GLAUKOS Corp

Previous 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.

Current wording

We incurred net losses for the three and nine months ended September 30, 2024 of $21.4 million and $112.8 million, respectively, and incurred net losses of $30.4 million and $97.9 million for the three and nine months ended September 30, 2023 respectively. As of September 30, 2024, we had an accumulated deficit of $711.9 million.

Previous wording

On June 14, 2024, we announced that we had entered into separate, privately negotiated exchange agreements (Exchange Agreements) with certain holders of our 2.75% Convertible Senior Notes due 2027 (Convertible Notes), pursuant to which we agreed, subject to customary closing conditions, to repurchase an aggregate of $230.0 million principal amount of Convertible Notes for aggregate consideration consisting of a number of shares of our common

Current wording

On June 28, 2024, we closed the transactions contemplated by separate, privately negotiated exchange agreements (Exchange Agreements) into which we had entered with certain holders of our 2.75% Convertible Senior Notes due 2027 (Convertible Notes), pursuant to which we exchanged $230.0 million in aggregate principal amount of the Convertible Notes for consideration consisting of an aggregate of 4,253,423 shares of our common stock (Shares),

Previous wording

stock, par value $0.001 per share, to be determined over an averaging period commencing on June 14, 2024, and cash in lieu of fractional shares and in respect of accrued interest on the Convertible Notes. On June 28, 2024, we closed the transactions contemplated by the Exchange Agreements, and the holders exchanged $230.0 million in aggregate principal amount of the Convertible Notes for consideration consisting of an aggregate of 4,253,423 shares of our common stock (Shares), and cash in lieu of fractional shares and in respect of accrued interest on the Convertible Notes. As of June 30, 2024, we reduced the balance of the Convertible Notes on the condensed consolidated balance sheets by $226.7 million, which is comprised of the reduction in Convertible Notes of $230.0 million principal, less $3.3 million in amortized debt issuance costs. We also recognized a non-cash inducement charge of $17.4 million and direct transaction costs of $0.6 million recorded within charges associated with convertible senior notes on the condensed consolidated statements of operations and increased additional paid-in capital on the condensed consolidated balance sheets of $244.1 million. The direct transaction costs of $0.6 million are included in accrued liabilities on the condensed consolidated balance sheets as of June 30, 2024.

Current wording

and cash in lieu of fractional shares and in respect of accrued interest on the Convertible Notes. We reduced the balance of the Convertible Notes on the condensed consolidated balance sheets by $226.7 million, which is comprised of the reduction in Convertible Notes of $230.0 million principal, less $3.3 million in amortized debt issuance costs. We also recognized a non-cash inducement charge of $17.4 million and direct transaction costs of $0.6 million recorded within charges associated with convertible senior notes on the condensed consolidated statements of operations and increased additional paid-in capital on the condensed consolidated balance sheets of $244.1 million.

Previous wording

During the three months ended June 30, 2024, we renegotiated our agreement with France’s Committee for Health Products (CEPS) that provides for a new government tiered rebate structure that increased the target population for ouriStent family of products. This new structure is retroactive to January 1, 2024 and is expected to reduce the rebate accrual rate in 2024 versus historical levels. The rebates payable under the CEPS agreement currently constitute the majority of the volume-based rebates accrued by us with respect to our international glaucoma franchise.

Current wording

During the quarter ended June 30, 2024, we renegotiated our agreement with France’s Committee for Health Products (CEPS) that provides for a new government tiered rebate structure that increased the target population for ouriStent family of products. This new structure is retroactive to January 1, 2024 and is expected to reduce the rebate accrual rate in 2024 versus historical levels. The rebates payable under the CEPS agreement currently constitute the majority of the volume-based rebates accrued by us with respect to our international glaucoma franchise.

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 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.

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 September 30, 2024, we have accrued $1.5 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, 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.

Current wording

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. 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.

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 would confirm reimbursement coverage of the standalone procedure utilizing theiStent infinite, which received FDA clearance in August 2022, and that would confirm non-coverage for surgical MIGS procedures in combination with other MIGS or surgical glaucoma procedures. These draft LCDs were finalized in October 2024 and will take effect on November 17, 2024. The other two MACs have taken preliminary steps to assess coverage ofiStent infinite through temporary local coverage article (LCA) updates. In the case of these two MACs, coverage of theiStent infinite is currently determined on a case-by-case basis.

