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Item 1. Business

2023-03-06 compared with 2022-02-28 · 579 added, 789 removed, 1000 unchanged (58% 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-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.

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.

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.

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.

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

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.

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

Dry Eye Disease

OTX-CSI (cyclosporine intracanalicular insert)

Our product candidate 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 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.

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)

Our product candidate OTX-DED incorporates the FDA-approved corticosteroid dexamethasone as a preservative-free active pharmaceutical ingredient in a hydrogel, drug-eluting intracanalicular insert.

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 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

In October 2020, we entered into a license agreement and collaboration with AffaMed Therapeutics Limited, or AffaMed, for the development and commercialization of DEXTENZA and OTX-TIC in mainland China , Hong Kong , Macau , and Taiwan ;

South Korea ;

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 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.

Additional Potential Areas for Growth

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 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

Our clinical stage product candidates and our marketed products are based on a proprietary bioresorbable hydrogel technology platform that uses polyethylene glycol, or PEG, as a key component.

Bioresorbable materials gradually break down in the body into non-toxic, water soluble compounds that are cleared by normal biological processes.

PEG is used in many pharmaceutical products and is widely considered to be safe and biocompatible.

Our technology platform allows us to tailor the physical properties, drug release profiles and bioresorption rates of our hydrogels to meet the needs of specific clinical indications.

We have used this platform to engineer each of our intracanalicular insert, intracameral implant, and intravitreal implant product candidates;

our suprachoroidal formulations;

and ReSure Sealant.

Our technical capabilities include a deep understanding of the polymer chemistry of PEG-based hydrogels and the design of the specialized manufacturing processes required to achieve a reliable, preservative-free and high purity product.

Product Pipeline

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.

Our mission 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.

Our current products and product candidates in clinical development incorporate therapeutic agents that have previously received regulatory approval from the U.S.

Food and Drug Administration, or FDA, including small molecules, 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.

We believe that our local programmed-release drug delivery technology has the potential to enable the treatment of 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, intracameral implants and intracanalicular inserts.

We are currently commercializing DEXTENZA, an intracanalicular insert for the treatment of both post-surgical ocular inflammation and pain and ocular itching associated with allergic conjunctivitis, in the United States.

We also have product candidates in preclinical and clinical development:

● OTX-TKI, an axitinib intravitreal implant being developed for the treatment of wet age-related macular degeneration, or wet AMD, diabetic retinopathy and other retinal diseases;

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

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

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

● A complement inhibitor program in preclinical development for the treatment of dry age-related macular degeneration, or dry AMD;

● A gene delivery program in preclinical development using our hydrogel technology to control the release of vectors such as adeno-associated virus , or AAV, to ocular tissues for the treatment of inherited and acquired ocular diseases, including dry or wet AMD.

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

According to the Market Scope 2022-2023 reports, our product candidates seek to address select indications within segments of ophthalmology that, in the aggregate, account for approximately $25 billion in global annual sales.

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

We hold worldwide exclusive commercial rights to the core technology underlying all of our product candidates in development and have not granted commercial rights to any marketing

partners 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 .

PIPELINE AT A GLANCE

Our strategy is to continue to build upon our experience in commercializing ophthalmology products that can be administered primarily in the surgical and/or office settings and 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.

● Grow DEXTENZA revenues primarily through sales for the treatment of ocular inflammation and pain following ophthalmic surgery.

● 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.

be prepared to initiate a pivotal clinical trial as early as the third quarter of 2023, subject to ongoing discussions with the FDA and obtaining the necessary financing to fund the trial, which could be provided through a strategic alliance.

o Diabetic Retinopathy:

be positioned to initiate a pivotal clinical trial as early as the first quarter of 2024 subject to favorable interim results from our ongoing Phase 1 clinical trial, discussions with the FDA and obtaining the necessary financing to fund the trial.

continue to enroll our U.S.-based Phase 2 clinical trial for the treatment of open-angle glaucoma or ocular hypertension and plan to provide topline data from the trial in the fourth quarter of 2023.

● Dry Eye Disease – OTX-DED and OTX-CSI:

initiate a small trial of OTX-DED in the first half of 2023 to identify a proper placebo control for any future trials of these product candidates.

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

● 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.

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.

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.

