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What changed in OCULAR THERAPEUTIX, INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of OCULAR THERAPEUTIX, INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+1069 added−950 removedSource: 10-K (2025-03-03) vs 10-K (2024-03-11)

Top changes in OCULAR THERAPEUTIX, INC's 2024 10-K

1069 paragraphs added · 950 removed · 690 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

591 edited+333 added−202 removed560 unchanged
Biggest changeOur net losses may fluctuate significantly from quarter to quarter and year to year. 61 Table of Contents We anticipate we will incur substantial expenses if and as we: ● continue our ongoing clinical trials, including our pivotal Phase 3 clinical trial of AXPAXLI, which we refer to as the SOL-1 trial, for the treatment of wet age-related macular degeneration, or wet AMD; the HELIOS trial of AXPAXLI for the treatment of non-proliferative diabetic retinopathy, or NPDR; our Phase 2 clinical trial of PAXTRAVA for the reduction of IOP in patients with primary open-angle glaucoma, or OAG, or ocular hypertension, or OHT; and our Phase 2 clinical trial of OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease; ● continue to monitor subjects according to the applicable clinical trial protocols in our clinical trials that have been completed, including our clinical trial to evaluate DEXTENZA in pediatric subjects following cataract surgery; ● determine to initiate new clinical trials to evaluate our product candidates, including our planned second pivotal Phase 3 clinical trial of AXPAXLI for the treatment of wet AMD, which we refer to as the SOL-2 trial; our planned pivotal Phase 3 clinical trial of AXPAXLI for the treatment of NPDR; and, subject to our evaluation of strategic alternatives, possible pivotal clinical trials of PAXTRAVA for the reduction of IOP in patients with primary OAG or OHT; ● continue to commercialize DEXTENZA in the United States; ● continue to develop and expand our sales, marketing and distribution capabilities for DEXTENZA and any other products or product candidates we intend to commercialize; ● conduct or support research and development activities on, and seek regulatory approvals for, DEXTENZA and PAXTRAVA in specified Asian markets pursuant to our license agreement and collaboration with AffaMed Therapeutics Limited, or AffaMed; ● continue the research and development of our other product candidates; ● seek to identify and develop additional product candidates; ● seek marketing approvals for any of our product candidates that successfully complete clinical development; ● scale up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates and commercialization of any of our product candidates for which we obtain marketing approval, and expand our facilities to accommodate this scale up and any corresponding growth in personnel; ● renovate our existing facilities including research and development laboratories, manufacturing space and office space; ● maintain, expand and protect our intellectual property portfolio; ● expand our operational, financial, administrative and management systems and personnel, including personnel to support our clinical development, manufacturing and commercialization efforts; ● defend ourselves against legal proceedings, if any; ● make investments to improve our defenses against cybersecurity and establish and maintain cybersecurity insurance; ● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and commercialization efforts; and ● continue to operate as a public company. 62 Table of Contents Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.
Biggest changeWe anticipate we will incur substantial expenses if and as we: ● continue our ongoing clinical trials, including our two registrational Phase 3 clinical trials of AXPAXLI for the treatment of wet age-related macular degeneration, or wet AMD, which we refer to as the SOL-1 and SOL-R trials; 58 Table of Contents ● initiate any additional clinical trials we might determine in the future to conduct for our product candidates, including any clinical trials that we might conduct for AXPAXLI for the treatment of patients with non-proliferative diabetic retinopathy, or NPDR, and diabetic macular edema, or DME; ● scale up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates, including AXPAXLI, and commercialization of any of our product candidates for which we obtain marketing approval and expand our facilities to accommodate this scale up and any corresponding growth in personnel; ● scale up our sales, marketing and distribution capabilities to prepare for commercialization of any product candidates for which we intend to obtain marketing approval; ● seek marketing approvals for any of our product candidates that successfully complete clinical development; ● continue to monitor subjects according to the applicable clinical trial protocols, or prepare submission documentation such as clinical study reports, for our clinical trials that have been completed; ● continue to commercialize DEXTENZA in the United States; ● maintain, expand and protect our intellectual property portfolio; ● expand our operational, quality assurance, financial, administrative and management systems and personnel, including personnel to support our clinical development, manufacturing and commercialization efforts; ● defend ourselves against legal proceedings, if any; ● make investments to improve our defenses against cybersecurity threats and establish and maintain cybersecurity insurance; ● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and commercialization efforts; and ● continue to operate as a public company.
We also believe programmed-release dosing may improve the therapeutic profile of the active pharmaceutical ingredient because it eliminates periods of little or no drug presence between eye drop or back of the eye injection administrations.
We also believe programmed-release dosing may improve the therapeutic profile of the active pharmaceutical ingredient because it eliminates periods of little or no drug presence between back of the eye injection or eye drop administrations.
We received an agreement letter regarding the overall trial design from the FDA under the SPA on October 30, 2023.
We received an agreement letter regarding the overall trial design from the FDA under the SPA agreement on October 30, 2023.
We selected dexamethasone as the active pharmaceutical ingredient for DEXTENZA because it is approved by the FDA and has a long history of ophthalmic use; is available on a generic basis; is highly potent and is typically prescribed for prevention of ocular inflammation and pain following ocular surgery; is available from multiple qualified suppliers; and has physical properties that are well suited for incorporation within our hydrogel technology.
We selected dexamethasone as the active pharmaceutical ingredient for DEXTENZA because it is approved by the FDA and has a long history of ophthalmic use; is available on a generic basis from multiple qualified suppliers; is highly potent and is typically prescribed for prevention of ocular inflammation and pain following ocular surgery; and has physical properties that are well suited for incorporation within our hydrogel technology.
Certain of our U.S. patents and applications, and foreign counterparts, are owned by us and other U.S. patents and applications, and their foreign counterparts have been in-licensed from Incept. The existence of patent applications does not guarantee that a patent will issue, or that any patent that does issue will cover the product or product candidate.
Certain of our U.S. patents and applications, and their foreign counterparts, are owned by us and other U.S. patents and applications, and their foreign counterparts have been in-licensed from Incept. The existence of patent applications does not guarantee that a patent will issue, or that any patent that does issue will cover the product or product candidate.
Risk Factors. ​ The following risk factors and other information included in this Annual Report on Form 10-K, including under the heading “Summary of Risk Factors” in this Annual Report, should be carefully considered. The risks and uncertainties described below are not the only ones we face.
The following risk factors and other information included in this Annual Report on Form 10-K, including under the heading “Summary of Risk Factors” in this Annual Report, should be carefully considered. The risks and uncertainties described below are not the only ones we face.
Even if we succeed in our commercialization efforts, we may never generate revenue that is sufficient to achieve profitability. We do not anticipate revenue from sales of DEXTENZA for the treatment of ocular inflammation and pain following ophthalmic surgery and ocular itching associated with allergic conjunctivitis will be sufficient for us to become profitable for several years, if ever.
Even if we succeed in our commercialization efforts, we may never generate revenue that is sufficient to achieve profitability. We do not anticipate that revenue from sales of DEXTENZA for the treatment of ocular inflammation and pain following ophthalmic surgery and ocular itching associated with allergic conjunctivitis will be sufficient for us to become profitable for several years, if ever.
The protocols for our clinical trials and other supporting information are subject to review by the FDA and regulatory authorities outside the United States. However, the FDA is not obligated to comment on our trial protocols within any specified time period or at all or to affirmatively clear or approve our planned pivotal clinical trials.
The protocols for our clinical trials and other supporting information are subject to review by the FDA and regulatory authorities outside the United States. The FDA is not obligated to comment on our trial protocols, however, within any specified time-period or at all or to affirmatively clear or approve our planned pivotal clinical trials.
We also may seek additional third-party collaborators for development and commercialization of product candidates, including PAXTRAVA and AXPAXLI. Our likely collaborators for any sales, marketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies.
We also may seek additional third-party collaborators for development and commercialization of product candidates, including AXPAXLI and PAXTRAVA. Our likely collaborators for any sales, marketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.
Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.
Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond.
CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond.
This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition.
This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition.
Further, the legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation.
Further, the legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation.
Our collaboration with AffaMed poses, and any future collaborations likely will pose, a number of risks including the following: ● collaborators have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations; ● collaborators may not perform their obligations as expected; ● collaborators may not pursue development and commercialization of our products or product candidates that receive marketing approval or may elect not to continue or renew development or commercialization programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; ● collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ● collaborators could be subject to bankruptcy proceedings or other similar arrangements which may result in us having to return funds that we previously received, or in collaborators selling or transferring product licenses to other parties; ● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; 80 Table of Contents ● product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; ● a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; ● disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of products or product candidates, might lead to additional responsibilities for us with respect to products or product candidates, or might result in litigation or arbitration, any of which would divert management attention and resources, be time-consuming and expensive; ● collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ● collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and ● collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable products or product candidates.
Our collaboration with AffaMed poses, and any future collaborations likely will pose, a number of risks including the following: ● collaborators have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations; ● collaborators may not perform their obligations as expected; ● collaborators may not pursue development and commercialization of our products or product candidates that receive marketing approval or may elect not to continue or renew development or commercialization programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; ● collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; ● collaborators could be subject to bankruptcy proceedings or other similar arrangements which may result in us having to return funds that we previously received, or in collaborators selling or transferring product licenses to other parties; ● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; 78 Table of Contents ● product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; ● a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; ● disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of products or product candidates, might lead to additional responsibilities for us with respect to products or product candidates, or might result in litigation or arbitration, any of which would divert management attention and resources, be time-consuming and expensive; ● collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; ● collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and ● collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable products or product candidates.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, such as the FDA’s requirement that we provide pediatric data for DEXTENZA for the treatment of post-surgical ocular inflammation and pain following cataract surgery prior and for the treatment of ocular itching associated with allergic conjunctivitis in connection with the approval of our NDA for DEXTENZA for those indications, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not favorable or are only modestly favorable or if there are safety concerns, we may: ● be delayed in obtaining or unable to obtain marketing approval for our product candidates; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing requirements; or ● have the product removed from the market after obtaining marketing approval.
If we are required to conduct additional clinical trials or other testing of AXPAXLI or our other product candidates beyond those that we currently contemplate, such as the FDA’s requirement that we provide pediatric data for DEXTENZA for the treatment of post-surgical ocular inflammation and pain following cataract surgery prior and for the treatment of ocular itching associated with allergic conjunctivitis in connection with the approval of our NDA for DEXTENZA for those indications, if we are unable to successfully complete clinical trials of AXPAXLI or our other product candidates or other testing, if the results of these trials or tests are not favorable or are only modestly favorable or if there are safety concerns, we may: ● be delayed in obtaining or unable to obtain marketing approval for AXPAXLI or our other product candidates; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; ● be subject to additional post-marketing testing requirements; or ● have the product removed from the market after obtaining marketing approval.
Restrictions under applicable federal and state healthcare laws and regulations include the following: ● the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; ● the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Physician Payments Sunshine Act requires applicable manufacturers of covered products to report payments and other transfers of value to physicians, other healthcare providers and teaching hospitals; and 92 Table of Contents ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and transparency statutes, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
Restrictions under applicable federal and state healthcare laws and regulations include the following: ● the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or 91 Table of Contents reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid; ● the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Physician Payments Sunshine Act requires applicable manufacturers of covered products to report payments and other transfers of value to physicians, other healthcare providers and teaching hospitals; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and transparency statutes, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
If clinical trials of any product candidate that we develop fail to demonstrate safety and efficacy to the satisfaction of the FDA or other regulatory authorities or do not otherwise produce clear or favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidate.
If clinical trials of AXPAXLI or any other product candidate that we develop fail to demonstrate safety and efficacy to the satisfaction of the FDA or other regulatory authorities or do not otherwise produce clear or favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of such product candidate.
Phase 1 Clinical Trial (United States) ​ We have conducted a prospective, multi-center, randomized, controlled Phase 1 clinical trial in the United States under an exploratory investigational new drug, or eIND, application to evaluate a single implant 600 µg dose of AXPAXLI with an anti-VEGF injection in comparison with a 2 mg dose of aflibercept.
Phase 1 Clinical Trial (United States) We have conducted a prospective, multi-center, randomized, controlled Phase 1 clinical trial in the United States under an exploratory investigational new drug, or eIND, application to evaluate a single 600 µg dose of AXPAXLI with an anti-VEGF injection in comparison with a 2 mg dose of aflibercept.
We augmented the results from our ongoing clinical trial with PK data in two animal models showing the uptake of axitinib from our hydrogel implant in the choroid and retinal pigment epithelium, or RPE, cells, where axitinib acts intra-cellularly to exert its VEGF receptor inhibiting effect.
We augmented the results from our ongoing clinical trial with PK data in two animal models showing the uptake of axitinib from our hydrogel in the choroid and retinal pigment epithelium, or RPE, cells, where axitinib acts intra-cellularly to exert its VEGF receptor inhibiting effect.
Data Privacy Framework, which would serve as a replacement to the EU-U.S. Privacy Shield. The EU initiated the process to adopt an adequacy decision for the EU-U.S. Data Privacy Framework in December 2022 and the European Commission adopted the adequacy decision on July 10, 2023. The adequacy decision will permit U.S. companies who self-certify to the EU-U.S.
Data Privacy Framework, which would serve as a replacement to the EU-U.S. Privacy Shield. The European Union initiated the process to adopt an adequacy decision for the EU-U.S. Data Privacy Framework in December 2022 and the European Commission adopted the adequacy decision on July 10, 2023. The adequacy decision will permit U.S. companies who self-certify to the EU-U.S.
