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Item 1. Business

2022-02-28 compared with 2021-03-11 · 829 added, 875 removed, 960 unchanged (64% of the section changed)

Overview of Ocular Therapeutix

We are a biopharmaceutical company focused on the formulation, development and commercialization of innovative therapies for diseases and conditions of the eye using our proprietary, bioresorbable hydrogel platform technology.

We use this technology to tailor duration and amount of delivery of a range of therapeutic agents in our product candidates.

We currently incorporate therapeutic agents that have previously received regulatory approval from the U.S.

Food and Drug Administration, or FDA, including small molecules and proteins, into our hydrogel technology with the goal of providing local programmed-release of drug to the eye.

We believe that our local programmed-release drug delivery technology has the potential to treat conditions and diseases of both the front and the back of the eye and can be administered through a range of different modalities including intravitreal implants, suprachoroidal implants, intracameral implants and intracanalicular inserts.

We have product candidates in preclinical and clinical development designed to utilize this technology to treat retinal diseases including wet age-related macular degeneration, or wet AMD;

We are a biopharmaceutical company focused on the formulation, development, and commercialization of innovative therapies for diseases and conditions of the eye using our proprietary bioresorbable hydrogel-based formulation technology.

Core to our strategy is (i) to continue to build upon our experience commercializing ophthalmology products that can be administered primarily in the surgical and/or office settings and (ii) to continue to develop a clinical pipeline of innovative ophthalmology products that address large areas of unmet need.

We currently have two FDA-approved products in commercialization in the United States:

DEXTENZA, an intracanalicular insert for the treatment of both post-surgical ocular inflammation and pain and ocular itching associated with allergic conjunctivitis, and ReSure Sealant, an ophthalmic device designed to prevent wound leaks in corneal incisions following cataract surgery.

We also have product candidates in preclinical and clinical development designed to utilize our proprietary, bioresorbable hydrogel technology to treat retinal diseases including wet age-related macular degeneration, or wet AMD;

glaucoma and ocular hypertension;

and ocular surface diseases and conditions including dry eye disease and ocular itching associated with allergic conjunctivitis.

We also have two FDA-approved products in commercialization in the United States:

DEXTENZA ® , an intracanalicular insert for the treatment of post-surgical ocular inflammation and pain, and ReSure ® Sealant, an ophthalmic device designed to prevent wound leaks in corneal incisions following cataract surgery.

Our earlier-stage assets include four programs in clinical development:

● OTX-TKI, an axitinib intravitreal implant administered by fine-gauge needle for the treatment of wet AMD;

● OTX-TIC, a travoprost intracameral implant for the reduction of intraocular pressure, or IOP, in patients with glaucoma or ocular hypertension;

● OTX-CSI, a cyclosporine intracanalicular insert for the chronic treatment of dry eye disease;

● OTX-DED, a dexamethasone intracanalicular insert for the short-term treatment of the signs and symptoms of dry eye disease.

We have a collaboration with Regeneron Pharmaceuticals, Inc., or Regeneron, for the development and potential commercialization of products containing our local programmed-release hydrogel in combination with Regeneron’s vascular endothelial growth factor, or VEGF inhibitor, aflibercept, currently marketed under the brand name Eylea.

We also continue to assess the potential use of our hydrogel platform technology in other areas of the body.

Retinal Disease Programs

We are engaged in the development of formulations of our hydrogel administered via intravitreal injection to address large markets for diseases and conditions of the back of the eye which we believe have significant growth potential.

Our initial development efforts for our retinal disease programs have focused on the use of our extended-delivery hydrogel in combination with anti-angiogenic drugs, such as TKIs or protein-based anti-VEGF drugs, for the treatment of retinal diseases such as wet AMD;

diabetic macular edema, or DME;

and retinal vein occlusion, or RVO.

Our initial goal for these programs is to provide extended delivery for at least six months, thereby reducing the frequency of the current monthly or bi-monthly immediate release intravitreal anti-VEGF injection regimens for wet AMD and other retinal diseases.

and ocular surface diseases and conditions including dry eye disease.

We incorporate therapeutic agents that have previously received regulatory approval from the U.S.

Food and Drug Administration, or FDA, including small molecules and proteins, into our proprietary bioresorbable hydrogel-based formulation technology in our internal drug development activities, with the goal of providing local programmed release to tailor the duration and amount of drug to be delivered to the eye.

Commercial Portfolio

Post-Surgical Ocular Inflammation and Pain

Ocular Itching Associated with Allergic Conjunctivitis

DEXTENZA (dexamethasone ophthalmic insert) 0.4 mg for intracanalicular use for the Treatment of Post-Surgical Ocular Inflammation and Pain

DEXTENZA incorporates the FDA-approved corticosteroid dexamethasone as a preservative-free active pharmaceutical ingredient into a hydrogel, drug-eluting intracanalicular insert for the treatment of post-surgical ocular inflammation and pain.

The FDA approved a new drug application, or NDA, for DEXTENZA for the treatment of post-surgical ocular pain in November 2018 and approved a supplemental new drug application, or sNDA, for DEXTENZA for the treatment of post-surgical ocular inflammation in June 2019.

In July 2019, we commercially launched DEXTENZA in the United States.

DEXTENZA is the first FDA-approved, physician-administered intracanalicular insert delivering dexamethasone to treat post-surgical ocular inflammation and pain for up to 30 days with a single administration.

In October 2021, the FDA approved an sNDA for DEXTENZA to include the treatment of ocular itching associated with allergic conjunctivitis as an additional indication.

With the approval, DEXTENZA is the first FDA-approved, physician-administered intracanalicular insert for the delivery of a preservative-free drug for the treatment of ocular itching associated with allergic conjunctivitis with a single administration for up to 30 days.

DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis also represents our first indication approved to be administered in a physician’s office during a routine, non-surgical appointment.

In the first quarter of 2022, we are commercially launching DEXTENZA in the United States for the treatment of ocular itching associated with allergic conjunctivitis.

Prevention of Wound Leaks Following Cataract Surgery

ReSure Sealant

In 2014, we commercially launched ReSure Sealant in the United States as a device approved to prevent wound leaks in corneal incisions following cataract surgery.

In the pivotal clinical trials that formed the basis for FDA approval, ReSure Sealant provided superior wound closure and a better safety profile than sutured closure.

As of the fourth quarter of 2021, we have suspended the production of ReSure in order to focus our manufacturing resources to support the commercialization of DEXTENZA.

We have received only limited revenues from ReSure Sealant to date.

Clinical Portfolio

Our clinical portfolio is comprised of our development efforts in our retinal disease program, glaucoma program and ocular surface disease programs.

Retinal Disease Program

OTX-TKI (axitinib intravitreal implant)

Our product candidate OTX-TKI is a preformed, bioresorbable hydrogel fiber implant incorporating a small molecule tyrosine kinase inhibitor, or TKI, axitinib, with anti-angiogenic properties delivered by intravitreal injection

and designed for a duration of six months or longer.

TKIs have shown promise in the treatment of wet AMD.

In the first quarter of 2019, we began dosing patients in a multi-center, open-label, dose-escalation Phase 1 clinical trial in Australia designed to evaluate the safety, durability and tolerability of OTX-TKI.

We are evaluating biological activity by measuring retinal thickness using spectral domain optical coherence tomography, or OCT, and following visual acuity over time.

Two cohorts were initially enrolled:

a lower dose cohort of 200 µg with six subjects and a higher dose cohort of 400 µg with seven subjects.

We are actively enrolling a third cohort of 12 subjects, split between parallel arms of six subjects each.

Subjects in the first arm of the third cohort will receive a dose of 600 µg, and subjects in the second arm will receive a 400 µg dose combined with an anti-VEGF induction injection.

At the Angiogenesis, Exudations, and Degeneration Virtual Conference in February 2021, we presented interim data from the Phase 1 clinical trial.

In the Phase 1 clinical trial, OTX-TKI was observed to have a generally favorable safety profile, with no reported ocular serious adverse events.

Some subjects in the Phase 1 clinical trial have shown a decrease in intraretinal or subretinal fluid by two months, and interim data suggests that OTX-TKI might have an extended duration of action beyond that of the current standard of care.

We plan to initiate a prospective, randomized, controlled Phase 1 clinical trial in the United States under an exploratory investigational new drug, or eIND, application in mid-2021 to evaluate a single implant 600 µg dose of OTX-TKI (combined with an anti-VEGF induction injection) in comparison with a 2 mg dose of aflibercept.

We have requested a pre-investigational new drug, or IND, application meeting with the FDA to discuss the possibility of transitioning from an eIND application to a traditional IND application.

Pending our receipt and review of the topline data from the Phase 1 clinical trial in Australia and related regulatory discussions, we also plan to initiate a Phase 2 clinical trial in Australia to compare the administration of a single implant 600 µg dose of OTX-TKI (combined with an anti-VEGF induction injection) to a 2 mg dose of aflibercept dosed every 8 weeks as the comparator.

OTX-AFS (aflibercept suprachoroidal injection) in collaboration with Regeneron

As described above, in October 2016, we entered into a strategic collaboration, option and license agreement with Regeneron for the development and potential commercialization of products using our local programmed-release hydrogel in combination with, among other things, Regeneron’s large molecule VEGF-targeting compounds for the treatment of retinal diseases, with the initial focus on the VEGF trap aflibercept.

We and Regeneron amended this agreement in May 2020 to, among other things, transition joint efforts under the collaboration to the research and development of an extended-delivery formulation of aflibercept to be delivered to the suprachoroidal space which we refer to as OTX-AFS.

Under the amended agreement, we have provided certain formulations to Regeneron who have agreed to perform preclinical assessments of OTX-AFS.

We are conducting a Phase 1 clinical trial of OTX-TKI in Australia and a Phase 1 clinical trial in the United States.

The U.S.-based Phase 1 clinical trial is fully enrolled, and we expect to report interim, six-month data in the second half of 2022.

At the Angiogenesis, Exudation, and Degeneration 2022 Meeting held in February 2022, we presented interim data from the ongoing Phase 1 clinical trial of OTX-TKI for the treatment of wet AMD conducted in Australia.

In subjects with subretinal and/or intraretinal fluid due to wet AMD, OTX-TKI was observed to be generally well tolerated with a favorable safety profile to date.

This data also showed a preliminary signal of biological activity as observed by a clinically-meaningful decrease in intraretinal and/or subretinal fluid.

Extended duration of activity was observed with over 60% of subjects across all cohorts and with over 80% of subjects in cohort 3a (600μg) with a duration of activity of six months or more that we believe could represent a compelling drug product profile.

Glaucoma Program

Our development efforts for our glaucoma program have focused on the use of our extended-delivery hydrogel in combination with travoprost, an FDA-approved prostaglandin analog designed to lower elevated IOP.

Our initial goal for this program is to provide extended delivery over at least four months with a single treatment.

OTX-TIC (travoprost intracameral implant)

Our product candidate OTX-TIC is a bioresorbable hydrogel implant incorporating travoprost that is designed to be administered by a physician as an intracameral injection with an initial target duration of drug release of four to six months.

We are currently conducting a multi-center, open-label, dose-escalation, proof-of-concept Phase 1 clinical trial to evaluate the safety, biological activity, durability and tolerability of OTX-TIC compared to topical travoprost (eye drops) in patients with primary open-angle glaucoma or ocular hypertension.

The trial consists of four patient cohorts:

cohort 1 is 5 subjects who are receiving a 15 µg dose, cohort 2 is 4 subjects who are receiving a 26 µg dose, cohort 3 is 5 subjects who are receiving a 15 µg with a fast-degrading implant, and cohort 4 is 5 subjects who are receiving a 5 µg with a fast-degrading implant.

We presented interim data on all four patient cohorts at the Glaucoma360 Virtual Conference in January 2021.

In this Phase 1 clinical trial, with a single implant, several subjects were able to achieve a decrease in IOP at least as large as that of the current standard of care.

Many subjects exhibited an IOP-lowering effect of more than six months in

cohorts 1 and 2 and between three and six months in cohorts 3 and 4, the cohorts in which the fast-degrading implant was used.

In the clinical trial, OTX-TIC was observed to have a generally favorable safety profile, with no reported ocular serious adverse events.

Corneal health, as measured by endothelial cell counts, pachymetry assessments and slit lamp examinations did not indicate a clinically meaningful change from baseline.

In mid-2021, we plan to initiate a Phase 2 clinical trial to evaluate two formulations of OTX-TIC for the treatment of glaucoma or ocular hypertension in patients compared to Durysta (Allergan).

The non-study eye of each patient will receive a topical prostaglandin daily.

Certain subjects in the Phase 2 clinical trial will receive the same formulation used in cohort 1 of the Phase 1 clinical trial, containing a 26 µg dose of drug and utilizing a standard implant, and others will receive the same formulation used in cohort 4 of the Phase 1 clinical trial, containing a 5 µg dose of drug and utilizing a fast-degrading implant.

In the fourth quarter of 2021, we initiated a randomized, double-masked, active-controlled Phase 2 clinical trial in which we plan to enroll approximately 105 subjects with open-angle glaucoma at 15-20 sites between three arms of approximately 35 subjects each to evaluate two formulations of OTX-TIC for the treatment of open-angle glaucoma or ocular hypertension in patients compared to DURYSTA™.

We expect to dose the first patient in the first quarter of 2022.

At Glaucoma 360 in February 2022, we presented interim data from a Phase 1 clinical trial evaluating OTX-TIC for the treatment of open-angle glaucoma or ocular hypertension.

This data highlighted the product candidate’s ability to cause a clinically meaningful decrease in intraocular pressure for six months or longer while preserving corneal health.

We believe these results are comparable to the decrease in intraocular pressure seen with topical travoprost, the current standard of care, and represent OTX-TIC’s potential for a unique and differentiated drug product profile.

OTX-TIC was observed to be generally well tolerated with a favorable safety profile to date and endothelial cell counts, pachymetry assessments, and slit lamp examinations in subjects indicated no changes from baseline.

Ocular Surface Disease Programs

We are engaged in the development of formulations of our hydrogel administered via intracanalicular inserts to address large markets for diseases and conditions of the surface of the eye.

Our initial development efforts are focused on the use of our extended-delivery hydrogel in combination with well-known and well-understood drugs (cyclosporine and corticosteroids) for the treatment of dry eye disease and allergic conjunctivitis.

Dry Eye Disease

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The product candidate is designed for a duration of three to four months for patients suffering from moderate to severe dry eye and to be administered by a physician as a bioresorbable intracanalicular insert.

In October 2020, we reported topline data from our five subject Phase 1 clinical trial evaluating OTX-CSI in the treatment of dry eye disease.

All subjects completed the 16-week study period with no drop-outs.

There were no serious adverse effects reported.

The inserts were observed to be generally well-tolerated, and there were no adverse events of stinging, irritation, blurred vision or tearing reported or observed.

In September 2020, we dosed the first patients in a Phase 2 clinical trial designed to assess the safety, tolerability, and durability and to evaluate the efficacy of OTX-CSI for the chronic treatment of dry eye disease.

The Phase 2 clinical trial is a U.S.-based, randomized, double-masked, multi-center trial evaluating two different formulations of OTX-CSI compared to a vehicle insert in approximately 140 subjects who are to be followed for a period of approximately 16 weeks.

Endpoints include tear production as measured by the Schirmer’s test;

signs of dry eye disease as measured by corneal fluorescein staining;

and symptoms of dry eye disease as measured by the visual analog scale, or VAS, eye dryness severity score and the VAS dry eye frequency score.

We currently anticipate receiving topline data from this Phase 2 clinical trial by year-end 2021.

We announced topline results from a Phase 2 clinical trial evaluating two different formulations of OTX-CSI for the chronic treatment of dry eye disease in October 2021.

The study did not show separation between the subjects receiving OTX-CSI (two formulations) and the subjects receiving the vehicle (both formulations).

Overall, the OTX-CSI insert (both formulations) was observed to be generally well tolerated with a favorable safety profile to date.

We are currently developing an appropriate clinical-regulatory development and manufacturing plan.

This plan will include additional formulation work for the OTX-CSI insert to allow improved retention and the development of an appropriate vehicle comparator.

OTX-DED (dexamethasone intracanalicular insert)

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OTX-DED incorporates the same active drug as DEXTENZA, but it includes a lower dose of the drug, delivers it via a smaller insert, and is designed to release it over a period of two to three weeks, compared with up to thirty days in the case of DEXTENZA.

We believe that OTX-DED will address several of the current limitations of existing dry eye disease steroid treatments, the toxicity associated with preservatives, and the potential for abuse of topical steroids.

In February 2021, we dosed the first patient in a U.S.-based prospective, randomized, double-masked, vehicle-controlled Phase 2 clinical trial evaluating two different formulations of OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease compared to a hydrogel insert in approximately 150 subjects.

We anticipate receiving topline data from this Phase 2 clinical trial in the first half of 2022.

Allergic Conjunctivitis

DEXTENZA (dexamethasone ophthalmic insert) for the Treatment of Ocular Itching Associated with Allergic Conjunctivitis

DEXTENZA, incorporating the corticosteroid dexamethasone, is our FDA-approved intracanalicular insert for the treatment of post-surgical ocular inflammation and pain.

We believe that allergic conjunctivitis represents a discrete potential market for DEXTENZA as a physician administered, hands-free, therapy administered in the office setting and designed to release preservative-free dexamethasone to the ocular surface for up to 30 days.

In April 2020, we reported topline results of a 96-subject, third pivotal Phase 3 clinical trial evaluating DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis.

DEXTENZA-treated subjects demonstrated a statistically significant (p-value < 0.0001) difference in mean ocular itching scores, compared to vehicle-treated subjects, at all three pre-specified time points.

In the fourth quarter of 2020, w e filed a supplemental new drug application, or sNDA, for DEXTENZA to include the treatment of ocular itching associated with allergic conjunctivitis as an additional indication.

The FDA has accepted our sNDA for filing and has established a target action date under the Prescription Drug User Fee Act, commonly known as PDUFA, of October 18, 2021.

If our sNDA is approved, we expect to launch DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis in the first half of 2022.

Post-Surgical Ocular Inflammation and Pain

DEXTENZA (dexamethasone ophthalmic insert) 0.4 mg for intracanalicular use for the Treatment of Post-Surgical Ocular Inflammation and Pain

As described above, DEXTENZA incorporates the FDA-approved corticosteroid dexamethasone as a preservative-free active pharmaceutical ingredient into a hydrogel, drug-eluting intracanalicular insert for the treatment of post-surgical ocular inflammation and pain.

We commercially launched DEXTENZA in the United States in July 2019.

DEXTENZA is the first FDA-approved intracanalicular insert delivering dexamethasone to treat post-surgical ocular inflammation and pain for up to 30 days with a single administration.

In September 2020, we announced that we had dosed the first patients in a Phase 3 clinical trial evaluating DEXTENZA for the treatment of post-surgical ocular inflammation and pain in children following cataract surgery.

This planned clinical trial is a post-approval requirement of the FDA in accordance with the Pediatric Research Equity Act of 2003, in connection with the FDA’s prior approval of DEXTENZA for the treatment of inflammation and pain following ophthalmic surgery in adults.

Additionally, we have received proposals for, and plan to support, several investigator-initiated trials evaluating DEXTENZA in different clinical situations.

To date, third-party clinical investigators have initiated over 25 trials to study the use of DEXTENZA in cataract surgery, other ophthalmic surgeries and other potential indications.

Seven of the trials have completed enrollment, and the remaining trials are actively enrolling and treated patients are being followed.

ReSure Sealant

In 2014, we commercially launched ReSure Sealant in the United States as a device approved to prevent wound leaks in corneal incisions following cataract surgery.

In the pivotal clinical trials that formed the basis for FDA approval, ReSure Sealant provided superior wound closure and a better safety profile than sutured closure.

The FDA required two post-approval studies as a condition for approval of our premarket approval, or PMA, application for ReSure Sealant.

The FDA has confirmed that first post-approval study, identified as the Clinical PAS, has been completed.

The second post-approval study, which we refer to as the Device Exposure Registry Study, was a retrospective analysis of the IRIS Registry, comparing endophthalmitis rates from sites that purchased ReSure Sealant versus those sites that did not.

We completed the retrospective study in accordance with our agreement with the FDA and submitted the final study report for the Device Exposure Registry Study to the FDA in January 2021.

We anticipate

that the FDA will review the report within 90 days of our submission and notify us as to whether our obligation to conduct the post-approval study has been satisfied.

While ReSure Sealant remains commercially available in the United States, commercial and sales support for this product are modest at this time.

We have received only limited revenues from ReSure Sealant to date and anticipate only limited sales for 2021.

We announced the topline results for a Phase 2 clinical trial evaluating OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease in December 2021.

The clinical trial achieved its pre-specified primary endpoint.

While the clinical trial was not powered to show statistical significance, the topline results demonstrated a statistically significant change of bulbar conjunctival hyperemia from baseline to day 15 compared to vehicle hydrogel using a central reading photographic assessment in the modified ITT population.

Both formulations of OTX-DED were observed to have a favorable safety profile and to be generally well tolerated.

We are currently developing an appropriate clinical-regulatory development and manufacturing plan.

This plan will include additional formulation work for the OTX-DED insert and the development of an appropriate vehicle comparator.

AffaMed License Agreement

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and the ASEAN markets ( Brunei , Cambodia , Indonesia , Laos , Malaysia , Myanmar , the Philippines , Singapore , Thailand and Vietnam ).

Under the terms of the agreement, we received an upfront payment of $12 million and are eligible to receive development, regulatory and commercial milestone payments and clinical development support payments of up to $91 million in the aggregate, as well as royalties from future product sales.

Under the terms of the agreement, we received an upfront payment of $12 million and became eligible to receive development, regulatory and commercial milestone payments and clinical development support payments of up to $91 million in the aggregate, as well as royalties from future product sales.

In the fourth quarter of 2021, we received a $1 million milestone payment;

we expect to recognize a clinical support payment of another $2 million in the first quarter of 2022 in connection with dosing the first patient in a Phase 2 clinical trial evaluating OTX-TIC for the treatment of open-angle glaucoma or ocular hypertension.

Royalties are tiered and will range from the low teens to low twenty percent range.

In return, we agreed to grant AffaMed exclusive rights to develop and commercialize DEXTENZA for the treatment of post-surgical inflammation and pain following ophthalmic surgery and ocular itching in patients with allergic conjunctivitis, and OTX-TIC for the reduction of elevated intraocular pressure in patients with primary open-angle glaucoma or ocular hypertension in specified Asian markets.

In January 2022, AffaMed announced that it had dosed its first patient in a real-world study conducted in China evaluating the safety and efficacy of DEXTENZA for the treatment of ocular inflammation and pain post-cataract surgery.

We retain the right to develop and commercialize DEXTENZA and OTX-TIC in all other global markets.

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We continue to leverage the potential of our hydrogel platform to explore areas for growth with our focus on formulating, developing and commercializing innovative therapies for diseases and conditions of the eye.

In September 2018, we entered into a second amended and restated license agreement, or Second Amended Agreement, with Incept LLC, an intellectual property holding company, or Incept.

The Second Amended Agreement expanded the scope of our intellectual property license to include products delivered for the treatment of acute post-surgical pain or for the treatment of ear, nose and/or throat diseases or conditions, subject to specified exceptions.

In June 2021, we entered into an agreement with Mosaic Biosciences, Inc., or Mosaic, to identify new targets and discover novel therapeutic agents aimed at the treatment of dry age-related macular degeneration, or dAMD.

Market Background

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Product Pipeline

The following table summarizes the status of our key product development programs and DEXTENZA, our marketed product.

We hold worldwide exclusive commercial rights to the core technology underlying all of our products in development and have not granted commercial rights to any marketing partners other than the option on commercial rights we granted to Regeneron for the delivery of protein-based anti-VEGF drugs in our hydrogel depot for the

treatment of retinal diseases and a license agreement and collaboration with AffaMed for the development and commercialization of DEXTENZA and OTX-TIC in the geographies agreed to between the parties .

We are pursuing three overall strategic goals:

to make prescription eye drops obsolete;

to make immediate release back-of-the-eye injections obsolete;

and to extend our hydrogel platform technology for use beyond the eye to other areas of the body.

The key tactics of our strategy to achieve these goals are:

● Advance our four core clinical development programs through Phase 2.

We believe the greatest potential value inflection points for us are the topline data readouts of the Phase 2 clinical trials of our four core clinical development programs:

OTX-TKI for the treatment of wet AMD, OTX-TIC for the treatment of glaucoma or ocular hypertension, OTX-CSI for the treatment of dry eye disease, and OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease.

● Expand Commercialization of DEXTENZA for the treatment of ocular inflammation and pain following ophthalmic surgery.

We expect to grow our salesforce to increase our active number of accounts and penetrate each account more deeply.

We intend to focus sales efforts on ambulatory surgical centers, or ASCs, that generate the largest volumes of cataract surgeries in the United States.

We are also seeking to expand the label for DEXTENZA—beginning with our sNDA to add ocular itching associated with allergic conjunctivitis as an approved indication—to permit the product’s use outside of the surgical setting and into ophthalmologists’ offices.

The following table summarizes the status of our key product development programs and DEXTENZA, our primary marketed product.

We hold worldwide exclusive commercial rights to the core technology underlying all of our products in development and have not granted commercial rights to any marketing partners that remain outstanding other than a license agreement and collaboration with AffaMed for the development and commercialization of DEXTENZA and OTX-TIC in the geographies agreed to between the parties .

Our strategy is to build an ophthalmology-focused biopharmaceutical company that capitalizes on the gaps that we believe increasingly exist in the ophthalmology sector between single product companies and large, multi-product pharmaceutical companies.

Core to our strategy is (i) to continue to build upon our experience in commercializing ophthalmology products that can be administered primarily in the surgical and/or office settings and (ii) to continue to develop a clinical pipeline of innovative ophthalmology products that address large areas of unmet need.

The key tactics of our strategy are:

● Expand commercialization of DEXTENZA for the treatment of ocular inflammation and pain following ophthalmic surgery and ocular itching associated with allergic conjunctivitis.

We are reorganizing our established commercial sales effort into two business units in the United States:

the surgical business unit, which will focus primarily on ambulatory surgery centers, or ASCs, that generate the largest volume of cataract surgeries, for the treatment of ocular inflammation and pain;

and the office business unit, which will focus on the offices of ophthalmologists and optometrists and the promotion of DEXTENZA for both the treatment of inflammation and pain and ocular itching associated with allergic conjunctivitis.

We expect to grow our salesforce in both the surgical and office settings not only to increase the active number of accounts but to also penetrate each of those account types more deeply.

● Advance our clinical development programs.

We have deep experience in developing innovative ophthalmology products from discovery through regulatory approval while minimizing the development risks often associated with new chemical entities.

Our current development pipeline includes:

We are conducting an Australian based Phase 1 clinical trial and a U.S.-based Phase 1 clinical trial to treat wet AMD by addressing the limitations of durability associated with the existing standard of care.

If we obtain favorable results, we intend to advance the program into a Phase 2 clinical trial in the United States.

We have initiated a U.S.-based Phase 2 clinical trial for the treatment of open-angle glaucoma or ocular hypertension.

If we obtain favorable data from this clinical trial, we intend to advance the program into a Phase 3 clinical trial.

We have completed a Phase 2 clinical trial for the treatment of chronic dry eye disease.

We continue to evaluate the data from this trial including, among other things, retention rates of the OTX-CSI inserts, or how long the inserts were observed to remain in the canaliculus, as well as the duration of the vehicle hydrogel inserts.

We have completed a Phase 2 clinical trial for the treatment of the short-term signs and symptoms of dry eye disease.

We continue to evaluate the data from this trial including, among other things, the duration of the vehicle hydrogel inserts.

● Leverage our commercial infrastructure with additional ophthalmology products for both the surgical and office settings.

We have an active business development effort to identify and assess opportunities to partner, in-license or potentially acquire ophthalmology products that we believe could complement our existing product offerings.

● Continue to develop experience and expertise with buy and bill products.

Key to our success is the ability to effectively commercialize buy and bill products in both the surgical and office settings.

We intend to continue to develop expertise in the selling and reimbursement of these types of products.

