Prepared remarks
Good morning, and welcome to Harrow's second quarter 2026 earnings conference call. My name is Michelle, and I will be the operator for today's call. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mike Biega, Vice President of Investor Relations and Communications for Harrow. Please go ahead.
Thank you, operator. Good morning, and welcome to Harrow's second quarter 2026 earnings conference call. My name is Mike Biega, Vice President of Investor Relations and Communications, and I'm excited to be introducing today's call. 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 the 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. 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. Joining me on today's call are Mark L. Baum, Chief Executive Officer; Andrew Boll, Chief Financial Officer; Patrick Sullivan, Chief Commercial Officer; and Amir Shojaei, Chief Scientific Officer. With that, I would like to turn the call over to Mark. Mark?
Thank you, Mike, and good morning, everyone. We spent the first half of 2026 building demand and strengthening the commercial foundation of our business. The second half is about converting that demand into accelerating revenue and growth and profitability and, of course, hitting numbers. Let me be direct. First half revenue of approximately $115 million was lighter than we expected entering the year, primarily because of the VEVYE net revenue impact we discussed last quarter. At the same time, we executed on major operating priorities we established for the first half, expanding our commercial organization, improving the economics of key products, strengthening our portfolio, launching Byooviz, and building physician demand across our key growth drivers. Those actions have positioned us to deliver meaningfully stronger revenue, growth, and profitability during the second half of 2026. IHEEZO is a good example. Despite the loss of pass-through on April 1 of this year, IHEEZO generated the highest quarterly unit demand in its history and delivered record new account growth. Channel inventory has now normalized, and an approximately 25% improvement in net pricing became effective July 1 with gross margins exceeding 90%. We expect IHEEZO will be a major contributor to both revenue growth and profitability during the second half. VEVYE is also positioned for stronger growth. During the second quarter, prescriptions increased 21% sequentially. Our prescriber base grew 15%, and the product delivered record quarterly revenue. The business rule changes we implemented at the end of April worked as intended. VEVYE's economics improved sequentially with meaningfully lower copay card utilization, which drove a higher ASP. Those results validated our ability to improve the economics of the franchise while continuing to grow prescription demand and physician adoption. During the second half, VEVYE will benefit from the full period of those revised business rules, broader commercial coverage that became effective August 1, an expanded sampling program, and a sales organization that has doubled in size over the past year. Together, those factors position VEVYE for stronger prescription growth and improved net revenue realization. TRIESENCE also reached another quarterly demand record with more than half of unit demand now coming from ocular surgery. We tripled our surgical commercial organization during the second quarter, and those representatives remain early in their productivity ramp. As they broaden account coverage and deepen utilization, we expect TRIESENCE revenue growth to build throughout the second half. Byooviz represents another incremental growth; we launched it on July 1 with encouraging early reception. Our specialty portfolio is similarly positioned to contribute more meaningfully. VERKAZIA has been relaunched, and interest is growing in the form of rising prescription volumes. IOPIDINE now benefits from a permanent J-code. We also expanded our AccessPlus commercial organization. This was either absent or only partially reflected in our first half results. Finally, subject to closing, TYRVAYA will further strengthen our dry eye franchise. We are acquiring global rights to the product, which is approved in the United States and China and is under regulatory review in five additional countries. TYRVAYA also offers a distinctive tolerability profile: zero contraindications, zero ocular adverse events, and zero warnings on its label, with sneezing as its most common adverse reaction. From a strategic perspective and given our commitment to relentlessly compete and win in the U.S. dry eye market, this acquisition makes a ton of sense. From an acquisition cost perspective, this deal may be the best deal we've ever struck. From sales and marketing to market access to share of voice in the ophthalmologist and optometrist's office, we're a much stronger company with TYRVAYA. In the past, I always wondered why people would be interested in a nasal spray for their dry eye disease. After going through our due diligence process and speaking to committed prescribers, I finally get it. There is a very sizable patient base who benefits