GLAUKOS Corp

Previous wording

We incurred net losses for each of the three months ended March 31, 2024 and March 31, 2023 of $40.8 million $34.6 million, respectively. As of March 31, 2024, we had an accumulated deficit of $639.9 million.

Current wording

We incurred net losses for the three and six months ended June 30, 2024 of $50.5 million and $91.4 million, respectively, and incurred net losses of $32.8 million and $67.4 million for the three and six months ended June 30, 2023 respectively. As of June 30, 2024, we had an accumulated deficit of $690.5 million.

Previous wording

development on the condensed consolidated statement of operations. Under the terms of the agreement, if these proprietary technologies are commercialized, we may have to make potential payments of up to $51.0 million upon the achievement of certain event-based development milestones, potential payments of up to $150.0 million upon the achievement of certain commercial sales-based milestones should annual net sales of a licensed product eventually exceed various levels, and up to a low double digit royalty on net sales. Furthermore, because the first two development milestones are payable in either cash or the Company’s shares at our sole discretion, we have accrued $1.4 million related to these two milestones which is classified as an other liability within the condensed consolidated balance sheets, as the contingent consideration is not expected to be paid within the next twelve months.

Current wording

On March 7, 2024, we issued $5.0 million of our common stock and paid approximately $5.1 million in cash in connection with the acquisition of 100% of the outstanding equity interests in a clinical stage biopharma company (the Seller) focused on developing novel therapeutics for ophthalmic diseases, including all related patents and patent applications, technology and know-how. We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business, and the acquisition costs are recorded within acquired in-process research and development on the condensed consolidated statement of operations. Under the terms of the agreement, if these proprietary technologies are commercialized, we may have to make potential payments of up to $51.0 million upon the achievement of certain event-based development milestones, potential payments of up to $150.0 million upon the achievement of certain commercial sales-based milestones should annual net sales of a licensed product eventually exceed various levels, and up to a low double digit royalty on net sales. Furthermore, because the first two development milestones are payable in either cash or the Company’s shares at our sole discretion, as of June 30, 2024, we have accrued $1.3 million related to these two milestones which is classified as an other liability within the condensed consolidated balance sheets, as the contingent consideration is not expected to be paid within the next twelve months.

Previous wording

In the U.S., healthcare providers use separate billing codes to report the provision of medical procedures and use of supplies to third-party payors, such as government programs or private insurance, and seek reimbursement for all or a portion of those costs. Physician fee payment rates for products covered by temporary Current Procedural Terminology (CPT) codes are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims. MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.

Current wording

In the U.S., healthcare providers use separate billing codes to report the provision of medical procedures and use of supplies to third-party payors, such as government programs or private insurance, and seek reimbursement for all or a portion of those costs. Physician fee payment rates for products covered by temporary Current Procedural Terminology (CPT) codes, such as ouriStent infinite andiDose TR products, are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims. MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.

Previous wording

In October and November 2023, five of the seven MACs released final local coverage determinations (LCDs) confirming reimbursement coverage of the standalone procedure utilizing theiStent infinite, which received FDA clearance in August 2022, and non-coverage for certain procedures, including the ophthalmic canaloplasty procedure utilizing ouriPRIME product. These LCDs also indicated that surgical MIGS procedures should not be performed in combination with other MIGS or surgical glaucoma procedures. In December 2023, prior to their respective effective dates, those five MACs rescinded the final LCDs and determined there would be no change in the current status of coverage for MIGS. The other two MACs have taken preliminary steps to assess coverage ofiStent infinite through temporary local coverage article (LCA) updates. In the case of each of these seven MACs, coverage of theiStent infinite is determined on a case-by-case basis.

Current wording

In October and November 2023, five of the seven MACs released final local coverage determinations (LCDs) confirming reimbursement coverage of the standalone procedure utilizing theiStent infinite, which received FDA clearance in August 2022, and non-coverage for certain procedures, including the ophthalmic canaloplasty procedure utilizing ouriPRIME product. These LCDs also indicated that surgical MIGS procedures should not be performed in combination with other MIGS or surgical glaucoma procedures. In December 2023, prior to their respective effective dates, those five MACs rescinded the final LCDs and determined there would be no change in the current status of coverage for MIGS. In April 2024, five of the seven MACs released draft LCDs that, if finalized, would confirm reimbursement coverage of the standalone procedure utilizing theiStent infinite, and that would confirm non-coverage for surgical MIGS procedures in combination with other MIGS or surgical glaucoma procedures. These draft LCDs did not include the non-coverage determination for ophthalmic canaloplasty procedures utilizing ouriPRIME product that was contained in the prior final LCDs. The other two MACs have taken preliminary steps to assess coverage ofiStent infinite through temporary local coverage article (LCA) updates. In the case of each of these seven MACs, coverage of theiStent infinite is currently determined on a case-by-case basis.