Buy and bill refers to the process by which an ASC, hospital outpatient department, or HOPD, or physician’s office acquires medication that the provider then administers in its respective site of care.

The “buy” part refers to the provider being responsible for ordering and purchasing the drug.

The “bill” part refers to the provider directly billing third-party payors for reimbursement, typically Medicare or commercial payors.

● Apply our local programmed-release hydrogel-based technology to create additional proprietary solutions for ophthalmic diseases and conditions.

In collaboration with Regeneron, we are conducting preclinical research

and development activities regarding an extended-delivery formulation of the VEGF trap aflibercept, currently marketed under the brand name Eylea, to be delivered to the suprachoroidal space.

We are assessing preclinical product candidates for the ophthalmic space that leverage not only our proprietary PEG-based bioresorbable hydrogel technology platform, but also active pharmaceutical ingredients used in FDA-approved ophthalmic drugs that are or are expected to become available on a generic basis.

Finally, we are frequently in discussions with other companies operating in the ophthalmic space regarding potential collaborations to combine our local programmed-release hydrogel technology with their proprietary drug formulations to address additional diseases and conditions of the eye.

● Address rest-of-world commercial opportunities through licensing and collaborations agreements .

In the fourth quarter of 2020, we announced a license agreement and collaboration with AffaMed for the development and commercialization of DEXTENZA and OTX-TIC in specified Asian markets.

From time to time, we may consider additional arrangements with other companies to address markets outside of the United States.

● Utilize our hydrogel platform to enable local programmed-release of therapeutics to areas of the body outside the eye.

We have licensed certain of Incept’s intellectual property rights for the development of product candidates for the treatment of acute post-surgical pain or for the treatment of ear, nose and/or throat diseases or conditions, subject to specified exceptions.

We intend to explore programs outside of the eye not only on our own but also potentially through collaborations with third parties who have expertise and experience with other therapeutics as well as other areas of the body.

From time to time, we are also in discussions with other ophthalmic companies

regarding potential collaborations to combine our local programmed-release hydrogel technology with their proprietary drug formulations to address additional diseases and conditions of the eye.

● Address rest-of-world commercial opportunities through licensing and collaboration agreements.

Similar to the collaboration that we have established with AffaMed, we will continue to consider arrangements with other companies to address market opportunities outside of the United States.

Eye disease can be caused by many factors and can affect both the front and back of the eye.

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and the optic nerve, which transmits visual information from the retina to the brain.

Eye disease can be caused by many factors and can affect both the front and back of the eye.

Intravitreal injections or oral pills have typically been used to deliver medications to the back of the eye.

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We currently focus on some of the largest markets in ophthalmology.

According to the Market Scope 2019 reports, our product candidates seek to address select indications within segments of ophthalmology that, in the aggregate, account for more than $20 billion global annual sales.

According to the Market Scope 2021 reports, our product candidates seek to address select indications within segments of ophthalmology that, in the aggregate, account for more than $20 billion in global annual sales.

Retinal Diseases

One of the principal retinal diseases is wet AMD, a serious disease of the central portion of the retina, known as the macula, that is responsible for detailed central vision and color perception.

One of the principal retinal diseases is wet AMD, a serious disease of the central portion of the retina, known as the macula, an oval-shaped pigmented area that is responsible for detailed central vision and color perception.

Wet AMD is characterized by abnormal new blood vessel formation, referred to as neovascularization, which results in blood vessel leakage and retinal distortion.

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The current standard of care for wet AMD is treatment with drugs that target VEGF, one of several proteins involved in neovascularization.

Wet AMD is the leading cause of blindness in people over the age of 55 in the United States and the European Union.

According to the 2019 Market Scope Retinal Disease Report, there are approximately 8.0 million people in the United States who suffer from vision-threatening retinal diseases.

Wet AMD is the most common cause of visual impairment among elderly patients in developed countries.

According to the Market Scope 2021 Retinal Pharmaceuticals Market Report, there are approximately 8.8 million people in the United States who suffer from vision-threatening retinal diseases.

This population is expected to grow at a 2.2% compound annual growth rate through 2026.

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Although serious adverse event rates after treatment with anti-VEGF compounds are low, intravitreal injections can result in severe complications and damage to the retina and other structures of the eye, such as ocular hemorrhage and tears in the retinal pigment epithelium.

The global market for retinal disease was approximately $13.0 billion in 2019 and was estimated to grow at approximately 11% per year through 2024 according to Market Scope.

The global market for retinal disease was approximately $14.1 billion in 2021 and is estimated to grow at approximately 6% per year through 2026 according to Market Scope.

market accounted for just over 50% of the global market or $7.6 billion in 2021.

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Lucentis, marketed in the United States by Genentech;

and Beovu, marketed in the United States by Novartis.

Avastin, a cancer treatment drug, marketed by Genentech, is also used off-label for the treatment of wet AMD.

and bevacizumab, an anti-VEGF therapy approved for the treatment of certain cancers, used off-label in ophthalmology.

Glaucoma is a progressive and highly individualized disease in which elevated levels of IOP are associated with damage to the optic nerve, which results in irreversible vision loss.

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Patients with ocular hypertension are at high risk of developing glaucoma.

Glaucoma impacts more than 2.7 million people age 40 or older in the United States.

According to Market Scope, it is estimated that there were 111.1 million people globally in 2021 with primary open-angle glaucoma or ocular hypertension.

In the United States, it is estimated there were 4.3 million and 3.5 million who had primary open-angle glaucoma or ocular hypertension, respectively.

Both groups are estimated to grow by 2.3% annually through 2026.

The primary goal of glaucoma treatment is to slow the progression of this chronic disease by reducing IOP, and many medications can accomplish this.

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market representing $1.9 billion.

The global market is estimated to grow at 6.6% annually to approximately $6.6 billion in 2026 while the U.S.

market is expected to grow 7.1% annually to approximately $2.7 billion in 2026.

The market for drugs administered by eye drops for the treatment of glaucoma consists of both branded and generic products.

Branded products have maintained premium pricing and significant market share.

These products include Travatan Z (travoprost) marketed by Alcon and Lumigan (bimatoprost) marketed by Allergan.

These products include Lumigan ® (bimatoprost) marketed by Allergan, Travatan Z (travoprost) marketed by Novartis and Tapros marketed by Santen.

The relevant patents covering travoprost expired in December 2014.

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In addition, the vast majority of dry eye patients experience acute episodic exacerbations of their symptoms, which are commonly referred to as flares, at various times throughout the year.

These flares can be triggered by

numerous factors, including exposure to allergens, pollution, wind and low humidity, intense visual concentration such as watching television and working at a computer, hormonal changes, contact lens wear, smoking and sleep deprivation, which cause ocular surface inflammation and impact tear production and/or tear film stability.

These flares can be triggered by numerous factors, including exposure to allergens, pollution, wind and low humidity, intense visual concentration such as watching television and working at a computer, hormonal changes, contact lens wear, smoking and sleep deprivation, which cause ocular surface inflammation and impact tear production and/or tear film stability.

There are approximately 17.6 million patients diagnosed with dry eye disease in the United States, according to the Market Scope 2021 Dry Eye Products Market Report.

Approximately 8.6 million of those patients are diagnosed with moderate to severe dry eye while the remaining 8.6 million patients are diagnosed with episodic dry eye disease.

Approximately 9.1 million of those patients are diagnosed with moderate to severe dry eye while the remaining 8.5 million patients are diagnosed with mild dry eye disease.

The prevalence of dry eye disease increases with age, and we expect that the number of dry eye disease cases will increase as the U.S.

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The global market for dry ocular surface disease, which we refer to as dry eye disease, was estimated by Market Scope at $5.9 billion in 2021 with the U.S.

market representing $2.1 billion, composed of approximately $1.5 billion in prescriptions and $0.6 billion in over-the-counter medications.

market representing $2.2 billion.

Within the prescription category, Restasis ® recorded sales in 2021 of approximately $1.2 billion in the United States while Xiidra ® recorded estimated sales of $0.3 billion in the United States.

With the approval by the FDA of Viatris’ generic to Allergan’s Restasis, 2022 Restasis revenues are anticipated to be lower.

Allergic Conjunctivitis

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Commonly used generic steroids include prednisolone, dexamethasone and fluorometholone.

Pataday and Patanol formerly led the prescription market in this category but have recently been made available as over-the-counter products.

Post-Surgical Ocular Inflammation and Pain

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If left untreated, inflammation of the eye may result in further ocular complications, including pain, scarring and vision loss.

Market Scope has estimated that approximately 4.7 million ocular surgeries were to be performed in the United States in 2020, of which approximately 3.2 million are estimated to be cataract surgeries.

Market Scope has estimated that approximately 4.5 million ocular surgeries were performed in the United States in 2021, of which approximately 4.4 million are estimated to have been cataract surgeries.

In 2022, Market Scope estimates 5.1 million cataract surgeries are to be performed.

We focus our sales efforts on patients covered by Medicare Part B which accounts for roughly 50% of all cataract surgeries or approximately 2 million surgeries annually.

We currently focus our sales efforts for DEXTENZA for the treatment of inflammation and pain on patients covered by Medicare Part B which accounts for roughly 50% of all cataract surgeries or approximately 2 million surgeries annually.

At the current wholesale acquisition price of $555 per insert, we estimate that there is a near-term addressable market of approximately $1 billion per year in the surgical space.

According to IMS Health data, approximately 19.8 million prescriptions were filled in the United States in 2021 for anti-inflammatory drugs administered by prescription eye drops for ocular diseases and conditions, resulting in sales of approximately $4.9 billion.

These prescriptions consisted of approximately 7.4 million prescriptions and $580.0 million in sales for single-agent corticosteroids, 2.8 million prescriptions and $293.4 million in sales for NSAIDs, 3.7 million prescriptions and $262.7 million in sales for corticosteroid and antibiotic combination products and approximately 3.6 million prescriptions and $2.9 billion in sales of Restasis and Xiidra for dry eye disease.

These prescriptions consisted of approximately 8.4 million prescriptions and $662.4 million in sales for single-agent corticosteroids, 3.2 million prescriptions and $312.6 million in sales for NSAIDs, 4.4 million prescriptions and $358.6 million in sales for corticosteroid and antibiotic combination products and approximately 4.0 million prescriptions and $3.5 billion in sales for dry eye disease products.

The Use of Eye Drops and its Limitations

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Eye drops are difficult to administer for many patients, in particularly the elderly, due to physical or mental conditions such as arthritis or dementia.

Difficulty in self-administering eye drops may lead to bacterial contamination in the bottle resulting from incorrect usage, limited accuracy administering the drops directly into the eye and the potential washout of drops from the eye.

Difficulty in self-administering eye drops may lead to bacterial contamination in the bottle resulting from incorrect usage, limited accuracy

administering the drops directly into the eye and the potential washout of drops from the eye.

We believe that this also may play a large role in lack of patient compliance and resulting diminished efficacy of treatment.

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As a result of these limitations, there is a significant unmet need for technologies that will allow for a longer duration of effect and an overall reduced number of injections.

Ocular Wound Closure

According to the World Health Organization, cataracts are the leading cause of visual impairment eventually progressing to blindness.

According to the American Academy of Ophthalmology Cataract and Anterior Segment Panel’s 2011 Preferred Practice Pattern Guidelines, cataract extraction is the most commonly performed eye surgery in the United States.

Market Scope has estimated that in 2019 there were approximately 4.0 million cataract extractions performed in the United States.

A cataract is a clouding of the lens inside the front of the eye.

During cataract surgery, a patient’s cloudy natural lens is removed and replaced with a prosthetic intraocular lens.

Clear corneal incision that allows entry to the eye is the typical method for performing cataract surgery.

The most common post-surgical approach is to allow the incisions to self-seal, or close, through normal biological processes.

However, self-sealing incisions can open spontaneously, especially within 12 to 24 hours following surgery, when IOP fluctuates or as a result of the application of external pressure or manipulation.

In addition, incisions that are left to self-seal may leak, which can sometimes result in complications.

Complications from fluid leakage include the development of hypotony, or low IOP, which can lead to corneal decompensation and vision loss, as well as the potential for infection.

The implanted intraocular lens also may shift in position due to hypotony, leading to reduced visual outcomes following surgery.

Sutures are the most widely used alternative method of wound closure.

However, sutures do not completely prevent fluid leakage, are time-consuming to place and have been associated with patient discomfort, corneal distortion, and shallowing of the interior chamber.

Sutures may also lead to astigmatism, a distortion of the cornea.

An additional visit may be required to remove sutures, thus adding time, inconvenience and expense to the surgical process.

These shortcomings limit the use of sutures in ophthalmic surgery.

In a 2012 survey of ophthalmologists in the United States conducted by Lachman Consulting LLC, a healthcare consulting firm, respondents indicated that they use sutures in approximately 14% of cataract surgeries.

The Ocular Therapeutix Approach

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Our intracanalicular inserts utilize our proprietary hydrogel technology and are embedded with an active drug.

Following insertion through the punctum, our inserts swell in tear fluid to fill the vertical canaliculus, which secures the inserts in place.

Following insertion through the punctum, our inserts swell in tear fluid to fill the vertical canaliculus, which secures the

inserts in place.

We design our inserts to release drug in a programmed fashion, tailored to each disease state, back through the punctum to the surface of the eye.

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We select the active pharmaceutical ingredients for our local programmed-release drug delivery product candidates, including our intracanalicular inserts, based on criteria we have developed through our extensive experience with hydrogel insert systems.

Our active pharmaceutical ingredient selection criteria include:

We consider the following selection criteria:

● prior approval by the FDA for the targeted ophthalmic indication, except for our OTX-TKI program in which the active pharmaceutical ingredient, axitinib, is not currently approved for an ophthalmic indication;

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The implants are designed to be held in place by currents and gravity present in the anterior chamber of an eye.

As an example, in the case of OTX-TIC, the implant is designed to infuse with

liquid, settle into the inferior angle of the eye and demonstrate little to no movement.

In the case of OTX-TIC, the implant is designed to infuse with liquid, settle into the inferior angle of the eye and demonstrate little to no movement.

The implants are preferably polymeric, biodegradable and provide sustained release of at least one therapeutic agent to both the trabecular meshwork and associated ocular tissue and the fluids within the anterior chamber of an eye.

OTX-TIC implant

Injection needle

Intravitreal Implants

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We designed the intravitreal implant to be injected and retained in the vitreous humor, as depicted in the figure below, to provide local programmed-release intravitreal delivery of anti-VEGF compounds.

Our initial intravitreal implant development efforts are focused on the use of our programmed-release hydrogel in combination with anti-angiogenic compounds such as protein-based anti-VEGF drugs or small molecule drugs, such as TKIs, for the treatment of retinal diseases, including wet AMD, RVO and DME.

Our initial intravitreal implant development efforts are focused on the use of our programmed-release hydrogel in combination with anti-angiogenic compounds or small molecule drugs, such as TKIs, for the treatment of retinal diseases, including wet AMD, RVO and DME.

Our initial goal for these programs is to provide extended delivery of a protein-based large molecule or small molecule TKI targeting VEGF and other indications over a six-month period or longer following administration of a bioresorbable hydrogel incorporating the drug by an injection into the vitreous humor.

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We have designed our intravitreal implant for delivery using typically available syringes and fine gauge needles compatible with the current standard of care.

Once in the vitreous humor, the hydrogel is designed to retain properties of

TKI and anti-VEGF compounds until they are released.

Once in the vitreous humor, the hydrogel is designed to retain properties of TKI and anti-VEGF compounds until they are released.

We have designed the hydrogel to liquefy, dissolve and be cleared from the eye through hydrolysis over time.

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By selecting a compound that is compatible with our hydrogel platform technology and that will have expiration of relevant patents within the timeline of our development program, we avoid the need to license the TKI molecule, thus retaining full worldwide rights to any products we develop.

Suprachoroidal Injections

The suprachoroidal space, which we refer to as the SCS, is a potential space between the sclera and choroid that traverses the circumference of the posterior segment of the eye.

The SCS is believed to be an attractive site for drug delivery because drugs are able to target the choroid, retinal pigment endothelium and retina with high bioavailability while maintaining low levels of drug elsewhere in the eye.

ReSure Sealant for Ocular Wound Closure

ReSure Sealant is our bioresorbable hydrogel device for wound closure following cataract surgery.

A surgeon applies ReSure Sealant as a liquid painted onto the corneal incision.

Within about 15 seconds, the sealant cross-links and transforms into a smooth, lubricious hydrogel that seals the wound.

ReSure Sealant dissipates as healing progresses and does not require removal.

In the pivotal clinical trials that formed the basis for FDA approval, ReSure Sealant provided superior wound closure and a better safety profile than sutured closure.

Development Pipeline and Marketed Products

The following table summarizes important information about our key product development programs and our marketed products, DEXTENZA and ReSure Sealant.

We hold worldwide commercial rights to each of our product candidates, DEXTENZA and ReSure Sealant.

We hold worldwide commercial rights to DEXTENZA, ReSure

Sealant and each of our product candidates other than rights we have licensed to AffaMed for the development and commercialization of DEXTENZA and OTX-TIC in specified Asian markets .

(Active Pharmaceutical

Product / Program

Preclinical Stage Product Candidates

Wet AMD, DME and RVO

Suprachoroidal implant (Aflibercept)

In collaboration with corporate partner Regeneron.

Early-Stage Clinical Product

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Australian Phase 1 clinical trial ongoing.

Plan to initiate Phase 1 trial in the United States under eIND in Q2 2021.

Plan to initiate a Phase 2 clinical trial in Australia, pending the receipt and review of topline data from the Phase 1 clinical trial in Australia.

Glaucoma or ocular hypertension

United States Phase 1 trial initiated in July 2021.

Plan to initiate a Phase 2 clinical trial in the United States, pending the receipt and review of topline data from the Phase 1 clinical trial in the United States, which is expected in the second half of 2022.

Open-angle glaucoma or ocular hypertension

Intracameral implant (Travoprost)

Phase 1 clinical trial ongoing.

Plan to commence Phase 2 clinical trial mid-2021.

Treatment of dry eye disease

Phase 2 clinical trial in the United States initiated in Q4 2021;

first patient dosed expected Q1 2022.

Chronic treatment of dry eye disease

Intracanalicular insert (Cyclosporine)

Phase 2 clinical trial ongoing;

topline data anticipated in Q4 2021.

Phase 2 topline data reported in October 2021;

evaluating additional data to inform the future of this program.

Short-term treatment of signs and symptoms of dry eye disease

Intracanalicular insert (Dexamethasone)

Commenced Phase 2 clinical trial in first quarter 2021;

topline data anticipated in first half 2022.

Late Stage Clinical Product

Allergic conjunctivitis

Intracanalicular insert (Dexamethasone)

PDUFA target action date of October 18, 2021.

Phase 2 topline data reported in December 2021;

evaluating additional data to inform the future of this program.

Approved Product

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Product commercially launched in the United States in July 2019.

Allergic conjunctivitis

Intracanalicular insert (Dexamethasone)

Product commercially launching in the United States in first quarter of 2022.

ReSure Sealant

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Our current intravitreal implant development efforts are focused on the use of our sustained-release hydrogel in combination with anti-angiogenic compounds, including anti-VEGF compounds, for the treatment of wet AMD.

initial implants have delivered anti-VEGF compounds in vitro over our targeted four to six month period, which we believe could make it possible to reduce the frequency of the current monthly or bi-monthly intravitreal injection regimen for wet AMD.

Our initial implants have delivered anti-VEGF compounds in vitro over our targeted four to six month period, which we believe could make it possible to reduce the frequency of the current monthly or bi-monthly intravitreal injection regimen for wet AMD.

In addition, our preclinical studies demonstrated a sustained pharmacodynamic effect in vivo of over six months with a small molecule TKI.

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We have conducted in vivo pharmacokinetic and pharmacodynamic studies with hydrogels loaded with axitinib injected intravitreally.

Pharmacokinetic data showed retinal tissue drug concentrations in excess of 3,000 times the published concentration needed to inhibit VEGF by 50% after six months and pharmacodynamic results show sustained efficacy for six months.

Phase 1 clinical development

We are conducting an open-label, proof-of-concept Phase 1 clinical trial of OTX-TKI for the treatment of patients with neovascular age related macular degeneration, or wet AMD, caused by excessive blood vessel growth in the back of the eye due to VEGF.

OTX-TKI is a bioresorbable hydrogel implant incorporating axitinib that is designed to be delivered via intravitreal injection into the vitreous humor of the eye and has an initial target duration of drug release for approximately six to nine months.

Preclinical studies to date have demonstrated suppression of vascular leakage and good pharmacokinetics in the relevant ocular tissues.

The Phase 1 clinical trial was submitted to the Therapeutic Goods Administration, Australia’s regulatory authority for therapeutic goods, in July 2018.

In the first quarter of 2019, we began dosing subjects in a Phase 1 clinical trial in Australia.

This clinical trial is a prospective, multi-center, open-label, does escalation study designed to evaluate the safety, durability, tolerability, and biological activity of OTX-TKI.

We are evaluating biological activity by following visual acuity over time and measuring retinal thickness using standard optical coherence tomography, or OCT.

Two cohorts have been enrolled, a lower dose cohort of 200 μg of six subjects and a higher dose cohort of 400 μg of seven subjects.

In the first two fully enrolled cohorts, OTX-TKI was generally well tolerated and observed to have a favorable safety profile with no ocular serious adverse events noted.

In the higher dose cohort, OTX-TKI showed a decrease in central subfield retinal thickness as measured by mean change in central subfield thickness values by decreases in intraretinal and/or subretinal fluid in some subjects.

We amended our clinical trial protocol to enroll two additional cohorts, cohort 3a consisting of six patients being administered a 600 µg dose and cohort 3b consisting of six patients being administered a 400 µg dose plus an induction injection of the anti-VEGF drug aflibercept.

Cohort 3a is fully enrolled and patients are being monitored while cohort 3b is still enrolling.

In February, interim data from this Phase 1 clinical trial of OTX-TKI was presented at the Angiogenesis, Exudation and Degeneration 2021 Virtual conference hosted by the Bascom Palmer Eye Institute, University of Miami Health System.

We believe that OTX-TKI has demonstrated a preliminary signal of biological activity as observed by a clinically-meaningful decrease in retinal fluid as measured by high resolution OCT that provides cross-sectional images of the anatomical structure of the retina.

As observed in cohort 2 (400 µg dose) and cohort 3a (600 µg dose), some subjects showed a decrease in intraretinal or subretinal fluid by two months after injection.

In cohort 3b (400 µg dose plus anti-VEGF induction injection of aflibercept), two subjects were observed to have a decrease in intraretinal and/or subretinal fluid as early as a week after injection.

In addition, the OTX-TKI implants in cohort 1 were observed to have biodegraded in all subjects within 9 to 10.5 months of injection.

It has also been observed that the implants are able to be adequately monitored and that there is limited to no movement of the implant in the anterior segment of the eye.

These findings are supported by the graphs below that present the mean change in central subfield thickness, or CSFT, and in best corrected visual acuity, or BCVA, across the four cohorts as well as specific patient images from cohorts 2, 3a and 3b showing declines in intraretinal and/or subretinal fluid over time.

OTX-TKI has been observed to have a favorable safety profile and be generally well-tolerated to date.

There have been no ocular serious adverse events reported.

Plasma concentrations of the active drug (axitinib) were measured to be below the limit of quantification of assay, or BLQ < 0.1 ng/ml, at all sampled time points for all patients in cohorts 1 and 2.

Pharmacokinetic data showed retinal tissue drug concentrations in excess of 3,000 times the published concentration needed to inhibit VEGF after six months and pharmacodynamic results show sustained efficacy for six months.

Preclinical studies to date have demonstrated suppression of vascular leakage and favorable pharmacokinetics in the relevant ocular tissues.

Phase 1 clinical development (Australia)

We are conducting an open-label, multi-center, proof-of-concept, dose-escalation Phase 1 clinical trial of OTX-TKI for the treatment of patients with wet AMD caused by excessive blood vessel growth in the back of the eye due to VEGF.

This Phase 1 clinical trial is designed to evaluate the safety, durability and tolerability of OTX-TKI.

OTX-TKI is a preformed, bioresorbable hydrogel implant incorporating axitinib that is designed to be delivered via intravitreal injection into the vitreous humor of the eye and has an initial target duration of drug release for approximately six to nine months.

The Phase 1 clinical trial was submitted to the Therapeutic Goods Administration, Australia’s regulatory authority for therapeutic goods, in July 2018 and is being conducted at multiple sites in Australia.

In the Phase 1 clinical trial of OTX-TKI, we are evaluating biological activity by measuring central subfield thickness, or CSFT, using spectral domain optical coherence tomography, or OCT, and following visual acuity over time as measured by BCVA, or Best Corrected Visual Acuity.

We have fully enrolled three cohorts to date:

a lower dose cohort of 200 µg with six subjects;

a higher dose cohort of 400 µg with seven subjects;

and a third cohort with two parallel arms, one arm of six subjects receiving a concomitant anti-VEGF injection with 400 µg of OTX-TKI and the other arm of six subjects receiving a 600 µg of OTX-TKI with no anti-VEGF injection.

We are actively enrolling a fourth cohort with two parallel arms, one arm of six subjects receiving a 600 µg single implant of OTX-TKI and the other arm of six subjects receiving a 600 µg single implant of OTX-TKI with anti-VEGF injection.

In February 2022, interim data as of January 11, 2022 from this Phase 1 clinical trial of OTX-TKI was presented at the Angiogenesis, Exudation and Degeneration Virtual Symposium.

We believe that this data showed a preliminary signal of biological activity for OTX-TKI as observed by a clinically-meaningful decrease in retinal fluid as measured by high resolution OCT that provides cross-sectional images of the anatomical structure of the retina.

Some subjects have shown a decrease in intraretinal or subretinal fluid by two months in cohorts 2 (400 µg) and 3a (600 µg).

In cohort 3b (400 µg dose plus anti-VEGF induction injection of aflibercept), two subjects showed a decrease in intraretinal or subretinal fluid as early as a week after treatment.

Extended duration of activity was observed over 60% of subjects across all cohorts over 80% of subjects in cohort 3a (600 µg) with a duration of activity of six months or longer.

In addition, the OTX-TKI implants in cohort 1 (single implant) were observed to have biodegraded in all subjects within nine to 10.5 months of injection.

It has also been observed in the trial that the implants were able to be adequately monitored and that there was limited to no movement of the implant in the anterior segment of the eye.

In the trial, OTX-TKI has been observed to have a favorable safety profile and be generally well-tolerated to date.

There have been no ocular serious adverse events in treatment naïve and previously treated wet AMD subjects.

Plasma concentrations of the active drug (axitinib) were measured to be below the limit of quantification of assay, or BLQ < 0.1 ng/ml, at all sampled time points for all patients in cohorts 1, 2, 3a and 3b.

This assessment indicates that there is no measurable systemic exposure to axitinib.

We believe that the interim data suggests that OTX-TKI is durable and may extend the duration of action beyond several months.

As noted in the table below, 50% of cohort 1 (200 µg dose) subjects, or 3 out of 6, and 57% of cohort 2 (400 µg dose) subjects, or 4 out of 7, did not require rescue medication at or before six months post-injection.

Further, several subjects in cohort 2 demonstrated durability of therapy for over 6 months and one subject demonstrated

durability out to 13.5 months without rescue.

In cohort 3a, one subject has demonstrated durability of therapy up to six months so far.

Follow-up remains ongoing for all cohorts.

Planned Phase 1 Clinical Trial (United States)

We also plan to initiate a randomized, masked Phase 1 clinical trial of up to 20 subjects in the United States under an eIND application in mid-2021 to evaluate 15 subjects dosed with a 600 µg dose of OTX-TKI in comparison to 5 subjects receiving a 2 mg dose of aflibercept every eight weeks for the treatment of wet AMD, DME and RVO.

The clinical trial will evaluate biological activity, as measured by CSFT and BCVA, tolerability and durability.

We have requested a pre-IND meeting with the FDA to discuss a possible plan to transition from an eIND application to a traditional IND application.