from this unique product, even down to the side effect profile. I had one fantastic dry eye specialist tell me that his patients just love TYRVAYA and would much rather have someone say, 'God bless you,' after a sneeze than to endure the stinging, burning, or dysgeusia after applying eye drops multiple times a day. Financially, while we expect only a modest revenue contribution this year based on the anticipated timing of the transaction, TYRVAYA and its experienced commercial organization will expand our reach and create additional opportunities to grow the entire dry eye franchise. Taken together, our principal growth drivers enter the second half with stronger demand, improved economics, broader access, and greater commercial support. Breadth matters. Our outlook is not dependent on one product, one launch, or one reimbursement event. We have multiple commercial growth drivers positioned to contribute more meaningfully during the second half. That is why we are reiterating our full year guidance. We recognize the magnitude of the second half ramp, and Andrew will walk through the financial bridge in more detail. We expect revenue to grow sequentially in both the third and fourth quarters with the larger step-up occurring in the fourth quarter as these initiatives contribute more fully. The first half was about doing the work required to create the opportunity in front of us. The second half is about execution: converting that opportunity into revenue, earnings, and durable value for our stockholders. Before I turn it over to Andrew, I did want to share something that has only deepened my conviction about MELT-300. At this year's American Society of Retina Specialists meeting, I spoke with dozens of retina specialists, and one theme came up again and again. Practices are struggling to secure reliable anesthesia coverage for their procedures. Many are now paying what they call stipends out of their own facility and global surgical fees just to keep anesthesia services available. We do not believe this is a short-term dislocation. We believe it is a reality that eye surgeons, physicians, and other specialties will be managing for many years to come. MELT-300, if approved, could be part of the solution to this growing problem. In nearly 15 years of running this company, I've never seen as consistently positive a reaction to a Harrow product candidate. That has got me extremely excited about the future of MELT-300. With that, I'll turn the call over to Andrew.
Thank you, Mark, and good morning, everyone. We reported revenue of $70.7 million, up 11% year-over-year and approximately 60% sequentially. That brings first half revenue to approximately $115 million. The year-over-year comparison understates the underlying trajectory. First half results reflected limited IHEEZO revenue as channel inventory normalized, as well as only a partial quarter benefit from the VEVYE business rule changes. VEVYE delivered quarterly revenue of $29.4 million, up nearly 58% year-over-year. The result reflected continued prescription growth and improved net revenue realization following the business rule changes implemented at the end of April. IHEEZO generated $15.6 million of revenue, primarily related to wholesaler stocking orders of our new 5-pack presentation. Unit demand for IHEEZO reached a quarterly record, but reported revenue continued to lag underlying demand as distributors sold through previously purchased inventory. We expect IHEEZO to enter the third quarter with a normalized revenue cycle and improved economics. Our specialty portfolio and TRIESENCE generated approximately $11 million of revenue, while our compounded portfolio generated $14.6 million of revenue. GAAP gross margin was 71%. For the second half, we expect gross margins to trend back towards the high 70s, supported by IHEEZO's return to a normal revenue cycle, increased overall revenue, continued VEVYE growth, and a more favorable product mix. SG&A was $53.3 million, which increased quarter-over-quarter, largely reflecting the commercial investments made during the quarter. Excluding the additional headcount expected to be added through the TYRVAYA transaction at closing, we expect base SG&A dollars to remain approximately flat with second quarter levels for the balance of the year. The core operating cost structure is largely in place, and our objective is to grow revenue against that expense base. Adjusted EBITDA was negative $1.2 million. We ended the quarter with cash and cash equivalents of $83.9 million. With the TYRVAYA transaction, we expect to fund the upfront consideration of $30 million with cash on hand. Following closing, to the extent any of the contingent net sales milestones are hit, we expect the payment of those milestone amounts will essentially be self-funded. Turning now to our outlook, we are reiterating full year guidance of $350 million to $365 million in revenue and $80 million to $100 million in adjusted EBITDA. Based on first half revenue of approximately $115 million, our guidance implies second half revenue of approximately $235 million to $250 million. We're not providing quarterly