What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-05 compared with 2025-03-03 · 136 added, 110 removed, 273 unchanged (47% of the section changed)

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Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties and should be read together with the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a biopharmaceutical company committed to redefining the retina experience.

AXPAXLI (axitinib intravitreal hydrogel, also known as OTX-TKI), our product candidate for retinal disease, is based on our proprietary ELUTYX bioresorbable hydrogel-based formulation technology.

AXPAXLI is currently in two repeat-dosing Phase 3 clinical trials for the treatment of wet age-related macular degeneration, or wet AMD, which we refer to as the SOL-1 and the SOL-R trials.

We have also completed a Phase 1 clinical trial of AXPAXLI for the treatment of non-proliferative diabetic retinopathy, or NPDR, which we refer to as the HELIOS trial.

We intend to meet with the U.S.

Food and Drug Administration, or FDA, in the first half of 2025 to discuss the design of a potential registrational clinical program for AXPAXLI for the treatment of NPDR and diabetic macular edema, or DME, and then evaluate our next steps.

We also leverage the ELUTYX technology in our commercial product DEXTENZA, an FDA-approved corticosteroid for the treatment of ocular inflammation and pain following ophthalmic surgery and for the treatment of ocular itching associated with allergic conjunctivitis, and our product candidate PAXTRAVA (travoprost intracameral hydrogel also known as OTX-TIC), which is currently in a Phase 2 clinical trial for the treatment of open-angle glaucoma, or OAG, or ocular hypertension, or OHT.

We are an integrated biopharmaceutical company committed to redefining the retina experience.

AXPAXLI, also known as OTX-TKI), our investigational product candidate for retinal disease, is an axitinib intravitreal hydrogel based

on our ELUTYX proprietary bioresorbable hydrogel-based formulation technology.

AXPAXLI is currently being evaluated in a Phase 3 registrational program for wet age-related macular degeneration, or wet AMD, which we refer to as the SOL program.

AXPAXLI is currently also being evaluated in a Phase 3 registrational program for diabetic retinal disease, including non-proliferative diabetic retinopathy, or NPDR, which we refer to as the HELIOS program.

We also leverage the ELUTYX technology in our commercial product DEXTENZA, a corticosteroid approved by the U.S.

Food and Drug Administration, or FDA, for the treatment of ocular inflammation and pain following ophthalmic surgery in adults and pediatric patients and for the treatment of ocular itching associated with allergic conjunctivitis in adults and pediatric patients aged two years or older, and in our product candidate OTX-TIC, which is a travoprost intracameral hydrogel that has completed a Phase 2 clinical trial for the treatment of open-angle glaucoma, or OAG, or ocular hypertension, or OHT.

We are currently evaluating next steps for the OTX-TIC program.

Key Business and Financial Developments

AXPAXLI for the treatment of wet AMD

In December 2024, the SOL-1 trial, our first registrational Phase 3 clinical trial of AXPAXLI for the treatment of wet AMD, completed randomization of more than 300 evaluable treatment-naïve subjects with a diagnosis of wet AMD in the study eye.

On January 14, 2025, we announced that, as of January 10, 2025, we had enrolled 311 subjects across various stages of loading and randomization in the SOL-R trial, our repeat-dosing registrational Phase 3 clinical trial of AXPAXLI for the treatment of wet AMD.

On February 24, 2025, we received an agreement letter regarding a second modification of our Special Protocol Assessment, or SPA, agreement for our SOL-1 trial from the FDA that allows us to add a repeat dose of AXPAXLI at each of Week 52 and Week 76 for the AXPAXLI arm to generate the required safety data for subjects re-dosed with AXPAXLI through Week 104 to support long-term dosing.

As of March 3, 2025, subject retention in the SOL-1 trial has been exceptional, and the vast majority of supplemental treatments, reviewed on a masked basis, have been in accordance with pre-specified criteria under the trial protocol.

Because the inclusion of re-dosing requires all data to be masked until Week 52, we now expect topline results for SOL-1 to be available in the first quarter of 2026.

The optimized design of the SOL-1 trial enhances the potential for a 6 - 12 month dosing label for AXPAXLI for the treatment of wet AMD and also provides insights into the long-term durability of AXPAXLI.

We previously intended to randomize 825 subjects in the SOL-R trial.

The inclusion of re-dosing in the SOL-1 trial and the exceptional subject retention to date in the SOl-1 trial allow us to reduce the SOL-R trial size to 555 subjects.

AXPAXLI for the treatment of NPDR and DME

We have completed the HELIOS trial of AXPAXLI for the treatment of NPDR.

We intend to meet with the FDA in the first half of 2025 to discuss the design of a potential registrational clinical program for AXPAXLI for the treatment of NPDR and DME and then evaluate our next steps.

Our net product revenue is generated from the sale of DEXTENZA to specialty distributors, or SDs, for resale to certain ambulatory surgery centers, or ASCs, certain hospital outpatient departments, or HOPDs, and certain physicians’ offices, and from the direct sale by us to ASCs and physicians’ offices.

Our net product revenue was $63.5 million for the year ended December 31, 2024, reflecting an increase of $5.6 million or 9.7% over the year ended December 31, 2023.

Pending the receipt of favorable results from the SOL-1 trial and planned interactions with the FDA, we intend to submit a new drug application, or NDA, for AXPAXLI for the treatment of wet AMD based on Week 52 data from the SOL-1 trial, without necessarily waiting to receive additional clinical data from the SOL-1, SOL-R or other clinical trials.

Because axitinib is FDA-approved for non-ophthalmic indications, we plan to submit an NDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or FDCA, which has the potential to shorten the review timeline for AXPAXLI by up to two months compared to the traditional review pathway for new molecular entities.

As of February 4, 2026, the SOL-1 trial continues to maintain an exceptional rate of subject retention and per protocol-defined treatment rescues.

All subjects have completed their Week 52 visit and have been re-dosed according to their baseline treatment assignment.

