HARROW, INC. (HROW)

Business overview

BUSINESS Overview We are a leading provider of ophthalmic disease management solutions in North America, and were founded with a commitment to deliver safe, effective, accessible, and affordable medications that enhance patient compliance and improve clinical outcomes. For over a decade, we have partnered with U. S. eyecare professionals to develop a comprehensive portfolio of high-quality products used to manage ophthalmic conditions affecting both the front and back of the eye, such as dry eye disease, wet (or neovascular) age-related macular degeneration, cataracts, refractive errors, glaucoma, and a range of other ocular surface conditions and retina diseases. By prioritizing clinical value – to the provider and the patient – Harrow empowers professionals to enhance patient outcomes and preserve vision.

By combining our culture of creativity, entrepreneurship and groundbreaking innovation with operational discipline and strong financial performance, we are building a future where life-changing ophthalmic treatments are within reach for all. Branded Ophthalmic Pharmaceuticals Over the past several years, we have expanded our portfolio of the U. S. Food and Drug Administration (the “FDA”)-approved ophthalmic products through acquisitions, licensing transactions, and internal investment. These efforts are focused primarily on the U. S.

and Canadian markets. We believe continued investment in our branded portfolio supports our ability to offer eyecare prescribers and patients access to a broader range of ophthalmic therapies across multiple disease states. We own U. S. commercial rights to the following products, which we market and sell: ● IHEEZO ® (chloroprocaine hydrochloride ophthalmic gel) 3%, a low-viscosity gel indicated for ocular surface anesthesia. ● VEVYE ® (cyclosporine ophthalmic solution) 0.

1%, utilizes a novel water-free vehicle (perfluorobutylpentane) based on semifluorinated alkanes, indicated for the treatment of the signs and symptoms associated with dry eye disease. ● TRIESENCE ® (triamcinolone acetonide injectable suspension) 40 mg/ml, a steroid injection for the treatment of certain ophthalmic diseases and for visualization during vitrectomy. ● BYOOVIZ ® (ranibizumab-nuna) 0. 05mL injection, the first FDA-approved LUCENTIS biosimilar indicated for the treatment of patients with Neovascular (Wet) Age-Related Macular Degeneration (AMD), Macular Edema following Retinal Vein Occlusion (RVO), and Myopic Choroidal Neovascularization (mCNV). We expect to commercially launch BYOOVIZ in mid-2026. ● OPUVIZ ® (aflibercept-yszy) 0.

05mL injection, an FDA-approved EYLEA biosimilar indicated for the treatment of patients with Wet AMD, Macular Edema following RVO, Diabetic Macular Edema (DME), and Diabetic Retinopathy (DR). We expect to commercially launch OPUVIZ in mid-2027. ● BYQLOVI TM (clobetasol propionate ophthalmic suspension) 0. 05% a high-potency ophthalmic corticosteroid formulated using proprietary APNT® nanoparticle formulation technology, indicated for the treatment of post-operative inflammation and pain following ocular surgery. We expect to commercially launch BYQLOVI in mid-2026. ● VIGAMOX ® (moxifloxacin hydrochloride ophthalmic solution) 0.

5%, a fluoroquinolone antibiotic eye drop for the treatment of bacterial conjunctivitis caused by susceptible strains of organisms. 4 ● ILEVRO ® (nepafenac ophthalmic suspension) 0. 3%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated with cataract surgery. ● FLAREX ® (fluorometholone acetate ophthalmic suspension) 0. 1%, a corticosteroid prepared as a sterile topical ophthalmic suspension indicated for use in the treatment of steroid-responsive inflammatory conditions of the palpebral and bulbar conjunctiva, cornea, and anterior segment of the eye. ● NATACYN ® (natamycin ophthalmic suspension) 5%, a sterile, antifungal drug for the treatment of fungal blepharitis, conjunctivitis, and keratitis caused by susceptible organisms, including Fusarium solani keratitis.

● TOBRADEX ® ST (tobramycin and dexamethasone ophthalmic suspension) 0. 3%/0. 05%, a topical antibiotic and corticosteroid combination for steroid-responsive inflammatory ocular conditions for which a corticosteroid is indicated and where superficial bacterial ocular infection or a risk of bacterial ocular infection exists. ● ZERVIATE ® (cetirizine ophthalmic solution) 0. 24%, a histamine-1 (H1) receptor antagonist indicated for treatment of ocular itching associated with allergic conjunctivitis. ● VERKAZIA ® (cyclosporine ophthalmic emulsion) 0.

