Earnings Call Transcript - HROW Q2 2023

Operator, Operator

Good afternoon, and welcome to Harrow's Second Quarter 2023 Earnings Conference Call. My name is Kate, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded. I would now like to turn the call over to Jamie Webb, Director of Communications and Investor Relations for Harrow. Please go ahead.

Jamie Webb, Director of Communications and Investor Relations

Thank you, operator. Good afternoon, and welcome to Harrow's second quarter 2023 earnings conference call. Before we begin today, let me remind you that the company's remarks may include forward-looking statements within the meaning of federal securities 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 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. Harrow's 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 is accurate only as of today. Additionally, Harrow refers to non-GAAP 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 share. 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. 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'd like to turn the call over to Mark to go over some prepared remarks prior to the question-and-answer session.

Mark L. Baum, CEO

Thanks, Jamie, and thanks to everyone for joining us on today's call. As always, I would recommend that you review our second quarter 2023 earnings release corporate presentation and letter to stockholders, all of which have been posted to the Investor Relations section of our corporate website. These documents are important to review as we continue to use our time on these calls to provide color on the operational highlights from the quarter and of course taking your questions. To begin based on our results to date, we remain confident in our 2023 financial guidance of $135 million to $143 million in net revenues and $44 million to $50 million in adjusted EBITDA. We intend to provide an update to our financial guidance later in the year after a few months of operations with our recently launched and newly acquired branded products. As I said in my stockholder letter, what a difference a few months makes. Since our last quarterly earnings call, we've added numerous products to our portfolio, including substantially all of the products in the North American Santen ophthalmic pharmaceutical portfolio as well as VEVYE from Novaliq. This is on top of the Fab Five portfolio we acquired from Novartis and closed on in the first quarter of 2023. Through the Santen acquisition, we acquired the rights to five branded prescription products and one OTC product for the US market as well as Canadian rights to one branded prescription product and one OTC product. Demand trends for all of the Santen products are positive and most assets have IP through 2028 or beyond. We expect this transaction to be immediately accretive to earnings following the NDA -New Drug Application or MA - Marketing Authorization transfers which we are currently working on. Now under the Novaliq transaction, we acquired the North American rights to FDA-approved VEVYE, the first and only cyclosporine-based product indicated for both signs and symptoms of dry eye disease. VEVYE is based on Novaliq's proprietary water-free EyeSol technology. In my view, Novaliq through EyeSol has essentially reinvented the eye drop. I have put water-free Novaliq products on my eye and they feel completely different. Almost like a puff of air is hitting your eye. In fact, my experience is that you barely know the drop has hit your eye. It's a totally unique feel that I believe prescribers and patients will love. Those who have followed Harrow's growth and development know that we have been keenly interested in and have studied the dry eye space for many years. My view is that the US dry eye market will consist of two camps. On the one side, you'll have products from what I'm calling the water world. And on the other side, you'll have products from the water-free world. Based on what I have seen in the data and my experience putting an EyeSol-based product on my eye, I am 100% all in as a water-free believer. I believe it will be challenging to sell what I am calling water world products when the water-free options are soon available. We believe VEVYE can be a game changer, not only because of EyeSol technology, but also because VEVYE contains a 0.1% concentration of the immunosuppressant cyclosporine. No other active pharmaceutical ingredient has been prescribed to treat dry eye disease globally and in the United States more than cyclosporine. It is the number one most prescribed active pharmaceutical ingredient for this patient population. Before VEVYE, the product profiles for cyclosporine-based products are challenging. You can review Slide 10 of our corporate deck, which is on our website for a label comparison of these products. You'll get a sense of what dry eye patients and their prescribers have been dealing with these legacy products for many years. We believe US prescribers want a