We do not have any long-term supply agreements in place for the clinical or commercial supply of any drug substances or raw materials for DEXTENZA or any of our product candidates. We purchase drug substance and raw materials, including the chemical constituents for our hydrogel, from independent suppliers on a purchase order basis.
We do not have any long-term supply agreements in place for the clinical or commercial supply of any drug substances or raw materials for DEXTENZA or any of our product candidates, including AXPAXLI. We purchase drug substance and raw materials, including the chemical constituents for our hydrogel, from independent suppliers on a purchase order basis.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of our Credit Agreement and any future debt agreements that we may enter into, may preclude us from paying dividends without the lenders’ consent or at all.
We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of our Barings Credit Agreement and any future debt agreements that we may enter into, may preclude us from paying dividends without the lenders’ consent or at all.
We have designed our inserts and implants to deliver drug in a programmed fashion in order to avoid the peak and valley dosing and related side effects and spikes in IOP associated with eye drops, as well as current standard of care injections for the back of the eye.
We have designed our hydrogel implants and inserts to deliver drug in a programmed fashion in order to avoid the peak and valley dosing and related side effects associated with current standard of care injections for the back of the eye, as well as spikes in IOP associated with eye drops.
We currently hold product liability insurance coverage; however these policies may not be adequate to cover all liabilities that we may incur and we may need to increase our insurance coverage as we expand our clinical trials and our sales of DEXTENZA and any product candidates for which we obtain marketing approval.
We currently hold product liability insurance coverage; however these policies may not be adequate to cover all liabilities that we may incur and we may need to increase our insurance coverage as we expand our clinical trials of AXPAXLI and our sales of DEXTENZA and any product candidates for which we may obtain marketing approval.
The market price for our common stock may be influenced by many factors, including: ● our success in commercializing DEXTENZA and any product candidates for which we obtain marketing approval; ● the success of competitive products or technologies; ● results of clinical trials of our product candidates and the product candidates of our competitors; ● regulatory or legal developments in the United States and other countries; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key scientific or management personnel; 102 Table of Contents ● the results of our efforts and the efforts of our current and future collaborators to discover, develop, acquire or in-license and out-license additional products, product candidates or technologies for the treatment of ophthalmic diseases or conditions, the costs of commercializing any such products and the costs of development of any such product candidates or technologies and any potential dilution to our shareholders as a result of these efforts; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● variations in our financial results or those of companies that are perceived to be similar to us; ● the ability to secure third-party reimbursement for our products or product candidates; ● market conditions in the pharmaceutical and biotechnology sectors; and ● the other factors described in this “Risk Factors” section.
The market price for our common stock may be influenced by many factors, including: ● results of clinical trials of our product candidates, including AXPAXLI, and the product candidates of our competitors; ● our success in commercializing DEXTENZA and any product candidates for which we may obtain marketing approval, including AXPAXLI; ● the success of competitive products or technologies; ● regulatory or legal developments in the United States and other countries; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key scientific or management personnel; ● the results of our efforts and the efforts of our current and future collaborators to discover, develop, acquire or in-license and out-license additional products, product candidates or technologies for the treatment of ophthalmic diseases or conditions, the costs of commercializing any such products and the costs of development of any such product candidates or technologies and any potential dilution to our shareholders as a result of these efforts; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● variations in our financial results or those of companies that are perceived to be similar to us; ● the ability to secure third-party reimbursement for our products or product candidates; 103 Table of Contents ● market conditions in the pharmaceutical and biotechnology sectors; and ● the other factors described in this “Risk Factors” section.
Back-of-the-Eye Injections An intravitreal injection is a procedure to place a medication directly into the space in the back of the eye called the vitreous cavity, which is filled with a jelly-like fluid called the vitreous humor gel. The procedure is usually performed by a trained retina specialist in the office setting.
Limitations of Back-of-the-Eye Injections An intravitreal injection is a procedure to place a medication directly into the space in the back of the eye called the vitreous cavity, which is filled with a jelly-like fluid called the vitreous humor gel. The procedure is usually performed by a trained retina specialist in the office setting.
Among other things, these provisions: ● provide for a classified board of directors such that only one of three classes of directors is elected each year; ● allow the authorized number of our directors to be changed only by resolution of our board of directors; ● limit the manner in which stockholders can remove directors from our board of directors; ● provide for advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors; ● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; ● limit who may call stockholder meetings; 101 Table of Contents ● authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and ● require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal specified provisions of our certificate of incorporation or bylaws.
Among other things, these provisions: ● provide for a classified board of directors such that only one of three classes of directors is elected each year; ● allow the authorized number of our directors to be changed only by resolution of our board of directors; ● limit the manner in which stockholders can remove directors from our board of directors; ● provide for advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors; ● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; ● limit who may call stockholder meetings; ● authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and ● require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal specified provisions of our certificate of incorporation or bylaws.
Reliance on third parties for aspects of the supply of our products and product candidates entails additional risks, including: ● reliance on the third party for regulatory compliance and quality assurance; ● the possible misappropriation of our proprietary information, including our trade secrets and know-how; ● the possible breach of an agreement by the third party; and ● the possible termination or nonrenewal of an agreement by the third party at a time that is costly or inconvenient for us. 79 Table of Contents Third-party suppliers or manufacturers may not be able to comply with our specifications, quality assurance standards, cGMP regulations or similar regulatory requirements outside the United States.
Reliance on third parties for aspects of the supply of our products and product candidates entails additional risks, including: ● reliance on the third party for regulatory compliance and quality assurance; ● the possible misappropriation of our proprietary information, including our trade secrets and know-how; ● the possible breach of an agreement by the third party; and ● the possible termination or nonrenewal of an agreement by the third party at a time that is costly or inconvenient for us. 77 Table of Contents Third-party suppliers or manufacturers may not be able to comply with our specifications, quality assurance standards, cGMP regulations or similar regulatory requirements outside the United States.
In April 2023, we presented data regarding the preclinical pharmacokinetics, or PK, of AXPAXLI and a review of the 10-month interim data from the ongoing Phase 1 clinical trial of AXPAXLI in the United States, including AXPAXLI implant resorption data to date.
In April 2023, we presented data regarding the preclinical pharmacokinetics, or PK, of AXPAXLI and a review of the 10-month interim data from the ongoing Phase 1 clinical trial of AXPAXLI in the United States, including AXPAXLI resorption data to date.
Our inability to enroll a sufficient number of subjects in any of our clinical trials would result in significant delays, could require us to abandon one or more clinical trials altogether and could delay or prevent our receipt of necessary regulatory approvals.
Our inability to enroll and randomize a sufficient number of subjects in any of our clinical trials would result in significant delays, could require us to abandon one or more clinical trials altogether and could delay or prevent our receipt of necessary regulatory approvals.
There were no retinal detachment, retinal vasculitis, or implant migration into the anterior chamber adverse events observed in the AXPAXLI arm, and no subjects had dropped out of either arm as of the data cut-off.
There were no retinal detachment, retinal vasculitis, or hydrogel implant migration into the anterior chamber adverse events observed in the AXPAXLI arm, and no subjects had dropped out of either arm as of the data cut-off.
Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which could cause the value of our common stock to decline and limit our ability to obtain additional financing.
Enrollment and randomization delays in our clinical trials may result in increased development costs for our product candidates, which could cause the value of our common stock to decline and limit our ability to obtain additional financing.
Therefore, we cannot know with certainty whether we or our licensor were the first to make the inventions claimed in our licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.
Therefore, we cannot know with certainty whether we or our licensor were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.
The actual injection at the time of administration is uncomfortable for patients and can be a deterrent in terms of compliance. Then there is the burden to both patients and their caregivers of regular office visits.
The actual injection at the time of administration is often uncomfortable for patients and can be a deterrent in terms of compliance. Then there is the burden to both patients and their caregivers of regular office visits.
We have designed our inserts and implants to provide the entire course of medication with a single administration by a healthcare professional for acute conditions or for months for chronic conditions.
We have designed our hydrogel implants and inserts to provide the entire course of medication with a single administration by a healthcare professional for acute conditions or for months for chronic conditions.
If we expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.
If and as we expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.
Failure to comply with regulatory requirements, may yield various results, including: ● restrictions on such products, manufacturers or manufacturing processes; ● restrictions on the labeling or marketing of a product; ● restrictions on product distribution or use of a product; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters or untitled letters; ● withdrawal of the products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit; ● recall of products; 91 Table of Contents ● fines, restitution or disgorgement of profits or revenues; ● suspension or withdrawal of marketing approvals; ● refusal to permit the import or export of our products; ● product seizure or detention; ● injunctions or the imposition of civil or criminal penalties; ● damage to relationships with any potential collaborators; ● unfavorable press coverage and damage to our reputation; or ● litigation involving patients using our products.
Failure to comply with regulatory requirements, may yield various results, including: ● restrictions on such products, manufacturers or manufacturing processes; ● restrictions on the labeling or marketing of a product; ● restrictions on product distribution or use of a product; ● requirements to conduct post-marketing studies or clinical trials; ● warning letters or untitled letters; ● withdrawal of the products from the market; ● refusal to approve pending applications or supplements to approved applications that we submit; ● recall of products; ● fines, restitution or disgorgement of profits or revenues; ● suspension or withdrawal of marketing approvals; ● refusal to permit the import or export of our products; ● product seizure or detention; ● injunctions or the imposition of civil or criminal penalties; ● damage to relationships with any potential collaborators; ● unfavorable press coverage and damage to our reputation; or ● litigation involving patients using our products.
Incept will continue to have sole control and responsibility for ongoing prosecution of patents included in the Original IP, and we will have sole control and responsibility for ongoing prosecution of patents and patent applications included in or arising under the Incept IP or Joint IP.
Patent Prosecution and Litigation. Incept will continue to have sole control and responsibility for ongoing prosecution of patents included in the Original IP, and we will have sole control and responsibility for ongoing prosecution of patents and patent applications included in or arising under the Incept IP or Joint IP.
Our inserts and implants are placed by a healthcare professional and are designed to provide local programmed-release of drug to the ocular surface, intracameral space or intravitreal space.
Our hydrogel implants and inserts are placed by a healthcare professional and are designed to provide local programmed-release of drug to the ocular surface, intracameral space or intravitreal space.
For example, because we have not conducted any clinical trials to date comparing the effectiveness of DEXTENZA directly to currently approved alternative treatments for post-surgical ocular inflammation and pain following cataract surgery or ocular itching associated with allergic conjunctivitis, market acceptance of DEXTENZA could be less than if we had conducted such trials, and we may not be able to achieve the market share we anticipate.
Furthermore, because we have not conducted any clinical trials to date comparing the effectiveness of DEXTENZA directly to currently approved alternative treatments for post-surgical ocular inflammation and pain following cataract surgery or ocular itching associated with allergic conjunctivitis, market acceptance of DEXTENZA could be less than if we had conducted such trials, and we may not be able to achieve the market share we anticipate.
In particular, the license agreement that we have entered into with Incept LLC, or Incept, an intellectual property holding company, which covers a significant portion of the patent rights and the technology for DEXTENZA, ReSure Sealant and our product candidates, provides that, with limited exceptions, Incept has sole control and responsibility for ongoing prosecution for certain patents covered by the license agreement.
In particular, the license agreement that we have entered into with Incept LLC, or Incept, an intellectual property holding company, which covers a significant portion of the patent rights and the technology for DEXTENZA, ReSure Sealant and our product candidates, including AXPAXLI, provides that, with limited exceptions, Incept has sole control and responsibility for ongoing prosecution for certain patents covered by the license agreement.
The term “substantial evidence” is defined under the FDCA as “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the product involved, on the basis of which it could fairly and responsibly be concluded by such experts that the product will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.” ​ The FDA has interpreted this evidentiary standard to require at least two adequate and well-controlled clinical investigations to establish effectiveness of a new product.
The term “substantial evidence” is defined under the FDCA as “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the 34 Table of Contents effectiveness of the product involved, on the basis of which it could fairly and responsibly be concluded by such experts that the product will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.” The FDA has interpreted this evidentiary standard to require at least two adequate and well-controlled clinical investigations to establish effectiveness of a new product.
Our inserts and implants are designed to fully dissipate and can be removed if necessary by a healthcare professional. ● Avoidance of preservative side effects .
Our hydrogel implants and inserts are designed to fully dissipate and can be removed if necessary by a healthcare professional. ● Avoidance of preservative side effects .
In addition, the sponsor must show that the biosimilar and reference products have the same mechanism of action for the conditions of use on the label, route of administration, dosage and strength, and the production facility must meet standards designed to assure product safety, purity and potency. ​ For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find not only that the product is biosimilar to the reference product but also that it can be expected to produce the same clinical results as the reference product such that the two products may be switched without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.
In addition, the sponsor must show that the biosimilar and reference products have the same mechanism of action for the conditions of use on the label, route of administration, dosage and strength, and the production facility must meet standards designed to assure product safety, purity and potency. 39 Table of Contents For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find not only that the product is biosimilar to the reference product but also that it can be expected to produce the same clinical results as the reference product such that the two products may be switched without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.
Our product candidates and any other product candidates that we may develop based on ELUTYX may not be suitable for continued preclinical or clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance.
AXPAXLI and any other product candidates that we may develop based on ELUTYX may not be suitable for continued preclinical or clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance.
We hold worldwide exclusive commercial rights to the core technology underlying all of our product candidates in development and have not granted commercial rights to any marketing partners other than a license agreement and collaboration with AffaMed Therapeutics Limited, or AffaMed, for the development and commercialization of DEXTENZA and PAXTRAVA in the geographies agreed to between the parties.
