OCULAR THERAPEUTIX INC

Previous wording

We are a biopharmaceutical company committed to enhancing people’s vision and quality of life through the development and commercialization of innovative therapies for wet age-related macular degeneration, or wet AMD, diabetic retinopathy, or DR, and other diseases and conditions of the eye. AXPAXLI (axitinib intravitreal implant, also known as OTX-TKI), our product candidate for retinal disease, is based on our ELUTYX proprietary bioresorbable hydrogel-based formulation technology. AXPAXLI is currently in a Phase 3 clinical trial for wet AMD, which we refer to as the SOL-1 trial. Our clinical portfolio also includes PAXTRAVA (travoprost intracameral implant, also known as OTX-TIC), currently in a Phase 2 clinical trial for the treatment of open-angle glaucoma, or OAG, or ocular hypertension, or OHT. AXPAXLI is also currently in a Phase 1 clinical trial for the treatment of non-proliferative diabetic retinopathy, or NPDR, which we refer to as the HELIOS trial.

Current wording

We are currently evaluating AXPAXLI as a treatment for wet age-related macular degeneration, or wet AMD, in two Phase 3 clinical trials, which we refer to as the SOL-1 trial and the SOL-R trial. Our clinical portfolio also includes PAXTRAVA (travoprost intracameral implant, also known as OTX-TIC), currently in a Phase 2 clinical trial for the treatment of open-angle glaucoma, or OAG, or ocular hypertension, or OHT. We are also currently evaluating AXPAXLI in a Phase 1 clinical trial for the treatment of non-proliferative diabetic retinopathy, or NPDR, which we refer to as the HELIOS trial.

Previous wording

Our expertise in the formulation, development and commercialization of innovative therapies and our ELUTYX platform supported the development and launch of our first commercial drug product, DEXTENZA, a corticosteroid approved by the U.S. Food and Drug Administration, or FDA, for the treatment of ocular inflammation and pain following ophthalmic surgery and ocular itching associated with allergic conjunctivitis. ELUTYX is also the foundation for two other clinical-stage assets, OTX-CSI (cyclosporine intracanalicular insert) for the chronic treatment of dry eye disease and OTX-DED (dexamethasone intracanalicular insert) for the short-term treatment of the signs and symptoms of dry eye disease, as well as several preclinical programs.

Current wording

Our expertise in the formulation, development and commercialization of innovative therapies of the eye and our ELUTYX platform supported the development and launch of our first commercial drug product, DEXTENZA, a corticosteroid approved by the U.S. Food and Drug Administration, or FDA, for the treatment of ocular inflammation and pain following ophthalmic surgery and ocular itching associated with allergic conjunctivitis. ELUTYX is also the foundation for two other clinical-stage assets, OTX-CSI (cyclosporine intracanalicular insert) for the chronic treatment of dry eye disease and OTX-DED (dexamethasone intracanalicular insert) for the short-term treatment of the signs and symptoms of dry eye disease.

Previous wording

We are currently conducting the SOL-1 trial, a pivotal Phase 3 clinical trial for the treatment of wet AMD. The SOL-1 trial is designed as a prospective, multi-center, randomized, parallel-group trial that we expect to be run primarily at U.S. sites, as well as sites in Argentina and several other countries. The SOL-1 trial is designed as a superiority trial comparing a single optimized implant of AXPAXLI with a drug load of 450 µg of axitinib to a single injection of aflibercept and assessing the safety and efficacy of AXPAXLI in subjects with wet AMD by measuring Best Corrected Visual Accuity, or BCVA, and central subfield thickness. We are conducting the SOL-1 trial in accordance with a Special Protocol Assessment, or SPA, agreement letter we received in October 2023 from the FDA regarding the proposed clinical trial protocol and the statistical analysis plan and a subsequent SPA agreement modification letter we received from the FDA in January 2024 regarding the formulation of AXPAXLI to be used and the trial’s inclusion criteria.

Current wording

We are currently conducting the SOL-1 trial, a registrational Phase 3 clinical trial for the treatment of wet AMD. The SOL-1 trial is designed as a prospective, multi-center, randomized, parallel-group trial. We expect to conduct the SOL-1 trial primarily at U.S. sites, as well as sites in Argentina and potentially other countries. The SOL-1 trial is designed as a superiority trial comparing a single optimized implant of AXPAXLI with a drug load of 450 µg of axitinib to a single injection of aflibercept and assessing the safety and efficacy of AXPAXLI in subjects with wet AMD by measuring Best Corrected Visual Accuity, or BCVA, and central subfield thickness. We are conducting the SOL-1 trial in accordance with a Special Protocol Assessment, or SPA, agreement letter we received in October 2023 from the FDA regarding the proposed clinical trial protocol and the statistical analysis plan and a subsequent SPA agreement modification letter we received from the FDA in January 2024 regarding the formulation of AXPAXLI to be used and the trial’s inclusion criteria.

