OCULAR THERAPEUTIX INC

Previous 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.

Current wording

We are a biopharmaceutical company committed to improving vision in the real world through the development and commercialization of innovative therapies for retinal diseases and other eye conditions. 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 two Phase 3 clinical trials for wet age-related macular degeneration, or wet AMD, which we refer to as the SOL-1 trial and the SOL-R trial, respectively. We have also completed a Phase 1 clinical trial of AXPAXLI 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 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.

Current wording

Our pipeline also leverages the ELUTYX technology in our commercial 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, and in our product candidate PAXTRAVA (travoprost intracameral implant also known as OTX-TIC), which is currently in a Phase 2 clinical trial for the treatment of open-angle glaucoma, or OAG, or ocular hypertension, or OHT.

Previous 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.

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 that involves over 100 trial sites located in the U.S. and Argentina. 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 2 mg 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 Agreement, or SPA, letter we received in October 2023 from the FDA regarding the proposed clinical trial protocol and the statistical analysis plan and a subsequent SPA 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

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.

Current wording

The SOL-1 trial is intended to randomize approximately 300 evaluable treatment-naïve subjects with a diagnosis of wet AMD in the study eye with good visual acuity and a diagnosis of macular choroidal neovascularization at screening. Under the study protocol, after initial screening, enrolled subjects in the trial will receive two aflibercept 2 mg 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 implant of AXPAXLI in the investigational arm or one injection of aflibercept 2 mg 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

Previous 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.

Current wording

The first subjects in the SOL-1 trial were screened and received their first loading aflibercept 2 mg 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 trial sites and 151 subjects enrolled in various stages of loading and randomization. As of November 14, 2024, we have activated over 100 trial sites. We expect the SOL-1 trial to be fully enrolled with all subjects randomized by the end of 2024 and to present topline data from the SOL-1 trial during the fourth quarter of 2025.

Previous wording

In June 2024, we initiated the SOL-R trial, a repeat-dosing registrational Phase 3 clinical trial for the treatment of wet AMD. The SOL-R trial is designed as a multi-center, double-masked, randomized (2:2:1), three-arm study that will involve sites located in the U.S. and the rest of the world. The trial is intended to randomize approximately 825 subjects that are either treatment naïve or have been diagnosed with wet AMD within three months prior to enrollment in the study eye. This non-inferiority trial reflects a patient enrichment strategy that includes multiple loading doses of aflibercept and monitoring to exclude those with significant retinal fluid fluctuations. In the first arm, subjects will be randomized to receive a single dose of AXPAXLI at Day 1 and re-dosed at Week 24. In the second arm, subjects will receive aflibercept (2mg) on-label every 8 weeks. In a third arm, subjects will receive a single dose of the comparator, Eylea HD, at Day 1 and will be re-dosed at Week 24, aligned with the AXPAXLI dosing regimen in the first arm and serving as adequate masking to the FDA. The clinical trial protocol requires that, during the study, subjects in any arm meeting pre-specified rescue criteria will receive a supplemental dose of aflibercept. The primary endpoint is non-inferiority in mean BCVA change from baseline between the AXPAXLI and on-label aflibercept (2mg) arms at one year. Subjects enrolled in SOL-R are initially expected to include subjects that constitute loading or randomization failures from the SOL-1 trial until such time as SOL-1 is fully enrolled. The first subjects were enrolled in the SOL-R trial in July 2024.

