Earnings Call Transcript - HROW Q2 2025

Michael D. Biega, Vice President of Investor Relations and Communications

Thank you, operator. Good morning, and welcome to Harrow's second quarter 2025 earnings conference call. My name is Mike Biega, and I'm excited to be introducing today's call, having joined Harrow as Vice President of Investor Relations and Communications in June. It's a pleasure to be part of the Harrow family and to speak with all of you this morning. Before we begin today, I would like to highlight a few new items for our quarterly report. We will be presenting slides during the webcast today. If you have registered and joined through the live conference call link, I would highly recommend that you also join through the webcast. You can find the link in the Investors Events section of our website at www.harrow.com or in our earnings press release that was issued yesterday. We also have a new corporate deck that was posted on our website yesterday. All of the slides we will be presenting today can be found in that deck. Moving forward, you should expect that our earnings process will mirror this format with potentially a few additional changes, and we will certainly update you on any future changes to this format. In addition, we recently launched a new corporate website, which I encourage all of you to explore. 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 will refer 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 Albaum; and Harrow's Chief Financial Officer, Andrew Bolt. With that, I would like to turn the call over to Mark to go over some prepared remarks prior to the question-and-answer session. Mark?

Mark L. Baum, CEO

Thanks, Mike, and good morning, everyone. Thank you for joining us today. I hope you've had a chance to review our supplemental documents for the second quarter, including our earnings release, corporate presentation and letter to stockholders, all of which can be found on the Investor Relations section of our newly designed harrow.com website. Harrow is a leading provider of ophthalmic disease management solutions in North America, enhancing the capability of eye care professionals to manage sight-threatening ophthalmic diseases. To achieve this, we ensure that our products are safe, effective, accessible, and affordable, while increasing patient compliance, which facilitates better management of ophthalmic diseases. Currently, our ophthalmic disease management solutions consist entirely of pharmaceuticals, but we may evolve in the future. Regardless, our focus will always be on providing cutting-edge products and exceptional service to help eye care professionals care for their patients. Our primary financial goal is to reach $250 million in revenue per quarter by the end of 2027. I believe this is attainable due to the strength of our assets, our current performance, and where I envision the business going, alongside our proven track record of growth from having no customers, no products, and no revenue about twelve years ago. I plan to share more details about how we plan to reach this quarterly revenue target on September 26 at our inaugural Investor and Analyst Day, which Mike Biega is coordinating. We aim to hold this event annually, hosted by Harrow leadership after Labor Day each year. I'm looking forward to our stockholders and analysts meeting team members from Harrow’s leadership, seeing our products firsthand, and learning more about how we collaborate with U.S. eye care professionals to manage ophthalmic diseases. Please feel free to contact Mike at mbiega@harrowoinc.com if you're interested in attending. Over the past five years, we've developed a robust and difficult-to-replicate infrastructure. Today, we possess one of the largest portfolios of ophthalmic products in the United States, totaling over 59 prescription products. We address both anterior and posterior eye diseases, operating in both the insurance-reimbursed and cash pay markets. We serve eye care professional practices, ASCs, hospitals, and ship directly to patients. I am particularly excited about the leverage in our model as Andrew and I look ahead over the next one to two years. Essentially, our commercial infrastructure is paid for and generating profits as demand for key products such as VEVYE and IHEEZO increases, and as we add revenue-generating assets like the Samsung ophthalmic biosimilars portfolio or begin selling TRIESENCE in a substantial market, which I will elaborate on later, we incur minimal additional costs. This allows us to significantly benefit from our sales. The second quarter was a positive setup for the latter part of the year, as we experienced deeper market penetration in our core growth drivers, largely due to the recently introduced VEVYE Access for All initiative. VEVYE saw a 66% increase in prescription volumes this quarter compared to the previous quarter, and we do not anticipate a slowdown in this momentum. Today, we've also announced a strategic partnership with Apollo Care, an innovative provider of patient access and commercial solutions that offers comprehensive nationwide coverage across the United States, serving as Harrow’s second specialty pharmacy partner for the BAFA program. IHEEZO's focus on retina has gained traction, resulting in a 25% growth in unit volume quarter-over-quarter. TRIESENCE continues to gain momentum, with volumes increasing and market share growing, achieving a 32% quarter-over-quarter