Oversight by an independent data and safety monitoring committee has not identified any safety signals in the SOL-1 trial to date.

As of February 4, 2026, the results of the SOL-1 trial remain masked.

We expect to present Week 52 results for the SOL-1 trial at the 49th Macula Society Annual Meeting, taking place between February 25 – 28, 2026.

In November 2025, we announced that the SOL-R trial has achieved its randomization target of 555 subjects.

We continued to allow randomization of previously enrolled subjects that were still in the loading phase when we achieved target randomization to maintain our commitment to both patients and investigators.

We completed randomization of the SOL-R trial in December 2025 with 631 subjects randomized.

We expect topline data from the SOL-R trial to be available in the first quarter of 2027, an acceleration from our previous guidance of the first half of 2027.

We plan to initiate, in the second quarter of 2026, a multi-center, open-label long-term safety extension clinical trial, which we refer to as the SOL-X trial, to evaluate subjects who have completed their two-year safety follow-up visits in either the SOL-1 or SOL-R trials for an additional three years.

AXPAXLI for the treatment of diabetic retinal disease

We have initiated our registrational program for AXPAXLI for the treatment of diabetic retinal disease with the HELIOS-3 superiority clinical trial for the treatment of NPDR in November 2025.

We plan to refine our development and regulatory strategy for AXPAXLI for the treatment of diabetic retinal disease based on our planned engagements with the FDA regarding the regulatory pathway for AXPAXLI for the treatment of wet AMD.

OTX-TIC for OAG or OHT

In the third quarter of 2025, we completed a pilot repeat-dose sub-study in a subset of subjects from our Phase 2 clinical trial of OTX-TIC to evaluate the safety of a repeat, sustained release dose of OTX-TIC 26 µg.

OTX-TIC 26 µg was generally well tolerated after both single and repeat dosing in patients with OAG or OHT.

In addition, no new safety concerns were identified following repeat-dosing of OTX-TIC 26 µg in the small subset of subjects who participated in the sub-study.

We are currently evaluating next steps for the OTX-TIC program.

2025 Offering

In October 2025, we completed an underwritten offering of 37,909,018 shares of our common stock for an offering price of $12.53 per share, or the 2025 Offering.

We received net proceeds of approximately $445.6 million, after deducting underwriting discounts and commissions and other offering expenses, from the 2025 Offering.

Our net product revenue was $51.8 million for the year ended December 31, 2025, reflecting a decrease of $11.6 million or 18.3% over the year ended December 31, 2024.

We believe that the year-over-year decrease in net product revenue is primarily attributable to the Medicare reimbursement cap, the impact of rebates and discounts, and the impact of the inclusion of DEXTENZA into the cost performance category of the Centers for Medicare & Medicaid Services’ Merit-based Incentive Payment System, or MIPS, for 2025.

Demand for DEXTENZA is determined by In-Market Sales, defined as unit sales from the SDs to ASCs, HOPDs, and physicians’ offices, and unit sales made directly by us to ASCs and physicians’ offices.

We recorded In-Market Sales of approximately 180,000 units for the year ended December 31, 2025, an increase of approximately 5,000 units compared to the year ended December 31, 2024.

Differences between In-Market Sales figures and the number of units of DEXTENZA sold by us to SDs and through Direct Sales as included in net product revenue recognized in our consolidated financial statements are attributable to distributor stocking patterns.

We believe that clinicians are adjusting to the impact of MIPS, and together with our increased sales efforts directed towards HOPDs, we expect DEXTENZA unit growth to continue.

Pursuant to 42 U.S.C.

1395 et seq., or the Medicare Statute, physician administered non-opioid pain medications will receive separate payment in both the ASC and HOPD settings of care effective as of January 1, 2025.

The Medicare Statute allows for continued separate payment of DEXTENZA in the ASC setting for 2025, and it re-establishes the separate payment of DEXTENZA in the HOPD setting that was lost for 2024.

Additionally, the Medicare Statute limits the separate payment for physician administered non-opioid pain medications.

In November 2024, the Centers for Medicare & Medicaid Services, or CMS, released the final Medicare Physician Fee Schedule, or MPFS, for the calendar year 2025, which results in a marginal decrease in physician payments for DEXTENZA.

Effective January 2025, a clinician’s cost for DEXTENZA is included in the cost performance category of CMS’ Merit-based Incentive Payment System, or MIPS.

For eligible clinicians, CMS calculates the MIPS final score based on four performance categories, which is then used by CMS to determine the payment adjustment applied to the clinicians’ Medicare Part B claims, with clinicians that incur costs above or below national average spending being penalized or incentivized, respectively.

We believe that DEXTENZA is currently used in less than 5% of cataract procedures and that commercial growth may be driven by a continued focus on sales to ASCs, specifically corporate accounts that own and control multiple ASCs and HOPDs.

In June 2024, we submitted the data for our clinical trial to evaluate DEXTENZA in pediatric subjects following cataract surgery to the FDA to fulfill a post-approval requirement of the FDA in connection with the FDA’s prior approval of DEXTENZA for the treatment of inflammation and pain following ophthalmic surgery in adults.

We anticipate receiving the FDA’s decision on the pediatric labeling for DEXTENZA during the second quarter of 2025.

Reduction in Force

In May 2024, our board of directors approved a strategic reduction in force to eliminate 37 full-time employees, primarily in research and development and technical operations and representing approximately 13% of our workforce, as part of an initiative to prioritize our resources on the clinical development of AXPAXLI for the treatment of wet AMD, or the Strategic Restructuring.

We completed the Strategic Restructuring, recorded the related restructuring charges of $1.6 million, resulting primarily from garden leaves and severance benefits, and paid all previously accrued restructuring charges in the year ended December 31, 2024.

2024 Private Placement

In February 2024, we sold in a private placement 32,413,560 shares of our common stock at $7.52 per share and, in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 10,805,957 shares of our common stock at a price of $7.519 per pre-funded warrant for total net proceeds to us of approximately $316.4 million, after deducting placement agent fees and other offering expenses, or the 2024 Private Placement.

