KALA BIO Inc

Previous wording

The CHASE trial is comprised of two patient cohorts. On March 27, 2023, we announced positive safety data from the first cohort of the CHASE trial, which is an open-label study to evaluate the safety of the high dose of KPI-012 ophthalmic solution (3 U/mL) dosed topically four times per day, or QID, in two patients. Both patients in the first cohort successfully completed at least one week of dosing with no safety issues observed. We have initiated the second and final patient cohort of the CHASE trial in the United States, which is a multicenter, randomized, double-masked, vehicle-controlled, parallel-group trial to evaluate the safety and tolerability of two doses of KPI-012 ophthalmic solution (3 U/mL and 1 U/mL) versus vehicle dosed topically QID for 56 days in approximately 90 patients. We have opened approximately 35 to 40 trial sites for the CHASE trial in the United States and are in the process of initiating trial sites for the CHASE trial in Latin America, subject to regulatory approval.

Current wording

The CHASE trial is comprised of two patient cohorts. On March 27, 2023, we announced positive safety data from the first cohort of the CHASE trial, which is an open-label study to evaluate the safety of the high dose of KPI-012 ophthalmic solution (3 U/mL) dosed topically four times per day, or QID, in two patients. Both patients in the first cohort successfully completed at least one week of dosing with no safety issues observed. We have initiated the second and final patient cohort of the CHASE trial in the United States, which is a multicenter, randomized, double-masked, vehicle-controlled, parallel-group trial to evaluate the safety and tolerability of two doses of KPI-012 ophthalmic solution (3 U/mL and 1 U/mL) versus vehicle dosed topically QID for 56 days in approximately 90 patients. We have opened 44 trial sites for the CHASE trial in the United States. We have also initiated several clinical trial sites in Argentina for the CHASE trial and we are in the process of initiating additional clinical trial sites in Latin America, subject to regulatory clearance.

Previous wording

The primary endpoint of the CHASE trial is the complete healing of the PCED as measured by corneal fluorescein staining. We are targeting reporting topline safety and efficacy data from the CHASE trial in the first quarter of 2025. If the results are positive, and subject to discussion with regulatory authorities, we believe this trial could serve as the first of two pivotal trials required to support the submission of a Biologics License Application, or BLA, for KPI-012 to the FDA.

Current wording

The primary endpoint of the CHASE trial is the complete healing of the PCED as measured by corneal fluorescein staining. We are targeting reporting topline safety and efficacy data from the CHASE trial in the second quarter of 2025. If the results are positive, and subject to discussion with regulatory authorities, we believe this trial could serve as the first of two pivotal trials required to support the submission of a Biologics License Application, or BLA, for KPI-012 to the FDA.

Previous wording

Since inception, we have incurred significant losses from operations and negative cash flows from operations. Our net loss was $9.6 million and $21.4 million for the three and six months ended June 30, 2024, respectively, and $42.2 million for the year ended December 31, 2023. As of June 30, 2024, we had an accumulated deficit of $650.8 million. We generated only limited revenues from product sales of EYSUVIS and INVELTYS prior to the sale of the Commercial Business to Alcon in July 2022. We have financed our operations primarily through proceeds from the sale of our Commercial Business to Alcon, our initial public offering, or IPO, follow-on public common stock offerings and sales of our common stock under our sales agreement with Jefferies, LLC, or Jefferies, in at-the-market offerings, private placements of common stock and/or preferred stock (including our most recent private placements resulting in gross proceeds of approximately $8.6 million in March 2024 and $12.5 million in June 2024), borrowings under credit facilities and our Loan Agreement with Oxford Finance, or the Loan Agreement, disbursements under a grant from California Institute for Regenerative Medicine, or CIRM (including our most recent disbursement of $3.2 million from CIRM in August 2024 upon the achievement of a specified milestone), convertible promissory notes and warrants.