DEXTENZA and all of our product candidates are designed to be medical-benefit “buy-and-bill” products with associated procedure codes.

Products with these characteristics are designed to be attractive not only to physicians, optometrists and patients but also to the sites of care that participate in utilization.

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

● 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.

The front of the human eye consists of the cornea on the surface of the eye, the lens and the aqueous humor, which is a transparent fluid that fills the anterior chamber between the lens and the cornea.

The tissue surrounding the eye also serves important functions.

There is a natural opening, called a punctum, located in the inner portion of each upper and lower eyelid near the nose.

The puncta open into nasolacrimal ducts, which collect and drain tears.

The conjunctiva is the membrane covering the inside of the eyelids and the white part of the eye, known as the sclera.

It helps to protect the eye from microbes and to lubricate the eye.

Diseases and conditions affecting the front of the eye have generally been treated with either surgery or with medications delivered to the ocular surface by eye drops.

The back of the eye contains the retina, which is the light sensing layer of tissue;

the vitreous humor, which is a transparent gel that fills the vitreous chamber between the lens and the retina;

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

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

Cross Section of Eye

Tear Drainage System

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

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, 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.

If untreated, neovascularization in wet AMD patients typically results in formation of a scar under the macular region of the retina.

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 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.

Because eye drops are unable to carry effective drug concentrations to the back of the eye, intravitreal injections or oral medications are used to deliver medications to this location.

However, the frequency of intravitreal injection can be a significant burden on patients, caregivers and clinicians.

For example, the current treatment protocol for wet AMD involves monthly or bi-monthly injections.

Intravitreal injections can lead to patient discomfort, a transient increase in IOP, and ocular inflammation and infection.

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 $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.

The anti-VEGF market for the treatment of wet AMD consists predominantly of three drugs that are approved for marketing and primarily prescribed for the treatment of wet AMD:

Eylea, marketed in the United States by Regeneron;

Lucentis, marketed in the United States by Genentech;

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.

According to the World Health Organization, glaucoma is the second leading cause of blindness in the world.

Ocular hypertension is characterized by elevated levels of IOP without any optic nerve damage.

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

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.

Importantly, however, adherence to current topical glaucoma therapies is known to be particularly poor with reported rates of non-adherence from 30% to 80%.

These low compliance rates may be associated with disease progression and loss of vision and may be part of the reason that glaucoma is a leading cause of blindness in people over 60 years of age.

In a healthy eye, fluid is continuously produced and drained to maintain pressure equilibrium and provide nutrients to the ocular tissue.

Excess fluid production or insufficient drainage of fluid in the front of the eye or a combination of these problems causes increased IOP.

The increased IOP associated with uncontrolled glaucoma results in degeneration of the optic nerve in the back of the eye and loss of peripheral vision.

Once glaucoma develops, it is a chronic condition that requires life-long treatment.

Prostaglandins are the most commonly used class of medications to treat patients with glaucoma and are administered via daily eye drops as the current standard of care.

The ability of patients to use and place daily eye drops is challenging.

The products that we are developing are designed to address the issue of compliance by delivering a prostaglandin analog, or PGA, formulated with our programmed release hydrogel to lower IOP for several months with a single insert.

The global market for glaucoma was estimated by Market Scope at $4.8 billion in 2021 with the U.S.

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 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.

Commonly used generic drugs include latanoprost and timolol.

Ocular Surface Diseases

Dry Eye Disease

Dry eye disease is a chronic, multifactorial disease affecting the tears and ocular surface that can result in dryness, inflammation, irritation, pain, tear film instability, visual disturbance and ocular surface damage.

Dry eye disease can have a significant impact on quality of life and can potentially cause long-term damage to the ocular surface.

Due to the impact of dry eye disease on tear film dynamics, the condition can affect performance of common vision-related activities such as reading, using a computer and driving, and can lead to complications associated with visual impairment.

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.

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 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.

population continues to age.

The current standard of care for moderate to severe dry eye disease is the use of artificial tears and topical anti- inflammatory and immune modulating drugs administered by prescription eye drops.

The anti-inflammatory and immune modulating prescription drug market consists of Restasis, for increasing tear production, marketed by Allergan;

Cequa™ for increasing tear production, marketed by Sun Ophthalmics in the United States;

lifitegrast, for the treatment of the signs and symptoms of dry eye disease, marketed by Novartis under the brand name Xiidra®;

and off-label use of corticosteroids.

