Introduction Our Business We are a specialty biopharmaceutical company committed to developing and commercializing innovative ophthalmic products for the treatment of eye diseases. Our lead product, DEXYCU (dexamethasone

We are a specialty biopharmaceutical company committed to developing and commercializing innovative ophthalmic products for the treatment of

eye diseases. Our lead product, DEXYCU (dexamethasone intraocular suspension) 9%, approved by the U.S. Food and Drug Administration ( FDA ) in February 2018, is administered as a single dose at the end of ocular surgery and is the

first long-acting intraocular product approved by the FDA for the treatment of post-operative inflammation. DEXYCU utilizes our proprietary Verisome drug-delivery platform, which allows for a

single intraocular injection that releases over time. There are over four million cataract surgeries performed annually in the U.S., and we plan to launch DEXYCU in the U.S. in the first half of 2019 with a primary focus on its use following

cataract surgery. Our lead product candidate is YUTIQ for the treatment of non-infectious uveitis affecting the posterior segment of the eye ( three-year uveitis ). Injected into the eye in an

office visit, YUTIQ is a tiny micro-insert that delivers a micro-dose of a corticosteroid to the back of the eye on a sustained constant (zero order release) basis for approximately three years. On March 19, 2018, the FDA accepted our New Drug

Application ( NDA ) for YUTIQ and set an FDA Prescription Drug User Fee Act ( PDUFA ) action date of November 5, 2018. YUTIQ is based on our proprietary Durasert sustained-release drug delivery technology platform,

which can deliver drugs for predetermined periods of time ranging from months to years. Posterior segment uveitis is the third leading cause of blindness in the U.S. and affects between 55,000 to 120,000 people in the U.S. If approved in November

2018, we expect to launch YUTIQ in the U.S. in the first half of 2019.

The Unmet Need in the Treatment of Eye Disease

The human eye is an organ which reacts to light to provide sight. The eye has two principal anatomical segments: the anterior segment and the

posterior segment. The anterior segment consists of the cornea, iris, pupil, lens and aqueous humor, while the posterior segment consists of the retina, choroid, vitreous humor and the optic nerve.

The tissues and structures in the anterior and posterior segment of the eye work in concert to produce sight. Light from an object or scene

enters the eye through the anterior chamber, beginning with the cornea. The cornea bends the light such that it passes freely through the pupil, which is the opening in the center of the iris. The iris works like a shutter in a camera enlarging or

shrinking, depending on how much light is entering the eye. After passing through the iris, the light rays pass through the eye s natural crystalline lens. This clear, flexible structure works like the lens in a camera, shortening and

lengthening its width in order to focus light rays properly. Light rays then pass from the anterior segment into the posterior segment of the eye starting with a dense, transparent gel-like substance, called

the vitreous. The vitreous fills the globe of the eyeball, which bathes the eye in nutrients and helps the eye hold its spherical shape. In a normal eye, the light rays come to a sharp focusing point on the retina. The retina functions much like the

film in a camera, capturing the light rays, processing them into light impulses through millions of tiny nerve endings and then sending these light impulses through over a million nerve fibers to the optic nerve. Because the process of producing

sight requires the precise coordination of the tissues and structures in both the anterior and posterior segment of the eye, if disease affects any one of these components, vision can be impaired or potentially blinded.

Diseases of the anterior chamber of the eye include ocular inflammation, cataracts, dry eye, infection, and refractive disorders. Glaucoma,

which is a disease that damages the optic nerve, can also be caused by inflammation in the anterior chamber (inflammatory or uveitic glaucoma). Because the anterior segment is readily accessible, physicians typically treat these diseases with

topically-applied eye drops. However, there are several limitations of eye drops. First, the eye often eliminates topically applied medications via tear elimination, limiting the penetration of drugs into the ocular tissue. Second, eye drops are

often administered by patients themselves, which often leads to misuse or non-compliance by patients due to complicated and arduous eye drop regimens.