cyclosporine-based dry eye formulation with a new product profile and that's what VEVYE delivers. VEVYE offers exceptional patient comfort and provides rapid clinical onset of 29 days. It has an extraordinarily mild adverse event profile and data has shown that it continues to help patients with both signs and symptoms of dry eye disease out to one year. As I said in my letter to stockholders, I view the US dry eye market as totally wide open and this is despite the handful or so of products that are currently approved and others that are in development. The market is large and growing and includes over 16-plus million diagnosed dry eye disease patients, of which about nine million are diagnosed with moderate to severe disease for a number of reasons including the suboptimal profiles of the existing prescription choices, which by the way still do over $1 billion in annual revenue in the US market alone, only about 10% of the patient population, the dry eye patient population is benefiting from a prescription dry eye therapy. And we intend to upend the US dry eye market by providing this new choice, VEVYE, to those dry eye patients who have tried and failed one or more of the existing dry eye prescription products. But we also want to increase the overall pool of diagnosed patients who can benefit from a prescription therapy, importantly because of VEVYE's unique comfort and efficacy attributes, we believe a meaningful number of VEVYE patients will also choose to maintain VEVYE therapy to treat their disease. With VEVYE and the other adjacent ocular surface disease products we now own including Freshkote, Tobradex ST and Flarex, Harrow is planting a flag in the US dry eye and ocular surface disease markets and we intend to compete vigorously to win meaningful market share and ultimately help millions of suffering American dry eye disease patients. And of course, we remain resolutely focused on and excited about IHEEZO, which we officially launched in May of this year at the American Society of Cataract and Refractive Surgeons Annual Meeting in San Diego. While it is still very early in its launch, we are encouraged, especially given the math on the IHEEZO market opportunity which is very straightforward. There are two main anesthetic use cases for IHEEZO. One for surgical interventions such as cataracts or glaucoma surgery and retina procedures, all of which take place in a hospital or an outpatient setting of care. And then secondly, an intervention in a physician's office such as an intravitreal injection. We estimate that in the aggregate there are more than 12 million such use cases in the US each year. And we were granted a product-specific J-code that's J2403 for all such use cases and the current wholesale acquisition cost or WAC pricing on IHEEZO is $544 per unit. The positive feedback we're getting from early adopters of IHEEZO on its clinical value is adding to our enthusiasm about the product. IHEEZO just works, and it works well. IHEEZO users have indicated that there are even more potential applications than we had previously anticipated, that eye care professionals are even eliminating opioids from many of their surgeries and that IHEEZO is getting reimbursed in both the ambulatory surgery center setting of care as well as for in-office applications. In summary, we've been hard at work building a company that we believe, with the current Harrow product portfolio and continued execution by the Harrow team, can become a top-tier US-focused ophthalmic pharmaceutical company. We now believe that we have five discrete revenue buckets with nine-figure annual revenue potential. These revenue buckets, which are described in full detail in our stockholders' letter, include Bucket 1, just IHEEZO. Bucket 2 is our dry eye disease and other ocular surface conditions bucket, which is led by VEVYE. Bucket 3 has one product, TRIESENCE. Bucket 4 consists of our specialty anterior segment products. And Bucket 5 is our tried and improved cornerstone ImprimisRx Compounded Pharmaceutical Products business. So those are the five buckets as I said more fully described in our stockholder letter. Some of the revenue buckets consist of a single product, and others contain groups of products. I believe IHEEZO and VEVYE are our largest revenue opportunities without question. That said, they are also new sources of revenue with IHEEZO only launched a few months ago and VEVYE expected to launch later in the year. Regardless of the exact timing of the start and steady build of revenue flow from these two exciting products, the key is that number one, Harrow now has them both. And two, we have an incredibly strong conviction of market need and ultimately market acceptance of both products. And of course, now, we have one of the most comprehensive ophthalmic portfolios of products in the US market, a position we always wanted to be in and a position that we now are in. We're happy to take your questions. I'll pause to have our operator poll for questions.

