Harrow to Acquire Melt Pharmaceuticals, Expanding Non-Opioid Sedation Portfolio

Harrow Expands Portfolio with Melt Pharmaceuticals Acquisition, Targets Non-Opioid Sedation Market

Harrow, Inc. (NASDAQ: HROW), a pharmaceutical company specializing in ophthalmic disease management solutions, announced an agreement to acquire Melt Pharmaceuticals, Inc., a clinical-stage entity focused on non-opioid, non-intravenous (IV) sedation therapies. This strategic acquisition is centered on Melt's lead investigational therapy, MELT-300, a sublingual tablet designed to provide procedural sedation without the use of opioids or IV administration, positioning Harrow for significant expansion into a multi-billion-dollar market.

The Event in Detail: MELT-300's Potential to Redefine Sedation

The acquisition, pending approval from Melt stockholders (excluding Harrow and affiliated parties), will integrate MELT-300 into Harrow's product pipeline. MELT-300 is a patented sublingual formulation combining midazolam and ketamine, developed to offer a convenient, needle-free alternative for procedural sedation. A pivotal Phase 3 study completed in November 2024 demonstrated MELT-300's statistical superiority over both sublingual midazolam alone and placebo, with significantly reduced requirements for rescue sedation. Furthermore, a recent cardiac safety study indicated the therapy does not alter normal heart rhythm. This regulatory pathway has been substantially de-risked by a Special Protocol Assessment (SPA) agreement with the U.S. Food and Drug Administration (FDA). Harrow plans to submit a New Drug Application (NDA) to the FDA in 2027, with a target U.S. commercial launch in 2028. While specific financial terms of the acquisition were not disclosed, the strategic rationale highlights a focus on market diversification and addressing an unmet medical need.

Analysis of Market Reaction and Strategic Rationale

Following the announcement, Harrow's stock has displayed notable momentum, with an InvestingPro analysis indicating a 67% return over the past six months. Analysts maintain a "strong buy" consensus on Harrow's stock, with price targets ranging from $42 to $76 per share. B.Riley notably raised its price target for Harrow to $70, upholding a "Buy" rating and identifying the company as a top investment prospect for the latter half of 2025. The firm underscored Harrow's objective of achieving a $1 billion-plus revenue run-rate by 2028 as a key driver for its positive outlook. This acquisition is poised to leverage Harrow's existing experience with its compounded MKO Melt product, which has been utilized in over 500,000 cataract surgeries. Upon FDA approval of MELT-300, Harrow intends to discontinue MKO Melt and transition customers to the newly approved product. Harrow, with a market capitalization of $1.71 billion and a 48% revenue growth over the last twelve months, is forecast by analysts to achieve profitability this year. While the company operates with moderate debt levels and a high debt-to-equity ratio of 4.66, InvestingPro data suggests a strong financial health score, supported by a robust three-year revenue growth rate of 27.4% and a gross margin of 74.56%.

Broader Context and Market Implications

MELT-300 represents a significant expansion opportunity for Harrow beyond its core ophthalmic focus, targeting a broad procedural sedation market. This includes an estimated 4 million annual cataract surgeries, but critically, extends to other procedures such as MRIs, colonoscopies, and dental interventions. The development of a non-opioid, non-IV sedation alternative directly addresses a critical public health need by aiming to decrease opioid dependence in medical procedures. MELT-300 incorporates Catalent's ZYDIS oral dissolving tablet technology, a platform already utilized in over 35 FDA-approved products, underlining the technological robustness of the therapy. Melt Pharmaceuticals was initially a subsidiary of Harrow before being spun off in 2019, making this re-acquisition a strategic re-consolidation of efforts.

Expert Commentary

Mark L. Baum, Chief Executive Officer of Harrow, articulated the transformative potential of MELT-300:

"MELT-300 has the potential to redefine the standard of care for millions of patients by providing a convenient, non-opioid alternative for procedural sedation."

This sentiment aligns with analyst consensus predicting substantial market penetration for the therapy and its role in Harrow's future growth trajectory.

Looking Ahead: Milestones and Financial Strategy

The immediate focus for Harrow will be the ongoing regulatory process, with the NDA submission for MELT-300 anticipated in 2027 and the subsequent commercial launch planned for 2028. Further reinforcing its financial position for these strategic initiatives, Harrow recently priced a $250 million private offering of senior unsecured notes at 8.625%, maturing in 2030, expected to close on September 12. Concurrently, the company secured a commitment for a new $40 million revolving credit facility with Fifth Third Bank. These financial activities are crucial for funding product development and market penetration efforts. Investors will also monitor Harrow's inaugural Investor & Analyst Day scheduled for September 26 in New York City, where further insights into the company's strategy and growth prospects are expected. The expansion of its "Harrow Access for All" program in late 2025 further highlights the company's commitment to broader healthcare access.