We hold worldwide exclusive commercial rights to the core technology underlying all of our product candidates in development and have not granted commercial rights to any marketing partners other than a license agreement and collaboration with AffaMed Therapeutics Limited, or AffaMed, for the development and commercialization of DEXTENZA and PAXTRAVA in certain geographies in Asia agreed to between the parties.
In the event of a temporary or protracted loss of this facility or equipment, we might not be able to transfer manufacturing to another facility or to a third party.
In the event of a temporary or protracted loss of a facility or equipment, we might not be able to transfer manufacturing to another facility or to a third party.
Our reliance on third parties for research and development activities reduces our control over these activities but does not relieve us of our responsibilities. For example, we remain responsible for ensuring that each of our clinical trials, including the SOL-1 trial and the HELIOS trial, is conducted in accordance with the general investigational plan and protocols for the trial.
Our reliance on third parties for research and development activities reduces our control over these activities but does not relieve us of our responsibilities. For example, we remain responsible for ensuring that each of our clinical trials, including the SOL-1 and the SOL-R trials, is conducted in accordance with the general investigational plan and protocols for the trial.
Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need. ​ 33 Table of Contents In December 2022, with the passage of Food and Drug Omnibus Reform Act, or FDORA, Congress began requiring sponsors to develop and submit a diversity action plan for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product.
Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need. 29 Table of Contents In December 2022, with the passage of Food and Drug Omnibus Reform Act, or FDORA, Congress began requiring sponsors to develop and submit a diversity action plan, or DAP, for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product.
There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2023 legislative sessions that will go into effect in 2024 and beyond, including New Hampshire and New Jersey. Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law.
There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2024 legislative sessions that will go into effect in 2025 and beyond, including New Hampshire and New Jersey. Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law.
We would also need FDA approval before any products manufactured at that facility could be used for commercial supply. In the case of any disruption in our manufacturing operations at this facility, we may not have sufficient quantities of our product candidates to meet our clinical trial requirements or of our product inventory to meet our commercial requirements.
We would also need FDA approval before any products manufactured at that facility could be used for commercial supply. In the case of any disruption in our manufacturing operations at a facility, we may not have sufficient quantities of our product candidates to meet our clinical trial requirements or of our product inventory to meet our commercial requirements.
We and any of our sublicensees are obligated to pay Incept royalties as follows under the Second Amended Agreement: (i) consistent with the Prior Agreement, a royalty equal to a low single-digit percentage of net sales by us or our affiliates of products, devices, materials, or components thereof, or Licensed Products, including or covered by Original IP, excluding the Shape-Changing IP, in the Ophthalmic Field of Use; (ii) a royalty equal to a mid-single-digit percentage of net sales by us or our affiliates of Licensed Products including or covered by Original IP, excluding the Shape-Changing IP, in the Additional Field of Use; and (iii) a royalty equal to a low single-digit percentage of net sales by us or our affiliates of Licensed Products including or covered by Incept IP or Joint IP in the field of drug delivery.
We and any of our sublicensees are obligated to pay Incept royalties as follows under the Second Amended Agreement: (i) consistent with the Prior Agreement, a royalty equal to a low single-digit percentage of net sales by us or our affiliates of products, devices, materials, or components thereof, or Licensed Products, including or covered by Original IP, excluding the Shape-Changing IP, in the Ophthalmic Field of Use; (ii) a royalty equal to a mid- 22 Table of Contents single-digit percentage of net sales by us or our affiliates of Licensed Products including or covered by Original IP, excluding the Shape-Changing IP, in the Additional Field of Use; and (iii) a royalty equal to a low single-digit percentage of net sales by us or our affiliates of Licensed Products including or covered by Incept IP or Joint IP in the field of drug delivery.
We and our licensor have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies, products and product candidates. Our licensed and owned patent portfolio that we believe is integral to our business includes patents with terms that extend from 2024 to 2041.
We and our licensor have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies, products and product candidates. Our licensed and owned patent portfolio that we believe is integral to our business includes patents with terms that extend from 2025 to 2041.
The interim results showed subjects treated with a single AXPAXLI implant demonstrated stable and sustained BCVA (mean change from baseline of -0.3 letters) and CSFT (mean change from baseline of -1.3 µm) in the AXPAXLI arm at 10 months, which was comparable with the aflibercept arm (mean change from BCVA baseline of -0.8 letters; mean change from CSFT baseline of -4.5 µm).
The interim results showed subjects treated with a single AXPAXLI dose demonstrated stable and sustained BCVA (mean change from baseline of -0.3 letters) and CSFT (mean change from baseline of -1.3 µm) in the AXPAXLI arm at 10 months, which was comparable with the aflibercept arm (mean change from BCVA baseline of -0.8 letters; mean change from CSFT baseline of -4.5 µm).
These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. Specifically, actions plans must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them.
These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. Specifically, DAPs must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them.
We hold our cash and cash equivalents that we use to fund our operating expenses, debt service obligations, and capital expenditure requirements in deposit accounts at two financial institutions. The balances held in these accounts typically exceeds the standard deposit insurance limit of the Federal Deposit Insurance Corporation, or FDIC.
We hold our cash and cash equivalents that we use to fund our operating expenses, debt service obligations, and capital expenditure requirements in deposit accounts at two financial institutions. The balances held in these accounts typically exceed the standard deposit insurance limit of the Federal Deposit Insurance Corporation, or FDIC.
Specifically, Section 505(b)(2) applies to NDAs for a drug for which the investigations made to show whether or not the drug is safe for use and effective in use and relied upon by the sponsor for approval of the application “were not conducted by or for the sponsor and for which the sponsor has not obtained a right of reference or use from the person by or for whom the investigations were conducted.” 36 Table of Contents ​ Section 505(b)(2) thus authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the sponsor.
Specifically, Section 505(b)(2) applies to NDAs for a drug for which the investigations made to show whether or not the drug is safe for use and effective in use and relied upon by the sponsor for approval of the application “were not conducted by or for the sponsor and for which the sponsor has not obtained a right of reference or use from the person by or for whom the investigations were conducted.” Section 505(b)(2) thus authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the sponsor.
One subject, the subject who experienced endophthalmitis, was rescued twice. None of these rescues met the preestablished rescue criteria set forth in the clinical trial protocol and were instead initiated at investigator discretion. One additional subject, who met the established rescue criteria at such subject’s Month 10 visit, was rescued at the end of Month 10.
One subject, the subject who experienced endophthalmitis, was rescued twice. None of these rescues met the pre-established rescue criteria set forth in the clinical trial protocol and were instead initiated at investigator discretion. One additional subject, who met the established rescue criteria at such subject’s Month 10 visit, was rescued at the end of Month 10.
District Court judge in the Northern District of Texas ruled that the individual mandate portion of the PPACA is an essential and inseverable feature of the PPACA, and therefore because the mandate was repealed as part of the Tax Act, the remaining provisions of the PPACA are invalid as well. 58 Table of Contents The U.S.
District Court judge in the Northern District of Texas ruled 55 Table of Contents that the individual mandate portion of the PPACA is an essential and inseverable feature of the PPACA, and therefore because the mandate was repealed as part of the Tax Act, the remaining provisions of the PPACA are invalid as well. The U.S.
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: ​ ● the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; ​ ● the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ​ ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ​ ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ​ 57 Table of Contents ● the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; ​ ● the Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment; ​ ● the federal transparency requirements under the ACA, known as the federal Physician Payments Sunshine Act, will require certain manufacturers of drugs, devices, biologics and medical supplies to report to CMS within the HHS information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and ​ ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. ​ Violations of these laws are punishable by criminal and/or civil sanctions, including, in some instances, exclusion from participation in federal and state health care programs, such as Medicare and Medicaid.
Such restrictions under applicable federal and state healthcare laws and regulations, include the following: ● the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; ● the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; 54 Table of Contents ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, including the Final Omnibus Rule published in January 2013, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; ● the Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment; ● the federal transparency requirements under the ACA, known as the federal Physician Payments Sunshine Act, will require certain manufacturers of drugs, devices, biologics and medical supplies to report to CMS within the HHS information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and physician ownership and investment interests held by physicians and their immediate family members; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.
As of the December 12, 2022 cut-off date, the interim data showed that the single 600 µg AXPAXLI implant was generally well tolerated with no drug-related ocular or systemic serious adverse events, or SAEs, observed through 10 months.
As of the December 12, 2022 cut-off date, the interim data showed that the single 600 µg AXPAXLI dose was generally well tolerated with no drug-related ocular or systemic serious adverse events, or SAEs, observed through 10 months.
These results align with our expectation that we would see a reactivation of disease in some subjects, which we believe indicates that AXPAXLI continues to function as designed with axitinib concentrations beginning to fall below therapeutic levels after the implant bioresorbs.
These results align with our expectation that we would see a reactivation of disease in some subjects, which we believe indicates that AXPAXLI continues to function as designed with axitinib concentrations beginning to fall below therapeutic levels after the hydrogel bioresorbs.
The Second Amended Agreement will expire on the later of (i) the expiration or disclaimer by us of the last valid claim of an issued and unexpired patent included in the Licensed IP or (ii) the final unappealable rejection or abandonment of the last pending patent application arising under the Licensed IP.
Term and Termination. The Second Amended Agreement will expire on the later of (i) the expiration or disclaimer by us of the last valid claim of an issued and unexpired patent included in the Licensed IP or (ii) the final unappealable rejection or abandonment of the last pending patent application arising under the Licensed IP.
After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval. ​ Under the Ensuring Innovation Act, which was signed into law in April 2021, the FDA must publish action packages summarizing its decisions to approve new drugs and biologics within 30 days of approval of such products.
After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval. 35 Table of Contents Under the Ensuring Innovation Act, which was signed into law in April 2021, the FDA must publish action packages summarizing its decisions to approve new drugs and biologics within 30 days of approval of such products.
We believe our current and future intracanalicular insert, intracameral implant and intravitreal implant products and product candidates may offer a range of favorable attributes as compared to eye drops and immediate release back-of-the-eye injections, including: ● Improved patient compliance .
We believe our current and future intravitreal hydrogel, intracameral hydrogel and intracanalicular insert products and product candidates may offer a range of favorable attributes as compared to immediate release back-of-the-eye injections and eye drops, including: ● Improved patient compliance .
In September 2021, the FDA published final regulations which describe the types of evidence that the agency will consider in determining the intended use of a drug or biologic. ​ It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in nonpromotional, non-misleading communication regarding off-label information, such as distributing scientific or medical journal information.
In September 2021, the FDA published final regulations which describe the types of evidence that the agency will consider in determining the intended use of a drug or biologic. 37 Table of Contents It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in nonpromotional, non-misleading communication regarding off-label information, such as distributing scientific or medical journal information.
Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops, when additional information or written or oral explanation is to be provided by the sponsor in response to questions of the CHMP.
Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of an MA is 210 days, excluding clock stops, when additional information or written or oral explanation is to be provided by the sponsor in response to questions of the CHMP.
The applicable legislation in the European Union also requires sponsors to either conduct clinical trials in a pediatric population in accordance with a Pediatric Investigation Plan approved by the Pediatric Committee of the European Medicines Agency, or EMA, or to obtain a waiver or deferral from the conduct of these studies by this Committee.
The applicable legislation in the European Union also requires sponsors to either conduct clinical trials in a pediatric population in accordance with a Pediatric Investigation Plan approved by the Pediatric Committee of the EMA or to obtain a waiver or deferral from the conduct of these studies by this Committee.
The degree of market acceptance of any of our products, or any product candidate for which we obtain marketing approval will depend on a number of factors, including: ● the efficacy and potential advantages compared to alternative treatments; ● our ability to offer our products for sale at competitive prices, particularly in light of the lower cost of alternative treatments; ● the clinical indications for which the product is approved; ● the convenience and ease of administration compared to alternative treatments, including the intracanalicular insert retention rate for our intracanalicular insert products and product candidates; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of our marketing and distribution support; ● timing of market introduction of competitive products; ● the availability of third-party coverage and adequate reimbursement; ● the prevalence and severity of any side effects; and ● any restrictions on the use of our products together with other medications.
The degree of market acceptance of any of our products, or any product candidate for which we may obtain marketing approval, will depend on a number of factors, including: ● the efficacy and potential advantages compared to alternative treatments; ● our ability to offer our products for sale at competitive prices, particularly in light of the lower cost of alternative treatments; ● the clinical indications for which the product is approved; ● the convenience and ease of administration compared to alternative treatments, including the retention rate for our intracanalicular insert product; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the strength of our marketing and distribution support; ● timing of market introduction of competitive products; ● the availability of third-party coverage and adequate reimbursement; 70 Table of Contents ● the prevalence and severity of any side effects; and ● any restrictions on the use of our products together with other medications.
Subject to certain exceptions specified in the Second Amended Agreement, Incept will own and license to the us (i) all intellectual property rights included in the Original License, or the Original IP, in the Ophthalmic Field of Use and the Additional Field of Use, (ii) intellectual property rights in the field of drug delivery conceived solely by the Company Individuals on or before the Effective Date, or Incept IP, and (iii) intellectual property rights in the field of 26 Table of Contents drug delivery conceived by one or more Company Individuals jointly with one or more individuals from Incept, including Dr.
Subject to certain exceptions specified in the Second Amended Agreement, Incept will own and license to the us (i) all intellectual property rights included in the Original License, or the Original IP, in the Ophthalmic Field of Use and the Additional Field of Use, (ii) intellectual property rights in the field of drug delivery conceived solely by the Company Individuals on or before the Effective Date, or Incept IP, and (iii) intellectual property rights in the field of drug delivery conceived by one or more Company Individuals jointly with one or more individuals from Incept, including Dr.
The FDA may also require a Risk Evaluation and Mitigation Strategy, or REMS, program as a condition of approval of our product candidates, which could entail requirements for long-term patient follow-up, a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.
