Baum: Thank you. Andrew, do you want to touch on that? I'll just say to start and that, To be clear, our philosophy on pricing for any product is focused on access and affordability. That is the cornerstone of our company. And there are products that we have raised prices on. But there are also other products in our portfolio where we've actually lowered prices and made them even more accessible. But before we do anything, just philosophically, we always make sure that we have a patient assistance program in place that is aggressive, whether it's a branded product or a compounded product to ensure access and affordability to anyone who can benefit from our product. Andrew, do you want to add anything on price?
Andrew you want to touch on it I'll just.
Say to start in that.
To be clear our philosophy on on pricing of any product.
He is focused on access and affordability.
The that is the cornerstone.
Stone of our company and you know.
There are products that we have raised prices on there are also other products in our portfolio, we've actually lowered prices on and made.
And even more accessible.
Before we do anything just philosophically, we always make sure that we have a patient assistance program in place that is aggressive.
Whether it's branded product or a compounded product to ensure access and affordability to anyone who can benefit from our products. Andrew do you want to add anything on pricing.
Andrew R. Boll: Yeah, Jeff, just more specifically in the corporate deck, we have some wholesale acquisition cost pricing for some of the products, triathlons probably being the most notable one, where WAC pricing for that product is going to be $944 at the time we relaunch the product into the market. At Mark's point, you know, black is list price, and there's a gross to net element to that.
Yeah, Jeff just more specifically in the corporate deck, we have some.
The wholesale acquisition cost pricing for some of the products.
<unk>, probably being the most notable one where.
Lack pricing for that product is going to be $924 at.
At the time, we relaunched the product tanker market.
To Mark's point.
Black as list price is the gross to net element to that.
Andrew R. Boll: You see, in the accounting and the footnotes, you know, we talk a lot about the gross center accounting, which factors in the patient assistance programs, the co-pay assistance programs, making sure we're living up to our mission, which is access and affordability for the patient. Ultimately, we're going to price the products to make sure we have enough supply of the products so that we can make money selling the products and getting them to the patients, but we're also keeping in mind that patient element. A great example of that related to triessence is related to triessence.
You see that in the accounting in our footnotes, we talked a lot about the Cristina accounting.
Which factors in the patient assistance programs the co pay assistance programs, making sure we're living up to our mission, which is access and affordability of a patient.
<unk>.
And so.
Ultimately, we're going to price the products to make sure we have.
Steady supply of the products, we can make money selling the products and getting them to the patient, but we're also keeping in mind that that patient access element.
A great example of that related to try essence is related to try out some of the price of Tri essence had not seen any adjust.
Mark L. Baum: You know, the price of Tryssence has not seen any adjustment for 16 years since the product actually hit the market. And so, you know, one of the challenges is that with a product that's on the FDA's drug shortage list that's not being made, that has not been priced competitively, there's just not a profit incentive to actually make the product available. And, therefore, it ends up on the drug shortage list year after year after year. And so when we thought about pricing for Tryssence, which is, you know, as Andrew said, 944 units, we looked at the other preservative-free triamcinolone product that's in the market. It's not competitive with our product, but it is a preservative-free triamcinolone product, and it's priced at more than $1,800 per unit.
Adjustment for 16 years since the product actually hit the market.
So one of the challenges is with a product that's on the Fda's drug shortage list, that's not being made that has not been priced competitively. There's just not a profit incentive to actually make the product available and therefore it ends up on the drug shortage list year after year after year and so when we thought about.
Pricing for Trey essence, which is.
As Andrew said 944 unit, we looked at the.
The other <unk>.
Preservative free.
Triamcinolone product thats in the market.
Not competitive with our product, but it is a preservative free triamcinolone product and it's priced.
More than $1800 per unit and so we're almost half.
Mark L. Baum: And so we're almost half of that price. So we're always going to be lower in price and try to be more accessible and more affordable. There are other intravitreal steroid products that are certainly over $1,400, $1,500 per unit.
Of that price, so we're always going to be lower in price.
To be more accessible and more affordable.
There are other intra vitriol steroid products that are you know certainly over 1400 $1500 per unit and so we remain significantly lower than them, but we did adjust the price too.
Mark L. Baum: And so we remain significantly lower than them, but we did adjust the price to create enough profit incentives for us to invest in the product and make sure that we have a steady supply of the product to provide to the market, which is considerable. Awesome. I think that does it for us. Thanks again for the comprehensive commentary and readout. For sharing. Thank you, Jeff.
To create enough profit incentive for us to invest in the product and make sure that we have a steady.
Supply of the product to provide to the market which is considerable.
Awesome I think of those Ross, Thanks, again for the comprehensive commentary and Rudolf.
I appreciate it thank you Jeff.
Thanks, Jeff.