As each of Restasis and Xiidra have a relatively long onset of action, they are not generally used for the short- term treatment of episodic dry eye flares.

In addition, patients have reported significant issues with stinging and burning when using several of the current treatments.

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 $2.2 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

Allergic conjunctivitis, another ocular surface disease, is an inflammatory disease of the conjunctiva resulting primarily from a reaction to allergy- causing substances such as pollen or pet dander.

The primary sign of this inflammation is redness and the primary symptom is acute itching.

Allergic conjunctivitis ranges in clinical severity from relatively mild, common forms to more severe forms that can cause impaired vision.

According to a study on the management of seasonal allergic conjunctivitis published in 2012 in the peer-reviewed journal Acta Ophthalmologica , allergic conjunctivitis affects 15% to 40% of the U.S.

The first line of defense against allergic conjunctivitis is avoidance of the allergen.

If this is not successful, physicians typically prescribe a combination of a topical mast cell stabilizer and anti-histamine.

These treatments act to reduce the signs and symptoms of the early phase allergic reaction.

For the subset of patients with chronic or more severe forms of allergic conjunctivitis, anti-histamines and mast cell stabilizers are often not sufficient to treat their signs and symptoms.

These refractory patients are frequently treated with topical corticosteroids administered by prescription eye drops.

It is estimated that up to 10 million people in the United States seek medical attention annually for the inflammatory response associated with allergic conjunctivitis caused by both seasonal and perennial allergens.

According to IMS Health data, approximately 4.9 million anti-allergy eye drop prescriptions were filled in the United States in 2021, resulting in sales of approximately $270.6 million.

The market to treat allergic conjunctivitis consists of antihistamines, mast-cell stabilizers and steroid eye drops and consists of both branded and generic products.

Branded steroids include Lotemax and Alrex (loteprednol etabonate) marketed by Bausch & Lomb, and Durezol (difluprednate) marketed by Alcon.

Commonly used generic steroids include prednisolone, dexamethasone and fluorometholone.

Post-Surgical Ocular Inflammation and Pain

Ocular inflammation and pain are common side effects following ophthalmic surgery.

Frequently performed ophthalmic surgeries include cataract, refractive, vitreoretinal, cornea, and glaucoma procedures.

Physicians prescribe anti-inflammatory drugs, such as corticosteroids, which are typically administered through eye drops multiple times per day, following ocular surgery as the standard of care.

These drugs improve patient comfort and also accelerate recovery through disruption of the inflammatory cascade resulting in decreased inflammation and reduced activity of the immune system.

Physicians also frequently prescribe non-steroidal anti-inflammatory drugs, or NSAIDs, as adjunctive or combination therapy to supplement the use of corticosteroids.

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 4.5 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 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 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

Limitations of Current Drug Delivery in Ophthalmology

Eye drops are widely used to deliver medications directly to the ocular surface and to intraocular tissue in the front of the eye.

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● Lack of patient compliance .

Eye drops require frequent administration.

For example, steroids for ophthalmic use require administration as frequently as four to six times daily and require tapered dosing over the course of the therapy.

As a result, patient compliance with required dosing regimens frequently suffers.

According to a published third-party study, more than 50% of glaucoma patients are not compliant with their prostaglandin therapy and do not refill prescriptions as required or do not follow the prescribed regimen within six months of initiating therapy.

Eye drops require frequent administration, and, as a result, patient compliance with required dosing regimens frequently suffers.

Poor patient compliance can lead to diminished efficacy and disease progression.

● Difficulty in administration .

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.

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

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, eye drops are often suboptimal as a therapeutic option for the treatment of many diseases and conditions of the front of the eye .

Challenges of Back-of-the-Eye Injections

Back-of-the-Eye Injections

An intravitreal injection is a procedure to place a medication directly into the space in the back of the eye called the vitreous cavity, which is filled with a jelly-like fluid called the vitreous humor gel.

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Intravitreal injections are used to administer medications to treat a variety of chronic conditions;

wet AMD, DME and RVO are among the most common conditions treated with intravitreal anti-VEGF drugs.

wet AMD, diabetic retinopathy, diabetic retinal edema, or DME, and retinal vein

occlusion, or RVO, are among the most common conditions treated with intravitreal anti-VEGF drugs.