1%, an orphan designated drug that is a calcineurin inhibitor immunosuppressant indicated for the treatment of vernal keratoconjunctivitis. ● NEVANAC ® (nepafenac ophthalmic suspension) 0. 1%, a non-steroidal, anti-inflammatory eye drop indicated for pain and inflammation associated with cataract surgery. ● FRESHKOTE ® Preservative Free (PF) is a lubricant eye drop that does not require a prescription and temporarily relieves burning, itching and other dry eye symptoms. ● MAXITROL ® (neomycin and polymyxin B sulfates and dexamethasone ophthalmic suspension) is an eye drop used to treat steroid-responsive inflammatory ocular conditions where bacterial infection or a risk of bacterial ocular infection exist. ● 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. […]

Management discussion and analysis

“Management’s Discussion and Analysis of Financial Condition and Result of Operations - Liquidity and Capital Resources.” Medicare, Medicaid and Other Reimbursement Options Sales in the U. S. of our marketed products are dependent, in large part, on the availability and extent of reimbursement from third-party payors, including private payor healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies, and government programs such as Medicare and Medicaid. See Item 1A. “Risk Factors” for risks related to reimbursement and government programs.

We participate in, and have certain price reporting obligations to, the Medicaid Drug Rebate program, state Medicaid supplemental rebate program(s), and other governmental pricing programs. We also have obligations to report the average sales price for certain drugs to the Medicare program. Under the Medicaid Drug Rebate program, we are required to pay a rebate to each state Medicaid program for our covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by a state Medicaid program as a condition of having federal funds being made available for our drugs under Medicaid and Part B of the Medicare program. Medicare is a federal program that is administered by the federal government that covers individuals age 65 and over or that are disabled as well as those with certain health conditions.

Medicare Part B generally covers drugs that must be administered by physicians or other health care practitioners; are provided in connection with certain durable medical equipment; or are certain oral anti-cancer drugs and certain oral immunosuppressive drugs. Medicare Part B pays for such drugs under a payment methodology based on the average sales price of the drugs. Manufacturers, including us, are required to report average sales price information to the Centers for Medicare & Medicaid Services (“CMS”) on a quarterly basis. The manufacturer-submitted information may be used by CMS to calculate Medicare payment rates. Starting in 2023, manufacturers are now required to pay refunds to Medicare for single-source drugs or biological products, or biosimilar biological products, reimbursed under Medicare Part B and packaged in single-dose containers or single-use packages for units of discarded drug reimbursed by Medicare Part B in excess of 10% of total allowed charges under Medicare Part B for that drug.

Manufacturers that fail to pay refunds could be subject to civil monetary penalties. Further, starting in 2023, the Inflation Reduction Act of 2022 (“IRA”) established a Medicare Part B inflation rebate scheme, effective in 2023, under which, generally speaking, manufacturers will owe rebates if the average sales price of a Part B drug increases faster than the pace of inflation. Failure to timely pay a Part B inflation rebate is subject to a civil monetary penalty. The IRA also created a drug price negotiation program under which, after being on the market for a certain period of time, the prices for certain high Medicare spending drugs and biological products provided to Medicare patients without generic or biosimilar competition will be capped by reference to, among other things, a specified non-federal average manufacturer price, starting in 2026.

Failure to comply with requirements under the drug price negotiation program is subject to an excise tax and a civil monetary penalty. This or any other legislative change could impact the market conditions for our products. 10 BYOOVIZ, OPUVIZ, IHEEZO and TRIESENCE are covered under Medicare Part B and we are developing other product candidates and may acquire drug products that are also covered under Medicare Part B. In February 2023, we announced that CMS had issued a permanent, product specific J-code for IHEEZO (J2403) which became effective under the Healthcare Procedure Coding System (HCPCS) on April 1, 2023. TRIESENCE has a permanent product specific J-code (J3300) as well, which physicians can use for reimbursement purposes of that product.