Current wording

Since inception, we have incurred significant losses from operations and negative cash flows from operations. Our net loss was $9.0 million and $30.3 million for the three and nine months ended September 30, 2024, respectively, and $42.2 million for the year ended December 31, 2023. As of September 30, 2024, we had an accumulated deficit of $659.7 million. We generated only limited revenues from product sales of EYSUVIS and INVELTYS prior to the sale of the Commercial Business to Alcon in July 2022. We have financed our operations primarily through proceeds from the sale of our Commercial Business to Alcon, our initial public offering, or IPO, follow-on public common stock offerings and sales of our common stock under our sales agreement with Jefferies, LLC, or Jefferies, in at-the-market offerings, private placements of common stock and/or preferred stock (including our most recent private placements resulting in net proceeds of approximately $8.5 million in March 2024 and $12.3 million in June 2024), borrowings under credit facilities and our Loan Agreement with Oxford Finance, or the Loan Agreement, disbursements under a grant from California Institute for Regenerative Medicine, or CIRM (including our most recent disbursement of $3.2 million from CIRM in August 2024 upon the achievement of a specified milestone), convertible promissory notes and warrants.

Previous wording

We expect that our general and administrative expenses for 2024 will be comparable to such expenses for the year ended December 31, 2023. We anticipate that our general and administrative expenses will stabilize at 2023 expense levels for the next several years. If we obtain marketing approval for KPI-012 or any product candidates we may develop, we expect that our general and administrative expenses will increase substantially if and as we incur commercialization expenses related to product marketing, sales and distribution.

Current wording

We expect that our general and administrative expenses for 2024 will be comparable to such expenses for the year ended December 31, 2023 and expect that our general and administrative expenses will continue at similar levels for the next several years. If we obtain marketing approval for KPI-012 or any product candidates we may develop, we expect that our general and administrative expenses will increase substantially if and as we incur commercialization expenses related to product marketing, sales and distribution.

Previous wording

On April 28, 2023, CIRM awarded Combangio a $15.0 million grant, or the CIRM Award, subject to entering into a final award agreement, to support Combangio’s ongoing KPI-012 program for the treatment of PCED as well as product and process characterization and analytical development for the program. On August 2, 2023, Combangio entered into the CIRM Award and received an initial $5.9 million disbursement from CIRM. On May 17, 2024, Combangio became entitled to receive a disbursement of $3.2 million from CIRM upon the achievement of a specified milestone, which disbursement was received in August 2024.

Current wording

On April 28, 2023, CIRM awarded Combangio a $15.0 million grant, or the CIRM Award, subject to entering into a final award agreement, to support Combangio’s ongoing KPI-012 program for the treatment of PCED as well as product and process characterization and analytical development for the program. On August 2, 2023, Combangio entered into the CIRM Award and received an initial $5.9 million disbursement from CIRM. On May 17, 2024, Combangio became entitled to receive a disbursement of $3.2 million from CIRM upon the achievement of a specified milestone, which was received in August 2024.

Previous wording

General and administrative expenses were $4.3 million for the three months ended June 30, 2024, compared to $5.0 million for the three months ended June 30, 2023, which was a decrease of $0.6 million. The decrease in general and administrative expenses for the three months ended June 30, 2024 was due to a decrease of $0.7 million in administrative and professional service fees and a decrease of $0.2 million in employee-related costs, partially offset by an increase of $0.3 million in stock-based compensation costs.

Current wording

General and administrative expenses were $4.4 million for the three months ended September 30, 2024, compared to $5.0 million for the three months ended September 30, 2023, which was a decrease of $0.6 million. The decrease in general and administrative expenses for the three months ended September 30, 2024 was due to a decrease of $0.4 million in stock-based compensation costs, $0.3 million in employee-related costs and $0.1 millionin facility related costs, partially offset by an increase of $0.2 million in administrative and professional service fees.

Previous wording

Gain on fair value remeasurement of contingent consideration for the three months ended June 30, 2024 was less than $0.1 million as compared to a loss of $0.4 million for the three months ended June 30, 2023, primarily due tochanges in discount rates, the passage of time and changes in the expected timing and probability of payment.