Previous wording

We plan to enroll approximately 300 evaluable wet AMD subjects who are treatment naïve in the study eye with good visual acuity and a diagnosis of macular choroidal neovascularization at screening in the SOL-1 trial. Every enrolled subject will receive two aflibercept injections between the initial screening visit and Day 1: one at week -8 and another at week -4. Subjects reaching approximately 20/20 vision or experiencing an improvement of 10 Early Treatment of Diabetic Retinopathy Study, or ETDRS, letters after these injections, in addition to satisfying other enrollment criteria, will then be randomized in the trial at Day 1 to receive either one implant of AXPAXLI in the investigational arm or one injection of aflibercept in the control arm. All subjects will then be followed every month and rescued as needed with supplemental anti-VEGF treatment based on pre-specified criteria. The primary endpoint is the

Current wording

We plan to randomize approximately 300 evaluable wet AMD subjects who are treatment naïve in the study eye with good visual acuity and a diagnosis of macular choroidal neovascularization at screening in the SOL-1 trial. Under the study protocol, after initial screening, enrolled subjects in the trial will receive two aflibercept loading doses between the screening visit and Day 1: one at week -8 and another at week -4. Subjects reaching approximately 20/20 vision or experiencing an improvement of 10 Early Treatment of Diabetic Retinopathy Study, or ETDRS, letters after these injections, in addition to satisfying other criteria, will then be randomized in the trial at Day 1 to receive either one

Previous wording

proportion of subjects who maintained visual acuity, defined as a BCVA loss of less than 15 letters on the ETDRS chart at week 36. Our pre-specified rescue criteria are a loss of 15 or more letters on the ETDRS chart compared to baseline, or a new hemorrhage that is deemed to be likely to cause irreversible vision loss. A loss of 15 letters or more on the ETDRS chart at any time in the trial would be considered as having met the endpoint as a treatment failure.

Current wording

implant of AXPAXLI in the investigational arm or one injection of aflibercept in the control arm. Those subjects who fail randomization will then be eligible to be enrolled in the SOL-R trial. All subjects who are successfully randomized in the SOL-1 trial will then be followed every month and rescued as needed with supplemental anti-VEGF treatment based on pre-specified criteria. The primary endpoint is the proportion of subjects who maintain visual acuity, defined as a BCVA loss of less than 15 letters on the ETDRS chart at week 36. Our pre-specified rescue criteria are a loss of 15 or more letters on the ETDRS chart compared to baseline, or a new hemorrhage that is deemed to be likely to cause irreversible vision loss. A loss of 15 letters or more on the ETDRS chart at any time in the trial would be considered as having met the endpoint as a treatment failure.

Previous wording

The first subjects in the SOL-1 trial were screened and received their first aflibercept injection in February 2024, and we started randomizing subjects in April 2024. We expect to complete enrollment of the SOL-1 trial by the end of the first quarter of 2025. We plan to enter into additional clinical trials of AXPAXLI for the treatment of wet AMD. We intend to pursue additional discussions with the FDA to guide development of these additional clinical trials. We are also developing a potential next-generation injector that we believe could improve the administration of AXPAXLI to the eye. If we were to obtain favorable results from the SOL-1 trial and any additional clinical trials we conduct for wet AMD, we plan to submit a New Drug Application, or NDA, with the FDA for marketing approval of AXPAXLI for the treatment of wet AMD.

Current wording

The first subjects in the SOL-1 trial were screened and received their first aflibercept injections in February 2024, and we started randomizing subjects in April 2024. During our Investor Day on June 13, 2024, we announced that, as of June 7, 2024, we had 60 active study sites and 151 subjects enrolled in various stages of loading and randomization. We expect to complete enrollment of the SOL-1 trial by the end of the first quarter of 2025.

Previous wording

We are currently conducting the HELIOS trial, a U.S.-based, multicenter, double-masked, randomized, parallel group Phase 1 study evaluating the safety, tolerability and biological activity of a single injection of AXPAXLI in patients with moderately severe to severe NPDR without diabetic macular edema. We dosed our first subject in February 2023. We started conducting the Phase 1 clinical trial initially under an exploratory IND, which was subsequently converted to a traditional IND. We have enrolled 22 subjects with diabetic retinopathy secondary to type 1 or type 2 diabetes who had not had an anti-VEGF injection in the prior 12 months or diabetic macular edema in the prior six months, randomized 2:1 to either a single implant of AXPAXLI containing 600 µg of axitinib or sham control. In April 2024, we announced topline data from the HELIOS trial. AXPAXLI was generally well tolerated with no inflammation observed including no incidence of iritis, vitritis or vasculitis. No patients in either arm received rescue medication. Six of 13 (46.2%) patients in the AXPAXLI group experienced a 1 or 2-step improvement in the Diabetic Retinopathy Severity Scale, or DRSS, at 40 weeks, with two of the six experiencing a 2-step improvement. No patients in the control group showed a 1- or 2-step improvement at the same time point. No patients in the AXPAXLI group experienced any worsening in DRSS. One of eight (12.5%) patients in the control group experienced worsening in the DRSS at 40 weeks. A single injection of AXPAXLI provided durable DRSS improvement up to 40 weeks.

