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Item 1. Business

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We are a biopharmaceutical company committed to enhancing people’s vision and quality of life through the development and commercialization of innovative therapies for diseases and conditions of the eye, with a specific focus on retinal disease.

Our program for retinal disease is led by AXPAXLI (axitinib intravitreal implant, also known as OTX-TKI), which is based on our ELUTYX proprietary bioresorbable hydrogel-based formulation technology.

We are currently conducting a pivotal Phase 3 clinical trial to evaluate AXPAXLI for the treatment of wet age-related macular degeneration, or wet AMD, which we refer to as the SOL-1 trial, and a Phase 1 clinical trial for the treatment of diabetic retinopathy.

Our clinical portfolio also includes PAXTRAVA (travoprost intracameral implant, also known as OTX-TIC), which is currently in Phase 2 clinical development for the treatment of primary open-angle glaucoma, or OAG, or ocular hypertension, or OHT.

Our expertise in the formulation, development and commercialization of innovative therapies and our ELUTYX platform supported the development and launch of our first commercial drug product, DEXTENZA, a corticosteroid approved by the U.S.

Food and Drug Administration, or FDA, for the treatment of ocular inflammation and pain following ophthalmic surgery and ocular itching associated with allergic conjunctivitis.

We are also developing two other clinical-stage assets, OTX-DED (dexamethasone intracanalicular insert) for the short-term treatment of the signs and symptoms of dry eye disease, and OTX-CSI (cyclosporine intracanalicular insert) for the chronic treatment of dry eye disease, which we collectively refer to as our Dry Eye Programs, and several preclinical programs.

Our current products and product candidates in clinical development generally incorporate therapeutic agents that have previously received regulatory approval from the FDA, including small molecules, into ELUTYX, with the goal of providing local programmed release to tailor the duration and amount of the therapeutic agent 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 ocular modalities including intravitreal implants, intracameral implants, and intracanalicular inserts.

The hydrogel technology that underpins ELUTYX has been used in the human body since 1992 and has demonstrated its safety and effectiveness in over five million patients across five FDA-approved devices since that time.

Our own approved product DEXTENZA, the first and only drug-eluting intracanalicular insert approved by the FDA, has been used in nearly 400,000 eyes since launch with reported adverse events in less than 1 in 10,000 patients.

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

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

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

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

We intend to meet with the U.S.

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

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

DEXTENZA and our product candidates in clinical development generally incorporate therapeutic agents that have previously received regulatory approval from the FDA, including small molecules, into ELUTYX, with the goal of providing local programmed release to tailor the duration and amount of the therapeutic agent to be delivered to the eye.

The hydrogel technology that underpins ELUTYX has been used in the human body since 1992 and has demonstrated its safety and effectiveness in over five million patients across eight FDA-approved treatments since that time.

Our own approved product DEXTENZA, the first and only drug-eluting intracanalicular insert approved by the FDA, has been used in nearly 550,000 eyes since launch with reported adverse events in approximately 2 of every 10,000 patients.

As a result, we believe that the ELUTYX technology is well tolerated.

We believe the ELUTYX technology can provide delivery solutions for durable therapies for wet AMD, non-proliferative diabetic retinopathy, or NPDR, and other diseases and conditions of the eye.

The only factors that regulate the bioresorption of our ELUTYX polymer are temperature and pH of the aqueous environment.

As body temperature and pH of the human aqueous environment are within a typical range for each human, and since water levels in the vitreous humor are more than sufficient to saturate our polymer matrix, we believe we can program our products and product candidates so that the polymer will be intact long-enough to deliver the active pharmaceutical ingredient and then be fully bio-resorbed when re-dosing is required.

That ELUTYX does not create an acidic microenvironment, is easily eliminated from the vitreous, leaving behind no harmful byproducts, and has soft gel properties provides further support for the ELUTYX safety profile.

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 the retina, glaucoma, and dry eye disease areas of ophthalmology.

These areas, in the aggregate, account for approximately $25.6 billion in global annual sales.

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

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 Therapeutics Limited, or AffaMed, for the development and commercialization of DEXTENZA and PAXTRAVA in the geographies agreed to between the parties.

We believe the ELUTYX technology can provide delivery solutions for durable therapies for wet AMD, NPDR, DME, proliferative diabetic retinopathy, or PDR, retinal vein occlusion, or RVO, and other diseases and conditions of the eye, such as glaucoma.

Our ELUTYX-based products and product candidates are hydrogels with ester bonds that are hydrolyzed over time by aqueous or vitreous humor fluid within the eye.

Unlike traditional implants, the ELUTYX-based hydrogel is not rigid, does not have a shell, and does not persist following dissolution of the active drug.

The factors that regulate the bioresorption of our ELUTYX polymer are temperature and pH of the aqueous environment.

As body temperature and pH of the human aqueous environment are within a typical range for humans, and since water levels in the aqueous or vitreous humor are more than sufficient to saturate our polymer matrix, we believe we can program our products and product candidates so that the polymer will be intact long-enough to deliver the active pharmaceutical ingredient and then be fully bioresorbed.

We believe that the ELUTYX safety profile is further supported because ELUTYX does not create an acidic microenvironment, it is easily eliminated from the eye, does not leave behind harmful byproducts, and it has soft gel properties.

AXPAXLI is seeking to address segments of the exudative retinal diseases market, which in the aggregate is estimated to include up to 8.5 million patients in the United States by 2029 and accounted for approximately $9.5 billion in U.S.

annual estimated revenues in 2024, according to the Market Scope 2024 Retinal Pharmaceuticals Market Report:

Wet AMD and Other Exudative Diseases, published in September 2024, or the “Market Scope 2024 Retina Report.

The following table summarizes the status of our key product candidates and development programs.

PIPELINE AT A GLANCE

Our strategy is to advance our pipeline of clinical assets, focusing specifically on our programs for wet AMD and NPDR, while we continue to build upon our experience in commercializing ophthalmology products.

Our strategy is to advance our pipeline of clinical assets, focusing specifically on our programs for wet AMD as well as NPDR and DME, while we continue to build upon our experience in commercializing ophthalmology products.

The key tactics of our strategy are:

● Advance our AXPAXLI clinical development programs.

Complete enrollment of the SOL-1 trial, our first pivotal Phase 3 clinical trial of AXPAXLI for the treatment of wet AMD by the end of the first quarter of 2025.

Subject to agreement with the FDA, we intend to commence screening of a second pivotal Phase 3 clinical trial, which we refer to as the SOL-2 trial, by the first quarter of 2025.

Deliver topline data from our Phase 1 clinical trial of AXPAXLI for the treatment of NPDR, which we refer to as the HELIOS trial, in the second quarter of 2024.

Subject to favorable topline data and agreement with the FDA, we intend to commence a pivotal Phase 3 clinical trial as a next step of clinical development.

● Deliver topline data from our U.S.-based Phase 2 clinical trial of PAXTRAVA for the reduction of intraocular pressure, or IOP, in patients with OAG or OHT in the second quarter of 2024.

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

● Deliver topline data from our ongoing trial to evaluate OTX-DED in the fourth quarter of 2024.

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.

Eye drops are administrable by the patient or care provider, inexpensive to produce and treat the local tissue.

However, eye drops have significant limitations, especially when used for chronic diseases or when requiring frequent administration, including:

● Lack of patient compliance .

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, 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.

● Need for high concentrations .

After eye drops are administered to the ocular surface, the tear film rapidly renews.

Most topically applied solutions are washed away by new tear fluid within 15 to 30 seconds.

Because contact time with the ocular surface is short, less than 5% of the applied dose actually penetrates to reach intraocular tissues.

As a result, eye drops generally require frequent administration at high drug concentrations to deliver a meaningful amount of drug to the eye.

This pulsed therapy results in significant variations in drug concentrations over a treatment period, which we refer to as peak and valley dosing.

At peak levels, the high concentrations can result in side effects, such as burning, stinging, redness of the clear membrane covering the white part of the eye, referred to as hyperemia, and spikes in IOP, which may lead to drug induced glaucoma.

At low concentration levels, the drug may not be effective, thus allowing the disease to progress.

● Side effects of preservatives .

To guard against contamination, many eye drops are formulated with antimicrobial preservatives, most commonly benzalkonium chloride, or BAK.

Patients on long term or chronic therapy, such as glaucoma patients, often suffer reactions, which have been linked to BAK, including burning, stinging, hyperemia, irritation and eye dryness.

Less frequently, conjunctivitis or corneal damage may result.

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 .

Back-of-the-Eye Injections

Continue the SOL-1 trial, as amended to incorporate re-dosing, and report topline data on the primary efficacy endpoint in the first quarter of 2026.

Complete enrollment and randomization of the SOL-R trial expeditiously.

● NPDR and DME:

Seek FDA feedback in the first half of 2025 to discuss the design of a potential registrational clinical program and then evaluate our next steps.

● Scale up our commercialization and manufacturing capabilities.

● Initiate activities to build on our existing sales, marketing and distribution capabilities, which we currently use to market DEXTENZA, to prepare for potential commercialization of AXPAXLI for the treatment of wet AMD as well as NPDR and DME.

● Build out and validate our manufacturing operations in our existing facilities.

We will evaluate our next steps for PAXTRAVA for the treatment of OAG or OHT once we have completed the Phase 2 clinical trial for this program.

Limitations of 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, diabetic retinopathy, diabetic retinal edema, or DME, and retinal vein occlusion, or RVO, are among the most common conditions treated with intravitreal anti-VEGF (vascular endothelial growth factor, or VEGFs) 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.

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

The most common intravitreal injections are anti-VEGF (vascular endothelial growth factor, or VEGFs) drugs.

Anti-VEGF drugs and steroids, which also can be injected intravitreally, 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.

Patients typically require injections every six to eight weeks, but can require them as frequently as every 4 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.

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

Then there is the burden to both patients and their caregivers of regular office visits.

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These patients may also be younger, part of the active workforce and therefore unwilling or unable to take personal time off to receive frequent injections.

Furthermore, injecting high doses of drug to the back of the eye every four to six weeks can result in the macula constantly alternating between a thicker and a thinner state, which may lead to fibrosis presenting as scarring and atrophy.

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-Based Formulation Technology ELUTYX

We apply our expertise with ELUTYX 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.

ELUTYX 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.

We tailor the hydrogel to act as a vehicle for local programmed-release drug delivery to the eye and as an ocular tissue sealant.

We create our hydrogels by cross-linking PEG molecules to form a network that resembles a three-dimensional mesh on a molecular level.

Our PEG molecules are branched, with four to eight branches or arms.

Each arm bears a reactive site on its end.

Our cross-linking chemistry uses a second molecule with four arms, bearing complimentary reactive sites on each end, such that when combined with the PEG molecules, a network spontaneously forms.

When swollen with water, this molecular network forms a hydrogel.

We design these hydrogels to slowly degrade in the presence of water, a process called hydrolysis, by inserting a biodegradable linkage between the PEG molecule and the cross-linked molecule.

By appropriately selecting the number of arms of the PEG molecule and the biodegradable linkage, we can design hydrogels with varying mechanical properties and bioresorption rates.

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 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:

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

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

● 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 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, 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 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, 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.

Further, we are designing our products and product candidates so that their drug release profiles can be tailored or programmed to match the treatment needs of the disease.

For example, steroids for ophthalmic purposes generally require administration over four weeks, with tapered dosing over this period.

In contrast, PGAs require administration in a steady fashion over the duration of treatment.

Our inserts and implants are designed to fully dissipate and can be removed if necessary by a healthcare professional.

● Avoidance of preservative side effects .

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.

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.

Intracameral Implants

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.

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

In the case of PAXTRAVA, 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.

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, such as AXPAXLI, 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.

Furthermore, frequent injections of medications to the back of the eye can lead to peaks and troughs of medication levels, with fluctuations of intraretinal fluid based on these levels.

Such fluid fluctuations have been associated with decreased vision and possibly fibrosis.

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 treatment burden, measured by the number of injections.

Clinical Portfolio

Retinal Diseases

Age-related macular degeneration, or AMD, and diabetic retinopathy are the most common retinal diseases, affecting approximately 212.0 million and 146.4 million, respectively, worldwide, according to the Market Scope 2023 Retinal Pharmaceuticals Market 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)

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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 2023 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 3.5% compound annual growth rate through 2028.

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.

NPDR, 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 VEGFs.

The current standard of care for DR at the non-proliferative 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 8.6 million cases of DR in the United States in 2023 according to the Market Scope 2023 Retinal Pharmaceuticals Market Report, of which 3.4 million cases were moderate to severe NPDR, growing at an approximately 1.8% compound annual growth rate through 2028.

Overall, there are an estimated 146.4 million cases of DR globally, growing at a compound annual growth rate of 3.1%.