Previous wording

On January 1, 2024, the U.S. Centers for Medicare & Medicaid Services’ (CMS’) final rules on 2024 Medicare physician fee and facility fee payment rates (2024 Final Rule) became effective. The 2024 Final Rule does not materially modify the 2023 Medicare physician fee and facility fee payment rates with respect to physician fee payment rates for procedures using ouriStent family of products in conjunction with cataract surgery but does contain increased facility fee rates for such procedures, in both the ASC and hospital settings. In addition, the 2024 Final Rule contained significant increases in the facility fee rates for ASCs and hospitals that performiStent infinite procedures in a standalone setting under its temporary Category III CPT code.

Current wording

On January 1, 2024, the U.S. Centers for Medicare & Medicaid Services’ (CMS’) final rules on 2024 Medicare physician fee and facility fee payment rates (2024 Final Rule) became effective. The 2024 Final Rule did not materially modify the 2023 Medicare physician fee and facility fee payment rates with respect to physician fee payment rates for procedures using ouriStent family of products in conjunction with cataract surgery but did contain increased facility fee rates for such procedures, in both the ASC and hospital settings. In addition, the 2024 Final Rule contained significant increases in the facility fee rates for ASCs and hospitals that performiStent infinite procedures in a standalone setting under its temporary Category III CPT code. In July 2024, CMS released proposed rules on 2025 Medicare physician fee and facility fee payment rates (2025 Proposed Rule) that do not materially modify the 2024 Final Rule. If adopted, the 2025 Proposed Rule would go into effect January 1, 2025.

Previous wording

On April 2, 2024, CMS assigned a unique, permanent Healthcare Common Procedure Coding System J-code foriDose TR indicated for the reduction of intraocular pressure in patients with open-angle glaucoma or ocular hypertension. The new J-code foriDose TR, J7355, is set to become effective July 1, 2024. J-codes are used by U.S. government and commercial payers, as well as surgeons, to streamline the billing and reimbursement process for procedural pharmaceuticals administered by a healthcare professional, such asiDose TR, along with other certain treatments. In addition to the J-code, on March 21, 2024, CMS assigned the CPT codes that are designed to be used to cover the procedural component ofiDose TR, 0660T and 0661T, to ambulatory payment classification 5492 (Level 2 Intraocular Procedures), effective April 1, 2024. The professional fees associated with aniDose TR procedure will be set by each individual MAC separately.

Current wording

On April 2, 2024, CMS assigned a unique, permanent Healthcare Common Procedure Coding System J-code foriDose TR indicated for the reduction of intraocular pressure in patients with open-angle glaucoma or ocular hypertension. The new J-code foriDose TR, J7355, became effective July 1, 2024. J-codes are used by U.S. government and commercial payers, as well as surgeons, to streamline the billing and reimbursement process for procedural pharmaceuticals administered by a healthcare professional, such asiDose TR, along with other certain treatments. In addition to the J-code, on March 21, 2024, CMS assigned the CPT codes that are designed to be used to cover the procedural component ofiDose TR, 0660T and 0661T, to ambulatory payment classification 5492 (Level 2 Intraocular Procedures), effective April 1, 2024. The professional fees associated with aniDose TR procedure will be set by each individual MAC separately.

Previous wording

In connection with ongoing macroeconomic conditions, including inflation, supply shortages or delays, changes in supply and demand, foreign exchange rate fluctuations and other conditions that have led to disruptions in commerce and pricing stability, some of our vendors are continuing to experience supply challenges, both in the acquisition of raw materials as well as due to labor shortages and other disruptions. As a result of these supply chain challenges and due ongoing inflationary pressures, we have experienced higher costs for certain components and raw materials. We expect some supply challenges and higher costs to continue throughout 2024. These challenges have occasionally led to longer lead times and delays of certain components needed for the manufacture of our products, in some cases requiring us to find alternative sources for materials. In the latter part of 2023 and into the first quarter of 2024, these supply challenges generally stabilized; however, if these supply issues persist or worsen in the future, they could impact our ability to ship some of our products to our customers, or bring some of our pipeline products to market, in a timely manner. Additionally, unfavorable foreign exchange rates in certain geographies in which we operate negatively impacted our sales during the three months ended March 31, 2023, and to a lesser extent, in the three months ended March 31, 2024.

