Sight Sciences Inc

Overview

Our mission is to develop transformative, interventional technologies that allow eyecare providers to procedurally elevate the standards of care – empowering people to keep seeing. We are passionate about improving patients’ lives by helping them to preserve their sight. Our business philosophy is grounded in the following principles: comprehensively understanding disease physiology; developing transformative technologies that are intended to preserve, protect, and restore natural physiological functionality to diseased eyes; developing and marketing products with proven clinical evidence that achieve superior effectiveness versus current treatment paradigms while minimizing complications or side effects; providing intuitive, patient friendly, interventional solutions to ophthalmologists and optometrists (together, "eyecare professionals" or "ECPs"); and delivering compelling economic value to all stakeholders, including patients, providers and third-party payors such as Medicare and commercial insurers. Our objective is to develop and market products for use in new treatment paradigms and to create an interventional mindset in eyecare whereby our technologies may be used in procedures which supplant conventional outdated approaches.

We have focused our initial product development efforts on the treatment of two of the world’s most prevalent and underserved eye diseases, glaucoma and dry eye disease ("DED"). We estimate the annual addressable U.S. market opportunities for the products in our surgical glaucoma ("Surgical Glaucoma") and dry eye ("Dry Eye") segments are approximately $6.0 billion (with approximately $1.0 billion in the combination cataract procedure segment, and $5.0 billion in the standalone procedure segment) and $2.5 billion, respectively. The combination cataract procedure market segment (the “Combination Cataract Market Segment”) is associated with procedures performed on patients with glaucoma in combination with a cataract procedure (“Combination Cataract Procedures”). The standalone procedure market segment (the “Standalone Market Segment”) is associated with procedures performed on patients with glaucoma not in combination with a cataract procedure, thus coming to the operating room solely due to their glaucoma condition (“Standalone Procedures”).

Glaucoma, which refers to a group of chronic, often asymptomatic, diseases that damage the optic nerve, is the world’s leading cause of irreversible blindness. Glaucoma does not have a cure and is a progressive disease; if left untreated or insufficiently treated, glaucoma can lead to irreversible disability and blindness. An estimated 126 million people worldwide suffer from glaucoma. Primary open-angle glaucoma ("POAG") is the most prevalent form of glaucoma and affects over 80 million people worldwide, including approximately 4.3 million people in the United States, of whom an estimated 3.4 million have been diagnosed. One of the greatest risk factors for POAG, and the only risk factor that can be controlled, is elevated intraocular pressure ("IOP"). Elevated IOP is often caused by malfunctioning drainage pathways in the eye that provide abnormal resistance to the outflow of aqueous humor, a clear, watery fluid that bathes and nourishes the lens and maintains pressure within the eye.

Microinvasive glaucoma surgery ("MIGS") procedures, which can be used to treat patients with glaucoma, have a strong demonstrated safety profile, characterized by minimal trauma to the eye and quick patient recovery times. We currently offer two commercial technologies in our Surgical Glaucoma segment, OMNI and SION, both of which enable MIGS procedures. OMNI is a handheld, single use, therapeutic technology that enables ophthalmic surgeons to perform a comprehensive procedure to reduce IOP in adult glaucoma patients. SION is a bladeless, manually operated device used in ophthalmic surgical procedures to excise trabecular meshwork, which is the tissue located near the cornea through which aqueous humor flows out of the eye.

Our goal is to establish OMNI and SION as the standards of care for our customers and patients, by continuing to grow their adoption and utilization in the existing Combination Cataract Market Segment, which we believe remains underpenetrated and estimate is capturing less than one-third of its current potential procedural volume. In addition, we believe training ophthalmic surgeons to use OMNI will help us to expand the Standalone Segment (which we currently estimate at over 85% of the potential U.S. POAG market). We believe the consistent therapeutic outcomes OMNI delivers are important for patients and surgeons alike, especially those considering a standalone MIGS procedure.

We primarily sell OMNI and SION in the U.S. through our dedicated Surgical Glaucoma sales team. Our commercial strategy for OMNI centers on building confidence and conviction among the glaucoma community through continued execution of our clinical trials and publication of their results in peer-reviewed journals. Coverage is available for the procedure enabled by OMNI, canaloplasty followed by trabeculotomy (ab interno), in all Medicare Administrative

Contractor ("MAC") jurisdictions and under numerous private insurers plans, covering an estimated 74% of medical benefit covered lives in the U.S. With advantages that have been observed to achieve safe, effective and highly consistent clinical outcomes, we believe that OMNI has the potential to benefit patients by establishing a more proactive, interventional paradigm for IOP reduction in POAG. Our Surgical Glaucoma segment, which includes OMNI and SION, represented 92% of our total revenues for the year ended December 31, 2023. We have established direct commercial operations in the United States, United Kingdom, and Germany, and sell OMNI in other countries in Europe through distributors.

Dry eye disease is caused by aqueous deficiency or evaporative dry eye and is a subset of ocular surface disease. The primary cause of evaporative DED is meibomian gland disease ("MGD"), a disease characterized by low quality tears that evaporate prematurely. Dry eye complaints are the most common reason for a patient visit to an eye doctor. Yet, of the estimated 39 million people with DED signs and symptoms in the U.S., only an estimated 18 million have been diagnosed with DED. Dry eye symptoms have a significant impact on the quality of life and productivity of patients suffering from DED. If left untreated, DED can be extremely painful, often leading to permanent cornea damage and vision impairment.

Studies have shown that evaporative DED resulting from MGD is associated with up to 86% of all DED cases. Approximately 49% of DED patients are considered moderate to severe. In healthy eyes, there are 25 to 30 meibomian glands located within each of the upper and lower eyelids. These glands produce and secrete an oily substance called meibum which forms the outer layer of healthy tears known as the lipid layer. Meibum normally has an olive oil-like consistency and contributes a vital element of the tear film that prevents premature tear evaporation. In patients with MGD, meibum hardens within the glands causing obstructions that can partially or completely block the oily secretions from reaching the tear film. The resulting compromised outer surface of the tear leads to accelerated tear evaporation and DED. Third-party clinical studies have demonstrated that treating MGD by liquefying and removing clogged meibum is the most effective method of eliminating obstructions and restoring a healthy tear film lipid layer, thereby preventing premature evaporation of tears.

We believe the MGD market requires additional ECP and patient education, including clinical data to differentiate procedural and product alternatives, and enhanced patient access through the development of reimbursement coverage. In our Dry Eye segment, our commercial product line currently consists of our TearCare system. The TearCare system is a proprietary, interventional, dry eye device designed to melt and facilitate the comprehensive removal of meibomian gland obstructions and restore gland functionality and healthy oil production. We believe TearCare has a compelling physiological profile to address gland obstructions caused by MGD. Our goals with the development of TearCare are to (i) fully transform the current outdated treatment paradigm based primarily on over-the-counter (“OTC”), and prescription eyedrops, both of which do not address obstruction of the meibomian glands, the primary root cause of MGD, and (ii) establish use of TearCare as the standard of care for the millions of patients suffering from evaporative DED caused by MGD.

We primarily sell TearCare in the U.S. through our dedicated Dry Eye ocular surface sales team. Our commercial strategy for TearCare has been to drive awareness and adoption through cash-pay sales of TearCare to ECPs while simultaneously seeking to lay the foundation for equitable coverage and reimbursement through the generation of compelling clinical data and conduct of a targeted coding, coverage and reimbursement initiative. In 2024, we are continuing our focus on establishing appropriate and equitable market access for TearCare based on our significant clinical trial portfolio showing strong efficacy for this procedure. Our Dry Eye segment, which includes TearCare and related accessories, represented 8% of our total revenues for the year ended December 31, 2023.