Planned Phase 2 Clinical Trial (Australia)

Pending our receipt and review of the topline data from the Phase 1 clinical trial in Australia and related regulatory discussions, we plan to initiate a Phase 2 clinical trial in Australia to compare the administration of a single dose of 600 µg OTX-TKI in combination with an anti-VEGF induction injection of a 2 mg dose of aflibercept, a current standard of care anti-VEGF therapy, to a 2mg dose of aflibercept alone as the comparator.

The Phase 2 clinical trial is anticipated to include approximately 100 subjects with wet AMD but who have responded to current standard of care anti-VEGF treatment and currently show an absence of fluid.

The Phase 2 clinical trial will be designed to evaluate efficacy, as measured by CSFT and BCVA, tolerability and durability.

Phase 1 Clinical Trial (United States)

In July 2021, we announced that we had dosed the first patient in a prospective, multi-center, randomized, controlled Phase 1 clinical trial in the United States under an exploratory investigational new drug, or eIND, application to evaluate a single implant 600 µg dose of OTX-TKI with an anti-VEGF injection in comparison with a 2 mg dose of

The trial consists of approximately 20 subjects previously treated with standard of care anti-VEGF therapy in two arms:

a fifteen-subject arm that will receive OTX-TKI in combination with an anti-VEGF injection and a five-subject arm that will receive aflibercept at eight week intervals.

The trial is designed to assess the safety, durability and tolerability of OTX-TKI as well as to assess preliminary biological activity in subjects by measuring anatomical and functional changes.

At a pre-investigational new drug, or pre-IND, application meeting in April 2021, we discussed with the FDA the possibility of transitioning from an eIND application to a traditional investigational new drug application.

The population being studied in this U.S.-based clinical trial is different than the population being studied in our ongoing Phase 1 clinical trial of OTX-TKI in Australia.

In this trial, we are including only subjects who have been previously treated with anti-VEGF therapy and evaluating how long we are able to maintain subjects without the need for retreatment.

In the Australian trial, we studied subjects who had pre-existing intraretinal and/or subretinal fluid and evaluated whether a TKI could reduce existing fluid levels.

The U.S.-based Phase 1 clinical trial is fully enrolled and we expect interim, six-month data in the second half of 2022.

Regulatory Pathway

If we receive positive data from the Phase 1 clinical trial in the United States, we plan to initiate a Phase 2 clinical trial and two Phase 3 clinical trials in the United States for the treatment of wet AMD, DME and RVO.

We expect to receive topline data from the Phase 1 clinical trial in the United States in the second half of 2022.

If we receive positive data, we plan to initiate a Phase 2 clinical trial and two Phase 3 clinical trials in the United States for the treatment of wet AMD, DME and RVO.

If our development efforts are successful, we expect that we would submit an NDA under Section 505(b)(2) of the FDCA.

See “—Government Regulation—Section 505(b)(2) NDAs” for additional information.

OTX-AFS (aflibercept suprachoroidal implant) in Collaboration with Regeneron

Regeneron Collaboration Agreement

In October 2016, we entered into a strategic collaboration, option and license agreement with Regeneron for the development and potential commercialization of products using our extended-delivery hydrogel formulation in combination with Regeneron’s large molecule VEGF-targeting compounds for the treatment of retinal diseases, with the initial focus on the VEGF trap aflibercept, currently marketed under the brand name Eylea.

We refer to the collaboration, option and license agreement, as amended to date, as the Collaboration Agreement.

Under the terms of the Collaboration Agreement, we granted Regeneron an option, or the Option, to enter into an exclusive, worldwide license under our intellectual property to develop and commercialize products using our hydrogel in combination with Regeneron’s large molecule VEGF-targeting compounds, or Regeneron Licensed Products.

The Collaboration Agreement does not cover the development of any products that deliver small molecule drugs, including TKIs, for any target including VEGF, or any products that deliver large molecule drugs other than those that target VEGF proteins.

Under the terms of the Collaboration Agreement, we and Regeneron agreed to conduct a joint research program with the aim of developing an extended-delivery formulation of aflibercept that is suitable for advancement into clinical development.

Regeneron has agreed to pay our personnel and material costs of ours for specified preclinical development activities in connection with the revised workplan, as well as costs of certain specialty equipment.

Under the terms of the Collaboration Agreement, Regeneron is responsible for funding an initial preclinical tolerability study.

If the Option is exercised, Regeneron will be obligated to conduct further preclinical development and an initial clinical trial under a collaboration plan.

We are obligated to reimburse Regeneron for certain development costs during the period through the completion of the initial clinical trial, subject to a cap of $25 million, which cap may be increased by up to $5 million under certain circumstances.

We do not expect our funding requirements under the collaboration to be material over the next twelve months.

If Regeneron elects to proceed with further development beyond the initial clinical trial, it will be solely responsible for conducting and funding further development and commercialization of product candidates.

If the Option is exercised, Regeneron is required to use commercially reasonable efforts to research, develop and commercialize at least one Regeneron Licensed Product.

Such efforts shall include initiating the dosing phase of a subsequent clinical trial within specified time periods following the completion of the first-in-human clinical trial or the initiation of preclinical toxicology studies, subject to certain extensions.

Under the terms of the Collaboration Agreement, Regeneron has agreed to pay us $10 million upon exercise of the Option.

If Regeneron elects to exercise the Option, we are also eligible to receive up to $145 million per Regeneron Licensed Product upon the achievement of specified development and regulatory milestones, including successful results from the first-in-human clinical trial;

$100 million per Regeneron Licensed Product upon first commercial sale of such Regeneron Licensed Product;

and up to $50 million based on the achievement of specified sales milestones for all Regeneron Licensed Products.

In addition, we are entitled to tiered, escalating royalties, in a range from a high-single digit to a low-to-mid teen percentage of net sales of Regeneron Licensed Products.

As amended, the Option is exclusive for twenty-four months following May 8, 2020.

The field of the potential license remains limited to Regeneron Licensed Products delivered by local administration to or around the eye for diagnostic, therapeutic, or prophylactic purposes relating to ophthalmic diseases or conditions.

The Collaboration Agreement will automatically terminate upon the failure of Regeneron to conduct or complete certain preclinical activities within specified timeframes or provide required notices regarding such certain preclinical activities to us, in each case subject to specified exceptions, unless Regeneron exercises its Option, the matter has been referred to the joint research committee, or the parties have otherwise agreed in writing.

The Agreement will also terminate if Regeneron has not exercised its Option prior to the expiration of the Option Period.

If Regeneron has timely exercised its Option, the Collaboration Agreement will expire on a Regeneron Licensed Product-by-Regeneron Licensed Product and country-by-country basis upon the expiration of the later of 10 years from the date of first commercial sale in such country or the expiration of all patent rights covering a Regeneron Licensed Product in such country.

We have agreed to grant Regeneron a fully paid-up, non-exclusive license to continue to develop and commercialize the Regeneron Licensed Products following expiration.

The Collaboration Agreement is terminable by Regeneron at its convenience, for any or all of the Regeneron Licensed Products, upon prior written notice.

Either party may, subject to a

cure period, terminate the Collaboration Agreement in the event of the other party’s uncured material breach, in addition to other specified termination rights.

Glaucoma Program

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Our product candidate OTX-TIC is a bioresorbable hydrogel implant incorporating travoprost that is designed to be administered by a physician as an intracameral injection into the anterior chamber of the eye with an initial target duration of drug release of four to six months.

In Vitro and Preclinical results

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Phase 1 clinical development

We are conducting a prospective, multi-center open-label, dose-escalation proof-of-concept Phase 1 clinical trial of OTX-TIC in the United States that we initiated in the second quarter of 2018 for the treatment of patients with moderate to severe glaucoma or ocular hypertension.

The clinical trial is designed to evaluate the safety, biological activity, durability and tolerability of OTX-TIC compared to topical travoprost (daily eye drops) in patients with open-angle glaucoma or ocular hypertension.

The clinical trial consists of four patient cohorts:

cohort 1 is 5 subjects who are receiving a 15 µg dose, cohort 2 is 4 subjects who are receiving a 26 µg dose, cohort 3 is 5 subjects who are receiving a 15 µg dose with a fast-degrading implant, and cohort 4 is 5 subjects who are receiving a 5 µg dose with a fast-degrading implant.

We presented initial results from the first cohort, comprised of five patients, in this clinical trial at the Association of Research and Vision of Ophthalmology (ARVO) meeting in April 2019 and the American Society of Cataract and Refractive Surgery annual meeting in May 2019.

This data demonstrated that, with a single implant, subjects were able to achieve IOP lowering for up to thirteen months at a level at least as good as standard of care topical eye drop that was placed in each subject’s non-study eye.

In addition, the hydrogel carrier, as designed, biodegraded in five to seven months.

There were no clinically meaningful changes in corneal health as measured by endothelial cell evaluation and corneal pachymetry.

Several subjects reported low-grade inflammation and peripheral anterior synechiae that we believe may be addressable with modifications to the implants.

At the Glaucoma360 2021 Virtual Conference, we presented interim results, presented below, from all four patient cohorts in the Phase 1 clinical trial.

We believe that OTX-TIC shows potential as a sustained-release therapy with a long duration of action.

OTX-TIC has demonstrated a clinically meaningful mean change from baseline as measured by IOP at 8:00 am, 10:00 am and 4:00 pm comparable to topical travoprost therapy as early as two days following injection across all four cohorts.

With regard to duration, three out of five subjects (60%) in cohort 1 and four out of four subjects (100%) in cohort 2 exhibited duration of IOP-lowering effect comparable to travoprost therapy at six months.

Two out of five subjects (40%) in cohort 3 and one out of 2 subjects (50%) in cohort 4 assessed to date exhibited duration of IOP-lowering effect comparable to travoprost at six months.

The OTX-TIC implant was observed to biodegrade in between five and seven months in cohorts 1 and 2.

In cohorts 3 and 4, the fast-degrading implants biodegraded between three and five months.

Within all four cohorts, implants were not observed to move when viewed with a slit lamp biomicroscope and were visible at all examinations in all patients using gonioscopy.

Corneal health as measured by endothelial cell counts, pachymetry assessments, and slit lamp examinations indicated no clinically meaningful changes from baseline in any of the four cohorts.

IOP elevation were observed in three subjects in cohort 3 at the approximate time of the implant resorption.

Planned Phase 2 Clinical Trial

In mid-2021, we plan to initiate a Phase 2 clinical trial to evaluate formulations of OTX-TIC for the treatment of open-angle glaucoma or ocular hypertension in patients.

The Phase 2 clinical trial will be a randomized, double-masked, active-controlled study with a total of approximately 105 subjects between three arms of approximately 35 subjects each.

The control arm will receive an injection of Durysta™.

The non-study eye of each patient will receive topical prostaglandin daily.

The trial will evaluate IOP changes from baseline among other endpoints.

We filed an IND for OTX-TIC in February 2018 and have completed a prospective, multi-center, open-label, dose-escalation, proof-of-concept Phase 1 clinical trial of OTX-TIC in the United States that we initiated in the second quarter of 2018 for the treatment of subjects with moderate to severe glaucoma or ocular hypertension.

The clinical trial was designed to evaluate the safety, biological activity, durability and tolerability of OTX-TIC in subjects with controlled open-angle glaucoma or ocular hypertension.

The clinical trial consisted of four patient cohorts:

cohort 1 included five subjects who received a 15 µg dose, cohort 2 included four subjects who received a 26 µg dose, cohort 3 included five subjects who received a 15 µg dose with a fast-degrading implant, and cohort 4 included five subjects who received a 5 µg dose with a fast-degrading implant.

In February 2022, at the Glaucoma 360 virtual meeting, we presented interim results from all four subject cohorts in the Phase 1 clinical trial.

We believe, based on these results, that OTX-TIC shows potential as a sustained-release therapy with a long duration of action.

In the Phase 1 clinical trial, at least one subject in each of the four cohorts receiving OTX-TIC were observed to experience a mean change in IOP from baseline as measured at 8:00 am, 10:00 a.m.

and 4:00 p.m.

as early as two days following injection.

We believe these results are comparable to the decrease in

IOP seen with topical travoprost, the current standard of care.

IOP lowering effects lasted more than six months in subjects in cohorts 1 and 2 and three to six months in subjects in cohorts 3 and 4.

The OTX-TIC implant was observed to biodegrade in between five and seven months in subjects in cohorts 1 and 2.

In subjects in cohorts 3 and 4, the fast-degrading implants biodegraded between three and five months.

Within all four cohorts, implants were not observed to move when viewed with a slit lamp biomicroscope and were visible at all examinations in all subjects using gonioscopy.

Corneal health as measured by endothelial cell counts, pachymetry assessments, and slit lamp examinations did not indicate any clinically meaningful changes from baseline in any of the four cohorts.

IOP elevation was observed in three subjects in cohort 3 at the approximate time of the implant resorption.

Phase 2 Clinical Trial

In November 2021, we filed an IND amendment for a randomized, double-masked, active-controlled Phase 2 clinical trial in which we plan to enroll approximately 105 subjects at 15-20 sites between three arms of approximately 35 subjects each to evaluate two formulations of OTX-TIC for the treatment of open-angle glaucoma or ocular hypertension in subjects compared to DURYSTA.

We initiated the Phase 2 clinical trial in the fourth quarter of 2021 and expect to dose the first subject in the first quarter of 2022.

One arm in the Phase 2 clinical trial will receive the same formulation used in cohort 1 of the Phase 1 clinical trial, containing a 26 µg dose of drug and utilizing a standard implant, and a second arm will receive the same formulation used in cohort 4 of the Phase 1 clinical trial, containing a 5 µg dose of drug and utilizing a fast-degrading implant.

The non-study eye of each subject will receive a topical prostaglandin daily.

The goals of the study will be to assess safety, tolerability and efficacy.

Efficacy will be measured by diurnal IOP mean change from baseline (8 a.m., 10 a.m.

and 4 p.m.) at two, six and 12 weeks.

The active comparator control arm will receive one injection of DURYSTA in one eye and a topical prostaglandin daily in the non-study eye.

Regulatory Pathway

If our planned Phase 2 clinical trial is successful, we would then be required to successfully complete two well-controlled Phase 3 clinical trials conducted under an IND to obtain marketing approval from the FDA.

If we were to obtain favorable results from these two pivotal clinical trials, we expect that we would submit an NDA to the FDA for marketing approval of OTX-TIC under Section 505(b)(2) of the FDCA.

If our Phase 2 clinical trial is successful, we would then be required to successfully complete two well-controlled Phase 3 clinical trials conducted under an IND to obtain marketing approval from the FDA.

If we were to obtain favorable results from these two pivotal clinical trials, we expect that we would submit an NDA to the FDA for marketing approval of OTX-TIC under Section 505(b)(2) of the Food, Drug and Cosmetic Act, or FDCA.

See “—Government Regulation—Section 505(b)(2) NDAs.”

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We are engaged in the development of formulations of our hydrogel administered via intracanalicular inserts to address large markets for diseases and conditions of the surface of the eye.

Our initial development efforts are focused on the use of our extended-delivery hydrogel in combination with well-known and well-understood corticosteroids and cyclosporine for the treatment of dry eye disease, allergic conjunctivitis and inflammation and pain following ophthalmic surgery.

Dry Eye Disease

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OTX-CSI incorporates the FDA-approved immunomodulator cyclosporine as a preservative-free active pharmaceutical ingredient into a hydrogel, drug-eluting, intracanalicular insert.

The product candidate is designed for patients suffering from moderate to severe dry eye and to be administered by a physician as a bioresorbable

intracanalicular insert.

OTX-CSI is designed to release cyclosporine to the ocular surface for approximately three to four months to increase tear production for the chronic treatment of dry eye disease.

The product candidate is designed for subjects suffering from moderate to severe dry eye and to be administered by a physician as a bioresorbable intracanalicular insert.

OTX-CSI is designed to release cyclosporine to the ocular surface for approximately three to four months in order to increase tear production for the chronic treatment of dry eye disease.

Phase 1 clinical development

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The Phase 1 clinical trial was a U.S.-based, open-label, single-center trial that included five subjects (ten eyes) who were followed for approximately four months.

The study was designed to evaluate the safety, tolerability and durability of OTX-CSI and assess the biological activity by measuring signs and symptoms of dry eye disease over this time period.

The study was designed to evaluate the safety,

tolerability and durability of OTX-CSI and assess the biological activity by measuring signs and symptoms of dry eye disease over this time period.

On October 8, 2020, we announced topline data from our Phase 1 clinical trial evaluating OTX-CSI in the chronic treatment of dry eye disease.

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One of five subjects (20%) had a greater than 10 mm increase from baseline in Schirmer’s score at Week 12.

Subjects saw an improvement in signs of dry eye disease as measured by corneal total fluorescein staining (a mean value of 6.7 at baseline, improved to a mean value of 2.7 at Week 12, on a scale of 0 to 15).

Further, subjects saw an improvement in symptoms of dry eye disease as measured by the VAS eye dryness severity score (a mean value of 51 at baseline, improved to a mean value of 33 at Week 12, on a scale of 0 to 100) and the VAS dry eye frequency score (a mean value of 51 at baseline, improved to a mean value of 31 at Week 12, on a scale of 0 to 100).

Subjects saw an improvement in signs of dry eye disease as measured by CFS, or corneal total fluorescein staining (a mean value of 6.7 at baseline, improved to a mean value of 2.7 at Week 12, on a scale of 0 to 15).

Further, subjects saw an improvement in symptoms of dry eye disease as measured by the Visual Analog Score, or VAS, eye dryness severity score (a mean value of 51 at baseline, improved to a mean value of 33 at Week 12, on a scale of 0 to 100) and the VAS dry eye frequency score (a mean value of 51 at baseline, improved to a mean value of 31 at Week 12, on a scale of 0 to 100).

The onset of action of OTX-CSI was seen as early as two weeks for both signs and symptoms of dry eye disease and was observed to continue over the sixteen-week study period.

Phase 2 clinical development

In September 2020, we dosed the first patients in a Phase 2 clinical trial designed to assess the safety, tolerability and durability and to evaluate the efficacy of OTX-CSI in the chronic treatment of dry eye disease.

The Phase 2 clinical trial is a U.S.-based, randomized, double-masked, multi-center, vehicle-controlled trial evaluating two different formulations of OTX-CSI compared with a hydrogel vehicle insert in approximately 140 subjects who are to be followed for a period of 16 weeks.

Included patients must have been diagnosed with dry eye disease in both eyes for a period of greater than six months and have a visual analog scale, or VAS, eye dryness severity score of greater than 30.

In September 2020, we dosed the first subjects in a U.S.-based, randomized, double-masked, multi-center, vehicle-controlled Phase 2 clinical trial designed to assess the safety, tolerability and durability and to evaluate the efficacy of OTX-CSI in the chronic treatment of dry eye disease.

The Phase 2 clinical trial evaluated two different formulations of OTX-CSI compared with a hydrogel vehicle insert in approximately 140 subjects who are to be followed for a period of 16 weeks (12 week study period, with an additional 4-week safety follow-up).

Included subjects must have been diagnosed with dry eye disease in both eyes for a period of greater than six months and have a VAS, eye dryness severity score of greater than 30.

The primary endpoints are incidence of treatment-emergent adverse events and the absolute value and change from baseline at week 12 in tear production as measured by the Schirmer’s test.

Secondary endpoints include signs of dry eye disease as measured by corneal fluorescein staining and symptoms of dry eye disease as measured by the VAS eye dryness severity score and the VAS dry eye frequency score.

Secondary endpoints include signs of dry eye disease as measured by CFS and symptoms of dry eye disease as measured by the VAS eye dryness severity score and the VAS dry eye frequency score.

We announced topline results from our Phase 2 clinical trial in October 2021.

In the Phase 2 clinical trial, OTX-CSI was administered to 147 subjects with dry eye disease at 15 sites in the United States.

The four groups evaluated in this study were:

OTX-CSI for a shorter duration (two to three months formulation-F1, n=42), OTX-CSI for a longer duration (three to four months formulation-F2a, n=40), vehicle insert for a longer duration (three to four months formulation-F2b, n=43) and vehicle insert for a very short duration (one week formulation-F3, n=22).

The study did not show separation between subjects receiving OTX-CSI (both formulations) and subjects receiving the vehicle (both formulations) for the primary endpoint of increased tear production at 12 weeks as measured by the Schirmer’s Test.

Mean change from baseline (improvement) in Schirmer’s Test scores for the four groups were as follows:

1.98 mm, OTX-CSI F2a:

1.91 mm, Vehicle F2b:

2.24 mm and Vehicle F3:

The study did show an improvement compared with baseline in signs of dry eye disease as measured by total CFS and symptoms of dry eye disease as measured by the VAS eye dryness in subjects treated with the OTX-CSI insert (both formulations) starting as early as two weeks after insertion and continuing over the 12 weeks study period.

These improvements were not statistically significant compared with vehicle insert (both formulations) for either CFS or VAS eye dryness (severity and frequency) at 12 weeks.

Overall, the OTX-CSI insert (both formulations) was generally observed to have a favorable safety profile and be well tolerated.

There were no ocular serious adverse events.

No subjects dropped out of the trial due to an adverse event.

The most common ocular adverse event was ocular pruritis, or itchy eyes, which was seen in less than 16% of subjects.

The adverse events of ocular discomfort or pain were seen in less than 3% of subjects.

The most common non-ocular event was COVID-19 and was seen in 3% of subjects.

We continue to evaluate the data from the Phase 2 clinical trial for additional information that may inform the future development of this program.

This data includes, among other things, retention rates of the OTX-CSI inserts, or how long the inserts were observed to remain in the canaliculus, as well as the duration of the vehicle hydrogel inserts.

Regulatory Pathway

We anticipate receiving topline data from our ongoing Phase 2 clinical trial in the fourth quarter of 2021.

If we determined to advance the program, we believe we would need to complete another Phase 2 clinical trial.

If this Phase 2 clinical trial were successful, we would then be required to successfully complete two well-controlled Phase 3 clinical trials conducted under an IND to obtain marketing approval from the FDA.

If our development efforts are successful, we expect that we would submit an NDA under Section 505(b)(2) of the FDCA.

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Topical anti-inflammatory drugs are used as one of several therapies to treat dry eye disease and are administered by eye drops.

As the understanding of dry eye disease, specifically the inflammatory components of dry eye disease, has evolved, the use of corticosteroids has become a common to offer short-term relief of signs and symptoms of the disease.

As the understanding of dry eye disease, specifically the inflammatory components of dry eye disease, has evolved, the use of corticosteroids has become common to offer short-term relief of signs and symptoms of the disease.

Physicians typically prescribe a topical corticosteroid for a period of two to four weeks, tapered over the course of delivery as the inflammation and symptoms subside.

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Phase 2 clinical trial

We filed an IND in December 2020 for OTX-DED.

In February 2021, we initiated a U.S.-based, randomized, double-masked, vehicle-controlled, multi-center Phase 2 clinical trial evaluating two different-strength formulations of OTX-DED (0.2 mg and 0.3 mg of dexamethasone) versus hydrogel implant in a total of approximately 150 subjects with dry eye disease, approximately 50 patients per arm.

The subjects will be followed for approximately two months after randomization.

We filed an IND in November 2020 for OTX-DED.

The subjects were followed for approximately two months after randomization.

This trial is designed to assess the safety and efficacy of these two formulations of OTX-DED for the short-term treatment of signs and symptoms of dry eye disease.

Included patients will be required to have diagnosed dry eye disease in both eyes for at least six months, a VAS eye dryness severity score of at least 30 and bulbar conjunctival hyperemia grade of at least 2 (Cornea Contact Lens Research Unit scale).

Included subjects were required to have diagnosed dry eye disease in both eyes for at least six months, a VAS eye dryness severity score of at least 30 and bulbar conjunctival hyperemia grade of at least 2 on the Cornea Contact Lens Research Unit (CCLRU) Grading scale.

The primary endpoint is mean change in bulbar conjunctival hyperemia from baseline measured at 15 days post treatment by central reading center photographic assessment.

Secondary endpoints include eye dryness symptoms using VAS, total corneal fluorescein staining using the National Eye Institute scale and adverse events, both ocular and non-ocular.

Secondary endpoints include eye dryness symptoms using VAS, total CFS using the National Eye Institute scale and adverse events, both ocular and non-ocular.

We announced the topline Phase 2 clinical results in December 2021.

The clinical trial achieved its pre-specified primary endpoint.

Although the clinical trial was not powered to show statistical significance, the topline results demonstrated a statistically significant change of bulbar conjunctival hyperemia from baseline to day 15 compared to vehicle hydrogel using a central reading photographic assessment in the modified ITT population.

Change from baseline using the CCLRU Grading scale (0-4) was -0.51 for the OTX-DED 0.2 mg group (n=55), -0.43 for the OTX-DED 0.3 mg group (n=56), and -0.21 for the vehicle hydrogel insert group (n=55).

These differences were statistically significant compared with the vehicle hydrogel for both the OTX-DED 0.2 mg group (p=.004) and the OTX-DED 0.3 mg group (p=.028).

Sensitivity analysis using different methods of imputation including last observation carry forward (LOCF), Markov Chain Monte Carlo (MCMC), and fully conditioned specifications (FCS) were consistent with the primary analysis.

Improvements from baseline were noted in the VAS dry eye symptoms for both OTX-DED 0.2 mg and OTX-DED 0.3 mg groups, but there was little separation between OTX-DED and the vehicle hydrogel insert.

Other secondary endpoints are being evaluated.

Both formulations of OTX-DED were generally observed to have a favorable safety profile and be well tolerated.

There were no ocular serious adverse events.

The most common ocular adverse events for subjects treated with OTX-DED were epiphora (lacrimation increase) (8.1%) and elevated IOP (3.6%).

All other ocular adverse events occurred in less than 1% of subjects.

The most common non-ocular adverse event for subjects treated with OTX-DED was arthralgia

(joint pain) which was seen in 1.8% of subjects.

All other non-ocular adverse events occurred in less than 1% of subjects.

We continue to evaluate the data from the Phase 2 clinical trial for additional information that may inform the future development of this program.

This data includes, among other things, the duration of the vehicle hydrogel inserts.

Regulatory Pathway

We anticipate receiving topline data from our ongoing Phase 2 clinical trial in the first half of 2022.

If we determined to advance the program, we believe we would need to complete another Phase 2 clinical trial.

If our development efforts are successful, we expect that we would submit an NDA under Section 505(b)(2) of the FDCA.

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Allergic Conjunctivitis

DEXTENZA (dexamethasone ophthalmic insert) for the Treatment of Ocular Itching Associated with Allergic Conjunctivitis

In October 2021, the FDA approved our sNDA, for DEXTENZA to include the treatment of ocular itching associated with allergic conjunctivitis as an additional indication.

With the approval, DEXTENZA became the first, FDA-approved, physician-administered intracanalicular insert capable of delivering a preservative-free drug for the treatment of ocular itching associated with allergic conjunctivitis with a single administration for up to 30 days.

We are launching DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis in the first quarter of 2022 utilizing a small, dedicated and highly focused sales force of four KAMs, or key account managers and two FRMs, or field reimbursement managers that will call exclusively on the offices of ophthalmologists and optometrists.

We believe that many of the specialists who treat patients for post-surgical inflammation and pain also treat patients suffering from allergic conjunctivitis.

We believe that allergic conjunctivitis represents a discrete potential market opportunity for preservative-free DEXTENZA because it is a physician-administered, hands-free, therapy administered in the office setting and designed to release the FDA-approved corticosteroid dexamethasone to the ocular surface for up to 30 days.

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Based on our clinical trial results to date, we believe that using DEXTENZA for allergic conjunctivitis could create a low, tapered, consistent dose of dexamethasone, potentially minimizing or eliminating side effects associated with the eye drop formulation, while retaining the drug’s anti-inflammatory effects.

Completed Phase 2 Clinical Trial

In November 2014, we completed a prospective, randomized, parallel-arm, vehicle-controlled, multicenter, double-masked Phase 2 clinical trial evaluating the safety and efficacy of DEXTENZA for the treatment of allergic conjunctivitis.

We conducted this trial using a modified version of a controlled exposure model commonly used to assess anti-allergy medications, Ora, Inc.’s modified Conjunctival Allergen Challenge (Ora-Cac ® ), which we refer to as the CAC Model.

