Harrow enters agreement to acquire exclusive US rights to suite of Novartis products

Last week, Harrow announced that it has entered into an agreement for the acquisition of exclusive commercial rights in the United States for 5 FDA-approved ophthalmic products from Novartis. The deal will diversify Harrow’s ophthalmic portfolio, which expands its presence in the US surgical and acute care markets. The acquisition is expected to close in early 2023.

“We know these products very well and have long appreciated and admired them for the value they have delivered to thousands of U.S. eyecare professionals and many millions of their patients,” Mark L. Baum, chairman and CEO of Harrow, said in a statement. “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 – giving them more choices and flexibility when considering the best treatment options for their patients and the specific needs of their practices.”

The full list of ophthalmic products included in this transaction are as follows:

• 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 caused by susceptible strains of organisms.
• MAXIDEX® (dexamethasone ophthalmic suspension) 0.1%, a steroid eye drop for steroid-responsive inflammatory conditions of the palpebral and bulbar conjunctiva, cornea, and anterior segment of the globe.
• TRIESENCE® (triamcinolone acetonide injectable suspension) 40 mg/ml, a steroid injection for the treatment of certain ophthalmic diseases and for visualization during vitrectomy.

Per the terms of the agreement, Harrow will make a one-time payment of $130 million at the time of closing and a milestone payment of $45 million at the time of commercial availability of Triesence, which is expected in 2023.

Novartis will continue to sell the above products in the US market and transfer the net profits to Harrow at the conclusion of the NDA transfer period, which is estimated to be about 6 months. After this period, Harrow will assume control over all US market activities. They will also initiate third party manufacturing of the products.

This is the second acquisition transaction between Harrow and Novartis. Novartis retains all rights to products outside of the US.

“This is a landmark transaction for Harrow, catapulting Harrow into a leadership position in the U.S. ophthalmic pharmaceuticals market,” Baum continued. “Following the satisfaction of the relevant closing conditions, these products will be immediately accretive to our revenues and excellently complement our current portfolio of ophthalmic prescription products.”

“Our market research indicates an increasing demand for the indications these products treat. Based on U.S. demographic growth, favorable competitive trends, and broad public and private payor reimbursement, revenue contribution from these products is expected to grow for many years,” Baum concluded. “Assuming this transaction closes during the first quarter of 2023, Harrow expects 2023 net revenues to be between $135 million and $143 million and adjusted EBITDA to be between $44 million and $50 million, with both net revenues and adjusted EBITDA ramping up during 2024 and beyond.”