guidance, but we expect revenue to grow sequentially in both the third and fourth quarters, with the larger step-up occurring in the fourth quarter. That is a substantial step-up, so let me be specific about the bridge. The largest incremental contributor should be IHEEZO. We enter the second half with record demand, normalized channel inventory, and an improvement in net pricing. Those factors should allow reported revenue to more closely reflect the strength of the underlying business beginning in the third quarter. VEVYE is another major driver. Its expanded sales organization should begin to contribute in the third quarter. The revised business rules will be in effect for the full second half of the year. Expanded commercial coverage became effective August 1, and net revenue realization should benefit as more patients satisfy their annual deductibles. TRIESENCE should also continue to grow. Demand reached another quarterly record, and the surgical organization we tripled during the second quarter remains early in its productivity curve. Byooviz formally launched July 1 following modest initial stocking activity in the second quarter. VERKAZIA has been relaunched, and now IOPIDINE benefits from a permanent J-code. Each contributes against a first half revenue base that was either minimal or constrained. Subject to closing, TYRVAYA should also contribute modest revenue this year in addition to revenue synergies with VEVYE that we expect to be realized following the close. Our guidance assumes only a limited 2026 contribution given the anticipated timing of the close and integration. The adjusted EBITDA bridge follows directly from the revenue bridge: substantially higher revenue, increasing gross margins into the high 70s, and a base operating expense structure that remains approximately flat. Upon closing the TYRVAYA transaction, we expect to expand our dry eye sales force and territories further by adding experienced professionals from the Viatris Eye Care Division, increasing SG&A expenses by approximately $20 million on an annualized basis once fully integrated. Looking ahead, we expect TYRVAYA to contribute more than $30 million in revenue during 2027 and overall to be financially accretive. We recognize the magnitude of the second half ramp. Our confidence is based on factors already visible in the business: prescription growth, record product demand, normalized inventory, improved pricing, broader coverage, and a growing commercial organization that remains early in its productivity curve. On that note, I'll now ask Pat to discuss our commercial progress in more detail.
Thank you, Andrew. Before turning to VEVYE, I'll briefly discuss what the pending TYRVAYA transaction means for our dry eye franchise. VEVYE remains the cornerstone of that franchise. TYRVAYA is complementary, offering physicians a differentiated, drop-free option for patients who may struggle with eye drops, prefer another route of administration, or are among the 45 million Americans who wear contact lenses. Subject to closing, we expect to add a large number of experienced dry eye sales representatives from Viatris whose territories are largely complementary to our existing coverage. This will expand our geographic reach, increase the frequency of our engagement with eye care professionals, and give our team more touch points through a broader portfolio. We expect to integrate those representatives during the fourth quarter and have them supporting both VEVYE and TYRVAYA. Together, the products give us more treatment options, greater commercial reach, and additional opportunities to grow the entire portfolio. Turning to VEVYE, total prescriptions grew 21% sequentially compared with 14% growth for the broader branded dry eye market based on IQVIA data. New prescription growth grew 4% sequentially while our prescriber base expanded 15%, and VEVYE exited June with a 14.6% share of the branded dry eye market, up from 14% at the end of March and 7.8% a year ago. Those results are particularly encouraging because they were achieved while we implemented significant new business rules designed to improve the economics of the franchise. Co-pay utilization declined meaningfully, yet physician adoption and prescription demand continued to grow. We are also still in the early stages of realizing the full potential of our expanded sales organization with broader commercial coverage through a top three pharmacy benefit manager effective August 1, an expanded sampling program now underway, and the ACTIVATE initiative encouraging clinicians to use VEVYE earlier in the treatment paradigm. We have multiple meaningful growth drivers coming online at the same time. Together, these initiatives position VEVYE to accelerate prescription growth and expand its share of the branded dry eye market during the second half. IHEEZO delivered one of the strongest commercial performances of the quarter. Despite the loss of pass-through reimbursement in cataract surgery on April 1, unit demand reached a record of 65,477 units, up 44% sequentially and 34% year-over-year. We exited the quarter with 224 total ordering accounts, up 