The FDA may also require a Risk Evaluation and Mitigation Strategy, or REMS, program as a condition of approval of our product candidates, which could entail requirements for long-term patient follow-up, a medication guide, physician 87 Table of Contents communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.
In an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business or operations, the amounts due under our Barings Credit Agreement or the Convertible Notes could accelerate.
In an event of default, including upon the occurrence of an event that would reasonably be expected to have a material adverse effect on our business or operations, the amounts due under our Barings Credit Agreement could accelerate.
Even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes because, among other reasons, federal tax rates and the rules governing NOL carryforwards might change; state NOLs generated in one state cannot be used to offset income generated in another state; and the use of NOL carryforwards might become subject to annual limitations under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and similar state provisions. ​ Risks Related to Product Development ​ Clinical trials of our product candidates may not be successful.
Even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes because, among other reasons, federal tax rates and the rules governing NOL carryforwards might change; state NOLs generated in one state cannot be used to offset income generated in another state; and the use of NOL carryforwards might become subject to annual limitations under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and similar state provisions. 63 Table of Contents Risks Related to Product Development Clinical trials of AXPAXLI or our other product candidates may not be successful.
We have conducted, and may in the future conduct, clinical trials for product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in such locations. ​ We have conducted, and may in the future choose to conduct, one or more of our clinical trials outside the United States.
We have conducted, and may in the future conduct, clinical trials for AXPAXLI and our other product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in such locations. We have conducted, and may in the future choose to conduct, one or more of our clinical trials outside the United States.
To achieve commercial success for DEXTENZA and any product candidate for which we obtain marketing approval, we will need to establish and maintain adequate sales, marketing and distribution capabilities, either ourselves or through collaborations or other arrangements with third parties.
To achieve commercial success for DEXTENZA and any product candidate for which we obtain marketing approval, including AXPAXLI, we will need to establish and maintain adequate sales, marketing and distribution capabilities, either ourselves or through collaborations or other arrangements with third parties.
CMS evaluates the eligibility of products such as DEXTENZA for separate payment annually, and there can be no assurance that CMS will not change the criteria applicable to non-opioid pain management drugs for 2024 or beyond.
CMS evaluates the eligibility of products such as DEXTENZA for separate payment annually, and there can be no assurance that CMS will not change the criteria applicable to non-opioid pain management drugs for 2025 or beyond.
The Phase 1 clinical trial was comprised of four cohorts consisting of subjects with pre-existing intraretinal and/or subretinal fluid: a lower dose cohort of 200 µg with six subjects; a higher dose cohort of 400 µg with seven subjects; a third cohort with two parallel arms, one arm of four subjects receiving a concomitant anti-VEGF injection with 400 µg of AXPAXLI and the other arm of six subjects receiving a 600 µg of AXPAXLI with no anti-VEGF injection; and a fourth cohort with two parallel arms, one arm of one subject receiving a 600 µg single implant of AXPAXLI and the other arm of five subjects receiving a 600 µg single implant of AXPAXLI with anti-VEGF injection.
The Phase 1 clinical trial was comprised of four cohorts consisting of subjects with wet AMD and pre-existing intraretinal and/or subretinal fluid: a lower dose cohort of 200 µg with six subjects; a higher dose cohort of 400 µg with seven subjects; a third cohort with two parallel arms, one arm of four subjects receiving a concomitant anti-VEGF injection with 400 µg of AXPAXLI and the other arm of six subjects receiving a 600 µg of AXPAXLI with no anti-VEGF injection; and a fourth cohort with two parallel arms, one arm of one subject receiving a 600 µg single dose of AXPAXLI and the other arm of five subjects receiving a 600 µg single dose of AXPAXLI with anti-VEGF injection.
Additionally, at its sole discretion, Incept may require, as a condition of any sublicense by us in the Additional Field of Use and in exchange for a reduction in the royalties owed on net sales of Licensed Products described above, payments equal to a mid-teen percentage of any upfront payment and, subject to certain conditions, other payments received by us from the sublicensee. ​ Patent Prosecution and Litigation.
Additionally, at its sole discretion, Incept may require, as a condition of any sublicense by us in the Additional Field of Use and in exchange for a reduction in the royalties owed on net sales of Licensed Products described above, payments equal to a mid-teen percentage of any upfront payment and, subject to certain conditions, other payments received by us from the sublicensee.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CFO has approximately 10 years of experience managing information technology teams of operating companies in the biotechnology industry. Our CFO leads a cross-functional Cybersecurity Committee, consisting of executive-level leaders and other management-level individuals with the requisite skills and education, that assists the CFO with carrying out these duties.
Biggest changeOur CFO and COO leads a cross-functional Cybersecurity Committee, consisting of executive-level leaders and other management-level individuals with the requisite skills and education, including our Executive Director IT and Cybersecurity, that assists the CFO and COO with carrying out these duties.
Our processes for assessing, identifying and managing cybersecurity risks include physical, procedural and technical safeguards, a cybersecurity incident response plan, regular tests on our systems, incident simulations and routine review of our policies and procedures to identify risks and improve our practices.
Our processes for identifying, assessing and managing cybersecurity risks include physical, procedural and technical safeguards, a cybersecurity incident response plan, regular tests on our systems, incident simulations and routine review of our policies and procedures to identify risks and improve our practices.
Collectively, the members of our Cybersecurity Committee have notable experience in managing information security, possess the education and skills to fulfill these duties, and attend periodic trainings as necessary. ​ In an effort to deter and detect cyber threats, we provide all employees, including part-time and temporary employees, with periodic training, including training related to data protection, cybersecurity and incident response, and prevention and compliance, which covers timely and relevant topics, including social engineering, phishing, password protection, confidential data protection, asset use and mobile security, and educates employees on the importance of reporting all incidents immediately.
Collectively, the members of our Cybersecurity Committee have notable experience in managing information security, possess the education and skills to fulfill these duties, and attend periodic trainings as necessary. 104 Table of Contents In an effort to deter and detect cyber threats, we provide all employees, including part-time and temporary employees, with periodic training, including training related to data protection, cybersecurity and incident response, and prevention and compliance, which covers timely and relevant topics, including social engineering, phishing, password protection, confidential data protection, asset use and mobile security, and educates employees on the importance of reporting all incidents immediately.
Cybersecurity ​ We have certain processes for assessing, identifying and managing cybersecurity risks, which are built into our overall risk management program and are designed to help protect our information assets and operations from internal and external cyber threats and to protect the information of employees, customers, vendors, and other individuals, such as subjects enrolled in our clinical trials, from unauthorized access or attack, as well as secure our networks and systems.
Cybersecurity We have certain processes for identifying, assessing and managing cybersecurity risks, which are built into our overall risk management program and are designed to help protect our people, technology, products, information and operations from internal and external cyber threats and to protect the information of employees, customers, vendors, and other individuals, such as subjects enrolled in our clinical trials, from unauthorized access or attack, as well as secure our networks and systems.
On our management team, our Chief Financial Officer, or CFO, leads the operational oversight of company-wide cybersecurity 103 Table of Contents strategy, policy, standards and processes and works across relevant departments to assess and help prepare us and our employees, customers, vendors and other individuals to address cybersecurity risks.
On our management team, our Chief Financial Officer and Chief Operating Officer, or CFO and COO, leads the operational oversight of company-wide cybersecurity strategy, policy, standards and processes and works across relevant departments to assess and help prepare us and our employees, customers, vendors and other individuals to address cybersecurity risks.
This does not imply that we meet any particular technical standards, specifications, or requirements of the NIST Framework, only that we use these standards as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
This does not imply that we meet any particular technical standards, specifications, or requirements of the NIST Framework, but rather only that we use these standards as a guide to help us mature our security posture in order to identify, assess, and manage cybersecurity risks relevant to our business.
We consider the internal risk oversight programs of third-party service providers before engaging them in order to help protect us from any related vulnerabilities. ​ We do not believe that there are currently any known risks from cybersecurity threats that are reasonably likely to materially affect us or our business strategy, results of operations or financial condition. ​ The Audit Committee of our board of directors provides direct oversight over cybersecurity risk and provides updates to the board of directors regarding such oversight as deemed necessary.
We do not believe that there are currently any known risks from cybersecurity threats that are reasonably likely to materially affect us or our business strategy, results of operations or financial condition. The Audit Committee of our board of directors provides direct oversight over cybersecurity risk and provides updates to the board of directors regarding such oversight as deemed necessary.
We have designed our processes based on, and periodically assess our processes against, the National Institute of Standards and Technology Cybersecurity Framework Special Publication 800-53, 800-61, rev 2, or the NIST Framework.
Our cybersecurity program is built upon, and we periodically assess our processes against, the National Institute of Standards and Technology, or NIST, Cybersecurity Framework Special Publication 800-53, and our incident response capabilities align with NIST 800-61, revision 2, or collectively, the NIST Framework.
We engage certain external parties, including computer security firms, to assist us with the identification, verification, and validation of cybersecurity risks, and to support mitigation efforts if necessary.
We engage certain external parties, including information technology security firms, to assist us with the identification, verification, and validation of cybersecurity risks, and to support mitigation efforts if necessary. We consider the internal risk oversight programs of third-party service providers before engaging them in order to help protect us from any related vulnerabilities.
Added
Our CFO and COO has more than ten years of experience managing information technology teams of operating companies in the biotechnology industry.
Added
The Executive Director IT and Cybersecurity has over ten years of offensive and defensive cybersecurity experience with departments of the U.S. government, international alliances and small to large biopharmaceutical companies.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our facilities consist of leased office space, laboratory space and manufacturing facilities in Bedford, Massachusetts. We occupy approximately 121,000 square feet of space.
Biggest changeItem 2. Properties Our facilities consist of leased office space, laboratory space and manufacturing facilities in Bedford, Massachusetts. We occupy approximately 91,000 square feet of space. The lease for approximately 71,000 square feet of this space expires in July 2027, and the lease for approximately 20,000 square feet of this space, which includes our manufacturing facility, expires in July 2028.
We do not intend to renew the lease that expires in March 2024 nor do we intend to lease new space, as we believe that our remaining current facilities are suitable and adequate to meet our current needs. ​
We believe our current facilities are suitable and adequate to meet our current needs. ​
Removed
The lease for approximately 71,000 square feet of this space expires in July 2027, the lease for approximately 30,000 square feet of this space expires in March 2024, and the lease for approximately 20,000 square feet of this space, which includes our manufacturing facility, expires in July 2028.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities We did not sell any shares of our common stock, shares of our preferred stock or warrants to purchase shares of our stock, or grant any stock options or restricted stock awards, during the year ended December 31, 2023 that were not registered under the Securities Act of 1933, as amended, or the Securities Act, and that have not otherwise been described in an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q.
Biggest changeRecent Sales of Unregistered Securities We did not sell any shares of our common stock, shares of our preferred stock or warrants to purchase shares of our stock, or grant any stock options or restricted stock awards, during the year ended December 31, 2024 that were not registered under the Securities Act of 1933, as amended, or the Securities Act, and that have not otherwise been described in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item will be set forth in the definitive proxy statement we will file in connection with our 2024 Annual Meeting of Stockholders and is incorporated by reference herein.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item will be set forth in the definitive proxy statement we will file in connection with our 2025 Annual Meeting of Stockholders and is incorporated by reference herein.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer’s Purchases of Equity Securities Our common stock has been publicly traded on the Nasdaq Global Market under the symbol “OCUL” since July 25, 2014. Holders As of March 7, 2024, there were approximately 29 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer’s Purchases of Equity Securities Our common stock has been publicly traded on the Nasdaq Global Market under the symbol “OCUL” since July 25, 2014. Holders As of February 27, 2025, there were approximately 10 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe expect to continue to incur losses in connection with our ongoing activities, particularly as we advance the clinical trials of our product candidates in development and increase our sales and marketing resources to support the commercialization of DEXTENZA and the potential launch of our product candidates, subject to receiving FDA approval. 115 Table of Contents We anticipate we will incur substantial expenses if and as we: ● continue our ongoing clinical trials, including the SOL-1 trial of AXPAXLI for the treatment of wet AMD; our Phase 1 clinical trials of AXPAXLI for the treatment of wet AMD; the HELIOS trial of AXPAXLI for the treatment of NPDR; our Phase 2 clinical trial of PAXTRAVA for the treatment of OAG or OHT; our Phase 2 clinical trial of OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease; ● continue to monitor subjects according to the applicable clinical trial protocols in our clinical trials that have been completed, including our clinical trial to evaluate DEXTENZA in pediatric subjects following cataract surgery; ● determine to initiate new clinical trials to evaluate our product candidates, including our planned SOL-2 trial of AXPAXLI for the treatment of wet AMD; our planned pivotal clinical trials of AXPAXLI for the treatment of NPDR; and, subject to our evaluation of strategic alternatives, possible pivotal clinical trials of PAXTRAVA for the reduction of IOP in patients with primary OAG or OHT; ● continue to commercialize DEXTENZA in the United States; ● continue to develop and expand our sales, marketing and distribution capabilities for DEXTENZA and any other products or product candidates we intend to commercialize; ● conduct or support research and development activities on, and seek regulatory approvals for, DEXTENZA and PAXTRAVA in specified Asian markets pursuant to our license agreement and collaboration with AffaMed Therapeutics Limited, or AffaMed; ● continue the research and development of our other product candidates; ● seek to identify and develop additional product candidates; ● seek marketing approvals for any of our product candidates that successfully complete clinical development; ● scale up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates and commercialization of any of our product candidates for which we obtain marketing approval, and expand our facilities to accommodate this scale up and any corresponding growth in personnel; ● renovate our existing facilities including research and development laboratories, manufacturing space and office space; ● maintain, expand and protect our intellectual property portfolio; ● expand our operational, financial, administrative and management systems and personnel, including personnel to support our clinical development, manufacturing and commercialization efforts; ● defend ourselves against legal proceedings, if any; ● make investments to improve our defenses against cybersecurity and establish and maintain cybersecurity insurance; ● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and commercialization efforts; and ● continue to operate as a public company. 116 Table of Contents The amount and timing of these expenses determines our future capital requirements.