We focus on continuous innovation and regularly seek input from our network of expert employees (including ophthalmologists on staff), advisors and customers to rapidly iterate our pre- and post-commercial product designs with the aim of better satisfying the needs of our customers and their patients, and increasing adoption and utilization of our solutions.

Our ability to continuously and rapidly innovate our products is a core competency of our company. Our product innovation has resulted in a comprehensive portfolio of 39 issued U.S. patents, 62 issued patents outside of the U.S. (including six issued European patents and their national validations), 28 pending U.S. non-provisional patent applications, 26 pending foreign patent applications and three pending Patent Cooperation Treaty patent applications as of December 31, 2023.

The overall success of our innovative approach to eyecare to date is evidenced by the over 220,000 estimated uses of our Surgical Glaucoma products in over 1,900 hospitals and ambulatory service centers ("ASCs") in the U.S. and Europe, and over 50,000 estimated uses of our TearCare technology in over 1,500 eyecare facilities in the U.S. through December 31, 2023.

Our Solutions

We have designed our OMNI, SION, and TearCare products to be interventional ophthalmology technologies. We believe both glaucoma and DED are significantly underserved by current treatment offerings and there are large market opportunities for effective solutions that preserve, protect, and restore the natural physiological functionality of diseased eyes.

Our Product Development Approach

The development of OMNI, SION, and TearCare follows our internal product development approach, which is governed by fundamental principles that we believe are critical to delivering the most effective, safe and consistent outcomes for patients with eye disease.

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Comprehensive Understanding of Disease Physiology

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Treatment of Underlying Causes with Interventional Mindset

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Intuitive Design

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Strong Clinical Evidence

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Patient Access

We aim and expect to be a clinical leader in every eyecare segment we enter, and we seek to achieve all criteria in our product development projects. From device ideation to commercialization, we take into consideration the perspectives of patients, providers and third-party payors throughout our product development process. When possible, we seek to streamline our product commercialization process by designing our products to achieve the most efficient routes for U.S. Food and Drug Administration ("FDA") clearance or authorization for each applicable indication and reimbursement coverage by third-party payors.

OMNI Surgical System

Our OMNI technology enables an ophthalmic surgeon to perform MIGS that addresses all three known areas of resistance in the conventional outflow pathway of the eye: the trabecular meshwork, Schlemm's canal, and the distal collector channels. OMNI is indicated forcanaloplasty (microcatheterization and transluminal viscodilation of Schlemm's canal) followed by trabeculotomy (cutting of the trabecular meshwork) to reduce IOP in adult POAG patients. This indication encompasses use of OMNI both by itself for Standalone Procedures and for Combination Cataract Procedures. OMNI has received 510(k) clearance from the FDA and a CE mark to be marketed in the U.S. and the European Union ("EU") respectively, for canaloplasty (microcatheterization and transluminal viscodilation of Schlemm’s canal) followed by trabeculotomy (cutting of trabecular meshwork) to reduce IOP in adult patients with POAG in the U.S. or with open-angle glaucoma ("OAG") in the EU. OMNI was originally FDA 510(k) cleared with the capability of delivering 11 microliters of ophthalmic viscoelastic device ("OVD") fluid and a version that is capable of delivering 21 microliters of OVD was FDA 510(k) cleared for the same indications for use as the original OMNI in August 2023, but has not yet been released to market.

The procedure performed with our OMNI technology addresses all three known areas of resistance in the conventional outflow pathway of the eye, and is designed to restore the eye’s natural drainage system without compromising the structural integrity of the eye or leaving implants behind post-surgery. The first steps of the procedure primarily address distal resistance (i.e., collapsed Schlemm’s canal, blocked collector channel ostia) and has some presumed effects on the inner wall of Schlemm’s canal and the trabecular meshwork due to dilation and stretching of the canal and meshwork. In the later steps of the procedure, a surgeon unroofs Schlemm’s canal by incising the diseased trabecular meshwork to provide aqueous humor with direct access to the drainage areas in the conventional outflow pathway. We believe that the procedure with OMNI technology is uniquely capable of treating all three known areas of resistance in the conventional outflow pathway of the eye. Certain competing MIGS devices have been cleared or approved by the FDA only for use in Combination Cataract Procedures for adult patients with mild-to-moderate severity, and not in Standalone Procedures. We estimate that over 85% of the U.S. addressable market opportunity for POAG is not currently being adequately served with Combination Cataract Procedures because less than 15% of POAG patients receive cataract surgery in any given year.

We believe that OMNI delivers high level of effectiveness as it provides access to 360 degrees of the diseased conventional outflow pathway through a clear corneal incision to address all three known areas of resistance in the conventional outflow pathway (trabecular meshwork, Schlemm’s canal, and the distal collector channels).

We have applied our medical expertise, as well as specialized design and engineering capabilities, to create a complex technology that is simple in appearance and intuitive to use. After inserting the distal tip into the corneal microincision and accessing Schlemm’s canal, the surgeon can advance and retract the catheter with a fingertip dial up to 180 degrees. On the forward advance, the physician can use the microcatheter technology to remove adhesions and herniations residing within Schlemm’s canal. Upon retraction of the catheter, OMNI synchronously delivers viscoelastic fluid to inflate and restore patency of Schlemm’s canal. The surgeon can address the remaining 180-degrees by reinserting the catheter and advancing it in the opposite direction. To perform the final steps of the procedure, the same microcatheter can be reinserted into Schlemm’s canal and used to deroof the trabecular meshwork per the surgeon’s discretion. The procedure performed with OMNI technology addresses all three areas of outflow resistance, and we believe that it offers the surgeon a robust and comprehensive solution for their glaucoma patients, enables surgeons to perform sequential comprehensive outflow treatments that they can customize based on an individual patient’s disease severity and eye anatomy in both Combination Cataract Procedures and in Standalone Procedures.

SION Surgical Instrument

We introduced SION in the third quarter of 2022. SION is registered with the FDA as a Class I 510(k) exempt device. SION’s bladeless design, micro-engineered and precision manufactured using specialized lasers, excises tissue without cutting. SION grasps and removes diseased tissue as the surgeon sweeps the instrument around Schlemm’s canal with a single smooth motion. The bladeless technology of SION was developed with leading ophthalmic surgeons to improve safety and ease of use by eliminating the need to navigate sharp instrumentation within the eye’s anterior chamber and iridocorneal angle anatomy. We believe SION represents our third consecutive best-in-category device and satisfies the American Academy of Ophthalmology's definition of goniotomy.

SION allows us to serve specific subsets of customers who may prioritize a faster or simpler procedure. Our target customers for SION include three types of combination cataract MIGS surgeons that are distinct from target OMNI customers: 1) high volume cataract surgeons seeking to perform the quickest MIGS procedures, 2) surgeons who are initially less experienced with MIGS such as surgical fellows at academic institutions and 3) surgeons looking for the most cost effective MIGS procedures. We believe that these use cases have very little overlap with the use cases for our OMNI device.

TearCare System

In an effort to address the treatment of evaporative DED due to MGD, we custom designed TearCare to facilitate what we believe is the optimal method for clearing meibomian gland obstructions based on numerous clinical studies: achieving and maintaining a maximal and highly precise external eyelid temperature of 45 degrees Celsius for 15 minutes that achieves a requisite inner eyelid therapeutic melting threshold temperature of 41 degrees Celsius to melt congealed meibum in the diseased meibomian glands. The precise, reproducible, and software-controlled thermal therapeutic melting cycle is followed promptly by clinician customized manual, comprehensive removal of the liquefied meibum obstructions with a separate clearance tool to help facilitate restoration of healthy meibum production to naturally fortify the tear’s protective lipid layer. The goal of TearCare treatments is to restore the eyelid’s natural ability to produce healthy lipid secretions and recover the integrity of the tear film.