Each pre-funded warrant has an exercise price of $0.001 per share, is currently exercisable and will remain exercisable until exercised in full.

Convertible Notes

In March 2024, the holder of our $37.5 million unsecured senior subordinated convertible notes, or the Convertible Notes, converted the principal amount of the Convertible Notes, and we issued to the holder of the Convertible Notes 5,769,232 shares of our common stock with a total fair value of $52.5 million and paid $11.4 million for accrued interest.

The accounting for the extinguishment of the Convertible Notes resulted in a non-cash loss of $28.0 million.

1395 et seq., or the Medicare Statute, physician administered non-opioid pain medications have received separate payment in both the ASC and HOPD settings of care effective as of January 1, 2025.

The Medicare Statute allows for continued separate payment of DEXTENZA in the ASC and HOPD settings in 2026.

The Medicare Statute limits the separate payment for physician administered non-opioid pain medications.

In October 2025, the Centers for Medicare & Medicaid Services, or CMS, released the final Medicare Physician Fee Schedule, or MPFS, for the calendar year 2026, or the CY 2026 MPFS, which resulted in a marginal decrease in physician payments compared to 2025 to $27.53 in the ASCs and HOPDs and a marginal increase compared to 2025 to $38.94 in the physician’s office for unilateral insertion.

The CY 2026 MPFS confirmed the inclusion of DEXTENZA in the cost performance category of MIPS for 2026.

Other Developments

The Trump administration has announced or imposed a series of tariffs on U.S.

trading partners.

In response, several countries have threatened or imposed retaliatory measures.

At this time, we do not anticipate the tariffs and changes in trade policies in place as of the filing of this Annual Report on Form 10-K will have a significant adverse effect on our business or operations.

Following recent changes more broadly within the FDA, and the federal government shutdown in 2025, we have not noticed any disruption in the cadence and nature of our dialogue with the FDA to date.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act, or the OBBBA, which includes, among other provisions, significant changes to healthcare policy.

At this time, we do not anticipate the changes implemented by the OBBBA to have a significant adverse effect on our business or operations.

Components of our Financial Performance

We recognize product revenue when we sell DEXTENZA in the United States to a network of SDs who then resell the product to ASCs, HOPDs, and physicians’ offices, and when we sell DEXTENZA on a direct basis to a small number of ASCs and physicians’ offices.

We record DEXTENZA product sales net of estimated chargebacks, rebates, distribution fees and product returns.

These deductions are generally referred to as gross-to-net deductions.

We record DEXTENZA product sales net of applicable reserves for variable consideration, including off-invoice discounts, or OIDs, estimated chargebacks, rebates, distribution fees, product returns, and other incentives.

Collectively, these discounts, allowances and other reserves are generally referred to as gross-to-net provisions, or GTN Provisions.

Operating Expenses

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Selling and Marketing Expenses

Selling and marketing expenses consist primarily of salaries and related costs for personnel in selling and marketing functions as well as consulting, advertising and promotion costs.

Selling and marketing expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in selling and marketing functions as well as consulting, advertising and promotion costs.

General and Administrative Expenses

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Other Income (Expense)

Interest Income.

We earn interest income primarily from investments of our cash and cash equivalents in money market funds.

Interest Expense .

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In August 2023, we entered into a credit and security agreement, or the Barings Credit Agreement, with Barings Finance LLC, or Barings, as administrative agent, and the lenders party thereto, providing for a secured term loan facility, or the Barings Credit Facility, in the aggregate principal amount of $82.5 million.

For the year ended December 31, 2024, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal) and the Convertible Notes (through March 28, 2024, no outstanding principal thereafter).

For the year ended December 31, 2025, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal).

For the year ended December 31, 2024, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal) and our $37.5 million unsecured senior subordinated convertible notes, or the Convertible Notes ($37.5 million outstanding principal through March 28, 2024, no outstanding principal thereafter).

For the year ended December 31, 2023, our interest-bearing debt included the Barings Credit Facility (from August 2, 2023), the Convertible Notes, and our obligations under a credit and security agreement with MidCap Financial Trust, as administrative agent, and other lenders that we entered into in 2014, or, as amended, the MidCap Credit Agreement, establishing a credit facility, or the MidCap Credit Facility ($25.0 million outstanding principal through August 2, 2023, no outstanding principal thereafter).

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The settlement of the Conversion Option Derivative Liability occurred on March 28, 2024.

The changes in fair value of these derivative liabilities are recorded through the consolidated statement of operations and comprehensive loss and are presented under the caption “change in fair value of derivative liabilities”.

The changes in fair value of these derivative liabilities are recorded through the consolidated statements of operations and comprehensive loss and are presented under the caption “change in fair value of derivative liabilities”.

Gains and Losses from Debt Extinguishment .

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The following table summarizes our results of operations for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,

Increase (Decrease)

(in thousands)

Product revenue, net

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Gains and (losses) on extinguishment of debt, net

Other expense, net

Total other income, net

Other gains (expenses)

Total other income (expense), net

Product Revenue, net

Our product revenue, net was $63.5 million and $57.9 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $5.6 million year-over-year.

Our product revenue, net was $51.8 million and $63.5 million for the years ended December 31, 2025 and 2024, respectively, reflecting a decrease of $11.6 million year-over-year.

All of our product revenue, net, was attributable to sales of DEXTENZA.

Our total gross-to-net provisions, or GTN Provisions, for the years ended December 31, 2024 and 2023 were 38.5% and 30.1%, respectively, of gross DEXTENZA product sales.

We increased the wholesale acquisition cost, or WAC, for DEXTENZA effective April 2024 and again effective October 2024.

Concurrently with the increases of the WAC, and additionally at other points in time in 2024, we also increased the off-invoice discount, or OID, for DEXTENZA as part of our overall pricing strategy.

The OID amounts are generally determined at the time of resale by SDs or direct sales to ASCs or physicians’ offices by us.