Current wording

In connection with ongoing macroeconomic conditions, including inflation, supply shortages or delays, changes in supply and demand, foreign exchange rate fluctuations and other conditions that have led to disruptions in commerce and pricing stability, some of our vendors are continuing to experience supply challenges, both in the acquisition of raw materials as well as due to labor shortages and other disruptions. These challenges have occasionally led to longer lead times and delays of certain components needed for the manufacture of our products, in some cases requiring us to find alternative sources for materials. As a result of these supply chain challenges and ongoing inflationary pressures, we have experienced higher costs for certain components and raw materials. Additionally, in the latter part of 2023 and into the second quarter of 2024, these supply challenges generally stabilized; however, if these supply issues persist or worsen in the future, they could impact our ability to ship some of our products to our customers, or bring some of our

Previous wording

CMS physician fee payment rate decreases have disrupted traditional customer ordering patterns and have resulted in our customers’ trialing and utilization of competitive products, causing reduced U.S. Glaucoma sales volumes of ouriStent family of products used in conjunction with cataract surgery in each of the three months ended March 31, 2024 and March 31, 2023. Our corneal health sales have experienced sporadic headwinds in recent years due to U.S. commercial payer volatility. We believe investments in our market access organization were successful in reducing volatility during the three months ended March 31, 2024 and March 31, 2023, however we cannot predict whether such success will continue.

Current wording

CMS physician fee payment rate decreases have disrupted traditional customer ordering patterns and may have resulted in certain of our customers’ utilization of competitive products, which may have reduced U.S. Glaucoma sales volumes of ouriStent family of products used in conjunction with cataract surgery in each of the three and six months ended June 30, 2024 and June 30, 2023. Our corneal health sales have experienced sporadic headwinds in recent years due to U.S. commercial payer volatility. We believe investments in our market access organization were successful in reducing volatility during the three and six months ended June 30, 2024 and June 30, 2023, although we cannot predict whether such success will continue.

Previous wording

Our net sales are generated primarily from sales of ouriStent family of products,Photrexa and other associated drug formulations, our proprietary bioactivation systems, and royalty income. Customers are primarily comprised of ambulatory surgery centers, hospitals and physician private practices, with independent distributors being used in certain international locations where we currently do not have a direct commercial presence.

Current wording

Our net sales are generated primarily from sales of ouriStent family of products,Photrexa and other associated drug formulations, and royalty income. We also began commercializingiDose TR in a controlled manner in February 2024.** **Customers are primarily comprised of ambulatory surgery centers, hospitals and physician private practices, with independent distributors being used in certain international locations where we currently do not have a direct commercial presence.

Previous wording

Cost of sales includes amortization of the $252.2 million developed technology intangible assets recorded as a result of our acquisition of Avedro, Inc. (Avedro). Amortization expense was $5.5 million for each of the three months ended March 31, 2024 and March 31, 2023.

Current wording

Cost of sales includes amortization of the $252.2 million developed technology intangible assets recorded as a result of our acquisition of Avedro, Inc. (Avedro). Amortization expense was $11.0 million and $5.5 million for each of the three and six months ended June 30, 2024 and June 30, 2023, respectively.

Previous wording

Our future gross profit as a percentage of net sales, or gross margin, will be impacted by numerous factors including commencement of sales of products in our pipeline, or any other future products, which may have higher pricing, or conversely, higher product costs. Our gross margin will also be affected by manufacturing or supply chain disruptions or inefficiencies that we may experience as we attempt to manufacture our products on a larger scale, manufacture new products and change our manufacturing capacity, processes, or output. Additionally, our gross margin will continue to be affected by amortization of Avedro developed technology and Celanese Agreement intangible assets, the impact of government pricing programs and by royalty expenses on current or future products associated with various licensing agreements. Our gross margin in future periods may also be impacted by other factors adversely affecting our net sales in future periods such as reductions of payment rates for certain of our products and related services, and inflationary pressures.