We developed TearCare to serve as an elegant, compact, portable, and intuitive solution comprised of the SmartHub™ ("SmartHub"), a reusable hardware controller, and the TearCare SmartLids® ("SmartLids"), a breakthrough, software-controlled, wearable, therapeutic eyelid technology. Applied adhesively and non-invasively to the outside of the eyelids, single-use, closed loop, software-sensor controlled SmartLids deliver a precise and programmed therapeutic level of heat into the meibomian glands. This process is software-controlled, delivering precise heat to the tarsal plates of the eyelids directly overlying the meibomian glands while continuously monitoring temperature and communicating 144 times per second with the SmartHub, a compact, finely calibrated power source and control unit which ensures a reproducible therapeutic interventional procedure for every patient. The technological design inputs of the system and precision-controlled therapeutic melting process follows clinically proven guidelines for temperature and duration required to melt obstructions in diseased meibomian glands and restore the production and secretion of healthy, clear meibum onto the tear surface.

The proprietary, thin, flexible, wearable, and open-eye design of TearCare SmartLids a) ensure a conformant fit for every patient and thereby ensure the reproducible delivery of thermal energy into the meibomian glands to achieve the requisite gland obstruction melting temperature across different eyelid anatomies, b) allows patients to blink naturally throughout the thermal portion of the procedure, which initiates the natural movement and expression of melted gland obstructions from the diseased meibomian glands, and c) provides a comfortable, open eye patient experience in the eye care provider’s office. Engineering SmartLids to remain comfortably adhered to virtually all shapes and sizes of eyelids while allowing freedom to blink and delivering precisely controlled, therapeutic levels of thermal energy is one of our most significant design accomplishments. Further, TearCare can be utilized by an ECP in a straightforward in-office procedure and can be accommodated during the course of a routine patient visit, which makes it convenient for patients, and allows providers to maintain procedural throughput in their practices. We believe these features and the positive patient and ECP experience with TearCare offer a stark contrast to available alternatives, which we believe are burdened by ineffective and suboptimal product design, a lack of conformance to the underlying diseased eyelid tissues yielding suboptimal therapy and clinical outcomes, and including awkward and uncomfortable patient experiences through closed eye or manual solutions that require extremely close patient proximity to the ECP throughout the treatment.

Following therapeutic heat application by TearCare, ECPs may use a separate clearance tool to manually express melted meibum from each gland. ECPs can tailor the amount of pressure applied during expression to specific glands based on a desired full evacuation of the glands, thereby allowing the eyelids to resume the production and secretion of meibum to coat and protect tears.

In December 2021, the FDA cleared TearCare for the application of localized heat therapy in adult patients with evaporative DED due to MGD, when used in conjunction with manual expression of the meibomian glands. In December 2023, the FDA cleared a next generation TearCare product for the same indications of use as TearCare, which has not been launched to market yet.

Our Success Factors

Our mission is to develop transformative, interventional technologies that allow eyecare providers to procedurally elevate the standards of care—empowering people to keep seeing. We design our products to enable ECPs to perform safe and effective interventional procedures that can transform treatment paradigms. We believe the following factors have contributed to our success and will continue to drive our growth:

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Large market opportunities in eyecare with sub-optimal treatment paradigms;

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Continual development of transformative technologies to preserve, protect, and restore natural eye function;

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Consistent delivery of exceptional customer experience;

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Prioritization of clinical and commercial excellence and market education;

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Focus on compelling economics and value creation for all eyecare stakeholders; and

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Scaling our team based on our core behaviors: love what you do, have each other's back, own it, break through walls, and grow every day.

Our Growth Strategy

The fundamental objectives of our growth strategy are to establish robust clinical data to support the development of our target markets and the continued commercialization of our products and to deliver an exceptional customer experience to the ECPs and patients who utilize our products. Our current growth strategies include:

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Establish OMNI and SION as the standards of care for interventional glaucoma treatment among MIGS-trained surgeons;

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Develop and expand the Standalone MIGS segment with OMNI;

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Drive fair market access to TearCare leveraging the SAHARA and OLYMPIA trials to establish reimbursement;

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Drive adoption and utilization of our products by leveraging additional clinical trials and market education;

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Deepen and broaden our commercial capabilities and expertise;

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Expand into additional international markets;

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Continue to create transformational and interventional technology innovation throughout eyecare; and

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Obtain and maintain appropriate reimbursement and coverage by governmental and commercial payors.

Clinical Data

We believe treatment decisions should be evidence-based and hold ourselves to the highest clinical and ethical standards to build and maintain credibility in the medical community. We are deeply committed to conducting studies to evaluate the safety, effectiveness and durability of treatments using our products, and subjecting the results to the rigorous peer review process for publication in leading journals. Our robust and growing libraries of evidence to support OMNI, SION and TearCare are helping to drive their awareness and adoption, and ultimately advancing patient care in ophthalmology and optometry.

We are currently conducting active and robust clinical trial programs in both POAG and MGD. Our clinical trial designs include both randomized controlled trials ("RCTs"), prospective, and retrospective real-world studies, based on our belief that each of these approaches has unique strengths. We also plan to continue supporting our investigator-initiated trial program.

OMNI Surgical System - Clinical Program

Building on a solid foundation of completed and ongoing clinical trials, we are investing significant resources to further develop clinical data regarding the use of OMNI. Since 2018, there have been 30 articles published in peer-reviewed journals for OMNI and its Sight Sciences predicate devices and procedures. Our completed trials include ROMEO, ROMEO 2, GEMINI, GEMINI 2, ORION 2, and TREY. ROMEO was used to support OMNI’s indication for use expansion in the U.S. in March 2021 and resulted in two published articles in peer-reviewed journals. ROMEO 2 replicated the results of ROMEO in a larger study population and provided longer-term (24 month) outcomes for original ROMEO subjects. GEMINI was a prospective, multi-center, historical control, single-arm, U.S. study, with GEMINI 2 providing 36-month follow-up for GEMINI subjects. TREY was a multi-center study evaluating the effectiveness of Standalone Procedure intervention using OMNI in eyes with uncontrolled IOP previously treated with trabecular bypass canal implants.

Table 1: Sight Sciences OMNI Ongoing and Planned Clinical Studies

TearCare System - Clinical Program

We have developed robust clinical data evaluating TearCare including one RCT for TearCare ("OLYMPIA") and we completed Phase 1 (superiority over Restasis® cyclosporine drops) of our SAHARA RCT ("SAHARA") in the third quarter of 2023. Data from OLYMPIA supported the FDA clearance of TearCare’s expanded indication for use in December 2021. The Phase 1 results from SAHARA were published in December 2023 in Clinical Ophthalmology and Phase 2 (cross-over of Restasis® subjects to a single TearCare treatment) has been completed with planned publication in the first half of 2024. We plan to leverage the results of our OLYMPIA and SAHARA studies to support FDA clearances to further expand indications for use of TearCare and to support our market access strategy.

In OLYMPIA, our large multi-center RCT, the TearCare procedure was associated with statistically significant clinical improvements in all assessed signs and symptoms of DED. This included tear breakup time ("TBUT"), and meibomian gland secretion score ("MGSS"), objective measurements of DED that were the trial’s primary endpoints, as well as patient-reported symptoms surveys, including Ehlers Danlos syndrome, ocular surface disease index ("OSDI"), and symptom assessment in dry eye, at all time periods measured (both two weeks and four weeks post-treatment).