32% year-over-year, and 62 placed their first-ever IHEEZO order during that quarter, the strongest quarter for new account acquisition since launch. Paired with a trailing 12-month reorder rate of approximately 85.5%, that reinforces that adoption continues to broaden following the reimbursement transition. Our focus now is on increasing utilization within existing accounts while expanding IHEEZO into additional procedures and sites of care, including the broader in-office procedure market, which adds more than 2.5 million annual procedures to our addressable opportunity. We believe those factors position the franchise for a substantially stronger second half. Before moving to TRIESENCE, I want to briefly touch on Byooviz. We formally launched the product on July 1, and while it remains early, initial physician engagement has been encouraging. Byooviz is a natural fit within our retina organization, expands the options our team can bring to retina specialists, and increases the value of each customer interaction. TRIESENCE also continued its exceptional momentum. Demand reached another quarterly record of 14,529 units, up 162% year-over-year. Total ordering accounts reached 805, a net increase of 69 over the quarter. And 54% of unit demand now comes from ocular surgery. That mix shift demonstrates that TRIESENCE is expanding beyond its historical retina base. We tripled our surgical commercial organization during the second quarter, and those representatives remain early in their productivity ramp. As they expand account coverage and drive broader adoption, we expect their contribution to begin showing up in the third quarter and build from there. Finally, our specialty portfolio continues to build momentum. The permanent J-code for IOPIDINE became effective on July 1. VERKAZIA continues to progress following its relaunch, and we expanded our AccessPlus commercial organization to support what we believe is the broadest ophthalmic cash-pay portfolio in the industry. Across each of these, our focus remains the same: expanding physician access, improving reimbursement, and increasing commercial execution. While I step back and look across this portfolio, what stands out most is the breadth of our momentum. We're seeing growth across multiple franchises, continued physician adoption, expanded commercial reach, and the benefits of the investments we made throughout the first half of the year. I believe Harrow enters the second half of 2026 in its strongest commercial position to date. I'm excited about the opportunities ahead.
I'll discuss some developments with our R&D pipeline. I'll start with MELT-300. As I mentioned during our last quarterly webcast, we have now officially secured our pre-NDA meeting with the FDA, which is scheduled for early in the fourth quarter. We are currently preparing the meeting dossier, completing the remaining ancillary activities, and remain on track to submit our NDA during the first half of 2027. This represents another important milestone for the program and keeps us on track for our anticipated regulatory timeline. The program continues to execute according to the development plan we outlined for investors. From a scientific perspective, I remain very excited about MELT-300. We believe it has the potential to fundamentally change procedural sedation by offering a rapid, IV-free, opioid-free alternative that addresses a significant unmet need across multiple procedural settings. Assuming a successful regulatory review, we continue to target a potential FDA approval in the first half of 2028, followed by a commercial launch later that year. Turning to MELT-210, the simplest way to think about the program is MELT-300 for pediatric patients. MELT-210 is being developed for children undergoing diagnostic and therapeutic endoscopic procedures. Today, oral midazolam is administered primarily as a syrup, which can be difficult for children to tolerate because of its taste and the challenges associated with administration. We believe an orally disintegrating tablet could provide a more convenient and child-friendly option while fitting within the dosing paradigm physicians already use for oral midazolam. Earlier this year, we completed our end of phase 2 meeting with the FDA. We are currently modifying our pharmacokinetics study protocol to align with the agency's feedback on this program. The development approach is a 505(b)(2) pathway to bridge to oral midazolam syrup through PK, and we expect to develop multiple dose strengths, likely four, to accommodate the current weight-based dosing paradigm. MELT-210 also benefits from the formulation, development, and regulatory experience we have generated through MELT-300, including use of the Zydis orally disintegrating tablet platform. We continue to target an NDA submission in 2027. Together, MELT-300 and MELT-210 represent the foundation of a broader procedural sedation platform addressing both adult and pediatric patients. We look forward to providing additional detail on the development plan for both programs at our Investor Day next March. With that, I'll turn the call over to the operator for questions.