Current wording

We are currently conducting the HELIOS trial, a U.S.-based, multicenter, double-masked, randomized, parallel group Phase 1 study evaluating the safety, tolerability and efficacy of a single injection of AXPAXLI in subjects with moderately severe to severe NPDR without diabetic macular edema. We started conducting the Phase 1 clinical trial initially under an exploratory IND, which was subsequently converted to a traditional IND. We have enrolled 22 subjects with diabetic retinopathy secondary to type 1 or type 2 diabetes who had not had an anti-VEGF injection in the prior 12 months or diabetic macular edema in the prior six months, randomized 2:1 to either a single implant of AXPAXLI containing 600 µg of axitinib or sham control. One subject dropped out from the HELIOS trial for reasons unrelated to HELIOS trial.

Previous wording

PAXTRAVA 26 µg was generally well tolerated with no impact on corneal endothelium having been observed at six months following a single administration of the product candidate. The majority of adverse events, or AEs, observed were mild in severity and generally resolved with topical medical treatment. Most ocular AEs within three days were deemed related to the injection procedure by the investigators. AEs observed more than three days post-injection

Current wording

PAXTRAVA 26 µg was generally well tolerated with no impact on the corneal endothelium having been observed at six months following a single administration of the product candidate. The majority of adverse events, or AEs, observed were mild in severity and generally resolved with topical medical treatment. Most ocular AEs within three days were deemed related to the injection procedure by the investigators. AEs observed more than three days post-injection procedure were consistent with the travoprost label. There was one serious AE in the trial, where an implant required removal, which the investigator assessed to be likely due to a peri-implantation bacterial infection.

Previous wording

We plan to seek an end-of-Phase 2 meeting with the FDA and to determine our next steps for PAXTRAVA for the treatment of OAG or OHT following that meeting. We are also developing a potential next-generation injector that we believe could improve the administration of therapy.

Current wording

Once we have completed the pilot repeat-dose sub-study, we plan to seek an end-of-Phase 2 meeting with the FDA and to determine our next steps for PAXTRAVA for the treatment of OAG or OHT following that meeting. We are also developing a potential next-generation injector that we believe could improve the administration of therapy.

Previous wording

Our net product revenue generated from the sale of DEXTENZA was $14.7 million for the three months ended March 31, 2024, reflecting an increase of $1.6 million or 11.8% over the three months ended March 31, 2023, and an increase of $0.1 million or 0.1% over the three months ended December 31, 2023.

Current wording

Our net product revenue generated from the sale of DEXTENZA was $16.4 million for the three months ended June 30, 2024, reflecting an increase of $1.4 million or 9.0% over the three months ended June 30, 2023, and an increase of $1.7 million or 11.3% over the three months ended March 31, 2024. Our net product revenue generated from the sale of DEXTENZA was $31.1 million for the six months ended June 30, 2024, reflecting an increase of $2.9 million or 10.1% over the six months ended June 30, 2023.

Previous wording

Our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs, such as fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical trials and regulatory fees. We do not allocate employee and contractor-related costs, costs associated with our proprietary bioresorbable hydrogel-based formulation technology ELUTYX, costs related to manufacturing or purchasing clinical trial materials, and facility expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified. We use internal resources in combination with third-party CROs, including clinical monitors and clinical research associates, to manage our clinical trials, monitor subject enrollment and perform data analysis for many of our clinical trials. These employees work across multiple development programs and, therefore, we do not track their costs by program.

Current wording

Our direct research and development expenses are tracked on a program-by-program basis and consist primarily of external costs, such as fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical trials and regulatory fees. We do not allocate employee and contractor-related costs, costs associated with our proprietary bioresorbable hydrogel-based formulation technology ELUTYX, costs related to manufacturing or purchasing clinical trial materials, and facility expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified. We use internal resources in combination with third-party CROs, including clinical monitors and clinical research associates, to manage our clinical trials, monitor patient enrollment and perform data analysis for many of our clinical trials. These employees work across multiple development programs and, therefore, we do not track their costs by program.