In SAHARA, our large, multi-center RCT, the TearCare procedure achieved its primary six-month endpoint, demonstrating the superiority of interventional eyelid procedures enabled by TearCare over Restasis® eyedrops in the improvement of TBUT, a key measure of aqueous retention, tear stability and the tear film’s ability to protect the ocular surface. The SAHARA trial also observed that procedures enabled by TearCare were non-inferior to Restasis® eyedrops in OSDI, which was the co-primary six-month endpoint. Throughout the study, interventional eyelid procedures with TearCare demonstrated clinically and statistically significant improvements of every endpoint and at every measurement interval: one week, one month, three months, and six months. Endpoints assessed include TBUT, MGSS, corneal staining, and conjunctival staining. In the next phase of the SAHARA trial, subjects in the Restasis® cohort will cease use of Restasis®, receive an interventional eyelid procedure with TearCare, and will be monitored for another six months. Subjects in the TearCare cohort will receive additional interventional eyelid procedures as necessary based on pre-determined criteria over an additional 18 months (24 months total study period) to measure the durability of procedural treatment effect. We expect publication of the one-year crossover clinical results by December 31, 2024.

Table 2: Sight Sciences TearCare Ongoing Clinical Study

Commercial Approach

We have built a world-class direct sales commercial organization that features professionals and executives with substantial leadership experience from leading ophthalmic product companies. In particular, we have recruited professionals with track records that include launching new technologies, growing primary demand, changing treatment paradigms and securing market access from payors. We believe this expertise is crucial to achieve our market development objectives for interventional standalone MIGS and MGD treatment. Sales representatives typically have relevant experience across medical device and/or pharmaceutical sales focused on eyecare to ensure the development of a trusted consultative relationship with our ECPs. As we have developed our clinical data and brand recognition, we believe our team has differentiated our product offerings and gained commercial traction through exceptional, highly involved training, support and ongoing professional education. As of December 31, 2023, our overall commercial team consisted of approximately 130 professionals dedicated to sales, marketing, commercial support, training and professional relations.

We maintain distinct sales, marketing, and training teams to support our business segments because our products are predominantly sold to different types of customers and require specialized product specific sales expertise and ECP training to integrate our products into their practices. We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, particularly ASCs and hospital outpatient departments ("HOPDs"). We sell TearCare to optometry and ophthalmology practices.

Our marketing efforts are centered around increasing awareness of our products and presenting clinical study results through leading medical publications and at large industry and scientific meetings, both directly and through our advisors. We have also partnered with qualified ECPs to speak to peers on our behalf through educational forums. Clinical data that demonstrate the benefits of OMNI and TearCare for their authorized uses will continue to underpin our commercial efforts and we intend to continue to devote significant resources to conduct new clinical studies and publish articles in peer-reviewed journals.

Seasonality

We believe our sales may be impacted by seasonal factors. For example, we typically experience higher procedure volumes in the second and fourth quarters versus the first and third quarters. Demand is often lower during summer months because of ECP vacations and in winter months in certain parts of the world because of fewer business or surgery days due to holidays and adverse weather conditions. But this may vary year-over year as it did in 2023 where demand was softer in the fourth quarter due to the impacts of the Draft LCDs, as amended, that were ultimately withdrawn by the MACs but created demand uncertainty in the period. Seasonality in future periods may also be impacted by reimbursement coverage, sales infrastructure, and consumer and physicians’ behaviors and confidence.

Reimbursement

Our commercial activities are substantially within the United States. We sell our Surgical Glaucoma products primarily to ASCs and HOPDs, who in turn bill various third-party payors, such as Medicare and private health insurance plans for the healthcare services and resources rendered to treat a patient. TearCare is not currently covered or paid by Medicare or private payors under any formal policy, although some payors may agree to provide case-based coverage outside of a formal policy. Our market access team facilitates patient access to the OMNI, SION and TearCare systems by engaging payors on coverage, coding and payment matters, and by providing support to patients and our customers as they seek reimbursement from payors that do not have positive coverage or those that do not have formal policies in place regarding our products.

Reimbursement for Uses of the OMNI Surgical System and SION Surgical Instrument

Surgeons are able to perform a comprehensive outflow procedure enabled by OMNI or a partial outflow procedure focused on the trabecular meshwork with SION.

Medicare coverage of non-implant MIGS procedures is available outside of a formal coverage policy. Widespread coverage is important for commercial adoption. Based on POAG prevalence, we estimate that currently approximately 70% of patients who receive glaucoma treatment are covered by Medicare (fee-for-service and Medicare Advantage plans). Private payor coverage policies vary for procedures that may be performed with OMNI or SION technologies. For instance, in the United States, some commercial payors, including numerous Blue Cross Blue Shield plans, Cigna plans, and Aetna plans, have published medical policies that consider canaloplasty medically necessary for the treatment of glaucoma, though specific criteria for coverage may vary depending on the payor.

Additionally, as with many healthcare items and services, some health plans cover the procedures performed using OMNI and SION outside of a formal coverage policy. Where coverage is less consistent or is limited, as is the case with certain commercial payors, our market access team works with payors directly and with customers to facilitate patient access to our Surgical Glaucoma products by working towards securing appropriate coverage and reimbursement. We have established and continue to build a substantial library of clinical evidence and health economics outcomes research data and published articles to directly address the needs of payors. We believe that the results from our completed, in-progress and planned clinical trials and subsequent accompanying peer-reviewed articles will help to expand and solidify coverage of procedures performed using OMNI and SION. We estimate that, as of December 31, 2023, approximately 79% of people with medical benefit coverage have reimbursed access to the canaloplasty procedures and procedures performed using

OMNI specifically under such coverage. In particular, we continue to proactively engage with the remaining key national and regional payors currently not covering performed using OMNI to seek reversals of their current non-coverage policies.

Virtually all sales of OMNI and SION in the U.S. are to ASCs and HOPDs. Per Medicare and many private payor payment policies, when certain procedures are performed in the ASC setting on the same day, such as cataract surgery, canaloplasty and goniotomy, multiple procedure payment reduction rules apply. Therefore, when a canaloplasty or goniotomy is performed with cataract surgery on the same patient on the same day, payment of the lower-cost procedure (most commonly the cataract procedure) is reduced by 50%. Multiple procedure payment reduction rules also typically apply to professional services. Physicians are likely to be paid at a reduced rate for lower valued procedures when performed concomitantly. In the HOPD setting, Medicare procedures performed using OMNI and SION as well as cataract procedures, are paid under comprehensive ambulatory payment classifications ("C-APCs"). In these circumstances, the highest valued code is paid at 100%, with payment for additional procedures performed during the same operative session bundled into the single highest payment rate. Many commercial payors use a similar payment methodology, but payment rules can vary across health plans, particularly across plan types (e.g., HMO, PPO, POS).

The rates for procedures performed with our products vary depending on the code billed and the setting where the procedure is performed. The table below outlines the Medicare national unadjusted average payment rates for each in 2023 and 2024.

These Medicare national unadjusted average facility payment rates are classified as comprehensive C-APCs, therefore in the HOPD setting, the highest valued code will be paid and other C-APC classified procedures will be bundled into the highest paid procedure. Based on customer feedback, we believe the rates for facility and physician reimbursement in both settings reflect attractive and reasonable payments to cover all of our customers’ costs and economic needs related to glaucoma treatments using OMNI and SION.