The modified CAC achieves a very high transient dose exposure by placing allergen directly into the space between the eyelid and the surface of the eye of the patient.

We initially exposed patients to specified allergens to determine which allergens resulted in an allergic response for the patients.

If patient was responsive to a particular allergen, we continued to expose the patient to that same allergen prior to each evaluation.

We enrolled 68 patients at two sites in the United States.

We randomized patients in a 1:1 ratio to receive either DEXTENZA or a placebo vehicle control intracanalicular insert without active drug.

We evaluated patients using three

allergen challenges in series for each of the two efficacy measures at 14, 28 and 42 days following placement of the intracanalicular insert.

The primary efficacy measures for this trial were ocular itching graded by the patient and conjunctival redness graded by the trial investigator, in each case based on a five point scale from zero to four.

The primary efficacy measures were differences between treatment groups of at least 0.5 units on the five point scale on day 14 for all three time points measured in a day for both ocular itching and conjunctival redness and differences between treatment groups of at least 1.0 unit for the majority of the three time points measured on 14 days post insertion for both ocular itching and conjunctival redness.

The secondary endpoints for this trial were similar to the primary efficacy endpoints, except that each variable was assessed at 28 days and 42 days following placement of the intracanalicular insert.

We enrolled patients in this trial who were at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to a perennial allergen and a seasonal allergen.

We excluded patients from this trial if, among other reasons, they had an active ocular infection or itching or conjunctival redness at screening.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and IOP, along with any adverse events.

In this trial, there was a statistically significant mean difference (p<0.05) between the DEXTENZA treatment group and the vehicle group for both ocular itching and conjunctival redness at all three time points measured on 14, 28, and 42 days following placement of the intracanalicular insert.

DEXTENZA met one of the two primary efficacy endpoints.

The DEXTENZA treatment group achieved a mean difference compared to the vehicle control group of more than 0.5 units on a five point scale at 14 days post insertion for all three time points measured in a day for both ocular itching and conjunctival redness.

The DEXTENZA group did not achieve a mean difference compared to the vehicle control group of 1.0 unit for the majority of the three time points measured on 14 days post insertion for either ocular itching or conjunctival redness.

However, in a pre-specified analysis group of a second site in the clinical trial, in which DEXTENZA intracanalicular inserts were placed 48 to 72 hours following exposure to the allergen, rather than on the same day, we observed a mean difference in ocular itching between the DEXTENZA group and the vehicle control group of approximately 1.0 unit for the majority of three time points measured on 14 days.

The results of this trial for each of the three time points on day 14 following the insertion of the intracanalicular insert for the DEXTENZA group and the vehicle control group are shown in the table below:

Ocular Itching

Conjunctival Redness

In this trial, there was one serious adverse event in the treatment arm, which was depression.

This event was not suspected to be related to treatment.

The serious adverse event was not ocular in nature.

In addition, there were a variety of adverse events in both the DEXTENZA group and the vehicle control group, with nine ocular adverse events and two non-ocular related adverse events in the DEXTENZA group and eight ocular adverse events and two non-ocular adverse events in the vehicle control group.

In the DEXTENZA group, the only adverse events that occurred more than once were reduction in visual acuity and increased IOP, both of which occurred twice.

The most common adverse events in the vehicle control group were erythema of the eyelid, discharge from the eye and an increase in lacrimation, all of which occurred twice.

All adverse events were transient in nature and completely resolved by the end of the trial.

Phase 3 Clinical Program

We met with the FDA in December 2014 to review the Phase 2 clinical trial results of DEXTENZA for the treatment of allergic conjunctivitis and to discuss our planned Phase 3 clinical development program.

Based on these discussions, we have completed two Phase 3 clinical trials and initiated a third Phase 3 clinical trial in August 2019.

The approval of DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis was based on three randomized, multicenter, double-masked, parallel group, vehicle-controlled studies in subjects with a positive history of ocular allergies and positive skin test reaction to perennial and seasonal allergens (n=255).

Our first Phase 3 clinical trial assessed both ocular itching and conjunctival redness associated with allergic conjunctivitis.

Our second and third Phase 3 clinical trials have focused on the ocular itching indication.

Our second and third Phase 3 clinical trials focused on the ocular itching indication only.

In all three trials, DEXTENZA demonstrated lower mean ocular itching scores compared with the vehicle group at all time points throughout the study duration of up to 30 days.

In two of the three studies, a higher proportion of subjects had statistically significant reductions in ocular itching on Day 8, at three minutes, five minutes and seven minutes post-

challenge in the DEXTENZA group compared to the vehicle group.

Data for the primary endpoint, ocular itching at Day 8, is shown below for all three studies (scale 0-4):

Reduction in Ocular Itching

Clinical Trial 1

Clinical Trial 2

Clinical Trial 3

Least Square Means

-0.7 (-1.2, -0.3)

-0.2 (-0.7, 0.3)

-0.9 (-1.2, -0.4)

-0.7 (-1.2, -0.3)

-0.2 (-0.8, 0.3)

-1.0 (-1.4, -0.6)

-0.8 (-1.2, -0.4)

-0.3 (-0.8, 0.3)

-1.0 (-1.4, -0.6)

DEXTENZA was observed to have a favorable safety profile and be generally well-tolerated in the allergic conjunctivitis as well as the ocular inflammation and pain clinical populations.

The most common ocular adverse events seen in the pooled analysis of the allergic conjunctivitis studies were:

increased intraocular pressure (3%), increased lacrimation (1%), eye discharge (1%) and reduced visual acuity (1%).

The most common non-ocular adverse reaction that occurred in subjects treated with DEXTENZA for allergic conjunctivitis was headache (1%).

First Phase 3 Clinical Trial

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This first Phase 3 clinical trial was a prospective, randomized, parallel-arm, vehicle-controlled, multicenter, double-masked trial.

A total of 73 patients were enrolled in this trial and were randomized in a 1:1 ratio to receive either DEXTENZA or a placebo vehicle control intracanalicular insert without active drug.

A total of 73 subjects were enrolled in this trial and were randomized in a 1:1 ratio to receive either DEXTENZA or a placebo vehicle control intracanalicular insert without active drug.

This trial was conducted using the CAC Model.

We evaluated patients using three allergen challenges in series for each of two efficacy measures at days 7, 14 and 28 following placement of intracanalicular insert as described below.

We evaluated subjects using three allergen challenges in series for each of two efficacy measures at days 7, 14 and 28 following placement of intracanalicular insert as described below.

In this Phase 3 clinical trial, we placed the intracanalicular inserts 48 to 72 hours after exposure to the allergen.

In our completed Phase 2 clinical trial, we obtained better efficacy results with this design protocol as noted in the description of the Phase 2 efficacy results above.

The primary efficacy measures for this trial were ocular itching graded by the subject and conjunctival redness graded by the trial investigator, in each case based on a five point scale from zero to four.

The primary efficacy endpoints were the differences between the treatment group and the vehicle group of at least 0.5 units on the five point scale measured on 7 days post-insertion of the intracanalicular insert for all three time points measured for both ocular itching and conjunctival redness and differences of at least 1.0 unit for the majority of the three time points measured on 7 days post-insertion of the intracanalicular insert for both ocular itching and conjunctival redness.

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As described below, ocular itching was the only primary efficacy endpoint in the second Phase 3 trial of DEXTENZA for the treatment of allergic conjunctivitis, with conjunctival redness being moved to a secondary efficacy endpoint.

We enrolled patients in this trial who were at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to a perennial allergen and a seasonal allergen.

We excluded patients from this trial if, among other reasons, they had an active ocular infection or itching or conjunctival redness at screening.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and IOP, along with any adverse events.

We enrolled subjects in this trial who were at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to a perennial allergen and a seasonal allergen.

We excluded subjects from this trial if, among other reasons, they had an active ocular infection or itching or conjunctival redness at screening.

We evaluated safety in all subjects at each study visit with an assessment of general eye conditions, including visual acuity and IOP, along with any adverse events.

In this trial, there was a statistically significant mean difference (p<0.0001) between the DEXTENZA treatment group and the placebo vehicle group for ocular itching at all three time points measured on 7 days post-placement of the intracanalicular insert.

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The DEXTENZA treatment group achieved a mean difference compared to the vehicle group of greater than 0.5 units on a five point scale on 7 days post-insertion at each time point and greater than 1.0 unit at a majority of the time points on 7 days post-insertion for ocular itching.

There was a statistically significant mean difference (p=0.01 or less) between the DEXTENZA treatment group and the placebo vehicle group for conjunctival redness at all three time points measured on 7 days post-placement of the intracanalicular insert.

There was a statistically significant mean difference (p=0.01 or less) between the

DEXTENZA treatment group and the placebo vehicle group for conjunctival redness at all three time points measured on 7 days post-placement of the intracanalicular insert.

However, the DEXTENZA group did not achieve the pre-specified primary efficacy endpoints on 7 days post-insertion with respect to conjunctival redness.

The results of this trial for each of the three time points on day 7 following placement of the intracanalicular insert for the DEXTENZA group and the vehicle control group are shown in the table below:

Ocular Itching

Conjunctival Redness

There were no serious adverse events reported in this trial.

There were a variety of adverse events in both the DEXTENZA group and the vehicle control group, with three patients in the DEXTENZA treatment group with a total of three ocular adverse events and one non-ocular adverse event and four patients in the vehicle control group with a total of six ocular adverse events and one non-ocular adverse events.

The most common ocular adverse event was increased lacrimation, which was experienced by one patient in the DEXTENZA group and two patients in the vehicle control group.

There were a variety of adverse events in both the DEXTENZA group and the vehicle control group, with three subjects in the DEXTENZA treatment group with a total of three ocular adverse events and one non-ocular adverse event and four subjects in the vehicle control group with a total of six ocular adverse events and one non-ocular adverse events.

The most common ocular adverse event was increased lacrimation, which was experienced by one subject in the DEXTENZA group and two subjects in the vehicle control group.

Other treatment-related ocular adverse events included increased IOP in the DEXTENZA group, and blepharospasm in the vehicle control group.

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This second Phase 3 clinical trial was a prospective, randomized, parallel-arm, vehicle-controlled, multicenter, double-masked trial.

A total of 72 patients were enrolled in this trial and randomized in a 1:1 ratio to receive either DEXTENZA or a placebo vehicle control intracanalicular insert without active drug.

A total of 72 subjects were enrolled in this trial and randomized in a 1:1 ratio to receive either DEXTENZA or a placebo vehicle control intracanalicular insert without active drug.

This trial was conducted using the CAC Model.

Patients were evaluated using three allergen challenges in series for each of two efficacy measures at days 7, 14 and 28 following insertion of the intracanalicular insert.

Subjects were evaluated using three allergen challenges in series for each of two efficacy measures at days 7, 14 and 28 following insertion of the intracanalicular insert.

In this Phase 3 clinical trial, we placed the intracanalicular inserts 48 to 72 hours after exposure to the allergen.

The single primary efficacy measure for this trial was ocular itching graded by the patient based on a five point scale from zero to four.

The single primary efficacy measure for this trial was ocular itching graded by the subject based on a five point scale from zero to four.

The primary efficacy endpoints were the differences between the treatment group and the vehicle group of at least 0.5 units on the five point scale 7 days post-insertion of the intracanalicular insert for all three time points measured for ocular itching and differences of at least 1.0 unit for the majority of the three time points measured 7 days post-insertion of the intracanalicular insert for ocular itching.

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The secondary endpoints for conjunctival redness were the differences between the treatment group and the vehicle group of at least 0.5 units on the five point scale 7 days post-insertion of the intracanalicular insert for all three time points measured and differences of at least 1.0 unit for the majority of the three time points measured 7 days post-insertion of the intracanalicular insert.

We enrolled patients in this trial who are at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to a perennial allergen and a seasonal allergen.

We excluded patients from this trial if, among other reasons, they had an active ocular infection or itching or conjunctival redness at screening.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and IOP, along with any adverse events.

We enrolled subjects in this trial who are at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to a perennial allergen and a seasonal allergen.

We excluded subjects from this trial if, among other reasons, they had an active ocular infection or itching or conjunctival redness at screening.

We evaluated safety in all subjects at each study visit with an assessment of general eye conditions, including visual acuity and IOP, along with any adverse events.

In this trial, DEXTENZA did not meet the primary efficacy endpoint of ocular itching at the three time points measured on day 7 post-placement of the intracanalicular insert.

The mean difference in ocular itching in the

DEXTENZA treatment group compared to the placebo group measured 7 days following insertion of the inserts, at 3, 5, and 7 minutes was -0.18, -0.29, and -0.29 units, respectively, on a five point scale and did not achieve statistical significance.

The mean difference in ocular itching in the DEXTENZA treatment group compared to the placebo group measured 7 days following insertion of the inserts, at 3, 5, and 7 minutes was -0.18, -0.29, and -0.29 units, respectively, on a five point scale and did not achieve statistical significance.

In addition, the trial did not achieve the requirement of at least a 0.5 unit difference at all three time points 7 days following insertion of the inserts and at least a 1.0 unit difference at a majority of the three time points between the treatment group and the placebo group 7 days following insertion of the inserts.

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The differences in the mean scores in conjunctival redness between the DEXTENZA treatment group and the placebo group 7 days following insertion of the inserts at 7, 15 and 20 minutes were -0.35, -0.39 and -0.42, respectively.

Ocular Itching

There were no serious adverse events reported in this trial.

There were a variety of adverse events in both the DEXTENZA group and the vehicle control group, with six patients in the DEXTENZA treatment group with a total of six ocular and one non-ocular adverse events and 11 patients in the vehicle control group with a total of nine ocular and eight non-ocular adverse events.

The lower rate of ocular adverse events in the DEXTENZA group could potentially be due to the presence of an anti-inflammatory active pharmaceutical ingredient.

Ocular adverse events reported more than one patient in either treatment group included increased IOP, which was experienced by two patients in the DEXTENZA group, as well as dacryostenosis acquired and dacryocanaliculitis, each experienced by two patients in the vehicle control group.

There were a variety of adverse events in both the DEXTENZA group and the vehicle control group, with six subjects in the DEXTENZA treatment group with a total of six ocular and one non-ocular adverse events and 11 subjects in the vehicle control group with a total of nine ocular and eight non-ocular adverse events.

The lower rate of ocular adverse events in the DEXTENZA group could potentially

be due to the presence of an anti-inflammatory active pharmaceutical ingredient.

Ocular adverse events reported more than one subject in either treatment group included increased IOP, which was experienced by two subjects in the DEXTENZA group, as well as dacryostenosis acquired and dacryocanaliculitis, each experienced by two subjects in the vehicle control group.

Both cases of IOP increased were considered treatment related, as were both cases of dacryocanaliculitis and a single case of dacryostenosis.

All other ocular adverse events were reported by single patients in either the DEXTENZA or vehicle control group, with most in the PV group considered treatment related.

All other ocular adverse events were reported by single subjects in either the DEXTENZA or vehicle control group, with most in the PV group considered treatment related.

Third Phase 3 Clinical Trial

In the third quarter of 2019, we began dosing patients in a 96-subject, pivotal Phase 3 clinical trial evaluating DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis.

In the third quarter of 2019, we began dosing subjects in a 96-subject, pivotal Phase 3 clinical trial evaluating DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis and we reported topline efficacy results in April 2020.

This Phase 3 clinical trial was a U.S.-based, multi-center, 1:1 randomized, double-masked, placebo-controlled trial designed to evaluate the safety and efficacy of DEXTENZA versus a punctum plug using the CAC Model.

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An assessment of the secondary endpoint of ocular itching at all other visits (day 7, day 8 (morning), day 8 (afternoon at 10 minutes following exposure), day 14, and day 15 (morning and afternoon)) also showed that DEXTENZA-treated subjects reported lower itching scores than vehicle-treated subjects at 3 minutes, 5 minutes, 7 minutes and 10 minutes post-exposure to the allergen challenge (p-value <0.05 for all 21 time points except day 7 at 3 minutes).

Primary Efficacy Endpoint Ocular Mean Itching Scores at Day 8 (PM)

*Statistically significant;

Least Squared Means;

Bars represent Standard Error

In the trial, DEXTENZA was generally observed to have a favorable safety profile and be well-tolerated.

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There were 8 ocular treatment-emergent adverse events in this trial (2 in the DEXTENZA group and 6 in the vehicle group).

Overview of clinical trial data

Data received from the third Phase 3 clinical trial evaluating DEXTENZA for ocular itching associated with allergic conjunctivitis was generally consistent with our observations in our prior Phase 2 and Phase 3a clinical trials using a similar repeat CAC Model as reflected in the two figures below.

For all analyses we have conducted, the subject is the unit of analysis.

For the Phase 2 clinical trial, the data shown is for the prespecified primary endpoint of ocular itching at day 15 using the Intent-to-Treat (ITT) population and utilizing the last observation carried forward (LOCF) methodology to impute missing data.

For the Phase 3 trials, the data shown is for the prespecified primary endpoint of ocular itching at day 8 using the ITT population and imputing missing data using the Markov Chain Monte Carlo (MCMC) multiple imputation method.

The two figures below reflect the Phase 3 data using the MCMC method with different bases for imputation.

In the first figure, the basis for imputation for the MCMC method is at the individual eye level.

In the second figure, the basis for imputation for the MCMC method is at the subject level (average of the two eyes).

Both methods may be appropriate and, in this case, yield similar conclusions.

In certain data we have previously disclosed, we have presented analyses using the MCMC method with the individual eye as the basis for imputation.

However, the statistical analysis plan for each of the three Phase 3 trials specifies that the basis for imputation for the MCMC method should be the subject level.

Multiple other methods of imputation were also performed in some of the Phase 3 studies—including LOCF, baseline observation carried forward (BOCF), worse case observation (WCO), and observation only with no imputation—with similar clinical conclusions.

Primary Efficacy Endpoint – Eye Level Imputation

Mean Ocular Itching Scores Across All Studies

* Statistically Significant;

ITT + LOCF (Phase 2) & ITT + MCMC (Phase 3)

Primary Efficacy Endpoint – Subject Level Imputation

Mean Ocular Itching Scores Across All Studies

* Statistically Significant;

ITT + LOCF (Phase 2) & ITT + MCMC (Phase 3)

Regulatory Pathway

In the fourth quarter of 2020, w e submitted an sNDA for DEXTENZA under Section 505(b)(2) of the FDCA (See “—Government Regulation—Section 505(b)(2) NDAs” for additional information) to include the treatment of ocular itching associated with allergic conjunctivitis as an additional approved indication.

The FDA has accepted our sNDA for filing and has established a target action date under PDUFA of October 18, 2021.

We believe that the totality of the efficacy and safety data across the Phase 2 trial and the three Phase 3 trials (n = 323 subjects), as well as the safety data associated with the prior approval of DEXTENZA for the treatment of inflammation and pain following ophthalmic surgery, represent a strong data package in support of the sNDA.

If our sNDA is approved, we expect to launch DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis in the first half of 2022.

Post-Surgical Ocular Inflammation and Pain

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Following FDA approval, we commercially launched DEXTENZA for the treatment of post-surgical inflammation and pain in July 2019.

DEXTENZA is the first FDA-approved intracanalicular insert delivering dexamethasone to treat post-surgical ocular inflammation and pain for up to 30 days with a single administration.

We selected dexamethasone as the active pharmaceutical ingredient for DEXTENZA because it:

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Embedded within our DEXTENZA intracanalicular insert are dexamethasone drug particles that gradually erode and release the drug in a programmed fashion until the drug is depleted.

As the dexamethasone drug particles erode and the hydrogel degrades by hydrolysis, the intracanalicular insert softens, liquefies and is cleared through the nasolacrimal duct.

As the dexamethasone drug particles erode and

the hydrogel degrades by hydrolysis, the intracanalicular insert softens, liquefies and is cleared through the nasolacrimal duct.

We provide the DEXTENZA drug product in a preservative-free formulation in a sterile, single use package.

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In the second Phase 3 clinical trial, DEXTENZA met the primary efficacy endpoint for absence of pain at day 8 with statistical significance but did not meet the primary efficacy endpoint for absence of inflammatory cells at day 14.

We met with the FDA in April 2015 to discuss the path forward for seeking marketing approval of DEXTENZA for the treatment of post-surgical ocular inflammation and pain.

In this pre-NDA clinical meeting, the FDA indicated that the existing data from our Phase 2 and two Phase 3 clinical trials are appropriate to support an NDA submission for DEXTENZA for a post-surgical ocular pain indication.

The FDA further indicated that we would need additional data from a third Phase 3 clinical trial for the inflammation endpoint to support the potential labeling expansion of DEXTENZA’s indications for use.

We initiated a third Phase 3 clinical trial for DEXTENZA for the treatment of post-surgical ocular inflammation and pain in October 2015.

In September 2015, we submitted to the FDA an NDA for DEXTENZA for the treatment of post-surgical ocular pain.

In July 2016, we received a complete response letter, or CRL, from the FDA regarding our NDA for DEXTENZA.

resubmitted our NDA for DEXTENZA for the treatment of post-surgical ocular pain in June 2018.

In November 2018, we received approval for the pain indication.

We resubmitted our NDA for DEXTENZA for the treatment of post-surgical ocular pain in June 2018 and received approval for the pain indication in November 2018.

We initiated a third Phase 3 clinical trial for DEXTENZA for the treatment of post-surgical ocular inflammation and pain in October 2015.

In the third Phase 3 clinical trial, DEXTENZA met both primary efficacy endpoints, absence of pain at day 8 and absence of inflammatory cells at day 14.

In January 2019, we submitted an sNDA for the treatment of post-surgical inflammation based, in part, on the results from the third Phase 3 clinical trial.

In June 2019, we received approval for the inflammation indication.

Completed Phase 3 Clinical Trials

In 2014, we initiated a pivotal clinical trial program that consisted of two prospective, randomized, parallel-arm, vehicle-controlled, multicenter, double-masked Phase 3 clinical trials evaluating the safety and efficacy of DEXTENZA for the treatment of ocular inflammation and pain following cataract surgery.

We initiated the first of these Phase 3 clinical trials in February 2014 and the second trial in April 2014.

Patient enrollment was completed in September 2014, and the topline efficacy data from these clinical trials was reported in March and April 2015.

We initiated a third Phase 3 clinical trial in the October 2015.

Patient enrollment in the third Phase 3 clinical trial was completed in May 2016 and the topline efficacy data was reported in November 2016.

We enrolled 247 patients at 16 sites in the first Phase 3 clinical trial, 241 patients at 16 sites in the second Phase 3 clinical trial and 438 patients at 21 sites in the third Phase 3 clinical trial in the United States pursuant to our effective IND.

We randomized patients in a 2:1 ratio in the first two Phase 3 clinical trials and in a 1:1 ratio in the third Phase 3 clinical trial to receive either DEXTENZA or a placebo vehicle control intracanalicular insert without active drug.

We evaluated patients at days 2, 4, 8, 14, 30 and 60 following surgery in the first two Phase 3 trials and at days 2, 4, 8, 14, and 30 in the third Phase 3 clinical trial.

The two primary efficacy measures in these trials were absence of inflammatory cells in the anterior chamber of the study eye when measured with a slit lamp biomicroscope and absence of pain in the study eye.

To meet the efficacy end point for absence of inflammatory cells, there needed to be a complete absence of inflammatory cells.

In these trials, absence of pain was based on a patient reported score of zero on a scale from zero to ten of ocular pain assessment.

The first primary efficacy endpoint for these trials was the difference in the proportion of patients in each treatment group with absence of inflammatory cells in the anterior chamber of the study eye at day 14 following surgery.

Pivotal clinical trials for other ophthalmic steroid drugs approved by the FDA for marketing in the United States also have evaluated this endpoint at day 14.

The second primary efficacy endpoint for these trials was the difference in the proportion of patients in each treatment group with absence of pain in the study eye at day 8 following surgery.

For clarification of the endpoints, the day of surgery and insertion of DEXTENZA or the placebo is considered to be day 1.

We evaluated as secondary efficacy measures the level of flare, an indicator of inflammation in the anterior chamber of the study eye at each evaluation date until day 30 and absence of inflammatory cells in the anterior chamber of the study eye and absence of pain in the study eye at each evaluation date other than the day used for the primary efficacy measure until day 30.

The secondary analyses on primary endpoints were intended to be exploratory assessments that can be used to support the results from the primary endpoints.

We enrolled patients in these two trials who were at least 18 years of age undergoing unilateral clear corneal cataract surgery.

We excluded patients from these trials if, among other reasons, they had intraocular inflammation or ocular pain in the study eye at screening or had glaucoma or ocular hypertension.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and IOP, along with any adverse events.

In the first Phase 3 clinical trial, DEXTENZA met the primary efficacy endpoint with statistical significance for the absence of cells in the anterior chamber compared to the vehicle control at day 14.

33.1% of DEXTENZA treated patients showed an absence of inflammatory cells in the anterior chamber of the study eye on day 14 following drug product insertion, compared to 14.5% of those receiving placebo vehicle control intracanalicular inserts (p=0.0018).

DEXTENZA also met the primary efficacy endpoint with statistical significance for absence of pain compared to the vehicle control at day 8.

80.4% of patients receiving DEXTENZA reported absence of pain in the study eye on day 8 following insertion of the drug product, compared to 43.4% of those receiving placebo vehicle control intracanalicular inserts (p< 0.0001).

In the second Phase 3 clinical trial, 77.5% of patients receiving DEXTENZA reported an absence of pain in the study eye on day 8 following insertion of the drug product, compared to 58.8% of those receiving placebo vehicle control intracanalicular inserts, a difference which was statistically significant (p=0.0025).

However, 39.4% of DEXTENZA

treated patients showed an absence of inflammatory cells in the anterior chamber of the study eye on day 14 following drug product insertion, compared to 31.3% of those receiving placebo vehicle control intracanalicular inserts, a difference which was not statistically significant (p=0.2182).

In the third Phase 3 clinical trial, DEXTENZA met the primary efficacy endpoint with statistical significance for the absence of cells in the anterior chamber compared to the vehicle control at day 14.

52.1% of DEXTENZA treated patients showed an absence of inflammatory cells in the anterior chamber of the study eye on day 14 following drug product insertion compared to 31.2% of those receiving placebo vehicle control intracanalicular inserts (p< 0.0001).

DEXTENZA also met the primary efficacy endpoint with statistical significance for absence of pain compared to the vehicle control at day 8.

79.3% of patients receiving DEXTENZA reported absence of pain in the study eye on day 8 following insertion of the drug product, compared to 61.3% of those receiving placebo vehicle control intracanalicular inserts (p< 0.0001).

Secondary analyses on primary endpoints for the three Phase 3 clinical trials were also completed.

In the first Phase 3 clinical trial, statistically significant differences were seen for absence of pain at all time points (days 2, 4, 8, 14, 30 and 60) in the DEXTENZA treatment group compared to the vehicle control group.

Statistically significant differences were seen for the absence of inflammatory cells at day 30 in the DEXTENZA treatment group compared to the vehicle control group, and there were no statistically significant differences seen at the other time points.

Statistically significant differences between the DEXTENZA treatment group and the vehicle control group were seen for flare at days 8, 14 and 30.

In the second Phase 3 clinical trial, statistically significant differences were seen for absence of pain at days 2, 4, 14 and 30 in the DEXTENZA treatment group compared to the vehicle control group.

A similar proportion of patients in the DEXTENZA treatment group and the vehicle control group were observed to have an absence of inflammatory cells at days 2, 4, 8, and 30.

A statistically significant difference between treatment groups was not seen for the absence of inflammatory cells until the day 60 visit, at which time a greater proportion of patients in the DEXTENZA treatment group compared to the vehicle control group were observed to have an absence of inflammatory cells at day 60 (p=0.0012).

Statistically significant differences between the DEXTENZA treatment group and the vehicle control group were seen for flare at days 14, 30 and 60.

In the third Phase 3 clinical trial, statistically significant differences were seen for absence of pain at all time points (days 2,4, 14, and 30) in the DEXTENZA treatment group compared to the vehicle control group.