The global market for retinal disease inclusive of wet AMD and DR was approximately $16.5 billion in 2023 and is estimated to grow at approximately 6.1% per year through 2028 according to Market Scope.

market accounted for approximately 58% of the global market or $9.5 billion in 2023 and is expected to grow at approximately 5.6% through 2028.

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;

The current standard of care for wet AMD is treatment with drugs that target VEGF, one of several proteins involved in neovascularization and hyper-permeability of established and new blood vessels.

Wet AMD is the most common cause of visual impairment among patients over the age of 50 years in developed countries.

According to the Market Scope 2024 Retina Report, there were approximately 1.7 million people in the United States who suffered from wet AMD in 2024.

This population is expected to grow at a 3.2% compound annual growth rate, or CAGR, through 2029.

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

Eylea and Eylea HD, marketed in the United States by Regeneron;

Lucentis, marketed in the United States by Genentech;

and Vabysmo, launched in 2022 and marketed in the United States by Genentech.

and Vabysmo, marketed in the United States by Genentech.

Bevacizumab, also known as Avastin, an anti-VEGF therapy approved for the treatment of certain cancers, is also used off-label in ophthalmology.

Non-Proliferative Diabetic Retinopathy (NPDR) and Diabetic Macular Edema (DME)

Diabetic retinopathy, or DR, is a progressive condition in which chronically elevated levels of blood glucose lead to damage of 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.

NPDR, which is an early stage of DR and sometimes called background retinopathy, is often asymptomatic and may go unnoticed until it is very advanced with vision loss imminent.

PDR is the most serious stage of the disease that develops when areas of the retina are starved for nourishment and oxygen, triggering the proliferation of new blood vessels via secretions of growth factors including VEGFs.

These new blood vessels can bleed or lead to tractional retinal detachments, or both, and permanent vision loss.

Another visual threatening complication of DR is DME where the damaged blood vessels leak blood and fluid into the retina.

The current standard of care for DR at the non-proliferative stage is watchful waiting, with the use of anti-VEGFs or steroids when the disease has progressed to center-involved DME, or CI-DME, or the proliferative stage.

In addition, laser treatment can be used to manage DR.

It is estimated that there were 6.3 million cases of NPDR and 1.7 million cases of DME in the United States in 2024 according to the Market Scope 2024 Retina Report, growing at a CAGR of 1.7% and 1.9%, respectively, through 2029.

The anti-VEGF market for the treatment of DR consists predominantly of three drugs that are approved for marketing, although only sparingly used for the treatment of DR:

Lucentis, Eylea, and Eylea HD.

Retinal Programs

AXPAXLI (axitinib intravitreal implant)

Our product candidate AXPAXLI is a preformed, bioresorbable hydrogel fiber implant based on our ELUTYX technology incorporating axitinib, a small molecule TKI with anti-angiogenic properties.

AXPAXLI (axitinib intravitreal hydrogel)

Our product candidate AXPAXLI is an investigational, bioresorbable hydrogel implant, based on our ELUTYX technology, incorporating axitinib, a small molecule, multi-target, tyrosine kinase inhibitor, or TKI, with anti-angiogenic properties.

AXPAXLI is delivered by intravitreal injection and is designed for a duration of six months or longer.

We are conducting the SOL-1 trial to evaluate AXPAXLI for the treatment of wet AMD in the United States, Argentina, and several other countries.

Subject to agreement with the FDA, we intend to commence screening of the SOL-2 trial by the first quarter of 2025.

Our wet AMD registrational program for AXPAXLI is comprised of two ongoing complementary clinical trials, SOL-1 and SOL-R, which are strategically designed with the intent of de-risking subject populations, aligning with regulatory standards, and providing a broad evaluation of AXPAXLI’s durability, repeatability, and flexibility.

We have also conducted a Phase 1 clinical trial in Australia and a Phase 1 clinical trial in the United States to evaluate AXPAXLI for the treatment of wet AMD.

We are also conducting the HELIOS trial in the United States to evaluate AXPAXLI for the treatment of NPDR.

Subject to favorable topline data from the HELIOS trial and agreement with the FDA, we intend to commence a pivotal Phase 3 clinical trial of AXAPXLI for the treatment of NPDR as a next step of clinical development.

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

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

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

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

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

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 believe ELUTYX gives us potential advantages to address all three of these challenges.

Our initial hydrogel 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 conducted the two Phase 1 trials of AXPAXLI for the treatment of wet AMD with different formulations of axitinib.

We are conducting the SOL-1 trial, and intend to conduct the SOL-2 trial and any pivotal trials for the treatment of NPDR, with a single 450 µg axitinib implant formulation of AXPAXLI, which is a different formulation than we used in either of the two Phase 1 trials.

We are conducting the SOL-1 and SOL-R trials with a single 450 µg axitinib dose of AXPAXLI, which is a different formulation than we used in either of the two Phase 1 trials of AXPAXLI for the treatment of wet AMD.

This optimized configuration is expected to provide for an increased daily release of the drug and is designed to improve synchronization of axitinib drug release with hydrogel bioresorption.

The two Phase 1 trials of AXPAXLI for the treatment of wet AMD, the HELIOS trial, and the initial portions of the SOL-1 and SOL-R trials were conducted with a two-piece injector.

We have developed a next-generation one-piece injector which we believe improves the administration of AXPAXLI to the eye.

We expect to use this one-piece injector for the administration of AXPAXLI in a majority of the subjects in the AXPAXLI arm of the SOL-R trial and for the repeat-dosing of AXPAXLI in all subjects in the AXPAXLI arm of the SOL-1 trial.

Wet Age-Related Macular Degeneration (Wet AMD)

The SOL-1 Trial

We initiated the SOL-1 trial, our first pivotal Phase 3 clinical trial of AXPAXLI for the treatment of wet AMD, in September 2023 with the activation of the trial’s first clinical site.

The SOL-1 trial is designed as a prospective, multi-center, randomized, parallel-group trial that will be run primarily at U.S.

sites, as well as sites in Argentina and several other countries.

The SOL-1 trial is designed as a superiority trial comparing a single optimized implant of AXPAXLI with a drug load of 450 µg of a more soluble form of axitinib to a single injection of aflibercept and assessing the safety and efficacy of AXPAXLI in subjects with wet AMD by measuring Best Corrected Visual Accuity, or BCVA, and central subfield thickness, or CSFT.

We plan to enroll approximately 300 evaluable wet AMD subjects who are treatment naïve in the study eye with good visual acuity and a diagnosis of choroidal neovascularization or sub-foveal neovascularization at screening in the SOL-1 trial.

Every enrolled subject will receive two aflibercept injections between the initial screening visit and day 1:

We are currently conducting the SOL-1 trial, a repeat-dosing registrational Phase 3 clinical trial for the treatment of wet AMD.

The SOL-1 trial is designed as a prospective, multi-center, randomized, parallel-group trial that involves more than 100 trial sites located in the United States and Argentina.

The SOL-1 trial is designed as a superiority trial comparing a single optimized dose of AXPAXLI with a drug load of 450 µg of axitinib to a single injection of aflibercept 2 mg and assessing the safety and efficacy of AXPAXLI in subjects with wet AMD.

The primary endpoint is the proportion of subjects who maintain visual acuity, defined as a Best Corrected Visual Acuity, or BCVA, loss of fewer than 15 letters on the Early Treatment of Diabetic Retinopathy Study, or ETDRS, letters chart from baseline at Week 36.

This superiority trial has an 8-week loading segment with two monthly aflibercept 2 mg intravitreal injections prior to randomization, thereafter a 52-week masked treatment segment, and a 52-week safety follow-up with re-dosing

at Weeks 52 and 76.

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

The SOL-1 trial is intended to randomize approximately 300 evaluable treatment-naïve subjects with a diagnosis of wet AMD in the study eye with good visual acuity and a diagnosis of macular choroidal neovascularization at screening.

The SOL-1 trial completed randomization of 344 subjects in December 2024.

Under the study protocol, after initial screening, every enrolled subject received two aflibercept 2 mg loading doses between the screening visit and Day 1:

one at Week -8 and another at Week -4.

Subjects reaching approximately 20/20 vision or experiencing an improvement of 10 Early Treatment of Diabetic Retinopathy Study, or ETDRS, letters after these injections, in addition to satisfying other enrollment criteria, will then be randomized in the trial at baseline to receive either one implant of AXPAXLI in the investigational arm or one injection of aflibercept in the control arm, followed every month and rescued as needed with supplemental anti-VEGF treatment based on pre-specified criteria.

The primary endpoint is the proportion of subjects who maintained visual acuity, defined as a BCVA loss of less than 15 letters on the ETDRS chart at week 36.

Our pre-specified rescue criteria are a loss of 15 or more letters on the ETDRS chart compared to baseline, or a new hemorrhage that is deemed to be likely to cause irreversible vision loss.

A loss of 15 letters or more on the ETDRS chart at any time in the trial would be considered as having met the endpoint as a treatment failure.

In September 2023, we submitted a request for a Special Protocol Assessment, or SPA, to the FDA to determine whether the proposed clinical protocol and the statistical analysis plan for the SOL-1 trial adequately addressed scientific and regulatory requirements for a clinical trial that could support a marketing application.

We received an agreement letter regarding the overall trial design from the FDA under the SPA on October 30, 2023.

In December 2023, we

submitted the SPA Agreement Modification to the FDA to broaden the inclusion criteria for subjects in the SOL-1 trial and to reflect our intention to evaluate a single optimized implant of AXPAXLI with a drug load of 450 µg of a more soluble form of axitinib in the trial.

This optimized configuration is expected to provide for a slightly increased daily release of the drug and is designed to improve synchronization of axitinib drug depletion with hydrogel bioresorption.

We received an agreement letter regarding the SPA Agreement Modification from the FDA on January 22, 2024.

The SPA Agreement Modification enables the trial to include treatment-naïve wet AMD subjects with visual acuity of approximately 20/80 or better at the initial screening visit.

The first three subjects in the SOL-1 trial were screened and received their first aflibercept injection in February 2024.

We expect to complete enrollment of the SOL-1 trial by the end of the first quarter of 2025.

Subjects reaching approximately 20/20 vision or experiencing an improvement of at least 10 ETDRS letters after these injections, in addition to satisfying other criteria, were randomized in the trial at Day 1 to receive either one dose of AXPAXLI 450 µg in the investigational arm or one injection of aflibercept 2 mg in the control arm.

After all predefined visit assessments at Week 52 and at Week 76, all subjects that were randomized in the trial at Day 1, including subjects who previously received supplemental anti-VEGF treatment, are re-dosed with their respective initial treatment of a single dose of AXPAXLI 450 µg in the investigational arm or a single injection of aflibercept 2 mg in the control arm and followed for safety until Week 104.

Throughout the trial, subjects are assessed monthly.

Subjects who failed randomization became eligible to be screened for the SOL-R trial.

Subjects who were successfully randomized in the SOL-1 trial on Day 1 are being followed every month and will receive a supplemental dose of aflibercept 2 mg as needed based on pre-specified criteria.

Our pre-specified rescue criteria are a loss of 15 or more letters on the ETDRS chart compared to baseline due to wet AMD, or a new hemorrhage that is deemed to be likely to cause irreversible vision loss due to progression of wet AMD.

The first time a subject is observed to have lost 15 or more ETDRS letters in BCVA in the study eye due to wet AMD at any time in the trial would be considered as having met the endpoint as a treatment failure.

We are conducting the SOL-1 trial in accordance with a Special Protocol Assessment, or SPA, agreement with the FDA.

We initially sought an SPA agreement from the FDA to determine whether the proposed clinical protocol and the statistical analysis plan for the SOL-1 trial adequately addressed scientific and regulatory requirements for a clinical trial that could support a marketing application.

We received an agreement letter regarding the overall trial design from the FDA under the SPA agreement on October 30, 2023.

In December 2023, we submitted a first SPA agreement modification to the FDA to broaden the inclusion criteria for subjects in the SOL-1 trial and to reflect our intention to evaluate a single optimized dose of AXPAXLI with a drug load of 450 µg of a more soluble form of axitinib in the trial.

We received an agreement letter regarding the first SPA agreement modification from the FDA on January 22, 2024.

This first SPA agreement modification enabled us to include in the trial treatment-naïve wet AMD subjects with visual acuity of approximately 20/80 or better at the initial screening visit.

These subjects then needed to reach the BCVA of approximately 20/20 or experience an improvement of at least 10 ETDRS letters gain from the initial screening visit at Day 1 to be randomized.

In addition, the subjects were stratified between the two treatment groups at randomization based on BCVA category (≤ 71 and >71 ETDRS letters) as of the initial screening visit.