Current wording

Loss on fair value remeasurement of contingent consideration for the three months ended September 30, 2024 was $0.4 million as compared to a gain of $1.7 million for the three months ended September 30, 2023, primarily due tochanges in discount rates, the passage of time and changes in the expected timing.

Previous wording

Interest income was $0.5 million for the three months ended June 30, 2024 and was $0.7 million for the three months ended June 30, 2023. Interest income consists of interest earned on our cash, cash equivalents and short-term investments, if any. The decrease was attributable to a lower cash balance and the quantity and mix of investments, partially offset by higher interest rates during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Current wording

Interest income was $0.6 million for the three months ended September 30, 2024 and was $0.7 million for the three months ended September 30, 2023. Interest income consists of interest earned on our cash, cash equivalents and short-term investments, if any. The decrease was attributable to a lower cash balance and the quantity and mix of investments, partially offset by higher interest rates during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Previous wording

We incurred interest expense of $1.5 million for the three months ended June 30, 2024 and $1.4 million for the three months ended June 30, 2023. Interest expense for the three months ended June 30, 2024 and 2023 was comprised of the contractual coupon interest expense, the amortization of the debt discount and the accretion of the final payment fee associated with our Loan Agreement with Oxford Finance. During both the three months ended June 30, 2024 and 2023, $34.0 million of indebtedness was outstanding under our Loan Agreement.

Current wording

We incurred interest expense of $1.5 million for the three months ended September 30, 2024 and $1.5 million for the three months ended September 30, 2023. Interest expense for the three months ended September 30, 2024 and 2023 was comprised of the contractual coupon interest expense, the amortization of the debt discount and the accretion of the final payment fee associated with our Loan Agreement with Oxford Finance. During both the three months ended September 30, 2024 and 2023, $34.0 million of indebtedness was outstanding under our Loan Agreement.

Previous wording

Grant income for the three months ended June 30, 2024 was $1.0 million related to the CIRM Award. There was no grant income recognized during the three months ended June 30, 2023.

Current wording

Grant income for the three months ended September 30, 2024 and 2023 was $1.9 million and $3.0 million, respectively, related to the CIRM Award.

Previous wording

There was no other (expense) income, net for the three months ended June 30, 2024. Other expense, net was $0.1 million for the three months ended June 30, 2023, which representedan expense recorded to assets held for sale.

Current wording

There was no other expense, net for the three months ended September 30, 2024. Other expense, net was $2.2 million for the three months ended September 30, 2023, which representedan expense recorded to assets held for sale.

Previous wording

The following table summarizes the results of our operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes the results of our operations for the nine months ended September 30, 2024 and 2023:

Previous wording

General and administrative expenses were $9.7 million for the six months ended June 30, 2024, compared to $11.0 million for the six months ended June 30, 2023, which was a decrease of $1.3 million. The decrease in general and administrative expenses for the six months ended June 30, 2024 was primarily due to a $2.0 million decrease in administrative and professional service fees, a $0.2 million decrease in employee-related costs and a $0.1 million decrease in facility related costs, partially offset by a $1.0 million increase in stock-based compensation costs.

Current wording

General and administrative expenses were $14.1 million for the nine months ended September 30, 2024, compared to $15.9 million for the nine months ended September 30, 2023, which was a decrease of $1.8 million. The decrease in general and administrative expenses for the nine months ended September 30, 2024 was primarily due to a $1.8 million decrease in administrative and professional service fees, a $0.5 million decrease in employee-related costs and a $0.2 million decrease in facility related costs, partially offset by a $0.7 million increase in stock-based compensation costs.

Previous wording

The following table summarizes the research and development expenses incurred during the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes the research and development expenses incurred during the nine months ended September 30, 2024 and 2023:

Previous wording

Research and development expenses were $5.3 million for the three months ended June 30, 2024, compared to $4.3 million for the three months ended June 30, 2023, an increase of $1.0 million. The increase was primarily related to a$0.6 million increase in KPI-012 development costs, as we advance the clinical development of KPI-012, a$0.3 million increasein employee-related costs and a $0.1 million increase in other research and development costs, which primarily included facility costs.