Anti-VEGF drugs and steroids help to reduce fluid leakage associated with these disorders.

While anti-VEGF treatment regimens can be very effective therapies, there are a number of significant drawbacks, driven primarily by the frequency of injections that typically range from every six to eight weeks.

We refer to the number of injections a patient has over a given time period as the treatment burden of the particular treatment.

The actual injection at the time of administration is uncomfortable for patients and can be a deterrent in terms of compliance.

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These patients may not be mobile enough to travel to the office on their own and therefore require not only the assistance of a caregiver but also transportation to and from the office.

And finally, while intravitreal injections are typically safe, there is the potential risk of endophthalmitis (infection in the eye), inflammation, bleeding into the vitreous gel and retinal detachment that comes with injections.

Finally, while intravitreal injections are typically safe, there is the potential risk of endophthalmitis (infection in the eye), inflammation, bleeding into the vitreous gel and retinal detachment that comes with injections.

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.

The Ocular Therapeutix Approach

Our Hydrogel Technology Platform

We apply our expertise with an established bioresorbable hydrogel technology to the development of products for local programmed-release of known, FDA-approved therapeutic agents for a variety of ophthalmic diseases and conditions and to ophthalmic wound closure.

Our bioresorbable hydrogel technology is based on the use of a proprietary form of PEG.

Our Hydrogel-Based Formulation Technology

We apply our expertise with an established bioresorbable hydrogel-based formulation technology to the development of products for local programmed-release of known, FDA-approved therapeutic agents for a variety of ophthalmic diseases and conditions and to ophthalmic wound closure.

Our bioresorbable hydrogel-based formulation technology is based on the use of a proprietary form of PEG.

Our technical capabilities include a deep understanding of the polymer chemistry of PEG-based hydrogels and the design of the highly specialized manufacturing processes required to achieve a reliable, preservative-free and pure product.

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Because the body has an abundance of water at a constant temperature and pH level, hydrolysis provides a predictable and reproducible degradation rate.

Our technology enables us to make hydrogels that can bioresorb over days, weeks or several months.

The figure below depicts the formation and bioresorption of the hydrogel for ReSure Sealant.

Intracanalicular Inserts

A punctum is a natural opening located in the inner portion of the eyelid near the nose.

There is a punctum in each of the lower eyelids and the upper eyelids.

The puncta open into nasolacrimal ducts, which collect and drain tears produced by the eyes’ lacrimal glands.

Tears produced in the lacrimal glands sweep across the eye surface and drain through the puncta to the nasal cavity.

The section of the nasolacrimal duct immediately beyond the puncta is called the vertical canaliculus.

Intracanalicular inserts that do not contain an active drug are commonly used for treatment of dry eye disease by physically blocking tear drainage.

Because intracanalicular inserts stay in contact with the tear film, they are well suited for local programmed-release of drug to the eye.

Intracanalicular insert shown positioned in the vertical canaliculus

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.

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.

Over time the inserts liquefy and are cleared through the nasolacrimal duct.

If necessary due to excessive tearing, discomfort or improper placement, a healthcare professional can remove an intracanalicular insert by a process of pushing the soft insert back through the punctum.

Our inserts allow incorporation of a variety of drugs with a controllable range of delivery durations and delivery rates.

For acute conditions, such as post-surgical ocular inflammation and pain and ocular itching associated with allergic conjunctivitis, we have designed our intracanalicular inserts to provide a local programmed-release of therapeutic levels of drug for the duration of treatment.

For chronic diseases, such as glaucoma, we have designed our intracanalicular inserts for repeat administration with extended dosing periods.

We are concentrating our initial development efforts on intracanalicular inserts incorporating active pharmaceutical ingredients that are approved by the FDA for the targeted indication and that satisfy other specific selection criteria that we have developed.

We manufacture our intracanalicular inserts from dried PEG-based hydrogel formed into tiny rods that hold an active pharmaceutical ingredient in a preservative-free formulation.

We embed the active pharmaceutical ingredient in the pre-hydrogel liquid formulation, which then solidifies to form a hydrogel containing the drug within.