In January 2025, we submitted a second SPA agreement modification to the FDA to add a repeat dose of AXPAXLI 450 µg at Week 52 and at Week 76, in each case, after all pre-defined efficacy endpoint assessments, to generate the required safety data for subjects re-dosed with AXPAXLI through Week 104, to support long-term dosing.

We received an agreement letter regarding the second SPA agreement modification from the FDA on February 24, 2025.

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

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

The SOL-R Trial

In June 2024, we initiated the SOL-R trial, a repeat-dosing registrational Phase 3 clinical trial for the treatment of wet AMD.

The SOL-R trial is designed as a multi-center, double-masked, randomized (2:2:1), three-arm trial that will involve sites located in the U.S.

and the rest of the world.

The trial is intended to randomize approximately 555 subjects that are either treatment naïve or have been diagnosed with wet AMD in the study eye within the prior four months and received up to three monthly anti-VEGF injections with last injection approximately 4 weeks prior to screening for SOL-R.

Prior to the second SPA amendment and inclusion of re-dosing in SOL-1 as described above, we previously intended to randomize 825 subjects in the SOL-R trial.

This non-inferiority trial reflects a patient enrichment strategy over the six months prior to randomization that includes five loading doses of anti-VEGF therapy, including aflibercept 2 mg, and monitoring to exclude those subjects with significant retinal fluid fluctuations.

In the first arm, subjects will receive a 450 µg dose of AXPAXLI at Day 1 and be re-dosed at Weeks 24, 48, and every 24 weeks thereafter.

In the second arm,

subjects will receive aflibercept 2 mg on-label every 8 weeks.

In the third arm, subjects will receive an 8 mg dose of aflibercept (Eylea HD) at Day 1 and will be re-dosed at Weeks 24, 48, and every 24 weeks thereafter, aligned with the AXPAXLI dosing regimen in the first arm and serving as adequate masking pursuant to current FDA guidance.

Subjects will be followed for safety until Week 104.

Throughout the trial, subjects are assessed monthly.

The clinical trial protocol requires that, during the trial, subjects in any arm meeting pre-specified rescue criteria will receive a supplemental dose of aflibercept 2 mg.

The pre-specified rescue criteria include a loss of 10 or more ETDRS letters in BCVA from baseline or a combination of worsening anatomical measures and BCVA loss.

The primary endpoint is non-inferiority in mean change in BCVA from baseline between the AXPAXLI and on-label aflibercept 2 mg arms at Week 56.

As per the protocol agreed to by the FDA, the non-inferiority margin for the lower bound is -4.5 letters of mean BCVA when compared to aflibercept 2 mg dosed every eight weeks.

The first subject was enrolled in the SOL-R trial in July 2024.

Initially, subjects screened and enrolled in the SOL-R trial included only subjects that constituted loading or randomization failures from the SOL-1 trial.

In a written Type C response received in August 2024, and a subsequent written response received in December 2024, the FDA agreed that the SOL-R repeat dosing wet AMD trial, with a primary endpoint at Week 56, should be appropriate as an adequate and well-controlled trial in support of a potential NDA and product label for AXPAXLI for the treatment of wet AMD.

The FDA also noted that the use of one superiority trial and one non-inferiority trial is generally acceptable as the basis of an eventual NDA in wet AMD.

On November 14, 2024, we announced that, as the SOL-1 trial neared completion of randomization, trial sites could directly screen and enroll eligible subjects into the SOL-R trial.

On January 14, 2025, we announced that, as of January 10, 2025, we had enrolled 311 subjects across various stages of loading and randomization.

All subjects that have been randomized to date have received their first 450 µg dose of AXPAXLI at Day 1 with the 2-piece injector.

Phase 1 Clinical Trial (Australia)

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

We have conducted an open-label, multi-center, proof-of-concept, dose-escalation Phase 1 clinical trial of AXPAXLI for the treatment of patients with wet AMD.

This Phase 1 clinical trial was designed to evaluate the safety, durability and tolerability of AXPAXLI.

All subjects have exited this Phase 1 clinical trial and we are in the process of closing all clinical sites.

All subjects have completed this Phase 1 clinical trial.

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

The Phase 1 clinical trial was comprised of four cohorts consisting of subjects with pre-existing intraretinal and/or subretinal fluid:

The Phase 1 clinical trial was comprised of four cohorts consisting of subjects with wet AMD and pre-existing intraretinal and/or subretinal fluid:

a lower dose cohort of 200 µg with six subjects;

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

and a fourth cohort with two parallel arms, one arm of one subject receiving a 600 µg single implant of AXPAXLI and the other arm of five subjects receiving a 600 µg single implant of AXPAXLI with anti-VEGF injection.

and a fourth cohort with two parallel arms, one arm of one subject receiving a 600 µg single dose of AXPAXLI and the other arm of five subjects receiving a 600 µg single dose of AXPAXLI with anti-VEGF injection.

In this trial, we evaluated whether AXPAXLI can reduce existing fluid levels.

In the Phase 1 clinical trial of AXPAXLI conducted in Australia, we evaluated biological activity by measuring CSFT, using spectral domain optical coherence tomography, or OCT, and following visual acuity over time as measured by BCVA.

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

In subjects with subretinal and/or intraretinal fluid due to wet AMD, AXPAXLI 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 subjects 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.

In the clinical trial, intravitreal injections of AXPAXLI at 200 μg, 400 μg, and 600 μg, with and without concurrent administration of anti-VEGF, were generally well tolerated.

There were no drug-related serious treatment-emergent adverse events reported in any of the AXPAXLI dose cohorts over the 9-month study period.

Plasma levels of the active drug, axitinib, were below the limit of quantification at all doses, indicating that systemic exposure to intravitreal delivery of axitinib by AXPAXLI up to 600 μg was negligible.

This data also showed a preliminary signal of biological activity as observed by a clinically meaningful decrease in the volume of 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.

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 AXPAXLI 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.

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

In addition, the AXPAXLI doses in cohort 1 (200 µg single dose) 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 hydrogels were able to be adequately monitored and that there was limited to no movement of the hydrogel and no migration into the anterior chamber has occurred.

Phase 1 Clinical Trial (United States)

We have conducted 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 AXPAXLI with an anti-VEGF injection in comparison with a 2 mg dose of aflibercept.

We have conducted 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 600 µg dose of AXPAXLI with an anti-VEGF injection in comparison with a 2 mg dose of aflibercept.

The population we studied in this U.S.-based clinical trial was different than the population we studied in our Phase 1 clinical trial of AXPAXLI in Australia.

In this trial, we evaluated how long we are able to maintain subjects who have been previously treated with

anti-VEGF therapy without the need for retreatment.

All subjects have exited this Phase 1 clinical trial and we are in the process of closing all clinical sites.

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:

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

All enrolled subjects have completed this Phase 1 clinical trial.

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

a 16-subject arm receiving AXPAXLI in combination with a single anti-VEGF injection at month one and a five-subject arm receiving on-label aflibercept at eight-week intervals.

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In February 2023, we announced interim 10-month data from the Phase 1 clinical trial of AXPAXLI 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 AXPAXLI implant was generally well tolerated with no drug-related ocular or systemic serious adverse events, or SAEs, observed through 10 months.

As of the December 12, 2022 cut-off date, the interim data showed that the single 600 µg AXPAXLI dose 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 AXPAXLI 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 AXPAXLI arm, and no subjects had dropped out of either arm as of the data cutoff.

The interim results showed subjects treated with a single AXPAXLI 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 AXPAXLI arm at 10 months, which was comparable with the aflibercept arm (mean change from BCVA baseline of -0.8 letters;

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

The interim results showed subjects treated with a single AXPAXLI dose 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 AXPAXLI 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).

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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.

None of these rescues met the pre-established 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.

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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 AXPAXLI 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 AXPAXLI arm and all five subjects in the aflibercept arm.

In April 2023, we presented data regarding the preclinical pharmacokinetics, or PK, of AXPAXLI and a review of the 10-month interim data from the ongoing Phase 1 clinical trial of AXPAXLI in the United States, including AXPAXLI implant resorption data to date.

We augmented the results from our ongoing clinical trial with PK data in two animal models showing the uptake of axitinib from our hydrogel implant in the choroid and retinal pigment epithelium, or RPE, cells, where axitinib acts intra-cellularly to exert its VEGF receptor inhibiting effect.

We augmented the results from our ongoing clinical trial with PK data in two animal models showing the uptake of axitinib from our hydrogel in the choroid and retinal pigment epithelium, or RPE, cells, where axitinib acts intra-cellularly to exert its VEGF receptor inhibiting effect.

That data showed that clinically representative formulations of AXPAXLI delivered sustained axitinib concentrations through 12 months that were well above the IC50 for VEGFR-2 (vascular endothelial growth factor receptor) in cynomolgus monkey retina tissue and choroid/RPE tissues.

This preclinical PK data aligns with the pharmacodynamics data we have observed to date in our ongoing U.S.

clinical trial, namely the high proportion of rescue-free subjects up to Month 10 and suggests that AXPAXLI may provide continuous VEGF receptor inhibition, which, in turn, may support this new treatment paradigm, Treat to Maintain, in wet AMD care.

This preclinical PK data aligns with the pharmacodynamics data we observed in our U.S.

clinical trial, namely the high proportion of rescue-free subjects up to Month 10 and suggests that AXPAXLI may provide continuous VEGF receptor inhibition.

In June 2023, we presented 12-month data from the ongoing Phase 1 clinical trial of AXPAXLI in the United States at the Clinical Trials at the Summit 2023 conference sponsored by the American Society of Retina Specialists.

As of the April 14, 2023 cut-off date, there were no drug-related ocular or systemic SAEs observed in the AXPAXLI arm except for the one SAE of endophthalmitis following the aflibercept injection at month one that we announced at the 10-month data readout in February 2023 and was assessed by the investigator as related to the injection procedure.

There were no retinal detachment, retinal vasculitis, or implant migration into the anterior chamber adverse events observed in the AXPAXLI arm, and no subjects had dropped out of either arm as of the data cut-off.

The results showed subjects treated with a single AXPAXLI implant continued to demonstrate sustained BCVA (mean change from baseline of -1.0 letters) and CSFT (mean change from baseline of +20.2 μm) in the AXPAXLI arm at 12 months, which was comparable

with the aflibercept arm (mean change from BCVA baseline of +2.0 letters;

There were no retinal detachment, retinal vasculitis, or hydrogel implant migration into the anterior chamber adverse events observed in the AXPAXLI arm, and no subjects had dropped out of either arm as of the data cut-off.

The results showed subjects treated with a single AXPAXLI dose continued to demonstrate sustained BCVA (mean change from baseline of -1.0 letters) and CSFT (mean change from baseline of +20.2 μm) in the AXPAXLI arm at 12 months, which was comparable with the aflibercept arm (mean change from BCVA baseline of +2.0 letters;

mean change from CSFT baseline of -2.2 μm).

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Overall, an 89% reduction in treatment burden was observed in AXPAXLI treated subjects at 12 months.

These results align with our expectation that we would see a reactivation of disease in some subjects, which we believe indicates that AXPAXLI continues to function as designed with axitinib concentrations beginning to fall below therapeutic levels after the implant bioresorbs.

Subject to agreement with the FDA, we intend to commence screening of the SOL-2 trial by the first quarter of 2025.

The SOL-2 trial design is expected to be substantially similar to the design of the SOL-1 trial.

If we were to obtain favorable results from the SOL-1 trial and the planned SOL-2 trial evaluating AXPAXLI for the treatment of wet AMD, we expect that we would submit an NDA under Section 505(b)(2) of the FDCA.

In the clinical trial, intravitreal administration of single AXPAXLI 600 µg dose was generally well tolerated during the 52 weeks of the study.

There were no drug-related ocular or systemic significant adverse events with either AXPAXLI or aflibercept treatment during 52 weeks of assessment.

BCVA was stable after single AXPAXLI 600 µg dose administration and appeared similar to that of the aflibercept 2 mg administered every 8 weeks during 52 weeks of assessment.

CSFT parameters were stable with AXPAXLI administration and appeared similar to that of the aflibercept 2 mg arm during 52 weeks of assessment.

There were fewer injections over 52 weeks in subjects with AXPAXLI compared with the annualized number of anti-VEGF injections in 52 weeks prior to baseline.

Furthermore, there were fewer injections over 52 weeks received in subjects from AXPAXLI treatment compared to those received in aflibercept 2 mg treatment arm.

If we were to obtain favorable results from the SOL-1 and the SOL-R trials evaluating AXPAXLI for the treatment of wet AMD, 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.

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Phase 1 Clinical Trial

Given our belief in the potential applicability of AXPAXLI to other retinal diseases, we initiated the HELIOS trial to evaluate AXPAXLI for the treatment of NPDR in the fourth quarter of 2022.