Previous wording

Interest Expense. Interest expense is incurred on our debt. In August 2023, we entered into a credit and security agreement, or the Barings Credit Agreement, with Barings Finance LLC, or Barings, as administrative agent, and the lenders party thereto, providing for a secured term loan facility, or the Barings Credit Facility, in the aggregate principal amount of $82.5 million. For the three months ended March 31, 2024, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal) and the Convertible Notes ($37.5 million outstanding principal through March 28, 2024, no outstanding principal thereafter).

Current wording

Interest Expense. Interest expense is incurred on our debt. In August 2023, we entered into a credit and security agreement, or the Barings Credit Agreement, with Barings Finance LLC, or Barings, as administrative agent, and the lenders party thereto, providing for a secured term loan facility, or the Barings Credit Facility, in the aggregate principal amount of $82.5 million. For the three months ended June 30, 2024, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal). For the six months ended June 30, 2024, our interest-bearing debt included the Barings Credit Facility and the Convertible Notes ($37.5 million outstanding principal through March 28, 2024, no outstanding principal thereafter).

Previous wording

*Change in Fair Value of Derivative Liabilities.*In August 2023, in connection with entering into the Barings Credit Agreement, we identified an embedded derivative liability, which we were required to measure at fair value at inception and then are required to measure at the end of each reporting period until the embedded derivative is settled. In 2019, in connection with the issuance of our Convertible Notes, we identified an embedded derivative liability, which we were required to measure at fair value at inception and then at the end of each reporting period until the embedded derivative is settled. The settlement of the derivative liability related to the Convertible Notes occurred on March 28, 2024. The changes in fair value of these derivative liabilities are recorded through the condensed consolidated statement of operations and comprehensive loss and are presented under the caption “change in fair value of derivative liabilities”.

Current wording

*Change in Fair Value of Derivative Liabilities.*In August 2023, in connection with entering into the Barings Credit Agreement, we identified an embedded derivative liability, which we were required to measure at fair value at inception and then are required to measure at the end of each reporting period until the embedded derivative is settled. In 2019, in connection with the issuance of our Convertible Notes, we identified an embedded derivative liability, which we were required to measure at fair value at inception and then at the end of each reporting period until the embedded derivative was settled. The settlement of the derivative liability related to the Convertible Notes occurred on March 28, 2024. The changes in fair value of these derivative liabilities are recorded through the condensed consolidated statement of operations and comprehensive loss and are presented under the caption “change in fair value of derivative liabilities”.

Previous wording

Our product revenue, net was $14.7 million and $13.2 million for the three months ended March 31, 2024 and 2023, respectively, reflecting an increase of $1.5 million year-over-year. All of our product revenue, net, was attributable to sales of DEXTENZA.

Current wording

Our product revenue, net was $16.4 million and $15.0 million for the three months ended June 30, 2024 and 2023, respectively, reflecting an increase of $1.4 million year-over-year. All of our product revenue, net, was attributable to sales of DEXTENZA.

Previous wording

We recognized $0.1 million of collaboration revenue related to the performance obligation under our license agreement with AffaMed to conduct a Phase 2 clinical trial of PAXTRAVA during the three months ended March 31, 2024 compared to $0.2 million in the three months ended March 31, 2023. We recognize collaboration revenue based on a cost-to-cost method.

Current wording

During the three months ended June 30, 2024, we recognized $0.1 million of collaboration revenue related to the performance obligation under our license agreement with AffaMed to conduct a Phase 2 clinical trial of PAXTRAVA, compared to $0.2 million in the three months ended June 30, 2023. We recognize collaboration revenue based on a cost-to-cost method.

Previous wording

We expect that clinical trial expenses for our product candidates will increase for the remainder of 2024 and beyond, as we progress with the SOL-1 trial; complete the HELIOS trial; continue the substudy in the Phase 2 clinical trial of PAXTRAVA for the treatment of primary OAG or OHT; initiate our planned additional clinical trials of AXPAXLI for wet AMD; and initiate any other clinical trials of our product candidates that we might determine in the future to conduct. We expect that personnel costs will increase for the remainder of 2024 and beyond, as we have recently strengthened and continue to strengthen our leadership team and our clinical teams with the addition of several retinal disease experts and other key professionals.

Current wording

We expect that direct research and development expenses for our products and product candidates will increase significantly for the remainder of 2024 and beyond as we progress with the SOL-1 trial and the SOL-R trial; complete our other ongoing clinical trials; and initiate any other clinical trials of our product candidates that we might determine in the future to conduct, partially offset by reduced costs related to preclinical programs as a result of the Strategic Restructuring. We expect that personnel costs will increase for the remainder of 2024 and beyond, as we have recently strengthened and continue to strengthen our leadership team and our clinical teams dedicated to the SOL-1 and SOL-R trials with the addition of several retinal disease experts and other key professionals. The anticipated increase will be partially offset by reduced personnel costs as a result of the Strategic Restructuring.