Current wording

In June 2024, we initiated the SOL-R trial, a repeat-dosing registrational Phase 3 clinical trial for the treatment of wet AMD. The SOL-R trial is designed as a multi-center, double-masked, randomized (2:2:1), three-arm trial that will involve sites located in the U.S. and the rest of the world. The trial is intended to randomize approximately 825 subjects that are either treatment naïve or have been diagnosed with wet AMD within three months prior to enrollment in the study eye. This non-inferiority trial reflects a patient enrichment strategy that includes five loading doses of aflibercept 2 mg and monitoring to exclude those subjects with significant retinal fluid fluctuations. In the first arm, subjects will receive a single dose of AXPAXLI at Day 1 and be re-dosed at Week 24. In the second arm, subjects will receive aflibercept 2 mg on-label every 8 weeks. In the third arm, subjects will receive a single dose of aflibercept 8 mg (Eylea HD), at Day 1 and will be re-dosed at Week 24, aligned with the AXPAXLI dosing regimen in the first arm and serving as adequate masking pursuant to FDA guidance. The clinical trial protocol requires that, during the trial, subjects in any arm meeting pre-specified rescue criteria will receive a supplemental dose of aflibercept 2 mg. The primary endpoint is non-inferiority in mean BCVA change from baseline between the AXPAXLI and on-label aflibercept 2 mg arms at one year. The first subjects were enrolled in the SOL-R trial in July 2024. Initially, subjects enrolled in the SOL-R trial included only subjects that constituted loading or randomization failures from the SOL-1 trial. On November 14, 2024, we announced that, as the SOL-1 trial nears the completion of randomization, trial sites can now directly enroll eligible subjects into the SOL-R trial.

Previous wording

In August 2024, we received a Type C written response in which the FDA agreed that the SOL-R clinical trial is appropriate as an adequate and well-controlled study in support of a potential NDA and product label. The FDA also noted that the use of one superiority study and one non-inferiority study is generally acceptable as the basis of an eventual NDA in wet AMD.

Current wording

In August 2024, we received a Type C written response in which the FDA agreed that the SOL-R clinical trial is appropriate as an adequate and well-controlled trial in support of a potential NDA and product label. The FDA also noted that the use of one superiority trial and one non-inferiority trial is generally acceptable as the basis of an eventual NDA in wet AMD.

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 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.

Current wording

We have completed the HELIOS trial, a U.S.-based, multicenter, double-masked, randomized, parallel group Phase 1 clinical trial evaluating the safety, tolerability and efficacy of a single injection of AXPAXLI in subjects with moderately severe to severe NPDR without diabetic macular edema, subject to finalization of the clinical study report, or CSR. We started conducting the HELIOS trial initially under an exploratory IND, which was subsequently converted to a traditional IND. We 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 the trial.

Previous wording

In June 2024, we announced topline data from the HELIOS trial at 48 weeks. AXPAXLI was generally well-tolerated and did not result in any reported incidence of intraocular inflammation, iritis, vitritis, or vasculitis. No subjects in either arm received rescue medication. At week 48, six of 13 (46.2%) subjects in the AXPAXLI group experienced a 1 or 2-step improvement in the Diabetic Retinopathy Severity Scale, or DRSS, with three of the 13 (23.1%) experiencing a 2-step improvement. No subjects in the control group showed a 1- or 2-step improvement at the same timepoint. No subjects in the AXPAXLI group experienced any worsening in DRSS. Two of eight (25.0%) subjects in the control group experienced worsening in the DRSS at 48 weeks. No subjects in the AXPAXLI group developed proliferative diabetic retinopathy, or PDR, or center-involved diabetic macular edema, or CI-DME at week 48. Three of eight (37.5%)

Current wording

In June 2024, we announced topline data from the HELIOS trial at 48 weeks. AXPAXLI was generally well-tolerated and did not result in any reported incidence of intraocular inflammation, iritis, vitritis, or vasculitis. No subjects in either arm received rescue medication. At week 48, six of 13 (46.2%) subjects in the AXPAXLI group experienced either a 1- or 2-step improvement in the Diabetic Retinopathy Severity Scale, or DRSS, with three of the 13 (23.1%) experiencing a 2-step improvement. No subjects in the control group showed a 1-step or greater improvement at the same timepoint. No subjects in the AXPAXLI group experienced any worsening in DRSS. Two of eight (25.0%) subjects in the control group experienced worsening in the DRSS at 48 weeks. No subjects in the AXPAXLI group developed proliferative diabetic retinopathy, or PDR, or center-involved diabetic macular edema, or CI-DME at week 48. Three of eight (37.5%) subjects in the control group developed PDR or CI-DME at the same timepoint. On average, subjects in the AXPAXLI arm showed improvement in mean central subfield thickness versus baseline compared to the control group, which showed worsening at the 48-week timepoint.