Current wording

Our future gross profit as a percentage of net sales, or gross margin, will be impacted by numerous factors including commencement of sales of products in our pipeline, or any other future products, which may have higher pricing, or conversely, higher product costs. Our gross margin will also be affected by manufacturing or supply chain disruptions or inefficiencies that we may experience as we attempt to manufacture our products on a larger scale, manufacture new products and change our manufacturing capacity, processes, or output. Additionally, our gross margin will continue to be affected by amortization of Avedro developed technology and Celanese Agreement intangible assets, the impact of rebates associated with government pricing programs and by royalty expenses on current or future products associated with various licensing agreements. Our gross margin in future periods may also be impacted by other factors adversely affecting our net sales in future periods such as reductions of payment rates for certain of our products and related services, and inflationary pressures.

Previous wording

connection with the development of our product candidates. We anticipate we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, the availability of funding resources, as well as ongoing assessments as to each current or future product candidate’s commercial potential and our likelihood of obtaining necessary regulatory approvals. We are not currently able to fully track expenses by product candidate.

Current wording

Costs for our clinical development programs include expenses for all activities necessary for obtaining regulatory approvals. Our research programs vary significantly for each current and future product candidate and completion dates are difficult to predict. As a result, while we expect our R&D costs to continue to increase for the foreseeable future, we cannot estimate with any degree of certainty the timing or the amount of costs we will incur in connection with the development of our product candidates. We anticipate we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, the availability of funding resources, as well as ongoing assessments as to each current or future product candidate’s commercial potential and our likelihood of obtaining necessary regulatory approvals. We are not currently able to fully track expenses by product candidate.

Previous wording

Non-operating expense, net primarily consists of interest expense associated with our finance lease for our Aliso Facility and for our 2.75% convertible notes due 2027 (Convertible Notes), interest income derived from our short-term investments, and unrealized gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar, primarily related to intercompany loans.

Current wording

Non-operating expense, net primarily consists of charges associated with our Convertible Note exchange, interest expense associated with our finance lease for our Aliso Facility and for our Convertible Notes, interest income derived from our short-term investments, and unrealized gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar, primarily related to intercompany loans.

Previous wording

Our tax provision is primarily comprised of state and foreign income taxes. Our net deferred tax liability of $7.1 million at March 31, 2024 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets. We continue to provide a full valuation allowance against our other net deferred tax assets.

Current wording

Our tax provision is primarily comprised of state and foreign income taxes, offset by release of uncertain tax positions for which the statute of limitations has expired. Our net deferred tax liability of $7.1 million at June 30, 2024 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets. We continue to provide a full valuation allowance against our other net deferred tax assets.

Previous wording

Net sales for the three months ended March 31, 2024 and March 31, 2023 were $85.6 million and $73.9 million, respectively, increasing by approximately 16% primarily related to the factors listed below.

Current wording

Net sales for the three months ended June 30, 2024 and June 30, 2023 were $95.7 million and $80.4 million, respectively, increasing by approximately 19% primarily related to the factors listed below.

Previous wording

Net sales of glaucoma products in the United States were $42.0 million and $35.1 million for the three months ended March 31, 2024 and March 31, 2023, respectively, increasing by 20%. This increase is primarily due to higher volumes sold of ouriStent family of products, primarilyiStent infinite and early contributions from* iDose TR*.* *

Current wording

Net sales of glaucoma products in the United States were $49.8 million and $39.6 million for the three months ended June 30, 2024 and June 30, 2023, respectively, increasing by 26%. This increase is primarily due to higher volumes sold of ouriStent family of products, primarilyiStent infinite, and early contributions from* iDose TR*.* *

Previous wording

Net sales of corneal health products were $18.4 million and $17.7 million for the quarter ended March 31, 2024 and March 31, 2023, respectively, increasing by 4%. Of the $0.7 million increase in net sales generated by our corneal health products, $1.0 million related to an increase in U.S. net sales of Photrexa using direct sales operations, which was positively impacted by higher realized average sales prices of Photrexa along with increases in sales to existing customers and new account starts, partially offset by accrued rebates related to the impact of our participation in the Medicaid Drug Rebate Program (MDRP). Our international corneal health sales decreased $0.4 million from net sales in countries outside the U.S. during the quarter ended March 31, 2024 as compared to the three months ended March 31, 2023.

