Q3 2024 Harrow Inc Earnings Call
Good morning, and welcome to heroes third quarter 'twenty 'twenty four earnings Conference call. My name is Sean and I would 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.
Speaker Change: I would now like to turn the call over to Jamie Webb Director of Communications and Investor Relations for Harold. Please go ahead.
Jamie Webb: Thank you operator.
Jamie Webb: Good morning, and welcome to Harold third quarter 2024 earnings Conference call.
Jamie Webb: 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.
Jamie Webb: Forward looking statements are subject to numerous risks and uncertainties many of which are beyond heralds control, including risks and uncertainties described from time to time and it does he see fine.
Jamie Webb: Such 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.
Jamie Webb: For a list and description of those 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-Q filed with the Securities and Exchange Commission.
Jamie Webb: <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.
This conference call contains time sensitive information and accurate only as of today.
Additionally, Harrow refer to non-GAAP financial metrics, specifically adjusted EBITDA and our adjusted earnings as well as core results such as core gross margin core net income and core diluted net income per share.
Jamie Webb: 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.
Jamie Webb: By 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 Dot Harrow Dot com.
Speaker Change: Joining me on today's call are Harris, Chief Executive Officer, Mark L. Baum, and <unk>, Chief Financial Officer, Andrew, though with that I'd like to turn the call over to Mark to go over some prepared remarks prior to the question and answer session.
Speaker Change: Thanks, Jamie and good morning to everyone. Thank you for joining us today.
Speaker Change: Please make sure to review our supplemental documents for the quarter, including our earnings release corporate presentation and letter to stockholders all of which are available on the Investor Relations section of our website.
Speaker Change: Third quarter total reported record revenue of $49 $3 million and that's a 44% increase over the prior year quarter, the slight increase over the previous quarter as well gross margins were solid and we generated cash from operations and operationally while.
Speaker Change: We could've done better as I do.
Speaker Change: Discussing in my letter to stockholders overall, we are well positioned to meet my commitment to exceed our 2024 financial guidance.
Speaker Change: Actually given what looks like record performance in October and the fourth quarter, which is expected to be our strongest quarterly period of the year.
Speaker Change: Now, let's discuss some of our key products and achievements from the third quarter.
Speaker Change: V VI, our crown jewel dry eye asset, which we launched in January of this year has surpassed our expectations and we believe it is destined to be a category leading product due to its rapid onset.
Speaker Change: You could see twice daily dosing and favorable Tolerability profile.
Speaker Change: <unk> prescription volume increased 55% in the third quarter compared with the second quarter.
Speaker Change: As I mentioned in my letter to stockholders, our commercial team did such an excellent job of selling Levi that we reached the outer bounds of our internal forecast leading to a temporary inventory shortage around mid September.
Speaker Change: And our V VI revenue potential therefore for the third quarter. It was unfortunately tapped the good news is that we were able to recover in the fourth quarter and.
Speaker Change: And we have appropriately adjusted our inventory levels by ordering additional batches. So that we will not run out again.
Speaker Change: What drives V by strong sales growth is its clinical value, which is best demonstrated in the amazing refill rate, we have seen listen to the statistic before these by 90% of patients did not refill their dry eye prescriptions and we are not on therapy at the end of the year.
Speaker Change: However, V VI patients are now into their eighth and ninth refills and we continue to see over 90% refill rates for Veeva. It's just incredible payers are also taking note and as a result, we are seeing consistent improvement in insurance formulary.
Speaker Change: Access for Levi and I talk more about that in our letter to stockholders strong D. Var prescription growth has led us to increase the number of covered territories, where we have boots on the ground from 51 in the second quarter to 61 in the third quarter and in those 60.
Speaker Change: <unk> territories, even though we haven't filled all of those open positions, we are already beating to Avaya and about 50% of these markets sequel, and about a third of our markets and my bow and nearly 10% of the markets.
Speaker Change: As demand increases and we continue to increase our market share. We will also add territories as warranted.
Speaker Change: <unk> continues to perform well too.
Speaker Change: The third quarter I, just saw a 15% sequential increase in unit demand over the second quarter and in addition, he says reorder rate also was impressive at 82%.