The relative size of one of our intracanalicular inserts is shown in the figure below.

We provide the intracanalicular insert as a thin dry rod to facilitate insertion through the narrow punctal opening.

Upon hydration with tear fluid, the insert swells, softens, and conforms to roughly the size and shape of the vertical canaliculus, to secure it in place.

We incorporate the active pharmaceutical ingredient in the form of micronized particles embedded directly in the hydrogel or as bioresorbable microspheres.

We have included a fluorescent label, or marker, in our intracanalicular insert hydrogel to serve as a visualization aid for the healthcare professional to confirm the insert’s presence.

The viewer applies a blue handheld light and a clear yellow filter aid to see the insert in the eyelid as shown in the figure below.

Because intracanalicular inserts stay in contact with the tear film, other companies have pursued the development of intracanalicular punctum plugs containing active drugs for local programmed release to the ocular surface.

However, these earlier product designs had significant limitations with respect to drug capacity, drug release kinetics and patient comfort and used non-degradable punctum plugs with a clear silicone hard rubber shell containing only a core with active drug.

These plugs typically extended outside of the punctal opening and secured themselves in place with an external cap.

The external cap was in constant contact with the surface of the eye, which may cause irritation and discomfort in some cases.

In addition, some prior designs resorted to plugging both the upper and lower puncta, which could cause excessive tearing and patient discomfort.

These designs did not incorporate a visualization agent to allow the patient and physician to assess the presence of the plug.

In contrast to these prior approaches, we have designed our intracanalicular inserts to:

● incorporate the active pharmaceutical ingredient throughout the insert rather than just in a core to allow for higher drug capacity and better control over drug release;

● be bioresorbable so that removal is not required for acute conditions and required infrequently for chronic conditions;

● be soft and to fit beneath the punctal opening for patient comfort;

● include a fluorescent label to allow the healthcare professional and patient to visualize and assess the presence of the insert.

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 technology enables us to make hydrogels that can bioresorb over days, weeks or months.

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

We consider the following selection criteria:

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● expiration of relevant patent protection prior to or within our anticipated development timeline;

● high potency to minimize required drug load in the intracanalicular insert;

● high potency to minimize required drug load in the intracanalicular insert, intracameral implant or intravitreal implant;

● availability from a qualified supplier;

● compatibility with our drug delivery system.

We believe our intracanalicular insert, intracameral implant and intravitreal implant product candidates may offer a range of favorable attributes as compared to eye drops and immediate release back-of-the-eye injections, including:

We believe our current and future intracanalicular insert, intracameral implant and intravitreal implant products and product candidates may offer a range of favorable attributes as compared to eye drops and immediate release back-of-the-eye injections, including:

● Improved patient compliance .

Our inserts and implants are placed by a healthcare professional and are designed to provide local programmed-release of drug to the ocular surface.

Our inserts and implants are placed by a healthcare professional and are designed to provide local programmed-release of drug to the ocular surface, intracameral space or intravitreal space.

Because patients are not responsible for self-administration of the drug and the inserts and implants dissipate over time and do not require removal for acute conditions or frequent removal for chronic conditions, we believe our inserts and implants address the problem of patient compliance.

● Ease of administration .

We have designed our inserts and implants to provide the entire course of medication with a single administration by a healthcare professional for acute conditions or for several months for chronic conditions.

We believe this avoids the need for frequent administration and the potential complications that could result if doses are missed.

We have designed our inserts and implants to provide the entire course of medication with a single administration by a healthcare professional for acute conditions or for months for chronic conditions.

We believe this avoids the need for frequent administration, reducing the patient’s treatment burden and the likelihood of potential complications that could result if doses are missed.

● Local programmed-release of drug .

We have designed our inserts and implants to deliver drug in a programmed fashion in order to avoid the peak and valley dosing and related side effects and spikes in IOP associated with eye drops.

We have designed our inserts and implants to deliver drug in a programmed fashion in order to avoid the peak and valley dosing and related side effects and spikes in IOP associated with eye drops, as well as current standard of care injections for the back of the eye.

We also believe programmed-release dosing may improve the therapeutic profile of the active pharmaceutical ingredient because it eliminates periods of little or no drug presence between eye drop or back of the eye injection administrations.