Biggest changeWe anticipate we will incur substantial expenses if and as we: ● continue our ongoing clinical trials, including the SOL-1 and the SOL-R trials, our two registrational Phase 3 clinical trials of AXPAXLI for the treatment of wet AMD; ● initiate any additional clinical trials we might determine in the future to conduct for our product candidates, including any clinical trials that we might conduct for AXPAXLI for the treatment of NPDR and DME; ● scale up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates, including AXPAXLI, and commercialization of any of our product candidates for which we obtain marketing approval, and expand our facilities to accommodate this scale up and any corresponding growth in personnel; ● scale up our sales, marketing and distribution capabilities to prepare for commercialization of any product candidates for which we intend to obtain marketing approval; ● seek marketing approvals for any of our product candidates that successfully complete clinical development; ● continue to monitor subjects according to the applicable clinical trial protocols, or prepare submission documentation such as clinical study reports, for our clinical trials that have been completed; ● continue to commercialize DEXTENZA in the United States; ● maintain, expand and protect our intellectual property portfolio; 116 Table of Contents ● expand our operational, quality assurance, financial, administrative and management systems and personnel, including personnel to support our clinical development, manufacturing and commercialization efforts; ● defend ourselves against legal proceedings, if any; ● make investments to improve our defenses against cybersecurity threats and establish and maintain cybersecurity insurance; ● increase our product liability and clinical trial insurance coverage as we expand our clinical trials and commercialization efforts; and ● continue to operate as a public company.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include: ● employee-related expenses, including salaries, related benefits and payroll taxes, travel and stock-based compensation expense for employees engaged in research and development, clinical and regulatory and other related functions; ● expenses incurred in connection with the clinical trials of our product candidates, including with the investigative sites that conduct our clinical trials and under agreements with contract research organizations, or CROs; ● expenses relating to regulatory activities, including filing fees paid to the FDA for our submissions for product approvals; ● expenses associated with developing our pre-commercial manufacturing capabilities and manufacturing clinical study materials; ● ongoing research and development activities relating to our core bioresorbable hydrogel technology and improvements to this technology; ● facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and supplies; ● costs relating to the supply and manufacturing of product inventory, prior to approval by the FDA or other regulatory agencies of our products; and ● expenses associated with preclinical development activities.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include: ● expenses incurred in connection with the clinical trials of our product candidates, including with the investigative sites that conduct our clinical trials and under agreements with contract research organizations, or CROs; ● employee-related expenses, including salaries, related benefits and payroll taxes, travel and stock-based compensation expense for employees engaged in research and development, clinical and regulatory and other related functions; ● expenses relating to regulatory activities, including filing fees paid to the FDA for our submissions for product approvals; ● expenses associated with developing our pre-commercial manufacturing capabilities and manufacturing clinical study materials; 109 Table of Contents ● ongoing research and development activities relating to our core bioresorbable hydrogel technology and improvements to this technology; ● facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and supplies; ● costs relating to the supply and manufacturing of product inventory, prior to approval by the FDA or other regulatory agencies of our products; and ● expenses associated with preclinical development activities.
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties and should be read together with the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties and should be read together with the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Our pledge of our assets as collateral to secure our obligations under the Barings Credit Facility pursuant to which we have a total borrowing capacity of $82.5 million, which has been fully drawn down, may limit our ability to obtain additional debt or other financing.
The covenants under the Barings Credit Facility and our pledge of our assets as collateral to secure our obligations under the Barings Credit Facility pursuant to which we have a total borrowing capacity of $82.5 million, which has been fully drawn down, may limit our ability to obtain additional debt or other financing.
Some of the figures that we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, and other factors. Because these estimates and assumptions are necessarily subjective, the amounts we will actually pay in future periods may vary from those reflected in the table.
Some of the figures that we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, and other factors. Because 119 Table of Contents these estimates and assumptions are necessarily subjective, the amounts we will actually pay in future periods may vary from those reflected in the table.
Comparison of the Years Ended December 31, 2022 and 2021 A discussion of changes in our results of operations during the year ended December 31, 2022 compared to the year ended December 31, 2021 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
Comparison of the Years Ended December 31, 2023 and 2022 A discussion of changes in our results of operations during the year ended December 31, 2023 compared to the year ended December 31, 2022 has been omitted from this Annual Report on Form 10-K but may be found in “Item 7.
The Barings Credit Agreement contains an embedded obligation to pay the Royalty Fee, or the Royalty Fee Obligation, that meets the criteria to be bifurcated and accounted for separately from the Barings Credit Facility, or the Royalty Fee Derivative Liability. Royalty payments are estimated using a Monte Carlo simulation.
Derivative Liabilities The Barings Credit Agreement contains the Royalty Fee Derivative Liability, an embedded obligation to pay the Royalty Fee, that meets the criteria to be bifurcated and accounted for separately from the Barings Credit Facility. Royalty payments are estimated using a Monte Carlo simulation.
Operating Expenses Cost of Product Revenue Cost of product revenue consists primarily of costs of DEXTENZA product revenue, which include: ● Direct materials costs; ● Royalties; 108 Table of Contents ● Direct labor, which includes employee-related expenses, including salaries, related benefits and payroll taxes, and stock-based compensation expense for employees engaged in the production process; ● Manufacturing overhead costs, which includes rent, depreciation, and indirect labor costs associated with the production process; ● Transportation costs; and ● Cost of scrap material.
Operating Expenses Cost of Product Revenue Cost of product revenue consists primarily of costs of DEXTENZA product revenue, which include: ● Direct materials costs; ● Royalties; ● Direct labor, which includes employee-related expenses, including salaries, related benefits and payroll taxes, and stock-based compensation expense for employees engaged in the production process; ● Manufacturing overhead costs, which includes rent, depreciation, and indirect labor costs associated with the production process; ● Transportation costs; and ● Cost of scrap material.
The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized 122 Table of Contents as revenue, but remains in the distribution channel inventories at the end of each reporting period.
The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period.
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 are required to measure at fair value at inception and then at the end of each reporting period until the embedded derivative is settled.
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, or the Royalty Fee Derivative Liability, which we are required to measure at fair value at inception and then at the end of each reporting period until the embedded derivative is settled.
We do not have any committed external source of funds, although our license agreement with AffaMed provides for AffaMed’s reimbursement of certain clinical expenses incurred by us in connection with our collaboration and for our potential receipt of development 117 Table of Contents and sales milestone payments and royalty payments.
We do not have any committed external source of funds, although our license agreement with AffaMed provides for AffaMed’s reimbursement of certain clinical expenses incurred by us in connection with our collaboration and for our potential receipt of development and sales milestone payments and royalty payments.
In 2019, in connection with the issuance of our Convertible Notes, we identified an embedded derivative liability, which we are required to measure at fair value at inception and then 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, or the Conversion Option Derivative Liability, which we are required to measure at fair value at inception and then at the end of each reporting period until the embedded derivative is settled.
In August 2023, we amended the Convertible Notes and accounted for the amendment as an extinguishment of debt in accordance with the guidance in Accounting Standards Codification Topic 470-50 Debt . Application of this accounting standard resulted in a gain on extinguishment.
In August 2023, we amended the Convertible Notes and accounted for the amendment, or the Convertible Notes Amendment, as an extinguishment of debt in accordance with the guidance in Accounting Standards Codification Topic 470-50 Debt . Application of this accounting standard resulted in a non-cash gain on extinguishment.
The net loss for 2023 comprises of a loss of $4.5 million from the change in the fair value of the derivative liability related to a conversion option embedded in the Convertible Notes and $0.9 million related to royalty fees under the Barings Credit Agreement that we paid or accrued, partially offset by a gain of $0.2 million from the change in the fair value of the derivative liability related to the Barings Credit Agreement.
The net loss for 2023 comprises of a loss of $4.5 million from the change in the fair value of the Conversion Option Derivative Liability and $0.9 million related to royalty fees under the Barings Credit Agreement that we paid or accrued, partially offset by a gain of $0.2 million from the change in the fair value of the Royalty Fee Derivative Liability.
Investing activities. Net cash used in investing activities was $6.1 million for the year ended December 31, 2023, consisting of cash used to purchase property and equipment and leasehold improvements. Net cash used in investing activities was $3.7 million for the year ended December 31, 2022, consisting of cash used to purchase property and equipment.
Net cash used in investing activities was $1.3 million for the year ended December 31, 2024, consisting of cash used to purchase property and equipment and leasehold improvements. Net cash used in investing activities was $6.1 million for the year ended December 31, 2023, consisting of cash used to purchase property and equipment and leasehold improvement.
Selling and Marketing Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase ​ 2023 2022 (Decrease) ​ ​ (in thousands) Personnel related (including stock-based compensation) ​ $ 27,434 ​ $ 26,679 ​ $ 755 Professional fees ​ 8,287 ​ 9,077 ​ (790) Facility related and other ​ 4,828 ​ 4,166 ​ 662 Total selling and marketing expenses ​ $ 40,549 ​ $ 39,922 ​ $ 627 ​ Selling and marketing expenses were $40.5 million and $39.9 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $0.6 million year-over-year.
Selling and Marketing Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase (Decrease) ​ 2024 2023 ​ 2022 2024 - 2023 2023 - 2022 ​ ​ (in thousands) Personnel-related (including stock-based compensation) ​ $ 27,576 ​ $ 27,434 ​ $ 26,679 ​ $ 142 ​ $ 755 Professional fees ​ 8,899 ​ 8,287 ​ 9,077 ​ 612 ​ ​ (790) Facility-related and other ​ 5,115 ​ 4,828 ​ 4,166 ​ 287 ​ ​ 662 Total selling and marketing expenses ​ $ 41,590 ​ $ 40,549 ​ $ 39,922 ​ $ 1,041 ​ $ 627 ​ Selling and marketing expenses were $41.6 million and $40.5 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $1.0 million year-over-year.
Each pre-funded warrant has an exercise price of $0.001 per share, is currently exercisable and will remain exercisable until exercised in full. 107 Table of Contents 2023 Equity Financing In December 2023, we completed an underwritten public offering of 35,420,000 shares of our common stock at a public offering price of $3.25 per share.
Each pre-funded warrant has an exercise price of $0.001 per share, is currently exercisable and will remain exercisable until exercised in full. 115 Table of Contents On December 18, 2023, we sold 35,420,000 shares of our common stock in an underwritten public offering at a public offering price of $3.25 per share.
In November 2018, the FDA approved DEXTENZA for the treatment of ocular pain following ophthalmic surgery. We entered into a limited number of arrangements with specialty distributors in the United States to distribute DEXTENZA.
Revenue Recognition We recognize product revenue from the sales of DEXTENZA product. In November 2018, the FDA approved DEXTENZA for the treatment of ocular pain following ophthalmic surgery. We entered into a limited number of arrangements with specialty distributors in the United States to distribute DEXTENZA.
Interest income was $4.0 million and $0.8 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $3.2 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. Interest Expense .
Other Income (Expense), Net Interest Income . Interest income was $20.3 million and $4.0 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $16.3 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. Interest Expense .
We anticipate that our general and administrative expenses will increase in the future as we support our continued development and commercialization of our product candidates.
We anticipate that our research and development expenses will increase in the future as we support our continued development of our product candidates.
Our future capital requirements will depend on many factors, including: ​ ● the level of product sales from DEXTENZA and any additional products for which we obtain marketing approval in the future and the level of third-party reimbursement of such products; ● the costs of sales, marketing, distribution and other commercialization efforts with respect to DEXTENZA and any additional products for which we obtain marketing approval in the future, including cost increases due to inflation; ● the progress, costs and outcome of our ongoing and planned clinical trials of our product candidates, in particular AXPAXLI for the treatment of wet AMD and NPDR, and, subject to our evaluation of strategic alternatives, PAXTRAVA for the treatment of OAG or OHT; ● the scope, progress, costs and outcome of preclinical development and clinical trials of our other product candidates; ● the costs, timing and outcome of regulatory review of our product candidates by the FDA, the EMA or other regulatory authorities; ● the costs of scaling up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates and commercialization of any of our product candidates for which we obtain marketing approval and of expanding our facilities to accommodate this scale up and any corresponding growth in personnel; ● the extent of our debt service obligations and our ability, if desired, to refinance any of our existing debt on terms that are more favorable to us; ● the amounts we are entitled to receive, if any, as reimbursements for clinical trial expenditures, development, regulatory, and sales milestone payments, and royalty payments under our license agreement with AffaMed; ● the extent to which we choose to establish additional collaboration, distribution or other marketing arrangements for our products and product candidates; ● the costs and outcomes of any legal actions and proceedings; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and ● the extent to which we acquire or invest in other businesses, products and technologies.