increase. Additionally, the third quarter numbers for TRIESENCE are looking promising as well. Our specialty branded product portfolio, consisting of essential everyday therapies relied upon by thousands of eye care professionals, had a strong quarter, rebounding nicely from the first quarter. Recently, we announced two strategic acquisitions that align perfectly with our commercial structure. At the end of the second quarter, we secured U.S. rights to BYQLOVI, a new treatment for postoperative inflammation and pain following ocular surgery, the first new ophthalmic steroid in its class in over 15 years. We also acquired the U.S. rights to Samsung's ophthalmic biosimilars pipeline, which includes BioViz, an FDA-approved biosimilar to LUCENTIS, and OPUVIZ, an FDA-approved biosimilar to EYLEA. In the second quarter, we reported total revenue of $63.7 million, marking a 30% increase compared to the same period in 2024 and a sequential increase of 33% from the first quarter of 2025. The first half of 2025 resulted in revenue of $111.6 million. To meet our guidance of over $280 million for 2025, we need to generate around $169 million in revenue in the second half of the year. Based on current trends, I believe we are positioned to achieve our guidance targets. I have consistently stated in past calls that the second half of the year tends to be stronger than the first half. As noted in our letter to stockholders and in my prepared remarks today, we are experiencing momentum with our key growth drivers that should lead to significant revenue increases starting as soon as the third quarter. Next year, we may provide annual revenue guidance split into two halves, which could work better for us. Adjusted EBITDA for the second quarter was strong, coming in at $17 million with a net income of $5 million, demonstrating the operating leverage we've established. Harrow is at a pivotal moment; our revenue is set to rise significantly in the latter half of this year, and as shown this quarter, our cost base remains relatively stable due to years of investment in building a robust, scalable commercial framework designed for this level of growth. VEVYE generated $18.6 million in revenue, a 13% decrease from the first quarter of 2025. As outlined in our letter to stockholders, the revenue drop compared to the first quarter stemmed from a normalization in average selling price (ASP), which I mentioned during our first quarter call and in our Q1 letter to stockholders. While we generally refrain from commenting on ASP changes quarter-over-quarter, it's vital to mention that the ASP in the first quarter was an anomaly related to business rule changes made at the beginning of the year. Currently, our VEVYE ASP reflects those VAFA business rules, and we anticipate both VEVYE volumes and revenues will increase reflecting our forecasts. From the prescription types we're observing, we believe VEVYE's ASP has stabilized, with even a path toward modest improvement throughout the year. As we continue to enhance our business rules algorithm, we have entered a strategic alliance with Apollo Care, a national service provider with comprehensive coverage that significantly broadens VEVYE's distribution network, enhancing pharmacy access and patient insurance coverage throughout the country. This collaboration is expected to stabilize our ASP at current levels and potentially enhance it as we forecast to see improvements over the next few quarters. Apollo Care's pharmacy network includes over 500 pharmacies and is broadly contracted with major and smaller commercial plans, as well as TRICARE and Medicare. With coverage spanning all U.S. regions and payer types, this partnership positions us to reach more patients than ever. Importantly, for our stockholders, virtually every prescription of VEVYE now generates profit for Harrow under the VAFA initiative, a significant improvement from before the program was implemented. These adjustments have resulted in structural improvements that enhance our revenue quality and our capacity to invest in VEVYE's long-term profitability. Our forecast of over $100 million in revenue for VEVYE in 2025 accounted for the expected decline in ASP and subsequent stabilization from Q1 to Q2. We continue to project VEVYE will generate more than $60 million in revenue in the second half of 2025. If we apply Q2 growth straight line for the remainder of the year with a stable ASP, we will be ahead of our target by year-end for the VEVYE franchise. IHEEZO generated $18.3 million in revenue, marking a 251% increase from the first quarter of 2025 as it gains momentum and market share. This quarter's growth is driven by the success of our retina pivot and expanded distribution through group purchasing organization agreements. IHEEZO is on track for a record year, and I am confident it will exceed our guidance of $50 million or more in revenue. TRIESENCE within our Specialty branded portfolio achieved $5.2 million in revenue, a 447% increase from the first quarter of 2025. As TRIESENCE gains market share in a significant market, I predict that the second half will outperform the first half by a wide margin. ImprimisRx generated $21.5 million in revenue, a 7% increase from the first quarter of 2025. This is a stable cash-generating business that is performing as expected, on track to meet our guidance of $80 million or more for this year. In summary, our guidance for 2025 remains solid, and