While commercialization of OMNI has primarily been focused on the U.S., we have also begun international commercialization efforts. Outside the U.S., we have focused our efforts in the United Kingdom and Germany, where we have hired local commercial and market access teams to promote OMNI to health care professionals, and we use distributors in other countries in Europe. Although Germany employs a single-payor health system and national MIGS procedure codes (which include canaloplasty and trabeculotomy), coverage decisions are made on a decentralized basis by the Physician’s Associations (Kassenärztliche Vereinigung) ("KVs") in each of Germany's regions. To date, the procedures most commonly performed with OMNI and SION are covered in all regions and we are working towards educating ECPs across all these regions regarding the appropriate procurement and submission of claims for reimbursement from the KVs to facilitate access to OMNI for patients and ECPs. In the United Kingdom, we believe the National Health System’s tariffs, or payments, for MIGS procedures, including procedures performed using OMNI, will continue to be favorable. As we expand into other countries, we intend to establish payor coverage and reimbursement strategies that are appropriate for each local market.

Reimbursement for Uses of the TearCare System

TearCare is not currently covered by Medicare or private payors via formal medical policy, although some payors may agree to provide coverage and payment outside of formal policy. In December 2021, the FDA cleared TearCare for the application of localized heat therapy in adult patients with evaporative DED due to MGD, when used in conjunction with manual expression of the meibomian glands. We believe the current standard of care (representing over 95% of the existing market), which primarily consists of warm compresses, over-the-counter artificial tears, or lubricating and prescription eyedrops, does not treat the root cause of MGD. We believe TearCare has the potential to offer a better standard of care for evaporative dry eye patients and reduce overall costs for payors.

Despite the presence of a large and growing patient-pay market for TearCare as shown in our controlled launch, we believe that improving access to TearCare through positive coverage decisions by Medicare and private payors will help grow the market for the TearCare procedures. We are pursuing a vigorous market access development plan to obtain more favorable policies from Medicare and private payors for procedures using TearCare in the U.S.

Category III CPT code 0563T, which became effective January 1, 2020, describes the heating of meibomian glands using a wearable open-eye device and manual evacuation of meibomian glands. This code allows providers to pursue reimbursement and payors to establish payment rates for the procedure. Prior to formal coverage decisions or establishment of a permanent Category I code, third-party payors may cover procedures billed with temporary Category III codes on a case-by-case basis.

We continue to generate clinical data to support positive coverage decisions from Medicare and private payors. In December 2023, Clinical Ophthalmology published the results of the six-month SAHARA RCT. This randomized controlled trial compared treatment using TearCare to the most commonly prescribed MGD therapeutic on the market. The data generated in the SAHARA RCT demonstrated that interventional eyelid procedures for dry eye disease enabled by TearCare were superior at all measured time points through six months to twice daily prescription eyedrops for the improvement of TBUT, the trial’s primary dry eye signs endpoint and a key measure of aqueous retention, tear stability and the tear film’s ability to protect the ocular surface.

In September 2021, an article discussing results from our OLYMPIA RCT was published in Cornea. This randomized controlled trial compared treatment using TearCare to the leading alternative MGD treatment device on the market. In the study, we observed that a single use of TearCare was associated with improvement in each of the signs and symptoms of DED within two weeks of treatment in subjects with MGD. A subset analysis of patients in the OLYMPIA trial with advanced dry eye disease demonstrating superior symptoms improvements with TearCare compared to an alternative MGD treatment device was published in Clinical Ophthalmology(August 2022). Additionally, results from the CHEETAH study suggesting that a single TearCare procedure is safe and effective in treatment signs and symptoms of DED were published in Clinical Ophthalmology (December 2020).

Our comprehensive long-term strategy to improve patient access to TearCare includes the following key initiatives:

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Demonstrate the effectiveness, safety and durability of TearCare with rigorous clinical data;

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Augment library of published articles on TearCare;

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Support coverage applications; and

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Convert to permanent Category I CPT code.

Competition

We believe our focus on developing and marketing intuitively designed products that are intended to restore the eye’s natural physiological function by addressing underlying causes of eye disease will be an important factor in our future success. The medical device and pharmaceutical industries are intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. We compete with medical device and pharmaceutical companies that develop and commercialize products for eye conditions. Notable competitors with approved MIGS products include Glaukos, Alcon/Ivantis, AbbVie/Allergan, New World Medical, and Nova Eye Medical Limited. Notable competitors with approved DED products include AbbVie/Allergan, Novartis, Johnson & Johnson, and Alcon. Some of our competitors are larger, well-capitalized companies with greater current market share and resources. We also compete with several smaller medical device companies that have single products or a limited range of products. Some of our competitors have:

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Significantly greater name recognition;

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Broader or deeper relations with healthcare professionals, customers, industry associations and third-party payors;

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More established distribution networks;

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Additional lines of products and the ability to offer rebates or bundle products to offer greater discounts or other incentives to attract adoption;

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Greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory clearance or approval for products; and

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Greater financial and human resources for product development, sales and marketing and patent and other intellectual property litigation.

We compete primarily on the basis that our medical devices are able to treat patients with prevalent eye diseases safely and effectively. Our continued success depends on our ability to:

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Develop innovative, proprietary technology and products that can cost-effectively address significant clinical needs;

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Obtain and maintain regulatory clearances or approvals for the use of our products;

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Obtain and maintain favorable reimbursement decisions relating to the use of our products;

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Demonstrate clinical safety and effectiveness in our sponsored and third-party trials and studies;

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Attract and retain skilled research and development and sales personnel; and

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Successfully market and sell products.

Manufacturing

We do not currently operate any manufacturing facilities and instead contract with third parties for our production requirements, including key components used in our products.

On January 14, 2021, we entered into a supply agreement with Peter’s Technology (Suzhou) CO LTD. ("PTCS"), a Chinese subsidiary of Peter’s Co., Ltd., a Taiwan-based contract manufacturer (the "Peter's Supply Agreement"). In February 2021, PTCS began to produce commercially saleable OMNI units for us at its Suzhou City, China production facility. In May 2021, we entered into a separate supply agreement with a U.S.-based manufacturer with multiple manufacturing sites for the production in the United States of our OMNI Surgical System. Our supply agreements with these manufacturers contain customary terms and conditions. Pursuant to the Peter’s Supply Agreement, PTCS purchases components from our approved suppliers for assembly, and we make purchases from PTCS on a purchase order basis. The Peter’s Supply Agreement expires January 14, 2025, and the agreement provides for automatic renewals of additional one-year periods if neither party provides notification that they intend to terminate the agreement within 90 days of the end of the then-current term. We also have the right to terminate the agreement without cause by providing 180 days’ advance written notice, or with 30 days’ written notice with any material agreement default by the manufacturer. We subsequently amended the Peter’s Supply Agreement in January and November 2022 to, among other things, contract with PTCS to manufacture our SmartLids and SION surgical instruments.

For the production of our TearCare System components, we currently have supply arrangements with several medical device manufacturers. In addition to our agreement with PTCS for the production of SmartLids, we partner with various other suppliers for the production of the SmartHub and Clearance Assistant components of our TearCare System.

We believe that the manufacturing capacity provided by our approved third-party suppliers will be adequate to meet our current and anticipated manufacturing needs. We do not currently plan to manufacture our products or any related components ourselves.