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. 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

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 third 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. We expect some supply challenges and higher costs to continue throughout 2024.

Previous wording

Unfavorable foreign exchange rates in certain geographies in which we operate negatively impacted our sales during the three and six months ended June 30, 2024, as well as in the three and six months ended June 30, 2023.

Current wording

While not significant for any period, foreign exchange rates in certain geographies in which we operate positively impacted our sales during the three months ended September 30, 2024 and September 30, 2023, respectively, and negatively impacted our sales for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Previous 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.

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 nine months ended September 30, 2024 and September 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 nine months ended September 30, 2024 and September 30, 2023, although we cannot predict whether such success will continue.

Previous wording

We manufacture ouriStent family of products andiDose TR at our facilities in San Clemente, California and our KXL systems at our manufacturing facility in Burlington, Massachusetts. We contract with third-party manufacturers in the U.S. and Germany to produce ourPhotrexa and other associated drug formulations. We currently intend to maintain our manufacturing facilities at our San Clemente and Burlington locations for the foreseeable future.

Current wording

We manufacture ouriStent family of products andiDose TR at our facilities in San Clemente, California and our KXL systems at our manufacturing facility in Burlington, Massachusetts. We contract with third-party manufacturers in the U.S. and Germany to produce ourPhotrexa and other associated corneal health drug formulations. We currently intend to maintain our manufacturing facilities at our San Clemente and Burlington locations for the foreseeable future.

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 $11.0 million and $5.5 million for each of the three and six months ended June 30, 2024 and June 30, 2023, respectively.

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) and our Celanese Agreement. Amortization expense was $5.5 million and $16.6 million for each of the three and nine months ended September 30, 2024 and September 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 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.

Current wording

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

Our research and development (R&D) activities primarily consist of new product development projects, pre-clinical studies, Investigational New Drug studies, and clinical trials. Our R&D expenses primarily consist of personnel-related expenses, including salaries, fringe benefits and stock-based compensation for our R&D employees; research materials; supplies and services; in-licenses, including event-based milestones; and the costs of conducting clinical studies, which include payments to investigational sites and investigators, clinical research organizations, consultants, and other outside technical services; and the costs of materials, supplies and travel. We expense R&D costs as they are incurred. We expect our R&D expenses to continue to increase as we initiate and advance our development programs, including our expanding pharmaceutical development efforts and clinical trials across the glaucoma, corneal health and retinal disease spectrums.

Current wording

Our research and development (R&D) activities primarily consist of new product development projects, pre-clinical studies, Investigational New Drug studies, and clinical trials. Our R&D expenses primarily consist of personnel-related expenses, including salaries, fringe benefits and stock-based compensation for our R&D employees; research materials; supplies and services; in-licenses, including event-based milestones; the costs of conducting clinical studies, which include payments to investigational sites and investigators, clinical research organizations, consultants, and other outside technical services; and the costs of materials, supplies and travel. We expense R&D costs as they are incurred. We expect our R&D expenses to continue to increase as we initiate and advance our development programs, including our expanding pharmaceutical development efforts and clinical trials across the glaucoma, corneal health and retinal disease spectrums.

Previous wording

Our acquired in-process research and development (IPR&D) expenses generally relate to acquisitions of technologies that management determines are not a business combination and do not have any alternative future uses. Future costs to develop these assets are expensed as R&D when incurred. We may have ongoing milestone and royalty payment obligations depending on the success, development, regulatory approval and commercialization of the proprietary technologies we have acquired.

Current wording

Future costs to develop these assets are expensed as R&D when incurred. We may have ongoing milestone and royalty payment obligations depending on the success, development, regulatory approval and commercialization of the proprietary technologies we have acquired.

Previous 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.

Current wording

Net sales for the three months ended September 30, 2024 and September 30, 2023 were $96.7 million and $78.0 million, respectively, increasing by approximately 24% primarily related to the factors listed below.

Previous wording

Net sales of glaucoma products in the United States were $91.7 million and $74.7 million for the six months ended June 30, 2024 and June 30, 2023, respectively, increasing by 23%. 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 $51.6 million and $38.1 million for the three months ended September 30, 2024 and September 30, 2023, respectively, increasing by 35%. This increase is primarily due to the introduction of* iDose TRas well as higher volumes sold of ouriStent* family of products due to higher demand, primarilyiStent infinite.