Speaker Change: And that demand has increased up and to the right every quarter largely because eyecare professionals are discovering that I E. Zoe is not only an excellent clinical choice for their patients, but we also hear that enhances their productivity by improving their procedural workflow.
Speaker Change: That said in the third quarter with the advice and support of our commercial leadership and after looking at the incredible opportunity before us I made a strategic decision to implement what I have referred to in the letter to stockholders.
Speaker Change: <unk>, the retina pivot, which is to say that our commercial teams call points moved nearly exclusively to the retina specialist community. There are numerous compelling reasons why I made this decision.
Speaker Change: It's because of the concentration of retina providers, which allows us to have more I E. Zoe unit volume impact with fewer call points.
Speaker Change: The intramuscular injection market is massive and growing.
Speaker Change: And he is though is an ideal clinical choice for ophthalmic anesthesia in this setting of care.
Speaker Change: And beginning on July one of 2024, because we had clarity from CMS on reimbursement even for same day bilateral use cases. It just would have been foolish not to make this market our primary interest.
Speaker Change: I discussed the retina pivot more and the letter to stockholders, but suffice it to say that this pivot may have resulted in a somewhat subdued demand for <unk> in the third quarter as our sales folks focus on sales processes in the retina specialist community.
Speaker Change: I am more than pleased to report that we are already seeing the benefits of this retina pivot in the fourth quarter, just as our commercial leadership predicted and I am 100% convinced that this decision was the right one for not only 2024, but for 2025 and beyond.
Speaker Change: Okay.
Speaker Change: And as promised the relaunch of Tri essence has happened in the month of October.
Speaker Change: Following years of market absence, bringing tri essence back to the retinal specialist community is yet another compelling reason for our retina pivot.
Speaker Change: Absence of try asking from the market created a backlog of demand for which there has been no on label alternatives and we are working hard to make sure that everyone in that community knows a try essence is back.
Speaker Change: We are convinced that our investment in tray essence will be richly rewarded and I can tell you that today I remain more convinced of this than ever.
Speaker Change: We also see the combination of <unk> and Tri essence is a powerful one two punch enhancing our commercial team's ability to effectively serve the retina market.
Speaker Change: Finally, other key parts of our business continue to perform and I would encourage you to review the letter to stockholders to see my latest commentary on our anterior segment business.
Speaker Change: And our Imprimis Rx business, we are happy to answer your questions I will pause to have our operator poll for questions operator.
Thank you to ask a question. Please press star one one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star one one again.
Speaker Change: And our first question comes from Chase Knickerbocker with Craig Hallum. Your line is now open.
Chase Knickerbocker: Good morning, Thanks for taking the questions.
Chase Knickerbocker: Mark I guess, just first health.
Chase Knickerbocker: Helpful to see you kind of give that inventory number that you have in Q4, Entre essence, I mean, how should investors be thinking about the performance of that drug in Q4, with a little bit more detail around them.
Chase Knickerbocker: Kind of what you think will need to be kind of stocked at distributors and then ultimately how much of that kind of inventory do you think you can pull through before the end of the year given that the product has been off the market for so long.
Chase Knickerbocker: Yeah.
Speaker Change: Thanks for that Chase well first I have some I think.
Speaker Change: Very positive news about <unk> and that is that all of the regional Macs.
Speaker Change: Have indicated that they are reimbursing for triad suite, so that is very important.
Speaker Change: News.
Speaker Change: I would also say that the response, thus far has been very positive I laid out as you noted in the stockholder letter the inventory that we have to sell and what I can tell you is that the commercial team.
Speaker Change: Actively working to push that inventory through the system and into the system. So we can realize revenue as much revenue as possible from those units in the fourth quarter and we have.
Speaker Change: I think some some very positive indications in terms of that inventory so far but the team is working hard.
Speaker Change: And.
Speaker Change: As I said I think emboldened by the response at least from me.
Speaker Change: Medicare on the product specific J code, thus far Andrew do you want to add to that at all.
Andrew: Yes, Jason I think from our perspective, two we're obviously early in the game with the relaunch.
Andrew: So little early for us to give kind of more precise guidance on what we think exact pull through will be but the initial response has been great.
The team is a big big point for us at HBO in October one when we came out and I think the.
The physicians.