Manufacturing facilities that produce medical devices or their component parts intended for distribution world-wide are subject to regulation and periodic unannounced inspection or audits by the FDA and other domestic and international regulatory agencies or notified bodies. In the United States, any products we sell are required to be manufactured in compliance with the FDA’s Quality System Regulation ("QSR"), which covers the methods used in, and the facilities used for, the design, testing, control, manufacturing, labeling, quality assurance, packaging, storage and shipping of our products.

The distribution of our products is handled directly through a third-party logistics provider. Our finished goods are shipped from our contract manufacturers to a local gamma sterilization facility after which they are shipped to distribution facilities and, ultimately, to our customers.

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain proprietary protection for our current and future products and product candidates, novel discoveries, product development technologies and know-how; to operate without infringing on the proprietary rights of others; and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, seeking to obtain or in-licensing U.S. and foreign patents and patent applications related to our proprietary technology that are important to the development and implementation of our business. We seek to obtain domestic and international patent protection, and endeavor to promptly file patent applications for new commercially valuable inventions. We file new patent applications as we conduct research and development, initiate new programs, and monitor the activities of others. We also rely on other approaches to protecting our proprietary position, such as trademarks, trade secrets, know-how, and/or continuing technological innovation to develop and maintain our proprietary position.

Patent Term

Generally, issued patents are granted a term of 20 years from the earliest claimed non-provisional filing date. In certain instances, U.S. patent terms can be adjusted to recapture a portion of delay by the U.S. Patent & Trademark Office ("USPTO"), in examining the patent application ("patent term adjustment") or extended to account for term effectively lost as a result of the FDA regulatory review period ("patent term extension"), or both. In some cases, the term of a U.S. patent may be shortened by terminal disclaimer, such that its term is reduced to end with that of an earlier-expiring patent.

Trade Secrets

In addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. We typically rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. It is our policy to protect trade secrets and/or know-how by establishing confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and collaborators. These agreements provide that all confidential information developed or made known during the course of an individual or entity’s relationship with us must be kept confidential during and after the relationship. These agreements also provide that all inventions resulting from work performed for us or relating to our business and conceived or completed during the period of employment or assignment, as applicable, shall be our exclusive property. In addition, we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary information by third parties.

Patents

As of December 31, 2023, we owned 39 issued U.S. patents, 62 issued patents outside the U.S. (which includes six issued European patents and their national validations), 28 pending U.S. non-provisional patent applications, 26 pending foreign patent applications and three pending Patent Cooperation Treaty patent applications. Our issued patents include claims directed to devices and methods for canaloplasty and/or trabeculotomy, ocular implants and related methods, methods for treating dry eye disease using pharmaceutical compositions, the TearCare apparatus and methods of using the TearCare apparatus, components of the TearCare apparatus (including the SmartHub and SmartLids) and methods of their use, the TearCare apparatus in combination with an eyelid compression instrument and methods of their use, and methods of using the TearCare apparatus with patients wearing contact lenses.

Subject to payment of required maintenance fees, annuities, and other charges, our issued U.S. patents have expiration dates between 2027 and 2041, with seven of our issued U.S. patents having expiration dates before 2030, 28 having expiration dates between 2031 and 2035, one having an expiration date in 2037, and the remaining three expiring in 2041, in each case exclusive of possible patent term extensions. Of our 28 pending U.S. non-provisional patent applications, one was filed in 2018, two were filed in 2019, three were filed in 2020, five were filed in 2021, six were filed in 2022, and eleven were filed in 2023. Our pending U.S. non-provisional patent applications, if issued, have expected expiration dates between 2026 and 2043, exclusive of any possible patent term adjustments or patent term extensions.

The foreign jurisdictions where we own issued patents include: Australia, Belgium, Brazil, China, France, Germany, Hong Kong, Ireland, Italy, Japan, Norway, Spain, Sweden, Switzerland, The Netherlands and the United Kingdom. Subject to payment of required annuities and other charges, these foreign patents have expiration dates between 2027 and 2035. We have pending patent applications in various countries including Australia, Brazil, Canada, China, Europe, Hong Kong, and Japan which, if issued, have expected expiration dates between 2032 and 2042.

As of December 31, 2023, we owned nine U.S. trademark registrations, two EU trademark registrations; two German trademark registration;, two Swiss trademark registrations; two UK trademark registrations; one Brazilian trademark registration; six pending U.S. trademark applications; six pending Brazilian trademark applications; one International Registration designating Australia, the EU, Japan, Korea, Mexico, Singapore, and the UK; one International Registration designating Australia, Canada, the EU, Japan, Korea, Mexico, Singapore, and the UK; one International Registration designating Australia, Canada, the EU, Japan, and Mexico; one International Registration designating Australia, Canada, the EU, Japan, Korea, Singapore, and the UK; one International Registration designating Japan; and one International Registration designating Australia, Canada, the EU, Japan, and Mexico.

Government Regulation

Our products and our operations are subject to extensive regulation by the FDA and other federal, state, and local authorities in the United States, as well as comparable authorities in foreign jurisdictions. Our products are subject to regulation as medical devices in the United States under the Federal Food, Drug, and Cosmetic Act ("FDCA") and its implementing regulations.

United States Regulation

The FDA regulates, among other things, the development, design, non-clinical and clinical testing, manufacturing, safety, effectiveness, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export and post-marketing surveillance of medical devices in the United States to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.

FDA Premarket Clearance and Approval Requirements

Unless an exemption applies, each new or significantly modified medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, or approval of a premarket approval ("PMA"), application.

Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III— depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.

Devices deemed to pose a lower risk are placed in either Class I or Class II, and devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices, or a device deemed to be not substantially equivalent to a previously cleared 510(k) device, are placed in Class III.

Our currently marketed OMNI and TearCare products are regulated as Class II devices subject to 510(k) clearance. Our SION surgical instrument is registered with the FDA as a Class I 510(k) exempt device.

Clinical Trials

Clinical trials are almost always required to support a PMA and are sometimes required to support a 510(k) submission. In the United States, absent certain limited exceptions, human clinical trials intended to support medical device clearance or approval or to determine safety and effectiveness of a device for an investigational use must be conducted in accordance with the FDA’s investigational device exemption ("IDE") regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk,” to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must be approved in advance by the FDA for a specified number of subjects.

If the device under evaluation does not present a significant risk to human health, then the device sponsor is not required to submit an IDE application to the FDA before initiating human clinical trials, but must still comply with abbreviated IDE requirements when conducting such trials.

Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of an institutional review board ("IRB") for each clinical site. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements. Clinical trials are subject to extensive monitoring, recordkeeping and reporting requirements. Clinical trials must be conducted under the oversight of an IRB, and the relevant clinical trial sites and must comply with FDA regulations, including but not limited to those relating to good clinical practices. To conduct a clinical trial, we also are required to obtain the subjects’ informed consent in form and substance that complies with both FDA requirements and state and federal privacy and human subject protection regulations. We, the FDA, or the IRB, could suspend a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Even if a trial is completed, the results of clinical testing may not adequately demonstrate the safety and effectiveness of the device or may otherwise not be sufficient to obtain FDA clearance or approval to market the product in the United States. Similarly, in Europe, the clinical study must be approved by a local ethics committee and in some cases, including studies with high-risk devices, by the ministry of health in the applicable country.

During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements, and satisfy state and federal privacy and human subject protection regulations. Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the potential benefits of the study are outweighed by cost, safety, or other factors.

510(k) Clearance Process

Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification submission demonstrating that the proposed device is “substantially equivalent,” as defined in the FDCA, to a legally marketed predicate device.