Diseases of the posterior segment of the eye include

age-related macular degeneration ( AMD ), diabetic retinopathy, diabetic macular edema ( DME ) and posterior segment uveitis. These diseases frequently result in damage to the vasculature

of the eye, leading to poor visual function, and often to proliferation of new, abnormal and leaky blood vessels in the back of the eye. These conditions can lead to retinal damage, scarring and irreversible loss of vision. Because the posterior

chamber is not readily accessible, physicians typically treat these diseases with intravitreal injections. However, there are several limitations of intravitreal injections. First, these injections can be painful to the eye and often cause swelling

or bleeding. Second, intravitreal injections are not an effective means of delivering a steady state dose to the site of disease.

delivery for treating ophthalmic diseases in both the anterior and posterior segments of the eye is a significant challenge. Due to the effectiveness of the blood-eye barrier, it is difficult for systemically

(orally or intravenously) administered drugs to reach the retina in sufficient quantities to have a beneficial effect without causing adverse side effects to other parts of the body. Injecting drugs in solution directly into the back of the eye can

achieve effective, but often transient, dosage levels in the eye, requiring repeated injections. In addition to the issues of inconvenience, cost and noncompliance, repeated intravitreal injections have medical risks, including intraocular

infection, perforated sclera and vitreous hemorrhage.

Ophthalmic drugs, whether drops, injections or taken orally, are often not

administered on the optimal schedule or at all, because patients do not self-administer as prescribed or do not get medical professional administration as required. The risk of patient non-compliance increases

when treatment involves multiple products or complex or painful dosing regimens, as patients age or suffer cognitive impairment or serious illness, or when the treatment is lengthy or expensive.

Due to the drawbacks of traditional delivery, we believe the development of methods to deliver drugs to patients in a more precise, controlled

fashion over sustained periods of time satisfies an unmet medical need. Our products, DEXYCU and, if approved, YUTIQ are intended to address diseases of both the anterior and posterior segment of the eye, respectively, through long-acting and

sustained delivery technology.

Our Products and Product Candidates

The following table describes the stage of each of our current development programs:

DEXYCU is the first long-acting intraocular product approved by the FDA for the treatment of post-operative inflammation. Cataract surgery is

one of the most frequent surgical procedures performed in the U.S., with over four million procedures performed annually. However, patients often experience post-operative ocular inflammation. Under the current standard of care for inflammation

associated with cataract surgery, patients, many of whom are elderly, must self-administer medicated eye drops several times a day over a period of several weeks. DEXYCU, administered as a single intraocular injection at the conclusion of surgery,

utilizes our Verisome technology to dispense a biodegradable extended-release formulation of dexamethasone in the posterior chamber directly behind the iris. We believe that a single administration of a corticosteroid at the site of inflammation may

benefit patients by eliminating non-compliance and dosing errors associated with the current practice of dispensing multiple daily self-administered eye drops following cataract surgery over a period of

The efficacy of DEXYCU was demonstrated in a double-blinded randomized Phase 3 clinical trial of 394 patients. In the

clinical trial, patients received an intraocular dose of 517 micrograms ( mcg ) of DEXYCU, 342 mcg of DEXYCU, or placebo administered by a physician at the end of cataract surgery. The primary efficacy outcome in the clinical trial was

anterior chamber cell clearing in the study eye on the eighth day following surgery. The percentage of patients meeting the primary efficacy outcome was 20% in the placebo group while 57% and 60% met the primary efficacy outcome in the 342 and 517

mcg DEXYCU treatment groups, respectively. In addition, the percentage of patients receiving rescue medication of ocular steroid or a nonsteroidal anti-inflammatory drug was significantly lower at day one, three, eight, 15 and 30 in the 342 and 517

mcg treatment groups versus placebo. The most common adverse reactions (5 15%) reported with DEXYCU were increased intraocular pressure, corneal edema and iritis. Other adverse reactions occurring in 1 5% of subjects included corneal

endothelial cell loss, blepharitis, eye pain, cystoid macular edema, dry eye, ocular inflammation, posterior capsule opacification, blurred vision, reduced visual acuity, vitreous floaters, foreign body sensation, photophobia and vitreous

detachment. Warnings and precautions included on the label for DEXYCU include increases in intraocular pressure, delayed healing, exacerbation of infection and cataract progression and side effects generally associated with intraocular steroids.