Previous wording

International sales of glaucoma products for the three months ended June 30, 2024 and June 30, 2023 were $26.1 million and $22.3 million, respectively, increasing by 17%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, the dollar-based results of

Current wording

International sales of glaucoma products for the three months ended September 30, 2024 and September 30, 2023 were $24.5 million and $20.3 million, respectively, increasing by 21%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, primarily France and Japan, during the quarter ended September 30, 2024, as compared to the quarter ended September 30, 2023.

Previous 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.

Current wording

which was positively impacted by higher realized average sales prices of Photrexa along with increases in sales to existing customers and new account starts, mostly offset by accrued rebates related to the impact of our participation in the Medicaid Drug Rebate Program (MDRP). Our international corneal health sales decreased $0.2 million from net sales in countries outside the U.S. during the quarter ended September 30, 2024 as compared to the three months ended September 30, 2023.

Previous 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.

Current wording

Cost of sales for the three months ended September 30, 2024 and September 30, 2023 were $22.6 million and $18.5 million, respectively, reflecting an increase of approximately $3.9 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 77% for three months ended September 30, 2024 and 76% for the three months ended September 30, 2023.

Previous wording

Of the total $21.4 million increase in SG&A expenses for the six months ended June 30, 2024 as compared to the three months ended June 30, 2023, $11.9 million related to increased compensation and related employee costs, with $1.2 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.

Current wording

Of the total $9.8 million increase in SG&A expenses for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, $4.7 million related to increased compensation and related employee costs, with $2.9 million of the incremental amount related to an increase in stock-based compensation expense, the majority of which was associated with certain performance equity awards that were achieved during the quarter. The residual 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

The remaining increase of $5.8 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities and allocated expenses.

Current wording

The remaining increase of $5.1 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities and allocated expenses.

Previous 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.

Current wording

During the three months ended September 30, 2024, we incurred $22.3 million in core R&D expenses and $12.4 million in clinical expenses, comprised of $20.4 million in compensation and related employee expenses with the remaining $14.3 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 September 30, 2023, we incurred $21.3 million in core R&D expenses and $12.0 million in clinical expenses, comprised of $19.3 million in compensation and related employee expenses with the remaining $14.0 million spent on the above-mentioned programs.

Previous 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.

Current wording

We had non-operating income, net of $3.4 million and non-operating expense, net of $2.4 million for the three months ended September 30, 2024 and September 30, 2023, respectively. The change primarily relates to a decrease of $1.7 million in interest expense on our Convertible Notes, and a change in unrealized foreign currency amounts recognized of approximately $4.7 million due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the three months ended September 30, 2023.

Previous 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.

Current wording

million and $0.1 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

Net sales for the six months ended June 30, 2024 and June 30, 2023 were $181.3 million and $154.3 million, respectively, increasing by approximately 18% primarily related to the factors listed below.

Current wording

Net sales for the nine months ended September 30, 2024 and September 30, 2023 were $278.0 million and $232.3 million, respectively, increasing by approximately 20% primarily related to the factors listed below.

Previous 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*.* *

Current wording

Net sales of glaucoma products in the United States were $143.3 million and $112.8 million for the nine months ended September 30, 2024 and September 30, 2023, respectively, increasing by 30%. This increase is primarily due to the introduction of* iDose TR* and higher volumes sold of ouriStent family of products due to higher demand, primarilyiStent infinite.* *

Previous 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.

Current wording

International sales of glaucoma products for the nine months ended September 30, 2024 and September 30, 2023 were $75.8 million and $63.7 million, respectively, increasing by 19%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, primarily France, Japan, the United Kingdom and Australia, the dollar-based results of which were modestly affected by unfavorable foreign exchange rates, primarily related to the Japanese Yen, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Previous wording

Net sales of corneal health products were $38.2 million and $36.2 million for the quarter ended June 30, 2024 and June 30, 2023, respectively, increasing by 6%. Of the $2.0 million increase in net sales generated by our corneal health products, $1.8 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 $0.2 million from net sales in countries outside the U.S. during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Current wording

Net sales of corneal health products were $58.8 million and $55.9 million for the nine months ended September 30, 2024 and September 30, 2023, respectively, increasing by 5%. Of the $3.0 million increase in net sales generated by our corneal health products, $2.8 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 decreased $0.4 million from net sales in countries outside the U.S. during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Previous wording

Cost of sales for the six months ended June 30, 2024 and June 30, 2023 were $42.8 million and $38.2 million, respectively, reflecting an increase of approximately $4.6 million that is proportionate to the increase in net sales for the corresponding period. Our gross margin was 76% and 75% for the six months ended June 30, 2024 and June 30, 2023, respectively.