Operator, Operator

The first question is from Jeffrey Cohen of Ladenburg Thalmann. Please go ahead.

Jeffrey Cohen, Analyst

Hi, Jamie, Mark, and Andrew. How are you?

Mark L. Baum, CEO

Great, great. Good to speak with you, Jeff.

Jeffrey Cohen, Analyst

I know, it's been a while. So just a few questions from our end. Maybe could you just expand a little bit and clarify, I guess, Andrew, on the core versus the regular on the margin front? Is the core the historical products up to recent and then the other gross margin number includes all the recent additions?

Andrew Boll, CFO

Yeah. Hey, Jeff, thanks for the question. So on the core we've got a pretty good reconciliation table on the back of the shareholder letter. But the basic difference between core and GAAP on gross margin is the amortization of those NDAs. So the non-cash amortization of the capitalized purchase price of the Fab Five products primarily. And there are a couple of other capitalized expenses that we're amortizing through cost of goods sold. And so that amortization is reflected in the GAAP number. The core number we're pulling that amortization out.

Jeffrey Cohen, Analyst

Okay. Got it. And Mark, any specific commentary on the IHEEZO launch thus far from April as far as physician acceptance and any relevant bullet points to communicate thus far?

Mark L. Baum, CEO

No, I think the color that's provided in the letter to stockholders on IHEEZO is fairly detailed. I mentioned in my prepared remarks that the performance of the product has been exceptional. We haven't had anyone who has used the product say that it doesn't perform exceptionally well. So people who try the product like the product. With a product like IHEEZO and you have such a large market opportunity, the real key is reimbursement and actually getting claims paid. That was sort of the last piece of the IHEEZO puzzle. We recognize that, we're not going to win over every customer account. We're not going to win every unit opportunity. But given the total number of unit opportunities, even winning a very small percentage of those creates a tremendous amount of value for our stockholders and for the company. And so we're really pleased now that the doctors who are using it, we're seeing them get reimbursed not only in the ASC setting of care, the hospital setting of care, but also in the in-office setting of care. And so these are intravitreal injections. The in-office setting of care, our permanent J-code is powerful. And that was sort of the last piece of the reimbursement puzzle for us. And I'm really, really pleased that the reports back from retina doctors are very positive. Just got one actually earlier today. So we're seeing claims paid for commercial payers, Medicare, of course, and then also Advantage. So Medicare Advantage plans. So, really excited about the payment side of it. The product is performing really well. As I said, I gave an analogy in the letter to stockholders about my old Blackberry that I used 15 years ago, and said, hey, when I had my BlackBerry, I loved the texting features. The phone was good. The camera was good and had great access to my email. I probably would not have been interested in the iPhone, this thing called the iPhone. But of course, once I experienced the benefits of the iPhone, I never went back to the BlackBerry. And we're seeing that same sort of pattern happen for users of IHEEZO. Doctors are thinking about their old way of doing anesthesia ocular anesthesia, and they're seeing, I think, a better way to do it. And of course, we're the only reimbursable topical anesthetic in the US market, which I think is a boon for the product.

Jeffrey Cohen, Analyst

Got it. And then lastly for us, could you bring us up to speed on how the commercial team currently looks as far as total FTEs and maybe demographic presence and then tie that into the recent acquisitions, the Santen portfolios and VEVYE, and if they came with any commercial folks and how they would be integrated?

Mark L. Baum, CEO

First of all, we are all dedicated W-2 employees. We have transitioned away from 1099, so the sales organization consists entirely of Harrow employees. Currently, we are nearing 50 full-time equivalents. As mentioned previously, our strategy is to allow revenue and demand to dictate increases in expenses, including those related to sales personnel. We are expanding the team gradually, and there are indeed open positions posted on LinkedIn. Additionally, our commercial leadership has noted that the quality of candidates we are attracting now is significantly better than in previous years. There seems to be an excitement in the ophthalmic pharmaceutical community, and top sales leaders are eager to join Harrow. They are noticing our activities and the portfolio we have established, which is allowing us to attract stronger candidates to our team. Andrew, would you like to add anything?

Andrew Boll, CFO

No Mark. I don't have anything to add on my side, but I agree with you. Importantly, we are ensuring that the work on the analytics side, market access, and reimbursement will influence our hiring decisions. We won't hire another 50 reps without the revenue to support it. Instead, we will allow revenue and demand to grow and follow up with the necessary expenses.

Jeffrey Cohen, Analyst

Got it. Okay. Super helpful. Nice readouts. Thanks for that questions.

Andrew Boll, CFO

Thank you, Jeff.

Mark L. Baum, CEO

Thanks, Jeff.

Operator, Operator

The next question is from Brooks O'Neil of Lake Street Capital Markets. Please go ahead.

Brooks O'Neil, Analyst

Thank you very much. Good afternoon, everyone. I quickly reviewed the shareholder letter but had three companies report after the market closed, so I might ask about something already covered in the letter. I apologize for that in advance. I want to start by following up on what Jeff was discussing regarding IHEEZO. I read much of the information in the letter but would like to know more about the $544 wholesale acquisition cost you mentioned. You noted that doctors are getting reimbursed by Medicare, MA, and commercial plans. Can you clarify what that $544 price means for you? Is that the amount you expect to receive for each vial of IHEEZO sold? Additionally, could you explain how much reimbursement doctors receive in different settings for IHEEZO?