Yeah.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Mark L. Baum for a closing remarks. Thank you, Drew.
This concludes our question and answer session I would like to turn the conference back over to Mark L. Baum for any closing remarks.
Thank you drew and.
Mark L. Baum: And I guess I kind of want to apologize to those of you who were waiting for the issuance of our fourth quarter and year-end earnings and letter to stockholders yesterday, which we intended to publish immediately after the market closed. But as I said earlier, very fortunately, yes, fortunately, after drafting all of our documents and preparing our press release and getting everything ready to go, the most positively consequential thing that has happened to our company actually happened. I mentioned the news that we received from CMS yesterday, which is going to make iHESO, which is a low-viscosity patented topical anesthetic gel that is doing fantastic things in clinics and surgery centers across the country, separately payable and separately reimbursable in the physician's office. This opens up a very large market for iHESO, and it allows Medicare beneficiaries to experience the unique benefits of the product.
I guess I kind of want to apologize to those of you who are waiting for the issuance of our fourth quarter and year end earnings and letter to stockholders less yesterday, which we intended to publish immediately after the market close but.
As I said earlier very Fortunately, yes, Fortunately after drafting over documents.
Preparing our press release and getting everything ready to go the most positively consequential thing that has happened to our company actually happened.
I mentioned the.
The news that we received from CMS yesterday.
Which is going to make I, he's though which is a low viscosity patented topical anesthetic gel.
<unk>, which is doing fantastic things in clinics and surgery centers across the country.
It's going to make it separately payable separately reimbursable in the physician's office and it opens up a very large market for <unk> and it allows Medicare beneficiaries to experience the unique benefits of our product.
Mark L. Baum: So after we calmed down from that excitement and decided not to delay our filings, we made those filings and then ultimately put out a separate Form 8K before the market opened, revealing this wonderful new development. So once again, we apologize for being slightly tardy yesterday in publishing everything I heard from some of our stockholders, but we hope you appreciate that this was an example of no news being very good news. Indeed, yesterday was special for every member of the Harrow family, and it was an answer to some of our prayers, actually. In last letters to stockholders, as I mentioned earlier, I've opined about aggregate revenue potential. I've said that our product portfolio could achieve a billion dollars in annual revenue if, as I said, some things go our way. Yesterday's news was an example of something that went our way. It's a beautiful thing for many reasons because we're seeing amazing stories, practical stories of how iHESO is positively changing anesthesia protocols around the country for ophthalmic procedures. It's even reducing patient exposure to dangerous opioids.
So after we call them down from that excitement.
We decided.
To not delay our filings we have made those filings and then ultimately put out a separate form 8-K before the market opened.
Revealing this wonderful new development. So once again, we apologize for being slightly tardy yesterday and publishing everything I heard from some of our stockholders, but we hope you. Appreciate that this was an example of no news being very good news.
Indeed yesterday with special for every member of the Herald family and it was and answered to some of our prayers actually.
Past letter stockholders.
As I mentioned earlier I have opined about aggregate revenue potential and said that our product portfolio can achieve a $1 billion in annual revenue.
As I said, some things go our way.
Yesterdays News was an example of a thing that went our way.
It's a beautiful thing for many reasons, because we're seeing amazing stories practical stories of how <unk> is positively changing anesthesia protocols around the country for ophthalmic procedures, even reducing patient exposure to dangerous opioids.
Mark L. Baum: Our team feels very good about what we believe is going to happen to IHESO and, therefore, Harrow. So as I close this communication from what has been a whirlwind couple of days, I want to acknowledge and thank all members of our Harrow family, our loyal employees, their families who support our employees, and our stockholders for their patience and steadfast support. Your belief in our mission has been a cornerstone of our progress, and together, we're going to build a company that we can be proud of. It has never been truer than today that the very best is not only yet to come for Harrow, but it is soon to come. Thanks to everyone for attending today's call and for your interest in Harrow. If you have any investor-related questions, please email Jamie Webb at jwebbb at harrowinc.com.
Our team feels very good about what we believe is going to happen to our Zoe and therefore herro.
Clothes. This communication from what has been a world win a cup.
A couple of days I want to acknowledge and thank all members of our hero family, our loyal employees their families support our employees and our stockholders for their patience and steadfast support your belief in our mission has been a cornerstone of our progress and together, we're going to build a company that we can be proud of.
Never been truer than today that the very best as not only yet to come for hero, but it is soon to come thanks to everyone for attending today's call and for your interest in Harrow do you have any investor related questions. Please email Jamie Webb J web J W. E B b.
Harrow Inc. Dot com.
Operator: This will conclude our call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [inaudible] The Ultimate Parody Site-Limited, LLC.
This will conclude our call.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
[music].
Yes.
[music].
Yeah.
[music].