Current wording

Cost of sales for the nine months ended September 30, 2024 and September 30, 2023 were $65.4 million and $56.7 million, respectively, reflecting an increase of approximately $8.7 million that is proportionate to the increase in net sales for the corresponding period. Our gross margin was 76% and 76% for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Previous 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.

Current wording

Of the total $31.2 million increase in SG&A expenses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, $16.6 million related to increased compensation and related employee costs, with $4.1 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

The remaining increase of $9.5 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities and allocated expenses.

Current wording

The remaining increase of $14.6 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities and allocated expenses.

Previous 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.

Current wording

R&D expenses for the nine months ended September 30, 2024 and September 30, 2023 were $99.9 million and $101.7 million, respectively. R&D expenses decreased during the nine months ended September 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 nine months ended September 30, 2023, partially offset by the spend described below.

Previous wording

During the six months ended June 30, 2024, we incurred $38.2 million in core R&D expenses and $26.9 million in clinical expenses, comprised of $38.8 million in compensation and related employee expenses with the remaining $28.9 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 six months ended June 30, 2023, we incurred $40.8 million in core R&D expenses and $27.6 million in clinical expenses, comprised of $37.4 million in compensation and related employee expenses with the remaining $31.0 million spent on the above-mentioned programs.

Current wording

During the nine months ended September 30, 2024, we incurred $60.6 million in core R&D expenses and $39.3 million in clinical expenses, comprised of $59.1 million in compensation and related employee expenses with the remaining $40.8 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 nine months ended September 30, 2023, we incurred $62.1 million in core R&D expenses and $39.6 million in clinical expenses, comprised of $57.1 million in compensation and related employee expenses with the remaining $44.6 million spent on the above-mentioned programs.

Previous 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.

Current wording

During the nine months ended September 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 nine months ended September 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

In the six months ended June 30, 2023, we issued $3.0 million of our common stock in connection with the acquisition of intellectual property rights regarding certain formulations and methods for treating an ophthalmic disorder, including all related patents and patent applications, technology and know-how.

Current wording

In the nine months ended September 30, 2023, we issued $3.0 million of our common stock in connection with the acquisition of intellectual property rights regarding certain formulations and methods for treating an ophthalmic disorder, including all related patents and patent applications, technology and know-how.

Previous wording

We had non-operating expense, net of $21.6 million and $4.5 million for the six 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 $2.4 million, as compared to the six months ended June 30, 2023.

Current wording

We had non-operating expense, net of $18.2 million and $6.9 million for the nine months ended September 30, 2024 and September 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 $2.4 million, and a decrease in interest expense related to our Convertible Notes of approximately $1.7 million, as compared to the nine months ended September 30, 2023.

Previous wording

Our effective tax rate for the six months ended June 30, 2024 and June 30, 2023 was (0.78)% and (1.25)%, respectively. For the six months ended June 30, 2024 and June 30, 2023, we recorded a provision for income taxes of $0.7 million and $0.8 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.

Current wording

Our effective tax rate for the nine months ended September 30, 2024 and September 30, 2023 was (0.79)% and (0.90)%, respectively. For each of the nine months ended September 30, 2024 and September 30, 2023, we recorded a provision for income taxes of $0.9 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

We plan to fund our operations, commitments for capital expenditures and other short and long-term known contractual and other obligations* *using existing cash and investments and, to the extent available, cash generated from commercial operations as well as cash generated from employee stock option exercises. Included within our existing cash and investments balances are the remaining net proceeds from the Convertible Notes issued in June 2020 (after payment for the related capped call transactions).

Current wording

We plan to fund our operations, commitments for capital expenditures and other short and long-term known contractual and other obligations* *using existing cash and investments and, to the extent available, cash generated from commercial operations as well as cash generated from employee stock option exercises and purchases under our Employee Stock Purchase Program. Included within our existing cash and investments balances are the remaining net proceeds from the Convertible Notes issued in June 2020 (after payment for the related capped call transactions).

Previous 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.

Current wording

Our cash, cash equivalents and short-term investments totaled approximately $262.5 million and our restricted cash totaled approximately $4.7 million as of September 30, 2024.