The HELIOS trial is a U.S.-based, multicenter, double-masked, randomized, parallel group study evaluating the safety, tolerability and biological activity of AXPAXLI in patients with moderately severe to severe NPDR without DME.

We dosed our first subject in February 2023.

We are conducting the Phase 1 clinical trial initially under an eIND and are in the process of converting this to a regular IND.

We have enrolled 22 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 diabetic macular edema in the prior six months, randomized 2:1 to either a single implant of AXPAXLI containing 600 µg of axitinib or sham control.

We announced the completion of enrollment in the HELIOS trial in June 2023 and expect to provide 9-month topline data in the second quarter of 2024.

We have had discussions with the FDA with respect to the clinical development of AXPAXLI for the treatment of NPDR and have a potential pivotal clinical trial design that is consistent with guidance from the FDA.

Subject to favorable topline data from the ongoing HELIOS trial and agreement with the FDA, we intend to commence a pivotal Phase 3 clinical trial evaluating AXPAXLI for the treatment of NPDR as a next step of clinical development.

We have completed the HELIOS trial, a U.S.-based, multicenter, double-masked, randomized, parallel group Phase 1 clinical trial evaluating the safety, tolerability and efficacy of a single injection of an AXPAXLI 600 µg dose in subjects with moderately severe to severe NPDR without CI-DME.

We conducted the HELIOS trial initially under an exploratory IND, which was subsequently converted to a traditional IND.

We enrolled 22 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 dose of AXPAXLI containing 600 µg of axitinib or sham control.

One subject died during the HELIOS trial due to reasons unrelated to the trial and study treatment.

In June 2024, we announced topline data from the HELIOS trial at 48 weeks.

AXPAXLI was generally well-tolerated and did not result in any reported incidence of intraocular inflammation, iritis, vitritis, or vasculitis.

No subjects in either arm received rescue medication.

At week 48, six of 13 (46.2%) subjects in the AXPAXLI group experienced either a 1- or 2-step improvement in the Diabetic Retinopathy Severity Scale, or DRSS, with three of the 13 (23.1%) experiencing a 2-step improvement.

No subjects in the control group showed a 1-step or greater improvement at the same timepoint.

No subjects in the AXPAXLI group experienced any worsening in DRSS.

Two of eight (25.0%) subjects in the control group experienced worsening in the DRSS at 48 weeks.

No subjects in the AXPAXLI group developed PDR or CI-DME at week 48.

Three of eight (37.5%) subjects in the control group developed PDR or CI-DME at the same timepoint.

On average, subjects in the AXPAXLI arm showed improvement in mean CSFT versus baseline compared to the control group, which showed worsening at the 48-week timepoint.

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

According to the Market Scope 2023 Glaucoma Pharmaceuticals Market Report, it is estimated that there were 126.6 million people globally in 2023 with primary OAG or OHT.

In the United States, it is estimated there are 6.8 million and 3.7 million who had primary OAG or OHT, respectively.

Both groups are estimated to grow by 1.3% and 2.4% annually through 2026, respectively.

According to the Market Scope 2024 Glaucoma Pharmaceuticals Market Report, or the Market Scope 2024 Glaucoma Report, it is estimated that there were 130.2 million people globally in 2024 with primary OAG or OHT.

In the United States, it is estimated there were 6.8 million and 3.7 million who had primary OAG or OHT, respectively.

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.

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.

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.

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The product candidates 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 $4.3 billion in 2023 with the U.S.

According to the Market Scope 2024 Glaucoma Report, the global market for glaucoma was estimated at $4.2 billion in 2024 with the U.S.

market representing $1.6 billion.

The global market is estimated to grow at 4.9% annually to approximately $5.5 billion in 2028 while the U.S.

market is expected to grow 3.9% annually to approximately $2.0 billion in 2028.

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

The global market is estimated to grow at a 4.7% CAGR through 2029 while the U.S.

market is expected to grow at a 3.7% CAGR through 2029.

The most commonly used treatments for glaucoma in the United States are topical eye drops including both branded and generic products.

Branded products have maintained premium pricing and significant market share.

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Glaucoma Program

PAXTRAVA (travoprost intracameral implant)

Our product candidate PAXTRAVA is a bioresorbable hydrogel implant based on ELUTYX, incorporating travoprost, an FDA-approved prostaglandin analog designed to lower elevated IOP, 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 with a single treatment.

PAXTRAVA (travoprost intracameral hydrogel)

Our product candidate PAXTRAVA is a bioresorbable hydrogel implant based on ELUTYX, incorporating travoprost, an FDA-approved PGA designed to lower elevated IOP, 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 with a single treatment.

Phase 2 Clinical Trial

We are conducting a U.S.-based Phase 2 prospective, multi-center, randomized, controlled clinical trial evaluating the safety, tolerability and efficacy of PAXTRAVA for the treatment of patients with primary OAG or OHT under an IND.

The Phase 2 clinical trial was initially designed to include approximately 105 subjects at 15 to 20 sites between three arms of approximately 35 subjects each to evaluate two formulations of PAXTRAVA for the treatment of OAG or OHT in subjects compared to DURYSTA.

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

The primary efficacy endpoint is 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 receives one injection of DURYSTA in one eye and a topical prostaglandin daily in the non-study eye.

OHT in subjects compared to DURYSTA.

The non-study eye of each subject receives a topical PGA daily, if not contraindicated.

The primary efficacy endpoint is measured by mean change from baseline (8 a.m., 10 a.m.

and 4 p.m.) at 2, 6 and 12 weeks in diurnal IOP.

The active comparator control arm receives one injection of DURYSTA in one eye and a topical PGA daily in the non-study eye, if not contraindicated.

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

One arm in the Phase 2 clinical trial is receiving the same formulation used in cohort 2 of the Phase 1 clinical trial of PAXTRAVA that we conducted, containing a 26 µg dose of drug and utilizing a standard implant.

The second arm was receiving 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.

Due to elevations in IOP observed approximately 12 weeks after enrollment in six subjects in the PAXTRAVA 5 µg arm of the trial, we terminated enrollment in the 5 µg arm of the trial in the fourth quarter of 2022 and continued with the PAXTRAVA 26 µg and DURYSTA arms of the trial.

The Phase 2 clinical trial consists of 86 subjects:

One arm in the Phase 2 clinical trial is receiving the same formulation used in cohort 2 of the Phase 1 clinical trial of PAXTRAVA that we conducted, containing a 26 µg dose of travoprost and utilizing a standard hydrogel.

The second arm was receiving 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 hydrogel.

Due to elevations in IOP observed in six subjects approximately 12 weeks after enrollment in the PAXTRAVA 5 µg arm of the trial, we terminated enrollment in the 5 µg arm of the trial in the fourth quarter of 2022 and continued with the PAXTRAVA 26 µg and DURYSTA arms of the trial.

The Phase 2 clinical trial primary study consisted of 83 subjects:

33 subjects in the PAXTRAVA 26 µg treatment arm, 34 subjects in the DURYSTA arm and 16 subjects that were previously enrolled in the PAXTRAVA 5 µg treatment arm.

Enrollment of the Phase 2 clinical trial was completed in July 2023.

We have started a pilot repeat-dose sub-study in the Phase 2 clinical trial to evaluate the safety of a repeat, sustained release dose of PAXTRAVA 26 μg, in a small subset of subjects with OAG or OHT.

In April 2024, we presented 6-month topline data from this Phase 2 clinical trial at the 2024 American Society of Cataract and Refractive Surgery Annual Meeting.

In the trial, the PAXTRAVA 26 µg single hydrogel implant demonstrated consistent control of IOP, through six months, as statistically significant IOP changes from baseline were observed for every individual and mean diurnal measurement at primary endpoints Week 2 (M0.5), Week 6 (M1.5), and Week 12 (M3), as well as secondary endpoints Months 4.5 and 6 (p<0.0001), although no formal statistical testing was prespecified by the clinical trial protocol.

Clinically meaningful mean IOP reduction of approximately 24-30% from baseline over six months was observed.

A majority (81.3%) of treated eyes did not require additional IOP-lowering therapy through six months, indicating sustained and consistent treatment effects.

PAXTRAVA 26 µg was generally well tolerated with no impact on the corneal endothelium having been observed at six months following a single administration of the product candidate.

The majority of adverse events, observed were mild in severity and generally resolved with topical medical treatment.

Most ocular adverse events occurring within three days of the injection were deemed related to the injection procedure by the investigators.

Adverse events observed more than three days post-injection procedure were consistent with the travoprost label.

There was one serious adverse event in the trial, where a hydrogel implant required removal, which the investigator assessed to be likely due to a peri-implantation bacterial infection.

Consistent bioresorption of the hydrogel implant coupled with the durable effect observed in the Phase 2 trial suggests redosing could be possible without the risk of implants stacking.

We are conducting a pilot repeat-dose sub-study in the Phase 2 clinical trial to evaluate the safety of a repeat, sustained release dose of PAXTRAVA 26 μg, in a small subset of subjects with OAG or OHT.

These subjects will be followed for at least six months after their enrollment in the sub-study to monitor and evaluate their endothelial cell health.

We plan to provide topline data from the single-dose portion of the Phase 2 clinical trial, assessing the safety, efficacy and durability of PAXTRAVA and whether the product candidate’s preservation of endothelial cell health could make the drug suitable for chronic dosing, at the American Society of Cataract and Refractive Surgery 2024 Annual Meeting in April 2024.

Phase 1 clinical development

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The clinical trial consisted of four subject 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.

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 hydrogel, and cohort 4 included five subjects who received a 5 µg dose with a fast-degrading hydrogel.

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 PAXTRAVA 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 PAXTRAVA were observed to experience a mean change in IOP from baseline as measured at 8:00 am, 10:00 a.m.

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as early as two days following injection.

We believe these results were comparable to the decrease in IOP achieved with topical travoprost administered via daily eye drops, the current standard of care.

We believe these results were comparable to the decrease in IOP achieved with topical travoprost administered via daily eye drops.

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 PAXTRAVA 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.

The PAXTRAVA hydrogel was observed to biodegrade over the course of between five and seven months in subjects in cohorts 1 and 2.

In subjects in cohorts 3 and 4, the fast-degrading hydrogels were observed to biodegrade over the course of between three and five months.

Within all four cohorts, hydrogel 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.

If the data from our Phase 2 clinical trial is favorable, we intend to evaluate our strategic alternatives for advancing the development of PAXTRAVA to pivotal Phase 3 clinical trials.

If we were to decide to move the PAXTRAVA program into pivotal Phase 3 clinical trials, we would be required to successfully complete two well-controlled pivotal clinical trials conducted under an IND to seek 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.

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

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 17.8 million patients diagnosed with dry eye disease in the United States, according to the Market Scope 2022 Dry Eye Products Market Report.

Approximately 9.8 million of those patients are diagnosed with moderate to severe dry eye while the remaining 8.0 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 Bausch & Lomb (previously 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 $5.7 billion in 2022 with the U.S.

market representing $2.2 billion.

There are many products to treat dry eye on the market from over an estimated 150 companies, from both the pharmaceutical and OTC segments.

Within the prescription category, two of the better-known branded products are Xiidra from Novartis and Restasis from Allergan.

In 2022, Xiidra recorded global sales of $487 million while Restasis recorded sales of $666 million.

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 9.8 million ocular surgeries were performed in the United States in 2023, an increase of approximately 3.5% over 2022.

According to the Market Scope 2023 US and Western Europe Cataract Pharmaceuticals Market Report, there were an estimated 4.7 million cataract surgeries in the United States in 2023, an increase of 3.0% over 2022.

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 IQVIA, Inc.

data, approximately 21.6 million prescriptions were filled in the United States in 2023 for anti-inflammatory drugs administered by prescription eye drops for ocular diseases and conditions, resulting in sales of approximately $4.6 billion.

These prescriptions consisted of approximately 8.8 million prescriptions and $520.0 million in sales for single-agent corticosteroids, 3.3 million prescriptions and $266.0 million in sales for NSAIDs, 5.4 million prescriptions and $348.0 million in sales for corticosteroid and antibiotic combination products and approximately 4.8 million prescriptions and $3.6 billion in sales for dry eye disease products.

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 an 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 IQVIA, Inc.

data, approximately 4.6 million anti-allergy eye drop prescriptions were filled in the United States in 2023, resulting in sales of approximately $257.0 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.

Commonly used 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.

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

OTX-DED (dexamethasone intracanalicular insert)

One of the causes of dry eye disease is inflammation.

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 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.

However, safety limitations associated with the prolonged use of corticosteroids for dry eye disease have limited widespread adoption.

We believe that our product candidate OTX-DED has potential as a short-term treatment of the signs and symptoms of dry eye disease caused by inflammation.