Mark L. Baum, CEO

Sure. Just to start, we don't sell the doctors on the spread and any economic benefit that a physician or an ASC gets is not part of the sales process or the marketing process to be clear.

Brooks O'Neil, Analyst

Yeah.

Mark L. Baum, CEO

In terms of the costs, we don't receive the full $544. There are distribution costs and other related expenses. Andrew can provide a rough breakdown of how that works.

Andrew Boll, CFO

Yeah, Brooks. As Mark mentioned, we are not experiencing overall growth across our branded products. Our net revenue will be after estimating rebates, wholesaler chargebacks, discounts, and other deductions. This can vary widely among products, from 12% to 60%. We have encountered products during our acquisition reviews that have an 80% gross to net discount. While I’m not implying that our products have that level of discounting, the range depends on the product, its application, and the extent of discounts, particularly with payers.

Brooks O'Neil, Analyst

Okay. And that’s very helpful guys. Any sense for what the doctor gets reimbursed in these various sites? Again I understand that it's various buckets whether we're talking hospitals or physician offices, whether we're talking commercial, Medicare, or Medicare Advantage. But just help us with a general sense. If I understand it correctly it's $544 plus some margin right?

Mark L. Baum, CEO

There is a price that the ASC hospital or physician pays for the product, which is usually lower than the reimbursed amount. Occasionally, an extra fee, known as GAAP, can be added to a supplemental. Currently, payments are coming through the J-code, and the supplementals are also being paid if coverage is available. We are not receiving any complaints, and I mean literally no complaints. There may be instances where the long NDC is billed or other administrative issues arise, but the code itself is being paid, and both commercial and supplemental advantages are covering the difference.

Brooks O'Neil, Analyst

Great. And your sense is that the physicians in their offices have had reasonable success getting paid too, which is really the big market, right?

Mark L. Baum, CEO

The in-office market is about twice the size we estimate to the cataract and surgical markets. So the intravitreal injection market in particular is double the size of the ASC hospital market. And so we're seeing coverage there as well. And as I said, I think the big picture message with IHEEZO is that that last piece of the puzzle to ensure adoption of the product. When you have a product that works like IHEEZO, you want to make sure and it does have a J-code, which IHEEZO has, we want to make sure that physicians are able to bill the code. And that was the last piece of the puzzle and we're seeing the code get paid. So there are really no barriers to doctors now adopting the product. And that's I think very, very positive.

Brooks O'Neil, Analyst

I think that's great. Let me change direction and ask you, I don't know much about IHEEZO, and I didn't know much about VEVYE either, and I apologize for that. I plan to learn more about both today and in the near future. But could you help us understand the reimbursement situation for VEVYE? Specifically, what your progress is in establishing reimbursement for that product, and in general terms, what the expected reimbursement amount might be for it?

Mark L. Baum, CEO

IHEEZO is a buy-and-bill product that falls under Part B. In contrast, VEVYE is categorized as a Part D drug product, which will be billed differently. VEVYE has recently received FDA approval, and our current focus, alongside ongoing marketing efforts, is on securing market access. Our team is dedicated to this and will be negotiating pricing contracts with both public and private payers. We have a strong market access team, making VEVYE a key priority for us. We have not yet set a price for VEVYE; similar products typically range from $600 to $800, and this will be determined in the coming months. Regardless of the pricing and access situation, we are determined to compete vigorously. One advantage of the VEVYE acquisition is our relatively low cost of acquiring the rights compared to competitors. This provides us some flexibility with pricing and rebates. Our goal is to ensure that as many patients as possible can access what we believe is an exceptional therapy. However, this product will not affect our revenues in 2023; its impact is expected in 2024 and beyond. The market potential is substantial, and we have a robust intellectual property portfolio to support VEVYE. The product's unique features and efficacy give us confidence as we navigate access challenges. We believe there is significant opportunity to create value for both patients and shareholders.

Brooks O'Neil, Analyst

That’s fantastic. That’s great. So let me just shift gears one more time and then I'll jump back. TRIESENCE, I think you mentioned in the letter and in your comments, is also a product with enormous potential. My sense is historically one issue has been manufacturability. And I saw in the letter that you commented that you've made some test batches and had some success, but just give us a little more color about the status there and sort of broadly, what you expect the timing to be because my sense is, if you can get that product to be available to your customers, it is a pretty big market opportunity for you there?