Questions and answers
Thank you.
Mark, maybe first to start on the national top three PBM win. Can you talk about exactly what that coverage constitutes? Is it tier one preferred, similar to the other top three win that you already have?
Yes. The only things we want to say about that coverage win are: first, it's a top three PBM; second, it's for commercial lives; third, these were lives that were formerly blocked that we did not have access to; and fourth, the number of lives that we now have access to is in the many millions. Other than that, I don't want to go into the specific positioning on the formulary, but we're really excited about this coverage win. We promised our stockholders we would pursue this, and we were able to deliver ahead of time. We didn't expect this to come until the first part of next year, but the VEVYE team is very excited to have millions of lives they now have access to that were formerly blocked.
Got it. And maybe a two-parter, one on IHEEZO and one on VEVYE. As we think about the recent volume acceleration for IHEEZO, can you discuss what percentage of that business is now in-office versus retina to help characterize that acceleration? And Andrew, on VEVYE, how do you see ASP in the second half? Since there was only a partial benefit from the business rule changes in Q2, is it fair to assume continued sequential improvement in VEVYE ASP?
On IHEEZO, the ASC market is effectively closed because of the loss of pass-through. The fact that we hit a record in unit demand for IHEEZO in the second quarter was an extraordinary result and reflects the team's focus on the in-office market, including both retina and other in-office procedures. The in-office market opens about 2.5 million additional procedures for us, and we have barely scratched the surface. A significant amount of the growth in IHEEZO for the second quarter came from the retina practices we've been targeting for the last year and a half. We forecast that in the third quarter we would be set up well with the new 5-pack, the new pricing, and emerging data, and that would cause acceleration in the second half of the year. IHEEZO is definitely exceeding expectations. We have probably less than 2% market share in the overall addressable market, and we continue to grow and pick up record numbers of accounts. That acceleration is continuing into the third quarter and should be reflected in the third quarter and fourth quarter results. IHEEZO will be an important part of us hitting our numbers for the second half. Andrew, do you want to talk about VEVYE?
With VEVYE ASP and generally anything going through the pharmacy benefit, we typically see improved pricing throughout the year as patients hit their deductibles, and we expect to see that for VEVYE. Regarding the amended business rules, we didn't get a full quarter benefit in Q2. Starting in Q3, we'll get the full benefit of those amended rules, which should add additional positive momentum to VEVYE ASP going forward.
Thanks, guys.
Thank you. The next question will come from Steven Seedhouse of Cantor.
First, on TYRVAYA, can you give us a sense of sales for that product, perhaps in 2025 and 2026 year-to-date, and whether it's growing, stable, or declining before you take over? Also, what are you modeling for loss of exclusivity of that product?
Andrew, do you want to discuss what we can share? We're trying to keep details quiet as we get to the closing, but anything you can discuss would be helpful.
Steven, there's not a lot we can say until we actually own the asset. You can review some of Viatris' comments for historical perspective. Our primary focus right now is closing as quickly as possible. Once closed, we are guiding that TYRVAYA will contribute more than $30 million of revenue in 2027. We're also adding additional heads on the sales and commercial front who will promote both TYRVAYA and VEVYE, so we expect to be able to grow the product. Regarding loss of exclusivity, we're assuming the product will have exclusivity through 2034.