Statistically significant differences were seen for the absence of inflammatory cells at days 4, 8, and 30 but not seen at day 2.

Statistically significant differences between the DEXTENZA treatment group and the vehicle control group were seen for flare at all measured time points (days 2, 4, 8, 14, and 30).

There were no ocular or treatment-related serious adverse events in the DEXTENZA treatment group in either of the first two completed Phase 3 clinical trials.

There was one ocular serious adverse event in the vehicle control group in the first two completed Phase 3 clinical trials:

hypopyon, or inflammatory cells in the anterior chamber.

There were two patients with three serious adverse events in the DEXTENZA treatment group in the first Phase 3 clinical trial (1.2% incidence), compared with two patients with four serious adverse events in the vehicle control group (2.4% incidence).

There were two serious adverse events in the DEXTENZA treatment group in the second Phase 3 clinical trial (1.3% incidence), compared with three serious adverse events in the vehicle control group (3.8% incidence).

There were three serious adverse events in the DEXTENZA treatment group in the third Phase 3 clinical trial (1.4% incidence), compared with two serious adverse events in the vehicle control group (0.9% incidence).

One serious adverse event in the DEXTENZA group was ocular in nature (retinal detachment) .

None of the serious adverse events in either group were deemed to be treatment-related.

Patients were randomized in a 2:1 ratio in the first two Phase 3 clinical trials and in a 1:1 ratio in the third Phase 3 clinical trial between the treatment group and the vehicle control group.

In the first Phase 3 clinical trial, 98 adverse events were noted in the DEXTENZA group and 59 adverse events were noted in the vehicle control group.

In the second Phase 3 clinical trial, 74 adverse events were noted in the DEXTENZA group and 47 adverse events were noted in the vehicle control group.

In the third Phase 3 clinical trial, 91 adverse events were noted in the DEXTENZA group and 109 adverse events were noted in the vehicle control group.

All adverse events were either resolved or considered chronic/stable at the time of subject exit from the study.

We expect to be able to use the safety data from these Phase 3 trials to support our other DEXTENZA clinical development programs, including for allergic conjunctivitis.

Investigator-Initiated Trials

We have received proposals for, and plan to support, several investigator-initiated trials evaluating DEXTENZA in different clinical situations.

To date, third-party clinical investigators have initiated over 25 trials to study the use of DEXTENZA in cataract surgery and other potential indications.

Seven of the trials have completed enrollment, the remaining trials are actively enrolling and treated patients are being followed.

Regulatory Pathway

In November 2018, we received FDA approval for DEXTENZA for the pain indication.

In January 2019, we submitted a sNDA for DEXTENZA for the treatment of post-surgical ocular inflammation.

In June 2019, we received FDA approval for DEXTENZA for the inflammation indication.

Although we conducted our Phase 3 clinical trials of DEXTENZA in patients who have undergone cataract surgery, these trials were intended to support, and DEXTENZA ultimately received, a label for patients who have undergone any ocular surgery.

To date, third-party clinical investigators have initiated over 25 trials to study the use of DEXTENZA in cataract surgery, other ophthalmic surgeries and other potential indications.

Over 15 of the trials have completed enrollment, and the remaining trials are actively enrolling and treated subjects are being followed.

Post-Approval Studies

In September 2020, we announced that we had dosed the first pediatric patients in a Phase 3 clinical trial evaluating DEXTENZA for the treatment of post-surgical ocular inflammation and pain in children following cataract surgery.

The Phase 3 clinical trial is a U.S.-based, randomized, multicenter clinical trial in which we intend to enroll approximately 60 subjects.

In September 2020, we announced that we had dosed the first pediatric subjects in a U.S.-based, randomized, multicenter Phase 3 clinical trial evaluating DEXTENZA for the treatment of post-surgical ocular inflammation and pain in children following cataract surgery.

This clinical trial is a post-approval requirement of the FDA in accordance with the Pediatric Research Equity Act of 2003, in connection with the FDA’s prior approval of DEXTENZA for the treatment of inflammation and pain following ophthalmic surgery in adults.

We intend to enroll approximately 60 subjects in this clinical trial.

It is designed to evaluate the safety and biological activity of DEXTENZA compared to an active control, prednisolone acetate suspension eye drops, for the treatment of inflammation and pain following ocular surgery for pediatric cataract in children between zero and three years of age.

The primary endpoint is the absence of pain at day eight post-treatment as measured by a FLACC (Face, Legs, Activity, Cry, Consolability) score of zero.

Enrollment is ongoing.

We intend to discuss with the FDA whether this Phase 3 clinical trial evaluating DEXTENZA for the treatment of post-surgical ocular inflammation and pain in children following cataract surgery may also satisfy the post-approval requirement for a pediatric trial as it relates to indication ocular itching associated with allergic conjunctivitis.

Foreign Approvals

Outside the United States, we continue to assess whether to seek regulatory approval for DEXTENZA in markets such as the European Union, Australia and Japan based on the market opportunity, particularly pricing, and the requirements for marketing approval.

Given our prioritization of the clinical development of our sustained-release product candidates and our planned commercialization efforts for our initial intracanalicular insert product candidates in the United States, we will need to engage a third parties to assist us in the approval process.

Given our prioritization of the clinical development of our sustained-release

product candidates and our planned commercialization efforts for our initial intracanalicular insert product candidates in the United States, we will need to engage a third parties to assist us in the approval process.

We have entered into a license agreement and collaboration with AffaMed for the development and commercialization of DEXTENZA, along with OTX-TIC, in specified Asian markets.

In January 2022, AffaMed dosed its first subject in a study conducted in China evaluating the safety and efficacy of DEXTENZA for the treatment of ocular inflammation and pain post-cataract surgery.

We retain the right to develop and commercialize DEXTENZA in all other global markets.

From time to time, we may consider additional arrangements with other companies to address markets outside of the United States.

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We believe ReSure Sealant offers important benefits over sutures, including superior wound closure, a better safety profile and less follow-up.

While ReSure Sealant remains commercially available in the United States, there is no sales support and only limited commercial support for this product at this time.

The market opportunity for a surgical sealant following cataract surgery may be modest because sutures are used in a minority of cataract surgeries and, currently, there is no direct separate reimbursement for ReSure Sealant—meaning ReSure Sealant is only reimbursed as part of a bundled payment for the associated surgery.

While ReSure Sealant remains commercially available in the United States, we are not providing any sales support and only modest commercial support for this product at this time.

As of the fourth quarter of 2021, we have suspended manufacturing ReSure in order to focus our manufacturing resources to support the further commercialization of DEXTENZA.

As a result, we do not expect to generate meaningful levels of revenue from the sale of ReSure Sealant.

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The device is stored at room temperature for easy access.

ReSure Sealant Clinical Development

We conducted a pivotal clinical trial evaluating the safety and effectiveness of ReSure Sealant compared to sutures for preventing incision leakage from clear corneal incisions.

In connection with FDA approval of ReSure Sealant in January 2014, we have agreed to conduct two post-approval studies.

The first post-approval registry study was designed to confirm whether ReSure Sealant can be used safely by physicians in a standard cataract surgery practice and to confirm the incidence of pre-specified adverse ocular events in eyes treated with ReSure Sealant.

The second post-approval study is designed to ascertain the incidence of endophthalmitis in patients treated with ReSure Sealant.

Pivotal Clinical Trial

In 2013, we completed a prospective, randomized, parallel-arm, controlled, multicenter, subject-masked pivotal clinical trial evaluating the safety and effectiveness of ReSure Sealant.

In this trial, we enrolled 488 patients at 24 sites across the United States.

One patient was excluded prior to treatment because the surgeon was unable to achieve a dry ocular surface for application of ReSure Sealant.

As a result, we randomized 304 patients for treatment with ReSure Sealant and 183 patients for treatment with sutures.

Based on the trial protocol, 295 patients treated with ReSure Sealant and 176 patients treated with sutures completed study follow-up without a significant protocol deviation that directly affected the primary efficacy endpoint.

The primary efficacy endpoint was non-inferiority of ReSure Sealant to sutures for preventing incision leakage from clear corneal incisions within the first seven days following cataract surgery.

A non-inferiority determination requires that the test product is not worse than the comparator by more than a small pre-specified margin.

The non-inferiority margin for the ReSure Sealant pivotal clinical trial was a percentage difference in leak rates between ReSure Sealant and sutures of 5%.

We randomized patients in a 5:3 ratio to receive either ReSure Sealant or sutures.

All patients received a standardized self-sealing incision.

Surgeons assessed incision leakage during the operation and during follow-up visits on days 1, 3, 7 and 28 after the procedure.

During the pre-randomization intraoperative evaluation, the surgeons assessed whether there was any leakage based on a standard test called a Seidel test in conjunction with an application of force near the incision using a standardized tool and technique.

The surgeon slowly applied force using the standardized tool that we provided until a

leak was observed or until a pre-specified maximum force of one ounce of force was reached.

In the assessments conducted during the operation, approximately 50% of leaks occurred spontaneously without application of force and 76% of leaks occurred with the application of 0.25 ounces of force or less.

Based on assessments conducted immediately following surgery, using the same standardized leak testing tool and technique, eyes receiving sutures leaked more frequently than eyes sealed with ReSure Sealant by a statistically significant margin of more than 8 to 1 (p<0.0001).

In this trial, ReSure Sealant demonstrated both non-inferiority and superiority relative to the suture control based on the proportion of eyes with leakage within the first seven days after surgery.

These results are shown in the figures below.

ReSure Sealant treated patients had significantly lower adverse event and device-related adverse event rates than patients treated with suture wound closure.

We determined statistical significance based on a widely used, conventional statistical method that establishes the p-value of clinical results.

Typically, a p-value of 0.05 or less represents statistical significance.

In adverse events related to the study device, ReSure Sealant had a lower occurrence rate by a statistically significant margin of 1.6% for ReSure Sealant compared to 30.6% for sutures (p<0.0001).

There were no significant or clinically relevant differences in the other safety endpoints, including slit lamp examination findings, between ReSure Sealant and suture patients, thus indicating that ReSure Sealant is well tolerated.

Only one ReSure Sealant treated patient out of 299 (0.3%) had a wound healing assessment characterized as outside of normal limits at the day 7 assessment due to the presence of mild stromal edema.

No ReSure Sealant treated subjects were outside of normal limits at the day 28 assessment.

In this trial, surgeons rated ReSure Sealant as “easy” or “very easy” to use for 94.1% of patients treated with ReSure Sealant.

Post-Approval Studies

ReSure Sealant is classified in the United States as a class III medical device subject to the rules and regulation of premarket approval by the FDA.

Following our submission of a PMA application to the FDA for review and during the

review process, the FDA completed compliance audits of our manufacturing facility and several of our pivotal clinical trial sites.

Before granting approval of the PMA application, the FDA sought input from the Ophthalmic Devices Advisory Committee, a panel of physicians charged with reviewing results from our pivotal clinical trial.

Before granting approval of the premarket approval, or PMA, application, the FDA

sought input from the Ophthalmic Devices Advisory Committee, a panel of physicians charged with reviewing results from our pivotal clinical trial.

The FDA approved our PMA application for ReSure Sealant in January 2014.

The FDA required two post-approval studies as a condition for approval of our premarket approval, or PMA, application for ReSure Sealant.

The FDA required two post-approval studies as a condition for approval of our PMA application for ReSure Sealant.

The first post-approval study, identified as the Clinical PAS, was to confirm that ReSure Sealant can be used safely by physicians in a standard cataract surgery practice and to confirm the incidence of the most prevalent adverse ocular events identified in our pivotal study in eyes treated with ReSure Sealant.

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We completed the retrospective study in accordance with our agreement with the FDA and submitted the final study report for the Device Exposure Registry Study to the FDA in January 2021.

We anticipate that the FDA will review the report within 90 days of our submission and notify us as to whether our obligation to conduct the post-approval study has been satisfied.

Failure by us to conduct the required post-approval trial for ReSure Sealant to the FDA’s satisfaction may result in withdrawal of the FDA’s approval of ReSure Sealant or other regulatory action.

Foreign Approvals

Outside the United States, we plan to assess whether to seek regulatory approval for ReSure Sealant in markets such as the European Union, Australia and Japan based on the market opportunity, particularly pricing, and the requirements for marketing approval.

Given our prioritization of the clinical development of our sustained-release product candidates and our planned commercialization efforts for our initial intracanalicular insert product candidates in the United States, we do not currently plan to seek CE Mark approval to commercialize ReSure Sealant in the European Union.

Outside of the United States and the European Union, we will need to engage a third party to assist us in the approval process.

If we obtain regulatory approval to market and sell ReSure Sealant in international markets, we expect to utilize a variety of types of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize ReSure Sealant.

See “—Government Regulation—Review and Approval of Medical Devices in the European Union” for additional information.

In April 2021, the FDA confirmed that the Device Exposure Registry Study had been completed and that we had fulfilled our post-approval study requirements.

Sales, Marketing and Distribution

We plan to prioritize our commercialization efforts in the United States.

We generally expect to retain commercial rights in the United States to any of our local programmed-release drug delivery product candidates for front-of-the-eye diseases and conditions for which we may receive marketing approvals and which we believe we can successfully commercialize.

We generally expect to retain commercial rights in the United States to any of our product candidates for which we may receive marketing approvals and which we believe we can successfully commercialize.

In general, if we receive approval to market any of our product candidates in the United States, we plan to then evaluate the regulatory approval requirements and commercial potential for any such product candidate in Europe, Japan and other selected geographies.

If we decide to commercialize our products outside of the United States, we expect to utilize a variety of types of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize any product of ours that receives marketing approval.

ReSure Sealant

We commercially launched ReSure Sealant in the United States in February 2014.

While ReSure Sealant remains commercially available in the United States, there is no sales support and only modest commercial support for this product at this time.

We may decide to actively promote ReSure Sealant in the future with the current sales force that supports DEXTENZA.

We sell DEXTENZA in the United States to a network of specialty distributors, who then resell DEXTENZA to ASCs and hospital outpatient departments, or HOPDs.

In connection with our commercial launch of DEXTENZA, we have built a highly targeted, key account sales force that focuses on the ASCs responsible for the largest volumes of cataract surgery in the United States and their affiliates, with an initial emphasis on the approximately two million cataract procedures performed annually under Medicare Part B.

In connection with the commercialization of DEXTENZA, we have built a highly targeted, key account sales force that focuses on the ASCs responsible for the largest volumes of cataract surgery in the United States and their affiliates, with an initial emphasis on the approximately two million cataract procedures performed annually under Medicare Part B.

We expect to grow our salesforce in 2022 to increase our active number of accounts and penetrate each account more deeply.

Our current field sales team consists of approximately 30 key account managers, or KAMs;

nine Field Reimbursement Managers, or FRMs;

and three Regional Directors, or RDs.

We intend to add up to six KAMs and up to two FRMs, and we may add one RD, during the course of 2021.

Our current field sales team consists of approximately 35 KAMs, nine FRMs and four Regional Directors, or RDs, all of whom are focused on selling DEXTENZA for the treatment of ocular inflammation and pain to surgical sites, primarily ASCs.

We intend to hire at least five additional KAMs who will also be focused on surgical sites.

With the approval of DEXTENZA for the indication of ocular itching associated with allergic conjunctivitis, we are launching a commercial effort in the first quarter of 2022 and intend to hire four KAMs and two FRMs dedicated to selling DEXTENZA to the offices of ophthalmologists and optometrists, where the vast majority of prescriptions for allergies are written.

We have entered into a license agreement and collaboration with AffaMed for the development and commercialization of DEXTENZA, along with OTX-TIC, in specified Asian markets.

If our sNDA to include the treatment of ocular itching associated with allergic conjunctivitis as an additional approved indication for DEXTENZA is approved, we expect to launch DEXTENZA for that indication in the first half of 2022.

We expect initially to support the launch of DEXTENZA for this indication with our existing field force given the high degree of overlap between surgeons performing cataract surgery and those that treat severe allergic conjunctivitis.

Following launch, we will consider the potential need for additional resources that may be required to support continued commercialization.

ReSure Sealant

We commercially launched ReSure Sealant in the United States in February 2014.

While ReSure Sealant remains commercially available in the United States, we are not providing any sales support.

As of the fourth quarter of 2021, we have suspended manufacturing ReSure in order to focus our manufacturing resources to support the further commercialization of DEXTENZA.

As a result, we do not expect to generate meaningful levels of revenue from the sale of ReSure Sealant.

Manufacturing

We fabricate devices and drug products for use in our clinical trials, research and development and commercial efforts for all of our therapeutic product candidates using current Good Manufacturing Practices, or cGMP, at our facility located in Bedford, Massachusetts.

In June 2016, we entered into a new lease agreement for approximately 71,000 square feet of a new facility in Bedford, Massachusetts that will include additional manufacturing space.

We are evaluating the potential relocation of our manufacturing operations to the new leased premises.

We plan to maintain our existing manufacturing space of approximately 20,000 square feet and extended the operating lease until June 2023.

We fabricate devices and drug products for use in our clinical trials, research and development and commercial efforts for all of our products and product candidates using current Good Manufacturing Practices, or cGMP, at our approximately 20,000 square foot facility located in Bedford, Massachusetts.

In June 2016, we entered into a new lease agreement for approximately 71,000 square feet of a facility in Bedford, Massachusetts that primarily houses our research and development functions but may include additional manufacturing space in the future.

We are currently evaluating a long-term master facilities plan to accommodate our manufacturing needs in the future.

We purchase active pharmaceutical ingredient drug substance from independent suppliers on a purchase order basis for incorporation into our drug product candidates.

We purchase our PEG and other raw materials from different vendors on a purchase order basis according to our specifications.

Multiple vendors are available for each component we purchase.

While we believe that multiple vendors are available for each component we purchase, we have historically sole-sourced each component.

We qualify vendors according to our quality system requirements.

We do not have any long-term supply agreements in place for any raw materials or drug substances.

We do not license any technology or pay any royalties to any of our drug or raw material vendors for the front-of-the-eye products.

We do not license any technology or pay any royalties to any of our drug or raw material vendors for the current or potential front and back-of-the-eye products.

We believe that our strategic investment in manufacturing capabilities allows us to advance product candidates at a more rapid pace and with more flexibility than a contract manufacturer, although we will continue to evaluate outsourcing unit operations for cost advantages.

Our manufacturing capability also enables us to produce products in a cost-effective manner while retaining control over the process and prioritize the timing of internal programs.

Our manufacturing capability also enables us to produce products in a cost-effective manner while retaining control over the manufacturing process and prioritizing the timing of internal programs.

Our manufacturing capabilities encompass the full manufacturing process through quality control and quality assurance and are integrated with our project teams from discovery through development and commercial release.

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We outsource sterilization services for our products.

We believe that we can scale our manufacturing processes to support DEXTENZA and ReSure Sealant sales as well as development of our drug product candidates and the potential commercialization of such product candidates.

We believe that we can scale our manufacturing processes to support DEXTENZA sales as well as development of our drug product candidates and the potential commercialization of such product candidates.

Intellectual Property

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We rely on patent protection, trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary position.

We actively protect our innovations by seeking patents and other forms of intellectual property to cover our inventions.

We also seek to in-license and acquire intellectual property to provide additional protection.

As a result, we have patents and/or patent applications pending for all of our commercial products and product candidates, as well as trade secrets to protect proprietary manufacturing processes.

Several patents and applications have been in-licensed from Incept.

We have patents and/or patent applications pending for all of our commercial products and product candidates, as well as trade secrets to protect proprietary manufacturing processes.

The number of U.S.

patents and applications owned by us may increase, on a product-by-product basis or in the aggregate, if we, for example, file additional patent applications and/or obtain patent grants from patent applications.

The number of patents and applications owned by us may decrease, on a product-by-product basis or in the aggregate, if we, for example, voluntarily abandon patents or patent applications, allow patent applications to expire, or have patents invalidated.

As of February 19, 2022, patents and/or patent applications pending owned by us, are 49 pending applications:

14 pending provisional applications, 12 pending U.S.

patent applications, 8 pending World Intellectual Property Organization applications and 15 foreign applications.

patents and applications, and foreign counterparts, have been in-licensed from Incept, and we may in-license additional U.S.

patents and applications, and foreign counterparts.

As of February 19, 2022, there have been 33 granted of which 15 are U.S.

patents and there are 45 patent applications pending of which 7 are U.S.

applications that are in-licensed from Incept.

The license from Incept is limited to the fields of human ophthalmic diseases and conditions, acute post-surgical pain and ear, nose and/or throat diseases or conditions.

As of February 26, 2021, we have licensed from Incept a total of 16 U.S.

patents, 8 U.S.

patent applications and foreign counterparts of some of these patents and patent applications.

The following is a summary of patents and patent applications that cover our commercial products and potentially cover our product candidates:

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We have licenses to several U.S.

patents and patent applications with the potential to cover this product candidate:

patents and issued patents in Australia, the European Union and Japan covering certain drug-release features of the hydrogel implant in combination with its hydrogel composition, all of which are expected to expire in 2027;

two granted U.S.

patents which are expected to expire in 2033 and 2034;

and issued patents in Australia, Canada, China, Hong Kong, the European Union, India, Japan and South Korea covering the process of making the hydrogel implant with its drug release features and the resultant compositions that are expected to expire in 2032.

We own a pending patent application in the United States with the potential to cover this product candidate that, if granted, is expected to expire in 2041.

OTX-TIC (travoprost intracameral implant) for glaucoma or ocular hypertension

patents and patent applications, and certain foreign counterparts, with the potential to cover this product candidate, expected to expire between 2027 and 2032.

We own pending patent applications in the United States with the potential to cover this product candidate that, if granted, are expected to expire in 2041.

OTX-TIC (travoprost intracameral implant) for open-angle glaucoma or ocular hypertension

We have licenses to a pending U.S.

application and foreign patent applications pending in Australia, Brazil, Canada, China, the European Union, Israel, India, Japan and Korea that potentially cover this product candidates that, if granted, are expected to expire in 2037.

We own a pending patent application in the United States and under the Patent Cooperation Treaty, or PCT, with the potential to cover this product candidate that, if granted, is expected to expire in 2042.

application and certain foreign patent applications pending that potentially cover this product candidates that, if granted, are expected to expire in 2037.

We own pending patent application in the United States and under the Patent Cooperation Treaty, or PCT, with the potential to cover this product candidate that, if granted, are expected to expire in 2042.

OTX-CSI (cyclosporine intracanalicular insert) for dry eye disease

We have licenses to three U.S.

patents, patents which have issued in Australia, Canada, China and Japan, and pending applications in the European Union and India that potentially cover this product candidate, all of which are expected to expire in 2030 and cover compositions and methods of use of this product candidate.

We have licenses to U.S.

patents and patent applications, and certain foreign counterparts, that potentially cover this product candidate, and which are expected to expire in 2030, relating to methods of use of this product candidate.

We own a pending patent application in the United States with the potential to cover this product candidate that, if granted, is expected to expire in 2041.

OTX-DED (dexamethasone intracanalicular insert) for episodic dry eye disease

We have licenses to three U.S.

We have licenses to U.S.

patents and pending applications, and certain foreign counterparts, which are expected to expire in 2030 and relate to compositions and methods of use of this product candidate.

We own a pending patent application in the United States with the potential to cover this product candidate that, if granted, is expected to expire in 2041.

DEXTENZA ® (dexamethasone ophthalmic insert) 0.4 mg

We have licenses to three U.S.

patents, patents which have issued in Australia, Canada, China and Japan, and pending applications in the European Union and India, that cover this product, all of which are expected to expire in 2030 and cover compositions and methods of use of this product candidate.

We also recently acquired a U.S.

We have licenses to U.S.

patents and pending applications, and certain foreign counterparts, which are expected to expire in 2030 and potentially cover compositions and methods of use of this product candidate.

We also own a U.S.

patent application with the potential to cover this product that, if granted, is expected to expire in 2036.

DEXTENZA ® (dexamethasone ophthalmic insert) 0.4 mg for allergic conjunctivitis

We have licenses to three U.S.

patents, patents which have issued in Australia, Canada, China and Japan, and pending applications in the European Union and India, that potentially cover this product candidate, all of which are expected to expire in 2030 and cover compositions and methods of use of this product candidate.

We have licenses to U.S.

patents, and certain foreign counterparts, which are expected to expire in 2030 and potentially cover compositions and methods of use of this product candidate.

We own a pending patent application in the United States with the potential to cover this product candidate that, if granted, is expected to expire in 2041.

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patents that cover ReSure Sealant.

patent is expected to expire in 2024 and covers the process of making and using hydrogel compositions.

Our second U.S.

patent is expected to expire in 2032 and covers certain features of the ReSure Sealant package.

patent is expected to expire in 2024 and relating to the process of making and using hydrogel compositions, and one U.S.

patent is expected to expire in 2032 and relates to certain features of the ReSure Sealant package.

The existence of patent applications does not guarantee that a patent will issue, or that any patent that does issue will cover the product or product candidate.

Issued patents are subject to validity and infringement challenges by third parties with uncertain chances of success.

Issued patents are subject to validity, enforceability and infringement challenges by third parties with uncertain chances of success.

The term of individual patents depends upon the legal term for patents in the countries in which they are granted.

In most countries, including the United States, the patent term is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country.

In the United States, a patent’s term may, in certain cases, be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the United States Patent and Trademark Office in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patent naming a common inventor and having an earlier expiration date.

disclaimed over a commonly owned patent or a patent naming a common inventor and having an earlier expiration date.

The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration date of a U.S.

patent as partial compensation for the length of time the drug is under regulatory review while the patent is in force.

patent for certain patents as partial compensation for the length of time the drug is under regulatory review while the patent is in force.

A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to each regulatory review period may be extended and only those claims covering the approved drug, a method for using it or a method for manufacturing it may be extended.

Similar provisions are available in the European Union and certain other foreign jurisdictions to extend the term of a patent that covers an approved drug.

In the future, if and when our product candidates receive approval by the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials for each drug and other factors.

In the future, if and when our product candidates receive approval by the FDA or foreign regulatory authorities, where applicable, we expect to apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials for each drug and other factors.

The expiration dates referred to above are without regard to potential patent term extension or other market exclusivity that may be available to us.

For patent applications covering our products and developmental candidates, we typically file patent applications under the PCT which provides for the filing of a single application that preserves the right to file in national patent offices in other countries up to 30 months from the first priority date.

We may rely, in some circumstances, on trade secrets to protect our technology.

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In January 2012, we entered into an amended and restated license agreement, which we refer to as either the Prior Agreement or Original License, with Incept under which we hold an exclusive, worldwide, perpetual, irrevocable license under specified patents and technology owned or controlled by Incept to make, have made, use, offer for sale, sell, sublicense, have sublicensed, offer for sublicense and import, products delivered to or around the human eye for diagnostic, therapeutic or prophylactic purposes relating to all human ophthalmic diseases or conditions.

This license covers a significant portion of the patent rights and the technology for ReSure Sealant and our hydrogel platform technology product candidates.

This license covers a significant portion of the patent rights and the technology for DEXTENZA, ReSure Sealant and our hydrogel platform technology product candidates.

The agreement supersedes an April 2007 license agreement between us and Incept.

Sawhney, our former President and Chief Executive Officer and former Executive Chairman of the Board of Directors, is a general partner of Incept.

Amar Sawhney, our former President and Chief Executive Officer and former Executive Chairman of the Board of Directors, is a general partner of Incept.

On September 13, 2018, or the Effective Date, we entered into a second amended and restated license agreement, or the Second Amended Agreement, with Incept.

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We will solely own, without a license to Incept, all intellectual property rights conceived solely by one or more individuals from our company, or the Company Individuals, after the Effective Date, subject to exceptions specified therein.

Subject to certain exceptions specified in the Second Amended Agreement, Incept will own and license to the us (i) all intellectual property rights included in the Original License, or the Original IP, in the Ophthalmic Field of Use and the Additional Field of Use, (ii) intellectual property rights in the field of drug delivery conceived solely by the Company Individuals on or before the Effective Date, or Incept IP, and (iii) intellectual property rights in the field of drug delivery conceived by one or more Company Individuals jointly with one or more individuals from Incept, including Dr.

drug delivery conceived by one or more Company Individuals jointly with one or more individuals from Incept, including Dr.