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 includes a lower dose of the drug, is administered in the office setting as a smaller insert and is designed to release dexamethasone over a period of two to three weeks, compared with up to thirty days in the case of DEXTENZA.

Phase 2 clinical trial

We submitted an IND in November 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 a hydrogel implant in a total of 166 subjects with dry eye disease, with more than 50 subjects per arm.

The subjects were followed for approximately two months after randomization.

This trial was 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 subjects were required to have diagnosed dry eye disease in both eyes for at least six months, a Visual Analog Score, or 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 was mean change in bulbar conjunctival hyperemia from baseline measured at 15 days post treatment by central reading center photographic assessment.

Secondary endpoints included eye dryness symptoms using VAS, total CFS, or corneal total fluorescein staining, 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 the 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.

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 observed.

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.

Ongoing Clinical Work

Based on the data from the Phase 2 clinical trial, we initiated a small trial in the second quarter of 2023 in connection with our efforts to develop an appropriate placebo comparator that may be used in both the OTX-DED and OTX-CSI programs.

This trial is evaluating the performance of OTX-DED versus placebo inserts, namely fast-dissolving, biodegradable collagen plugs, and no inserts at all, to explain the placebo performance seen in the Phase 2 clinical trials evaluating both OTX-DED and OTX-CSI in which the vehicle hydrogel placebo insert or placebo comparator vehicle remained in the canaliculus longer than anticipated, performing more like an active comparator than a placebo.

We anticipate we will complete enrollment for this trial in the first half of 2024, and to deliver topline data in the fourth quarter of 2024.

We plan to use the results of this trial to inform the next steps for both the OTX-DED and OTX-CSI programs.

If the data from the ongoing trial of evaluating OTX-DED versus potential comparators is favorable, we intend to evaluate our strategic alternatives for advancing the development of OTX-DED.

OTX-CSI (cyclosporine intracanalicular insert)

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 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

We submitted an IND for OTX-CSI in the United States in December 2019 and initiated a Phase 1 clinical trial in the first quarter of 2020.

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.

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.

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

Tear production as measured by the Schirmer’s test improved from mean values of 4.2 mm at baseline to 8.2 mm at Week 12.

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

Subjects saw an improvement in signs of dry eye disease as measured by CFS (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).

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 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 were 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 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 observed.

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.

If the data from the ongoing trial of evaluating OTX-DED versus potential comparators is favorable, we intend to evaluate our strategic alternatives for advancing the development of OTX-CSI.

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

Once we have completed the pilot repeat-dose sub-study, we will evaluate whether an end-of-Phase 2 meeting with the FDA is appropriate for determining our next steps for PAXTRAVA for the treatment of OAG or OHT.

Dry Eye Programs

We are not currently actively pursuing additional development activities for our product candidates OTX-DED (dexamethasone intracanalicular insert) for the short-term treatment of the signs and symptoms of dry eye disease, or OTX-CSI (cyclosporine intracanalicular insert) for the chronic treatment of dry eye disease.

The Ocular Therapeutix Approach

Our Hydrogel-Based Formulation Technology ELUTYX

ELUTYX is based on the use of a proprietary form of polyethylene glycol, or PEG.

We tailor the hydrogel to act as a vehicle for local programmed-release drug delivery to the eye and as an ocular tissue sealant.

We create our hydrogels by cross-linking PEG molecules to form a network that resembles a three-dimensional mesh on a molecular level.

Our PEG molecules are branched, with four to eight branches or arms.

Each arm bears a reactive site on its end.

Our cross-linking chemistry uses a second molecule with multiple arms, bearing complimentary reactive sites on each end, such that when combined with the PEG molecules, a network spontaneously forms.

When swollen with water, this molecular network forms a hydrogel.

We design these hydrogels to slowly degrade in the presence of water, a process called hydrolysis, by inserting a biodegradable linkage between the PEG molecule and the cross-linked molecule.

By appropriately selecting the number of arms of the PEG molecule and the biodegradable linkage, we can design hydrogels with varying mechanical properties and bioresorption rates.

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 months.

We consider the following selection criteria:

● prior approval by the FDA for the targeted ophthalmic indication,

● scientific rationale, either clinical or pre-clinical, for active pharmaceutical ingredients such as axitinib, which are not currently approved for an ophthalmic indication;

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

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

● availability from a qualified supplier;

● compatibility with our drug delivery system.

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

● Improved patient compliance .

Our hydrogel implants and inserts 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 hydrogel implants and inserts dissipate over time and do not require removal for acute conditions or frequent removal for chronic conditions, we believe our hydrogel implants and inserts address the problem of patient compliance.

● Ease of administration .

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

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 back of the eye injection or eye drop administrations.

Further, we are designing our products and product candidates so that their drug release profiles can be tailored or programmed to match the treatment needs of the disease.

For example, steroids for ophthalmic purposes generally require administration over four weeks, with tapered dosing over this period.

In contrast, PGAs require administration in a steady fashion over the duration of treatment.

Our hydrogel implants and inserts are designed to fully dissipate and can be removed if necessary by a healthcare professional.

● Avoidance of preservative side effects .

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

Intravitreal Hydrogels

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 hydrogel product candidates, such as AXPAXLI, consist of a PEG-based hydrogel, which contains embedded micronized particles of active drug.

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

Intracameral Hydrogels

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

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

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

In the case of PAXTRAVA, the hydrogel is designed to infuse with intracameral water, settle into the inferior angle of the eye and demonstrate little to no movement.

The hydrogels are soft, 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.

Intracanalicular Inserts

Our intracanalicular inserts, including DEXTENZA, 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 and ocular itching associated with allergic conjunctivitis.

Our intracanalicular inserts utilize ELUTYX 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.

Commercial Portfolio

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DEXTENZA (dexamethasone intracanalicular insert)

DEXTENZA incorporates the FDA-approved corticosteroid dexamethasone as a preservative-free active pharmaceutical ingredient into a hydrogel, drug-eluting intracanalicular insert.

DEXTENZA incorporates the FDA-approved corticosteroid dexamethasone as a preservative-free active pharmaceutical ingredient into a drug-eluting intracanalicular insert that is based on ELUTYX.

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.

DEXTENZA is the first and only 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 is approved by the FDA and has a long history of ophthalmic use;

is available on a generic basis;

is available on a generic basis from multiple qualified suppliers;

is highly potent and is typically prescribed for prevention of ocular inflammation and pain following ocular surgery;

is available from multiple qualified suppliers;

and has physical properties that are well suited for incorporation within our hydrogel technology.

The dexamethasone drug particles embedded within our DEXTENZA intracanalicular insert 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 ELUTYX 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.

The standard regimen for dexamethasone eye drops following cataract surgery is an initial administration of four times daily for one week, with a gradual tapering in the number of eye drops over a four-week period.

Such a regimen is often confusing to patients as they must remember to taper the number of times per day they administer the steroid, while also taking multiple drops of other drugs, such as antibiotics and NSAIDs.

Such a regimen is often confusing to patients as they must remember to taper the number of times per day they administer the steroid, while also taking multiple eye drops of other drugs following surgery, such as antibiotics and non-steroidal anti-inflammatory drugs, or NSAIDs.

We believe that local programmed-release of drug to the eye may result in better control of ocular inflammation and pain as compared to prescription eye drops and that a low dose amount may provide enhanced safety by eliminating spikes in IOP associated with high-dose steroid eye drops.

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We have received proposals for, and are supporting, several investigator-initiated trials evaluating DEXTENZA in different clinical situations.

To date, third-party clinical investigators have initiated over 45 trials to study the use of DEXTENZA in cataract surgery, other ophthalmic surgeries and other potential indications.

Over 25 of the trials have completed enrollment, and the remaining trials are actively enrolling and treated subjects are being followed.

To date, 19 of the trials have published study reports.

To date, third-party clinical investigators have initiated 45 trials to study the use of DEXTENZA in cataract surgery, other ophthalmic surgeries, and other potential indications.

Of those, 21 trials have published study reports, and 14 trials have been terminated.

The remaining 10 trials are in various stages of enrollment and treatment.

Post-Approval Studies

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The FDA has agreed that 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 the indication for ocular itching associated with allergic conjunctivitis.

All subjects have exited this trial and we are in the process of analyzing the final data.

We anticipate that we will submit the clinical study report and updated package insert to the FDA in the second quarter of 2024.

In June 2024, we submitted the data for our clinical trial to evaluate DEXTENZA in pediatric subjects following cataract surgery and the updated package insert to the FDA.

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

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 third parties to assist us in the approval process.

Given our prioritization of the clinical development of our sustained-release product candidates, in particular for retinal diseases, and our planned commercialization efforts for our initial intracanalicular insert product candidates in the United States, we expect we will need to engage 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 PAXTRAVA in mainland China, Taiwan, Hong Kong, Macau, South Korea, and the countries of the Association of Southeast Asian Nations, or the AffaMed License Agreement .

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

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

In October 2021, the FDA approved our supplemental New Drug Application, or 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.

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.

Although dexamethasone is clinically effective in the treatment of late-phase inflammatory allergic reactions, the safety limitations associated with eye drop administration, including the potential to generate spikes in IOP due to the high levels of drug due to potential patient abuse to treat this symptomatic condition, have limited its widespread

We commercially launched DEXTENZA for the treatment of ocular itching associated with allergic conjunctivitis in the first quarter of 2022.

These elevations in IOP can lead to drug-induced glaucoma, although the incidence is low.

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

We commercially launched 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 key account managers and two field reimbursement managers that called exclusively on the offices of ophthalmologists and optometrists.

In the fourth quarter of 2022, we redeployed this small sales force to join the DEXTENZA sales force focused on the ophthalmic surgery market, specifically cataract surgery, in ambulatory surgery centers, or ASCs, and hospital outpatient departments, or HOPDs.

We believe that cataract surgeries represent a larger, near-term market opportunity.

AffaMed License Agreement

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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.

We sell DEXTENZA in the United States primarily to a network of specialty distributors on a direct basis, who then resell DEXTENZA to ASCs, HOPDs, and physicians’ offices.

We also sell DEXTENZA on a direct basis to a small number of ASCs.

We intend to offer this distribution option more broadly to our end customers starting in the third quarter of 2024.

In addition to distribution agreements with specialty distributors and a small number of ASCs, we enter into arrangements with government payors that provide for government-mandated rebates and chargebacks with respect to the purchase of DEXTENZA.

We sell DEXTENZA in the United States to specialty distributors, or SDs, for resale to certain ambulatory surgery centers, or ASCs, certain hospital outpatient departments, or HOPDs, and certain physicians’ offices, and directly to

certain ASCs and physicians’ offices.

We are continuing to offer this distribution option more broadly to our end customers.

In addition to distribution agreements with specialty distributors and a small number of ASCs and physicians’ offices, we enter into arrangements with government payors that provide for government-mandated rebates and chargebacks with respect to the purchase of DEXTENZA.

We have built a highly targeted, key account sales force of KAMs, or key account managers, Regional Directors, and FRMs, or field reimbursement managers, that focus on the ASCs and their affiliates responsible for the largest volumes of cataract surgery in the United States, with an initial emphasis on the approximately two million cataract procedures performed annually under Medicare Part B.

During 2022, we adjusted our discounting and rebate strategy to meet the demands of the market.

In the third quarter of 2022, we implemented an off-invoice discount program whereby providers receive the discounted price immediately upon purchase, rather than having to wait until the end of the quarter for a rebate payment.

Since 2022, we have periodically adjusted our discounting and rebate strategy to meet the demands of the market.

For example, in the third quarter of 2022, we implemented an off-invoice discount, or OID, program whereby providers receive the discounted price immediately upon purchase, rather than having to wait until the end of the quarter for a rebate payment.

We focus our sales efforts on sales to ASCs and strategic accounts that own and control multiple ASCs.

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Manufacturing

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 fabricate devices and drug products for use in our clinical trials, research and development and commercial efforts for DEXTENZA using current Good Manufacturing Practices, or cGMP, at our approximately 20,000 square foot facility located in Bedford, Massachusetts.

We fabricate devices and drug products for use in our clinical trials and other research and development activities for our product candidates, including AXPAXLI, using cGMP at our 71,000 square foot facility that is also located in Bedford, Massachusetts.

This facility may include additional manufacturing space in the future as we increase our manufacturing capacity and capabilities for AXPAXLI.

We purchase active pharmaceutical ingredient drug substance from independent suppliers on a purchase order basis for incorporation into our drug product candidates.

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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.

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 if we were to work with a contract manufacturer, although we will continue to evaluate outsourcing unit operations for cost advantages or eventually as a second source.

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.

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We have designed our manufacturing facility and processes to provide flexibility for the manufacture of different product candidates.

We outsource sterilization services for our products.

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.

We outsource sterilization and packaging services for our products.