Our future capital requirements will depend on many factors, including: ● the progress, costs and outcome of our ongoing clinical trials of AXPAXLI for the treatment of wet AMD; ● the timing, scope, progress, costs and outcome of a potential registrational clinical program of AXPAXLI for the treatment of NPDR and DME; ● the costs, timing and outcome of regulatory review of AXPAXLI or our other product candidates by the FDA, the European Medicines Agency, or EMA, or other regulatory authorities; ● the scope, progress, costs and outcome of preclinical development and any additional clinical trials we might determine in the future to conduct for our other product candidates, including PAXTRAVA for the reduction of intraocular pressure, or IOP, in patients with primary open-angle glaucoma, or OAG, or ocular hypertension, or OHT; ● the level of product sales from DEXTENZA and any additional products for which we obtain marketing approval in the future and the level of third-party reimbursement of such products; ● the costs of sales, marketing, distribution and other commercialization efforts with respect to DEXTENZA and any of our product candidates for which we obtain marketing approval in the future, including cost increases due to inflation; ● the costs of scaling up our manufacturing processes and capabilities to support sales of commercial products, clinical trials of our product candidates, including AXPAXLI, and commercialization of any of our product candidates for which we obtain marketing approval, including AXPAXLI, and of expanding our facilities to accommodate this scale up and any corresponding growth in personnel; ● the extent of our debt service obligations and our ability, if desired, to refinance any of our existing debt on terms that are more favorable to us; ● the amounts we are entitled to receive, if any, as reimbursements for clinical trial expenditures, development, regulatory, and sales milestone payments, and royalty payments under our license agreement with AffaMed; 117 Table of Contents ● the extent to which we choose to establish additional collaboration, distribution or other marketing arrangements for our products and product candidates; ● the costs and outcomes of any legal actions and proceedings; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and ● the extent to which we acquire or invest in other businesses, products and technologies.
Product Revenue, Net — We derive our product revenues from the sale of DEXTENZA in the United States to customers, which includes a limited number of specialty distributors, who then subsequently resell DEXTENZA to physicians, clinics and certain medical centers or hospitals. We also sell DEXTENZA directly to a small population of ASCs, based on individually negotiated direct distribution agreements.
Product Revenue, Net — We derive our product revenues from the sale of DEXTENZA in the United States to customers, which includes a limited number of specialty distributors, who then subsequently resell DEXTENZA to ASCs, HOPDs, and physicians’ offices. We also sell DEXTENZA directly to a small population of ASCs and physicians’ offices, based on individually negotiated direct distribution agreements.
Components of our Financial Performance Revenue 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 and hospital out-patient departments, or HOPDs, and physicians’ offices, and when we sell DEXTENZA on a direct basis to a small number of ASCs.
Components of our Financial Performance Revenue 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.
Net cash used in investing activities was $1.2 million for the year ended December 31, 2021, consisting of cash used to purchase property and equipment. Financing activities.
Net cash used in investing activities was $3.7 million for the year ended December 31, 2022, consisting of cash used to purchase property and equipment. Financing activities.
We recognize collaboration revenue based on a cost-to-cost method. ​ 111 Table of Contents Research and Development Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase ​ 2023 2022 (Decrease) ​ ​ (in thousands) Direct research and development expenses by program: ​ ​ ​ AXPAXLI for wet AMD ​ ​ 8,750 ​ ​ 5,296 ​ ​ 3,454 PAXTRAVA for glaucoma or ocular hypertension ​ 3,600 ​ 2,835 ​ 765 AXPAXLI for diabetic retinopathy ​ $ 2,868 ​ $ 659 ​ $ 2,209 DEXTENZA for post-surgical ocular inflammation and pain ​ ​ 2,224 ​ ​ 1,649 ​ ​ 575 OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease ​ 837 ​ 328 ​ 509 OTX-CSI for treatment of dry eye disease ​ 161 ​ 453 ​ (292) DEXTENZA for ocular itching associated with allergic conjunctivitis ​ ​ — ​ ​ 21 ​ ​ (21) Preclinical programs ​ ​ 1,501 ​ ​ 1,947 ​ ​ (446) Unallocated expenses: ​ ​ ​ ​ ​ Personnel costs ​ 27,068 ​ 25,106 ​ 1,962 All other costs ​ 14,046 ​ 15,168 ​ (1,122) Total research and development expenses ​ $ 61,055 ​ $ 53,462 ​ $ 7,593 ​ Research and development expenses were $61.1 million and $53.5 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $7.6 million year-over-year.
We recognize collaboration revenue based on a cost-to-cost method. 112 Table of Contents Research and Development Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase (Decrease) ​ 2024 2023 ​ 2022 2024 - 2023 2023 - 2022 ​ (in thousands) Direct research and development expenses by program: ​ ​ ​ ​ ​ ​ ​ ​ ​ AXPAXLI for wet AMD ​ $ 57,507 ​ $ 8,750 ​ $ 5,296 ​ $ 48,757 ​ $ 3,454 AXPAXLI for NPDR ​ 2,301 ​ 2,868 ​ ​ 659 ​ (567) ​ 2,209 PAXTRAVA for OAG or OHT ​ ​ 2,331 ​ ​ 3,600 ​ ​ 2,835 ​ ​ (1,269) ​ ​ 765 DEXTENZA for post-surgical ocular inflammation and pain ​ ​ 2,115 ​ ​ 2,224 ​ ​ 1,649 ​ ​ (109) ​ ​ 575 OTX-DED for the short-term treatment of the signs and symptoms of dry eye disease ​ 499 ​ 837 ​ ​ 328 ​ (338) ​ 509 OTX-CSI for treatment of dry eye disease ​ — ​ 161 ​ ​ 453 ​ (161) ​ (292) DEXTENZA for ocular itching associated with allergic conjunctivitis ​ ​ — ​ ​ — ​ ​ 21 ​ ​ — ​ ​ (21) Preclinical programs ​ ​ 853 ​ ​ 1,501 ​ ​ 1,947 ​ ​ (648) ​ ​ (446) Unallocated expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ — Personnel costs ​ 37,818 ​ 27,068 ​ ​ 25,106 ​ 10,750 ​ 1,962 All other costs ​ 24,211 ​ 14,046 ​ ​ 15,168 ​ 10,165 ​ (1,122) Total research and development expenses ​ $ 127,635 ​ $ 61,055 ​ $ 53,462 ​ $ 66,580 ​ $ 7,593 ​ Research and development expenses were $127.6 million and $61.1 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $66.6 million year-over-year.
Based on our current operating plan, which includes estimates of anticipated cash inflows from DEXTENZA product sales and cash outflows from operating expenses and capital expenditures and reflects our observance of the minimum liquidity covenant of $20.0 million under the Barings Credit Agreement, we believe that our existing cash and cash equivalents as of December 31, 2023, plus the cash received from the 2024 Private Placement of our common stock in February 2024 of $325.0 million before deducting placement agent fees and other offering expenses, will enable us to fund our planned operating expenses, debt service obligations and capital expenditure requirements at least into 2028.
Based on our current operating plan, which includes estimates of anticipated cash inflows from DEXTENZA product sales and cash outflows from operating expenses and capital expenditures and reflects our observance of the minimum liquidity covenant of $20.0 million under the Barings Credit Agreement, we believe that our existing cash and cash equivalents as of December 31, 2024 will enable us to fund our planned operating expenses, debt service obligations and capital expenditure requirements into 2028.
We recognized a loss from the change in fair values of our derivative liabilities of $5.2 million for the year ended December 31, 2023, compared to a gain of $13.8 million for the year ended December 31, 2022.
Change in Fair Value of Derivative Liabilities. We recognized a net loss from the change in fair values of our derivative liabilities of $0.5 million for the year ended December 31, 2024, compared to a net loss of $5.2 million for the year ended December 31, 2023.
Transaction Price, including Variable Consideration — Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established.
Product revenues are recorded net of applicable reserves for variable consideration, including discounts and allowances. 121 Table of Contents Transaction Price, including Variable Consideration — Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established.
The commitments under the Barings Credit Agreement represent repayment of principal only. Future payments of interest under the Barings Credit Agreement depends on the level of SOFR, and future payments of royalty fees depend on our future revenue from DEXTENZA, both of which cannot be estimated at this time.
Future payments of interest under the Barings Credit Agreement depends on the level of the Secured Overnight Financing Rate, or SOFR, and future payments of royalty fees depend on our future revenue from DEXTENZA, both of which cannot be estimated at this time.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 ​ ​ (in thousands) Cash used in operating activities ​ $ (70,234) ​ $ (59,603) ​ $ (65,550) Cash used in investing activities ​ (6,087) ​ (3,715) ​ (1,194) Cash provided by financing activities ​ 169,828 ​ 1,454 ​ 2,851 Net increase (decrease) in cash and cash equivalents ​ $ 93,507 ​ $ (61,864) ​ $ (63,893) ​ Operating activities.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 2022 Cash used in operating activities ​ $ (134,677) ​ $ (70,234) ​ $ (59,603) Cash used in investing activities ​ (1,288) ​ (6,087) ​ (3,715) Cash provided by financing activities ​ 332,110 ​ 169,828 ​ 1,454 Net increase in cash and cash equivalents ​ $ 196,145 ​ $ 93,507 ​ $ (61,864) ​ Operating activities.
The trade payment terms with our customers do not exceed one year and therefore we have elected to apply the practical expedient and no amount of consideration has been allocated as a financing component. Product revenues are recorded net of applicable reserves for variable consideration, including discounts and allowances.
The trade payment terms with our customers do not exceed one year and therefore we have elected to apply the practical expedient and no amount of consideration has been allocated as a financing component.
Interest expense was $11.3 million and $7.0 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $4.3 million year-over-year.
Interest expense was $13.6 million and $11.3 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $2.2 million year-over-year.
In August 2023, we also extinguished our obligations under the MidCap Credit Facility, resulting in a loss on extinguishment. 110 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2023 and December 31, 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase ​ 2023 2022 (Decrease) ​ ​ (in thousands) Revenue: ​ ​ ​ Product revenue, net ​ $ 57,870 ​ $ 50,457 ​ $ 7,413 Collaboration revenue ​ 573 ​ 1,037 ​ (464) Total revenue, net ​ 58,443 ​ 51,494 ​ 6,949 Costs and operating expenses: ​ ​ ​ Cost of product revenue ​ 5,281 ​ 4,540 ​ 741 Research and development ​ 61,055 ​ 53,462 ​ 7,593 Selling and marketing ​ 40,549 ​ 39,922 ​ 627 General and administrative ​ 33,940 ​ 32,224 ​ 1,716 Total costs and operating expenses ​ 140,825 ​ 130,148 ​ 10,677 Loss from operations ​ (82,382) ​ (78,654) ​ (3,728) Other income (expense): ​ ​ ​ Interest income ​ 3,983 ​ 798 ​ 3,185 Interest expense ​ (11,338) ​ (7,022) ​ (4,316) Change in fair value of derivative liabilities ​ ​ (5,188) ​ 13,841 ​ ​ (19,029) Gains and losses on extinguishment of debt, net ​ ​ 14,190 ​ — ​ ​ 14,190 Other expense, net ​ (1) ​ (1) ​ — Total other income, net ​ 1,646 ​ 7,616 ​ (5,970) Net loss ​ $ (80,736) ​ $ (71,038) ​ $ (9,698) ​ Product Revenue, net ​ Our product revenue, net was $57.9 million and $50.5 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $7.4 million year-over-year.
In August 2023, we also extinguished our obligations under the MidCap Credit Facility, resulting in a non-cash loss on extinguishment. 111 Table of Contents Results of Operations The following table summarizes our results of operations for the years ended December 31, 2024, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase (Decrease) ​ 2024 2023 ​ 2022 2024 - 2023 2023 - 2022 ​ ​ (in thousands) Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Product revenue, net ​ $ 63,461 ​ $ 57,870 ​ $ 50,457 ​ $ 5,591 ​ $ 7,413 Collaboration revenue ​ 262 ​ 573 ​ 1,037 ​ (311) ​ (464) Total revenue, net ​ 63,723 ​ 58,443 ​ 51,494 ​ 5,280 ​ 6,949 Costs and operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ Cost of product revenue ​ 5,626 ​ 5,281 ​ 4,540 ​ 345 ​ ​ 741 Research and development ​ 127,635 ​ 61,055 ​ 53,462 ​ 66,580 ​ ​ 7,593 Selling and marketing ​ 41,590 ​ 40,549 ​ 39,922 ​ 1,041 ​ ​ 627 General and administrative ​ 60,653 ​ 33,940 ​ 32,224 ​ 26,713 ​ ​ 1,716 Total costs and operating expenses ​ 235,504 ​ 140,825 ​ 130,148 ​ 94,679 ​ 10,677 Loss from operations ​ (171,781) ​ (82,382) ​ (78,654) ​ (89,399) ​ (3,728) Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 20,282 ​ 3,983 ​ 798 ​ 16,299 ​ ​ 3,185 Interest expense ​ (13,577) ​ (11,338) ​ (7,022) ​ (2,239) ​ ​ (4,316) Change in fair value of derivative liabilities ​ ​ (480) ​ (5,188) ​ 13,841 ​ ​ 4,708 ​ ​ (19,029) Gains and losses on extinguishment of debt, net ​ ​ (27,950) ​ 14,190 ​ — ​ ​ (42,140) ​ ​ 14,190 Other expense, net ​ — ​ (1) ​ (1) ​ 1 ​ ​ — Total other income, net ​ (21,725) ​ 1,646 ​ 7,616 ​ (23,371) ​ (5,970) Net loss ​ $ (193,506) ​ $ (80,736) ​ $ (71,038) ​ $ (112,770) ​ $ (9,698) ​ Product Revenue, net Our product revenue, net was $63.5 million and $57.9 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $5.6 million year-over-year.
Our net loss was primarily attributed to research and development activities, selling and marketing costs and our general and administrative expenses partially offset by $58.4 million of revenue and other income of $1.6 million.
Our net loss was primarily attributed to operating expenses of $140.8 million, which we incurred primarily for research and development activities, selling and marketing activities, and general and administrative activities, partially offset by $58.4 million of revenue and a net non-operating income of $1.6 million.