Current wording

Research and development expenses were $16.8 million for the nine months ended September 30, 2024, compared to $13.9 million for the nine months ended September 30, 2023, which was an increase of $3.0 million. The increase was primarily related to a$1.5 million increase in KPI-012 development costs, as we advance the clinical development of KPI-012, a$1.1 million increasein employee-related costs and a $0.4 million increase in other research and development costs, which primarily included facility costs.

Previous wording

There was no gain or loss on fair value remeasurement of Deferred Purchase Consideration for the six months ended June 30, 2024 due to the final settlement of the liability in March 2023. The gain on fair value remeasurement of Deferred Purchase Consideration for the six months ended June 30, 2023 was $0.2 million, which was primarily due to a change in the fair value of our underlying stock price.

Current wording

There was no gain or loss on fair value remeasurement of Deferred Purchase Consideration for the nine months ended September 30, 2024 due to the final settlement of the liability in March 2023. The gain on fair value

Previous wording

Loss on fair value remeasurement of contingent consideration for the six months ended June 30, 2024 and 2023 was $0.1 million and $2.2 million, respectively, primarily due tochanges in discount rates, the passage of time and changes in the expected timing and probability of payment.

Current wording

Loss on fair value remeasurement of contingent consideration for the nine months ended September 30, 2024 and 2023 was $0.5 million and $0.5 million, respectively, primarily due tochanges in discount rates, the passage of time and changes in the expected timing and probability of payment.

Previous wording

Interest income was $1.0 million for the six months ended June 30, 2024 and was $1.4 million for the six months ended June 30, 2023. Interest income consists of interest earned on our cash, cash equivalents and short-term investments, if any. The decrease was attributable to a lower cash balance and the quantity and mix of investments, partially offset by higher interest rates during thesix months ended June 30, 2024, as compared to thesix months ended June 30, 2023.

Current wording

Interest income was $1.6 million for the nine months ended September 30, 2024 and was $2.1 million for the nine months ended September 30, 2023. Interest income consists of interest earned on our cash, cash equivalents and short-term investments, if any. The decrease was attributable to a lower cash balance and the quantity and mix of investments, partially offset by higher interest rates during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Previous wording

We incurred interest expense of $2.9 million for both the six months ended June 30, 2024 and 2023. Interest expense for the six months ended June 30, 2024 and 2023 was comprised of the contractual coupon interest expense, the amortization of the debt discount and the accretion of the final payment fee associated with our Loan Agreement with Oxford Finance. During the six months ended June 30, 2024, $34.0 million of indebtedness was outstanding under our Loan Agreement. During the six months ended June 30, 2023, $43.3 million of indebtedness was outstanding under our Loan Agreement until $9.3 million was repaid on January 25, 2023 resulting in an outstanding indebtedness of $34.0 million.

Current wording

We incurred interest expense of $4.4 million for the nine months ended September 30, 2024 and $4.3 million for the nine months ended September 30, 2023. Interest expense for the nine months ended September 30, 2024 and 2023 was comprised of the contractual coupon interest expense, the amortization of the debt discount and the accretion of the final payment fee associated with our Loan Agreement with Oxford Finance. During the nine months ended September 30, 2024, $34.0 million of indebtedness was outstanding under our Loan Agreement. During the nine months ended September 30, 2023, $43.3 million of indebtedness was outstanding under our Loan Agreement until $9.3 million was repaid on January 25, 2023 resulting in an outstanding indebtedness of $34.0 million.

Previous wording

Grant income for the six months ended June 30, 2024 was $2.1 million related to the CIRM Award. There was no grant income recognized during the six months ended June 30, 2023.

Current wording

Grant income for the nine months ended September 30, 2024 and 2023 was $4.0 million and $3.0 million, respectively, related to the CIRM Award.

Previous wording

There was no other (expense) income, net for thesix months ended June 30, 2024. Other expense, net was $2.1 million for the six months ended June 30, 2023 andrepresenteda $2.3 million expense recorded to assets held for sale for expiring inventory, partially offset by $0.2 million of reimbursable transition related services we provided to Alcon following the sale of the Commercial Business.