Andrew: Happy to see it back obviously, it's an important product in the market.
We're really focused on also.
Andrew: The planning, making sure that supply chain is set for the for the duration of them.
<unk> next year and beyond and so that is also another critical focus for us.
Andrew: This initial stock.
Andrew: Yeah.
Andrew: Our focus really on continuing to make sure supply is there so that theres no shortages for the market.
Andrew: Forward.
Andrew: And I do want to add we do have additional batches being made and scheduled to be made in 2025. So.
Speaker Change: I think the issue that Andrew is referring to is just longer term.
Speaker Change: Supply.
Speaker Change: Got it and then just a confirmation question there I guess on those batches you would expect to have more inventory next year in a material sense then than what you had in Q4 here for Triathletes and then just a couple on on V. VI.
Mark: Mark I'm, sorry, if I missed this but can you quantify kind of what you guys think from a dollar perspective that disruption caused kind of in late Q3.
Mark: And then a little bit.
Mark: More kind of color around.
Mark: That initial part D coverage that.
Speaker Change: You were talking about in the recent press release and in the shareholder letter.
Speaker Change: Any color there around kind of formulary management is there any step edits and narrow what does that what are those kind of contracts look like on the Medicare side.
Yes, so I think I.
Speaker Change: My phone on mute, but I think your question was around.
Speaker Change: Quantifying what the Veeva disruption was and then also kind of where we work on a qualitative basis with this Medicare part D contract is that right.
Speaker Change: That's correct.
Speaker Change: Okay, Yeah. So I mean look if you.
Speaker Change: If you add up what we would have had with <unk> and V VI.
Speaker Change: It's several million dollars of Ids.
Speaker Change: <unk> revenue and.
Speaker Change: Probably would have allowed us to meet revenue.
Speaker Change: <unk>.
Speaker Change: The external analysts.
Speaker Change: The good news is is we're going to recapture that we are recapturing that revenue in the fourth quarter.
Speaker Change: So it was as I I think characterized it in my letter to stockholders, we view it as a bump it's an unfortunate bump, but it's something that we had to deal with nevertheless.
Speaker Change: It's kind of a good problem to have but youre going to have any problem.
Speaker Change: Is that the demand is so strong that it is outside of the bounds of your forecast.
Speaker Change: But we do take responsibility, we can do a better job I think of forecasting but the answer to your question is that it was several million dollars for the period.
Speaker Change: In terms of the part D plans, that's a really great story, because we're talking about a preferred brand position with one of the largest med D providers. So it's not easy to get those sorts of positions.
Speaker Change: We're still working on additional agreements, but the response so far I think is better than we had anticipated and we're getting these contracts in place before we thought we would get them in place so.
We're doing well there and I think we.
Speaker Change: Should expect additional <unk>.
Speaker Change: Coverage arrangements.
Speaker Change: Near term, Andrew do you want to add to that at all.
Yeah.
Speaker Change: Nothing yet.
Speaker Change: Great and then just one confirmation and I'll hop back in queue guys, sorry for all the questions, but just on D. By the eight months and that 91% refill rate that you mentioned is that kind of from first fill and so just I guess asked another way that would be kind of like two or three ex kind of what we would think of from kind of competitive dry.
Speaker Change: I kind of.
Speaker Change: Discontinuation rates.
Speaker Change: Improvement there can you just confirm that I'm looking at that number right.
Speaker Change: Yeah, Andrew can comment on on on that and I would just say by the way I mean V. By Conservative conservatively next year is set to weigh more than double that's if we don't do much of anything so it's a really exciting product.
Speaker Change: And I think also.
Speaker Change: We're slated to capture more and more of that revenue next year as we get more contracting done which is very exciting as our ASP hopefully improves Andrew do you want to comment on.
Andrew: Yes, yes.
Andrew: I'd say, so that the refill rate is based on patients eligible for that refill.
Andrew: And so out there in other words, if they are eligible for their 10 three Phil we're seeing.
Andrew: That large portion.
Andrew: Ah patients refilling.
Andrew: I think for the last two calls I have been.
<unk> said, how excited I am about that refill rate because.
Speaker Change: Ross I mean from a modeling perspective, it is well beyond what we expected.
Speaker Change: Definitely well beyond my model that's.