The GTN Provisions relative to gross DEXTENZA product sales increased as a result of the changes in the OID and are expected to increase with any additional anticipated OID increases, and we expect that GTN Provisions relative to gross DEXTENZA product sales will remain at this increased level, or might increase further, for 2025 and beyond.

Our total GTN Provisions for the years ended December 31, 2025 and 2024 were 51.6% and 38.5%, respectively, of gross DEXTENZA product sales.

We are required to estimate the expected GTN Provisions when we sell DEXTENZA to SDs, ASCs and physicians’ offices and accrue for them at that time.

We adjust the OID, a significant component of the GTN Provisions for DEXTENZA from time to time and typically on a quarterly basis as part of our overall pricing strategy.

The actual OID amounts are generally determined at the time of resale by SDs or direct sales to ASCs or physicians’ offices by us.

Effective January 1, 2026, we increased the OID.

The total GTN Provisions for the year ended December 31, 2025 therefore include timing effects related to the increased OID, as the estimated GTN Provisions for units that we sold to SDs during 2025 under the pre-January 2026 OID and that were not sold as In-Market Sales during 2025 will be subject to the increased OID.

We expect that GTN Provisions relative to gross DEXTENZA product sales will remain at this increased level, or might increase further, for 2026 and beyond.

Collaboration Revenue

We recognized $0.3 million of collaboration revenue related to the performance obligation under our license agreement with AffaMed to conduct a Phase 2 clinical trial of PAXTRAVA during the year ended December 31, 2024 compared to $0.6 million in the year ended December 31, 2023.

Our collaboration revenue was $0.1 million and $0.3 million for the years ended December 31, 2025 and 2024, respectively.

All of our collaboration revenue was attributable to the performance obligation under our license agreement with AffaMed to conduct a Phase 2 clinical trial of OTX-TIC, which we fully satisfied in 2025.

We recognize collaboration revenue based on a cost-to-cost method.

We do not expect to recognize additional collaboration revenue for 2026, as we do not expect that the additional performance obligations under our license agreement with AffaMed will be fully or partially satisfied in 2026.

Research and Development Expenses

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AXPAXLI for NPDR

PAXTRAVA for OAG or OHT

OTX-TIC for OAG or OHT

DEXTENZA for post-surgical ocular inflammation and pain

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For the year ended December 31, 2025, we incurred $128.0 million in direct research and development expenses for our products and product candidates compared to $65.6 million for the year ended December 31, 2024.

The increase of $45.7 million is related to timing and conduct of our various clinical trials for our product candidates, including the progression of the SOL-1 trial, which was fully randomized by December 2024, the initiation of the SOL-R trial, the completion of the HELIOS trial, and development activities related to our preclinical programs.

We expect that direct research and development expenses for our products and product candidates will increase significantly for 2025 as we progress with the SOL-1 and the SOL-R trials;

complete our other ongoing clinical trials;

and initiate any other clinical trials of our product candidates that we might determine in the future to conduct, partially offset by reduced costs related to preclinical programs as a result of the Strategic Restructuring.

We expect that personnel costs will increase for 2025 and beyond, as we have strengthened in 2024, and may continue to further strengthen in 2025, our clinical leadership team and our clinical teams dedicated to the SOL-1 and SOL-R trials, with the addition of several retinal disease experts and other key professionals.

The anticipated increase will be partially offset by reduced personnel costs as a result of the Strategic Restructuring.

We do not anticipate to incur significant research and development costs for our former product candidates OTX-DED and OTX-CSI in 2025 and beyond.

The increase of $62.4 million is related to timing and conduct of our various clinical trials for our product candidates, including the progression of the SOL-1 trial, which was fully randomized by December 2024, the initiation of the SOL-R trial in June 2024 and its progression through 2025, the initiation of the HELIOS-3 trial in the fourth quarter of 2025, the completion of the HELIOS-1 trial in the first half of 2024, and development activities related to our preclinical programs.

We expect that direct research and development expenses for our products and product candidates will remain at this level or increase further for 2026 and beyond as we progress with the SOL-1, SOL-R and HELIOS-3 trials;

initiate the planned SOL-X trial in the second quarter of 2026 and, if needed, the HELIOS-2 trial;

and scale-up registration-enabling manufacturing activities for AXPAXLI.

We expect that personnel costs will continue to increase for 2026 and beyond as we plan to hire additional personnel to support our planned clinical trials and manufacturing scale-up.

Selling and Marketing Expenses

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Selling and marketing expenses were $53.9 million and $41.6 million for the years ended December 31, 2025 and 2024, respectively, reflecting an increase of $12.3 million year-over-year.

The increase was primarily due to an increase of $0.6 million in professional fees, an increase in facility-related and other costs of $0.3 million, and an increase in personnel costs, including stock-based compensation, of $0.1 million.

We expect our selling and marketing expenses to remain stable or increase slightly for 2025 as we continue to support the commercialization of DEXTENZA.

The increase was primarily due to an increase in personnel costs, including stock-based compensation of $5.9 million, primarily related to the expansion of our commercial team for AXPAXLI, an increase in $5.4 million in

professional fees, including costs related to corporate branding and pre-commercial activities for AXPAXLI, and an increase in other costs of $1.0 million.

We expect our selling and marketing expenses to increase for 2026 and beyond as we invest in marketing-related activities in connection with the potential commercial launch of AXPAXLI, ongoing corporate branding, and as we continue to support the commercialization of DEXTENZA.

General and Administrative Expenses

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General and administrative expenses were $64.4 million and $60.7 million for the years ended December 31, 2025 and 2024, respectively, reflecting an increase of $3.7 million year-over-year.

The increase was primarily due to an increase of $18.9 million in personnel-related costs including stock-based compensation, an increase in professional fees of $4.7 million and an increase of $3.0 million in facility related and other costs.

Personnel-related costs, including stock-based compensation, for the year ended December 31, 2024 include $1.6 million related to wages, severance, and other benefits under the Strategic Restructuring, and $9.3 million related to accrued severance and acceleration of stock-based compensation for certain former members of our senior leadership team who departed during the year ended December 31, 2024 separate from the Strategic Restructuring.