The FDA-approved dosage of DEXYCU is 0.005 milliliters

( mL ) of dexamethasone 9% (equivalent to 517 mcg), administered as a single dose intraocularly in the posterior chamber, directly behind the iris, at the end of surgery. DEXYCU will be available as a 9% intraocular suspension equivalent

to dexamethasone 103.4 mg/mL in a single-dose vial provided in a kit. The drug is encapsulated in the fully bioerodible Verisome technology, which provides a steady release of dexamethasone for up to 22 days post injection.

We acquired the rights to DEXYCU on March 28, 2018 through the acquisition of Icon Bioscience, Inc. ( Icon ). We paid

Icon s security holders approximately $15 million at the closing of the transaction, and are obligated to pay certain post-closing contingent cash payments upon the achievement of specified milestones based upon certain net sales and

partnering revenue standards, in each case subject to the terms and conditions set forth in that certain Agreement and Plan of Merger, dated March 28, 2018, by and among us, Oculus Merger Sub, Inc., Icon and Shareholder Representative Services

LLC, solely in its capacity as the representative of Icon s securityholders (the Merger Agreement ). These include but are not limited to (i) a one-time development milestone of

$15.0 million payable in cash upon the first commercial sale of DEXYCU in the United States, (ii) sales milestone payments totaling up to $95.0 million upon the achievement of certain sales thresholds and subject to certain Centers

for Medicare & Medicaid Services ( CMS ) reimbursement conditions set forth in the Merger Agreement, (iii) quarterly earn-out payments equal to 12% on net sales of DEXYCU in a given

year, which earn-out payments will increase to 16% of net sales of DEXYCU in such year beginning in the calendar quarter for such year to the extent aggregate annual consideration of DEXYCU exceeds

$200.0 million in such year, (iv) quarterly earn-out payments equal to 20% of partnering revenue received by us for DEXYCU sales outside of the United States, and (v) single-digit percentage

quarterly earn-out payments with respect to net sales and/or partnering income, if any, resulting from future clinical development, regulatory approval and commercialization of any other product candidates we

acquired in connection with the acquisition of Icon.

We plan to launch DEXYCU in the U.S. in the first half of 2019 following the

successful scale up of commercial infrastructure and commercial supplies. We plan to commercialize DEXYCU ourselves in the U.S. through a contract sales organization ( CSO ) utilizing a build and buy strategy whereby the sales

leadership (National Sales Director and District Managers) is hired by us, and the key account managers ( KAMs ) and sales representatives are hired by the CSO with the option for us to hire these reps after a period of time. We believe

this flexible sales model provides less execution risk to us as CSOs can leverage costs across multiple clients, and thus are able to cost-effectively build the necessary infrastructure to support sales activities using varied, industry-wide

experience to provide the most impactful solutions.

We believe that approximately four million cataract surgeries will be performed in

the U.S. in 2018. The current standard of care in the U.S. for treating post-operative inflammation is primarily a combination of steroid, antibiotic and non-steroidal eye drops on a tapered treatment regimen

that can last up to four weeks. This eye drop treatment regimen is complicated, and can result in up to 100 eye drops being administered over time. Steroid eye drops are the most complicated, requiring up to 70 eye drops over 3-4 weeks on a tapered dosing schedule. Further, cataract surgery patients are often elderly and can have compromised cognitive function, osteoarthritis in their hands and poor eyesight due to the cataract surgery.