Speaker Change: That's one of the reasons, Doug Yeah that inventory shortage issue in the last couple couple of weeks of September.
Speaker Change: But it's something shareholder should be really excited about it's going to drive a ton of value I think.
Speaker Change: Next year and certainly in the long term because those refills are just continuing to stack.
Speaker Change: The product is.
Speaker Change: It really performing well.
Speaker Change: And better than we expected from a clinical perspective and certainly from.
Speaker Change: On a financial perspective.
Speaker Change: And it continues for me as CFO to be my favorite product, it's something that we want to continue to invest in on the sales and marketing side.
Speaker Change: <unk>.
Revenues from that product scale up in and drive further value in the medium and long term.
Speaker Change: Great. Thanks, guys.
Chase Knickerbocker: Thanks Chase.
Speaker Change: And the next question comes from Brooks O'neil with Lake Street Capital. Your line is now open.
Speaker Change: Good morning, guys. So I have a couple of quick questions first just curious if you'd provide any additional color on summer seasonality I think you called that out as the factor that.
Speaker Change: Maybe normally limit.
Speaker Change: Results in Q3, but any color would be helpful.
Speaker Change: Sure.
Speaker Change: Since we began producing revenue back in 2014.
Speaker Change: A lot of our revenue was dependent on surgical scheduling.
Speaker Change: The summer months are always the weakest months and that's not only true for our business, but really.
Any any.
Speaker Change: Drug company or device company that.
Speaker Change: Cells into those markets so.
Speaker Change: The summer time.
Patients go on vacation doctors go on vacation staff goes on vacation and so there is always a reduced.
Speaker Change: Number of surgical openings.
Speaker Change: Yeah.
Speaker Change: Makes sense, let me just ask you one other.
Speaker Change: One that is.
Speaker Change: I appreciate all the color you gave on the buy in I E, though and try asking.
Speaker Change: As you take a step back and think about the launches of each of those products and the response in the marketplace is there.
Speaker Change: Anything you'd call out that worries you that strike.
That's not what we hope for and Thats not what we expected.
Speaker Change: Beyond the color you offered so far thank you very much for taking my questions.
Speaker Change: Sure.
Speaker Change: I think with any launch.
Speaker Change: Things go your way.
Speaker Change: Many times and then there are always things that don't go your way.
Speaker Change: It just happens.
I think with.
Speaker Change: Zoe.
Speaker Change: There have been a number of challenges.
Speaker Change: Over the last year and a half or so.
I'm really excited about where we stand right now I mean, the product is on track next year I mean, it's heading towards being a nine figure revenue product.
Speaker Change: In short order, that's what we promised and that's what looks like is happening.
Speaker Change: And that's a good thing we have absolute clarity on the reimbursement side now that is very positive we didn't have that when we launch so in many ways I would say things didn't go perfectly out of the gate.
But the team has done such an extraordinary job of PAH.
Speaker Change: Positioning the product now.
Speaker Change: Many years into the future.
Speaker Change: Our stockholders I think should be really excited about.
Speaker Change: Zoe.
Speaker Change: We buy as Andrew said, he is incredibly enthusiastic about it and he should be because once patient start using this product it looks like they continue to use it they continue to refill it.
Speaker Change: And as I've said, many times over the years the value of products like be buy is really on the refill the chronic use of the product without having to invest further in sales and marketing.
Speaker Change: That's how you get the economic compounding effect, taking place for chronic pharmaceutical products like Levi.
Speaker Change: And then finally, I would say with with Tri essence.
Speaker Change: Yeah.
Speaker Change: That's right now and I can tell you once again, some things have gone absolutely as we expected and some things have not.
Speaker Change: But it's really important to note that our team when we launch something or take a particular action we not only have a primary action, but we have secondary and tertiary strategies behind them. Because you have to anticipate that not everything is going to go your way.
Speaker Change: <unk> seen that happen with Tri essence, we actually have a really exciting lifecycle management strategy for that product as I've said on these calls I think in the past our expectation is that we want to be able to sell more try essence in 2035 than we do in 2025, So our stock.
Speaker Change: Holders should count on the fact that we have a lifecycle management strategy.
Speaker Change: That will be implemented to affect what I'm, saying.