Mark L. Baum, CEO

We have received a lot of inquiries from ophthalmologists every week about TRIESENCE. They want it back and need access for various uses of the product. As mentioned in the stockholder letter, we have been working closely with our manufacturing partner on this. The good news is that a batch of the material has been successfully produced. Our partner is now replicating that batch, and we expect this process to conclude in early fourth quarter. We should have results from these PPQ batches, and if those results align with the previously successful batch, we anticipate having material available by the end of the year or early in the first quarter of next year. Additionally, our agreement with Novartis includes a financial incentive for them to provide a commercial batch by or before mid-January. The payment owed to Novartis for the NDA transfer for TRIESENCE is $45 million, but if the batch is not produced by that time, the amount will be reduced to $37 million, creating an $8 million incentive to deliver inventory by mid-January.

Brooks O'Neil, Analyst

So will they manufacture it for you for a period of time, or are they just assisting you and your commercial partner in getting to the point of being able to manufacture it?

Mark L. Baum, CEO

With all of the products that we've acquired, whether it's from Novartis or Santen, we always ensure that we have an ongoing multi-year contract manufacturing agreement in place. And of course, we have flexibility to move the manufacturing to another partner if we so choose. But we do have a partner in place for TRIESENCE, and we intend to continue that relationship and we're excited to hopefully have some inventory by the end of the year. And I think the nice thing about TRIESENCE is we don't need a lot of salespeople to sell TRIESENCE. It will pretty much sell itself. So if we have the inventory, I think our wholesalers will take as much as we could produce and we'll be able to produce a lot of value for our stockholders.

Brooks O'Neil, Analyst

Great. I appreciate your taking my questions and patience with me, and I’ll look forward to talking to you guys again soon.

Mark L. Baum, CEO

Thank you, Brooks.

Operator, Operator

The next question is from Mayank Mamtani of B. Riley. Please go ahead.

Mayank Mamtani, Analyst

Good afternoon, Dean, and congrats on a strong quarter and good to see the five-year strategic plan in your stakeholder letter. So a couple of fairly targeted questions from us. Maybe to start and picking your thoughts regarding the full-year guidance. We get a lot of question on the push and pull there in terms of how much IHEEZO might be driving that, but also your cap products seem to be ramping up relatively ahead of plan. And I wonder also how much accretion you're able to have Santen and then within the calendar year 2023. If you could just comment on that, that would be great.

Mark L. Baum, CEO

Yes. So thank you for the question. The revenue growth is being driven broadly speaking by our branded portfolio. That's VIGAMOX, it's MAXITROL, MAXIDEX, ILEVRO, NEVANAC, and of course IHEEZO. So that's where we're seeing the growth. And we expect the Santen portfolio to also provide not only sort of the revenue base that we acquired when we brought the products on, but we also expect to see some meaningful growth in that portfolio once we have the marketing authorizations under our control. That's not going to happen tomorrow. It's going to take a few months. So there's sort of a transition period that we're undergoing. And you should see I think in 2024 a pickup from the Santen portfolio in terms of revenues and overall contribution. But I think the real growth drivers in the business in 2024 are going to come from IHEEZO. We expect significant continued growth in 2024 and 2025 and beyond for IHEEZO and we're very excited about VEVYE and really beginning the market access work there. And this is just a market I personally have spent a lot of time trying to understand. We have interviewed hundreds and hundreds of chronic dry disease patients, conducted telephonic interviews. And so we think we understand this patient population very well and what the nuances are that you have to overcome to help these folks. And so we just are very, very excited about VEVYE and what it will offer to this patient population. And this is going to be a product that will build in 2024 and for many, many years to come. I mean you've got very strong IP on VEVYE out into 2039 and beyond actually. So it's a product that we're going to offer for a long, long time. It's going to help a lot of people.

Mayank Mamtani, Analyst

Thank you. Staying on the topic of your entry into the DED marketplace, we have the analogy of water versus water-free. Regarding VEVYE, how does the product differentiate itself from more recent drug launches that have led to perceptions of slow uptake and limited market opportunity, particularly because many patients remain undertreated and don’t comply as well? From a clinical data standpoint, what profile are we looking at compared to these recent drugs? Additionally, people are interested in how it compares to genetic cyclosporine.