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Our inserts and implants do not involve the use of preservatives, such as BAK, which have been linked to side effects including burning, stinging, hyperemia, irritation, eye dryness and, less frequently, conjunctivitis or corneal damage.

Intracanalicular Inserts

Our intracanalicular inserts, including DEXTENZA, OTX-DED, and OTX-CSI, are designed to be inserted into the patient’s punctum by a healthcare professional and to release drug to the surface of the eye to address diseases including ocular inflammation and pain following ophthalmic surgery, ocular itching associated with allergic conjunctivitis, and dry eye disease.

Our intracanalicular inserts utilize our proprietary hydrogel-based formulation 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.

Over time, the inserts liquefy and are cleared through the nasolacrimal duct.

Intracameral Implants

We are engaged in the clinical development of our hydrogel administered via intracameral injection to address retinal diseases.

We are engaged in the clinical development of our hydrogel administered via intracameral injection to address glaucoma.

Intracameral implants refer to biodegradable or bioresorbable implants placed into the anterior chamber or front of the eye for the treatment of ocular conditions.

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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

We are engaged in the clinical development of our hydrogel administered via intravitreal injection to address the large and growing markets for diseases and conditions of the back of the eye.

Our intravitreal implant product candidates consist of a PEG-based hydrogel suspension, which contains embedded micronized particles of active drug.

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 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.

This approach would reduce the frequency of the current monthly or bi-monthly intravitreal injection regimen for wet AMD and other retinal diseases and potentially provide a more consistent, uniform release of drug over the treatment period.

We believe TKIs are well suited for use with our platform given their high potency, multi-target capability, and compatibility with a hydrogel vehicle.

In the absence of a sophisticated drug delivery system, these drugs have been difficult to deliver to the eye for acceptable timeframes at therapeutic levels without causing local and systemic toxicity due to low drug solubility and notably short half-lives in solution.

We believe our local drug delivery technology gives us potential advantages in this regard.

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.

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

We design our hydrogels to control the hydrogel biodegradation rate and, as a result, the timing of TKI and anti-VEGF compound release.

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.

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 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

Early-Stage Clinical Product

Intravitreal implant (Axitinib)

Australian Phase 1 clinical trial ongoing.

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 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 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)

Phase 2 topline data reported in December 2021;

evaluating additional data to inform the future of this program.

Approved Product

Post-surgical ocular inflammation and pain

Intracanalicular insert (Dexamethasone)

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

Cataract incision closure

Ocular sealant

Product commercially launched in the United States in February 2014.

Our intravitreal implant product candidates, such as OTX-TKI, consist of a PEG-based hydrogel suspension, which contains embedded micronized particles of active drug.

We design the intravitreal implant to be injected and retained in the vitreous humor to provide local programmed-release intravitreal delivery of anti-VEGF compounds.

Clinical Portfolio

Retinal Diseases

Age-related macular degeneration, or AMD, and diabetic retinopathy are the most common retinal diseases, affecting approximately 207.6 million and 141.2 million, respectively, worldwide, according to the Market Scope 2022 Retinal Pharmaceuticals Report.

In the United States, Market Scope estimates that there are approximately 17.9 million suffering from some form of AMD.

Wet Aged-Related Macular Degeneration (Wet AMD)

Wet AMD is 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.

If untreated, neovascularization in wet AMD patients typically results in formation of a scar under the macular region of the retina.

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 most common cause of visual impairment among elderly patients in developed countries.

According to the Market Scope 2022 Retinal Pharmaceuticals Market Report, there are approximately 1.6 million people in the United States who suffer from wet AMD.

This population is expected to grow at a 3.0% compound annual growth rate through 2027.

Diabetic Retinopathy (DR)

DR is a progressive condition in which chronically elevated levels of blood glucose and depleted levels of oxygen damage the tiny blood vessels in the retina.

DR is among the most common microvascular complications of diabetes, making diabetes the leading cause of new cases of blindness in adults.

DR can take time to develop.

Nonproliferative DR, sometimes called background retinopathy, is usually mild and may go unnoticed.

Proliferative DR is the most serious stage of the disease and develops when areas of the retina are starved for nourishment and oxygen, triggering the proliferation of new blood vessels via secretions of vascular endothelial growth factor (VEGF).