Speaker Change: And I think that means that we should be able to over the longer term realize the value from these products that we had expected and that we've promised to our stockholders over the last year and a half or so.
Speaker Change: Yeah.
Speaker Change: It makes total sense, let me just slip in one more.
Speaker Change: I thought of it as you were talking.
Speaker Change: You've commented on the pivot the Haynesville pivot I think it was.
Speaker Change: Do you have plans to go back and try to capture the opportunity in the ophthalmic and cataract surgery areas or how are you thinking about that now.
Speaker Change: Yes first of all we're not abandoning that that market, we have quite a few.
Speaker Change: Customers in those markets and we will continue to service those customers without question.
Speaker Change: But when you take a look at what I've said.
Speaker Change: Regarding.
Speaker Change: How do you get to $1 billion of revenue by the end of 2027 on a revenue run rate basis.
Speaker Change: Every one of those quarterly periods.
Speaker Change: One of the things we need is significant revenue for my Heizo and I discussed that in the letter to stockholders, we penciled in about $75 million of quarterly revenue from that product.
Speaker Change: And what does that mean that means that we need to capture about six or 7% of the <unk>.
Speaker Change: <unk> injection market for Zoe.
Speaker Change: So it just makes sense give.
Speaker Change: Given what we're trying to accomplish by 2027 to really laser focus on that specific market does that mean, we're not going to have any units sold into the cataract surgery market no.
Speaker Change: Can expect it will probably sell into that market even by that date, even if it's not reimbursed in the ASC environment, but because we have such clarity.
Speaker Change: On in office reimbursement, that's really where we need to focus we have a permanent J code and we have clarity of reimbursement in the office setting and there are just more than $10 million annual procedures that take place there and we have an ideal product.
It is gaining traction.
Speaker Change: That is producing a lot of value not only clinically, but also I think for our stockholders.
Speaker Change: Great. Thank you very much.
Speaker Change: And the next question comes from Jeffrey Cohen with Ladenburg Thalmann <unk> Company. Your line is open.
Speaker Change: Hey, Mark good morning.
I guess you didn't talk about the size of the organization.
Speaker Change: Commercial for Veeva wanted to jump over to a user or <unk> could you give us at least some some relative metrics all sars if those folks out there are so both our user and <unk> and we talked about.
Speaker Change: Turning into Opex going forward and how youre thinking about.
Speaker Change: Great.
Speaker Change: Sure Thanks for that Jeff.
Speaker Change: To be clear the team that is selling.
Speaker Change: <unk> is also the same team that is selling try essence so.
Speaker Change: We now have two products in their bag, our strategic accounts team.
Speaker Change: <unk> is also selling both products, obviously and what we're working on I think to make.
Speaker Change: Our our efforts even more potent our new GPO relationships outside of even our sales organization, where we can efficiently.
Speaker Change: Reach very large segments of the market and particularly.
Speaker Change: That's true with strategic accounts, so we have a small but very mighty sales organization.
Speaker Change: Moving <unk> and <unk> and as I said.
Speaker Change: That team, which is extraordinarily.
Speaker Change: <unk> coupled with these new relationships that were bringing on which I also talked about or mentioned in the letter to stockholders.
Speaker Change: Really going to set us up well not only for the fourth quarter, but also for 2025 and beyond Andrew do you want to.
Speaker Change: Comment.
Speaker Change: On.
Speaker Change: The balance of the question.
Yes, Jeff on the operating expense side.
Jeff: The approach, it's typically would take kind of a moderated approach where we're trying to make sure the business is profitable.
Jeff: While we're still in growth mode.
Jeff: The operating infrastructure.
Jeff: The G&A part of SG&A is really there it's in place for the most part.
So any investment further in operating expenses is going to be tied primarily to the commercial side.
Jeff: And we'll continue to do that as revenues ramp as market access improves on refi.
Jeff: You should see us continuing to invest in our sales and marketing and market access type activities to further drive revenue and further drive growth.
Jeff: So all of those important part about that really is that those expenses shouldn't be tied to correlating revenue increase as well.
So the overall profitability of the company as we as we grow Opex will continue to expand.
Jeff: In 2025.
Jeff: Yes.