Previous wording

Selling and marketing expenses were $10.2 million and $10.8 million for the three months ended March 31, 2024 and 2023, respectively, reflecting a decrease of $0.7 million year-over-year.

Current wording

Selling and marketing expenses were $10.0 million and $11.2 million for the three months ended June 30, 2024 and 2023, respectively, reflecting a decrease of $1.2 million year-over-year.

Previous wording

The decrease was primarily due to a decrease of $0.5 million in professional fees, including consulting, and a decrease in personnel-related costs, including stock-based compensation, of $0.2 million, partially offset by an increase in facility-related and other costs of $0.1 million.

Current wording

The decrease was primarily due to a decrease in personnel-related costs, including stock-based compensation, of $0.6 million; a decrease in professional fees, including consulting, of $0.4 million; and a decrease in facility-related and other costs of $0.2 million.

Previous wording

We expect our selling and marketing expenses to increase slightly for the remainder of 2024 and beyond as we continue to support the commercialization of DEXTENZA.

Current wording

We expect our selling and marketing expenses to remain stable or increase slightly for the remainder of 2024 and beyond as we continue to support the commercialization of DEXTENZA.

Previous wording

The increase was primarily due to an increase of $3.9 million in personnel-related costs, including stock-based compensation, an increase in professional fees of $0.9 million, and an increase of $0.2 million in facility-related and other costs. Personnel-related costs, including stock-based compensation, for the three months ended March 31, 2024 include $2.8 million related to accrued severance and acceleration of stock-based compensation for certain employees who departed during the three months ended March 31, 2024.

Current wording

The increase was primarily due to an increase of $9.4 million in personnel-related costs, including stock-based compensation, an increase in professional fees of $1.2 million, and an increase of $0.9 million in facility-related and other costs. Personnel-related costs, including stock-based compensation, for the three months ended June 30, 2024 include $1.6 million related to accrued wages, severance, and other benefits under the Strategic Restructuring, and $7.1 million related to accrued severance and acceleration of stock-based compensation for certain employees who departed during the three months ended June 30, 2024 separate from the Strategic Restructuring, including our former Chief Executive Officer and our former Chief Medical Officer.

Previous wording

Interest Income. Interest income was $3.9 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively, reflecting an increase of $3.3 million year-over-year. The increase is primarily due to a higher average balance of cash and cash equivalents held by us, and higher interest rates.

Current wording

Interest Income. Interest income was $6.0 million and $0.7 million for the three months ended June 30, 2024 and 2023, respectively, reflecting an increase of $5.3 million year-over-year. The increase is primarily due to a higher average balance of cash and cash equivalents held by us, and higher interest rates.

Previous wording

Interest Expense. Interest expense was $4.1 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively, reflecting an increase of $2.3 million year-over-year. The increase is primarily due to higher balances of debt outstanding as a result of us drawing $82.5 million of debt under the Barings Credit Facility in August 2023, partially offset by us paying off the MidCap Credit Facility, as defined below, of $25.0 million in August 2023.

Current wording

Interest Expense. Interest expense was $3.2 million and $2.0 million for the three months ended June 30, 2024 and 2023, respectively, reflecting an increase of $1.2 million year-over-year. The increase is primarily due to higher average balances of debt outstanding as a result of us drawing $82.5 million of debt under the Barings Credit Facility in August 2023, partially offset by us paying off the MidCap Credit Facility, as defined below, of $25.0 million in August 2023, and the conversion of the Convertible Notes of $37.5 million in March 2024.

Previous wording

Our total gross-to-net provisions for the three months ended March 31, 2024 and 2023 were 36.1% and 28.1%, respectively, of gross DEXTENZA product sales. Effective April 1, 2024, we increased the wholesale acquisition cost, or WAC, for DEXTENZA and the off-invoice discount, or OID, under our rebate program. The OID amounts are generally determined at the time of resale by specialty distributors or direct sales to ASCs by us. The total gross-to-net provision for the three months ended March 31, 2024 includes timing effects related to this increase, as units that we sold to specialty distributors under the pre-April 1, 2024 WAC through March 31, 2024 will be subject to the increased OID to the extent that such units are sold in-market by specialty distributors to ASCs, HOPDs, and physicians’ offices after March 31, 2024. We expect that the gross-to-net provision relative to gross DEXTENZA product sales will increase as a result of this change.