These complexities can lead to poor compliance due to missed eye drops, eye drops not going into the eye, and/or not finishing the treatment regimen. In addition, patients often call their physician s office multiple times to have them re-explain the treatment regimen. As a result, physicians, their staffs, patients and their caregivers are frustrated with the current post-ocular drop intensive treatment regimen. We believe DEXYCU addresses many

of these issues and potentially eliminates the need for post-surgical steroid eye drops by providing one injection immediately post-surgery into the same incision site where the new intraocular lens has been placed. We believe physicians will react

positively to this single injection because the full steroid dose will be placed at the surgical site where inflammation can occur post-surgery.

The majority of patients who undergo cataract surgery are covered by Medicare Part B. New drugs approved by the FDA that are part of cataract

surgery must be priced at a not insignificant price level relative to the overall cost of the procedure to be covered under what is called a transitional pass-through payment. This pass through payment consists of Medicare

reimbursement for the drug paid in addition to an ambulatory surgical center s facility fee. The pass-through payment was established by Congress to foster innovative drug development. This

Congressional provision is referred to as transitional because it is designed to be a bridge into the regular reimbursement payment scheme. The pass-through status is temporary, lasting three

years and the product is reimbursed under what is called a C code. C codes are issued quarterly by CMS.

for Medicare transitional pass-through payment if we price DEXYCU at the minimum threshold required as part of the transitional pricing formula, which we intend to do. As such, we expect to file for a pass-through C code shortly before launch. Under

this regulation, we will be required to price DEXYCU at a minimum of approximately $485 per dose. We have not yet determined final pricing, other than that it will be modestly higher than $485 to ensure we will continue to qualify for pass-through

status after including normal industry discounts and rebates given to providers or commercial payors.

After three years, pass through

status is eliminated and DEXYCU would be incorporated into the cataract bundled payment system, which will significantly reduce the pricing for DEXYCU. We are working with outside consultants to potentially gain an extension to the transitional

payment system, or separate the drug payment from the bundled cataract surgery payment after the three-year transitional payment ends and continue to be reimbursed separately for a longer period of time, potentially through patent life.

Our DEXYCU U.S. patent portfolio consists of two issued patents under an exclusive license from Ramscor, Inc. for all ophthalmic conditions.

These two issued patents contain composition claims for delivering biologically active substances using citric acid esters. In addition, we have received Notices of Acceptance for two U.S. patent applications. These patent applications, one with

method of use claims and the other with device claims, would provide further protection for DEXYCU through May 2034.

technology used in DEXYCU is called Verisome. The basic technology can be formulated into numerous products, as a biodegradable solid, gel, or liquid substance that provides drug release in a controlled manner over a period of weeks to several

months for ocular, systemic, or topical applications. Ophthalmic applications are focused on the ability of this system to create an injectable liquid or slightly viscous gel. Verisome-based products can be injected into the aqueous or vitreous

humor as a liquid via a small gauge needle. When the drug is injected into an ocular chamber, it coalesces into a single spherule that settles in the lower portion of the chamber. The system is biodegradable and versatile for administering different

drugs; furthermore, duration of use can be tailored. Shrinkage of the Verisome spherule over time reflects simultaneous degradation of the delivery system and release of the active agent. In ophthalmology, this mode of delivery offers advantages

because the physician can easily assess the status of therapy by observing the drug-containing system within the eye. When the spherule is no longer visible, the entire drug has been released, and no inactive ingredient remains in the eye.

We believe our Verisome system could be used to release a broad range of pharmaceutical agents, including small molecules, peptides, proteins,

and monoclonal antibodies. Potential applications could include intraocular products to treat inflammation, ocular hypertension and glaucoma.

Our Durasert technology platform uses proprietary sustained polymer technology to deliver drugs to treat chronic

diseases, especially those affecting the hard to access posterior segment of the eye. The Durasert technology platform utilizes a miniaturized, injectable, sustained-release insert for small molecules that can last for up to three years. The