One other comment: the operational synergy between these assets is remarkable, and you'll likely see that as early as the fourth quarter. These assets are clinically complementary. In discussions with dry eye professionals, the ability to treat the disease with a chronic care product like VEVYE and to supplement treatment with a product that nearly immediately produces tears like TYRVAYA is very strong. This was stronger than we anticipated before diligence, and these assets are clinically complementary and operationally synergistic.
All right, thanks. On IHEEZO, where is such strong demand coming from specifically? Many tailwinds like the QUEL data and biosimilar launches are still coming. Is there a way to articulate what is driving such strong demand and how likely that is to continue into subsequent quarters as those additional tailwinds come online?
The demand is impressive and broad-based. The team has done a phenomenal job growing the business in terms of new accounts and increasing utilization within accounts. We're also picking up larger accounts that use higher volumes. The reason doctors are increasingly using IHEEZO is because the product performs very well clinically, feels good on the patient's eye, and has predictable onset and duration. The excipient in the product makes the eye feel better than alternatives, which can include an injection of lidocaine into the eye. Word is spreading among the retina community and multi-specialty practices. The in-office market is real and growing, including cataract surgery in the office, and we are picking that up. Expect continued growth and acceleration for the product; we've barely scratched the surface with likely less than 2% of the addressable market.
Makes sense. Thanks, Mark.
Thank you. The next question will come from Lachlan Hanbury-Brown with William Blair.
Quick follow-up on TYRVAYA contribution to 2026. Should we pro rata your 2027 guidance for 2026 depending on closing timing? Would it be accretive to EBITDA in 2026, or will initial integration costs affect that?
Lachlan, it's fair to pro rata the guide for 2027 depending on closing timing; we're working to close as fast as possible. We don't expect TYRVAYA to pull down earnings this year. There may be some integration costs in the first few months as we implement the product into our systems, so expect a little higher cost in the initial months. Beginning next year, those integration costs should largely be cleared, and the product should be a positive contribution.
Thanks. On VEVYE, Mark, can you comment on where ASP from that new coverage may end up relative to current coverage? Is it an improvement, similar, or worse than current coverage? Also, regarding the sampling program, how impactful is it and how much of current volume is going through a $0 first fill that sampling can convert more quickly?
On ASP, we do not sign deals unless there is a net improvement to ASP. We would not sign a deal that materially reduces net pricing unless the increased volume would more than offset it. For this coverage in particular, it should improve our unit revenue for VEVYE. Regarding the $0 first fill, we've built the company on a foundation of access: ensuring any patient in the United States who needs our medications will have affordable access. When launching VEVYE, coverage was limited and our coverage has been poor; the recent coverage win came from a PBM where we were blocked. We implemented a $0 first fill to ensure patients had access, but it's expensive financially because of COGS and processing fees. The sampling program is expected to achieve similar access at far lower cost and ultimately a more profitable structure for stockholders.
Should we think about that showing through as slightly lower scripts written but higher ASP per script?
I wouldn't characterize it exactly that way. We're seeing higher volumes of prescriptions, both new prescriptions and total prescriptions, as a result of this program. The business rule changes we made were expected by some to constrict prescribing and dispensing, but the opposite has happened: these changes have not affected demand for the product, and both NRx and TRx moved up meaningfully in Q2 and are continuing in Q3. We're getting great productivity from the sales force. More reps correlate with more NRx, and for a product like VEVYE, that drives more TRx. With more coverage and better unit economics, we expect increasing overall revenue for the franchise.
I would reinforce that we expect ASP to improve for VEVYE throughout the year.
Thanks.
Thank you. The next question is from Thomas Schrader with U.S. Bank.
Are TYRVAYA and VEVYE going to be sold by the same field force in lockstep when you add the TYRVAYA sales team? Will the TYRVAYA reps also promote VEVYE so that both products are carried by every rep?