Sawhney, or the Incept Individuals, after the Effective Date.

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Financial Terms.

We and any of our sublicensees are obligated to pay Incept royalties as follows under the Agreement:

We and any of our sublicensees are obligated to pay Incept royalties as follows under the Second Amended Agreement:

(i) consistent with the Prior Agreement, a royalty equal to a low single-digit percentage of net sales by the us or our affiliates of products, devices, materials, or components thereof, or Licensed Products, including or covered by Original IP, excluding the Shape-Changing IP, in the Ophthalmic Field of Use;

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We have the right, subject to certain conditions, to bring suit against third parties who infringe the patents included in the Original IP in the Ophthalmic Field of Use or the Additional Field of Use, patents included in the Incept IP in the drug delivery filed, patents included in the Joint IP in the drug delivery field, and patents included in the Shape-Changing IP in all fields except as described above.

We have also agreed, if requested by Incept, to enter into a joint defense and prosecution agreement for the purpose of allowing the parties to share confidential and attorney-client

privileged information regarding the possible infringement of one or more patents covered by the Second Amended Agreement.

We have also agreed, if requested by Incept, to enter into a joint defense and prosecution agreement for the purpose of allowing the parties to share confidential and attorney-client privileged information regarding the possible infringement of one or more patents covered by the Second Amended Agreement.

We are responsible for all costs incurred in prosecuting any infringement action it brings.

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Under the License Agreement, we granted AffaMed (i) a non-exclusive, royalty-free, non-sublicensable license under certain of our intellectual property rights and know-how to use the AffaMed Licensed Products in connection with specified activities in accordance with a development plan agreed between the parties and (ii) an exclusive, royalty-bearing, sublicensable, non-transferable (subject to specified exceptions), license under certain of our intellectual property rights and know-how to commercialize the AffaMed Licensed Products in the applicable Field in the Territories.

We have further agreed not to, and to cause its affiliates or agents not to, develop or commercialize in the Territories (i) the AffaMed Licensed Products outside of the applicable Fields and (ii) any other product containing the same active pharmaceutical ingredients as the AffaMed Licensed Products and administered into the anterior chamber of the eye, in each case without AffaMed’s prior written consent.

same active pharmaceutical ingredients as the AffaMed Licensed Products and administered into the anterior chamber of the eye, in each case without AffaMed’s prior written consent.

AffaMed has agreed not to, and to cause its affiliates or agents not to, engage in the development, manufacture, or commercialization of any competing product in the Territories.

Under the terms of the License Agreement, we received upfront payments totaling $12 million in the fourth quarter of 2020.

We are also eligible to receive up to an additional $91 million in aggregate, inclusive of a low-seven-figure clinical support payment, upon the achievement of certain development and commercial milestones.

We also became eligible to receive up to an additional $91 million in aggregate, inclusive of a low-seven-figure clinical support payment, upon the achievement of certain development and commercial milestones.

In the fourth quarter of 2021, we received a $1 million milestone payment under the License Agreement from AffaMed;

we expect to recognize a clinical support payment of another $2 million in the first quarter of 2022 in connection with dosing the first subject in a Phase 2 clinical trial evaluating OTX-TIC for the treatment of open-angle glaucoma or ocular hypertension.

There can be no guarantee, however, that any of these milestones will be achieved.

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AffaMed is further obligated, at its sole cost and expense, to use commercially reasonable efforts to commercialize the AffaMed Licensed Products in the applicable Fields in the Territories.

The License Agreement contemplates that the parties negotiate and enter into a future agreement requiring us to use commercially reasonable efforts to manufacture

and supply finished drug products in sufficient quantity for clinical development and commercialization of the AffaMed Licensed Products in the applicable Fields in the Territories.

The License Agreement contemplates that the parties negotiate and enter into a future agreement requiring us to use commercially reasonable efforts to manufacture and supply finished drug products in sufficient quantity for clinical development and commercialization of the AffaMed Licensed Products in the applicable Fields in the Territories.

In accordance with its terms, the License Agreement expires upon the expiration of the last royalty term for the last AffaMed Licensed Product in any applicable Field in the Territories.

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Many of our potential competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do.

These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

These competitors also

compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

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Several competitors are developing sustained drug release products for the same ophthalmic indications as our retinal implants, intracameral implants, intracanalicular insert and wound sealant products and product candidates, as set forth below.

Competitors of our Retinal Implants

Competitors of OTX-TKI

Our intravitreal implant for the treatment of wet AMD will compete with anti-VEGF compounds administered in their current formulation and prescribed for the treatment of wet AMD as these agents can in some instances deliver one to two months or more of therapeutic effect.

They include Lucentis, Eylea, Beovu and off-label use of the cancer therapy Avastin.

They include Lucentis, Eylea, Beovu, Vabysmo and off-label use of the cancer therapy Avastin.

Multiple companies, although all in early stages of development, are exploring ways to deliver anti-VEGF products in a sustained-release fashion, including Clearside Biomedical, Inc., which is pursuing a TKI (axitinib) administered into the suprachoroidal space;

Eyepoint Pharmaceuticals, Inc., which is pursuing a sustained-release bioerodible device containing a TKI (vorolanib) using its Durasert™ technology;

Aerie Pharmaceuticals, which is

pursuing development of a 4-6 month TKI implant (axitinib) using its Print® manufacturing technology;

Aerie Pharmaceuticals, which is pursuing development of a 4-6 month TKI implant (axitinib) using its Print® manufacturing technology;

Graybug Vision, Inc.

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and Kodiak Sciences Inc., which is pursuing sustained release therapies based on its anti-VEGF biopolymer conjugate technology.

Recently, Genentech received approval for Susvimo which utilizes the company’s port delivery system for delivery of ranibizumab.

In addition, there are several companies pursuing gene therapy to treat retinal diseases including Adverum Biotechnologies, Inc.

and REGENXBIO Inc.

There also are a number of companies with products in development targeting the inhibition of the complement system to address retinal diseases, specifically geographic atrophy including Apellis Pharmaceuticals, IVERIC bio, Inc., Annexion Biosciences, Gyroscope Therapeutics, Genentech/Ionis and Janssen Pharmaceutical, among others.

There also are a number of companies with products in development targeting the inhibition of the complement system to address retinal diseases, specifically geographic atrophy including Apellis Pharmaceuticals, IVERIC bio, Inc., Annexion Biosciences, Novartis (Gyroscope Therapeutics), Genentech/Ionis and Janssen Pharmaceuticals, among others.

Competitors of OTX-TIC

Allergan PLC, now owned by AbbVie, Inc., received approval in March 2020 of DURYSTA, a biodegradable bimatoprost intracameral implant consisting of a PGA and a biodegradable polymer matrix for the reduction of IOP in patients with open-angle glaucoma or ocular hypertension.

Allergan purchased ForSight VISION5 who was conducting a Phase 2 clinical development of the Helios insert, a sustained-release ocular insert placed below the eyelid that delivers bimatoprost for the treatment of glaucoma.

Allergan purchased ForSight VISION5 who was conducting a Phase 2 clinical trial with the Helios insert, a sustained-release ocular insert placed below the eyelid that delivers bimatoprost for the treatment of glaucoma.

Glaukos, Inc.

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In addition, several other companies have announced their intention to develop products for treatment of glaucoma using sustained-release therapy, although each of these is at an early stage of development.

Mati Therapeutics has conducted a Phase 2 clinical development of an intracanalicular insert for the treatment of glaucoma.

Mati Therapeutics has conducted a Phase 2 clinical trial with an intracanalicular insert for the treatment of glaucoma.

Competitors of OTX-CSI and OTX-DED

A number of therapies are currently available for the treatment of DED in the United States.

The most commonly used treatments for DED in the United States are over-the-counter eye drops, often referred to as “artificial tears,” and three FDA-approved prescription eye drop therapies:

A number of therapies are currently available for the treatment of dry eye disease in the United States.

The most commonly used treatments for dry eye disease in the United States are over-the-counter eye drops, often referred to as “artificial tears,” and three FDA-approved prescription eye drop therapies:

Restasis, Xiidra and Cequa.

Artificial tears are intended to supplement insufficient tear production or improve tear film instability but are primarily saline-based and provide only temporary relief.

Restasis and Cequa, both calcineurin inhibitor immunosuppressants, and Xiidra, a LFA-1 antagonist, address chronic inflammation associated with DED.

Kala Pharmaceuticals received approval in 2020 and launched EYESUVIS™, (loteprednol etabonate ophthalmic suspension) 0.25% for the short term (up to two weeks) treatment of the signs and symptoms of dry eye disease.

Restasis and Cequa, both calcineurin inhibitor immunosuppressants, and Xiidra, a LFA-1 antagonist, address chronic inflammation associated with dry eye disease.

Kala Pharmaceuticals received approval in 2020 and launched EYSUVIS™, (loteprednol etabonate ophthalmic suspension) 0.25% for the short term (up to two weeks) treatment of the signs and symptoms of dry eye disease.

Oyster Point Pharma received approval in 2021 for TYRVAYA™ (varenicline solution) Nasal Spray, a cholinergic agonist indicated for the treatment of the signs and symptoms of dry eye disease.

Other treatment options include ointments, gels, warm compresses, omega-3 fatty acid supplements and a number of medical devices.

We are aware of many other companies developing therapies for DED, including Aerie Pharmaceuticals, Alcon, Aldeyra Therapeutics, Allergan, Aurinia Pharmaceuticals, Azura Ophthalmics, Bausch Health (Novaliq), HanAll BioPharma, Johnson & Johnson, Mitotech, Novartis, Oyster Point Pharma, Parion Sciences, ReGenTree, Silk Technologies, Sylentis, TearSolutions, and TopiVert Pharma.

We are aware of many other companies developing therapies for dry eye disease, including Aerie Pharmaceuticals, Alcon, Aldeyra Therapeutics, Allergan, Aurinia Pharmaceuticals, Azura Ophthalmics, Bausch Health (Novaliq), HanAll BioPharma, Johnson & Johnson, Mitotech, Novartis, Parion Sciences, ReGenTree, Silk Technologies, Sylentis, TearSolutions, and TopiVert Pharma.

Competitors of DEXTENZA

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Eyepoint launched DEXYCU commercially in the first quarter of 2019.

OMIDRIA ® , recently purchased by Rayner Surgical Group Limited, is a prescription medication used during cataract surgery.

According to the OMIDRIA website, this product helps the black part in the center of your eye (pupil) stay open (dilated) during cataract surgery and decreases eye pain after surgery.

Competitors of ReSure Sealant

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This product has received a CE Mark in Europe but is not approved for use in the United States.

Sutures are the primary alternative for closing ophthalmic wounds.

In addition, a technique called stromal hydration, which involves the localized injection of a balanced salt solution at the wound edges, is often used to facilitate the self-sealing of a wound.

Sutures are the primary alternative device for closing ophthalmic wounds.

Most commonly, however, a technique called stromal hydration, which involves the localized injection of a balanced salt solution at the wound edges, is often used to facilitate the sealing of a wound.

Government Regulation

testing, manufacture, quality control, clearance, approval, pricing, sales, reimbursement, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import and export of pharmaceutical products and medical devices.

Government authorities in the United States, at the federal, state and local level, and in other countries and jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing, manufacture, quality control, clearance, approval, pricing, sales, reimbursement, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import and export of pharmaceutical products and medical devices.

The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources.

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● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations;

● submission to the FDA of an IND, which must take effect before human clinical trials may begin;

● design of a clinical protocol and submission to the FDA of an IND, which must take effect before human clinical trials may begin;

● approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;

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Preclinical studies include laboratory evaluation of the purity and stability of the manufactured drug substance or active pharmaceutical ingredient and the formulated product, as well as in vitro and animal studies to assess the safety and activity of the investigational product for initial testing in humans and to establish a rationale for therapeutic use.

The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations.

The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations and standards and the United States Department of Agriculture’s Animal Welfare Act.

The results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, are submitted to the FDA as part of an IND.

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We generally plan to conduct our later stage and pivotal clinical trials of our intracanalicular insert product candidates in the United States.

A sponsor may choose, but is not required, to conduct a foreign clinical trial under an IND.

When a foreign clinical trial is conducted under an IND, all FDA IND requirements must be met unless waived.

When a foreign clinical trial is not conducted under an IND, the sponsor must ensure that the trial complies with certain regulatory requirements of the FDA in order to use the trial as support for an IND or application for marketing approval.

Specifically, the FDA requires such trials to be conducted in accordance with GCP, including review and approval by an independent ethics committee and informed consent from subjects.

The GCP requirements encompass both ethical and data integrity standards for clinical trials.

The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical trials, as well as the quality and integrity of the resulting data.

They further help ensure that non-IND foreign trials are conducted in a manner comparable to that required for IND trials.

In addition to the foregoing IND requirements, an IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct continuing review and reapprove the study at least annually.

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Other reasons for suspension or termination may be made by us based on evolving business objectives and/or competitive climate.

Information about clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on its ClinicalTrials.gov website.

Reporting Clinical Trial Results

Under the PHSA, sponsors of clinical trials of certain FDA-regulated products, including prescription drugs and biologics, are required to register and disclose certain clinical trial information on a public registry (clinicaltrials.gov) maintained by the U.S.

National Institutes of Health, or NIH.

In particular, information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial.

Although sponsors are also obligated to disclose the results of their clinical trials after completion, disclosure of the results can be delayed in some cases for up to two years after the date of completion of the trial.

The NIH’s Final Rule on registration and reporting requirements for clinical trials became effective in 2017, and both NIH and the FDA have recently signaled the government’s willingness to begin enforcing those requirements against non-compliant clinical trial sponsors.

Expanded Access to an Investigational Drug for Treatment Use

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and the expanded use of the investigational drug for the requested treatment will not interfere initiation, conduct, or completion of clinical investigations that could support marketing approval of the product or otherwise compromise the potential development of the product.

Drug and biologic companies are required to make publicly available their policies for expanded access for individual patient access to products intended for serious diseases.

Sponsors are required to make such policies publicly available upon the earlier of initiation of a Phase 2 or Phase 3 study;

or 15 days after the drug or biologic receives designation as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.

There is no obligation for a sponsor to make its investigational products available for expanded access;

however, as required by amendments to the FDCA included in the 21st Century Cures Act, or the Cures Act, passed in 2016, if a sponsor has a policy regarding how it responds to expanded access requests with respect to product candidates in development to treat serious diseases or conditions, it must make that policy publicly available.

Sponsors are required to make such policies publicly available upon the earlier of initiation of a Phase 2 or Phase 3 study for a covered investigational product;

or 15 days after the investigational product receives designation from the FDA as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.

In addition, on May 30, 2018, the Right to Try Act was signed into law.

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Clinical trials are conducted under written study protocols detailing, among other things, the inclusion and exclusion criteria, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.

A sponsor may choose, but is not required, to conduct a foreign clinical trial under an IND.

When a foreign clinical trial is conducted under an IND, all FDA IND requirements must be met unless waived.

Specifically, the FDA requires such trials to be conducted in accordance with GCP, including review and approval by an independent ethics committee and informed consent from subjects.

The GCP requirements encompass both ethical and data integrity standards for clinical trials.

The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical trials, as well as the quality and integrity of the resulting data.

They further help ensure that non-IND foreign trials are conducted in a manner comparable to that required for IND trials.

Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

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The drug or biologic is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.

Phase 3 clinical trials are commonly referred to as “pivotal” trials, which typically denotes a trial which presents the data that the FDA or other relevant regulatory agency will use to determine whether to approve a drug.

Progress reports detailing the safety results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.

A clinical trial may combine the elements of more than one phase, and the FDA often requires more than one Phase 3 trial to support marketing approval of a product candidate.

A company’s designation of a clinical trial as being of a particular phase is not necessarily indicative that the study will be sufficient to satisfy the FDA requirements of that phase because this determination cannot be made until the protocol and data have been submitted to and reviewed by the FDA.

Moreover, as noted above, a pivotal trial is a clinical trial that is believed to satisfy FDA requirements for the evaluation of a product candidate’s safety and efficacy such that it can be used, alone or with other pivotal or non-pivotal trials, to support regulatory approval.

Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need.

In some cases, the FDA may approve an NDA or BLA for a product candidate but require the sponsor to conduct additional clinical trials to further assess the product candidate’s safety and effectiveness after approval.

Such post-approval trials, typically referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.

These trials are used to gain additional experience from the treatment of a larger number of patients in the intended treatment group.

In certain instances, the FDA may mandate the performance of Phase 4 clinical trials, such as to verify clinical benefit in the case of products approved under accelerated approval regulations.

Failure to exhibit due diligence with regard to conducting mandatory Phase 4 clinical trials could result in withdrawal of FDA approval for products.

In response to the COVID-19 pandemic, FDA issued guidance on March 18, 2020, and has updated it periodically since that time to address the conduct of clinical trials during the pandemic.

The guidance sets out a number of considerations for sponsors of clinical trials impacted by the pandemic, including the requirement to include in the clinical study report (or as a separate document) contingency measures implemented to manage the study, and any disruption of the study as a result of COVID-19;

a list of all study participants affected by COVID-19-related study disruptions by a unique subject identifier and by investigational site, and a description of how the individual’s participation was altered;

and analyses and corresponding discussions that address the impact of implemented contingency measures (e.g., participant discontinuation from investigational product and/or study, alternative procedures used to collect critical safety and/or efficacy data) on the safety and efficacy results reported for the study, among other things.

The FDA has indicated that it will continue to provide any necessary guidance to sponsors, clinical investigators, and research institutions as the public health emergency evolves.

Interactions with FDA During the Clinical Development Program

Following the clearance of an IND and the commencement of clinical trials, the sponsor will continue to have interactions with the FDA.

Progress reports detailing the results of clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.

In addition, IND safety reports must be submitted to the FDA for any of the following:

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findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the product candidate;

and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

and any clinically important increase in the occurrence of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or

The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.

Concurrent with clinical trials, companies often complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, must develop methods for testing the identity, strength, quality, purity, and potency of the final drug.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.

In addition, sponsors are given opportunities to meet with the FDA at certain points in the clinical development program.

Specifically, sponsors may meet with the FDA prior to the submission of an IND (pre-IND meeting), at the end of Phase 2 clinical trial (EOP2 meeting) and before an NDA or BLA is submitted (pre-NDA or pre-BLA meeting).

Meetings at other times may also be requested.

There are three types of meetings that occur between sponsors and the FDA.

Type A meetings are those that are necessary for an otherwise stalled product development program to proceed or to address an important safety issue.

Type B meetings include pre-IND and pre-NDA/pre-BLA meetings, as well as end of phase meetings such as EOP2 meetings.

A Type C meeting is any meeting other than a Type A or Type B meeting regarding the development and review of a product, including for example meetings to facilitate early consultations on the use of a biomarker as a new surrogate endpoint that has never been previously used as the primary basis for product approval in the proposed context of use.

These meetings provide an opportunity for the sponsor to share information about the data gathered to date with the FDA and for the FDA to provide advice on the next phase of development.

For example, at an EOP2 meeting, a sponsor may discuss its Phase 2 clinical results and present its plans for the pivotal Phase 3 clinical trial(s) that it believes will support the approval of the new product.

Such meetings may be conducted in person, via teleconference/videoconference or written response only with minutes reflecting the questions that the sponsor posed to the FDA and the FDA’s responses.

The FDA has indicated that its responses, as conveyed in meeting minutes and advice letters, only constitute mere recommendations and/or advice made to a sponsor and, as such, sponsors are not bound by such recommendations and/or advice.

Nonetheless, from a practical perspective, a sponsor’s failure to follow the FDA’s recommendations for design of a clinical program may put the program at significant risk of failure.

Manufacturing and Other Regulatory Requirements

Concurrently with clinical trials, sponsors usually complete additional animal safety studies, develop additional information about the chemistry and physical characteristics of the product candidate and finalize a process for manufacturing commercial quantities of the product candidate in accordance with cGMP requirements.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other criteria, the sponsor must develop methods for testing the identity, strength, quality, and purity of the finished product.

Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Specifically, the FDA’s regulations require that pharmaceutical products be manufactured in specific approved facilities and in accordance with cGMPs.

The cGMP regulations include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and product containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products.

Manufacturers and other entities involved in the manufacture and distribution of approved pharmaceuticals are required to register their establishments with the FDA and some state agencies, and they are subject to periodic unannounced inspections by the FDA for compliance with cGMPs and other requirements.

Inspections must follow a “risk-based schedule” that may result in certain establishments being inspected more frequently.

Manufacturers may also have to provide, on request, electronic or physical records regarding their establishments.

Delaying, denying, limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated.

Changes to the manufacturing process, specifications or container closure system for an approved product are strictly regulated and often require prior FDA approval before being implemented.

The FDA’s regulations also require, among other things, the investigation and correction of any deviations from cGMP and the imposition of reporting and documentation requirements upon the sponsor and any third-party manufacturers involved in producing the approved product.

Pediatric Studies

Under the Pediatric Research Equity Act of 2003, an application or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

With enactment of the Food and Drug Safety and Innovation Act, or the FDASIA, in 2012, sponsors must also submit pediatric study plans prior to the assessment data.

Those plans must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, any deferral or waiver requests, and other information required by regulation.

The applicant, the FDA, and the FDA’s internal review committee must then review the information submitted, consult with each other, and agree upon a final plan.

The FDA or the applicant may request an amendment to the plan at any time.

For drugs intended to treat a serious or life-threatening disease or condition, the FDA must, upon the request of an applicant, meet to discuss preparation of the initial pediatric study plan or to discuss deferral or waiver of pediatric assessments.

Under the Pediatric Research Equity Act, or PREA, applications and certain types of supplements to applications must contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The sponsor must submit an initial Pediatric Study Plan, or PSP, within 60 days of an EOP2 meeting or as may be agreed between the sponsor and the FDA.

Those plans must contain an outline of the

proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.

The sponsor and the FDA must reach agreement on a final plan.

A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or other clinical development programs.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.

Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in the Food and Drug Administration Safety and Innovation Act, or FDASIA.

The FDA maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population.

Congress amended the FDA Reauthorization Act of 2017, or FDARA.

Previously, drugs that had been granted orphan drug designation were exempt from the requirements of the Pediatric Research Equity Act.

Under the amended section 505B, beginning on August 18, 2020, the submission of a pediatric assessment, waiver or deferral will be required for certain molecularly targeted cancer indications with the submission of an application or supplement to an application.

Review of an NDA or BLA by the FDA

In order to obtain approval to market a drug or biological product in the United States, a marketing application must be submitted to the FDA that provides data establishing the safety and effectiveness of the proposed drug product for the proposed indication, and the safety, purity and potency of the biological product for its intended indication.

The application includes all relevant data available from pertinent preclinical and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry, manufacturing, controls and proposed labeling, among other things.

Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational drug product and the safety, purity and potency of the biological product to the satisfaction of the FDA.

The NDA and BLA are thus the vehicles through which applicants formally propose that the FDA approve a new product for marketing and sale in the United States for one or more indications.

Every new product candidate must be the subject of an approved NDA or BLA before it may be commercialized in the United States.

Under federal law, the submission of most applications is subject to an application user fee, which for federal fiscal year 2021 is $2,875,842 for an application requiring clinical data.

The sponsor of an approved application is also subject to an annual program fee, which for fiscal year 2021 is $336,432.

Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for product candidates with orphan designation and a waiver for certain small businesses.

Following submission of an NDA or BLA, the FDA conducts a preliminary review of the application generally within 60 calendar days of its receipt and strives to inform the sponsor by the 74th day after the FDA’s receipt of the submission to determine whether the application is sufficiently complete to permit substantive review.

The FDA may request additional information rather than accept the application for filing.

A deferral may be granted for several reasons, including a finding that the product or therapeutic candidate is ready for approval for use in adults before pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric trials begin.

The law now requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation.

It further requires the FDA to publicly post the PREA Non-Compliance letter and sponsor’s response.

Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although the FDA has recently taken steps to limit what it considers abuse of this statutory exemption in PREA by announcing that it does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of what is otherwise a common disease.

The FDA also maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease in the pediatric population.

Section 505(b)(2) NDAs

NDAs for most new drug products are based on two full clinical studies which must contain substantial evidence of the safety and efficacy of the proposed new product.

These applications are submitted under Section 505(b)(1) of the FDCA.

The FDA is, however, authorized to approve an alternative type of NDA under Section 505(b)(2) of the FDCA.

This type of application allows the applicant to rely, in part, on the FDA’s previous findings of safety and efficacy for a similar product, or published literature.

Specifically, Section 505(b)(2) applies to NDAs for a drug for which the investigations made to show whether or not the drug is safe for use and effective in use and relied upon by the applicant for approval of the application “were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted.”

Section 505(b)(2) thus authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the applicant.

NDAs filed under Section 505(b)(2) may provide an alternate and potentially more expeditious pathway to FDA approval for new or improved formulations or new uses of previously approved products.

If the 505(b)(2) applicant can establish that reliance on the FDA’s previous approval is scientifically appropriate, the applicant may eliminate the need to conduct certain preclinical or clinical studies of the new product.

The FDA may also require companies to perform additional studies or measurements to support the change from the approved product.

The FDA may then approve the new drug candidate for all or some of the label indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.

If we obtain favorable results in our clinical trials, we plan to submit NDAs for our product candidates under Section 505(b)(2).

Acceptance and Review of NDAs and BLAs

Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, along with information relating to the product’s chemistry, manufacturing, controls, safety updates, patent information, abuse information and proposed labeling, are submitted to the FDA as part of an application requesting approval to market the product candidate for one or more indications.

Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use or from a number of alternative sources, including studies initiated by investigators.

To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of a drug product and the safety, potency and purity of the biological product to the satisfaction of the FDA.

The fee required for the submission and review of an application under the Prescription Drug User Fee Act, or PDUFA, is substantial (for example, for FY2022 this application fee is approximately $3.1 million), and the sponsor of an approved application is also subject to an annual program fee, currently more than $369,000 per eligible prescription product.

These fees are typically adjusted annually, and exemptions and waivers may be available

under certain circumstances, such as where a waiver is necessary to protect the public health, where the fee would present a significant barrier to innovation, or where the applicant is a small business submitting its first human therapeutic application for review.

The FDA conducts a preliminary review of all applications within 60 days of receipt and must inform the sponsor at that time or before whether an application is sufficiently complete to permit substantive review.

In pertinent part, FDA’s regulations state that an application “shall not be considered as filed until all pertinent information and data have been received” by the FDA.

In the event that FDA determines that an application does not satisfy this standard, it will issue a Refuse to File, or RTF, determination to the applicant.

Typically, an RTF will be based on administrative incompleteness, such as clear omission of information or sections of required information;

scientific incompleteness, such as omission of critical data, information or analyses needed to evaluate safety and efficacy or provide adequate directions for use;

or inadequate content, presentation, or organization of information such that substantive and meaningful review is precluded.

The FDA may request additional information rather than accept an application for filing.

In this event, the application must be resubmitted with the additional information.

The resubmitted application is also subject to review before the FDA accepts it for filing.

Once the submission is accepted for filing, the FDA begins an in-depth substantive review.

The FDA has agreed to specified performance goals in the review process of NDAs and BLAs.

Under that agreement, 90% of applications seeking approval of New Molecular Entities, or NMEs, are meant to be reviewed within ten months from the date on which FDA accepts the application for filing, and 90% of applications for NMEs that have been designated for “priority review” are meant to be reviewed within six months of the filing date.

For applications seeking approval of products that are not NMEs, the ten-month and six-month review periods run from the date that FDA receives the application.

The review process and the Prescription Drug User Fee Act goal date may be extended by the FDA for three additional months to consider new information or clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission.

Before approving an application, the FDA typically will inspect the facility or facilities where the product is or will be manufactured.

These pre-approval inspections may cover all facilities associated with an NDA or BLA submission, including drug component manufacturing (e.g., active pharmaceutical ingredients), finished drug product manufacturing, and control testing laboratories.