Previous wording

We are conducting a U.S.-based Phase 2 prospective, multi-center, randomized, controlled clinical trial evaluating the safety, tolerability and efficacy of PAXTRAVA for the treatment of subjects with primary OAG or OHT under an IND. The Phase 2 clinical trial was initially designed to include approximately 105 subjects at 15 to 20 sites between three arms of approximately 35 subjects each to evaluate two formulations of PAXTRAVA for the treatment of OAG or OHT in subjects compared to DURYSTA. The non-study eye of each subject receives a topical prostaglandin analog daily, if not contraindicated. The primary efficacy endpoint is measured by diurnal IOP mean change from baseline (8 a.m., 10 a.m. and 4 p.m.) at two, six and 12 weeks. The active comparator control arm receives one injection of DURYSTA in one eye and a topical prostaglandin analog daily in the non-study eye, if not contraindicated. In April 2024, we presented 6-month topline data from this Phase 2 clinical trial at the 2024 American Society of Cataract and Refractive Surgery Annual Meeting. In the trial, the PAXTRAVA 26 µg single implant demonstrated consistent control of intraocular pressure, or IOP, through six months, as statistically significant IOP changes from baseline were observed for every individual and mean diurnal measurement at primary endpoints Week 2 (M0.5), Week 6 (M1.5), and Week 12 (M3), as well as secondary endpoints Months 4.5 and 6 (p<0.0001), although no formal statistical testing was prespecified by the clinical trial protocol. Clinically meaningful mean IOP reduction of approximately 24-30% from baseline over six months was observed. A majority (81.3%) of treated eyes did not require additional IOP-lowering therapy through six months, indicating sustained and consistent treatment effects.

Current wording

We are conducting a U.S.-based Phase 2 prospective, multi-center, randomized, controlled clinical trial evaluating the safety, tolerability and efficacy of PAXTRAVA for the treatment of subjects with primary OAG or OHT under an IND. The Phase 2 clinical trial was initially designed to include approximately 105 subjects at 15 to 20 sites between three arms of approximately 35 subjects each to evaluate two formulations of PAXTRAVA for the treatment of OAG or OHT in subjects compared to DURYSTA. The non-study eye of each subject receives a topical prostaglandin analog daily, if not contraindicated. The primary efficacy endpoint is measured by diurnal intraocular pressure, or IOP, mean change from baseline (8 a.m., 10 a.m. and 4 p.m.) at 2, 6 and 12 weeks. The active comparator control arm receives one injection of DURYSTA in one eye and a topical prostaglandin analog daily in the non-study eye, if not contraindicated. In April 2024, we presented 6-month topline data from this Phase 2 clinical trial at the 2024 American Society of Cataract and Refractive Surgery Annual Meeting. In the trial, the PAXTRAVA 26 µg single implant demonstrated consistent control of IOP, through six months, as statistically significant IOP changes from baseline were observed for every individual and mean diurnal measurement at primary endpoints Week 2 (M0.5), Week 6 (M1.5), and Week 12 (M3), as well as secondary endpoints Months 4.5 and 6 (p<0.0001), although no formal statistical testing was prespecified by the clinical trial protocol. Clinically meaningful mean IOP reduction of approximately 24-30% from baseline over six months was observed. A majority (81.3%) of treated eyes did not require additional IOP-lowering therapy through six months, indicating sustained and consistent treatment effects.