The current standard of care for DR at the nonproliferative stage is watchful waiting, with the use of anti-VEGFs when the disease has progressed to the proliferative stage.

It is estimated that there were 8.4 million cases of DR in the United States in 2022 according to Market Scope, of which 3.3 million cases were moderate to severe non-proliferative DR, growing at an approximately 2% compound annual growth rate through 2027.

Overall, there are an estimated 141.2 million cases of DR globally, growing at a compound annual growth rate of 3%.

The global market for retinal disease inclusive of wet AMD and DR was approximately $15.9 billion in 2022 and is estimated to grow at approximately 6% per year through 2027 according to Market Scope.

market accounted for just over 50% of the global market or $8.5 billion in 2022 and is expected to grow at approximately 7% through 2027.

The anti-VEGF market for the treatment of wet AMD consists predominantly of three drugs that are approved for marketing and primarily prescribed for the treatment of wet AMD:

Eylea, marketed in the United States by Regeneron;

Lucentis, marketed in the United States by Genentech;

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

A new anti-VEGF, Vabysmo, launched by Genentech in 2022, has penetrated the market rapidly and is expected to gain significant market share in the future.

Retinal Disease Programs

OTX-TKI (axitinib intravitreal implant)

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.

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.

Our product candidate OTX-TKI is a preformed, bioresorbable hydrogel fiber implant incorporating axitinib, a small molecule TKI with anti-angiogenic properties delivered by intravitreal injection and designed for a duration of six months or longer.

We are conducting a Phase 1 clinical trial in Australia and a Phase 1 clinical trial in the United States to evaluate OTX-TKI for the treatment of wet AMD.

Our initial implants have delivered anti-VEGF compounds in vitro over a targeted nine to twelve month period, which we believe could make it possible to reduce patients’ treatment burden by reducing the frequency of the current monthly or bi-monthly intravitreal injection regimen for wet AMD.

We are also conducting a Phase 1 clinical trial in the United States to evaluate OTX-TKI for the treatment of DR.

We believe axitinib is well suited for use with our platform given its high potency, multi-target capability, and compatibility with a hydrogel vehicle.

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We believe our local programmed-release drug delivery technology gives us potential advantages in this regard.

In Vitro and preclinical results

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 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 have conducted two Phase 1 trials of OTX-TKI for the treatment of wet AMD, with different formulations of axitinib.

We currently intend to move forward into pivotal trials with our single 600 µg axitinib implant formulation of OTX-TKI for both the treatment of wet AMD and the treatment of diabetic retinopathy.

As we have previously disclosed, we are also developing a second formulation of OTX-TKI that could be used in future trials of retinal indications.

Currently, we do not believe any additional development work is required to advance to pivotal trials in either wet AMD or diabetic retinopathy.

Wet Age-Related Macular Degeneration (wet AMD)

Phase 1 Clinical Trial (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:

Our Phase 1 clinical trial of OTX-TKI in Australia is comprised of four cohorts consisting of subjects with pre-existing intraretinal and/or subretinal fluid:

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.

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;

and 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 this trial, we are evaluating whether OTX-TKI can reduce existing fluid levels.

This trial’s enrollment is complete.

We plan to continue to follow subjects at least until their respective seventeen-month anniversaries of initial dosing, in accordance with the clinical trial protocol.

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 subjects with subretinal and/or intraretinal fluid

due to wet AMD, OTX-TKI was observed to be generally well tolerated.

No ocular serious adverse events were reported in treatment naïve or 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 indicated that there was no measurable systemic exposure to axitinib.

This interim data also showed a preliminary signal of biological activity as observed by a clinically meaningful decrease in intraretinal and/or subretinal fluid as measured by high resolution OCT that provides cross-sectional images of the anatomical structure of the retina.

Some subjects showed 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.

We observed extended duration of activity of six months or more for over 60% of subjects across all cohorts and for over 80% of subjects in cohort 3a, in which we administered a 600 μg dose.

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.

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

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 population we are studying in this U.S.-based clinical trial is different than the population we are studying in our ongoing Phase 1 clinical trial of OTX-TKI in Australia.