The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

Additionally, before approving an NDA or BLA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

Under the FDA Reauthorization Act of 2017, the FDA must implement a protocol to expedite review of responses to inspection reports pertaining to certain applications, including applications for products in shortage or those for which approval is dependent on remediation of conditions identified in the inspection report.

In addition, as a condition of approval, the FDA may require an applicant to develop a REMS.

REMS use risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the potential risks.

To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events, and whether the product is a new molecular entity.

The FDA may refer an application for a novel product to an advisory committee or explain why such referral was not made.

Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and

under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

After the submission is accepted for filing, the FDA begins an in-depth substantive review of the application.

The FDA reviews the application to determine, among other things, whether the proposed product is safe and effective for its intended use, whether it has an acceptable purity profile and whether the product is being manufactured in accordance with cGMP.

Under the goals and policies agreed to by the FDA under PDUFA, the FDA has ten months from the filing date in which to complete its initial review of a standard application that is a new molecular entity, and six months from the filing date for an application with “priority review.” The review process may be extended by the FDA for three additional months to consider new information or in the case of a clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission.

Despite these review goals, it is not uncommon for FDA review of an application to extend beyond the PDUFA target action date.

In connection with its review of an application, the FDA will typically submit information requests to the applicant and set deadlines for responses thereto.

The FDA will also conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether the manufacturing processes and facilities comply with cGMPs.

The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and are adequate to assure consistent production of the product within required specifications.

The FDA also may inspect the sponsor and one or more clinical trial sites to assure compliance with IND and GCP requirements and the integrity of the clinical data submitted to the FDA.

To ensure cGMP and GCP compliance by its employees and third-party contractors, an applicant may incur significant expenditure of time, money and effort in the areas of training, record keeping, production and quality control.

Additionally, the FDA may refer an application, including applications for novel product candidates which present difficult questions of safety or efficacy, to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions.

Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendation of an advisory committee, but it considers such recommendations when making final decisions on approval.

Data from clinical trials are not always conclusive, and the FDA or its advisory committee may interpret data differently than the sponsor interprets the same data.

The FDA may also re-analyze the clinical trial data, which could result in extensive discussions between the FDA and the applicant during the review process.

The FDA also may require submission of a Risk Evaluation and Mitigation Strategy, or REMS, if it determines that a REMS is necessary to ensure that the benefits of the product outweigh its risks and to assure the safe use of the product.

The REMS could include medication guides, physician communication plans, assessment plans and/or elements to assure safe use, such as restricted distribution methods, patient registries or other risk minimization tools.

The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case basis.

If the FDA concludes a REMS is needed, the sponsor of the application must submit a proposed REMS and the FDA will not approve the application without a REMS.

Decisions on NDAs and BLAs

The FDA reviews an applicant to determine, among other things, whether the product is safe and whether it is effective for its intended use(s), with the latter determination being made on the basis of substantial evidence.

The term “substantial evidence” is defined under the FDCA as “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the product involved, on the basis of which it could fairly and responsibly be concluded by such experts that the product will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.”

The FDA has interpreted this evidentiary standard to require at least two adequate and well-controlled clinical investigations to establish effectiveness of a new product.

Under certain circumstances, however, FDA has indicated that a single trial with certain characteristics and additional information may satisfy this standard.

This approach was subsequently endorsed by Congress in 1998 with legislation providing, in pertinent part, that “If FDA determines, based on relevant science, that data from one adequate and well-controlled clinical investigation and confirmatory evidence (obtained prior to or after such investigation) are sufficient to establish effectiveness, FDA may consider such data and evidence to constitute substantial evidence.” This modification to the law recognized the potential for FDA to find that one adequate and well controlled clinical investigation with confirmatory evidence, including supportive data outside of a controlled trial, is sufficient to establish effectiveness.

In December 2019, FDA issued draft guidance further explaining the studies that are needed to establish substantial evidence of effectiveness.

It has not yet finalized that guidance.

After evaluating the application and all related information, including the advisory committee recommendations, if any, and inspection reports of manufacturing facilities and clinical trial sites, the FDA will issue either a CRL or an approval letter.

To reach this determination, the FDA must determine that the drug is effective and that its expected benefits outweigh its potential risks to patients.

This “benefit-risk” assessment is informed by the extensive body of evidence about the product’s safety and efficacy in the NDA or BLA.

This assessment is also informed by other factors, including:

the severity of the underlying condition and how well patients’ medical needs are addressed by currently available therapies;

uncertainty about how the premarket clinical trial evidence will extrapolate to real-world use of the product in the post-market setting;

and whether risk management tools are necessary to manage specific risks.

In connection with this assessment, the FDA review team will assemble all individual reviews and other documents into an “action package,” which becomes the record for FDA review.

The review team then issues a recommendation, and a senior FDA official makes a decision.

A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form.

A CRL generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application.

The CRL may require additional clinical or other data, additional pivotal Phase 3 clinical trial(s) and/or other significant and time- consuming requirements related to clinical trials, preclinical studies or manufacturing.

If a CRL is issued, the applicant will have one year to respond to the deficiencies identified by the FDA, at which time the FDA can deem the application withdrawn or, in its discretion, grant the applicant an additional six-month extension to respond.

The FDA has committed to reviewing resubmissions in response to an issued CRL in either two or six months depending on the type of information included.

Even with the submission of this additional information, however, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

The FDA has taken the position that a CRL is not final agency action making the determination subject to judicial review.

An approval letter, on the other hand, authorizes commercial marketing of the product with specific prescribing information for specific indications.

That is, the approval will be limited to the conditions of use (e.g., patient population, indication) described in the FDA-approved labeling.

Further, depending on the specific risk(s) to be addressed, the FDA may require that contraindications, warnings or precautions be included in the product labeling, require that post-approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s safety after approval, require testing and surveillance programs to monitor the product after commercialization or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS which can materially affect the potential market and profitability of the product.

The FDA may prevent or limit further marketing of a product based on the results of post-marketing trials or surveillance programs.

After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Under the Ensuring Innovation Act, which was signed into law in April 2021, the FDA must publish action packages summarizing its decisions to approve new drugs and biologics within 30 days of approval of such products.

To date, CRLs are not publicly available documents.

Accelerated Approval Pathway

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All promotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA.

The FDA’s Decision on an Application

On the basis of the FDA’s evaluation of the application and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter, or CRL.

An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications.

A CRL generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application.

If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the application, the FDA will issue an approval letter.

The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

If the FDA approves a product, it may limit the approved indications for use for the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess the product candidate’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms, including REMS, which can materially affect the potential market and profitability of the product.

The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance programs.

After approval, many types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Post-Approval Regulation

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A product may also be subject to official lot release, meaning that the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.

If the product is subject to official release, the manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot, to the FDA.

If the product is subject to official release, the manufacturer must submit samples of each lot, together with a release protocol showing a summary of the history of

manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot, to the FDA.

The FDA may in addition perform certain confirmatory tests on lots of some products before releasing the lots for distribution.

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This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes drug products.

In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, and its implementing regulations, as well as the Drug Supply Chain Security Act, or DSCA, which regulate the distribution and tracing of prescription drugs and prescription drug samples at the federal level, and set minimum standards for the regulation of drug distributors by the states.

The PDMA, its implementing regulations and state laws limit the distribution of prescription pharmaceutical product samples, and the DSCA imposes requirements to ensure accountability in distribution and to identify and remove counterfeit and other illegitimate products from the market.

Section 505(b)(2) NDAs

NDAs for most new drug products are based on two full clinical studies which must contain substantial evidence of the safety and efficacy of the proposed new product.

These applications are submitted under Section 505(b)(1) of the FDCA.

The FDA is, however, authorized to approve an alternative type of NDA under Section 505(b)(2) of the FDCA.

This type of application allows the applicant to rely, in part, on the FDA’s previous findings of safety and efficacy for a similar product, or published literature.

Thus, Section 505(b)(2) authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the applicant.

NDAs filed under Section 505(b)(2) may provide an alternate and potentially more expeditious pathway to FDA approval for new or improved formulations or new uses of previously approved products.

The FDA may also require companies to perform additional studies or measurements to support the change from the approved product.

If we obtain favorable results in our clinical trials, we plan to submit NDAs for our intracanalicular insert product candidates under Section 505(b)(2).

Abbreviated New Drug Applications for Generic Drugs

In 1984, with passage of the Hatch-Waxman Amendments to the FDCA, Congress authorized the FDA to approve generic drugs that are the same as drugs previously approved by the FDA under the NDA provisions of the statute.

Specifically, in order for an abbreviated new drug application, or ANDA, to be approved, the FDA must find that the generic version is identical to the reference listed drug, or RLD, with respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug.

In September 2021, the FDA published final regulations which describe the types of evidence that the agency will consider in determining the intended use of a drug or biologic.

In addition, the distribution of prescription pharmaceutical products is subject to a variety of federal and state laws, the most recent of which is still in the process of being phased into the U.S.

supply chain and regulatory framework.

The Prescription Drug Marketing Act, or PDMA, was the first federal law to set minimum standards for the registration and regulation of drug distributors by the states and to regulate the distribution of drug samples.

Today, both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution.

Congress more recently enacted the Drug Supply Chain Security Act, or DSCSA, which made significant amendments to the FDCA, including by replacing certain provisions from the PDMA pertaining to wholesale distribution of prescription drugs with a more comprehensive statutory scheme.

The DSCSA now requires uniform national standards for wholesale distribution and, for the first time, for third-party logistics providers;

it also provides for preemption of certain state laws in the areas of licensure and prescription drug traceability.

Generic Drugs and Regulatory Exclusivity

In 1984, with passage of the Hatch-Waxman Act, Congress established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs that are shown to contain the same active ingredients as, and to be bioequivalent to, drugs previously approved by the FDA pursuant to NDAs and it also enacted Section 505(b)(2).

To obtain approval of a generic drug, an applicant must submit an abbreviated new drug application, or ANDA, to the agency.

In support of such applications, a generic manufacturer may rely on the preclinical and clinical testing conducted for a drug product previously approved under an NDA, known as the reference listed drug, or RLD.

Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with respect to the active ingredients, the route of administration, the dosage form, the strength of the drug and the conditions of use of the drug.

At the same time, the FDA must also determine that the generic drug is “bioequivalent” to the innovator drug.

Under the statute, a generic drug is bioequivalent to an RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.”

Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book.” Physicians and pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the RLD.

In addition, by operation of certain state laws and numerous health insurance programs, the FDA’s designation of therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the prescribing physician or patient.

Under the Hatch-Waxman Amendments, the FDA may not approve an ANDA until any applicable period of non-patent exclusivity for the RLD has expired.

The FDCA provides a period of five years of non-patent data exclusivity for a new drug containing a new chemical entity.

An NCE is a drug that contains no active moiety that has previously been approved by the FDA in any other NDA.

Under the statute, a generic drug is bioequivalent to a RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.” Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book.” Physicians and pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the RLD.

Under the Hatch-Waxman Act, the FDA may not approve an ANDA or 505(b)(2) application until any applicable period of non-patent exclusivity for the RLD has expired.

The FDCA provides a period of five years of non-patent data exclusivity for a new drug containing a new chemical entity, or NCE.

For the purposes of this provision, FDA has consistently taken the position that an NCE is a drug that contains no active moiety that has previously been approved by the FDA in any other NDA.

This interpretation was confirmed with enactment of the Ensuring Innovation Act in April 2021.

An active moiety is the molecule or ion responsible for the physiological or pharmacological action of the drug substance.

In cases where such exclusivity has been granted, an ANDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification, in which case the applicant may submit its application four years following the original product approval.

The FDCA also provides for a period of three years of exclusivity if the NDA includes reports of one or more new clinical investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the applicant and are essential to the approval of the application.

This three-year exclusivity period often protects changes to a previously approved drug product, such as a new dosage form, route of administration, combination or indication.

In cases where such NCE exclusivity has been granted, a generic or follow-on drug application may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification, in which case the applicant may submit its application four years following the original product approval.

This three-year exclusivity period often protects changes to a previously approved drug product, such as a new dosage form, route of administration, combination or indication.

This three-year exclusivity period often protects changes to a previously approved drug product, such as new indications, dosage forms, route of administration or combination of ingredients.

Three-year exclusivity would be available for a drug product that contains a previously approved active moiety, provided the statutory requirement for a new clinical investigation is satisfied.

Unlike five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accepting ANDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product.

The FDA typically makes decisions about awards of data exclusivity shortly before a product is approved.

Hatch-Waxman Patent Certification and the 30-Month Stay

Upon approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or an approved method of using the product.

Each of the patents listed by the NDA sponsor is published in the Orange Book.

When an ANDA applicant files its application to the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in the Orange Book, except for patents covering methods of use for which the ANDA applicant is not seeking approval.

To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.

Specifically, the applicant must certify with respect to each patent that:

● the required patent information has not been filed;

● the listed patent has expired;

● the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration;

● the listed patent is invalid, unenforceable or will not be infringed by the new product.

A certification that the new product will not infringe the already approved product’s listed patents or that such patents are invalid or unenforceable is called a Paragraph IV certification.

If the applicant does not challenge the listed patents or indicate that it is not seeking approval of a patented method of use, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.

If the ANDA applicant or 505(b)(2) applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA.

The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification.

The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months after the receipt of the Paragraph IV notice, expiration of the patent, or a decision in the infringement case that is favorable to the ANDA applicant.

To the extent that the Section 505(b)(2) applicant is relying on trials conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.

As a result, approval of a Section 505(b)(2) NDA can be stalled until all the listed patents claiming the referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.

The 2010 Patient Protection and Affordable Care Act, which was signed into law on March 23, 2010, or ACA, included a subtitle called the Biologics Price Competition and Innovation Act of 2009 or BPCIA.

That Act established a regulatory scheme authorizing the FDA to approve biosimilars and interchangeable biosimilars.

As of January 1, 2021, the FDA has approved 29 biosimilar products for use in the United States.

No interchangeable biosimilars, however, have been approved.

The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.

Additional guidance is expected to be finalized by FDA in the near term.

Under the BPCIA, a manufacturer may submit an application for licensure of a biologic product that is “biosimilar to” or “interchangeable with” a previously approved biological product or “reference product.” In order for the FDA to approve a biosimilar product, it must find that there are no clinically meaningful differences between the reference product and proposed biosimilar product in terms of safety, purity, and potency.

For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find that the biosimilar product can be expected to produce the same clinical results as the reference product, and for products administered multiple times that the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date of approval of the reference product.

The FDA may not approve a biosimilar product until 12 years from the date on which the reference product was approved.

Even if a product is considered to be a reference product eligible for exclusivity, another company could market a competing version of that product if the FDA approves a full BLA for such product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law.

Unlike five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accepting ANDAs or 505(b)(2) NDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product;

rather, this three-year exclusivity covers only the conditions of use associated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving follow-on applications for drugs containing the original active ingredient.

Five-year and three-year exclusivity also will not delay the submission or approval of a traditional NDA filed under Section 505(b)(1) of the FDCA;

however, an applicant submitting a traditional NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

As part of the submission of an NDA or certain supplemental applications, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or an approved method of using the product.

Upon approval of a new drug, each of the patents listed in the application for the drug is then published in the Orange Book.

The FDA’s regulations governing patient listings were largely codified into law with enactment of the Orange Book Modernization Act in January 2021.

When an ANDA applicant files its application with the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in the Orange Book.

Specifically, the ANDA applicant must certify that:

(i) the required patent information has not been filed;

(ii) the listed patent has expired;

(iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration;

or (iv) the listed patent is invalid or will not be infringed by the new product.

Moreover, to the extent that the Section 505(b)(2) NDA applicant is relying on studies conducted for an already approved product, the applicant also is required to certify to the FDA concerning any patents listed for the NDA-approved product in the Orange Book to the same extent that an ANDA applicant would.

If the generic drug or follow-on drug applicant does not challenge the innovator’s listed patents, FDA will not approve the ANDA or 505(b)(2) application until all the listed patents claiming the referenced product have expired.

A certification that the new generic product will not infringe the already approved product’s listed patents or that such patents are invalid or unenforceable is called a Paragraph IV certification.

If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA owner and patent holders once the ANDA has been accepted for filing by the FDA.

The NDA owner and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification.

The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earliest of 30 months after the receipt of the Paragraph IV

notice, expiration of the patent and a decision in the infringement case that is favorable to the ANDA or 505(b)(2) NDA applicant.

Regulatory Exclusivity Governing Biologics

When a biological product is licensed for marketing by FDA with approval of a BLA, the product may be entitled to certain types of market and data exclusivity barring FDA from approving competing products for certain periods of time.

In March 2010, the Patient Protection and Affordable Care Act was enacted in the United States and included the Biologics Price Competition and Innovation Act of 2009, or the BPCIA.

The BPCIA amended the PHSA to create an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product.

To date, the FDA has approved a number of biosimilars and the first interchangeable biosimilar product was approved on July 30, 2021 and a second product previously approved as a biosimilar was designated as interchangeable in October 2021.

The FDA has also issued numerous guidance documents outlining its approach to reviewing and licensing biosimilars and interchangeable biosimilars under the PHSA, including a draft guidance issued in November 2020 that seeks to provide additional clarity to manufacturers of interchangeable biosimilars.

Under the BPCIA, a manufacturer may submit an application for a product that is “biosimilar to” a previously approved biological product, which the statute refers to as a “reference product.” In order for the FDA to approve a biosimilar product, it must find that there are no clinically meaningful differences between the reference product and the proposed biosimilar product in terms of safety, purity and potency.

The biosimilar applicant may demonstrate that its product is biosimilar to the reference product on the basis of data from analytical studies, animal studies and one or more clinical studies to demonstrate safety, purity and potency in one or more appropriate conditions of use for which the reference product is approved.

In addition, the applicant must show that the biosimilar and reference products have the same mechanism of action for the conditions of use on the label, route of administration, dosage and strength, and the production facility must meet standards designed to assure product safety, purity and potency.

For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find not only that the product is biosimilar to the reference product but also that it can be expected to produce the same clinical results as the reference product such that the two products may be switched without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.

Upon licensure by the FDA, an interchangeable biosimilar may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.

Following approval of the interchangeable biosimilar product, the FDA may not grant interchangeability status for any second biosimilar until one year after the first commercial marketing of the first interchangeable biosimilar product.

A reference biological product is granted 12 years of exclusivity from the time of first licensure of the product, and the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product.

Even if a product is considered to be a reference product eligible for exclusivity, however, another company could market a competing version of that product if the FDA approves a full BLA for such product containing the sponsor’s own preclinical data and data from adequate and well controlled clinical trials to demonstrate the safety, purity, and potency of their product.

There have been recent government proposals to reduce the 12-year reference product exclusivity period, but none has been enacted to date.

At the same time, since passage of the BPCIA, many states have passed laws or amendments to laws, which address pharmacy practices involving biosimilar products.

Pediatric Exclusivity

Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent exclusivity.

Pediatric exclusivity is a type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of exclusivity.

For drug products, the six-month exclusivity may be attached to the term of any existing patent or regulatory exclusivity, including the orphan exclusivity and regulatory exclusivities available under the Hatch-Waxman Act.

For biologic products, the six month period may be attached to any existing regulatory exclusivities but not to any patent terms.

The conditions for pediatric exclusivity include the FDA’s determination that information relating to the use of a new product in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric clinical trials, and the applicant agreeing to perform, and reporting on, the requested clinical trials within the statutory timeframe.

This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data.

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rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted.

If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months.

This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application.

If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patents that cover the product are extended by six months.

Although this is not a patent term extension, it effectively extends the regulatory period during which the FDA cannot approve another application.

With regard to patents, the six-month pediatric exclusivity period will not attach to any patents for which an ANDA or 505(b)(2) applicant submitted a paragraph IV patent certification, unless the NDA sponsor or patent owner first obtains a court determination that the patent is valid and infringed by the proposed product.

Patent Term Restoration and Extension

A patent claiming a new drug product may be eligible for a limited patent term extension under the Hatch-Waxman Act, which permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review.

The restoration period granted is typically one-half the time between the effective date of an IND and the submission date of an NDA, plus the time between the submission date of an NDA and the ultimate approval date.

Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date.

Only one patent applicable to an approved drug product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in question.

A patent that covers multiple drugs for which approval is sought can only be extended in connection with one of the approvals.

The United States Patent and Trademark Office reviews and approves the application for any patent term extension or restoration in consultation with the FDA.

In the United States, a patent claiming a new product, its method of use or its method of manufacture may be eligible for a limited patent term extension under the Hatch Waxman Act, which permits a patent extension of up to five years for patent term lost during product development and FDA regulatory review.

Assuming grant of the patent for which the extension is sought, the restoration period for a patent covering a product is typically one half the time between the effective date of the IND involving human beings and the submission date of the NDA or BLA, plus the time between the submission date of the application and the ultimate approval date.

Patent term restoration cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval date in the United States.

Only one patent applicable to an approved product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent for which extension is sought.

A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals.

The USPTO reviews and approves the application for any patent term extension in consultation with the FDA.

Review and Approval of Medical Devices in the United States

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If the FDA’s evaluations are not favorable, the FDA will deny approval of the PMA application or issue a not approvable letter.

The PMA application process, including the

gathering of clinical and nonclinical data and the submission to and review by the FDA, can take several years, and the process can be expensive and uncertain.

The PMA application process, including the gathering of clinical and nonclinical data and the submission to and review by the FDA, can take several years, and the process can be expensive and uncertain.

Moreover, even if the FDA approves a PMA application, the FDA may approve the device with an indication that is narrower or more limited than originally sought.

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The clinical trial must be conducted in accordance with applicable regulations, including but not limited to the FDA’s IDE regulations and GCP.

The investigators must obtain subject informed consent, rigorously follow the investigational plan and study protocol, control the disposition of investigational devices, and comply with all reporting and record keeping requirements.

The investigators must obtain subject informed consent, rigorously follow the investigational plan

and study protocol, control the disposition of investigational devices, and comply with all reporting and record keeping requirements.

A clinical trial may be suspended or terminated by the FDA, the IRB or the sponsor at any time for various reasons, including a belief that the risks to the study participants outweigh the benefits of participation in the trial.

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Review and Approval of Combination Products in the United States

Certain products may be comprised of components that would normally be regulated under different types of regulatory authorities, and frequently by different Centers at the FDA.

These products are known as combination products.

Specifically, under regulations issued by the FDA, a combination product may be:

● a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity;

● two or more separate products packaged together in a single package or as a unit and comprised of drug and device products;

● a drug or device packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug or device where both are required to achieve the intended use, indication, or effect and where upon approval of the proposed product the labeling of the

approved product would need to be changed, e.g., to reflect a change in intended use, dosage form, strength, route of administration, or significant change in dose;

● any investigational drug or device packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect.

Under the FDCA, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product.

That determination is based on the “primary mode of action” of the combination product.

Thus, if the primary mode of action of a device-drug combination product is attributable to the drug product, the FDA Center responsible for premarket review of the drug product would have primary jurisdiction for the combination product.

The FDA has also established an Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review process.

That office serves as a focal point for combination product issues for agency reviewers and industry.

It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the FDA center that has primary jurisdiction for review of combination products where the jurisdiction is unclear or in dispute.

● A combination product is a product composed of any combination of a drug and a device;

a biological product and a device;

a drug and a biological product;

or a drug, device, and a biological product.

Under FDA’s regulations, a combination product is defined to include:

a product comprised of two or more regulated components that are physically, chemically, or otherwise combined or mixed and produced as a single entity (a “single-entity” combination product);

● two or more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or biological and drug products (“co-packaged” combination product);

● a drug, device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, device, or biological product (a “cross-labeled” combination product);

● any investigational drug, device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product where both are required to achieve the intended use, indication, or effect (a “cross-labeled” investigational combination product).

The FDA has established an Office of Combination Products to serve as a focal point for combination product issues and for medical product classification and assignment issues for agency staff and industry.

That office issues guidance and regulations to clarify the regulation of combination products, and is responsible for assigning products to an FDA center for premarket review and regulation where their classification or assignment is unclear or in dispute.

Combination products are assigned to an FDA center based on a determination of the “primary mode of action” or PMOA of the combination product.

The FDCA defines PMOA as “the single mode of action of a combination product that provides the most important therapeutic action of the combination product.” For example, if the PMOA of a device-biological combination product is attributable to the biological product, the FDA Division responsible for premarket review of that biological product would have primary jurisdiction for the combination product.

One investigational application is generally sufficient for a combination product, but that application must include all information on the entire combination product.

In most cases, the type of investigational application is that typically required by the lead center.

Thus, if the drug constituent part of a drug/device combination product provides the PMOA, the investigation would be under an IND.

Federal and State Data Privacy Laws

There are multiple privacy and data security laws that may impact our business activities, in the United States and in other countries where we conduct trials or where we may do business in the future.

These laws are evolving and may increase both our obligations and our regulatory risks in the future.

In the health care industry generally, under the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, the HHS has issued regulations to protect the privacy and security of protected health information, or PHI, used or disclosed by covered entities including certain healthcare providers, health plans and healthcare clearinghouses.

HIPAA also regulates standardization of data content, codes and formats used in healthcare transactions and standardization of identifiers for health plans and providers.

HIPAA also imposes certain obligations on the business associates of covered entities that obtain protected health information in providing services to or on behalf of covered entities.

HIPAA may apply to us in certain circumstances and may also apply to our business partners in ways that may impact our relationships with them.

Our clinical trials are regulated by the Common Rule, which also includes specific privacy-related provisions.

In addition to federal privacy regulations, there are a number of state laws governing confidentiality and security of health information that may be applicable to our business.

In addition to possible federal civil and criminal penalties for HIPAA violations, state attorneys general are authorized to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with pursuing federal civil actions.

In addition, state attorneys general

(along with private plaintiffs) have brought civil actions seeking injunctions and damages resulting from alleged violations of HIPAA’s privacy and security rules.

State attorneys general also have authority to enforce state privacy and security laws.

New laws and regulations governing privacy and security may be adopted in the future as well.

At the state level, California has enacted legislation that has been dubbed the first “GDPR-like” law in the United States.

Known as the California Consumer Privacy Act, or CCPA, it creates new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.

The CCPA went into effect on January 1, 2020 and requires covered companies to provide new disclosures to California consumers, provide such consumers new ways to opt-out of certain sales of personal information, and allow for a new cause of action for data breaches.

Additionally, effective starting on January 1, 2023, the California Privacy Rights Act, or CPRA, will significantly modify the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.

The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.

The CCPA and CPRA could impact our business activities depending on how it is interpreted and exemplifies the vulnerability of our business to not only cyber threats but also the evolving regulatory environment related to personal data and individually identifiable health information.

These provisions may apply to some of our business activities.

In addition, other states, including Virginia and Colorado, already have passed state privacy laws and other states will likely be considering similar laws in the near future.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under such laws, it is possible that some of our current or future business activities, including certain clinical research, sales and marketing practices and the provision of certain items and services to our customers, could be subject to challenge under one or more of such privacy and data security laws.

The heightening compliance environment and the need to build and maintain robust and secure systems to comply with different privacy compliance and/or reporting requirements in multiple jurisdictions could increase the possibility that a healthcare company may fail to comply fully with one or more of these requirements.

If our operations are found to be in violation of any of the privacy or data security laws or regulations described above that are applicable to us, or any other laws that apply to us, we may be subject to penalties, including potentially significant criminal, civil and administrative penalties, damages, fines, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a consent decree or similar agreement to resolve allegations of non-compliance with these laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

To the extent that any product candidates we may develop, once approved, are sold in a foreign country, we may be subject to similar foreign laws.

Review and Approval of Medical Products in the European Union

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Clinical trial application must be accompanied by an investigational medicinal product dossier with supporting information prescribed by the European Clinical Trials Directive and corresponding national laws of the member states and further detailed in applicable guidance documents.

In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014, which is set to replace the current Clinical Trials Directive 2001/20/EC.

The new Clinical Trials Regulation will become directly applicable to and binding in all 28 EU Member States without the need for any national implementing legislation.

It will overhaul the current system of approvals for clinical trials in the EU.

Specifically, the new legislation aims at simplifying and streamlining the approval of clinical trials in the EU.