We anticipate that the level of our general and administrative expenses, exclusive of the one-time charges related to restructuring activities, will increase for 2025, as we have recently strengthened, and will continue to further

strengthen, our leadership team and other certain functions that support our clinical trials of AXPAXLI, including the SOL-1 trial and the SOL-R trial, and our business in general.

The increase was primarily due to an increase of $3.0 million in personnel-related costs including stock-based compensation, and an increase of $2.1 million in facility-related and other costs, including IT, partially offset by a decrease in professional fees of $1.4 million.

Personnel-related costs, including stock-based compensation, for the year ended December 31, 2025 include $1.5 million related to acceleration of stock-based compensation for former executives who departed during the years ended December 31, 2025 and 2024.

In the year ended December 31, 2024, we executed and completed a strategic reduction in force as part of an initiative to prioritize our resources on the clinical development of AXPAXLI for wet AMD, or the Strategic Restructuring Personnel-related costs, including stock-based compensation, for the year ended December 31, 2024 include $1.6 million related to wages, severance, and other benefits under the Strategic Restructuring, and $9.3 million related to accrued severance and acceleration of stock-based compensation for certain former members of our senior leadership team who departed during the year ended December 31, 2024 separate from the Strategic Restructuring, including our former Chief Executive Officer, our former Chief Business Officer, and our former Chief Medical Officer.

We anticipate that our general and administrative expenses will increase for 2026 and beyond, as we continue to further strengthen certain functions and processes that support our clinical trials of AXPAXLI, including the SOL-1 trial, the SOL-R trial, the HELIOS-3 trial, and the planned SOL-X trial, manufacturing scale-up and potential commercial launch initiatives for AXPAXLI.

Other Income (Expense), Net

Interest Income .

Interest income was $20.3 million and $4.0 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $16.3 million year-over-year.

The increase is primarily due to a higher average balance of cash and cash equivalents held by us, and higher interest rates.

Interest income was $18.4 million and $20.3 million for the years ended December 31, 2025 and 2024, respectively, reflecting a decrease of $1.9 million year-over-year.

The decrease is attributable primarily to a lower average balance of interest-generating cash and cash equivalents.

Interest Expense .

Interest expense was $13.6 million and $11.3 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $2.2 million year-over-year.

The increase is primarily due to higher average balances of debt outstanding as a result of us drawing $82.5 million of debt under the Barings Credit Facility in August 2023, partially offset by us paying off the MidCap Credit Facility, of $25.0 million in August 2023, and the conversion of the Convertible Notes of $37.5 million in March 2024, and higher interest rates.

Interest expense was $11.8 million and $13.6 million for the years ended December 31, 2025 and 2024, respectively, reflecting a decrease of $1.7 million year-over-year.

The decrease is primarily due to lower average balances of debt outstanding as a result of the conversion of the Convertible Notes of $37.5 million in March 2024.

Change in Fair Value of Derivative Liabilities.

We recognized a net loss from the change in fair values of our derivative liabilities of $2.5 million for the year ended December 31, 2025, compared to a net loss of $0.5 million for the year ended December 31, 2024.

The net loss for 2024 comprises of a gain of $2.6 million from the change in the fair value of the Conversion Option Derivative Liability, a loss of $0.9 million from the change in the fair value of the Royalty Fee Derivative Liability, and an expense of $2.2 million related to royalty fees under the Barings Credit Agreement that we paid or accrued.

The net loss for 2023 comprises of a loss of $4.5 million from the change in the fair value of the Conversion Option Derivative Liability and $0.9 million related to royalty fees under the Barings Credit Agreement that we paid or accrued, partially offset by a gain of $0.2 million from the change in the fair value of the Royalty Fee Derivative Liability.

The net loss for the year ended December 31, 2025 was comprised of a loss of $0.7 million from the change in the fair value of the Royalty Fee Derivative Liability, and an expense of $1.8 million related to royalty fees under the Barings Credit Agreement that we paid or accrued.

The net loss for the year ended December 31, 2024 comprises of a gain of $2.6 million from the change in the fair value of the Conversion Option Derivative

Liability, a loss of $0.9 million from the change in the fair value of the Royalty Fee Derivative Liability, and an expense of $2.2 million related to royalty fees under the Barings Credit Agreement that we paid or accrued.

Gains and Losses on Extinguishment of Debt, Net.

We recognized a non-cash loss on extinguishment of debt of $28.0 million for the year ended December 31, 2024, compared to a gain, net, on extinguishment of debt of $14.2 million for the year ended December 31, 2023.

The net loss for the year ended December 31, 2024 results from the conversion of the Convertible Notes in March 2024.

The net gain for the year ended December 31, 2023 results from the accounting for the Convertible Notes Amendment, which resulted in a non-cash gain on extinguishment of debt of $14.9 million, and for the extinguishment of our obligations under the MidCap Credit Agreement, which resulted in a loss on extinguishment of debt of $0.7 million.

We recognized a non-cash loss on extinguishment of debt of $28.0 million for the year ended December 31, 2024, resulting from the conversion of the Convertible Notes in March 2024.

Comparison of the Years Ended December 31, 2024 and 2023

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As of December 31, 2025, we had cash and cash equivalents of $737.1 million, and outstanding notes payable with a principal amount of $82.5 million par value under the Barings Credit Facility.

In February 2024, we sold 32,413,560 shares of our common stock at $7.52 per share and, in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 10,805,957 shares of our common stock at a price of $7.519 per pre-funded warrant for total net proceeds of approximately $316.4 million, after deducting placement agent fees and other offering expenses, in the 2024 Private Placement.

Each pre-funded warrant has an exercise price of $0.001 per share, is currently exercisable and will remain exercisable until exercised in full.

On December 18, 2023, we sold 35,420,000 shares of our common stock in an underwritten public offering at a public offering price of $3.25 per share.