Speaker Change: Okay got it that's hopeful then one more if I may we haven't heard about it or any commentary or thoughts on how everything is going well.
Speaker Change: Mr. Please.
Speaker Change: Andrew do you want to.
Speaker Change: And a comment about implements.
Speaker Change: Business is doing really well is producing a lot of cash that's for sure.
Speaker Change: And Jeffrey we added a new disclosure in the Q, where we broke out segments. So you can kind of get an idea of the profitability of.
Speaker Change: Of the on premise business as well as our branded business and how those two things are performing at an individual level.
But we've been really pleased with with housing firms businesses and operating this year summer months are traditionally slow as Mark mentioned.
Speaker Change: But despite that it's continuing to see improvement, we really see a pathway, especially in 2025 to see double digit revenue growth.
Speaker Change: And we've talked about in the past hitting.
Speaker Change: Definitely seeing new accounts get added there.
Speaker Change: And continue to see a real market need for the products.
Speaker Change: Teen market and seeing even new products come to market, we launched a new product called <unk> <unk> and <unk>.
Speaker Change: Seeing initial uptake there.
Speaker Change: Customer reception has been really positive.
Speaker Change: Super Thanks for taking my questions.
Jeff: Thank you Jeff.
Speaker Change: As a reminder to ask a question press star one on your telephone.
Speaker Change: The next question comes from my own Tani with B Riley Securities. Your line is now open.
Speaker Change: Goodbye and team thanks for taking the question.
Speaker Change: I appreciate it deployed cube trained update that's helpful. Just.
Speaker Change: Just quickly on the V Y script volume and market share trends look impressive could you talk a bit more on what youre doing to improve gross to net based on I'm not you are trending towards lower than <unk>.
Dry eye launch.
Speaker Change: The comment on relevant.
Speaker Change: Moshe panic of it goes or how you might be investing in access band.
Speaker Change: Efforts and also should we see.
Speaker Change: Some DTC activity from you as we've seen from from the FDA and then added a couple of quick follow ups.
Speaker Change: Sure. Thanks for the question, let me start by commenting on the DTC effort and the answer is absolutely not you will not see us investing in DTC.
Speaker Change: That said, we really appreciate.
Speaker Change: The investments that we are seeing in DTC because.
Speaker Change: They are definitely increasing awareness.
Speaker Change: Dry eye disease.
Speaker Change: And when you have a product like the bi that is so effective and that patience.
Speaker Change: Appreciate it so much they refill at the rates that we're seeing.
Speaker Change: You just really want as much awareness consumer awareness in particular about the condition. So we're not going to invest there, but I think we're going to benefit there.
Which is terrific.
Speaker Change: Also wanted to add that the market access team that's working on V. VI is doing an extraordinary job we took a look at the gross.
Speaker Change: This last quarter and we just are seeing massive number, especially for a new launch in a very small on a rep.
Speaker Change: At a base of sales organization so very.
Speaker Change: I think efficient.
Speaker Change: Team.
Speaker Change: A lot of.
Speaker Change: Building a lot of revenue question is how do we get more and more of that revenue, we're going to do that through obviously contracting.
There is a lot of interest on the payer side with the product because of the refill rate because of what is being seen clinically.
Speaker Change: But what I can tell you is that on a net basis and that's really what our stockholders care a lot about is not only the refill rate, but what are we capturing on a per prescription basis. There is a significant.
Speaker Change: Uh huh.
Speaker Change: <unk> of revenue per unit that we can capture by tweaking a few little things.
Speaker Change: And those efforts underway right now and I think over the next couple of quarters.
Speaker Change: We have.
Speaker Change: The ability to vary meaningfully improve our ESP and that's what we're going to do I think our stockholders can count on us to do that that's not only going to improve revenue, but it's going to improve margins as well for the product Andrew do you want to add to that.
Speaker Change: Yes.
Speaker Change: From a gross to net perspective.
Speaker Change: This year, especially on the launch side, we've really been focused on volume and <unk>.
Speaker Change: <unk> volume and getting patients on therapy and getting doctors.
Introduce to the product.
That said next year and beyond as we gain more access as Mark was saying.
Speaker Change: And that should continue to improve.