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

The trial enrolled a total of 21 subjects at six clinical sites, comprising two arms consisting of subjects previously treated with, and responsive to, standard of care anti-VEGF therapy:

a 16-subject arm receiving OTX-TKI in combination with a single anti-VEGF injection at month one and a five-subject arm receiving on-label 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.

This trial was fully enrolled as of February 2022.

In February 2023, we announced interim 10-month data from the ongoing Phase 1 clinical trial of OTX-TKI in the United States at the Angiogenesis, Exudation, and Degeneration 2023 Annual Meeting.

As of the December 12, 2022 cut-off date, the interim data showed that the single 600 µg OTX-TKI implant was generally well tolerated with no drug-related ocular or systemic serious adverse events, or SAEs, observed through 10 months.

One SAE of endophthalmitis was observed in the OTX-TKI arm which occurred following the aflibercept injection required by the clinical trial protocol at month one and was assessed by the investigator as related to the injection procedure.

There were no instances of elevated IOP, retinal detachment, retinal vasculitis, or implant migration into the anterior chamber observed in the OTX-TKI arm, and no subjects had dropped out of either arm as of the data cutoff.

The interim results showed subjects treated with a single OTX-TKI implant demonstrated stable and sustained BCVA (mean change from baseline of -0.3 letters) and CSFT (mean change from baseline of -1.3 µm) in the OTX-TKI arm at 10 months, which was comparable with the aflibercept arm (mean change from BCVA baseline of -0.8 letters;

mean change from CSFT baseline of -4.5 µm).

Up to Month 10, 73% of subjects remained rescue-free.

Overall, a 92% reduction in treatment burden (average percent decrease in injections over the period compared to a standard monthly injection regimen) was observed in OTX-TKI treated subjects for up to 10 months.

Four subjects were rescued in the OTX-TKI arm up to Month 10.

One subject, the subject who experienced endophthalmitis, was rescued twice.

None of these rescues met the preestablished rescue criteria set forth in the clinical trial protocol and were instead initiated at investigator discretion.

One additional subject, who met the established rescue criteria at such subject’s Month 10 visit, was rescued at the end of Month 10.

There was one subject randomized to the OTX-TKI arm who was inadvertently given aflibercept instead of sham injections at the subject’s month three and month five visits.

Since this subject was not treated according to protocol, the subject was excluded from the analysis of biological activity, which comprised 15 out of the 16 subjects in the OTX-TKI

arm and all five subjects in the aflibercept arm, but the subject was included in the safety analysis which comprised all 16 subjects in the OTX-TKI arm and all five subjects in the aflibercept arm.

Per protocol, we will continue to follow subjects in the Phase 1 trial at least until their respective one-year anniversaries of initial dosing.

Regulatory Pathway

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.

We are in active discussions with the FDA regarding the regulatory pathway for OTX-TKI for the treatment of wet AMD and potential future clinical trial requirements.

Subject to those discussions and obtaining the necessary financing, which could be provided through a strategic alliance, we aim to be prepared to initiate a pivotal clinical trial for the treatment of wet AMD in the third quarter of 2023.

If we were to obtain favorable results from two pivotal clinical trials, 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.

Diabetic Retinopathy (DR)

Phase 1 Clinical Trial

Given our belief in the potential applicability of OTX-TKI to other retinal diseases, we initiated a Phase 1 U.S.-based clinical trial to evaluate OTX-TKI for the treatment of DR in the fourth quarter of 2022 and dosed our first patient in February 2023.

We are conducting the Phase 1 clinical trial initially under an eIND.

The trial is designed to include approximately 21 subjects with diabetic retinopathy secondary to type 1 or type 2 diabetes who had not had an anti-VEGF injection in the prior 12 months or DME in the prior six months, randomized 2:1 to either a single 600 µg implant of OTX-TKI or sham control across approximately 10 sites.

We anticipate disclosing topline results as early as the fourth quarter of 2023.

Regulatory Pathway

We are in active discussions with the FDA regarding the clinical development of OTX-TKI.

Assuming positive topline data results from the Phase 1 clinical trial, the finalization of the design of our clinical development program reflecting of our ongoing discussions with the FDA, and additional financing to fund the trials, we believe we could be in a position to initiate our first pivotal trial of OTX-TKI for the treatment of DR as early as the first quarter of 2024 and a second pivotal trial shortly thereafter.

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