Current wording

There was no other expense, net for the nine months ended September 30, 2024. Other expense, net was $4.3 million for the nine months ended September 30, 2023 and represented a $7.6 million expense recorded to assets held for sale for expiring inventory and $1.1 million related to an adjustment for the returns’ reserve associated with our former commercial products, partially offset by the $4.2 million write-off related to the deferred gain recorded on the sale of the Commercial Business and $0.2 million of reimbursable transition related services we provided to Alcon following the sale of the Commercial Business.

Previous wording

(3) $75.0 million upon the achievement of $175.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029 and (4) $160.0 million upon the achievement of $250.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029. Each milestone payment will only become payable once, if at all, upon the first time such milestone is achieved, and only one milestone payment will be paid with respect to a calendar year. In the event that more than one milestone is achieved in a calendar year, the higher milestone payment will become payable and the lower milestone payment will become payable only if the corresponding milestone is achieved again in a subsequent calendar year. To date, we have not received any such milestone payments. We now have no revenue-generating commercial products, and although we are eligible to receive up to $325.0 million in milestone-based payments from Alcon, there can be no assurance as to when we may receive such milestone payments or the amount of milestone payments we may receive, if any.

Current wording

In July 2022, we sold our Commercial Business to Alcon. In addition to the upfront cash payment of $60.0 million we received from Alcon, we are also eligible to receive from Alcon up to four commercial-based sales milestone payments as follows: (1) $25.0 million upon the achievement of $50.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (2) $65.0 million upon the achievement of $100.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (3) $75.0 million upon the achievement of $175.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029 and (4) $160.0 million upon the achievement of $250.0 million or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029. Each milestone payment will only become payable once, if at all, upon the first time such milestone is achieved, and only one milestone payment will be paid with respect to a calendar year. In the event that more than one milestone is achieved in a calendar year, the higher milestone payment will become payable and the lower milestone payment will become payable only if the corresponding milestone is achieved again in a subsequent calendar year. To date, we have not received any such milestone payments. We now have no revenue-generating commercial products, and although we are eligible to receive up to $325.0 million in milestone-based payments from Alcon, there can be no assurance as to when we may receive such milestone payments or the amount of milestone payments we may receive, if any.

Previous wording

During the six months ended June 30, 2023, we sold an aggregate of 190,000 shares of our common stock under the Open Market Sale Agreement under the 2023 Shelf Registration for total net proceeds of $3.1 million, all of which were sold during the three months ended June 30, 2023. During the six months ended June 30, 2023, we sold an aggregate of 665,265 shares of our common stock pursuant to (1) the Amended and Restated Sales Agreement and the Open Market Sale Agreement under the 2020 Shelf Registration and (2) the Open Market Sale Agreement under the 2023 Shelf Registration, for total net proceeds of $18.0 million.

Current wording

During the nine months ended September 30, 2023, we sold an aggregate of 190,000 shares of our common stock under the Open Market Sale Agreement under the 2023 Shelf Registration for total net proceeds of $3.1 million, none of which were sold during the three months ended September 30, 2023. During the nine months ended September 30, 2023, we sold an aggregate of 665,265 shares of our common stock pursuant to (1) the Amended and Restated Sales Agreement and the Open Market Sale Agreement under the 2020 Shelf Registration and (2) the Open Market Sale Agreement under the 2023 Shelf Registration, for total net proceeds of $18.0 million.

Previous wording

During the six months ended June 30, 2024, we sold an aggregate of 387,500 shares of our common stock under the Open Market Sale Agreement under the 2023 Shelf Registration for total net proceeds of $2.5 million, all of which were sold during the three months ended June 30, 2024.

Current wording

During the nine months ended September 30, 2024, we sold an aggregate of 387,500 shares of our common stock under the Open Market Sale Agreement under the 2023 Shelf Registration for total net proceeds of $2.5 million, none of which were sold during the three months ended September 30, 2024.