Current wording

Our total GTN Provisions for the six months ended June 30, 2024 and 2023 were 38.0% and 28.9%, respectively, of gross DEXTENZA product sales. Effective April 1, 2024, we increased the WAC for DEXTENZA and the OID. The OID amounts are generally determined at the time of resale by specialty distributors or direct sales to ASCs by us. The total GTN Provisions for the six months ended June 30, 2024 include timing effects related to this increase, as units that we sold to specialty distributors under the pre-April 1, 2024 WAC through March 31, 2024 will be subject to the increased OID to the extent that such units are sold in-market by specialty distributors to ASCs, HOPDs, and physicians’ offices after March 31, 2024. The increase in the WAC and the OID has resulted in an elevation of the level of the GTN Provisions relative to gross DEXTENZA product sales compared to periods prior to the increase in the WAC and the OID, and we expect that GTN Provisions relative to gross DEXTENZA product sales will further increase for 2024 and beyond.

Previous wording

Within research and development expenses, expenses for clinical programs increased $4.5 million, unallocated expenses increased $1.9 million, and expenses for preclinical programs decreased $0.4 million.

Current wording

Within research and development expenses, expenses for clinical programs increased $15.2 million, unallocated expenses increased $4.7 million, and expenses for preclinical programs decreased $0.1 million.

Previous wording

For the three months ended March 31, 2024, we incurred $8.7 million in direct research and development expenses for our products and product candidates compared to $4.6 million for the three months ended March 31, 2023. The increase of $4.1 million is related to timing and conduct of our various clinical trials for our product candidates, including the SOL-1 trial and the HELIOS trial, partially offset by reduced development activities related to our preclinical programs.

Current wording

For the six months ended June 30, 2024, we incurred $23.8 million in direct research and development expenses for our products and product candidates compared to $8.7 million for the six months ended June 30, 2023. The increase of $15.1 million is primarily related to timing and conduct of our clinical trials of AXPAXLI, including the SOL-1 trial and the initiation of the SOL-R trial, partially offset by reduced development activities related to our Phase 2 clinical trial of PAXTRAVA as we shifted to the smaller size repeat dose sub-study.

Previous wording

*Change in Fair Value of Derivative Liabilities.*We recognized a non-cash loss from the change in fair values of our derivative liabilities of $5.2 million for the three months ended March 31, 2024, compared to a loss of $6.6 million for the three months ended March 31, 2023. The net loss for the three months ended March 31, 2024 comprises of a loss of $7.2 million from the change in the fair value of the derivative liability related to the Barings Credit Agreement, and $0.5 million related to royalty fees under the Barings Credit Agreement that we paid or accrued, partially offset by a gain of $2.6 million from the change in the fair value of the derivative liability related to a conversion option embedded in the Convertible Notes. The loss for the three months ended March 31, 2023 results solely from the change in the fair value of the derivative liability related to the Conversion Option. We cannot predict how the fair value of the derivative liabilities will change in 2024 and beyond.

Current wording

*Change in Fair Value of Derivative Liabilities.*We recognized a non-cash loss from the change in fair values of our derivative liabilities of $8.2 million for the six months ended June 30, 2024, compared to a loss of $5.4 million for the six months ended June 30, 2023. The net loss for the six months ended June 30, 2024 is comprised of a loss of $9.7 million from the change in the fair value of the derivative liability related to the Barings Credit Agreement, and $1.1 million related to royalty fees under the Barings Credit Agreement that we paid or accrued, partially offset by a gain of $2.6 million from the change in the fair value of the derivative liability related to a conversion option embedded in the Convertible Notes. The loss for the six months ended June 30, 2023 results solely from the change in the fair value of the derivative liability related to the conversion option embedded in the Convertible Notes. We cannot predict how the fair value of the derivative liability related to the Barings Credit Agreement will change in 2024 and beyond.

Previous wording

Loss on extinguishment of debt. We recognized a non-cash loss on extinguishment from the conversion of the Convertible Notes in March 2024 of $28.0 million.

Current wording

Loss on extinguishment of debt. We recognized a non-cash loss on extinguishment of debt from the conversion of the Convertible Notes in March 2024 of $28.0 million.

Previous wording

We have financed our operations primarily through private placements of our preferred stock, public offerings and private placements of our common stock, borrowings under credit facilities, the private placements of our convertible notes, and sales of our products.

Current wording

We have financed our operations primarily through private placements of our preferred stock, public offerings and private placements of our common stock and pre-funded warrants to purchase our common stock, borrowings under credit facilities, the private placements of our convertible notes, and sales of our products.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $482.9 million, and outstanding notes payable with a principal amount of $82.5 million par value under the Barings Credit Facility.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $459.7 million, and outstanding notes payable with a principal amount of $82.5 million par value under the Barings Credit Facility.

Previous wording

We have a history of incurring significant operating losses. Our net losses were $64.8 million for the three months ended March 31, 2024, and $80.7 million and $71.0 million for the years ended December 31, 2023 and 2022, respectively. As of March 31, 2024, we had an accumulated deficit of $762.4 million.