Previous wording

In May 2024, our board of directors approved a strategic reduction in force to eliminate 37 full-time employees, primarily in research and development and technical operations and representing approximately 13% of our workforce, as part of an initiative to prioritize our resources on the clinical development of AXPAXLI for the treatment of wet

Current wording

In May 2024, our board of directors approved a strategic reduction in force to eliminate 37 full-time employees, primarily in research and development and technical operations and representing approximately 13% of our workforce, as part of an initiative to prioritize our resources on the clinical development of AXPAXLI for the treatment of wet AMD, or the Strategic Restructuring. We substantially completed the Strategic Restructuring and recorded the related restructuring charges of $1.6 million, resulting primarily from garden leaves and severance benefits, in the three months ended June 30, 2024. We paid all previously accrued restructuring charges in the three months ended September 30, 2024.

Previous wording

We recognize product revenue when we sell DEXTENZA in the United States to a network of specialty distributors on a direct basis, who then resell the product to ASCs, hospital out-patient departments, or HOPDs, and physicians’ offices, and when we sell DEXTENZA on a direct basis to a small number of ASCs. We refer to these resales from the specialty distributors to the ASCs and HOPDs as in-market unit sales. We record DEXTENZA product sales net of estimated chargebacks, rebates, distribution fees and product returns. These deductions are generally referred to as gross-to-net deductions.

Current wording

We recognize product revenue when we sell DEXTENZA in the United States to a network of SDs who then resell the product to ASCs, HOPDs, and physicians’ offices, and when we sell DEXTENZA on a direct basis to a small number of ASCs and physicians’ offices. We record DEXTENZA product sales net of estimated chargebacks, rebates, distribution fees and product returns. These deductions are generally referred to as gross-to-net deductions.

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 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).

Current wording

For the three months ended September 30, 2024, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal). For the three months ended September 30, 2023, our interest-bearing debt included the Barings Credit Facility (from August 2, 2023), the Convertible Notes, and our obligations under a credit and security agreement with MidCap Financial Trust, as administrative agent, and other lenders that we entered into in 2014, or, as amended, the MidCap Credit Agreement, establishing a credit facility, or the MidCap Credit Facility ($25.0 million outstanding principal through August 2, 2023, 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 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”.

Current wording

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

Losses from Debt Extinguishment. In March 2024, the holder of the Convertible Notes converted the Convertible Notes. In connection with the conversion, our obligations under the Convertible Notes extinguished, resulting in a loss on extinguishment.

Current wording

Gains and Losses on Extinguishment of Debt. In March 2024, the holder of the Convertible Notes converted the Convertible Notes. In connection with the conversion, our obligations under the Convertible Notes extinguished, resulting in a loss on extinguishment.

Previous 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.

Current wording

Our product revenue, net was $15.3 million and $15.0 million for the three months ended September 30, 2024 and 2023, respectively, reflecting an increase of $0.3 million year-over-year. All of our product revenue, net, was attributable to sales of DEXTENZA.

Previous wording

Our total gross-to-net provisions, or GTN Provisions, for the three months ended June 30, 2024 and 2023 were 39.6% and 29.7%, 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. The OID amounts are generally determined at the time of resale by specialty distributors or direct sales to ASCs by us. 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 remain at an elevated level for 2024 and beyond.

Current wording

Our total gross-to-net provisions, or GTN Provisions, for the three months ended September 30, 2024 and 2023 were 39.0% and 29.8%, respectively, of gross DEXTENZA product sales. Effective October 2024, we increased the wholesale acquisition cost, or WAC, and we concurrently increased the off-invoice discount, or OID, for DEXTENZA as part of our overall pricing strategy. The OID amounts are generally determined at the time of resale by SD or direct sales to ASCs or physicians’ offices by us. The total GTN Provisions for the three months ended September 30, 2024 includes timing effects related to this increase, as units that we sold to SDs under the pre-October 2024 OID will be subject to the increased OID to the extent that such units are subsequently sold as In-Market Sales. We expect that the GTN Provisions relative to gross DEXTENZA product sales will increase as a result of this change and any additional anticipated OID increases, and we expect that GTN Provisions relative to gross DEXTENZA product sales will remain at an elevated level for 2024 and beyond.