In October 2025, we completed the sale of 37,909,018 shares of our common stock pursuant to the 2025 Offering, resulting in net proceeds to us of $445.6 million after deducting underwriting discounts and commissions and estimated other offering expenses.

In August 2021, we entered into an Open Market Sale Agreement, or the 2021 Sales Agreement, with Jefferies LLC, or Jefferies, under which we may offer and sell shares of our common stock from time to time through Jefferies, acting as agent.

In November 2023, we filed a prospectus in connection with the 2021 Sales Agreement for the issuance and sale of common stock having an aggregate offering price of up to $100.0 million thereunder.

In June 2025, we sold 11,548,364 shares of our common stock under the 2021 Sales Agreement, resulting in gross proceeds to us of $96.8 million and net proceeds, after accounting for issuance costs, of $94.0 million.

Each pre-funded warrant that remains outstanding has an exercise price of $0.001 per share, is currently exercisable and will remain exercisable until exercised in full.

In December 2023, we sold 35,420,000 shares of our common stock in an underwritten public offering at a public offering price of $3.25 per share.

The total net proceeds of the public offering to us were approximately $107.7 million, after deducting underwriting discounts and commissions and other offering expenses payable by us.

In August 2023, we entered into the Barings Credit Agreement with Barings as administrative agent, and the lenders party thereto, providing for the Barings Credit Facility in the aggregate principal amount of $82.5 million.

We borrowed the full amount of $82.5 million at closing and received proceeds of $77.3 million, after the application of an original issue discount and fees.

In August 2021, we entered into an Open Market Sale Agreement, or the 2021 Sales Agreement, with Jefferies LLC, or Jefferies, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $100.0 million from time to time through Jefferies, acting as agent.

We did not offer or sell shares of our common stock under the 2021 Sales Agreement during the year ended December 31, 2024.

During the year ended December 31, 2023, we sold 1,514,926 shares of common stock under the 2021 Sales Agreement, resulting in net proceeds to us, after accounting for issuance costs, of $9.5 million.

In August 2023, we borrowed $82.5 million under the Barings Credit Facility and received proceeds of $77.3 million, after the application of an original issue discount and fees.

In connection with entering the Barings Credit Facility, in August 2023, we paid MidCap Financial Trust, as administrative agent, and our other lenders an aggregate of $26.2 million in satisfaction of our obligations under the MidCap Credit Facility.

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As of December 31, 2025, we had an accumulated deficit of $1,157.0 million.

We expect to continue to incur losses in connection with our ongoing activities, particularly as we advance the clinical trials of our product candidates in development, including AXPAXLI, and increase our sales and marketing resources to support the commercialization of DEXTENZA and the potential launch of our product candidates, subject to receiving FDA approval.

We expect to continue to incur losses in connection with our ongoing activities, particularly as we advance the clinical trials of our product candidates in development, specifically the SOL-1, SOL-R and HELIOS-3 trials, as we initiate new clinical trials, specifically the planned SOL-X trial and, if needed, the HELIOS-2 trial, and as we support the commercialization of DEXTENZA and the potential commercialization of our product candidates, subject to receiving FDA approval.

We anticipate we will incur substantial expenses if and as we:

● continue our ongoing clinical trials, including the SOL-1 and the SOL-R trials, our two registrational Phase 3 clinical trials of AXPAXLI for the treatment of wet AMD;

● initiate any additional clinical trials we might determine in the future to conduct for our product candidates, including any clinical trials that we might conduct for AXPAXLI for the treatment of NPDR and DME;

● continue our ongoing registrational programs, including the SOL registrational program of AXPAXLI for the treatment of wet AMD, and the HELIOS registrational program of AXPAXLI for the treatment of diabetic retinal disease, including NPDR;

● initiate our planned SOL-X trial, our long-term extension study of AXPAXLI for the treatment of wet AMD;

● initiate any additional clinical trials we might determine in the future to conduct for our product candidates;

● scale up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates, including AXPAXLI, and commercialization of any of our product candidates for which we obtain marketing approval, and expand our facilities to accommodate this scale up and any corresponding growth in personnel;

● scale up our sales, marketing and distribution capabilities to prepare for commercialization of any product candidates for which we intend to obtain marketing approval;

● seek marketing approvals for any of our product candidates that successfully complete clinical development;

● continue to monitor subjects according to the applicable clinical trial protocols, or prepare submission documentation such as clinical study reports, for our clinical trials that have been completed;

● seek marketing approvals for any of our product candidates that successfully complete clinical development;

● continue to commercialize DEXTENZA in the United States;

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Based on our current operating plan, which includes estimates of anticipated cash inflows from DEXTENZA product sales and cash outflows from operating expenses and capital expenditures and reflects our observance of the minimum liquidity covenant of $20.0 million under the Barings Credit Agreement, we believe that our existing cash and cash equivalents as of December 31, 2025 will enable us to fund our planned operating expenses, debt service obligations and capital expenditure requirements into 2028.

Our planned operating expenses do not include the expenses necessary to conduct a clinical trial of AXPAXLI for NPDR and DME, or to build out our manufacturing capabilities beyond the buildout of our existing manufacturing facilities.

Although we believe our current and available cash resources are sufficient to get through potential approval of AXPAXLI for the treatment of wet AMD by the FDA, additional funding will likely be required to support the commercialization of AXPAXLI, if approved.

These estimates are subject to various assumptions, including assumptions as to the revenues and expenses associated with the

commercialization of DEXTENZA, the pace of our research and clinical development programs, the timing of commencement of dosing and enrollment of our clinical trials, the progress of our manufacturing validation and scale-up and other aspects of our business.