Current wording

We have a history of incurring significant operating losses. Our net losses were $43.8 million for the three months ended June 30, 2024, $108.6 million for the six months ended June 30, 2024, and $80.7 million and $71.0 million for the years ended December 31, 2023 and 2022, respectively. As of June 30, 2024, we had an accumulated deficit of $806.2 million.

Previous wording

We expect to continue to incur losses in connection with our ongoing activities, particularly as we advance the clinical trials of our product candidates in development, specifically AXPAXLI for the treatment of wet AMD, and as we support the commercialization of DEXTENZA and the potential commercialization of our product candidates, subject to receiving FDA approval.

Current wording

We expect to continue to incur losses in connection with our ongoing activities, particularly as we advance the clinical trials of our product candidates in development, specifically the SOL-1 trial and the SOL-R trial, and as we support the commercialization of DEXTENZA and the potential commercialization of our product candidates, subject to receiving FDA approval.

Previous wording

Operating activities. Net cash used in operating activities was $33.9 million for the three months ended March 31, 2024, primarily resulting from our net loss of $64.8 million, adjusted for losses on extinguishment of debt of $28.0 million, changes in the fair value of our derivative liabilities of $5.2 million, and other non-cash items of $10.9 million, partially offset by net unfavorable changes in operating assets and liabilities of $13.2 million. Our net loss was primarily attributed to research and development activities, selling and marketing costs, our general and administrative expenses, and other non-operating expenses of $33.2 million, partially offset by $14.8 million of revenue. Our other non-cash items were $8.0 million of stock-based compensation expense, $2.0 million in non-cash interest expense, and $0.9 million in depreciation and amortization expense. Net cash used by net unfavorable changes in our operating assets and liabilities during the three months ended March 31, 2024 consisted primarily of net decreases of accrued expenses of $14.0 million, which include a $11.4 million payment of interest to the holder of the Convertible Notes and other items, net, of $0.7 million, partially offset by increases of accounts payable, excluding accounts payable related to additions to property and equipment, of $1.7 million.

Current wording

Operating activities. Net cash used in operating activities was $58.7 million for the six months ended June 30, 2024, primarily resulting from our net loss of $108.6 million and net unfavorable changes in operating assets and liabilities of $9.9 million, partially offset by non-cash adjustments of $59.8 million. Our net loss was primarily attributed to operating expenses of $106.4 million, which we incurred primarily for research and development activities, selling and marketing activities, and general and administrative activities, and non-operating expenses of $33.4 million, partially offset by $31.2 million of revenue. Non-cash adjustments primarily include losses on extinguishment of debt of $28.0 million, stock-based compensation expense of $19.3 million, changes in the fair value of our derivative liabilities of $8.2 million, non-cash interest expense of $2.5 million, and depreciation and amortization expense of $1.9 million. Net cash used by net unfavorable changes in our operating assets and liabilities during the six months ended June 30, 2024 consisted primarily of net decreases of accrued expenses of $6.2 million and net increases of accounts receivable of $4.1 million, partially offset by other items, net, of $0.4 million. Decreases of accrued expenses include a $11.4 million payment of interest to the holder of the Convertible Notes.

Previous wording

Net cash used in operating activities was $20.0 million for the three months ended March 31, 2023, primarily resulting from our net loss of $30.3 million, adjusted for changes in the fair value of a derivative liability of $6.6 million and $3.8 million of other non-cash items and changes in operating assets and liabilities. Our net loss was primarily attributed to research and development activities, selling and marketing costs, our general and administrative expenses, and our other income, partially offset by $13.4 million of revenue. Our other non-cash items during the three months ended March 31, 2023 consisted primarily of $4.6 million of stock-based compensation expense, $1.2 million in non-cash interest expense, and $0.5 million in depreciation and amortization expense, partially offset by $2.5 million unfavorable changes in our operating assets and liabilities. Net cash used by unfavorable changes in our operating assets and liabilities during the three months ended March 31, 2023 consisted primarily of decreases in accrued expenses, excluding accrued non-cash interest, of $2.6 million and increases of prepaid expenses and other current assets of $0.7 million, partially offset by increases in accounts payable of $1.0 million.

Current wording

Net cash used in operating activities was $40.0 million for the six months ended June 30, 2023, primarily resulting from our net loss of $51.0 million and net unfavorable changes in operating assets and liabilities of $7.1 million, partially offset by non-cash adjustments of $18.0 million. Our net loss was primarily attributed to operating expenses of $71.7 million, which we incurred primarily for research and development activities, selling and marketing activities, and general and administrative activities, and non-operating expenses of $7.9 million, partially offset by $28.6 million of revenue. Non-cash adjustments primarily include stock-based compensation expense of $9.0 million, changes in the fair value of our derivative liabilities of $5.4 million, non-cash interest expense of $2.5 million, and depreciation and amortization expense of $1.1 million. Net cash used by net unfavorable changes in our operating assets and liabilities during the six months ended June 30, 2023 consisted primarily of net increases of accounts receivables of $6.0 million and other items, net of $1.1 million.