Under the new coordinated procedure for the approval of clinical trials, the sponsor of a clinical trial will be required to submit a single application for approval of a clinical trial to a reporting EU Member State (RMS) through an EU Portal.

The submission procedure will be the same irrespective of whether the clinical trial is to be conducted in a single EU Member State or in more than one EU Member State.

The Regulation was published on June 16, 2014 but has not yet become effective.

In January 2020, the website of the European Commission reported that the implementation of the Clinical Trials Regulation was dependent on the development of a fully functional clinical trials portal and database, which would be confirmed by an independent audit, and that the new legislation would come into effect six months after the European Commission publishes a notice of this confirmation.

The website indicated that the audit was expected to commence in December 2020.

In late 2020, the EMA indicated that it plans to focus on the findings of a system audit;

improving the usability, quality and stability of the clinical trial information system;

and knowledge transfer to prepare users and their organizations for the new clinical trial system.

The EMA has indicated that the system will go live in December 2021.

In April 2014, the new Clinical Trials Regulation, (EU) No 536/2014, or the Clinical Trials Regulation, was adopted.

The Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the European Union.

The main characteristics of the regulation include:

a streamlined application procedure via a single entry point, the “EU portal”;

a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors;

and a harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts.

Part I is assessed by the competent authorities of all European Union Member States in which an application for authorization of a clinical trial has been submitted (Member States concerned).

Part II is assessed separately by each Member State concerned.

Strict deadlines have been established for the assessment of clinical trial applications.

The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the concerned European Union Member State.

However, overall related timelines will be defined by the Clinical Trials Regulation.

The new Regulation came into application on January 31, 2022, following confirmation of full functionality of the Clinical Trials Information System through an independent audit by the European Commission in mid-2020.

The Clinical Trials Regulation repealed the prior Clinical Trials Directive 2001/20/EC.

According to the transitional provisions, if a clinical trial initiated prior to the effectiveness of the new Regulation continues for more than three years from the day on which the Clinical Trials Regulation becomes applicable, the Clinical Trials Regulation will at that time begin to apply to the clinical trial.

Parties conducting certain clinical trials must, as in the United States, post clinical trial information in the European Union at the EudraCT website:

https://eudract.ema.europa.eu.

Marketing Authorization

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If a member state cannot approve the assessment report and related materials on the grounds of potential serious risk to public health, the disputed points are subject to a dispute resolution mechanism and may eventually be referred to the European Commission, whose decision is binding on all member states.

Regulatory Data Protection in the European Union

In the EU, innovative medicinal products approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Directive 2001/83/EC.

Regulation (EC) No 726/2004 repeats this entitlement for medicinal products authorized in accordance the centralized authorization procedure.

Data exclusivity prevents applicants for authorization of generics of these innovative products from referencing the innovator’s data to assess a generic (abridged) application for a period of eight years.

During an additional two-year period of market exclusivity, a generic marketing authorization application can be submitted and authorized, and the innovator’s data may be referenced, but no generic medicinal product can be placed on the EU market until the expiration of the market exclusivity.

The overall ten-year period will be extended to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

Even if a compound is considered to be a new chemical entity so that the innovator gains the prescribed period of data exclusivity, another company nevertheless could also market another version of the product if such company obtained marketing authorization based on an MAA with a complete independent data package of pharmaceutical tests, preclinical tests and clinical trials.

Conditional Approval

In particular circumstances, European Union legislation (Article 14–a Regulation (EC) No 726/2004 (as amended by Regulation (EU) 2019/5 and Regulation (EC) No 507/2006 on Conditional Marketing Authorizations for Medicinal Products for Human Use) enables applicants to obtain a conditional marketing authorization prior to obtaining the comprehensive clinical data required for an application for a full marketing authorization.

Such conditional approvals may be granted for product candidates (including medicines designated as orphan medicinal products) if (1) the product candidate is intended for the treatment, prevention or medical diagnosis of seriously debilitating or life-threatening diseases;

(2) the product candidate is intended to meet unmet medical needs of patients;

(3) a marketing authorization may be granted prior to submission of comprehensive clinical data provided that the benefit of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required;

(4) the risk-benefit balance of the product candidate is positive, and (5) it is likely that the applicant will be in a position to provide the required comprehensive clinical trial data.

A conditional marketing authorization may contain specific obligations to be fulfilled by the marketing authorization holder, including obligations with respect to the completion of ongoing or new studies and with respect to the collection of pharmacovigilance data.

Conditional marketing authorizations are valid for one year, and may be renewed annually, if the risk-benefit balance remains positive, and after an assessment of the need for additional or modified conditions or specific obligations.

The timelines for the centralized procedure described above also apply with respect to the review by the CHMP of applications for a conditional marketing authorization.

Periods of Authorization and Renewals

A marketing authorization has an initial validity for five years in principle.

The marketing authorization may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the EU Member State.

The marketing authorization may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the European Union Member State.

To this end, the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the marketing authorization was granted, at least six months before the marketing authorization ceases to be valid.

The European Commission or the competent authorities of the EU Member States may decide, on justified grounds relating to pharmacovigilance, to proceed with one further five-year period of marketing authorization.

The European Commission or the competent authorities of the European Union Member States may decide, on justified grounds relating to pharmacovigilance, to proceed with one further five-year period of marketing authorization.

Once subsequently definitively renewed, the marketing authorization shall be valid for an unlimited period.

Any authorization which is not followed by the actual placing of the medicinal product on the European Union market (in case of centralized procedure) or on the market of the authorizing EU Member State within three years after authorization ceases to be valid (the so-called sunset clause).

Any authorization which is not followed by the actual placing of the medicinal product on the European Union market (in case of centralized procedure) or on the market of the authorizing European Union Member State within three years after authorization ceases to be valid (the so-called sunset clause).

Regulatory Requirements after a Marketing Authorization has been Obtained

In case an authorization for a medicinal product in the EU is obtained, the holder of the marketing authorization is required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products.

In case an authorization for a medicinal product in the European Union is obtained, the holder of the marketing authorization is required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products.

These include:

● Compliance with the EU’s stringent pharmacovigilance or safety reporting rules must be ensured.

● Compliance with the European Union’s stringent pharmacovigilance or safety reporting rules must be ensured.

These rules can impose post-authorization studies and additional monitoring obligations.

● The manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory, must also be conducted in strict compliance with the applicable EU laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC, Regulation (EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice.

These requirements include compliance with EU cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the EU with the intention to import the active pharmaceutical ingredients into the EU.

● The marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the EU notably under Directive 2001/83EC, as amended, and EU Member State laws.

Direct-to-consumer advertising of prescription medicines is prohibited across the EU.

● The manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory, must also be conducted in strict compliance with the applicable European Union laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC, Regulation (EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice.

These requirements include compliance with European Union cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the European Union with the intention to import the active pharmaceutical ingredients into the European Union.

● The marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the European Union notably under Directive 2001/83EC, as amended, and European Union Member State laws.

Direct-to-consumer advertising of prescription medicines is prohibited across the European Union.

Regulatory Data Protection in the European Union

In the European Union, innovative medicinal products approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Directive 2001/83/EC.

Regulation (EC) No 726/2004 repeats this entitlement for medicinal products authorized in accordance the centralized authorization procedure.

During an additional two-year period of market exclusivity, a generic marketing authorization application can be submitted and authorized, and the innovator’s data may be referenced, but no generic medicinal product can be placed on the European Union market until the expiration of the market exclusivity.

Pediatric Exclusivity

If an applicant obtains a marketing authorization in all European Union Member States, or a marketing authorization granted in the centralized procedure by the European Commission, and the study results for the pediatric population are included in the product information, even when negative, the medicine is then eligible for an additional six-month period of qualifying patent protection through extension of the term of the Supplementary Protection Certificate, or SPC, or alternatively a one year extension of the regulatory market exclusivity from ten to eleven years, as selected by the marketing authorization holder.

Patent Term Extensions

The European Union also provides for patent term extension through SPCs.

The rules and requirements for obtaining a SPC are similar to those in the United States.

An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of fifteen years of marketing exclusivity for a drug.

In certain circumstances, these periods may be extended for six additional months if pediatric exclusivity is obtained.

Although SPCs are available throughout the European Union, sponsors must apply on a country by country basis.

Similar patent term extension rights exist in certain other foreign jurisdictions outside the European Union.

Reimbursement and Pricing of Prescription Pharmaceuticals

In the European Union, similar political, economic and regulatory developments to those in the United States may affect our ability to profitably commercialize our product candidates, if approved.

In markets outside of the United States and the European Union, reimbursement and healthcare payment systems vary significantly by country and many countries have instituted price ceilings on specific products and therapies.

In many countries, including those of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control and access.

In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product.

To obtain reimbursement or pricing approval in some countries, pharmaceutical firms may be required to conduct a clinical trial that compares the cost-effectiveness of the product to other available therapies.

Review and Approval of Medical Devices in the European Union

The European Union has adopted numerous directives and standards regulating, among other things, the design, manufacture, clinical trials, labeling, approval and adverse event reporting for medical devices.

In the European Union, or the EU, medical devices must comply with the Essential Requirements in Annex I to the currently applicable EU Medical Devices Directive (Council Directive 93/42/EEC), or the Essential Requirements.

In the European Union, or the European Union, medical devices must comply with the Essential Requirements in Annex I to the currently applicable European Union Medical Devices Directive (Council Directive 93/42/EEC), or the Essential Requirements.

Compliance with these requirements is a prerequisite to be able to affix the CE Mark of Conformity to medical devices, without which they cannot be marketed or sold in the European Economic Area, or EEA, comprised of the European Union member states plus Norway, Iceland, and Liechtenstein.

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Additionally, all manufacturers placing medical devices in the market in the European Union are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the competent authority in whose jurisdiction the incident occurred.

In the European Union, manufacturers must comply with the EU Medical Device Vigilance System.

Under this system, incidents must be reported to the relevant authorities of the European Union countries, and manufacturers are required to take Field Safety Corrective Actions, or FSCAs, to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

In the European Union, manufacturers must comply with the European Union Medical Device Vigilance System.

Under this system, incidents must be reported to the relevant authorities of the

European Union countries, and manufacturers are required to take Field Safety Corrective Actions, or FSCAs, to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

An incident is defined as any malfunction or deterioration in the characteristics and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which, directly or indirectly, might lead to or might have led to the death of a patient or user or of other persons or to a serious deterioration in their state of health.

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FSCAs must be communicated by the manufacturer or its European Authorized Representative to its customers and to the end users of the device through Field Safety Notices.

The legal framework currently applicable for medical devices in the European Union will soon be amended by Medical Devices Regulation (Regulation (EU) 2017/745) adopted in 2017, which we refer to as the MDR and which

repeals and replaces the EU Medical Devices Directive.

Unlike directives, which must be implemented into the national laws of the European Economic Area, or EEA, member states, the MDR will be directly applicable (i.e., without the need for adoption of EEA member State laws implementing them) in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among EEA member states.

The legal framework currently applicable for medical devices in the European Union was amended by Medical Devices Regulation (Regulation (EU) 2017/745) adopted in 2017, which we refer to as the MDR and which repeals and replaces the European Union Medical Devices Directive.

Unlike directives, which must be implemented into the national laws of the European Economic Area, or EEA, member states, the MDR is directly applicable (i.e., without the need for adoption of EEA member State laws implementing them) in all EEA member states and is intended to eliminate current differences in the regulation of medical devices among EEA member states.

The MDR, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical and ensure a high level of safety and health.

Currently, the MDR is scheduled to become applicable on May 26, 2021.

Once applicable, the MDR will, among other things:

The MDR became applicable on May 26, 2021 and will, among other things:

● strengthen the rules on placing devices on the market and reinforce surveillance once they are available;

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● improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

● set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU;

● set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the European Union;

● strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.

Brexit and the Regulatory Framework in the United Kingdom

On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the EU, commonly referred to as Brexit.

Following protracted negotiations, the United Kingdom left the EU on January 31, 2020.

Under the withdrawal agreement, there is a transitional period until December 31, 2020 (extendable by up to two years).

On December 24, 2020, the United Kingdom and the European Union entered into a Trade and Cooperation Agreement.

The agreement sets out certain procedures for approval and recognition of medical products in each jurisdiction.

Since the regulatory framework for pharmaceutical products in the United Kingdom covering quality, safety and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit could materially impact the future regulatory regime which applies to products and the approval of product candidates in the UK, as the UK legislation now has the potential to diverge from EU legislation.

It remains to be seen how Brexit will impact regulatory requirements for product candidates and products in the UK in the long-term.

The MHRA has recently published detailed guidance for industry and organizations to follow from January 1, 2021 now the transition period is over, which will be updated as the UK’s regulatory position on medicinal products evolves over time.

The United Kingdom’s withdrawal from the European Union took place on January 31, 2020.

The European Union and the U.K.

reached an agreement on their new partnership in the Trade and Cooperation Agreement, or the Trade and Cooperation Agreement, which was applied provisionally beginning on January 1, 2021 and which entered into force on May 1, 2021.

The Trade and Cooperation Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products.

Thereafter, the European Union and the U.K.

will form two separate markets governed by two distinct regulatory and legal regimes.

As such, the Trade and Cooperation Agreement seeks to minimize barriers to trade in goods while accepting that border checks will become inevitable as a consequence that the U.K.

is no longer part of the single market.

As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or the MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law whereas Northern Ireland continues to be subject to European Union rules under the Northern Ireland Protocol.

The MHRA will rely on the Human Medicines Regulations 2012 (SI 2012/1916) (as amended), or the HMR, as the basis for regulating medicines.

The HMR has incorporated into the domestic law the body of European Union law instruments governing medicinal products that pre-existed prior to the U.K.’s withdrawal from the European Union.

Furthermore, while the Data Protection Act of 2018 in the United Kingdom that “implements” and complements the European Union’s General Data Protection Regulation, or GDPR, has achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, it is still unclear whether transfer of data from the European Economic Area, or EEA, to the United Kingdom will remain lawful under GDPR.

The Trade and Cooperation Agreement provides for a transitional period during which the United Kingdom will be treated like an European Union member state in relation to processing and transfers of personal data for four months from January 1, 2021.

The Trade and Cooperation Agreement provides for a transitional period during which the United Kingdom will be treated like an European Union member state in relation to

processing and transfers of personal data for four months from January 1, 2021.

This may be extended by two further months.

After such period, the United Kingdom will be a “third country” under the GDPR unless the European Commission adopts an adequacy decision in respect of transfers of personal data to the United Kingdom.

The United Kingdom has already determined that it considers all of the EU 27 and EEA member states to be adequate for the purposes of data protection, ensuring that data flows from the United Kingdom to the EU/EEA remain unaffected.

The United Kingdom has already determined that it considers all of the European Union 27 and EEA member states to be adequate for the purposes of data protection, ensuring that data flows from the United Kingdom to the European Union/EEA remain unaffected.

General Data Protection Regulation

The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the EU, including personal health data, is subject to the EU General Data Protection Regulation, or GDPR, which became effective on May 25, 2018.

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that

process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater.

Many countries outside of the United States maintain rigorous laws governing the privacy and security of personal information.

The collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are located in the EEA, and the processing of personal data that takes place in the EEA, is subject to the GDPR, which became effective on May 25, 2018.

The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, and it imposes heightened requirements on companies that process health and other sensitive data, such as requiring in many situations that a company obtain the consent of the individuals to whom the sensitive personal data relate before processing such data.

Examples of obligations imposed by the GDPR on companies processing personal data that fall within the scope of the GDPR include providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, appointing a data protection officer, providing notification of data breaches and taking certain measures when engaging third-party processors.

The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the United States, and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater.

The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.

Compliance with the GDPR will be a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance.

Compliance with the GDPR is a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance.

In July 2020, the Court of Justice of the European Union, or the CJEU, invalidated the European Union-U.S.

Privacy Shield framework, one of the mechanisms used to legitimize the transfer of personal data from the EEA to the United States.

The CJEU decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the United States.

Following the withdrawal of the U.K.

from the European Union, the U.K.

Data Protection Act 2018 applies to the processing of personal data that takes place in the U.K.

and includes parallel obligations to those set forth by GDPR.

Pharmaceutical Coverage, Pricing and Reimbursement

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Under the statute, transitional pass-through payments can be made for at least two years but not more than three years.

We applied for a transitional pass-through reimbursement status on November 30, 2018 for DEXTENZA from CMS.

In May 2019, we received formal notification from CMS that it had approved transitional pass-through payment status and established an interim billing code, known as a C-Code, for DEXTENZA that subsequently became effective on July 1, 2019.

We also submitted an application to CMS for a J-Code for DEXTENZA in December 2018 and received a specific and permanent J-Code J1096 in July 2019 which became effective on October 1, 2019.

With the effectiveness of our permanent J-Code for DEXTENZA as of October 1, 2019, our C-code is no longer in effect.

DEXTENZA is scheduled to lose transitional pass-through status in July 2022.

In November 2021, CMS, in its annual rulemaking, has indicated that DEXTENZA will be paid separately in the ASC and HOPD settings through 2022 despite its scheduled loss of pass-through status.

CMS also indicated that DEXTENZA is eligible for separate payment in the ASC setting beyond 2022 because it meets the criteria set forth for non-opioid pain management drugs as a surgical supply provision.

In addition, CMS, during the same rulemaking cycle, made a final recommendation on the fixed reimbursement amount for the procedure of inserting DEXTENZA, a Category I Current Procedural Terminology, or CPT, code 68841 to replace DEXTENZA’s current Category III CPT code 0365T, effective January 1, 2022.

The physician fee for the insertion of DEXTENZA into the canaliculus will be $31.58 in the ASCs and HOPDs and $37.29 in the physician’s office for unilateral insertion as of January 1, 2022 under the new Category I code.

Additionally, although CMS established these reimbursement amounts for 2022, CMS will review such determination as part of its annual rulemaking cycle.

A specific and permanent J-Code for ophthalmic inserts containing dexamethasone including DEXTENZA is in effect.

J-Codes are familiar to both medical practices and their billing staffs, as well as Medicare (Part B and Part C) and commercial insurers.

As a result, J-Codes generally allow for a simpler and more convenient reimbursement process.

We expect pricing for DEXTENZA while in pass-through payment status to be approximately $538 per insert, and we expect pass-through status to remain in effect for up to three years from the effective date of the C-code, or July 1, 2019.

To date, four of seven Medicare Administrative Contractors, or MACs, have established physician fee schedules for the Category III Current Procedural Terminology, or CPT, procedure code 0356T currently in effect for the administration of drug-eluting intracanalicular inserts, including DEXTENZA:

Novitas Solutions, Inc., or Novitas;

First Coast Service Options, Inc., or First Coast;

National Government Services, Inc., or NGS;

and Wisconsin Physician Services, Inc, or WPS.

The professional fee for CPT code 0356T is now eligible for physician payment for each insertion, in accordance with the applicable MAC’s fee schedule.

Novitas covers Medicare patients in New Mexico, Texas, Colorado, Oklahoma, Arkansas, Louisiana, Mississippi, New Jersey, Pennsylvania, Delaware, Virginia and the District of Columbia.

First Coast covers Medicare patients in Florida, Puerto Rico, and the U.S.

Virgin Islands.

NGS covers Medicare patients in Illinois, Minnesota, Wisconsin, New York, Massachusetts, Connecticut, New Hampshire, Maine, Rhode Island, and Vermont.

Wisconsin Physician Services, Inc.

covers Medicare beneficiaries in Iowa, Kansas, Missouri, Nebraska, Indiana and Michigan.

Combined, Novitas, First Coast, NGS and WPS cover over 60% of all Medicare beneficiaries.

As of March 1, 2021, all seven MACs were reimbursing providers for intracanalicular insertions under CPT code 0356T despite only four of them having published physician fee schedules for the procedure.

On November 4, 2020, we announced that our application to the American Medical Association CPT Editorial Panel, or the Panel, for the creation of a Category I CPT procedure code had been granted.

Category I CPT codes normally have a standardized Medicare physician fee schedule.

As a result, they can improve coverage and payment across all payers for procedures performed in both the ASC and physician office settings.

The Panel has agreed to create a permanent Category I CPT procedure code, effective January 1, 2022, to replace CPT code 0356T currently in effect for the administration of drug-eluting intracanalicular inserts including DEXTENZA.

Separately, a CPT procedure code has been established for the administration of drug-eluting intracanalicular inserts to facilitate reimbursement for physicians for the procedure of inserting DEXTENZA into the canaliculus.

We expect pricing for DEXTENZA while in pass-through payment status to be approximately $555 per insert.

In the European Union, pricing and reimbursement schemes vary widely from country to country.

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officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment;

● the federal transparency requirements under the ACA, known as the federal Physician Payments Sunshine Act, will require certain manufacturers of drugs, devices, biologics and medical supplies to report to CMS within the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members;

● the federal transparency requirements under the ACA, known as the federal Physician Payments Sunshine Act, will require certain manufacturers of drugs, devices, biologics and medical supplies to report to CMS within the Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and physician ownership and investment interests held by physicians, other healthcare providers and their immediate family members;

● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

Violations of these laws are punishable by criminal and/or civil sanctions, including, in some instances, exclusion from participation in federal and state health care programs, such as Medicare and Medicaid.

Ensuring compliance is time consuming and costly.

Similar healthcare laws and regulations exist in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of personal information.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.

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Healthcare Reform

A primary trend in the United States healthcare industry and elsewhere is cost containment.

There have been a number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and biopharmaceutical products, limiting coverage and reimbursement for drugs and other medical products, government control and other changes to the healthcare system in the United States.

In March 2010, the United States Congress enacted the Patient Protection and Affordable Care Act, or ACA, which, among other things, includes changes to the coverage and payment for products under government health care programs.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted.

A primary trend in the U.S.

healthcare industry and elsewhere is cost containment.

There have been a number of federal and state proposals during the last few years regarding the pricing of drug and biologic products, limiting coverage and reimbursement for medical products and other changes to the healthcare system in the United States.

In March 2010, the United States Congress enacted the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the PPACA, which, among other things, includes changes to the coverage and payment for pharmaceutical products under government healthcare programs.

Other legislative changes have been proposed and adopted since the PPACA was enacted.

In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.

A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2030 under the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act.

The American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

These laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional actions to repeal and replace provisions of the law.

For example, with enactment of the Tax Cuts and Jobs Act of 2017, which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019.

Further, on December 14, 2018, a U.S.

District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs Act, the remaining provisions of the ACA are invalid as well.

On December 18, 2019, the Court of Appeals for the Fifth Circuit affirmed the lower court’s ruling that the individual mandate portion of the ACA is unconstitutional and it remanded the case to the district court for reconsideration of the severability question and additional analysis of the provisions of the ACA.

Thereafter, the U.S.

Supreme Court agreed to hear this case.

Oral argument in the case took place on November 10, 2020.

On February 10, 2021, the Biden Administration withdrew DOJ’s support for this lawsuit.

A ruling by the U.S.

Supreme Court is expected sometime this year.

Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.

The Trump Administration also took executive actions to undermine or delay implementation of the ACA, including directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

On January 28, 2021, however, President Biden rescinded those orders and issued a new Executive Order which directs federal agencies to reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and strengthen that access.

A Joint Select

Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2031.

Pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, and subsequent legislation, these Medicare sequester reductions have been suspended through the end of March 2022.

From April 2022 through June 2022 a 1% sequester cut will be in effect, with the full 2% cut resuming thereafter.

Since enactment of the PPACA, there have been, and continue to be, numerous legal challenges and Congressional actions to repeal and replace provisions of the law.

For example, with enactment of the Tax Cuts and Jobs Act of 2017, or the Tax Act, which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019.

On December 14, 2018, a U.S.

District Court judge in the Northern District of Texas ruled that the individual mandate portion of the PPACA is an essential and inseverable feature of the PPACA, and therefore because the mandate was repealed as part of the Tax Act, the remaining provisions of the PPACA are invalid as well.

Supreme Court heard this case on November 10, 2020 and, on June 17, 2021, dismissed this action after finding that the plaintiffs do not have standing to challenge the constitutionality of the ACA.

Litigation and legislation over the PPACA are likely to continue, with unpredictable and uncertain results.

The Trump Administration also took executive actions to undermine or delay implementation of the PPACA, including directing federal agencies with authorities and responsibilities under the PPACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the PPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.

On January 28, 2021, however, President Biden rescinded those orders and issued a new executive order that directs federal agencies to reconsider rules and other policies that limit access to healthcare, and consider actions that will protect and strengthen that access.

Under this order, federal agencies are directed to re-examine:

policies that undermine protections for people with pre-existing conditions, including complications related to COVID-19;

demonstrations and waivers under Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements;

demonstrations and waivers under Medicaid and the PPACA that may reduce coverage or undermine the programs, including work requirements;

policies that undermine the Health Insurance Marketplace or other markets for health insurance;

policies that make it more difficult to enroll in Medicaid and the ACA;

policies that make it more difficult to enroll in Medicaid and under the PPACA;

and policies that reduce affordability of coverage or financial assistance, including for dependents.

The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United States To date, there have been several recent U.S.

congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

To those ends, President Trump issued five executive orders intended to lower the costs of prescription drug products but it is unclear whether, and to what extent, these orders will remain in force under the Biden Administration.

Further, on September 24, 2020, the Trump Administration finalized a rulemaking allowing states or certain other non-federal government entities to submit importation program proposals to the FDA for review and approval.

Applicants are required to demonstrate that their importation plans pose no additional risk to public health and safety and will result in significant cost savings for consumers.

The FDA has issued draft guidance that would allow manufacturers to import their own FDA-approved drugs that are authorized for sale in other countries (multi-market approved products).

Pharmaceutical Prices

The prices of prescription pharmaceuticals have also been the subject of considerable discussion in the United States.

There have been several recent U.S.

congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other things, bring more transparency to pharmaceutical pricing, review the relationship between pricing and manufacturer patient programs, and reduce the costs of pharmaceuticals under Medicare and Medicaid.

In 2020, President Trump issued several executive orders intended to lower the costs of prescription products and certain provisions in these orders have been incorporated into regulations.

These regulations include an interim final rule implementing a most favored nation model for prices that would tie Medicare Part B payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced countries, effective January 1, 2021.

That rule, however, has been subject to a nationwide preliminary injunction and, on December 29, 2021, CMS issued a final rule to rescind it.

With issuance of this rule, CMS stated that it will explore all options to incorporate value into payments for Medicare Part B pharmaceuticals and improve beneficiaries' access to evidence-based care.

In addition, in October 2020, HHS and the FDA published a final rule allowing states and other entities to develop a Section 804 Importation Program, or SIP, to import certain prescription drugs from Canada into the United States.

The final rule is currently the subject of ongoing litigation, but at least six states (Vermont, Colorado, Florida, Maine, New Mexico, and New Hampshire) have passed laws allowing for the importation of drugs from Canada with the intent of developing SIPs for review and approval by the FDA.

Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January 1, 2023 in response to ongoing litigation.

The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe

harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have also been delayed by the Biden administration until January 1, 2023.

On July 9, 2021, President Biden signed Executive Order 14063, which focuses on, among other things, the price of pharmaceuticals.

The Executive Order directs the HHS to create a plan within 45 days to combat “excessive pricing of prescription pharmaceuticals and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such pharmaceuticals, and to address the recurrent problem of price gouging.” On September 9, 2021, HHS released its plan to reduce pharmaceutical prices.

The key features of that plan are to:

(a) make pharmaceutical prices more affordable and equitable for all consumers and throughout the health care system by supporting pharmaceutical price negotiations with manufacturers;

(b) improve and promote competition throughout the prescription pharmaceutical industry by supporting market changes that strengthen supply chains, promote biosimilars and generic drugs, and increase transparency;

and (c) foster scientific innovation to promote better healthcare and improve health by supporting public and private research and making sure that market incentives promote discovery of valuable and accessible new treatments.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs.

A number of states, for example, require drug manufacturers and other entities in the drug supply chain, including health carriers, pharmacy benefit managers, wholesale distributors, to disclose information about pricing of pharmaceuticals.

In addition, regional healthcare organizations and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription pharmaceutical and other healthcare programs.

These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

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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 1. Business