Intellectual Property

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Certain of our U.S.

patents and applications, and foreign counterparts, are owned by us and other U.S.

patents and applications, and their foreign counterparts, are owned by us and other U.S.

patents and applications, and their foreign counterparts have been in-licensed from Incept.

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The following is a summary of patents and patent applications that cover our commercial products and potentially cover our product candidates:

AXPAXLI (axitinib intravitreal implant) for Wet AMD, DME and RVO

AXPAXLI (axitinib intravitreal hydrogel)

We own issued patents in the United States and patents in certain foreign jurisdictions that cover this product candidate, with current expiration dates in 2041.

We own a pending Patent Cooperation Treaty application with the potential to cover this product candidate in the U.S.

and foreign jurisdictions, that, if granted, is expected to expire in 2044.

Additional U.S.

and foreign patent applications are pending.

PAXTRAVA (travoprost intracameral implant) for OAG or OHT

We have licenses to pending U.S.

applications and certain foreign patent applications pending that potentially cover this product candidate that, if granted, are expected to expire in 2037.

Certain foreign licensed patent applications have been issued and expire in 2037.

PAXTRAVA (travoprost intracameral hydrogel) for the treatment of OAG or OHT

We have licenses to a U.S.

patent, and certain foreign counterparts, with current expiration dates in 2037 with corresponding pending U.S.

and foreign counterparts.

We own an issued patent in the United States and patents in certain foreign jurisdictions that cover this product candidate, with current expiration dates in 2041.

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and foreign patent applications are pending.

OTX-DED (dexamethasone intracanalicular insert) for episodic dry eye disease

We have licenses to U.S.

patents, and certain foreign counterparts, with current expiration dates in 2030.

We own an issued patent that expires in 2037 that covers this product candidate and a pending patent application in the United States, and certain foreign counterparts, with the potential to cover this product candidate that, if granted, are expected to expire in 2041.

OTX-CSI (cyclosporine intracanalicular insert) for dry eye disease

We have licenses to U.S.

patents, and certain foreign counterparts, that cover this product candidate, with current expiration dates in 2030.

We own issued patents and pending patent applications in the United States that cover this product candidate with current expiration dates in 2037 and in 2041, and corresponding foreign patent applications that, if granted, are expected to expire in 2041.

DEXTENZA (dexamethasone ophthalmic insert) 0.4 mg

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patents, and certain foreign counterparts, with current expiration dates in 2030 that cover this product.

We also own a U.S.

patent that covers this product with a current expiration date in 2037.

DEXTENZA (dexamethasone ophthalmic insert) 0.4 mg for allergic conjunctivitis

We also own two U.S.

patents that cover this product with current expiration dates in 2036 and 2037, and a pending U.S.

patent application.

DEXTENZA (dexamethasone ophthalmic insert) 0.4 mg for the treatment of allergic conjunctivitis

We have licenses to U.S.

patents, and certain foreign counterparts, with current expiration dates in 2030 that cover this product.

We also own a U.S.

patent that covers this product with a current expiration date in 2037 and a pending patent application in the United States, and certain foreign counterparts, with the potential to cover this product candidate that, if granted, is expected to expire in 2041.

ReSure Sealant

We have licenses to two U.S.

patents that cover ReSure Sealant.

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.

We also own two U.S.

patents that cover this product with current expiration dates in 2036 and 2037.

We also own an issued U.S.

patent expiring in 2041, and related pending U.S.

and foreign applications.

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.

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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.

Sawhney, or the Incept Individuals, after the Effective Date.

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(i) consistent with the Prior Agreement, a royalty equal to a low single-digit percentage of net sales by 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;

(ii) a royalty equal to a mid-single-digit percentage of net sales by us or our affiliates of Licensed Products including or covered by Original IP, excluding the Shape-Changing IP, in the Additional Field of Use;

(ii) a royalty equal to a mid-

single-digit percentage of net sales by us or our affiliates of Licensed Products including or covered by Original IP, excluding the Shape-Changing IP, in the Additional Field of Use;

and (iii) a royalty equal to a low single-digit percentage of net sales by us or our affiliates of Licensed Products including or covered by Incept IP or Joint IP in the field of drug delivery.

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Under the AffaMed 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.

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.

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.

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.

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There can be no guarantee, however, that any of the remaining milestones will be achieved.

We are also entitled to receive tiered, escalating royalties on the net sales of the AffaMed Licensed Products ranging from a low-teen to low-twenties percentage.

We are also entitled to receive tiered,

escalating royalties on the net sales of the AffaMed Licensed Products ranging from a low-teen to low-twenties percentage.

Royalties under the AffaMed License Agreement are payable on an AffaMed Licensed Product-by-AffaMed Licensed Product and jurisdiction-by-jurisdiction basis and are subject to potential reductions in specified circumstances, subject to a specified floor.

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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.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

The key competitive factors affecting the success of each of our product candidates, if approved for marketing, are likely to be efficacy, safety, method and frequency of administration, convenience, price, the level of generic competition and the availability of coverage and adequate reimbursement from government and other third-party payors.

Because the active pharmaceutical ingredients in our product candidates are available on a generic basis, or are soon to be available on a generic basis, competitors will be able to offer and sell products with the same active pharmaceutical ingredient as our products so long as these competitors do not infringe the patents that we license.

pharmaceutical ingredient as our products so long as these competitors do not infringe the patents that we license.

For example, our licensed patents related to our intracanalicular insert product candidates largely relate to the hydrogel composition of the intracanalicular inserts and certain drug-release features of the intracanalicular inserts.

As such, if a third party were able to design around the formulation and process patents that we license and create a different formulation using a different production process not covered by our licensed patents or patent applications, we would likely be unable to prevent that third party from manufacturing and marketing its product.

Competitors of AXPAXLI

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 three to four months or more of therapeutic effect.

They include Lucentis, Eylea and Eylea HD, 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 Regeneron which received approval for its 8mg version of Eylea in August 2023;

Competitors to AXPAXLI

In wet AMD and DR, AXPAXLI 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 more than one or two months of therapeutic effect.

They include Lucentis (ranibizumab), Eylea (aflibercept 2 mg), Eylea HD (aflibercept 8 mg), Beovu (brolicizumab), Vabysmo (faricimab), Susvimo (ranibizumab Port Delivery System), and off-label use of the cancer therapy Avastin.

Biosimilars to ranibizumab and aflibercept 2 mg have received FDA approval as well.

Multiple companies, in various stages of development, are pursuing products for wet AMD that would be competitive with AXPAXLI.

Programs in later-stage development include:

Eyepoint Pharmaceuticals, which is pursuing a sustained-release bioerodible device containing a TKI (vorolanib) using its Durasert-E technology;

Opthea, which is pursuing an anti-VEGF C/D Trap evaluated in combination with anti-VEGF;

Clearside Biomedical, which is pursuing a TKI (axitinib) administered into the suprachoroidal space;

Eyepoint Pharmaceuticals, which is pursuing a sustained-release bioerodible device containing a TKI (vorolanib) using its Durasert technology;

Aerie Pharmaceuticals, which is pursuing development of a four to six month TKI implant (axitinib) using its Print® manufacturing technology;

and Kodiak Sciences, which is pursuing sustained release therapies based on its anti-VEGF biopolymer conjugate technology.

In October 2021, Genentech received approval for Susvimo which utilizes the company’s port delivery system for delivery of ranibizumab but has recently launched a voluntary recall of the product due to manufacturing issues.

In addition, there are several companies pursuing gene therapy to treat retinal diseases including Adverum Biotechnologies, and REGENXBIO.

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, or GA, including Apellis Pharmaceuticals, IVERIC bio, now owned by Astellas Pharma, Annexion Biosciences, Novartis (Gyroscope Therapeutics), Genentech/Ionis and Janssen Pharmaceuticals, among others.

Apellis received approval of SYFOVRE as the first approved treatment for GA in February 2023, and IVERIC bio’s Izervay was approved for the treatment of GA in August 2023.

Competitors of PAXTRAVA

and Kodiak Sciences, which is pursuing products based on its anti-VEGF biopolymer conjugate technology.

In addition, there are several companies pursuing gene therapies to treat wet AMD including, 4D Molecular Therapeutics, Adverum Biotechnologies and RegenxBio.

Programs in early phases of development include but are not limited to:

Alcon, which is pursuing development of a TKI implant containing axitinib using its Print manufacturing technology;

Glaukos, which is pursuing a sustained-release bioerodible implant containing a TKI (axitinib) through its Retina-XR delivery platform;

and Roche, which is pursuing intravitreal products along with those delivered with its Port Delivery System technology.

In DR, AXPAXLI will compete with approved agents, including Lucentis, Eylea and Eylea HD.

These treatments, although approved for DR, are sparingly used, largely due to the treatment burden.

Multiple companies, in various stages of development, are pursuing products that would be competitive with AXPAXLI.

Programs in later-stage development include:

Roche, which is pursuing Susvimo for the treatment of DR;

Kodiak Sciences, which is pursuing an anti-VEGF molecule built on its antibody polymer conjugate technology;

RegenxBio, which is pursuing a suprachoroidal formulation of its gene therapy for the treatment of DR;

and Opus Genetics, which is pursuing an oral treatment.

Competitors to PAXTRAVA

A number of therapies are currently available for the treatment of glaucoma in the United States.

The most commonly used treatments for glaucoma in the United States are topical eye drops, including both branded and generic PGAs, along with combination therapies.

Allergan, now owned by AbbVie, 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 OAG or OHT.

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.

In December 2023, Glaukos received approval for iDose, a prostaglandin analog indicated for the reduction of IOP in patients with OHT or OAG.

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 trial with an intracanalicular insert for the treatment of glaucoma.

Competitors of OTX-DED and OTX-CSI

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 there are 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 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.

EYSUVIS was sold to Alcon in July 2022.

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.

Oyster Point was purchased by Viatris in November 2022.

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 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

In December 2023, Glaukos received marketing approval from the FDA for iDose, a PGA indicated for the reduction of IOP in patients with OHT or OAG.

In addition, several other companies, in varying stages of development, have announced their intention to develop products for treatment of glaucoma using sustained-release therapy.

These programs include but are not limited to:

Glaukos, which is developing a second-generation formulation of the iDose, referred to as iDose TREX;

AbbVie, which is pursuing an intracameral implant comprised of a PGA;

PolyActiva, which is pursuing an ocular implant with latanoprost based on its Prezia technology;

and Spyglass Pharma, which is pursuing an intraocular lens which elutes bimatoprost.

Competitors to DEXTENZA

Icon Biosciences, Inc.

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DEXYCU lost separate government reimbursement as of January 1, 2023 and is no longer actively marketed.

OMIDRIA, 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.

OMIDRIA, purchased by Rayner Surgical Group Limited, is a prescription medication used during cataract

According to the OMIDRIA website, this product helps the black part in the center of the eye (pupil) stay open (dilated) during cataract surgery and decreases eye pain after surgery.

Government Regulation

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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.

The regulatory requirements applicable to product development, approval and marketing are subject to change, and regulations and administrative guidance often are revised or reinterpreted by government agencies in ways that may have a significant impact on our business.

Review and Approval of Drugs and Biologics in the United States

In the United States, the FDA approves and regulates drugs under the FDCA and related regulations.

In the United States, the FDA approves and regulates drug products under the FDCA and related regulations.

Drugs are also subject to other federal, state and local statutes and regulations.

Biological products are licensed for marketing under the Public Health Service Act, or PHSA, and subject to regulation under the FDCA and related regulations, and other federal, state and local statutes and regulations.

Biological products, or biologics, are licensed for marketing under the Public Health Service Act, or PHSA, and subject to regulation under the FDCA and related regulations, and other federal, state and local statutes and regulations.

A company, institution, or organization which takes responsibility for the initiation and management of a clinical development program for such products is referred to as a sponsor.

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● approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated;

● performance of adequate and well-controlled human clinical trials in accordance with GCPs, to establish the safety and efficacy of the proposed drug product for each indication;

BLA, demonstrating the safety, purity and potency of the proposed biological product for one or more proposed indications;

● performance of adequate and well-controlled human clinical trials in accordance with GCPs, to establish the safety and efficacy of the proposed drug product or the safety, potency and purity for the proposed biological product for each indication;

● preparation and submission to the FDA of a new drug application, or NDA, demonstrating the safety and efficacy for the drug candidate product or, with respect to biologics, a biological licensing application, or BLA, demonstrating the safety, purity and potency of the proposed biological product for one or more proposed indications;

● review by an FDA advisory committee, where appropriate or if applicable;

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● satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of clinical data;

● payment of user fees and securing FDA approval of the NDA or BLA;

● payment of user fees pursuant to the Prescription Drug User Fee Act;

● securing FDA approval of the NDA or BLA authorizing marketing of the new drug product or biological product in the United States;

● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and the potential requirement to conduct post-approval studies.