Previous wording

We will be required to make a final payment fee of 7.00% of the original principal amount of any funded term loan payable on the earlier of (i) the prepayment of the term loan in full or (ii) the maturity date. At our option, we may elect to make partial repayments of the term loan to the Lender, subject to specified conditions, including the payment of applicable fees and accrued and unpaid interest on the principal amount of the term loan being repaid. For further information about the Loan Agreement, see Note 8, “Debt”, of our condensed consolidated financial statements.

Current wording

elect to make partial repayments of the term loan to the Lender, subject to specified conditions, including the payment of applicable fees and accrued and unpaid interest on the principal amount of the term loan being repaid. For further information about the Loan Agreement, see Note 7, “Debt”, of our condensed consolidated financial statements.

Previous wording

On April 28, 2023, CIRM awarded Combangio a $15 million grant, subject to entering into a final award agreement, to support its ongoing KPI-012 program for the treatment of PCED as well as product and process characterization and analytical development for the program. On August 2, 2023, Combangio entered into the CIRM Award and received a $5.9 million disbursement from CIRM, and in August 2024, Combangio received an additional $3.2 million disbursement from CIRM upon achievement of a specified milestone under the CIRM Award in May 2024. For a further description of the CIRM Award and the potential milestone payments we may receive, see “Financial Operations Overview – Grant Income” above.

Current wording

On April 28, 2023, CIRM awarded Combangio a $15 million grant, subject to entering into a final award agreement, to support its ongoing KPI-012 program for the treatment of PCED as well as product and process characterization and analytical development for the program. On August 2, 2023, Combangio entered into the CIRM Award and received a $5.9 million disbursement from CIRM, and in August 2024, Combangio received an additional $3.2 million disbursement from CIRM upon achievement of a specified milestone under the CIRM Award. For a further description of the CIRM Award and the potential milestone payments we may receive, see “Financial Operations Overview – Grant Income” above.

Previous wording

which are contingent upon the achievement of specified development, regulatory and commercialization milestones is $40.0 million and the total potential maximum payout for future sales-based milestone payments is an additional $65.0 million. To date, of the $40.0 million of contingent consideration payable upon achievement of specified development, regulatory and commercialization milestones, in March 2023 we paid to the former Combangio Equityholders an aggregate of $2.5 million in cash and $2.4 million in shares of our common stock (representing an aggregate of 105,038 shares of our common stock) following dosing of the first patient in our CHASE trial in February 2023. The remaining amount of $0.1 million for this milestone was paid in cash in January 2024. For a full description of the consideration payable as a result of the Combangio Acquisition, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Note 3, “Fair Value of Financial Instruments”, of our condensed consolidated financial statements.

Current wording

As a result of the acquisition of Combangio, we may be required to pay additional contingent consideration to the former Combangio Equityholders. Former Combangio Equityholders are entitled to receive from us, subject to the terms and conditions of the merger agreement, contingent consideration, which would become payable upon our achievement of various development, regulatory and sales milestones and as a result of certain cash royalty payment obligations which are in the mid-to-high single digits. The total potential maximum payout for the milestone payments which are contingent upon the achievement of specified development, regulatory and commercialization milestones is $40.0 million and the total potential maximum payout for future sales-based milestone payments is an additional $65.0 million. To date, of the $40.0 million of contingent consideration payable upon achievement of specified development, regulatory and commercialization milestones, in March 2023 we paid to the former Combangio Equityholders an aggregate of $2.5 million in cash and $2.4 million in shares of our common stock (representing an aggregate of 105,038 shares of our common stock) following dosing of the first patient in our CHASE trial in February 2023. The remaining amount of $0.1 million for this milestone was paid in cash in January 2024. For a full description of the consideration payable as a result of the Combangio Acquisition, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and Note 3, “Fair Value of Financial Instruments”, of our condensed consolidated financial statements.

Previous wording

As of June 30, 2024 and December 31, 2023, we had $54.2 million and $50.9 million in cash and cash equivalents, respectively. As of June 30, 2024 and December 31, 2023, we had $34.0 million in indebtedness, which represented the aggregate principal amount that was outstanding under the Loan Agreement with Oxford Finance.