Previous 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.

Current wording

During the three months ended September 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 $0.1 million in the three months ended September 30, 2023. We recognize collaboration revenue based on a cost-to-cost method.

Previous 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.

Current wording

Within research and development expenses, expenses for clinical programs increased $13.8 million, unallocated expenses increased $8.3 million, and expenses for preclinical programs decreased $0.1 million.

Previous wording

For the three months ended June 30, 2024, we incurred $15.1 million in direct research and development expenses for our products and product candidates compared to $4.1 million for the three months ended June 30, 2023. The increase of $11.0 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 a decrease in costs associated with our Phase 2 clinical trial of PAXTRAVA as we shifted to the smaller size repeat dose sub-study.

Current wording

For the three months ended September 30, 2024, we incurred $18.2 million in direct research and development expenses for our products and product candidates compared to $4.5 million for the three months ended September 30, 2023. The increase of $13.7 million is primarily related to timing and conduct of our clinical trials of AXPAXLI for wet AMD, including the SOL-1 trial and the SOL-R trial, partially offset by a decrease in costs associated with the HELIOS clinical trial which we have completed, subject to finalization of the CSR, and our Phase 2 clinical trial of PAXTRAVA as we shifted to the smaller repeat dose sub-study.

Previous 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.

Current wording

The increase was primarily due to an increase in professional fees of $0.7 million; an increase in personnel-related costs, including stock-based compensation, of $0.3 million; and an increase in facility-related and other costs of $0.2 million.

Previous wording

We anticipate that the level of our general and administrative expenses will be lower for the remainder of 2024, due to $11.5 million of one-time expenses incurred in the six months ended June 30, 2024 related to the departure of certain employees and the Strategic Restructuring. We anticipate, however, that the level of our general and administrative expenses, exclusive of these one-time charges, will increase for the remainder of 2024 and beyond, as we have recently strengthened, and as we continue to further strengthen, our leadership team and other certain functions that support our clinical trials of AXPAXLI, including the SOL-1 trial and the SOL-R trial, and our business in general.

Current wording

We anticipate that the level of our general and administrative expenses may continue to increase for the remainder of 2024 and beyond, as we have recently strengthened, and as we continue to further strengthen, our leadership team and other certain functions that support our clinical trials of AXPAXLI, including the SOL-1 trial and the SOL-R trial, and our business in general.

Previous 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.

Current wording

Interest Income. Interest income was $5.7 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively, reflecting an increase of $4.5 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

Selling and marketing expenses were $20.2 million and $22.0 million for the six months ended June 30, 2024 and 2023, respectively, reflecting a decrease of $1.8 million year-over-year.

Current wording

Interest Expense. Interest expense was $3.2 million and $3.4 million for the three months ended September 30, 2024 and 2023, respectively, reflecting a decrease of $0.2 million year-over-year.

Previous wording

million from the change in the fair value of the derivative liability related to the Barings Credit Agreement, and $0.6 million related to royalty fees under the Barings Credit Agreement that we paid or accrued. The loss for the three months ended June 30, 2023 resulted solely from the change in the fair value of the derivative liability related to a 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.