Our net loss was primarily attributed to research and development activities, selling and marketing costs and our general and administrative expenses partially offset by $51.5 million of revenue and $7.6 million of other income.
Our net loss was primarily attributed to operating expenses of $130.1 million, which we incurred primarily for research and development activities, selling and marketing activities, and general and administrative activities, partially offset by $51.5 million of revenue and a net non-operating income of $7.6 million.
In connection with entering the Barings Credit Facility, in August 2023, we paid MidCap Financial Trust, as administrative agent, and our other lenders an aggregate of $26.2 million in satisfaction of our obligations under our prior credit facility, which we refer to as the MidCap Credit Facility.
In connection with entering the Barings Credit Facility, in August 2023, we paid MidCap Financial Trust, as administrative agent, and our other lenders an aggregate of $26.2 million in satisfaction of our obligations under the MidCap Credit Facility. Funding Requirements We have a history of incurring significant operating losses.
While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this annual report, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements. 120 Table of Contents Revenue Recognition We recognize product revenue from the sales of DEXTENZA product.
While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Contractual Obligations and Commitments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than ​ 1 to 3 ​ 3 to 5 ​ More than ​ Total 1 Year Years Years 5 Years ​ ​ (in thousands) Operating lease commitments ​ $ 10,713 ​ $ 2,504 ​ ​ 7,493 ​ ​ 716 ​ ​ — Barings Credit Agreement ​ 82,474 ​ — ​ ​ — ​ ​ — ​ ​ 82,474 Convertible Notes ​ ​ 61,535 ​ ​ — ​ ​ — ​ ​ — ​ ​ 61,535 Total ​ $ 154,722 ​ $ 2,504 ​ $ 7,493 ​ $ 716 ​ $ 144,009 ​ The table above includes our enforceable and legally binding obligations and future commitments at December 31, 2023, as well as obligations related to contracts that we are likely to continue, regardless of the fact that they may be cancelable at December 31, 2023.
Contractual Obligations and Commitments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than ​ 1 to 3 ​ 3 to 5 ​ More than ​ Total 1 Year Years Years 5 Years ​ ​ (in thousands) Operating lease commitments ​ $ 8,737 ​ $ 2,722 ​ ​ 5,265 ​ ​ 750 ​ ​ — Barings Credit Agreement ​ 82,474 ​ — ​ ​ — ​ ​ 82,474 ​ ​ — Total ​ $ 91,211 ​ $ 2,722 ​ $ 5,265 ​ $ 83,224 ​ $ — ​ The table above includes our enforceable and legally binding obligations and future commitments at December 31, 2024, as well as obligations related to contracts that we are likely to continue, regardless of the fact that they may be cancelable at December 31, 2024.
The increase is primarily due to higher balances of debt outstanding as a result of us drawing $82.5 million of debt under the Barings Credit Facility in August 2023, partially offset by us paying off the MidCap Credit Facility of $25.0 million in August 2023. Change in Fair Value of Derivative Liabilities.
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, and higher interest rates.
Net cash used in operating activities was $59.6 million for the year ended December 31, 2022, primarily resulting from our net loss of $71.0 million, adjusted for changes in the fair value of our derivative liabilities of $13.8 million, partially offset by $25.2 million of other non-cash items and changes in operating assets and liabilities.
Net cash used in operating activities was $59.6 million for the year ended December 31, 2022, primarily resulting from our net loss of $71.0 million, partially offset by non-cash adjustments of $10.1 million and net favorable changes in operating assets and liabilities of $1.3 million.
The changes in fair value of these derivative liabilities are recorded through the consolidated statement of operations and comprehensive loss and are presented under the caption change in fair value of derivative liabilities. Gains and Losses from Debt Extinguishment .
The settlement of the Conversion Option Derivative Liability occurred on March 28, 2024. The changes in fair value of these derivative liabilities are recorded through the consolidated statement of operations and comprehensive loss and are presented under the caption “change in fair value of derivative liabilities”. Gains and Losses from Debt Extinguishment .
Net cash used by unfavorable changes in our operating assets and liabilities during the year ended December 31, 2023 consisted primarily of net increases of prepaid expenses and other current assets of $5.0 million, net increases in accounts receivable of $4.9 million, partially offset by increases of accounts payable, excluding accounts payable related to additions to property and equipment, of $1.8 million, and increases in accrued expenses and other current liabilities, excluding accrued non-cash interest, of $0.8 million.
Net cash used by net unfavorable changes in our operating assets and liabilities during the year ended December 31, 2023 consisted primarily of increases of accounts receivables of $4.9 million, increases of prepaid expenses and other current assets of $3.8 million, partially offset by increases of other items, net, of $1.2 million.
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.
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.
Within research and development expenses, expenses for clinical programs increased $7.2 million, unallocated expenses increased $0.8 million, and expenses for preclinical programs decreased $0.4 million. For the year ended December 31, 2023, we incurred $18.4 million in direct research and development expenses for our products and product candidates compared to $11.2 million for the year ended December 31, 2022.
Within research and development expenses, direct expenses for clinical programs increased $46.3 million, unallocated expenses increased $20.9 million, and expenses for preclinical programs decreased $0.6 million. For the year ended December 31, 2024, we incurred $65.6 million in direct research and development expenses for our products and product candidates compared to $19.9 million for the year ended December 31, 2023.
Our liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period.
Our liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period. 122 Table of Contents Purchaser/Provider Discounts and Rebates —We offer rebate payments for which ASCs, HOPDs and other prescribers qualify by meeting quarterly purchase volumes of DEXTENZA under our volume-based rebate program.
We use internal resources in combination with third-party CROs, including clinical monitors and clinical research associates, to manage our clinical trials, monitor subject enrollment and perform data analysis for many of our clinical trials.
We use internal resources in combination with third-party CROs, including clinical monitors and clinical research associates, to manage our clinical trials, monitor subject enrollment and perform data analysis for many of our clinical trials. These employees work across multiple development programs and, therefore, we do not track their costs by program.
The increase was primarily due to an increase of $3.1 million in personnel related costs including stock-based compensation, which was partially offset by a decrease in professional fees of $0.8 million and a decrease of $0.6 million in facility related and other costs.
The increase was primarily due to an increase of $18.9 million in personnel-related costs including stock-based compensation, an increase in professional fees of $4.7 million and an increase of $3.0 million in facility related and other costs.
We have not included in the table above any payments to Incept under this license agreement as the amount, timing and likelihood of such payments are not known. ​ Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission, such relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets.
Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission, such relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheets. 120 Table of Contents Critical Accounting Policies and Significant Judgments and Estimates Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America.
In connection with entering the Barings Credit Facility, in August 2023, we paid MidCap Financial Trust, as administrative agent, and our other lenders an aggregate of $26.2 million in satisfaction of our obligations under the MidCap Credit Facility. 2024 Private Placement In February 2024, we sold 32,413,560 shares of our common stock at $7.52 per share and, in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 10,805,957 shares of our common stock at a price of $7.519 per pre-funded warrant for aggregate gross proceeds of approximately $325.0 million, before deducting placement agent fees and other offering expenses, under the 2024 Private Placement.
In February 2024, we sold 32,413,560 shares of our common stock at $7.52 per share and, in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 10,805,957 shares of our common stock at a price of $7.519 per pre-funded warrant for total net proceeds of approximately $316.4 million, after deducting placement agent fees and other offering expenses, in the 2024 Private Placement.
We enter into contracts in the normal course of business to assist in the performance of our research and development activities and other services and products for operating purposes.
We enter into contracts in the normal course of business to assist in the performance of our research and development activities and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts which are not included in contractual obligations and commitments.
We are currently conducting a pivotal Phase 3 clinical trial to evaluate AXPAXLI for the treatment of wet age-related macular degeneration, or wet AMD, which we refer to as the SOL-1 trial, and a Phase 1 clinical trial for the treatment of diabetic retinopathy.
AXPAXLI is currently in two repeat-dosing Phase 3 clinical trials for the treatment of wet age-related macular degeneration, or wet AMD, which we refer to as the SOL-1 and the SOL-R trials. 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.
All of our product revenue, net, was attributable to sales of DEXTENZA. ​ Our total gross-to-net provisions for the years ended December 31, 2023 and 2022 were 30.1% and 24.9%, respectively, of gross DEXTENZA product sales. ​ Collaboration Revenue ​ We recognized $0.6 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 year ended December 31, 2023 compared to $1.0 million in the year ended December 31, 2022.
Collaboration Revenue We recognized $0.3 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 year ended December 31, 2024 compared to $0.6 million in the year ended December 31, 2023.
Our net loss was primarily attributed to research and development activities, selling and marketing costs and our general and administrative expenses partially offset by $71.5 million of other income and $43.5 million of revenue.
Our net loss was primarily attributed to operating expenses of $235.5 million, which we incurred primarily for research and development activities, selling and marketing activities, and general and administrative activities, and non-operating expenses of $21.7 million, partially offset by $63.7 million of revenue.
Interest expense is incurred on our debt. For the year ended December 31, 2023, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal since August 2, 2023), the Convertible Notes ($37.5 million outstanding principal) and the notes payable under the MidCap Credit Facility ($25.0 million outstanding principal through August 2, 2023, no outstanding principal thereafter).
For the year ended December 31, 2024, our interest-bearing debt included the Barings Credit Facility ($82.5 million outstanding principal) and the Convertible Notes (through March 28, 2024, no outstanding principal thereafter).
Net cash used in operating activities was $70.2 million for the year ended December 31, 2023, primarily resulting from our net loss of $80.7 million, adjusted for net gains on extinguishment of debt of $14.2 million, partially offset by changes in the fair value of our derivative liabilities of $5.2 million and $19.5 million of other non-cash items and changes in operating assets and liabilities.
Net cash used in operating activities was $134.7 million for the year ended December 31, 2024, primarily resulting from our net loss of $193.5 million and net unfavorable changes in operating assets and liabilities of $10.2 million, partially offset by non-cash adjustments of $69.1 million.
If actual results in the future vary from our original estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. 121 Table of Contents Trade Discounts and Allowances —We compensate (through trade discounts and allowances) our customers for sales order management, data, and distribution services.
Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our original estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 6, 2023, which discussion is incorporated herein by reference and which is available free of charge on the SECs website at www.sec.gov. 113 Table of Contents ​ Liquidity and Capital Resources Sources of Liquidity We have financed our operations primarily through private placements of our preferred stock, public offerings and private placements of our common stock, borrowings under credit facilities, the private placements of our convertible notes, and sales of our products.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 11, 2024, which discussion is incorporated herein by reference and which is available free of charge on the SECs website at www.sec.gov.
The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as an accrued expenses and other current liabilities for volume-based rebates and as a reduction of accounts receivable for OID rebates. ​ Other Incentives — Other incentives which we offer include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payors.
The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as an accrued expenses and other current liabilities for volume-based rebates and as a reduction of accounts receivable for OID rebates.
The increase was primarily due to an increase of $0.8 million in personnel costs, including stock-based compensation, as we expanded our field-based team to support the commercialization of DEXTENZA, and an increase in facility-related and other costs of $0.7 million, partially offset by a decrease in professional fees, including consulting, trade shows, and conferences, of $0.8 million. 112 Table of Contents We expect our selling and marketing expenses to continue to increase for the remainder of 2024 and beyond as we continue to support the commercialization of DEXTENZA. ​ General and Administrative Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Increase ​ 2023 2022 (Decrease) ​ ​ (in thousands) Personnel related (including stock-based compensation) ​ $ 21,356 ​ $ 18,227 ​ $ 3,129 Professional fees ​ 10,821 ​ 11,634 ​ (813) Facility related and other ​ 1,763 ​ 2,363 ​ (600) Total general and administrative expenses ​ $ 33,940 ​ $ 32,224 ​ $ 1,716 ​ General and administrative expenses were $33.9 million and $32.2 million for the years ended December 31, 2023 and 2022, respectively, reflecting an increase of $1.7 million year-over-year.
General and Administrative Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase (Decrease) ​ 2024 2023 ​ 2022 2024 - 2023 2023 - 2022 ​ ​ (in thousands) ​ ​ Personnel-related (including stock-based compensation) ​ $ 40,273 ​ $ 21,356 ​ $ 18,227 ​ $ 18,917 ​ $ 3,129 Professional fees ​ 15,568 ​ 10,821 ​ 11,634 ​ 4,747 ​ (813) Facility-related and other ​ 4,812 ​ 1,763 ​ 2,363 ​ 3,049 ​ (600) Total general and administrative expenses ​ $ 60,653 ​ $ 33,940 ​ $ 32,224 ​ $ 26,713 ​ $ 1,716 ​ General and administrative expenses were $60.7 million and $33.9 million for the years ended December 31, 2024 and 2023, respectively, reflecting an increase of $26.7 million year-over-year.
Our other non-cash items during the year ended December 31, 2022 consisted primarily of $17.0 million of stock-based compensation expense, $4.9 million in non-cash interest expense, $2.1 million in depreciation and amortization expense, and $1.3 million net cash generated by favorable changes in our operating assets and liabilities.
Net cash provided by net favorable changes in our operating assets and liabilities during the year ended December 31, 2022 consisted primarily of increases of accrued expenses of $1.6 million, partially offset by decreases of other items, net, of $0.3 million. Investing activities.
Our share of these fees and costs is equal to the total amount of such fees and costs divided by the total number of Incept’s exclusive licensees of the patent application.
Our share of these fees and costs is equal to the total amount of such fees and costs divided by the total number of Incept’s exclusive licensees of the patent application. We have not included in the table above any payments to Incept under this license agreement as the amount, timing and likelihood of such payments are not known.
We borrowed the full amount of $82.5 million at closing and received proceeds of $77.3 million, after the application of an original issue discount and fees.