I am very confident in our team's ability to achieve it. Since the implementation of VEVYE Access for All in late March, demand for VEVYE has soared. The VAFA program promises to enhance patient access, reduce patient out-of-pocket costs, and secure reasonable profits for Harrow. As detailed further in our letter to stockholders, the VAFA initiative is fulfilling all our commercial objectives. VEVYE consistently exceeds our prelaunch expectations across the board—new prescriptions, refill rates, patient satisfaction, and prescriber engagement. The impact of VAFA is reflected in our results; prescription volumes rose 66% sequentially, totaling 119,526 units. Nearly 50,000 of these were new prescriptions, leading to a 62% increase in new prescriptions compared to the first quarter of 2025. As prescription volumes grow, we are maintaining industry-leading refill rates, a critical indicator of product acceptance and satisfaction. Covered patients receiving VEVYE via PhilRx averaged 9 refills in 2024, significantly outperforming typical refill rates for other dry eye therapies. This sustained refill behavior underscores not only VEVYE's clinical value but also its ability to maintain ongoing patient engagement beyond the initial prescription. The combined impact of increasing new prescriptions and consistently high refill rates positions us for sustained revenue growth. We expect to see the first significant financial impact as early as the third quarter, driven by continued momentum in new prescription volume, a more stable ASP, and an increase in refill activity. This surge is largely due to the strong demand generated following the launch of VAFA. To reiterate, nearly every VEVYE prescription is now profitable, marking a significant change from the previous situation. We've also secured extra manufacturing capacity for 2025, allowing us to extend our commercial reach further. Alongside this, we are reassessing next year's forecast, boosting our supply chain flexibility and ensuring we are well-equipped to meet the sustained and growing demand anticipated for both new and refill VEVYE prescriptions. As mentioned earlier, we are also on track to open a second VEVYE manufacturing site next year, which will further strengthen our supply chain and support our growth strategy. VEVYE's market penetration continues to rise; by the end of Q2, we captured a 7.8% share of the national dry eye market, representing a 2.6% increase quarter-over-quarter. According to IQVIA and PhilRx data, VEVYE has now surpassed Sequa in national market share, a significant milestone that validates our commercial strategy. VEVYE is now the second most prescribed cyclosporine-based dry eye brand. We are also beginning to close in on MIEBO, having surpassed it in new prescriptions in four sizable U.S. markets. In conclusion, we are still in the early stages of the VEVYE launch, and the growth potential is substantial. Demand is sharply increasing, refill rates are leading the industry, and with only 7.8% share captured, there is significant runway ahead. With a best-in-class clinical profile, a strong access framework, and a capable commercial team, we are confident VEVYE is poised to exceed $100 million in annual revenue this year, representing just the start of a multi-year growth trajectory. In June 2025, we announced the acquisition of BYQLOVI from Formosa Pharmaceuticals. I am particularly enthusiastic about BYQLOVI, an FDA-approved steroid for treating inflammation and pain post-ocular surgery, marking the first novel steroid introduced to the U.S. market in over ten years. BYQLOVI is a highly potent next-generation therapy, being the only FDA-approved ocular steroid formulated with clobetasol, providing strong clinical efficacy backed by a well-established safety profile. The traditional risks with ophthalmic corticosteroids typically entail increased intraocular pressure (IOP), but in this case, only 1.4% of the population experienced increases in IOP during pivotal studies, substantially less than products like DEXTENZA which are less potent but carry higher risk. BYQLOVI has a longer duration of action, requiring administration twice daily instead of the typical four times daily. In ophthalmic care, products requiring four daily doses pose significant compliance challenges. Thus, BYQLOVI may enhance patient compliance. In terms of efficacy, BYQLOVI outperformed all other FDA-approved products for the same postoperative indication in the U.S. at the earliest regulatory time point of four days. Although this assessment is based on label comparisons rather than head-to-head studies, we see a considerable market opportunity with over 7 million ophthalmic surgeries performed annually in the U.S., and I am confident our commercial team can drive robust adoption of this differentiated product. We expect to launch BYQLOVI in the first quarter of 2026. I am pleased to see IHEEZO's revenue and unit volumes returning to nearly fourth quarter 2024 levels, which experienced increased stocking, indicating positive momentum and growing market share. The second quarter showcased new account growth and deeper usage within existing practices, achieving a 25% increase in unit volume over the first quarter of 2025. This uptick in demand can be attributed to our retina pivot strategy and expanded distribution through new GPO relationships. Our efforts led to the addition of 19 new accounts during the period, all devoted