Current wording

*Change in Fair Value of Derivative Liabilities.*We recognized a non-cash gain from the change in fair values of our derivative liabilities of $7.1 million and $6.7 million for the three months ended September 30, 2024 and 2023, respectively. The net gain for the three months ended September 30, 2024 is comprised of a gain of $7.6 million from the change in the fair value of the derivative liability related to the Barings Credit Agreement, partially offset by a $0.5 million expense related to royalty fees under the Barings Credit Agreement that we paid or accrued. The gain for the three months ended September 30, 2023 is comprised of a gain of $7.1 million, net, from the changes in the fair value of the derivative liabilities related to the Barings Credit Agreement and the Convertible Notes, partially offset by a $0.4 million expense related to royalty fees under the Barings Credit Agreement that we paid or accrued. 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

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

Current wording

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

Previous wording

Our product revenue, net was $31.1 million and $28.2 million for the six months ended June 30, 2024 and 2023, respectively, reflecting an increase of $2.9 million year-over-year. All of our product revenue, net, was attributable to sales of DEXTENZA.

Current wording

Our product revenue, net was $46.4 million and $43.2 million for the nine months ended September 30, 2024 and 2023, respectively, reflecting an increase of $3.2 million year-over-year. All of our product revenue, net, was attributable to sales of DEXTENZA.

Previous 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.

Current wording

Our total GTN Provisions for the nine months ended September 30, 2024 and 2023 were 38.3% and 29.2%, respectively, of gross DEXTENZA product sales. Effective April 2024, we increased the WAC for DEXTENZA and the OID. Effective October 2024, we increased the WAC and the OID for DEXTENZA as part of our overall pricing strategy further. The OID amounts are generally determined at the time of resale by SDs or direct sales to ASCs and physicians’ offices by us. The total GTN Provisions for the nine months ended September 30, 2024 include timing effects related to these increases, as units that we sold to SDs under the previously effective WACs and OIDs will be subject to the increased OID to the extent that such units are sold as In-Market Sales after the respective increases came into effect. The increase in the WAC and the increases in the OID have 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. We expect that GTN Provisions relative to gross DEXTENZA product sales will further increase for 2024 and beyond based on these changes and any additional anticipated OID increases.

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 six months ended June 30, 2024 compared to $0.3 million in the six months ended June 30, 2023. We recognize collaboration revenue based on a cost-to-cost method.

Current wording

We recognized $0.2 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 nine months ended September 30, 2024 compared to $0.4 million in the nine months ended September 30, 2023. We recognize collaboration revenue based on a cost-to-cost method.

Previous wording

Within research and development expenses, expenses for clinical programs increased $10.7 million, unallocated expenses increased $2.8 million, and expenses for preclinical programs increased $0.3 million.

Current wording

Within research and development expenses, expenses for clinical programs increased $29.0 million, unallocated expenses increased $13.0 million, and expenses for preclinical programs decreased $0.2 million.

Previous 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.

Current wording

For the nine months ended September 30, 2024, we incurred $42.0 million in direct research and development expenses for our products and product candidates compared to $13.2 million for the nine months ended September 30, 2023. The increase of $28.8 million is primarily related to timing and conduct of our clinical trials of AXPAXLI, including the SOL-1 trial and 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 repeat dose sub-study.

Previous 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.

Current wording

Selling and marketing expenses were $30.8 million and $31.3 million for the nine months ended September 30, 2024 and 2023, respectively, reflecting a decrease of $0.5 million year-over-year.

Previous wording

The decrease was primarily due to a decrease of $0.9 million in professional fees, including consulting; a decrease in personnel-related costs, including stock-based compensation, of $0.8 million; and a decrease 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 $0.5 million and a decrease in professional fees of $0.1 million; partially offset by an increase in facility-related and other costs of $0.1 million.

Previous wording

The increase was primarily due to an increase of $13.3 million in personnel-related costs, including stock-based compensation, an increase in professional fees of $2.1 million, and an increase of $1.1 million in facility-related and other costs. Personnel-related costs, including stock-based compensation, for the six months ended June 30, 2024 include $1.6 million related to accrued wages, severance, and other benefits under the Strategic Restructuring and $9.9 million related to accrued severance and acceleration of stock-based compensation for certain employees who departed during the six months ended June 30, 2024 separate from the Strategic Restructuring, including our former Chief Executive Officer, our former Chief Business Officer, and our former Chief Medical Officer.