Previous wording

Investing activities. Net cash used in investing activities was $0.3 million for the three months ended March 31, 2024, consisting of cash used to purchase property and equipment and leasehold improvements. Net cash used in investing activities was $3.4 million for the three months ended March 31, 2023, consisting of cash used to purchase property and equipment, primarily consisting of leasehold improvements.

Current wording

Investing activities. Net cash used in investing activities was $1.0 million for the six months ended June 30, 2024, consisting of cash used to purchase property and equipment and leasehold improvements. Net cash used in investing activities was $5.4 million for the six months ended June 30, 2023, consisting of cash used to purchase property and equipment, primarily consisting of leasehold improvements.

Previous wording

Financing activities. Net cash provided by financing activities for the three months ended March 31, 2024 was $321.2 million and consisted of total net proceeds from the issuance of common stock and pre-funded warrants in a private placement of approximately $316.4 million, and proceeds from the exercise of stock options of $4.9 million.

Current wording

Financing activities. Net cash provided by financing activities for the six months ended June 30, 2024 was $323.4 million and consisted of total net proceeds from the issuance of common stock and pre-funded warrants in a private placement of approximately $316.4 million, proceeds from the exercise of stock options of $6.6 million, and proceeds from issuing shares under our Employee Stock Purchase Plan, or ESPP, of $0.5 million.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2023 was $0.1 million and consisted of proceeds from the exercise of stock options of $0.1 million. In March 2023, we requested a protective advance of $2.0 million under our Fourth Amended and Restated Credit and Security Agreement with MidCap Financial Trust, as administrative agent, and the lenders party thereto, in response to the closure of Silicon Valley Bank, which was deemed a credit extension. We repaid the full principal amount of $2.0 million in March 2023.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2023 was $9.7 million and consisted of proceeds of $8.8 million from the sale of shares of our common stock under the 2021 Sales Agreement with Jefferies and $0.9 million from the exercises of stock options and purchases of shares of our common stock under the ESPP. In March 2023, we requested a protective advance of $2.0 million under our Fourth Amended and Restated Credit and Security Agreement with MidCap Financial Trust, as administrative agent, and the lenders party thereto, in response to the closure of Silicon Valley Bank, which was deemed a credit extension. We repaid the full principal amount of $2.0 million in March 2023.

Previous wording

The table above includes our enforceable and legally binding obligations and future commitments at March 31, 2024, as well as obligations related to contracts that we are likely to continue, regardless of the fact that they may be cancelable at March 31, 2024. Some of the figures that we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, and other factors. Because these estimates and assumptions are necessarily subjective, the amounts we will actually pay in future periods may vary from those reflected in the table.

Current wording

The table above includes our enforceable and legally binding obligations and future commitments at June 30, 2024, as well as obligations related to contracts that we are likely to continue, regardless of the fact that they may be cancelable at June 30, 2024. Some of the figures that we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, and other factors. Because these estimates and

Previous wording

We enter into contracts in the normal course of business to assist in the performance of our research and development activities and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts which are not included in contractual obligations and commitments.

Current wording

We enter into contracts in the normal course of business to assist in the performance of our research and development activities, including agreements with clinical research organizations regarding the SOL-1 trial and the SOL-R trial, and other services and products for operating purposes. These contracts generally provide for termination on notice and therefore are cancelable contracts which are not included in contractual obligations and commitments.

Previous wording

Operating lease commitments represent payments due under our leases of office, laboratory and manufacturing space in Bedford, Massachusetts and certain office equipment under operating leases that expire in July 2027 and July 2028.

Current wording

Operating lease commitments represent payments due under our leases of office, laboratory and manufacturing space in Bedford, Massachusetts that expire in July 2027 and July 2028, and leases of equipment that expire in 2028.

Previous wording

The commitments under the Barings Credit Agreement represent repayment of principal only. Future payments of interest under the Barings Credit Agreement depends on the level of the Secured Overnight Financing Rate, and future payments of royalty fees depend on our future revenue from DEXTENZA, both of which cannot be estimated at this time.

Current wording

The commitments under the Barings Credit Agreement represent repayment of principal only. Future payments of interest under the Barings Credit Agreement depend on the level of the Secured Overnight Financing Rate, and future payments of royalty fees depend on our future revenue from DEXTENZA, both of which cannot be estimated at this time.