Current wording

As of September 30, 2024 and December 31, 2023, we had $49.2 million and $50.9 million in cash and cash equivalents, respectively. As of September 30, 2024 and December 31, 2023, we had $34.0 million in indebtedness, which represented the aggregate principal amount that was outstanding under the Loan Agreement with Oxford Finance.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 was $20.1 million, compared to $17.3 million for the six months ended June 30, 2023, an increase of $2.8 million, primarily due to a $6.3 million increase due to the timing of working capital fluctuations, partially offset by the decrease in the net loss adjusted for non-cash charges of $3.5 million. Notable working capital fluctuations included a $2.7 million increase in prepaid expenses and other current assets during the six months ended June 30, 2024, primarily as a result of a second disbursement of $3.2 million from CIRM in August 2024, which was included in prepaid expenses and other current assets as of June 30, 2024, as compared to a $6.7 million decrease during the six months ended June 30, 2023, as a result of the collection of receivables due from Alcon and third parties in connection with transition-related services. Inventory and assets held for sale decreased by $2.3 million during the six months ended June 30, 2023, as a result of the expense recorded to assets held for sale to write-off the remaining inventory balance, whereas there was no fluctuation related to inventory for the six months ended June 30, 2024. These changes in working capital from the six months ended June 30, 2023 as compared to the six months ended June 30, 2024 were partially offset by a decrease of $5.4 million in accounts payable and accrued expenses and other current liabilities fluctuations primarily due to the timing of payables.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 was $24.8 million, compared to $20.2 million for the nine months ended September 30, 2023, an increase of $4.6 million, primarily due to a $13.9 million increase due to the timing of working capital fluctuations, partially offset by the decrease in the net loss adjusted for non-cash charges of $9.3 million. Notable working capital fluctuations included a $6.0 million decrease in prepaid expenses and other current assets during the nine months ended September 30, 2023, as compared to a $0.1 million increase during the nine months ended September 30, 2024, as a result of the collection of receivables due from Alcon and third parties in connection with transition-related services. Inventory and assets held for sale decreased by $7.5 million during the nine months ended September 30, 2023, as a result of the expense recorded to assets held for sale to write-off the remaining inventory balance, whereas there was no fluctuation related to inventory for the nine months ended September 30, 2024.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2024 was less than $0.1 million compared to $10.1 million for the six months ended June 30, 2023, a decrease of $10.1 million. Net cash used in investing activities for the six months ended June 30, 2024 related to purchases of property and equipment and other assets. Net cash used in investing activities for the six months ended June 30, 2023 related to purchases of short-term investments of $9.9 million and purchases of property and equipment and other assets of $0.3 million, partially offset by proceeds from the sale of property and equipment of less than $0.1 million.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $0.1 million compared to $0.4 million for the nine months ended September 30, 2023, a decrease of $0.3 million. Net cash used in investing activities for the nine months ended September 30, 2024 related to purchases of property and equipment and other assets. Net cash used in investing activities for the nine months ended September 30, 2023 related to purchases of short-term investments of $9.9 million and purchases of property and equipment and other assets of $0.6 million, partially offset by proceeds from the sale or maturities of short-term investments of $10.0 million.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2024 was $23.4 million, compared to $5.9 million for the six months ended June 30, 2023, an increase of $17.5 million. Net cash provided by financing activities for the six months ended June 30, 2024 largely consisted of $12.5 million of gross proceeds fromthe sale of common stock and shares of our Series H Preferred Stock in our June 2024 private placement,$8.5 million of netproceeds from the sale of shares of our Series G Preferred Stock in our March 2024 private placement and$2.5 million ofnet proceeds from the sale of shares of our common stock through Jefferies under our at-the-market equity offering, partially offset by a $0.1 million payment for the First Dosing Milestone reflected in financing activities. Net cash provided by financing activities for the six months ended June 30, 2023 largely consisted of $18.0 million of net proceeds from the sale of shares of our common stock through Jefferies under our at-the-market equity offering, partially offset by $10.0 million of repayment of principal and final payment fee on our Loan Agreement and a $2.0 million payment for the First Dosing Milestone reflected in financing activities.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2024 was $23.2 million, compared to $6.0 million for the nine months ended September 30, 2023, an increase of $17.3 million. Net cash provided by financing activities for the nine months ended September 30, 2024 largely consisted of $12.3 million of net proceeds fromthe sale of common stock and shares of our Series H Preferred Stock in our June 2024 private placement,$8.5 million of netproceeds from the sale of shares of our Series G Preferred Stock in our March 2024 private placement and$2.5 million ofnet proceeds from the sale of shares of our common stock through Jefferies under our at-the-market equity offering, partially offset by a $0.1 million payment for the First Dosing Milestone reflected in financing activities. Net cash provided by financing activities for the nine months ended September 30, 2023 largely consisted of $18.0 million of net proceeds from the sale of shares of our common stock through Jefferies under our at-the-market equity offering, partially offset by $10.0 million of repayment of principal and final payment fee on our Loan Agreement and a $2.0 million payment for the First Dosing Milestone reflected in financing activities.

