Harrow Health Inc (NASDAQ:HROW) revealed that it has forged a binding agreement for the acquisition of the exclusive US commercial rights to five Food and Drug Administration (FDA) approved ophthalmic products from the Novartis group of companies.
The Nashville, Tennessee-based eye care pharmaceutical company said the acquisition, when closed, will further expand Harrow’s portfolio of branded pharma products and its ability to serve the US ophthalmic surgical and acute care markets. The acquisition is expected to close in early 2023 and is subject to customary closing conditions.
Shares of Harrow raced nearly 18% higher on Wedensday in New York.
In a statement, Harrow CEO Mark L. Baum said: "This is a landmark transaction for Harrow, catapulting Harrow into a leadership position in the US ophthalmic pharmaceuticals market…these products will be immediately accretive to our revenues and excellently complement our current portfolio of ophthalmic prescription products.”
"We believe the addition of these five products to our ophthalmic pharmaceutical portfolio, which includes newly FDA‑approved IHEEZO, MAXITROL 3.5mg/10,000 units/0.1%, IOPIDINE 1%, and the market-leading ImprimisRx compounded formulary, will be of tremendous value to our customers,” he added.
Assuming the transaction closes during the first quarter of 2023, Baum said Harrow expects 2023 net revenues to be between $135 million and $143 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be between $44 million and $50 million, with both net revenues and adjusted EBITDA ramping up during 2024 and beyond.
The transaction, which is the second acquisition transaction between Harrow and Novartis, transfers exclusive US rights to the following ophthalmic products:
- ILEVRO (nepafenac ophthalmic suspension) 0.3%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated with cataract surgery;
- NEVANAC (nepafenac ophthalmic suspension) 0.1%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated with cataract surgery;
- VIGAMOX (moxifloxacin hydrochloride ophthalmic solution) 0.5%, a fluoroquinolone antibiotic eye drop for the treatment of bacterial conjunctivitis;
- MAXIDEX (dexamethasone ophthalmic suspension) 0.1%, a steroid eye drop for steroid-responsive inflammatory conditions of the palpebral and bulbar conjunctiva, cornea;
- TRIESENCE (triamcinolone acetonide injectable suspension) 40 mg/ml, a steroid injection for the treatment of certain ophthalmic diseases and for visualization during vitrectomy.
Terms of the deal
Under the terms of the deal, Harrow will make a one-time payment of $130 million at closing, with up to an additional $45 million payable in a milestone payment on the commercial availability of TRIESENCE, in the second half of 2023.
During an estimated 6-month NDA transfer period, Novartis will continue to sell the products in the US market and will transfer all net profits to Harrow.
Following the NDA transfer period, Harrow will assume control over all US market activities and will begin a process to have the products manufactured by third parties.
Novartis will retain all rights to the products outside of the US.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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