Bausch + Lomb's recent earnings call was a symphony of optimism, a chorus of growth across all segments, fueled by the launch of the revolutionary dry eye treatment Miebo. But beneath this crescendo of positivity, a fascinating gamble is taking place, a silent wager on the beleaguered Xiidra, a drug with a troubled past and a future shrouded in uncertainty.

Xiidra, once a rising star in the dry eye market, had fallen from grace under Novartis' stewardship, its sales stagnating, its promotional muscle atrophying. Yet, Bausch + Lomb, in a move that surprised many, placed a hefty bet on this fallen angel, acquiring the drug and embarking on an ambitious rehabilitation project.

While the spotlight shines brightly on the spectacular debut of Miebo, the Xiidra narrative unfolds in the shadows, a story whispered in the margins of the earnings call. But make no mistake, this is a billion-dollar bet, a gamble on the company's ability to not just resurrect a fallen drug, but to propel it to new heights.

The first quarter results offered a glimpse into this Xiidra revival, with $79 million in revenue recorded. On the surface, a respectable figure. However, factoring in the Change Healthcare cyber attack, the highest deductible season, and the realignment of the sales force, the underlying performance of Xiidra remains a mystery, a puzzle yet to be fully deciphered.

Despite this, Bausch + Lomb is doubling down, projecting Xiidra to generate $400 million in revenue for 2024, a 13% growth over the combined performance of Bausch + Lomb and Novartis in 2023. This ambitious target suggests a belief in Xiidra's inherent potential, a conviction that with the right support, the drug can reclaim its market leadership.

But the Xiidra gamble goes beyond just financial targets. It's a strategic play, an integral part of Bausch + Lomb's overarching ambition to dominate the dry eye market. By owning both Miebo, the groundbreaking new treatment for evaporative dry eye, and Xiidra, the revitalized champion for inflammatory dry eye, Bausch + Lomb positions itself as the undisputed leader in this rapidly growing market.

The integrated sales force, the largest in the dry eye space, becomes the spearhead of this market dominance strategy, armed with the best weapons for each type of dry eye. This cross-selling potential is a crucial piece of the Xiidra puzzle, amplifying the impact of both drugs.

While quantifying this cross-selling impact is difficult at this early stage, it's undeniable that the integrated sales force adds a powerful multiplier effect to the Xiidra equation. Doctors, now presented with the best options for both evaporative and inflammatory dry eye by a single, highly trained force, are more likely to prescribe both, boosting the overall performance of the dry eye franchise.

But the Xiidra gamble is not without risks. Rehabilitating a neglected brand, re-energizing a disenchanted sales force, and re-capturing lost market share are herculean tasks, even for a company with Bausch + Lomb's pedigree.

The $400 million revenue target for Xiidra, while achievable, hinges on flawless execution across multiple fronts. The sales force, newly integrated and equipped with advanced selling tools, must deliver. The marketing campaign, reignited with a direct-to-consumer approach, needs to resonate with patients. And crucially, the Change Healthcare disruption must be fully resolved, ensuring smooth patient access.

Failure on any of these fronts could jeopardize the Xiidra gamble, impacting not just the financial performance of the drug, but also Bausch + Lomb's grand vision of dry eye market dominance.

Revenue Performance: Miebo vs. Xiidra (Q1 2024)

The following chart compares the Q1 2024 revenue performance of Miebo and Xiidra. While Miebo has enjoyed a strong launch, Xiidra's performance has been hampered by several factors.

Key Factors Influencing Xiidra's Performance

Bausch + Lomb's bold wager on Xiidra is a captivating sub-plot in the company's growth story, a silent bet with billion-dollar implications. While Miebo takes center stage, the Xiidra narrative, unfolding discreetly, deserves close attention. Its success, or lack thereof, could define Bausch + Lomb's future, shaping its trajectory in the lucrative and fiercely competitive dry eye market.

"Fun Fact: Dry eye disease affects an estimated 344 million people worldwide! Bausch + Lomb, with its comprehensive portfolio of dry eye treatments, is at the forefront of addressing this growing public health issue."