to retina practices, reflecting the success of our strategic focus and IHEEZO's increased adoption in this crucial specialty. Notably, IHEEZO's volume surged by 33% quarter-over-quarter within the largest retina GPO, representing about 70% of the retina market. Overall, shipments for IHEEZO increased by an impressive 170% in Q2 compared to Q1 of 2025, showcasing the strong demand we are experiencing. IHEEZO currently benefits from solid coverage, with over 81% of commercial and governmental payers offering reimbursement. Data indicates that only 3% of IHEEZO claims are not covered and merely 4% require prior authorization. This demonstrates outstanding coverage figures. In light of this strong access, I have initiated the IHEEZO for All strategy, aimed at expanding utilization in retina procedures across both existing and new accounts to foster near-term sales growth. With all four major GPOs engaged, combined with strong clinical synergy between IHEEZO, TRIESENCE, and eventually our new anti-VEGF products, BYOOVIZ and OPUVIZ, I believe IHEEZO's growth is just beginning. Although still in the early launching phase, I expect accelerated growth for IHEEZO backed by four differentiated and highly complementary therapies in Harrow's portfolio and a proven commercial team executing our strategy. In the early days of the third quarter, we have already surpassed the total number of new IHEEZO accounts achieved throughout the entire second quarter, with all new accounts being retina practices. TRIESENCE is making strong headway within the retina community with increasing volumes and market share. Year-to-date, TRIESENCE has welcomed 870 new accounts and achieved 32% quarter-over-quarter growth. TRIESENCE also enjoys 84% coverage, with only 8% of claims requiring prior authorization and merely 3% of claims returned as uncovered—indicative of comprehensive coverage. Our go-to-market strategy for TRIESENCE is exhibiting momentum in the early stages of our relaunch. Now that we've established the necessary buy-and-bill commercial infrastructure, we will extend its use into the ocular inflammation market, including cataract surgery, the largest potential market for TRIESENCE, which we have yet to penetrate. We've recently appointed Chad Brines to lead our Specialty Brands sales team, which includes TRIESENCE. One of Chad’s primary responsibilities will be to steer our strategic initiatives for TRIESENCE in the ocular inflammation market. With extensive experience selling buy-and-bill ophthalmic steroid products, he is well-suited to lead this crucial initiative. Based on feedback from our physician clientele, we anticipate that these new strategies will drive unit demand growth, which will begin to manifest in the fourth quarter and into 2026, especially as we roll out more proactively into the ocular inflammation market. I'm thrilled about our collaboration with Samsung Bioepis, which we announced in July. We obtained exclusive U.S. commercial rights to their biosimilars ophthalmology portfolio, including BYOOVIZ, an FDA-approved biosimilar to Lucentis, and OPUVIZ, an FDA-approved biosimilar to EYLEA—both widely utilized anti-VEGF therapies for retinal diseases and possessing interchangeability status. These products will blend seamlessly with our existing commercial framework, and we aim to leverage our significant commercial flexibility to compete vigorously in this market. By combining Harrow's extensive retina expertise with Samsung's insights from the prior BYOOVIZ launch, we are uniquely positioned to refine our offerings and compete effectively in this important market. We look forward to sharing more about our upcoming commercial launch soon. ImprimisRx showed improvement this quarter following seasonal softness in Q1. April marked a record month for the business, and we continued to see steady growth throughout the quarter across our key product lines. The team is focused on several initiatives to enhance gross margins, drive revenue growth, and improve operational efficiency. The business remains robust in generating cash flow, delivering substantial value to our stockholders. In conclusion, Harrow is on a growth trajectory, and we are at the beginning of an exciting journey. I am energized by our exceptional team, the strategic products in our portfolio, and the significant opportunities that lie ahead. The best is yet to come for Harrow. With the accelerating performance of VEVYE, TRIESENCE finally set to enter its largest market, IHEEZO gaining momentum, and our recent acquisition of BYQLOVI along with a strong biosimilars pipeline, coupled with the success of our compounding business, ImprimisRx, we now address the full spectrum of high-value ocular conditions. Our national GPO partnerships, specialty pharmacy reach, and successful commercial execution provide us with powerful leverage. Each new product launch enhances the uptake of others by strengthening our presence in surgical centers, retina and general ophthalmic practices, and even optometry offices. Supported by a seasoned leadership team, a solid balance sheet, a well-defined R&D roadmap, and an active M&A strategy, we have substantial growth potential. Simply put, we have assembled the right products, platforms, and people to redefine success in the ophthalmic market, and we anticipate even more significant advancements ahead. With that, I'll turn the call over to our operator to open the line for questions.