We have based our estimates on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

Our future capital requirements will depend on many factors, including:

● the progress, costs and outcome of our ongoing clinical trials of AXPAXLI for the treatment of wet AMD;

● the timing, scope, progress, costs and outcome of a potential registrational clinical program of AXPAXLI for the treatment of NPDR and DME;

● the progress, costs and outcomes of our ongoing SOL and HELIOS registrational programs of AXPAXLI for the treatment of wet AMD and for the treatment of diabetic retinal disease, including NPDR, respectively;

● the timing, scope, progress, costs and outcome of our planned SOL-X trial, our long-term extension study of AXPAXLI for the treatment of wet AMD;

● the costs, timing and outcome of regulatory review of AXPAXLI or our other product candidates by the FDA, the European Medicines Agency, or EMA, or other regulatory authorities;

● the scope, progress, costs and outcome of preclinical development and any additional clinical trials we might determine in the future to conduct for our other product candidates, including PAXTRAVA for the reduction of intraocular pressure, or IOP, in patients with primary open-angle glaucoma, or OAG, or ocular hypertension, or OHT;

● the scope, progress, costs and outcome of preclinical development and any additional clinical trials we might determine in the future to conduct for our other product candidates, including OTX-TIC for the reduction of intraocular pressure, or IOP, in patients with primary open-angle glaucoma, or OAG, or ocular hypertension, or OHT;

● the costs of developing, validating and scaling up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates, including AXPAXLI, and commercialization of any of our product candidates for which we may obtain marketing approval, including AXPAXLI, and of expanding our facilities to accommodate this scale up and any corresponding growth in personnel;

● the costs of sales, marketing, distribution and other commercialization efforts with respect to DEXTENZA and any of our product candidates for which we obtain or may obtain marketing approval in the future, such as AXPAXLI, including costs related to preparing for and implementing the potential marketing of AXPAXLI outside the United States;

● the level of product sales from DEXTENZA and any additional products for which we obtain marketing approval in the future and the level of third-party reimbursement of such products;

● the costs of sales, marketing, distribution and other commercialization efforts with respect to DEXTENZA and any of our product candidates for which we obtain marketing approval in the future, including cost increases due to inflation;

● the costs of scaling up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates, including AXPAXLI, and commercialization of any of our product candidates for which we obtain marketing approval, including AXPAXLI, and of expanding our facilities to accommodate this scale up and any corresponding growth in personnel;

● cost increases due to inflation;

● the extent of our debt service obligations and our ability, if desired, to refinance any of our existing debt on terms that are more favorable to us;

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Until such time, if ever, as we can generate product revenues sufficient to achieve profitability, we expect to finance our cash needs through equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, royalty agreements, and marketing and distribution arrangements.

We do not have any committed external source of funds, although our license agreement with AffaMed provides for AffaMed’s reimbursement of certain clinical expenses incurred by us in connection with our collaboration and for our potential receipt of development and sales milestone payments and royalty payments.

We do not have any committed

external source of funds, although our license agreement with AffaMed provides for AffaMed’s reimbursement of certain clinical expenses incurred by us in connection with our collaboration and for our potential receipt of development and sales milestone payments and royalty payments.

To the extent that we raise additional capital through the sale of equity, preferred equity or convertible debt securities, our securityholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing securityholders’ rights as holders or beneficial owners of our common stock.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

The covenants under the Barings Credit Facility and our pledge of our assets as collateral to secure our obligations under the Barings Credit Facility pursuant to which we have a total borrowing capacity of $82.5 million, which has been fully drawn down, may limit our ability to obtain additional debt or other financing.

Debt financing, such as our existing Barings Credit Facility, and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Our pledge of our assets as collateral to secure our obligations under the Barings Credit Facility pursuant to which we have a total borrowing capacity of $82.5 million, which has been fully drawn down, may limit our ability to obtain additional debt or other financing.

If we raise additional funds through collaborations, strategic alliances, licensing arrangements, royalty agreements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, products or product candidates or grant licenses on terms that may not be favorable to us.

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Operating activities.

Net cash used in operating activities was $204.9 million for the year ended December 31, 2025, primarily resulting from our net loss of $265.9 million, partially offset by non-cash adjustments of $53.3 million and net favorable changes in operating assets and liabilities of $7.7 million.

Our net loss was primarily attributed to operating expenses of $322.0 million, which we incurred primarily for research and development activities, selling and marketing activities, and general and administrative activities, and non-operating expenses, net, of $4.1 million, partially offset by $51.9 million of revenue.

Non-cash adjustments primarily include stock-based compensation expense of $43.2 million, depreciation and amortization expense of $4.3 million, non-cash interest expense of $3.4 million, and a net non-cash loss related to changes in the fair value of our derivative liabilities of $2.5 million.

Net cash provided by net favorable changes in our operating assets and liabilities during the year ended December 31, 2025 consisted primarily of increases of accrued expenses and other liabilities of $5.2 million, resulting primarily from employee compensation-related accruals as well as accruals related to our clinical development, decreases of prepaid expenses and other current assets of $2.6 million, and decreases of accounts receivable of $1.7 million, resulting from decreased net sales of DEXTENZA, partially offset by decreases of accounts payable of $0.9 million and other changes, net, of $1.0 million.

Net cash used in operating activities was $134.7 million for the year ended December 31, 2024, primarily resulting from our net loss of $193.5 million and net unfavorable changes in operating assets and liabilities of $10.2 million, partially offset by non-cash adjustments of $69.1 million.

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Non-cash adjustments primarily include losses on extinguishment of debt of $28.0 million, stock-based compensation expense of $33.1 million, depreciation and amortization expense of $3.8 million, non-cash interest expense of $3.7 million, and a net non-cash loss related to changes in the fair value of our derivative liabilities of $0.5 million.

Net cash used by net unfavorable changes in our operating assets and liabilities during the year ended December 31, 2024 consisted primarily of increases of accounts receivable of $6.2 million, resulting from increased sales of DEXTENZA, and increases of prepaid expenses and other current assets of $5.7 million, resulting predominantly from our clinical development activities, partially offset by other decreases, net, of $1.6 million.

sales of DEXTENZA, and increases of prepaid expenses and other current assets of $5.7 million, resulting predominantly from our clinical development activities, partially offset by other decreases, net, of $1.6 million.