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Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the candidate product does not undergo unacceptable deterioration over its shelf life.

With passage of the FDA’s Modernization Act 2.0 in December 2022, Congress eliminated provisions in both the FDCA and the PHSA that required animal testing in support of an NDA or BLA.

While animal testing may still be conducted, the FDA was authorized to rely on alternative non-clinical tests, including cell-based assays, microphysiological systems, or bioprinted or computer models.

The IND and IRB Processes

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The FDA requires a 30-day waiting period after the filing of each IND before clinical trials may begin.

This waiting period is designed to allow the FDA to review the IND to assure the safety and rights of patients and to help assure that the quality of the investigation will be adequate to permit an evaluation of the drug’s effectiveness and safety

and of the biological product’s safety, purity and potency .

At any time during this 30-day period, or thereafter, the FDA may raise concerns or questions about the conduct of the trials as outlined in the IND and impose a clinical hold or partial clinical hold.

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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.

The IRB must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects.

The IRB must review and approve, among other

things, the study protocol and informed consent information to be provided to study subjects.

An IRB must operate in compliance with FDA regulations.

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The decision to terminate development of an investigational drug or biological product may be made by either a health authority body such as the FDA, an IRB or ethics committee, or by us for various reasons.

Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board, or DSMB, or committee.

Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data monitoring committee.

This group provides authorization for whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the study.

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The NIH’s Final Rule on registration and reporting requirements for clinical trials became effective in 2017.

The PHSA grants the Secretary of Health and Human Services the authority to issue a notice of noncompliance to a responsible party for failure to submit clinical trial information as required.

The responsible party, however, is allowed 30 days to correct the noncompliance and submit the required information.

As of December 19, 2024, the FDA has issued six notices of non-compliance, thereby signaling the government’s willingness to begin enforcing these requirements against non-compliant clinical trial sponsors.

While these notices of non-compliance did not result in civil monetary penalties, the failure to submit clinical trial information to clinicaltrials.gov is a prohibited act under the FDCA with violations subject to potential civil monetary penalties of up to $10,000 for each day the violation continues.

Violations may also result in injunctions and/or criminal prosecution or disqualification from federal grants.

Expanded Access to an Investigational Drug for Treatment Use

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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.

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;

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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 December 2022, with the passage of Food and Drug Omnibus Reform Act, or FDORA, Congress began requiring sponsors to develop and submit a diversity action plan for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product.

In December 2022, with the passage of Food and Drug Omnibus Reform Act, or FDORA, Congress began requiring sponsors to develop and submit a diversity action plan, or DAP, for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product.

These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products.

Specifically, actions plans must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them.

In addition to these requirements, the legislation directs the FDA to issue new guidance on diversity action plans.

Specifically, DAPs must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them.

In addition to these requirements, the legislation directs the FDA to issue new guidance on DAPs.

In June 2024, as mandated by FDORA, the FDA issued draft guidance outlining the general requirements for DAPs.

Unlike most guidance documents issued by the FDA, the DAP guidance when finalized will have the force of law because FDORA specifically dictates that the form and manner for submission of DAPs are specified in FDA guidance.

On January 27, 2025, in response to an Executive Order issued by President Trump on January 21, 2025, on Diversity, Equity and Inclusion programs, the FDA removed this draft guidance from its website.

This action raises questions about the applicability of statutory obligations to submit DAPs and the agency’s current thinking on best practices for clinical development.

In June 2023, the FDA issued draft guidance with updated recommendations for GCPs aimed at modernizing the design and conduct of clinical trials.

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Clinical Trials Outside the United States in Support of FDA Approval

We generally plan to conduct our later stage and pivotal clinical trials of our product candidates in the United States.

Nonetheless, in connection with our clinical development program, we may have trial sites outside the United States.

In connection with our clinical development program, we have trial sites outside the United States from time to time.

When a foreign clinical trial is conducted under an IND, all IND requirements must be met unless waived.

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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.

These reports must include a development safety update report.

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 occurrence 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 at all.

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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).

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.

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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.

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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 sponsor 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.

The FDA’s ability to meet its review goals may be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel and statutory, regulatory and policy changes.

Average review times at the FDA have fluctuated in recent years.

In connection with its review of an application, the FDA will typically submit information requests to the sponsor and set deadlines for responses thereto.

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To ensure cGMP and GCP compliance by its employees and third-party contractors, a sponsor may incur significant expenditure of time, money and effort in the areas of training, record keeping, production and quality control.

Moreover, the FDA will review a sponsor’s financial relationship with the principal investigators who conducted the clinical trials in support of the NDA.

That is because, under certain circumstances, principal investigators at a clinical trial site may also serve as scientific advisors or consultants to a sponsor and receive compensation in connection with such services.

Depending on the level of that compensation and any other financial interest a principal investigator may have in a sponsor, the sponsor may be required to report these relationships to the FDA.

The FDA will then evaluate that financial relationship and determine whether it creates a conflict of interest or otherwise affects the interpretation of the trial or the integrity of the data generated at the principal investigator’s clinical trial site.

If so, the FDA may exclude data from the clinical trial site in connection with its determination of safety and efficacy of the investigational product.

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.

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The FDA reviews a sponsor 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.”

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.

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In December 2019, FDA issued draft guidance further explaining the studies that are needed to establish substantial evidence of effectiveness.

The FDA 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.

The FDA also issued draft guidance in September 2023 that outlines considerations for relying on confirmatory evidence in lieu of a second clinical trial to demonstrate efficacy.

The FDA has not yet finalized such guidance.

To reach this determination, the FDA must determine that the drug is effective and that its expected benefits outweigh its potential risks to patients.

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and whether risk management tools are necessary to manage specific risks.

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.

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.

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The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints but has indicated that such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a drug.

The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate

or intermediate clinical endpoint occurs rapidly.

The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit.

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The guidance provides that although single-arm trials have been commonly used to support accelerated approval, a randomized controlled trial is the preferred approach as it provides a more robust efficacy and safety assessment and allows for direct comparisons to an available therapy.

While this guidance is currently only in draft form and will ultimately not be legally binding even when finalized, sponsors typically observe FDA’s guidance closely to ensure that their investigational products qualify for accelerated approval.

Subsequently, in December 2024 and January 2025, the FDA issued additional draft guidances relating to accelerated approval.

These guidances describe FDA’s latest thinking on what it means to conduct a confirmatory trial with due diligence and how the agency plans to interpret whether such a study needs to be underway at the time of approval.

While these guidances are currently only in draft form and will ultimately not be legally binding even when finalized, sponsors typically observe the FDA’s guidance closely to ensure that their investigational products qualify for accelerated approval.

Post-Approval Regulation

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imposition of post-market studies or clinical trials to assess new safety risks;

imposition of distribution or other restrictions under a REMS program.

or imposition of distribution or other restrictions under a REMS program.

Other potential consequences include, among other things:

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Previously, such communications were permitted under FDA guidance but the new legislation explicitly provides protection to sponsors who convey certain information about products and product candidates in development to payors, including unapproved uses of approved products.

In addition, in October 2023, the FDA published draft guidance outlining the agency’s non-binding policies governing the distribution of scientific information on unapproved uses to healthcare providers.

This draft guidance calls for such communications to be truthful, non-misleading, factual, and unbiased and include all information necessary for healthcare providers to interpret the strengths and weaknesses and validity and utility of the information about the unapproved use.

In addition, in January 2025, the FDA published final guidance outlining the agency’s non-binding policies governing the distribution of scientific information on unapproved uses of approved products to healthcare providers.

This final guidance calls for such communications to be truthful, non-misleading, factual, and unbiased and include all information necessary for healthcare providers to interpret the strengths and weaknesses and validity and utility of the information about the unapproved use.

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.

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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.

In November 2013, the Federal Drug Supply Chain Security Act became effective in the U.S., mandating an industry-wide, electronic, interoperable system to trace prescription drugs through the pharmaceutical distribution supply chain with a ten-year phase-in process.

Manufacturers were required by November 2023 to have such systems and processes.

So as not to disrupt supply chains, the FDA has granted certain exemptions from enhanced drug distribution security requirements for eligible trading partners for particular periods of time.

Generic Drugs and Regulatory Exclusivity

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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.

The FDCA provides a period of five years of regulatory 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.

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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 sponsor 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 sponsor and are essential to the approval of the application.

The FDCA also provides for a period of three years of regulatory 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 sponsor 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 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.

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 or 505(b)(2) NDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product;

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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 sponsor.

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 sponsor.

Regulatory Exclusivity Governing Biologics

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The data do not need to show the product to be effective in the pediatric population studied;

rather, if the clinical trial is

deemed to fairly respond to the FDA’s request, the additional protection is granted.

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 patents that cover the product are extended by six months.

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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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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.

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.

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The provisions in the CPRA may apply to some of our business activities.

In addition to California, at least eleven other states have passed comprehensive privacy laws similar to the CCPA and CPRA.

In addition to California, at least eighteen other states have passed comprehensive privacy laws similar to the CCPA and CPRA.

These laws are either in effect or will go into effect sometime before the end of 2026.

Like the CCPA and CPRA, these laws create obligations related to the processing of personal information, as well as special obligations for the processing of “sensitive” data (which includes health data in some cases).

Like the CCPA and CPRA, these laws create obligations related to the processing of personal information, as well as special obligations

for the processing of “sensitive” data, which includes health data in some cases.

Some of the provisions of these laws may apply to our business activities.

There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2023 legislative sessions that will go into effect in 2024 and beyond, including New Hampshire and New Jersey.

Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law.

There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2024 legislative sessions that will go into effect in 2025 and beyond.

Other states will be considering similar laws in the future, and Congress has also been debating passing a federal privacy law.

There are also states that are specifically regulating health information that may affect our business.

For example, Washington state passed a health privacy law in 2023 that will regulate the collection and sharing of health information, and the law also has a private right of action, which further increases the relevant compliance risk.

Connecticut and Nevada have also passed similar laws regulating consumer health data and additional states (including Vermont) are considering such legislation for 2024.

For example, the State of Washington passed the My Health My Data Act in 2023 which specifically regulated health information that is not otherwise regulated by the HIPAA rules, and the law also has a private right of action, which further increases the relevant compliance risk.

Connecticut and Nevada have also passed similar laws regulating consumer health data, and more states are considering such legislation in 2024.

These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.

Plaintiffs’ lawyers are also increasingly using privacy-related statutes at both the state and federal level to bring lawsuits against companies for their data-related practices.

In particular, there have been a significant number of cases filed against companies for their use of pixels and other web trackers.

These cases often allege violations of the California Invasion of Privacy Act and other state laws regulating wiretapping, as well as the federal Video Privacy Protection Act.

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.

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The approval process ultimately varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods.

The time required to obtain approval in other

countries and jurisdictions might differ from and be longer than that required to obtain FDA approval.

The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval.

Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

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After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the CTR.

Parties conducting certain clinical trials must, as in the United States, post clinical trial information in the European Union at the EU Clinical Trials Register.

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

To obtain marketing approval of a drug under European Union regulatory systems, a sponsor must submit a marketing authorization application, or MAA, either under a centralized or decentralized procedure.

To obtain marketing approval of a drug under European Union regulatory systems, a sponsor must submit a marketing authorization application, or MA, either under a centralized or decentralized procedure.

The centralized procedure provides for the grant of a single marketing authorization by the European Commission that is valid for all European Union member states.

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The CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization.

Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops, when additional information or written or oral explanation is to be provided by the sponsor in response to questions of the CHMP.

Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of an MA is 210 days, excluding clock stops, when additional information or written or oral explanation is to be provided by the sponsor in response to questions of the CHMP.

Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is of major interest from the point of view of public health and in particular from the viewpoint of therapeutic innovation.

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The decentralized procedure provides for approval by one or more other, or concerned, member states of an assessment of an application performed by one member state designated by the sponsor, known as the reference member state.

Under this procedure, a sponsor submits an application based on identical dossiers and related materials, including a draft summary of product characteristics, and draft labeling and package leaflet, to the reference member state and concerned member states.

concerned member states.

The reference member state prepares a draft assessment report and drafts of the related materials within 210 days after receipt of a valid application.

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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, but applicants can also request EMA to conduct an accelerated assessment, for instance in cases of unmet medical needs.

Exceptional Circumstances

A MA may also be granted “under exceptional circumstances” under Article 14(8) of Regulation (EC) No 726/2004 when the applicant can show that it is unable to provide comprehensive data on the efficacy and safety under normal conditions of use even after the product has been authorized and subject to specific procedures being introduced.

This may arise in particular when the intended indications are very rare and, in the present state of scientific knowledge, it is not possible to provide comprehensive information, or when generating data may be contrary to generally accepted ethical principles.