Previous wording

We expect to continue to incur significant expenses and operating losses. Net losses may fluctuate significantly from quarter-to-quarter and year-to-year. We anticipate that our cash and cash equivalents as of June 30, 2024, together with the $3.2 million of funds received under the CIRM Award in August 2024 and the $5.9 million of remaining funding anticipated under the CIRM Award, will enable us to fund our operations, lease and debt service obligations, and capital expenditure requirements into the fourth quarter of 2025. We expect that our existing cash resources will be sufficient to enable us to obtain safety and efficacy data from our ongoing CHASE trial of KPI-012 in PCED. However, we do not expect that our existing cash resources will be sufficient to enable us to complete the clinical development of KPI-012 for PCED or for any other indication. We have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. For example, we may not receive all of the remaining funds under the CIRM Award. As a result, we could deplete our available capital resources sooner or later than we currently expect.

Current wording

We expect to continue to incur significant expenses and operating losses. Net losses may fluctuate significantly from quarter-to-quarter and year-to-year. We anticipate that our cash and cash equivalents as of September 30, 2024, together with the $5.9 million of remaining funding anticipated under the CIRM Award, will enable us to fund our operations, lease and debt service obligations, and capital expenditure requirements into the fourth quarter of 2025. We expect that our existing cash resources will be sufficient to enable us to obtain safety and efficacy data from our ongoing CHASE trial of KPI-012 in PCED. However, we do not expect that our existing cash resources will be sufficient to enable us to complete the clinical development of KPI-012 for PCED or for any other indication. We have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. For example, we may not receive all of the remaining funds under the CIRM Award. In addition, our estimates also assume that we remain in compliance with the covenants and no event of default occurs under our Loan Agreement with Oxford Finance. If we do not receive all of the funding from CIRM we currently expect or if an event of default occurs under our Loan Agreement and Oxford Finance exercises its rights under the Loan Agreement to foreclose on our cash, our ability to fund our operations, lease and debt service obligations will be shorter than we currently expect. As a result, we could deplete our available capital resources sooner than we currently expect.

Previous wording

We will need to raise additional capital in the future to advance our business. Additional private or public financings may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a material adverse effect on our financial condition and our ability to pursue our business strategy. If we raise additional funds through collaborations, strategic alliances, licensing arrangements, royalty agreements, or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or current or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Current wording

We will need to raise additional capital in the future to advance our business. Additional private or public financings may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a material adverse effect on our financial condition and our ability to pursue our business strategy. If we raise additional funds through collaborations, strategic alliances, licensing arrangements, royalty agreements, or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or current or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves or cease operations and, potentially, wind down the company under the bankruptcy laws or otherwise. If we were to cease operations and wind down the company under the bankruptcy laws or otherwise, we cannot assure our stockholders or other stakeholders of any specific level of recovery, or any recovery at all on their specific claims or interest.