HROWL - Harrow Successfully Manufactures Triesence; Management Credibility Soars

2024-06-24 11:42:34 ET

Summary

• Harrow announced the successful production of the notoriously hard to manufacture drug, Triesence. There were many doubters, but management has been proven right in its confidence.
• This will result in $1.50 of incremental FCF/share in 2025, and then up from there, so that Triesence may by itself be worth more than the current share price.
• There are huge synergies with Iheezo, as the same buyers can be targeted for both drugs.
• The incremental EBITDA from Triesence should allow the company to safely expand the sales force for its most important drug, Vevye, enabling a more rapid ramp of that drug.
• The stock price is up on the news, but nowhere near enough.

Harrow, Inc. ( HROW ) started in 2014 with no products and no revenue and has built the largest ophthalmic compounding pharmacy in the US in only 10 years, with a 35% market share, and perhaps 10x the size of their largest competitor. Revenue from this business is modest, less than $100M, because of the low price point for compounded drugs, despite having a customer base of perhaps half of US ophthalmic prescribers with tens of of buying power.

HROW is a tiny company with a massive customer base, and its founder/CEO, Mark Baum, is seeking to take advantage of this by expanding into the much larger branded pharmaceutical product [BPP] space, essentially using HROW's impressive distribution to sell BPPs to its existing large customer base. The first 2 major drug launches, Iheezo and Vevye, are off to a good start. Despite this, the company has its doubters, as evidenced by the substantial (albeit decreasing) short interest in the stock....

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