Operator, Operator

Our first question comes from Chase Knickerbocker with Craig-Hallum.

Chase Richard Knickerbocker, Analyst

Congrats on the progress here. Mark, maybe just first on VEVYE. Can you help us a little bit with kind of any kind of business rule changes within there as you guys onboard Apollo Care, et cetera, as far as how we should be thinking about ASPs sequentially from here? Is it just kind of normal seasonality where less co-pay assistance kind of brings ASPs a little bit higher? Are there any other changes that you've made that you kind of expect some sequential improvement to ASPs through the year?

Mark L. Baum, CEO

Thank you for your question, Chase. Regarding VEVYE ASP, there are a few points to consider. First, while we are continuing to refine our algorithm, these adjustments are minor. The current business rules are performing well. However, between Q1 and Q2, we needed to transition all existing VEVYE patients through the new business rules for the VEVYE Access for All program. At the start of the year, many patients, particularly those with co-pay resets, were paying significant out-of-pocket costs for VEVYE, which many couldn't afford. The VEVYE Access for All program enabled those patients to maintain their therapy and access the product at a lower cost. These are patients we likely would have lost otherwise. As we progressed through Q2 and into Q3 with the established business rules, we are beginning to understand what the ASP should ideally be. Additionally, with Apollo Care, we have been facing patient losses. Some patients have coverage but cannot use it since their plans are not contracted with our current pharmacy provider. As we expand our network, we expect to include more high-value patients in the overall ASP calculation. We anticipate that by the end of the year, we will see an upward bias in ASP. We are also confident that, now that all existing patients have transitioned through these business rules, our ASP will show stability.

Chase Richard Knickerbocker, Analyst

Got it. And maybe just on the biosimilars we expect that we're going to get an Analyst Day in September. But any thoughts as far as kind of contribution to the model in '26 and '27 because some of these biosimilar launches can be pretty quick uptake considering their existing markets. So any thoughts on particularly the LUCENTIS biosimilar as we think about '26 and '27?

Mark L. Baum, CEO

Well, we're still working on it. I've done a lot of talking so far, and I'm very excited about the Samsung portfolio, but there's one person who's even more excited than me, and that's Andrew. So I'll let him take that question.

Andrew R. Boll, CFO

I'm really excited about the biosimilar portfolio. Samsung is a leader in biosimilars, and we believe Harrow is a leader in ophthalmology. We envision being one of the top ophthalmology pharmaceutical companies in the U.S., and this collaboration feels like a perfect match. Regarding our contribution in 2026, we hope to launch BYOOVIZ that year, expecting an immediate increase in demand due to the existing market. We have a solid go-to-market strategy. While we can't share too much right now as we navigate the transition period with Samsung and their previous partner, once we get past this phase, we will provide more details about the timing of the launch or relaunch and other biosimilars in the portfolio. I want to emphasize that of all the deals we've made, this one excites me the most. It's highly synergistic, integrates well into our commercial infrastructure, and complements our relationships in the retina space. It aligns seamlessly with IHEEZO and some of our other buy-and-bill products, giving us significant leverage. We know where these products are utilized, and we already have relationships with those customers. I believe this will lead to significant upside for investors and those evaluating the company's long-term value.

Operator, Operator

Our next question comes from the line of Steve Seedhouse with Cantor.

Steven James Seedhouse, Analyst

First question, I just want to ask about the growth in new prescriptions in the second quarter for VEVYE. How much of that was driven by Klarity-C switchers? And are you largely through any expected bolus of patients from Klarity-C now? And then just second part of that question, you mentioned you're sort of cautious about growing too much faster for the remainder of the year for VEVYE in your stockholder letter. I'm just wondering how much growth would slow naturally from the Klarity-C patient bolus sort of unwinding? Or are you also expecting a slowing of sort of the organic growth ex Klarity-C?