I won't get into detailed strategy, Tom, but VEVYE is and will remain our primary product and core focus. There are tremendous operational synergies between these products, and they are clinically complementary. Pat, do you want to comment on how we intend to approach VEVYE and TYRVAYA?
We're excited about the complementary nature of these products. VEVYE has performed very well, and we're in a large, active market that continues to grow. VEVYE focuses on inflammation as the cornerstone of treating dry eye and has delivered positive experience and growth in NRx, TRx, and writers. TYRVAYA helps open another segment opportunity related to basal tear production, which often presents similarly in inflammation patients. We see the opportunity for both products to grow Harrow's share, help more patients, bring in more writers, and grow the business.
On biosimilars, protecting price is important. Any comments on your strategy to protect ASP versus biosimilar entrants?
The team has received a tremendous amount of inbound interest in the product, and we're focused on converting that interest into demand and revenue. We have a market access strategy designed to preserve pricing, and we believe we have unique advantages with our product over other choices, including branded alternatives and biosimilars.
Maintaining net revenue per unit durability is very important. We have experience managing buy-and-bill products and will apply those learnings here. The reimbursement dynamic is similar since it's going through the medical benefit and reimbursed on its own code, so we will use that experience to try to extend durability for both Byooviz and future products.
Is IHEEZO use in the surgical setting gone forever, or could clinical data enable some return to that market?
We will focus where we are winning and where there is significant headroom, which is the in-office retina market and the in-office procedure market. We have well over 10 million more procedures we can address annually in-office. The surgical market is attractive, and it was how we launched the product, but we have a massive in-office opportunity with a product-specific J-code, reimbursement better than 95%, and a sub-5% prior authorization rate. We're seeing tremendous success in the office with retina professionals and other in-office procedures, and that's where we're focusing.
Great. Thanks for the details.
Thank you. The next question will come from Mayank Mamtani with B. Riley Securities.
On the shareholder letter, you mentioned third-party data undercounts VEVYE. Can you comment on what you're seeing on total dispense units that may not show up in IQVIA? Also, how are you tracking versus another incumbent brand that's expanding the dry eye market? Regarding the new PBM win, what percentage of the new lives were previously filling as cash pay versus completely blocked?
On cash pay versus covered, we don't break that out specifically and do not intend to. This is an incredibly competitive market. Andrew, do you want to address data issues regarding VEVYE reporting?
We are seeing an increasing disparity between third-party aggregator data and our internal data. Our internal metrics show VEVYE brand share at about 14.6% at the end of June, up from last quarter and nearly double from a year ago. The share growth we're seeing, especially year-over-year, reflects productivity even with a smaller sales force historically. New reps are beginning to produce prescriptions, and there is a direct correlation between feet on the street and increases in NRx and TRx. Adding TYRVAYA and experienced commercial personnel from Viatris, who will also promote VEVYE, should further accelerate our position in dry eye.
To add, the dashboard I watch is our FillRX dashboard, and I watch it closely. I see higher highs and higher lows in daily volume, including week-over-week comparisons such as one Tuesday versus the prior Tuesday. That gives me confidence in the franchise and the team's work. The second half is about commercial execution, and I have tremendous confidence in Pat, Maria, and the VEVYE team to continue the trends we're seeing.
Understood. On pipeline: the ASRS interim data for IHEEZO was encouraging but small. How do you see upcoming data building on that, including comparisons to subconjunctival lidocaine on post-procedure pain and other relevant endpoints? For MELT-300, what are the key questions for the pre-NDA meeting in early Q4, and do you anticipate ancillary studies being wrapped up by year-end?
I'll turn those to Amir, but briefly on QUEL and the ASRS data: from a patient's perspective, if you can avoid an injection into the eye and instead get a topical drop, patients will prefer the drop. We aim to demonstrate that the anesthetic effect is the same as lidocaine injection, with patient preference and pain outcomes supporting the benefit. Amir will provide more detail on QUEL and the pre-NDA meeting.