Current wording

Net sales of corneal health products were $19.8 million and $18.5 million for the quarter ended June 30, 2024 and June 30, 2023, respectively, increasing by 7%. Of the $1.3 million increase in net sales generated by our corneal health products, $0.8 million related to an increase in U.S. net sales of Photrexa using direct sales operations, which was positively impacted by higher realized average sales prices of Photrexa along with increases in sales to existing customers and new account starts, partially offset by accrued rebates related to the impact of our participation in the Medicaid Drug Rebate Program (MDRP). Our international corneal health sales increased $0.6 million from net sales in countries outside the U.S. during the quarter ended June 30, 2024 as compared to the three months ended June 30, 2023.

Previous wording

Cost of sales for the three months ended March 31, 2024 and March 31, 2023 were $20.3 million and $18.1 million, respectively, reflecting an increase of approximately $2.1 million that is proportionate to the increase in net sales for the corresponding period, offset by certain new product launch manufacturing costs associated withiDose TR. Our gross margin was 76% for each of the three months ended March 31, 2024 and March 31, 2023.

Current wording

Cost of sales for the three months ended June 30, 2024 and June 30, 2023 were $22.6 million and $20.1 million, respectively, reflecting an increase of approximately $2.5 million that is proportionate to the increase in net sales for the corresponding period, offset by certain new product launch manufacturing costs associated withiDose TR. Our gross margin was 76% for three months ended June 30, 2024 and 75% for the three months ended June 30, 2023.

Previous wording

Of the total $62.0 million, we incurred approximately $36.2 million of costs associated with commercial personnel and discretionary spending during the three months ended March 31, 2024 as compared to $32.6 million during the three months ended March 31, 2023, with the increase primarily due to compensation and related employee expenses associated with growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded. We also incurred approximately $25.8 million of costs associated with general and administrative personnel and discretionary spending during the three months ended March 31, 2024 as compared to $21.0 million during the three months ended March 31, 2023, with the change primarily associated with increased expenses related to our ongoing administrative and support functions, inclusive of information technology and allocated facilities expenses. Of the total $8.3 million increase in SG&A expenses for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, $4.6 million related to increased compensation and related employee costs, with $0.4 million of the incremental amount related to an increase in stock-based compensation expense.

Current wording

Of the total $13.1 million increase in SG&A expenses for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, $7.3 million related to increased compensation and related employee costs, with $0.9 million of the incremental amount related to an increase in stock-based compensation expense. This increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.

Previous wording

During the three months ended March 31, 2024, we incurred $18.4 million in core R&D expenses and $12.3 million in clinical expenses, comprised of $17.8 million in compensation and related employee expenses with the remaining $12.9 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generationiDoseproducts*;* Epioxa, a pharmaceutical therapeutic system for the treatment of keratoconus without the removal of the epithelium (also referred to as “epi-on”); and our earlier stage programs for* *glaucoma, corneal, retinal and other therapeutic investments. For the three months ended March 31, 2023, we incurred $20.4 million in core R&D expenses and $14.8 million in clinical expenses, comprised of $18.4 million in compensation and related employee expenses with the remaining $16.8 million spent on the above-mentioned programs.

Current wording

During the three months ended June 30, 2024, we incurred $19.8 million in core R&D expenses and $14.6 million in clinical expenses, comprised of $21.4 million in compensation and related employee expenses with the remaining $13.4 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generationiDoseproducts*;* Epioxa, a pharmaceutical therapeutic system for the treatment of keratoconus without the removal of the epithelium (also referred to as “epi-on”); and our earlier stage programs for* *glaucoma, corneal, retinal and other therapeutic investments. For the three months ended June 30, 2023, we incurred $20.4 million in core R&D expenses and $12.8 million in clinical expenses, comprised of $19.3 million in compensation and related employee expenses with the remaining $13.9 million spent on the above-mentioned programs.

Previous wording

We had non-operating expense, net of $1.4 million and $1.2 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The change primarily relates to increased interest income earned on investments of $1.4 million, offset by a change in other (expense) income, net of approximately $1.6 million due to recognition of higher unrealized foreign currency losses due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the three months ended March 31, 2023.

Current wording

We had non-operating expense, net of $20.2 million and $3.3 million for the three months ended June 30, 2024 and June 30, 2023, respectively. The change primarily relates to $18.0 million of expenses related to our June 2024 Convertible Note exchange, partially offset by an increase in interest income earned on investments of $0.9 million, as compared to the three months ended June 30, 2023.

Previous wording

Our effective tax rate for the first quarter of 2024 and 2023 was (0.93)% and (1.17)%, respectively. For each of the three months ended March 31, 2024 and March 31, 2023, we recorded a provision for income taxes of $0.4 million, which was primarily comprised of state and foreign income tax expense.