Speaker Change: And then importantly, I think as access improves obviously you should also help drive volume so we should get a double benefit.
Speaker Change: Things start coming online.
Speaker Change: Very helpful and then on the Jai Essent re launch Ed.
Speaker Change: Sure.
Speaker Change: I know, it's early but are there is there any overlap in patients and procedures.
Speaker Change: Youll see users go that he's doing.
Speaker Change: In China.
Speaker Change: And some of that question.
Speaker Change: Net price.
Speaker Change: You expect.
Speaker Change: Jai essence that.
Based on the early discussions I know the gross to net for Eagle. For example is that training and 70%. So is the expectation that things would also be in that same range.
Speaker Change: So first first thing were not going to really comment on sort of net pricing for <unk> right now, we're actually still completing that work.
Speaker Change: But with respect to the first part of the question.
Speaker Change: What I can tell you is at least like on a GPO basis.
Speaker Change: Moving both products together.
Speaker Change: And so.
You can create a sort of retina specialists formulary.
Speaker Change: And Thats one of the real big positives about having both I Zoe and try essence.
Speaker Change: Think we're one of the only companies in the ophthalmic pharma market, we may even be the only company that actually has two products to sell into that market, which is exciting.
Speaker Change: Okay, and lastly, I know it isn't big low color on.
Speaker Change: Previous deal in your shareholder letter, including the Spa East with FDA recently and the phase two read out is obviously expecting shortly how should we think about value creation from that and thanks for taking my questions.
Speaker Change: Thank you Mike.
Speaker Change: I believe that.
Speaker Change: By this time next week.
Speaker Change: We're going to know where we stand with milk in terms of the phase III data.
Speaker Change: My expectations are that the phase III data.
Speaker Change: We'll read out early next week and that there'll be some sort of external communication regarding that.
Speaker Change: By this time next week.
Speaker Change: In terms of value creation for Mt.
Speaker Change: We are very interested in that product, obviously as I've said.
Speaker Change: And in prior communications we.
Speaker Change: We sell a compounded version of the melt formulation.
And if we were able to sell an FDA approved version of that product.
Speaker Change: It would result in nearly $100 million of annual <unk>.
Speaker Change: Revenue.
Speaker Change: We know who those customers are that use the compounded formulation.
Speaker Change: And I have a high degree of confidence they would prefer to use an FDA approved version of the product.
Speaker Change: And so as I said, it creates sort of a.
Speaker Change: As much of a no brainer a commercial launch as you could possibly have.
Speaker Change: That's something we're really attracted to but.
Speaker Change: All of that is premature unless we have a positive readout.
Speaker Change: And so we'll hopefully know more about that this time next week. If the data is strong as the data comes through especially given the spa that.
Speaker Change: Company was able to reach with FDA will be well positioned.
Speaker Change: To do great things with cat that patented formulation, it's patented not only domestically, but its patented internationally.
Speaker Change: It has uses.
Speaker Change: Certainly in ophthalmology, where we're focused but the.
Speaker Change: Greater number of use cases outside of ophthalmology.
Speaker Change: It's going to be a big product, but we need to see what the data looks like and if we were to fast forward a week from now we will now.
Speaker Change: That's all the time that we do have for questions and I would like now to turn it back to Mark for closing remarks.
Mark: Sure. Thank you operator, and thanks for joining us today I just want to reiterate how grateful we are for your continued support and trust in our company as we execute on this vision, it's not a short term vision. It's a long term vision I think we have a pretty good record of creating value over the longer term.
Mark: Really exciting time to be a part of our journey, though.
Mark: Whether you're an investor or a customer a partner or a member of the Herald family.
Mark: The progress and achievements that we've made this year a testament to the team's hard work and dedication of partnerships that we've built along the way and as we move towards the very end of this year, which I believe is going to certainly be a record year, our focus is going to be delivering sustainable growth.
Operational excellence and importantly value for all of our stockholders and stakeholders. So if you have any other questions or you need additional information.
Speaker Change: Does it take to reach out to Jamie Webb. Her E Mail address is J W. E. B B at Arrow, Inc. Dot Com This will conclude our call.
Speaker Change: Thank you so much for participating this does conclude the call you may now disconnect.
Speaker Change: Okay.
[music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: <unk>.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].