A predicate device is a legally marketed device that is not subject to premarket approval and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process. A device is considered to be substantially equivalent if, with respect to the predicate device, it has the same intended use and has either (i) the same technological characteristics; or (ii) different technological characteristics, but the information provided in the 510(k) submission demonstrates that the device does not raise different questions of safety or effectiveness than the predicate device.

The FDA has implemented a mandatory electronic submission template, called eSTAR, for all 510(k) submissions starting October 1, 2023. This new template helps ensure that 510(k)s are complete by providing guided prompts to facilitate the collection and assembly of the necessary elements of a complete submission. Therefore, acceptance reviews will no longer be required however a technical screening process will be conducted. The Medical Device User Fee Amendments sets a performance goal of 90 days for FDA review of a 510(k) submission, but the review time can be delayed if FDA raises questions or requests additional information during the review process. As a practical matter, clearance often takes longer than 90 days. Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.

If the FDA determines that the device is substantially equivalent to a predicate device, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous requirements of the PMA approval process, or can request a risk-based classification determination for the device in accordance with the “de novo” process, which is a route to market for certain novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification, PMA approval orde novo reclassification. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), de novo request or a PMA in the first instance, but the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the manufacturer to cease marketing and/or request the recall of the modified device until 510(k) marketing clearance or PMA approval is obtained or ade novo request is granted. Also, in these circumstances, the manufacturer may be subject to significant regulatory fines or penalties.

Over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period, or could make it more difficult for manufacturers to utilize the 510(k) clearance process for their products.

Ongoing Regulation by the FDA

Even after the FDA permits a device to be marketed, numerous and pervasive regulatory requirements continue to apply. These include:

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Establishment of registration and device listing with the FDA;

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QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, supplier/contractor selection, compliant handling, documentation and other quality assurance procedures during all aspects of the design and manufacturing process;

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Labeling regulations, advertising and promotion requirements, restrictions on sale, distribution or sale of a device, each including the FDA prohibition against the promotion of products for any uses other than those authorized by the FDA, which are commonly known as “off-label” uses;

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The Medical Device Reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

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FDA approval of product modifications of approved devices that affect safety or effectiveness or that would constitute a major change in intended use of an approved device;

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Medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

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Recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death;

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An order of repair, replacement, or refund;

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Device tracking requirements; and

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Post-market study and surveillance requirements.

The FDA has broad regulatory compliance and enforcement powers. If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:

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Warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

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Recalls, withdrawals, or administrative detention or seizure of our products;

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Operating restrictions or partial suspension or total shutdown of production;

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Refusing or delays in processing, clearing, or approving submissions or applications for new products or modifications to existing products;

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Suspension or withdrawal of 510(k) clearances or PMA approvals that have already been granted;

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FDA refusal to issue certification to foreign governments needed to export our products for sale in other countries; or

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Criminal prosecution.

International Regulation of Our Products

Our research, development, and clinical programs, as well as our manufacturing and marketing operations, are subject to extensive regulation in other countries. For example, the EU has adopted specific regulations regulating the design, manufacture, clinical investigations, conformity assessment, labeling and adverse event reporting for medical devices.

Until May 25, 2021, medical devices were regulated by Council Directive 93/42/EEC ("Medical Devices Directive") which has been repealed and replaced by Regulation (EU) No 2017/745 ("EU MDR"). Our original CE Mark certificates were granted under the Medical Devices Directive. However, as of May 26, 2021, some of the EU MDR requirements apply in place of the corresponding requirements of the Medical Devices Directive, with regard to registration of economic operators and of devices, post-market surveillance and vigilance requirements. Pursuing marketing of medical devices in the EU requires that our devices be certified under the new regime set forth in the EU MDR. On December 11, 2023, the Company received approval of the OMNI Surgical System family of products under the EU Medical Device Regulation (EU MDR), fulfilling these requirements. Our MDD certificate remains valid until May 26, 2024.

Medical Devices Regulation

On April 5, 2017, the EU MDR was adopted. The EU MDR establishes a uniform, transparent, predictable and sustainable regulatory framework across the EU for medical devices and ensure a high level of safety and health while supporting innovation. Unlike the Medical Devices Directive, the EU MDR is directly applicable in EU member states without the need for member states to implement into national law. This aims at increasing harmonization across the EU.

The EU MDRbecame effective on May 26, 2021. The new regulation among other things:

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strengthens the rules on placing devices on the market(e.g. reclassification of certain devices and wider scope than the Medical Devices Directive)and reinforces surveillance once they are available;

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establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market;

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establi shes explicit provisions on importers’ and distributors’ obligations and responsibilities;

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imposes an obligation to identify a responsible person who is ultimately responsible for all aspects of compliance with the requirements of the new regulation;

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improves the traceability of medical devices throughout the supply chain to the end-user or patient through the introduction of a unique identification number, to increase the ability of manufacturers and regulatory authorities to trace specific devices through the supply chain and to facilitate the prompt and efficient recall of medical devices that have been found to present a safety risk;

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sets up a central database ("Eudamed") to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and

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strengthens the rules for the assessment of certain high-risk devices, such as implants, which may have to undergoa clinical evaluation consultation procedure by experts before they are placed on the market.

The aforementioned EU rules are generally applicable in the European Economic Area ("EEA"), which consists of the 27 EU member states plus Norway, Liechtenstein and Iceland. Other countries, such as Switzerland, have entered into Mutual Recognition Agreements and allow the marketing of medical devices that meet EU requirements. With the entry into force of the EU MDR, the Swiss-EU Mutual Recognition Agreement was updated as Switzerland is considered a third country to the European Union. Switzerland released their national regulation, the Swiss Medical Devices Ordinance (“MedDO”) on May 25, 2021 and has aligned their requirements with the EU MDR, subject to transitional provisions. Therefore, EU CE Marking Certificates are accepted in Switzerland, along with additional requirements as set forth in the MedDO.

As of January 1, 2021, the United Kingdom has entered a transition period following Brexit. During that period, the UK Medical Devices Regulations (“UK MDR”) 2002 remains applicable in England, Scotland and Wales ("Great Britain"). During 2021, a UK Responsible Person was appointed and we registered the OMNI System with the Medicines and Healthcare products regulatory agency. Valid CE marks under the EU MDR will continue to be accepted in Great Britain, and the requirement to obtain a UK Conformity Assessed ("UKCA") mark has been delayed until June 30, 2030. Sight Sciences received a UKCA certification for the OMNI family of products on March 1, 2024 and will create a transition plan during the period when the CE Mark is still accepted to transition over to the UKCA requirements.

Healthcare Fraud and Abuse Laws

In the United States, we are subject to a number of federal and state healthcare regulatory laws that restrict business practices in the healthcare industry. These laws include, but are not limited to, federal and state anti- kickback, false claims, transparency and other healthcare fraud and abuse laws.

The U.S. federal Anti-Kickback Statute prohibits, among other things, any person or entity from knowingly and willfully offering, paying, soliciting, receiving or providing any remuneration, directly or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease, or order of any good, facility, item or service reimbursable, in whole or in part, under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of value, including cash, improper discounts, and free or reduced price items and services. Among other things, the Anti-Kickback Statute has been interpreted to apply to arrangements between medical device manufacturers on the one hand and prescribers and purchasers on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. The government can exercise enforcement discretion in taking action against unprotected activities. Further, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. The majority of states also have anti- kickback laws, which establish similar prohibitions, and in some cases may apply to items or services reimbursed by any third-party payor, including commercial insurers and self-pay patients.