Mark L. Baum, CEO

Yes. As I said the reason for our enthusiasm is twofold. One because of what we have which is exceptional. So we have a great product. But our enthusiasm is buttressed by the competition that we face. And so, on the one hand, you may look at the products that are in the market and say there's a lot of them. But if you're a dry eye patient and you have pain in your eye, you're feeling grittiness and redness and you're aggravated and it's hard to work. And you go to put a product in your eye and 22% of the patients experience pain when you instill a product in your eye, or the adverse event profile even gets worse than that for some of the products that are in development. So, you're that patient and you need something that soothes your pain. I don't think that these products that live in the so-called water world are really helping them. And we have a totally unique different approach. And as I said, I personally have put an EyeSol product in my eye on my eye and there's just nothing that feels like it. And having listened to literally hundreds of interviews of chronic dry eye disease patients, I just think we have something that's going to really benefit them. Not on the margin like some of the existing products may benefit patients. But we're talking about in a completely new way, something that doesn't have that burning and stinging, it doesn't cause dysgeusia. It doesn't cause pain at instillation, something you don't have to spray up your nose or doesn't cause sneezing when you put it up your nose. This is a different approach. And we're going to patiently execute strategy to make sure patients have access to VEVYE. It is a totally new world. It's the water-free world.

Mayank Mamtani, Analyst

Got it. And maybe just one last question for Andrew. Is there a target range for the leverage ratio that you're aiming for in the near to medium term? It's obviously improved, but is there a specific range you are working towards, Andrew?

Andrew Boll, CFO

That's a good question, and I appreciate it. The answer is that it depends. What I mean by that is we're inherently deal-focused. If there are transactions we can pursue and leverage, we won’t pass them up. However, it must be an attractive deal for us to proceed. Based on our current leverage ratio, particularly on an annualized basis, I would personally like to see it lower, and we are certainly working towards that. As noted in our guidance, we expect EBITDA to continue growing throughout the year to meet our targets. At the same time, we prefer to use debt to fund transactions if they arise. We will take advantage of that opportunity along with our debt partners.

Mayank Mamtani, Analyst

Understood. Makes a lot of sense. Thanks again for taking our questions.

Andrew Boll, CFO

Thank you, Mayank.

Operator, Operator

The next question is from Jim Roumell of Roumell Asset Management. Please go ahead.

Jim Roumell, Analyst

Thanks. I have a quick question. I'm new to this but I’ve been following along. I noticed your net equity dropped nearly 20% in the quarter. I haven't had the opportunity to look into the specifics, but could you explain the balance sheet decisions you’re making and how they relate to the expansion of credit for growth? Also, could you elaborate on why your net equity fell by nearly 20% in the quarter or in the first half of the year?

Andrew Boll, CFO

Hey Jim. This is Andrew. I'm glad to discuss that. On a GAAP basis for the year, we've lost just under $11 million. There are many noncash impacts associated with that, including amortization of the NDAs we mentioned earlier with Jeff. Importantly, after the quarter ended, we also raised about $69 million in new capital, which will increase that equity balance in the coming periods.

Jim Roumell, Analyst

Okay. So a lot of non-cash charges in the first half of the year?

Andrew Boll, CFO

That's right.

Jim Roumell, Analyst

What are you writing off? Are you amortizing acquisitions, or are you actually writing things down?

Andrew Boll, CFO

Sure. So I can go through a couple of examples. A big chunk of that, about $4.7 million of it so far is amortization of these intangible assets, non-cash amortization. There's some investment losses related to our holding in Eaton. And then we also had a debt extinguishment cost of about $5.6 million. All of that is essentially non-cash or not operating.

Jim Roumell, Analyst

Okay. Well, I appreciate that. I’ll probably follow-up later.

Andrew Boll, CFO

Thank you, Jim.

Jim Roumell, Analyst

Okay. Thank you.

Operator, Operator

That is all the time we have for questions today. I will now turn the call back to Mark Baum for closing remarks.

Mark L. Baum, CEO

Thank you, operator. The first half of 2023 has proven to be a productive and exciting period for Harrow. Momentum is continuing to build in 2023 and we expect it to continue for many years to come. I know that we would never have achieved this or had a shot at achieving our goals without the trust of our loyal employees, customers, vendors, and stockholders, who have supported us throughout this journey. Thanks to everyone for attending today's call and for your interest in Harrow. If you have any investor-related questions, please e-mail Jamie Webb at jwebb@harrowinc.com. Thank you and this will conclude our call.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.