Current wording

Our effective tax rate for the second quarter of 2024 and 2023 was (0.66)% and (1.34)%, respectively. For the three months ended June 30, 2024 and June 30, 2023, we recorded a provision for income taxes of $0.3 million and $0.4 million, respectively, which was primarily comprised of state and foreign income tax expense, offset by release of uncertain tax positions for which the statute of limitations has expired.

Previous wording

International sales of glaucoma products for the three months ended March 31, 2024 and March 31, 2023 were $25.2 million and $21.1 million, respectively, increasing by 20%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, the dollar-based results of which were modestly affected by unfavorable foreign exchange rates, primarily related to the Japanese Yen, during the quarter ended March 31, 2024, as compared to the quarter ended March 31, 2023.

Current wording

International sales of glaucoma products for the six months ended June 30, 2024 and June 30, 2023 were $51.4 million and $43.4 million, respectively, increasing by 18%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, the dollar-based results of which were modestly affected by unfavorable foreign exchange rates, primarily related to the Japanese Yen, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Previous wording

R&D expenses for the three months ended March 31, 2024 and March 31, 2023 were $30.7 million and $35.2 million, respectively. R&D expenses decreased during the three months ended March 31, 2024 primarily because we made a one-time $3.2 million payment associated with our New Drug Application (NDA) foriDose TR submitted to the FDA and also had elevated spend around otheriDose TR NDA activities during the three months ended March 31, 2023.

Current wording

R&D expenses for the six months ended June 30, 2024 and June 30, 2023 were $65.2 million and $68.4 million, respectively. R&D expenses decreased during the six months ended June 30, 2024 primarily because we made a one-time $3.2 million payment associated with our New Drug Application (NDA) foriDose TR submitted to the FDA and also had elevated spend around otheriDose TR NDA activities during the six months ended June 30, 2023.

Previous wording

On March 7, 2024, we issued $5.0 million of our common stock and paid approximately $5.1 million in cash in connection with the acquisition of 100% of the outstanding equity interests in a clinical stage biopharma company (the Seller) focused on developing novel therapeutics for ophthalmic diseases, including all related patents and patent applications, technology and know-how. We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business, and the acquisition costs are recorded within acquired in-process research and

Current wording

Acquired In-process Research and Development

Previous wording

During the three months ended March 31, 2024, we issued $5.0 million of our common stock and paid approximately $5.1 million in cash, in connection with the asset acquisition of 100% of the outstanding equity interests in a clinical stage biopharma company focused on developing novel therapeutics for ophthalmic diseases, including all related patents and patent applications, technology and know-how. We may have ongoing milestone payments based on achieving certain clinical and regulatory milestones depending on the success of the development and approval of the proprietary technologies. Also included in IPR&D for the three months ended March 31, 2024 is $1.4 million of contingent consideration related to the aforementioned asset acquisition.

Current wording

During the six months ended June 30, 2024, we issued $5.0 million of our common stock and paid approximately $5.1 million in cash, in connection with the asset acquisition of 100% of the outstanding equity interests in a clinical stage biopharma company focused on developing novel therapeutics for ophthalmic diseases, including all related patents and patent applications, technology and know-how. Also included in IPR&D for the six months ended June 30, 2024 is $1.3 million of contingent consideration related to our Sales Agreement with Celanese and our $2.5 million upfront payment related to our aforementioned License Agreement, pursuant to which we obtained an exclusive, worldwide license to develop and commercialize drug products incorporating certain proprietary technology.

Previous wording

Our cash, cash equivalents and short-term investments totaled approximately $272.9 million and our restricted cash totaled approximately $5.9 million as of March 31, 2024.

Current wording

Our cash, cash equivalents and short-term investments totaled approximately $261.7 million and our restricted cash totaled approximately $4.7 million as of June 30, 2024.

Previous wording

Our Convertible Notes may be converted at the option of the holders at the times and under the circumstances and at the conversion rate described inNote 9. Convertible Senior Notes our condensed consolidated financial statements. As of March 31, 2024, one of the conditions allowing holders of the Convertible Notes to convert had been met. The conditions allowing holders of the Convertible Notes to convert are measured each quarter. The trading price of our common stock remained above 130% of the applicable $56.10 conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, March 31, 2024, holders of the Convertible Notes would have the right to convert their Convertible Notes beginning April 1, 2024 through June 28, 2024 (the last business day of the quarter ending June 30, 2024). Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in the manner and subject to the terms and conditions provided in the Indenture. Settling all or a portion of the conversion obligation in cash could adversely affect our liquidity.