Mark L. Baum, CEO

Thanks for that question, Steve. I can share that approximately 7,000 units came from Klarity-C during the period. Patients who transitioned from Klarity-C have typically been very loyal, possibly even more so than those we've seen with VEVYE. Additionally, I noted in the stockholder letter that we didn't anticipate VEVYE's rapid growth in our forecasts and production planning with our supply chain partners. While we didn't get caught off guard, these are certainly high-value challenges to manage. We intentionally refrained from aggressively increasing VEVYE production because we wanted to ensure that we could meet demand from both existing patients and new prescriptions. In the coming months, we expect to better understand the appropriate safety stock levels for VEVYE. As mentioned in the stockholder letter, since nearly every unit of VEVYE is profitable, we're confident about entering a new investment phase and aim to capture additional market share, likely starting at the end of the year and positioning us well for 2026.

Steven James Seedhouse, Analyst

And just I wanted to also follow up on the Specialty Branded and TRIESENCE segment. So the guidance here, obviously, is pretty assertive, I mean, like more than a 7x increase half-over-half from $6 million to the incremental $44 million. And I know you mentioned the ocular inflammation market, but you did say that, that would sort of kick in, in force in fourth quarter. So I guess what are the expectations for third quarter? And what other assumptions are you making there to grow revenue so acutely in that segment really in fourth quarter, it sounds like?

Mark L. Baum, CEO

The ex TRIESENCE products have not performed to our expected levels, but we are seeing a rebound. We anticipate that we will likely double the revenue of those ex TRIESENCE products by the end of the year, which we believe is achievable. However, the TRIESENCE revenue is not fully accounted for in our projections. There is a solid WACC price associated with it, and I mentioned the coverage levels in my opening remarks and in the stockholder letter. TRIESENCE has extensive coverage. It's important to note that we don't need to capture a significant share of the postsurgical ocular inflammation market to reach those numbers, but we do need some favorable developments. With new leadership in place, we're focused on enhancing the value of this part of our portfolio, and while we have work ahead, our calculations suggest the targets are attainable. We are also observing substantial improvement in TRIESENCE within the retina market, especially in the third quarter, as I referenced in both the stockholder letter and my prepared remarks. TRIESENCE is experiencing growth, and we have excellent coverage, similar to IHEEZO, which is positioned to potentially outperform. We believe we can achieve our goals with TRIESENCE, though it will be challenging.

Operator, Operator

Our next question comes from the line of Mayank Mamtani with B. Riley Securities.

Mayank Mamtani, Analyst

Congratulations on the progress. I have two questions related to your earlier comments, Mark. Regarding the stabilization of ASP, do you expect the net price to remain at the levels you reached in the second quarter? Additionally, how much do you foresee unit volume expanding, especially with new patient starts? I'm thinking about the long-term implications if your peak sales assumptions remain largely unchanged. I also have a follow-up.

Mark L. Baum, CEO

We are comfortable with the current average selling price for VEVYE. I anticipate that we could see some improvement in ASP by the end of the year, supported by better coverage and a shift towards a higher ratio of paid claims compared to lower-priced prescriptions. Overall, while our revenue from some units is higher and from others it is lower, the average remains acceptable, exceeding our expectations from 2024 and significantly surpassing our prelaunch plans. We are pleased with our ASP position. I believe it will improve, and we are already noticing signs of that. Regarding growth, I closely monitor weekly prescriptions, which allows me to track them almost in real-time. We're performing well in new prescriptions, even during the typical summer slowdown when people go on vacation. Additionally, our sales organization is modest, and we haven't made significant investments yet. Once we stabilize supply and strengthen our safety stock, we expect to see several years of growth for VEVYE. We anticipate sustained growth and believe we are well-positioned for the future.

Mayank Mamtani, Analyst

Understood. And also would be helpful to hear a bit more on the IHEEZO end of 2Q stocking dynamic, how similar or different it is to what we saw back in 4Q? I understand that was end of year. And if there's any other stocking dynamic we need to be aware of for any other branded products.