Similarly, BYOOVIZ and OPUVIZ have permanent product specific reimbursement codes of Q5124 and Q5153, respectively, which healthcare professionals can use for reimbursement of those biosimilar products. New drugs approved by the FDA that are used in surgeries performed in a hospital outpatient departments or ambulatory surgical centers may receive a transitional pass-through reimbursement under Medicare, provided they meet certain criteria, including a “not insignificant” cost criterion. Pass-through status allows for separate payment (i. e. , outside the packaged payment rate for the surgical procedure) under Medicare Part B, which consists of Medicare reimbursement for a drug based on a defined formula for calculating the minimum fee that a manufacturer may charge for the drug. Under current regulations of CMS, pass-through status applies for a period of three years; […]

Key risk disclosures

“Risk Factors” for risks related to reimbursement and government programs. We participate in, and have certain price reporting obligations to, the Medicaid Drug Rebate program, state Medicaid supplemental rebate program(s), and other governmental pricing programs. We also have obligations to report the average sales price for certain drugs to the Medicare program. Under the Medicaid Drug Rebate program, we are required to pay a rebate to each state Medicaid program for our covered outpatient drugs that are dispensed to Medicaid beneficiaries and paid for by a state Medicaid program as a condition of having federal funds being made available for our drugs under Medicaid and Part B of the Medicare program.

Medicare is a federal program that is administered by the federal government that covers individuals age 65 and over or that are disabled as well as those with certain health conditions. Medicare Part B generally covers drugs that must be administered by physicians or other health care practitioners; are provided in connection with certain durable medical equipment; or are certain oral anti-cancer drugs and certain oral immunosuppressive drugs. Medicare Part B pays for such drugs under a payment methodology based on the average sales price of the drugs. Manufacturers, including us, are required to report average sales price information to the Centers for Medicare & Medicaid Services (“CMS”) on a quarterly basis.

The manufacturer-submitted information may be used by CMS to calculate Medicare payment rates. Starting in 2023, manufacturers are now required to pay refunds to Medicare for single-source drugs or biological products, or biosimilar biological products, reimbursed under Medicare Part B and packaged in single-dose containers or single-use packages for units of discarded drug reimbursed by Medicare Part B in excess of 10% of total allowed charges under Medicare Part B for that drug. Manufacturers that fail to pay refunds could be subject to civil monetary penalties. Further, starting in 2023, the Inflation Reduction Act of 2022 (“IRA”) established a Medicare Part B inflation rebate scheme, effective in 2023, under which, generally speaking, manufacturers will owe rebates if the average sales price of a Part B drug increases faster than the pace of inflation.

Failure to timely pay a Part B inflation rebate is subject to a civil monetary penalty. The IRA also created a drug price negotiation program under which, after being on the market for a certain period of time, the prices for certain high Medicare spending drugs and biological products provided to Medicare patients without generic or biosimilar competition will be capped by reference to, among other things, a specified non-federal average manufacturer price, starting in 2026. Failure to comply with requirements under the drug price negotiation program is subject to an excise tax and a civil monetary penalty. This or any other legislative change could impact the market conditions for our products.

10 BYOOVIZ, OPUVIZ, IHEEZO and TRIESENCE are covered under Medicare Part B and we are developing other product candidates and may acquire drug products that are also covered under Medicare Part B. In February 2023, we announced that CMS had issued a permanent, product specific J-code for IHEEZO (J2403) which became effective under the Healthcare Procedure Coding System (HCPCS) on April 1, 2023. TRIESENCE has a permanent product specific J-code (J3300) as well, which physicians can use for reimbursement purposes of that product. Similarly, BYOOVIZ and OPUVIZ have permanent product specific reimbursement codes of Q5124 and Q5153, respectively, which healthcare professionals can use for reimbursement of those biosimilar products. New drugs approved by the FDA that are used in surgeries performed in a hospital outpatient departments or ambulatory surgical centers may receive a transitional pass-through reimbursement under Medicare, provided they meet certain criteria, including a “not insignificant” cost criterion.

Pass-through status allows for separate payment (i. e. , outside the packaged payment rate for the surgical procedure) under Medicare Part B, which consists of Medicare reimbursement for a drug based on a defined formula for calculating the minimum fee that a manufacturer may charge for the drug. Under current regulations of CMS, pass-through status applies for a period of three years; which is measured from the date Medicare makes its first pass-through payment for the product. Following the three-year period, the product would be incorporated into the cataract bundled payment system, which could significantly reduce the pricing for that product. Temporary pass-through reimbursement for IHEEZO was awarded by CMS and made effective in the second quarter of 2023 and temporary pass-through reimbursement for TRIESENCE was made effective April 1, 2025. […]

Source and methodology

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