Current wording

Our remaining Convertible Notes outstanding may be converted at the option of the holders at the times and under the circumstances and at the conversion rate described inNote 9. Convertible Senior Notes of our condensed consolidated financial statements. As of June 30, 2024, there was $57.5 million in principal balance on the Convertible Notes outstanding, and one of the conditions allowing holders of the Convertible Notes to convert had been met. The conditions allowing holders of the Convertible Notes to convert are measured each quarter. The trading price of our common stock remained above 130% of the applicable $56.10 conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, June 30, 2024, holders of the Convertible Notes would have the right to convert their Convertible Notes beginning July 1, 2024 through September 30, 2024. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, in the manner and subject to the terms and conditions provided in the Indenture. Settling all or a portion of the conversion obligation in cash could adversely affect our liquidity.

Previous wording

Our short-term liquidity requirements primarily consist of regular operating costs, interest payments related to our Convertible Notes, R&D project funding, capital expenditures as we continue the development of our manufacturing facilities and office spaces, operating and financing lease obligations, government rebate obligations and other firm purchase commitments. As of March 31, 2024, we had net working capital of $316.4 million, which indicates that our current assets are sufficient to cover our short-term liabilities.

Current wording

Our short-term liquidity requirements primarily consist of regular operating costs, R&D project funding, capital expenditures as we continue the development of our manufacturing facilities and office spaces, operating and financing lease obligations, government rebate obligations, interest payments related to our Convertible Notes, and other firm purchase commitments. As of June 30, 2024, we had net working capital of $313.7 million, which indicates that our current assets are sufficient to cover our short-term liabilities.

Previous wording

Our long-term liquidity requirements primarily consist of interest and principal payments related to our Convertible Notes, capital expenditures for the continued development of our manufacturing facilities and office spaces, payments in connection with our Promissory Note with Radius, potential future payments related to our licensing agreements, and firm purchase commitments. As demand grows for our products, we will continue to expand global operations to meet demand through investments in our manufacturing capabilities.

Current wording

Our long-term liquidity requirements primarily consist of interest and potential principal payments related to our Convertible Notes, capital expenditures for the continued development of our manufacturing facilities and office spaces, potential future payments related to our licensing agreements, and firm purchase commitments. As demand grows for our products, we will continue to expand global operations to meet demand through investments in our manufacturing capabilities.

Previous wording

In the three months ended March 31, 2024, our operating activities used $33.9 million in net cash and in the three months ended March 31, 2023 our operating activities used $30.8 million of net cash.

Current wording

In the six months ended June 30, 2024, our operating activities used $52.2 million in net cash and in the six months ended June 30, 2023 our operating activities used $38.9 million of net cash.

Previous wording

For the three months ended March 31, 2024, our net cash used in operating activities reflected our net loss of $40.8 million, adjusted for non-cash items of $29.4 million, primarily consisting of stock-based compensation expense of $11.2 million, depreciation of $2.7 million, amortization of intangible assets of $6.2 million, noncash lease expense of $1.1 million, amortization of debt issuance costs of $0.3 million, other liabilities of $2.5 million, accretion of discount of $1.1 million and IPR&D acquired through issuance of common stock of $5.0 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $22.4 million, which resulted primarily from increases in accounts receivable of $7.1 million, an increase in inventory of $8.6 million, an increase in other assets of $2.2 million, an increase in prepaid expenses and other current assets of $0.9 million, and a decrease in accounts payable and accrued liabilities of $3.6 million.

Current wording

For the six months ended June 30, 2024, our net cash used in operating activities reflected our net loss of $91.4 million, adjusted for non-cash items of $69.8 million, primarily consisting of inducement expense related to the Convertible Notes exchange of $17.4 million, stock-based compensation expense of $22.5 million, depreciation of $5.4 million, amortization of intangible assets of $12.5 million, noncash lease expense of $2.1 million, amortization of debt issuance costs of $0.6 million, other liabilities of $3.5 million, amortization of premium on short-term investments of $2.2 million and IPR&D acquired through issuance of common stock of $5.0 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $30.6 million, which resulted primarily from an increase in inventory of $15.1 million, an increase in accounts receivable of $12.0 million, an increase in other assets of $2.2 million, a decrease in accounts payable and accrued liabilities of $5.0 million, partially offset by a decrease in prepaid expenses and other current assets of $3.7 million.