The federal false claims legislation, including the civil False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government, knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government, or knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. federal government. A claim includes “any request or demand” for money or property presented to the U.S. government. Actions under the civil False Claims Act may be brought by the Attorney General or as a qui tam action by a private individual in the name of the government. Moreover, a claim including items or services resulting from a violation of the U.S. federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. In addition, various states have enacted false claim laws analogous to the federal False Claims Act, although many of these state laws apply where a claim is submitted to any third-party payor and not merely a federal healthcare program.

The federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") created additional federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the

U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program ("CHIP"), with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services ("CMS") information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, such obligations were expanded to include payments and other transfers of value provided in the previous year to additional healthcare professionals, including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives.

Violations of fraud and abuse laws, including federal and state anti-kickback and false claims laws, may be punishable by criminal and civil sanctions, including fines and civil monetary penalties, the possibility of exclusion from federal healthcare programs (including Medicare and Medicaid), disgorgement and corporate integrity agreements, which impose, among other things, rigorous operational and monitoring requirements on companies. Similar sanctions and penalties, as well as imprisonment, also can be imposed upon executive officers and employees of such companies.

Coverage and Reimbursement

In the United States, our currently cleared products are not separately reimbursed by any third-party payors, and if covered, are paid for as part of the procedure in which the product is used. Our commercial success depends in part on the extent to which governmental authorities, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures in which our products are used. Failure by physicians, hospitals, ambulatory surgery centers and other users of our products to receive adequate reimbursement from third-party payors for procedures in which our products are used, or adverse changes in government and private third-party payors’ coverage and reimbursement policies, may adversely impact demand for our products.

Based on our experience to date, third-party payors generally reimburse for the procedures in which our products are used only if the patient meets the established medical necessity criteria for the procedure. Some payors have moved toward a managed care system and control their healthcare costs by establishing coverage policies that categorically restrict coverage of certain procedures, or by limiting authorization for procedures, including elective procedures using our devices. No uniform policy of coverage and reimbursement among payors in the United States exists, and coverage and reimbursement for procedures can differ significantly from payor to payor. Third-party payors are increasingly auditing and challenging the prices charged for medical products and services with concern for upcoding, miscoding, using inappropriate modifiers, or billing for inappropriate care settings. Some third-party payors must approve coverage for new or innovative devices or procedures before they will reimburse healthcare providers who use the products or therapies. Even though a new product may have been cleared for commercial distribution by the FDA, we may find limited demand for our product unless reimbursement approval can be obtained and/or maintained from governmental and private third-party payors.

In addition to uncertainties surrounding coverage policies, there are periodic changes to reimbursement levels. Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies used to determine reimbursement amounts. This includes routine updates to payments to physicians, hospitals and ambulatory surgery centers for procedures during which our products are used. These updates, which could include lower reimbursement rates for procedures in which our products are used, could directly impact the demand for our products.

We believe the overall escalating cost of medical products and services being paid for by the government and private health insurance has led to, and will continue to lead to, increased pressures on the healthcare and medical device industry to reduce the costs of products and services. Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs through prospective reimbursement and capitation programs, group purchasing, redesign of benefits, and exploration of more cost-effective methods of delivering healthcare. In the United States, some insured individuals enroll in managed care programs, which monitor and often require pre-approval of the services that a member will receive. Some managed care programs pay their providers on a per capita (patient) basis, which puts the providers at financial risk for the services provided to their patients by paying these providers a predetermined payment per member per month and, consequently, may limit the willingness of these providers to use our products.

Healthcare Reform

The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access. Current and future legislative proposals to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products. The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our products.

The implementation of the Affordable Care Act ("ACA") in the United States, for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly. The ACA, among other things, provided incentives to programs that increase the federal government’s comparative effectiveness research, and implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models. Additionally, the ACA expanded eligibility criteria for Medicaid programs and created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. Since its enactment, there have been judicial, executive and political challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. It is unclear how healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact the law or our business.

In addition, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. The Medicare Access and CHIP Reauthorization Act of 2015 repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments that began in 2019 that are based on various performance measures and physicians’ participation in alternative payment models, such as accountable care organizations.

We expect additional state, federal, and foreign healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal, state, and foreign governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure.

Data Privacy and Security Laws

Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of personal information, including health-related information. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners. In addition, certain state and non-U.S. laws, such as the California Consumer Privacy Act ("CCPA"), the Colorado Privacy Act ("CPA"), other state laws similar to the CCPA or CPA, and the General Data Protection Regulation ("GDPR"), govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

In Europe, the GDPR went into effect on May 25, 2018 and introduces strict requirements for processing the personal data of European Union data subjects. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EU and the United States remains uncertain.

Further, from January 1, 2021, companies have to comply with the GDPR and also the United Kingdom General Data Protection Regulation ("UK GDPR"), which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The relationship between the United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is also unclear how United Kingdom data protection laws and regulations will develop, and how data transfers to and from the United Kingdom will be regulated.

Human Capital

As of December 31, 2023, we had 214 full-time employees. Our highly qualified and experienced team includes scientists, physicians and professionals across sales, marketing, regulatory, finance and other important functions that are critical to our success. We believe that the success of our business will depend, in part, on our ability to attract and retain qualified personnel. None of our employees are represented by a labor union or are a party to a collective bargaining agreement and we believe that we have good relations with our employees.

We believe that our continued success is reliant on the ability to attract, develop and retain top talent. To facilitate talent attraction and retention, we strive to foster an inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by competitive compensation and benefits programs. In the attraction, development and retention of talent, we emphasize:

Compensation and Benefits. We strive to provide competitive compensation and benefits programs to attract and retain top talent and review these programs annually against the competitive landscape to ensure they continue to meet the needs of our employees. In addition to salaries, these programs include a variety of short and long-term incentive plans such as annual bonuses, equity awards, an Employee Stock Purchase Plan, a 401(k) Plan, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, and employee assistance programs. In addition to our broad-based equity award programs, we have used targeted equity-based grants with vesting conditions to facilitate the retention and engagement of our talent.

Talent Development. We believe employees are our greatest asset and we strive to provide development and promotional opportunities in order to help our employees reach their potential. We provide formal and informal training opportunities designed to enhance learning and development. Consistent with our performance review processes, we foster and encourage continuous manager and employee dialogue around performance and development.

Health, Safety and Wellness. We are committed to the health, safety and wellness of our employees. We provide our employees and their families with access to a variety of flexible and convenient health and wellness programs, including benefits that provide protection and security so they can have peace of mind concerning events that may require time away from work or that impact their financial well-being; that support their physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors.

Diversity, Equity, Inclusion, and Belonging. We believe diversity of thought, values, individual characteristics, beliefs and backgrounds is critical to our overall success. We are an equal opportunity employer and believe that diverse and differentiated views contribute to make us a better organization where every employee not only contributes to our collective success but also feels a sense of belonging. It is our conscious effort to support the advancement of women and Black, Indigenous and other people of color and promote equal opportunity for all our employees within the workplace.

Additional Information

Sight Sciences, Inc. was incorporated as a Delaware corporation on February 10, 2010. We maintain a website at www.sightsciences.com. At our Investor Relations website, investors.sightsciences.com, we make available free of charge information for investors, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC. The information found on our website is not part of this or any other report we file with, or furnish to, the SEC, and references to our website address are inactive textual references only.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Annual Report on Form 10-K, before investing in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects, as well as our ability to accomplish our strategic objectives. In that event, the market price of our common stock could decline and you could lose part or all of your investment.

Risks Related to Our Business

We are an early-stage company with a history of significant losses, we expect to incur losses in the future and we may not be able to achieve or sustain profitability, which may make it difficult to evaluate the success of our business to date and to assess the prospects for our future viability.