Mark L. Baum, CEO

I have no concerns about additional products regarding the stocking dynamic. However, regarding IHEEZO, I recently returned from the ASRS meeting in Long Beach, California. When we first acquired the product and held advisory board meetings, I remember doctors asking why they needed it, as they felt their existing methods were sufficient. I compared this to how I loved my BlackBerry until I switched to the iPhone. In many cases, the anesthesia protocol for intravitreal injections that they were using was inefficient, costing them not only in supplies and materials but, more importantly, their time. IHEEZO adds significant value to these practices, especially since just one dose is needed to anesthetize an eye for intravitreal injections. At the ASRS meeting, I noticed a clear shift in reception; the initial skepticism has transformed into enthusiasm. There could be various factors contributing to this change, such as the Samsung deal or an increase in offices gaining access to TRIESENCE, which has led to a different dynamic in the market. More accounts are now adopting IHEEZO and recognizing its benefits. I believe there's considerable upside based on the guidance we provided earlier this year. We're excited about IHEEZO for the rest of the year, especially since only a small percentage of overall intravitreal injections currently use it, indicating even more potential for growth. We have a strong leadership team dedicated to selling this product.

Operator, Operator

Our next question comes from the line of Tom Shrader with BTIG.

Thomas Eugene Shrader, Analyst

Could you explain the difference between the two specialty pharmacies? Is Apollo a better option for you because they are more integrated with existing plans, and can you direct patients that way? Regarding IHEEZO for All, are you facilitating easy access for people to try IHEEZO, which might lead to some fluctuations in its average selling price in the short term, with the expectation of growth in the future?

Mark L. Baum, CEO

Thanks, Tom. In terms of the distinction between Phil and Apollo Care, Phil is well-recognized in ophthalmic practices and optometric offices across the United States, so many offices are familiar with the Phil platform. We utilize Apollo Care as a co-pay card vendor, and they are also well-known in the ophthalmic market, now branching out into specialty pharmacy. Their extensive contracts with a variety of plans provide us an opportunity to capture more prescriptions covered by commercial policies that might otherwise result in $59 prescriptions when Phil isn’t contracted with a particular plan. This is one reason we believe our average selling price is stable and may even improve. Regarding IHEEZO for All, our goal is to ensure that every patient who could benefit from IHEEZO has access to it. There has been some misconception among our customers about needing to selectively choose patients or conduct thorough benefit investigations before using IHEEZO. We have a strong coverage message that any product would envy, and we want to inform our physician customers that they can use IHEEZO for all of their intravitreal injections without having to pick and choose. This program aims to deepen our relationships within existing accounts. As our message spreads about the positive experiences their colleagues have had with IHEEZO and the value it brings to their practices, we anticipate more new account starts. Indeed, as of early August, we surpassed the number of new account starts for IHEEZO that we had in all of the second quarter.

Thomas Eugene Shrader, Analyst

So more than free drug, it's help showing that they can get it covered?

Mark L. Baum, CEO

Yes, it's not about free drug. It's about reimbursement confidence. It's about confidence of coverage. I don't think that these practices know how pervasive our coverage is for TRIESENCE for IHEEZO and even we're seeing improved coverage for VEVYE. So coverage is our friend with those products. It's their friend with those products, and we're spreading that message.

Operator, Operator

Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalman & Company.

Jeffrey Scott Cohen, Analyst

And it's been brought up a couple of times, but I wanted to get back to it and hopefully, you can walk us through bit of information as far as specialty sales team out there that you have now and how you'd expect that to grow into back half of the year, Q3, Q4 and how that's helping on the awareness drive and education and actual number of feet on the street.

Mark L. Baum, CEO

Thanks, Jeff. I believe we haven't performed as well as we could with certain products, including TRIESENCE, which has had a slow launch. The focus is on what can be achieved, and we expect that by the end of the year, especially in the fourth quarter, our revenue run rate will align with where these products stood when we acquired them. TRIESENCE is a different case, and I have high expectations for it, especially as we enter the ocular inflammation market, which represents a significant opportunity for us. It's a trusted and proprietary product with a low $37 co-payment, making it the most affordable option for consumers in this category. This value is critical for prescribers wanting to reduce their patients' out-of-pocket costs on a monthly basis. We're also in the process of staffing Chad for this focus, and we are committed to capitalizing on the TRIESENCE opportunity. We plan to launch BYQLOVI at the Hawaiian Eye meeting early next year and expect modest initial sales in the fourth quarter. Our main focus is on the TRIESENCE opportunity in the ocular inflammation market, while Ali and her team are successfully increasing TRIESENCE unit volumes in the retina market, as I witnessed at the ASRS meeting in Long Beach. We have work ahead with that portfolio, but I am optimistic about our progress. We are seeing positive signs of growth in the third quarter, and I believe we can achieve our targets for that product basket. I want to emphasize that while some areas of our business may underperform, others will exceed expectations. Overall, I think we will perform well during this period, with the potential for TRIESENCE to significantly outperform in the fourth quarter. IHEEZO is also showing promise, and VEVYE may perform well too.