On QUEL: this is a double-masked controlled trial. The study is well-enrolling, and we anticipate enrollment completion later this year and results later this year. Endpoints include demonstrating numbing equivalency to subconjunctival lidocaine and patient outcomes: a range of symptoms we track and overall satisfaction through 24 hours post-injection. We've been generating evidence for this program for around 20 months, and the accumulating data supports the benefits we see with IHEEZO in procedures. On MELT-300: the pre-NDA meeting is oriented around the submission package—what we are putting in and the format. We'll discuss CMC and ancillary programs, including PK studies. It's an important meeting, but the focus is the constellation of data that will be in the NDA.
Understood. Thank you.
Thank you. The next question comes from Jeffrey Cohen with Ladenburg Thalmann.
Could you talk about contact lens wearers and TYRVAYA pickup from VEVYE? It may be early, but do you expect access programs, sampling programs, or couponing for TYRVAYA as you bring it in the back half?
All eye-drop products for contact lens wearers typically require removing lenses, which can be inconvenient. One advantage of TYRVAYA is that it is suitable for the 45 million contact lens wearers in the U.S. Historically, TYRVAYA had significant revenue, and we believe we can restore and grow the business. It hasn't had much attention recently, and we intend to focus on contact lens wearers and other patients who would benefit. VEVYE will remain our primary focus—it's the product we brought to market—but we have high hopes for TYRVAYA. Regarding access programs, I won't get into specific programs for TYRVAYA now, but we will continue to implement access programs ensuring patients in need can access Harrow products regardless of insurance status. Access is part of our culture and how we've built the business.
Thanks, Mark. One more quick question on the compounding business: any net changes this quarter, and should we expect a similar run rate in Q3 and Q4?
We experienced an inventory recovery, so inventory is back, which is half the battle. We've demonstrated that when we have inventory, we grow. Our interest is in converting compounded units to branded units where appropriate because that can be better for patients and financially better for Harrow stockholders. We do expect that business to grow in Q3 and Q4.
In March we guided that the compounding business would do about $60 million to $65 million in revenue. That guidance is still in place, implying continued revenue increases through the second half. We also expect improvement in gross margins from that business as we progress through the year and spread fixed costs over higher revenue.
Thank you. Thanks for taking the questions.
Thank you. The next question will come from Nelson Cox with Lake Street Capital.
Regarding the $250 million revenue exit rate for 2027 you referenced earlier, did that original goal include any of the more recent portfolio additions, or should we view those incremental to the goal? Was business development always baked into that target?
We have a history of doing business development to generate revenue, so it's reasonable to expect further BD activity, but that was not baked into the $250 million goal. The belief was that we could achieve that with the products we had at the time, excluding TYRVAYA. I believe we can reach that target without additional BD, though it's a difficult objective. TYRVAYA is additive and should be helpful toward that number, but the original idea was that we would hit the goal without new BD.
Thank you.
I am showing no further questions at this time. I will now turn the call back over to Mark for closing remarks.
Thank you, operator. I'll close where I began. The first half of 2026 was about setting the table: expanding our commercial organization, improving pricing, normalizing inventory, launching new products, and advancing our pipeline. We did what we said we would do. The second half is about serving the meal. Demand across every one of our growth drivers is strengthening, our commercial organization is larger and more capable than it has ever been, and the investments we made in the first half are already showing up in the business today. That is why we are reiterating our full year guidance and why I remain confident in our ability to deliver it. I want to end this call by letting our stockholders know that people within this organization matter. After nearly 15 years as the leader of this business, we have never had the level of talent we now have throughout the company. We have significantly upgraded our talent level, most pronounced in our commercial group. I am betting on our commercial team to make it happen, and I believe you should too. The table is set. Now we serve. One final note: we announced our Investor Day on March 22, 2027, in New York City. Please mark your calendars. We hope to provide more information about this event later in the year. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.