This MA is close to the conditional MA as it is reserved to medicinal products to be approved for severe diseases or unmet medical needs and the applicant does not hold the complete data set legally required for the grant of a MA.

However, unlike the conditional MA, the applicant does not have to provide the missing data and will never have to.

Although the MA “under exceptional circumstances” is granted definitively, the risk-benefit balance of the medicinal product is reviewed annually and the MA is withdrawn in case the risk-benefit ratio is no longer favorable.

Under these procedures, before granting the MA, the EMA or the competent authorities of the European Union Member States make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

Periods of Authorization and Renewals

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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.

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 MA with a complete independent data package of pharmaceutical tests, preclinical tests and clinical trials.

In this context, it should be noted that the European Union pharmaceutical legislation is currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative, launched by the European Commission in November 2020.

The European Commission’s proposal for revision of several legislative instruments related to medicinal products was published in April 2023 and includes, among other things, provisions that would potentially reduce the duration of regulatory data protection.

The European Parliament requested several amendments in April 2024.

At this time, the proposed revisions remain to be agreed and adopted by the European Parliament and European Council and the proposals may therefore be substantially revised before adoption, which is not anticipated before early 2026.

The revisions may, however, have a significant impact on the pharmaceutical industry in the long term, if and when adopted.

Pediatric Exclusivity

If a sponsor 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.

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

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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

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.

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Brexit and the Regulatory Framework in the United Kingdom

The UK’s withdrawal from the EU took place on January 31, 2020.

The EU and the UK reached an agreement on their new partnership in the Trade and Cooperation Agreement, which we refer to as the Agreement and which was applied provisionally beginning on January 1, 2021 and which entered into force on May 1, 2021.

The 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 EU and the UK will form two separate markets governed by two distinct regulatory and legal regimes.

As such, the Agreement seeks to minimize barriers to trade in goods while accepting that border checks will become inevitable as a consequence that the UK is no longer part of the single market.

As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency (MHRA) became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales.

Under the 2023 “Windsor Framework” and related laws, the MHRA became responsible for approving all medicinal products destined for the UK market (i.e., Great Britian and Northern Ireland), effective January 1, 2025.

A single UK-wide marketing authorization will be granted by the MHRA for all medicinal products to be sold in the UK, enabling products to be sold in a single pack and under a single authorization throughout the UK.

The Human Medicines Regulations 2012 (SI 2012/1916) (as amended) (HMR) is the primary legal instrument for the regulation of medicines in the UK.

The HMR has incorporated into the domestic law the body of EU law instruments governing medicinal products that pre-existed prior to the UK’s withdrawal from the EU.

EU laws which have been transposed into UK law through secondary legislation continue to be applicable as “retained EU law.” However, new legislation such as the (EU) Clinical Trials Regulation will not be applicable in Great Britain.

Since a significant proportion of the regulatory framework for pharmaceutical products in the UK covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorizations, commercial sales, and distribution of pharmaceutical products is derived from EU directives and regulations, Brexit may have a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval, and commercialization of our product candidates in the UK.

For example, the UK is no longer covered by the centralized procedures for obtaining EU-wide marketing authorizations from the EMA, and a separate marketing authorization will be required to market our product candidates in the UK.

A new international recognition framework has been in place since January 1, 2024, whereby the MHRA will have regard to decisions on the approval of marketing authorizations made by the EMA and certain other regulators when determining an application for a new Great Britian marketing authorization.

As of January 1, 2025, the Medicines and Healthcare Products Regulatory Agency, or the MHRA, is responsible for approving all medicinal products destined for the U.K.

market (Great Britain and Northern Ireland), and the EMA will no longer have any role in approving medicinal products destined for Northern Ireland.

The MHRA relies 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 domestic law the body of EU law instruments governing medicinal products that pre-existed prior to the United Kingdom’s withdrawal from the European Union.

As of January 1, 2024, a new international recognition procedure, or the IRP, applies which intends to facilitate approval of pharmaceutical products in the United Kingdom.

The IRP is open to applicants that have already received an authorization for the same product from one of the MHRA’s specified Reference Regulators, or RRs.

The RRs notably include EMA and regulators in the EEA member states for approvals in the European Union centralized procedure and mutual recognition procedure as well as the FDA (for product approvals granted in the United States).The RR assessment must have undergone a full and standalone review.

RR assessments based on reliance or recognition cannot be used to support an IRP application.

A CHMP positive opinion or an MRDC positive end of procedure outcome is an RR authorization for the purposes of IRP.

General Data Protection Regulation

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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.

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 UK from the European Union, the UK Data Protection Act 2018 applies to the processing of personal data that takes place in the UK and includes parallel obligations to those set forth by GDPR.

Following the withdrawal of the United Kingdom from the European Union, the UK Data Protection Act 2018 applies to the processing of personal data that takes place in the United Kingdom and includes parallel obligations to those set forth by GDPR.

Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S.

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Privacy Shield.

The EU initiated the process to adopt an adequacy decision for the EU-U.S.

The European Union initiated the process to adopt an adequacy decision for the EU-U.S.

Data Privacy Framework in December 2022 and the European Commission adopted the adequacy decision on July 10, 2023.

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These codes are used by CMS and other managed care organizations to identify drugs that ordinarily cannot be self-administered by a patient.

Lacrimal ophthalmic inserts containing dexamethasone, such as DEXTENZA, have a specific and permanent J-Code, J1096, that allows for a simpler and more convenient reimbursement process versus miscellaneous J-codes.

Since its launch, DEXTENZA has been payable in ASCs and HOPDs separately from ophthalmic surgery via the transitional pass-through status under the J1096 J-Code.

Lacrimal ophthalmic inserts containing dexamethasone, such as DEXTENZA, have a specific and permanent J-Code, in case of DEXTENZA J1096, that allows for a simpler and more convenient reimbursement process versus miscellaneous J-codes.

Initially, DEXTENZA was payable in ASCs and HOPDs separately from ophthalmic surgery via the transitional pass-through status under the J1096 J-Code.

However, the pass-through status for J1096 ended on December 31, 2022.

In November 2022, as part of the annual CMS rule-making cycle, the CY 2023 OPPS rule was finalized and provided that DEXTENZA would qualify under the criteria established for non-opioid pain

management drugs as a surgical supply provision.

This provision allows for continued separate payment of DEXTENZA in the ASC setting for 2023 but does not require separate payment for DEXTENZA in the HOPD setting.

In November 2022, as part of the annual CMS rule-making cycle, the CY 2023 OPPS rule was finalized and provided that DEXTENZA would qualify under the criteria established for non-opioid pain management drugs as a surgical supply provision.

This provision allowed for continued separate payment of DEXTENZA in the ASC setting for 2023 but did not require separate payment for DEXTENZA in the HOPD setting.

In November 2023, the CY 2024 OPPS was finalized and confirmed that DEXTENZA would continue to be separately reimbursed in the ASC setting in 2024.

The CY 2025 OPPS rule, which was released in November 2024, allows for

continued separate payment of DEXTENZA in the ASC setting, and it re-establishes the separate payment of DEXTENZA in the HOPD setting.

CPT codes are part of the HCPCS Level I set of procedure codes which consists of codes that are used to report medical services and procedures furnished by physicians.

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In 2024, the Medicare Physician Fee Schedule, or MPFS, for the insertion of DEXTENZA into the canaliculus was $31.43 in the ASCs and $37.33 in the physician’s office for unilateral insertion.

In November 2023, the CY 2024 MPFS rule was finalized resulting in a marginal decrease in physician payments compared to 2023 to $31.43 in the ASCs and $37.33 in the physician’s office for unilateral insertion, due to a decrease in the conversion factor which CMS uses to translate the relative value units, or RVUs, of medical services into fee schedule payment amounts.

The RVU for code 68841 was unchanged.

In November 2024, the CY 2025 MPFS rule was finalized resulting in a marginal decrease in physician payments compared to 2024 to $31.38 in the ASCs and HOPDs and $36.88 in the physician’s office for unilateral insertion, due to a decrease in the conversion factor which CMS uses to translate the relative value units, or RVUs, of medical services into fee schedule payment amounts.

Although the office based RVU for code 68841 was unchanged, the RVU code in the ASC and HOPD setting increased from 0.96 to 0.97.

The CY 2025 MPFS final rule also includes finalized policies for the quality payment program, including the Merit-based Incentive Payment System, or MIPS.

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

Based on the CY 2025 MPFS final rule, the respective surgeon’s cost for DEXTENZA is included in the MIPS cost performance category for surgeons using DEXTENZA to treat post-surgical ocular inflammation and pain following cataract surgery effective January 1, 2025.

In the European Union, pricing and reimbursement schemes vary widely from country to country.

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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.

Similar healthcare laws and regulations exist in the European Union 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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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 and reduced through the end of June 2022, with the full 2% cut resuming thereafter.

Under current legislation, the actual reductions in Medicare payments may vary up to 4%.

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.

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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.

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 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 under the PPACA;

and policies that reduce affordability of coverage or financial assistance, including for dependents.

Pharmaceutical Prices

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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.

Seven states (Colorado, Florida, Maine, New Hampshire, New Mexico, Texas and Vermont) have passed laws allowing for the importation of products from Canada.

North Dakota and Virginia have passed legislation establishing workgroups to examine the impact of a state importation program.

As of May 2024, five states (Colorado, Florida, Maine, New Hampshire and New Mexico) had submitted Section 804 Importation Program proposals to the FDA.

On January 5, 2023, the FDA approved Florida’s plan for Canadian product importation.

That state now has authority to import certain products from Canada for a period of two years once certain conditions are met.

Florida will first need to submit a pre-import request for each product selected for importation, which must be approved by the FDA.

The state will also need to relabel the products and perform quality testing of the products to meet FDA standards.

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.

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It originally was set to go into effect on January 1, 2022, but with passage of the Inflation Reduction Act, or IRA, has been delayed by Congress to January 1, 2032.

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.

More recently, on August 16, 2022, the IRA was signed into law by President Biden.

The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or

enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage.

The new legislation has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage.

Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap;

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The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year.

The first cycle of negotiations for the Medicare Drug Price Negotiation Program commenced in the summer of 2023.

On August 15, 2024, the HHS published the results of the first Medicare drug price negotiations for ten selected

drugs that treat a range of conditions, including diabetes, chronic kidney disease, and rheumatoid arthritis.

The prices of these ten drugs will become effective January 1, 2026.

On January 17, 2025, CMS announced its selection of 15 additional drugs covered by Part D for the second cycle of negotiations by February 1, 2025.

While there had been some questions about the Trump Administration’s position on this program, CMS issued a public statement on January 29, 2025, declaring that lowering the cost of prescription drugs is a top priority of the new administration and CMS is committed to considering opportunities to bring greater transparency in the negotiation program.

The second cycle of negotiations with participating drug companies will occur during 2025, and any negotiated prices for this second set of drugs will be effective starting January 1, 2027.

In June 2023, Merck & Co.

filed a lawsuit against HHS and CMS asserting that, among other things, the IRA’s Drug Price Negotiation Program for Medicare constitutes an uncompensated taking in violation of the Fifth Amendment of the Constitution.

Subsequently, a number of other parties, including the U.S.

Chamber of Commerce, Bristol Myers Squibb Company, PhRMA, Astellas, Novo Nordisk, Janssen Pharmaceuticals, Novartis, AstraZeneca and Boehringer Ingelheim, also filed lawsuits in various courts with similar constitutional claims against HHS and CMS.

HHS has generally won the substantive disputes in these cases, and various federal district court judges have expressed skepticism regarding the merits of the legal arguments being pursued by the pharmaceutical industry.

Certain of these cases are now on appeal and, on October 30, 2024, the Court of Appeals for the Third Circuit heard oral argument in three of these cases.

Litigation involving these and other provisions of the IRA will continue with unpredictable and uncertain results.

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.

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.

This is increasingly true with respect to products approved pursuant to the accelerated approval pathway.

State Medicaid programs and other payers are developing strategies and implementing significant coverage barriers, or refusing to cover these products outright, arguing that accelerated approval drugs have insufficient or limited evidence despite meeting the FDA’s standards for accelerated approval.

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.

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Total Employees

We are committed to inclusion and diversity and believe that these are important elements of our culture that enables us to attract and retain a high quality workforce.

The development, attraction and retention of employees is a critical success factor for us for the execution of our business strategy and succession planning.

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None of our employees are represented by labor unions or covered by collective bargaining agreements.

We consider our relationship with our employees to be good.

We value the health, safety and wellbeing of our employees and their families.

As an example, in response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, which included allowing a number of our corporate employees to work remotely, as appropriate.

We value the health, safety and wellbeing of our employees and their families, and we consider our relationship with our employees to be good.

Our Corporate Information

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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