Operator, Operator

Our next question comes from the line of Thomas Flaten with Lake Street Capital Markets.

Thomas Flaten, Analyst

Mark, in your prepared comments, you said something that caught my eye about right now, your solutions or pharmaceuticals, but that might evolve. Can you dig into that a little bit for us?

Mark L. Baum, CEO

Sure. We will provide more details during the Investor and Analyst Day. We typically do not discuss our pipeline, but at that event, we plan to share information about some of our pipeline products and other initiatives we are exploring, which may not solely be pharmaceutical in nature. It's important for our investors to understand that we aim to be a business focused on managing ophthalmic diseases, and our solutions may extend beyond traditional pharmaceuticals. I realize I have spoken a lot today, and in our next investor call, I promise to have Amir discuss the scientific aspects, our Head of Commercial will cover commercial matters, and Andrew will address the financials. You will hear less from me in the next conference call. At the investor and analyst meeting, you'll have an excellent chance to meet our commercial leadership, including those selling IHEEZO and TRIESENCE. We also plan to invite several customers, including physicians who use our products, so they can share their firsthand experiences with you.

Thomas Flaten, Analyst

Excellent. And just one quick follow-up. You mentioned the refill rates in 2024. I was curious if in 2025, 7 and a bit months in, if the refill rates in 2025 are annualizing at kind of that 9 refills per patient per year rate.

Mark L. Baum, CEO

I believe we're making good progress. The product is outstanding and really stands out compared to others. Recently, we had a great campaign at the Women in Ophthalmology meeting. I came up with a concept a while back that our commercial team initially didn't support. It was titled "Cut the BS," which might seem risky, but "BS" refers to burning and stinging. The doctors really connected with the idea of alleviating burning and stinging. Many newer products struggle with these issues, but we have an excellent tolerability profile. The most important concern regarding tolerability is the patient's experience. When patients find relief from burning and stinging and their dry eye condition improves, they tend to refill their prescriptions. Our refill rate remains stable, and we don't expect that to change anytime soon, Thomas.

Operator, Operator

Our next question comes from the line of Yi Chen with H.C. Wainwright & Company.

Yi Chen, Analyst

Could you provide some comments regarding the timing difference of the VEVYE prescription growth in the quarter and also the recorded revenue for the quarter? And also, do you have an estimate time line as to when VEVYE could become the largest cyclosporine-based dry product?

Mark L. Baum, CEO

Wow, Andrew, would you like to start? I'll give you the first question and maybe the last one as well.

Andrew R. Boll, CFO

With all the products this quarter, we didn't see a whole lot of stocking dynamics. So the unit demand and script numbers were pretty tight as it related to the revenue recognition during the quarter.

Mark L. Baum, CEO

Our primary goal with the franchise is to be the top cyclosporine in the U.S. market. Additionally, we aim to become the leading anti-inflammatory product in the U.S. market. Ultimately, we also aspire to be the most prescribed product in the U.S. Our focus is on achieving the number one position for cyclosporine, and that is the direction Maria, the CEO of that franchise, is pursuing with her team every day. Thank you, operator, and thanks, everyone, for the questions and for joining us today. As we continue to build on our strong momentum, we remain focused on driving sustained growth and expanding our impact across the ophthalmic space. The addition of experienced senior leaders to our team further strengthens our ability to execute with excellence and scale with confidence. Thanks to the efforts of our Harrow family. We're excited about what lies ahead and look forward to sharing more progress in the coming months to come. If you have any further questions or need additional information, please don't hesitate to reach out to Mike Biega once again, mbiega@harrowoinc.com. This will conclude our call.

Operator, Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.