Current wording

The increase was primarily due to an increase of $14.6 million in personnel-related costs, including stock-based compensation, an increase in professional fees of $3.9 million, and an increase of $1.6 million in facility-related and other costs. Personnel-related costs, including stock-based compensation, for the nine months ended September 30, 2024 include $1.6 million related to wages, severance, and other benefits under the Strategic Restructuring, and $9.9 million related to accrued severance and acceleration of stock-based compensation for certain employees who departed during the nine months ended September 30, 2024 separate from the Strategic Restructuring, including our former Chief Executive Officer, our former Chief Business Officer, and our former Chief Medical Officer.

Previous wording

We anticipate that the level of our general and administrative expenses will be lower for the remainder of 2024, due to $8.7 million of one-time expenses incurred in the three months ended June 30, 2024 related to the departure of certain employees and the Strategic Restructuring. We anticipate, however, that the level of our general and administrative expenses, exclusive of these one-time charges, will increase for the remainder of 2024 and beyond, as we have recently strengthened, and as we continue to further strengthen, our leadership team and other certain functions that support our clinical trials of AXPAXLI, including the SOL-1 trial and the SOL-R trial, and our business in general.

Current wording

We anticipate that the level of our general and administrative expenses, exclusive of the one-time charges incurred during the first nine months of the year, will increase for the remainder of 2024 and beyond, as we have recently strengthened, and as we continue to further strengthen, our leadership team and other certain functions that support our clinical trials of AXPAXLI, including the SOL-1 trial and the SOL-R trial, and our business in general.

Previous wording

Interest Income. Interest income was $10.0 million and $1.3 million for the six months ended June 30, 2024 and 2023, respectively, reflecting an increase of $8.7 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 $15.6 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively, reflecting an increase of $13.1 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 $7.2 million and $3.8 million for the six months ended June 30, 2024 and 2023, respectively, reflecting an increase of $3.4 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, of $25.0 million in August 2023, and the conversion of the Convertible Notes of $37.5 million in March 2024.

Current wording

Interest Expense. Interest expense was $10.5 million and $7.2 million for the nine months ended September 30, 2024 and 2023, respectively, reflecting an increase of $3.3 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, of $25.0 million in August 2023, and the conversion of the Convertible Notes of $37.5 million in March 2024.

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 $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.

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 $1.1 million for the nine months ended September 30, 2024, compared to a gain of $1.3 million for the nine months ended September 30, 2023. The net loss for the nine months ended September 30, 2024 is comprised of a loss of $2.1 million from the change in the fair value of the derivative liability related to the Barings Credit Agreement and a $1.6 million expense 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 net gain for the nine months ended September 30, 2023 is comprised of a gain of $1.7 million from the change in the fair value of the derivative liability related to a conversion option embedded in the Convertible Notes, partially offset by a $0.4 million expense related to royalty fees under the Barings Credit Agreement that we paid or accrued. 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 of debt from the conversion of the Convertible Notes in March 2024 of $28.0 million.

Current wording

Gains and Losses on Extinguishment of Debt, Net. We recognized a non-cash loss on extinguishment of debt of $28.0 million for the nine months ended September 30, 2024, compared to a gain, net, on extinguishment of debt of $14.2 million for the nine months ended September 30, 2023. The net loss for the nine months ended September 30, 2024 results from the conversion of the Convertible Notes in March 2024. The net gain for the nine months ended September 30, 2023 results from the accounting for the Convertible Notes Amendment, which resulted in a non-cash gain on extinguishment of debt of $14.9 million, and for the extinguishment of our obligations under the MidCap Credit Agreement, which resulted in a loss on extinguishment of debt of $0.7 million.

Previous 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.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $427.2 million, and outstanding notes payable with a principal amount of $82.5 million par value under the Barings Credit Facility.