In August 2023, we entered into the Barings Credit Agreement with Barings as administrative agent, and the lenders party thereto, providing for the Barings Credit Facility in the aggregate principal amount of $82.5 million. We borrowed the full amount of $82.5 million at closing and received proceeds of $77.3 million, after the application of an original issue discount and fees.
Our program for retinal disease is led by AXPAXLI (axitinib intravitreal implant, also known as OTX-TKI), which is based on our ELUTYX proprietary bioresorbable hydrogel-based formulation technology.
Overview Our Company We are a biopharmaceutical company committed to redefining the retina experience. AXPAXLI (axitinib intravitreal hydrogel, also known as OTX-TKI), our product candidate for retinal disease, is based on our proprietary ELUTYX bioresorbable hydrogel-based formulation technology.
Net cash provided by financing activities for the year ended December 31, 2021 was $2.9 million and consisted primarily of $3.7 million, net, of proceeds in borrowings under our Credit Facility, proceeds from the exercise of stock options of $2.6 million; and proceeds from the issuance of common stock pursuant to our employee stock purchase plan of $1.0 million offset by payments on notes payable of $4.2 million.
Net cash provided by financing activities for the year ended December 31, 2024 was $332.1 million and consisted of total net proceeds from the issuance of common stock and pre-funded warrants in a private placement of approximately $316.4 million, proceeds from the exercise of stock options of $14.7 million, and proceeds from issuing shares under our Employee Stock Purchase Plan, or ESPP, of $1.0 million.
Net cash generated by changes in our operating assets and liabilities during the year ended December 31, 2022 consisted primarily of an increase of $1.6 million in accrued expenses, an increase in deferred revenue of $1.0 million and a decrease of prepaid expenses of $0.7 million partially offset by increase in inventory of $0.7 million, decrease in accounts payable of $0.6 million and an increase of accounts receivable of $0.2 million. 118 Table of Contents Net cash used in operating activities was $65.6 million for the year ended December 31, 2021, primarily resulting from our net loss of $6.6 million, adjusted for changes in the fair value of our derivative liabilities of $78.1 million, partially offset by $19.1 million of other non-cash items and changes in operating assets and liabilities.
Net cash used by net unfavorable changes in our operating assets and liabilities during the year ended December 31, 2024 consisted primarily of increases of accounts receivable of $6.2 million, resulting from increased sales of DEXTENZA, and increases of prepaid expenses and other current assets of $5.7 million, resulting predominantly from our clinical development activities, partially offset by other decreases, net, of $1.6 million. 118 Table of Contents Net cash used in operating activities was $70.2 million for the year ended December 31, 2023, primarily resulting from our net loss of $80.7 million and net unfavorable changes in operating assets and liabilities of $7.4 million, partially offset by non-cash adjustments of $17.9 million.
General and Administrative Expenses General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, information technology, human resources and administrative functions. General and administrative expenses also include insurance, facility-related costs and professional fees for legal, patent, consulting and accounting and audit services. Other Income (Expense) Interest Expense .
General and administrative expenses also include insurance, facility-related costs and professional fees for legal, patent, consulting and accounting and audit services. Other Income (Expense) Interest Expense . Interest expense is incurred on our debt.
Our clinical portfolio also includes PAXTRAVA (travoprost intracameral implant, also known as OTX-TIC), which is currently in Phase 2 clinical development for the treatment of primary open-angle glaucoma, or OAG, or ocular hypertension, or OHT. ​ Our expertise in the formulation, development and commercialization of innovative therapies and our ELUTYX platform supported the development and launch of our first commercial drug product, DEXTENZA, a corticosteroid approved by the U.S.
We also leverage the ELUTYX technology in our commercial product DEXTENZA, an FDA-approved corticosteroid for the treatment of ocular inflammation and pain following ophthalmic surgery and for the treatment of ocular itching associated with allergic conjunctivitis, and our product candidate PAXTRAVA (travoprost intracameral hydrogel 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.
Purchaser/Provider Discounts and Rebates —We offer rebate payments for which ASCs, HOPDs and other prescribers qualify by meeting quarterly purchase volumes of DEXTENZA under our volume-based rebate program. We calculate rebate payment amounts due under this program quarterly, based on actual qualifying purchases and apply a contractual discount rate.
We calculate rebate payment amounts due under this program quarterly, based on actual qualifying purchases and apply a contractual discount rate.
The total gross proceeds of the public offering were approximately $115.1 million, before deducting underwriting discounts and commissions and other offering expenses payable by us, resulting in net proceeds of approximately $107.7 million. ​ In 2023, we sold 1,514,926 shares of our common stock under our Open Market Sale Agreement with Jefferies LLC, or Jefferies, resulting in gross proceeds to us of $9.9 million, and net proceeds, after accounting for issuance costs, of $9.5 million. ​ 2023 Debt Financing 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 for us, or the Barings Credit Facility, in the aggregate principal amount of $82.5 million.
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.
Our other non-cash items during the year ended December 31, 2023 consisted primarily of $17.8 million of stock-based compensation expense, $6.1 million in non-cash interest expense, and $3.0 million in depreciation and amortization expense, partially offset by $7.4 million unfavorable changes in our operating assets and liabilities.
Non-cash adjustments primarily include stock-based compensation expense of $17.0 million, non-cash income related to changes in the fair value of our derivative liabilities of $13.8 million, non-cash interest expense of $4.9 million, and depreciation and amortization expense of $2.1 million.
These employees work across multiple development programs and, therefore, we do not track their costs by program. 109 Table of Contents The successful development and commercialization of our products or product candidates is highly uncertain.
The successful development and commercialization of our products or product candidates is highly uncertain.
These contracts generally provide for termination on notice, and therefore are cancelable contracts which are not included in contractual obligations and commitments. 119 Table of Contents Operating lease commitments represent payments due under our leases of office, laboratory and manufacturing space in Bedford, Massachusetts and certain office equipment under operating leases that expire in March 2024, July 2027, and July 2028.
Operating lease commitments represent payments due under our leases of office, laboratory and manufacturing space in Bedford, Massachusetts that expire in July 2027 and July 2028, and leases of equipment that expire between 2026 and 2028. The commitments under the Barings Credit Agreement represent repayment of principal only.
We anticipate that our research and development expenses will increase in the future as we support our continued development of our product candidates. Selling and Marketing Expenses Selling and marketing expenses consist primarily of salaries and related costs for personnel in selling and marketing functions as well as consulting, advertising and promotion costs.
Selling and Marketing Expenses Selling and marketing expenses consist primarily of salaries and related costs for personnel in selling and marketing functions as well as consulting, advertising and promotion costs. 110 Table of Contents General and Administrative Expenses General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, information technology, human resources and administrative functions.
The increase of $7.2 million is related to timing and conduct of our various clinical trials for our product candidates, including the initiation of the SOL-1 trial and the HELIOS trial, and development activities related to our preclinical programs.
The increase of $45.7 million is related to timing and conduct of our various clinical trials for our product candidates, including the progression of the SOL-1 trial, which was fully randomized by December 2024, the initiation of the SOL-R trial, the completion of the HELIOS trial, and development activities related to our preclinical programs. 113 Table of Contents We expect that direct research and development expenses for our products and product candidates will increase significantly for 2025 as we progress with the SOL-1 and the SOL-R trials; complete our other ongoing clinical trials; and initiate any other clinical trials of our product candidates that we might determine in the future to conduct, partially offset by reduced costs related to preclinical programs as a result of the Strategic Restructuring.
We recognized a gain from accounting for the modification of the Convertible Notes as an extinguishment of $14.9 million, partially offset by a loss from extinguishment of the MidCap Credit Facility of $0.7 million.
The net gain for the year ended December 31, 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.
Each pre-funded warrant has an exercise price of $0.001 per share, is currently exercisable and will remain exercisable until exercised in full. ​ ​ Funding Requirements We have a history of incurring significant operating losses. Our net losses were $80.7 million, $71.0 million, and $6.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Our net losses were $193.5 million, $80.7 million, and $71.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $891.1 million.
The final rule confirms that DEXTENZA will continue to be separately reimbursed by Medicare in the ambulatory surgical center, or ASC, setting under the non-opioid pain provision; and that CPT 68841, the code that describes the insertion of DEXTENZA, maintains a Q1 status indicator. ​ We believe that DEXTENZA is currently used in less than 5% of cataract procedures and that commercial growth may be driven by a continued focus on sales to ASCs, specifically strategic accounts that own and control multiple ASCs. ​ 2024 Private Placement In February 2024, concurrent with the Board of Directors and Leadership Updates detailed above, we sold 32,413,560 shares of our common stock at $7.52 per share and, in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 10,805,957 shares of our common stock at a price of $7.519 per pre-funded warrant for aggregate gross proceeds of approximately $325.0 million, before deducting placement agent fees and other offering expenses, or the 2024 Private Placement.
We completed the Strategic Restructuring, recorded the related restructuring charges of $1.6 million, resulting primarily from garden leaves and severance benefits, and paid all previously accrued restructuring charges in the year ended December 31, 2024. 2024 Private Placement In February 2024, we sold in a private placement 32,413,560 shares of our common stock at $7.52 per share and, in lieu of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 10,805,957 shares of our common stock at a price of $7.519 per pre-funded warrant for total net proceeds to us of approximately $316.4 million, after deducting placement agent fees and other offering expenses, or the 2024 Private Placement.
Our other non-cash items during the year ended December 31, 2021 consisted primarily of $15.0 million of stock-based compensation expense, $4.6 million in non-cash interest expense, and $2.4 million in depreciation and amortization expense, partially offset by $2.9 million unfavorable changes in our operating assets and liabilities.
Non-cash adjustments primarily include a net gain on extinguishment of debt of $14.2 million, stock-based compensation expense of $17.8 million, non-cash interest expense of $6.1 million, non-cash expenses related to changes in the fair value of our derivative liabilities of $5.2 million, and depreciation and amortization expense of $3.0 million.
The net gain for 2022 results solely from the change in the fair value of the derivative liability related to the Conversion Option. We cannot predict how the fair value of the derivative liabilities will change in 2024 and beyond. Gains and losses on extinguishment of debt, net.
The net loss for 2024 comprises of a gain of $2.6 million from the change in the fair value of the Conversion Option Derivative Liability, a loss of $0.9 million from the change in the fair value of the Royalty Fee Derivative Liability, and an expense of $2.2 million related to royalty fees under the Barings Credit Agreement that we paid or accrued.
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Overview Our Company We are a biopharmaceutical company committed to enhancing people’s vision and quality of life through the development and commercialization of innovative therapies for diseases and conditions of the eye, with a specific focus on retinal disease.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe account for the obligation to pay royalty fees embedded in the Barings Credit Agreement as a separate financial instrument, measured at fair value, using a Monte Carlo simulation, which we refer to as the Royalty Fee 123 Table of Contents Derivative Liability. As of December 31, 2023, the Royalty Fee Derivative Liability was valued at $12.4 million.
Biggest changeWe account for the obligation to pay royalty fees embedded in the Barings Credit Agreement as a separate financial instrument, measured at fair value, using a Monte Carlo simulation, which we refer to as the Royalty Fee Derivative Liability. As of December 31, 2024, the Royalty Fee Derivative Liability was valued at $13.2 million.
As of December 31, 2023, a 10% increase or decrease of the interest rate used in the valuation model would not have a material effect on the fair value of the Royalty Fee Derivative Liability. Changes of the fair value of the Royalty Fee Derivative Liability have no impact on anticipated cash outflows.
As of December 31, 2024, a 10% increase or decrease of the interest rate used in the valuation model would not have a material effect on the fair value of the Royalty Fee Derivative Liability. Changes of the fair value of the Royalty Fee Derivative Liability have no impact on anticipated cash outflows. ​
As of December 31, 2023, we had a secured term loan facility with a principal amount of $82.5 million under a credit and security agreement with Barings Finance LLC and the lenders party thereto, or the Barings Credit Agreement.
As of December 31, 2024, we had a secured term loan facility with a principal amount of $82.5 million under a credit and security agreement with Barings Finance LLC and the lenders party thereto, or the Barings Credit Agreement.
As of December 31, 2023, an immediate 100 basis point increase or decrease in the SOFR would not have a material effect on the anticipated cash outflows from this instrument.
As of December 31, 2024, an immediate 100 basis point increase or decrease in the SOFR would not have a material effect on the anticipated cash outflows from this instrument.
Expected cash outflows from this financial instrument fluctuate based on changes in the Secured Overnight Financing Rate, or SOFR, which is, among other factors, affected by the general level of U.S. and international central bank interest rates.
Expected cash outflows from this financial instrument fluctuate based on changes in the Secured Overnight Financing Rate, or SOFR, which is, among other factors, affected by the general level of U.S. and international central bank 123 Table of Contents interest rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk related to changes in interest rates. As of December 31, 2023, we had cash and cash equivalents of $195.8 million, which includes cash in operating bank accounts, and investments in money market funds.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk related to changes in interest rates. As of December 31, 2024, we had cash and cash equivalents of $392.1 million, which includes cash in operating bank accounts, and investments in money market funds.
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We account for the conversion option embedded in our unsecured senior subordinated convertible notes, or the Convertible Notes, as a separate financial instrument, measured at fair value, using a binomial lattice model, which we refer to as the Conversion Option Derivative Liability. As of December 31, 2023, the Conversion Option Derivative Liability was valued at $17.6 million.
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As of December 31, 2023, a 10% increase or decrease of the main inputs to the valuation model would not have a material effect on the fair value of the Conversion Option Derivative Liability. Changes of the fair value of the Conversion Option Derivative Liability have no impact on anticipated cash outflows. ​

Other OCUL 10-K year-over-year comparisons