Previous wording

For the three months ended March 31, 2023, our net cash used in operating activities reflected our net loss of $34.6 million, adjusted for non-cash items of $20.3 million, primarily consisting of stock-based compensation expense of $10.2 million, depreciation of $2.1 million, amortization of intangible assets of $6.2 million, and amortization of lease right-of-use assets of $1.0 million. Additionally, changes in operating assets and liabilities were $16.4 million, which resulted primarily from increases in accounts receivable of $1.7 million, an increase in inventory of $3.1 million, and an increase in prepaid expenses and other current assets of $2.5 million, and a decrease in accounts payable and accrued liabilities of $9.3 million.

Current wording

For the six months ended June 30, 2023, our net cash used in operating activities reflected our net loss of $67.4 million, adjusted for non-cash items of $44.7 million, primarily consisting of stock-based compensation expense of $20.1 million, depreciation of $4.2 million, amortization of intangible assets of $12.5 million, and noncash lease expense of $2.2 million. Additionally, changes in operating assets and liabilities were $16.2 million, which resulted primarily from increases in accounts receivable of $3.1 million, an increase in inventory of $2.3 million, and an increase in prepaid expenses and other current assets of $1.5 million, and a decrease in accounts payable and accrued liabilities of $9.5 million.

Previous wording

In the three months ended March 31, 2024 and March 31, 2023 our investing activities used $29.4 million and $13.8 million of net cash, respectively.

Current wording

In the six months ended June 30, 2024 and June 30, 2023 our investing activities provided $5.5 million and $12.1 million of net cash, respectively.

Previous wording

For the three months ended March 31, 2024, we used cash of approximately $49.3 million for purchases of short-term investments, approximately $1.0 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; and approximately $1.0 million related to investments in company-owned life insurance, and we received cash of approximately $21.9 million from sales and maturities of short-term investments.

Current wording

For the six months ended June 30, 2024, we used cash of approximately $91.1 million for purchases of short-term investments, approximately $3.1 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; and approximately $2.1 million related to investments in company-owned life insurance, and we received cash of approximately $101.7 million from sales and maturities of short-term investments.

Previous wording

For the three months ended March 31, 2023, we used cash of approximately $96.3 million for purchases of short-term investments, approximately $6.9 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; Burlington, Massachusetts; and San Clemente, California; and approximately $0.5 million related to investments in company-owned life insurance, and we received cash of approximately $89.9 million from sales and maturities of short-term investments.

Current wording

For the six months ended June 30, 2023, we used cash of approximately $170.1 million for purchases of short-term investments, approximately $12.7 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; Burlington, Massachusetts; and San Clemente, California; and approximately $2.0 million related to investments in company-owned life insurance, and we received cash of approximately $196.9 million from sales and maturities of short-term investments.

Previous wording

In the three months ended March 31, 2024 and March 31, 2023, our financing activities provided $13.2 million and $1.2 million of net cash, respectively.

Current wording

In the six months ended June 30, 2024 and June 30, 2023, our financing activities provided $21.8 million and $0.3 million of net cash, respectively.

Previous wording

For the three months ended March 31, 2024, we received $15.7 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $2.4 million for payment of employee taxes related to restricted stock unit vesting and paid $0.2 million in principal on our finance lease.

Current wording

For the six months ended June 30, 2024, we received $26.7 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $4.5 million for payment of employee taxes related to restricted stock unit vesting and paid $0.4 million in principal on our finance lease.

Previous wording

For the three months ended March 31, 2023, we received $2.8 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $1.5 million for payment of employee taxes related to restricted stock unit vesting and paid $0.1 million in principal on our finance lease.

Current wording

For the six months ended June 30, 2023, we received $4.5 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $3.9 million for payment of employee taxes related to restricted stock unit vesting and paid $0.3 million in principal on our finance lease.

Previous wording

Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Estimates” included in Part II, Item 7 of our Annual Report. There have been no material changes to our critical accounting policies and estimates as disclosed therein, during the three months ended March 31, 2024, as compared with those disclosed in our Annual Report.

Current wording

Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Estimates” included in Part II, Item 7 of our Annual Report. There have been no material changes to our critical accounting policies and estimates as disclosed therein, during the three and six months ended June 30, 2024, as compared with those disclosed in our Annual Report.