Net cash used in operating activities was $70.2 million for the year ended December 31, 2023, primarily resulting from our net loss of $80.7 million and net unfavorable changes in operating assets and liabilities of $7.4 million, partially offset by non-cash adjustments of $17.9 million.

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Net cash used by net unfavorable changes in our operating assets and liabilities during the year ended December 31, 2023 consisted primarily of increases of accounts receivables of $4.9 million, increases of prepaid expenses and other current assets of $3.8 million, partially offset by increases of other items, net, of $1.2 million.

Net cash used in operating activities was $59.6 million for the year ended December 31, 2022, primarily resulting from our net loss of $71.0 million, partially offset by non-cash adjustments of $10.1 million and net favorable changes in operating assets and liabilities of $1.3 million.

Our net loss was primarily attributed to operating expenses of $130.1 million, which we incurred primarily for research and development activities, selling and marketing activities, and general and administrative activities, partially offset by $51.5 million of revenue and a net non-operating income of $7.6 million.

Non-cash adjustments primarily include stock-based compensation expense of $17.0 million, non-cash income related to changes in the fair value of our derivative liabilities of $13.8 million, non-cash interest expense of $4.9 million, and depreciation and amortization expense of $2.1 million.

Net cash provided by net favorable changes in our operating assets and liabilities during the year ended December 31, 2022 consisted primarily of increases of accrued expenses of $1.6 million, partially offset by decreases of other items, net, of $0.3 million.

Investing activities.

Net cash used in investing activities was $11.9 million for the year ended December 31, 2025, consisting of $11.4 million in cash used to purchase property and equipment and to make leasehold improvements for the scale-up of AXPAXLI manufacturing, and $0.6 million in cash used to purchase other items of property and equipment to support ongoing operations, partially offset by $0.1 million cash received from the sale of obsolete items of property and equipment.

Net cash used in investing activities was $1.3 million for the year ended December 31, 2024, consisting of cash used to purchase property and equipment and leasehold improvements.

Net cash used in investing activities was $6.1 million for the year ended December 31, 2023, consisting of cash used to purchase property and equipment and leasehold improvement.

Net cash used in investing activities was $3.7 million for the year ended December 31, 2022, consisting of cash used to purchase property and equipment.

Net cash used in investing activities was $6.1 million for the year ended December 31, 2023, consisting of cash used to purchase property and equipment and leasehold improvements.

Financing activities.

Net cash provided by financing activities for the year ended December 31, 2025 was $561.7 million and consisted of total net proceeds from the 2025 Offering of $445.6 million, total net proceeds from the issuance of common stock under the 2021 Sales Agreement of $94.0 million, proceeds from the exercise of stock options of $20.5 million, and proceeds from issuing shares under our ESPP, of $1.6 million.

Net cash provided by financing activities for the year ended December 31, 2024 was $332.1 million and consisted of total net proceeds from the issuance of common stock and pre-funded warrants in a private placement of approximately $316.4 million, proceeds from the exercise of stock options of $14.7 million, and proceeds from issuing shares under our Employee Stock Purchase Plan, or ESPP, of $1.0 million.

Net cash provided by financing activities for the year ended December 31, 2023 was $169.8 million and consisted of proceeds from the issuance of common stock in public offerings of $117.3 million, drawings under the Barings Credit Facility of $77.3 million, net of issuance costs, proceeds from the issuance of common stock pursuant to our employee stock purchase plan of $0.9 million and proceeds from the exercise of stock options of $0.6 million, partially offset by repayment of the MidCap Credit Facility of $26.1 million.

Net cash provided by financing activities for the year ended December 31, 2022 was $1.5 million and consisted of proceeds from the issuance of common stock pursuant to our employee stock purchase plan of $0.9 million and proceeds from the exercise of stock options of $0.5 million.

Net cash provided by financing activities for the year ended December 31, 2023 was $169.8 million and consisted of proceeds from the issuance of common stock in public offerings of $117.3 million, gross proceeds received from drawings under the Barings Credit Facility of $82.5 million, proceeds from the issuance of common stock pursuant to our employee stock purchase plan of $0.9 million and proceeds from the exercise of stock options of $0.6 million, partially offset by repayment of the MidCap Credit Facility of $26.1 million and payments of debt refinancing costs of $5.2 million.

Contractual Obligations and Commitments

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Some of the figures that we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, and other factors.

these estimates and assumptions are necessarily subjective, the amounts we will actually pay in future periods may vary from those reflected in the table.

Because these estimates and assumptions are necessarily subjective, the amounts we will actually pay in future periods may vary from those reflected in the table.

We enter into contracts in the normal course of business to assist in the performance of our research and development activities and other services and products for operating purposes.

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Operating lease commitments represent payments due under our leases of office, laboratory and manufacturing space in Bedford, Massachusetts that expire in July 2027 and July 2028, and leases of equipment that expire between 2026 and 2028.

In January 2026, we entered into a sublease for additional office space in Bedford, Massachusetts that expires in March 2031.

Operating lease commitments from this new lease are not included in the table above.

The commitments under the Barings Credit Agreement represent repayment of principal only.

Future payments of interest under the Barings Credit Agreement depends on the level of the Secured Overnight Financing Rate, or SOFR, and future payments of royalty fees depend on our future revenue from DEXTENZA, both of which cannot be estimated at this time.

Future payments of interest under the Barings Credit Agreement depend on the level of the Secured Overnight Financing Rate, or SOFR, and future payments of royalty fees depend on our future revenue from DEXTENZA, both of which cannot be estimated at this time.

We have in-licensed a significant portion of our intellectual property from Incept, an intellectual property holding company, under an amended and restated license agreement, or the License Agreement, that we entered into with Incept in January 2012, which was most recently amended in September 2018.

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Other Incentives — Other incentives which we offer include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payors.

The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period.

The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized

as revenue, but remains in the distribution channel inventories at the end of each reporting period.

The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as accrued expenses and other current liabilities on the consolidated balance sheets.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis