eye from microbes and to lubricate the eye. The back of the eye contains the retina, which is the light sensing layer of tissue, the vitreous humor, which is a transparent gel that fills the vitreous chamber between the lens and the retina, and the optic nerve, which transmits visual information from the retina to the brain. Eye disease can be caused by many factors and can affect both the front and back of the eye. Diseases and conditions affecting the front of the eye are generally treated either with surgery or with medications delivered to the ocular surface by eye drops. Intravitreal injections or oral pills are typically used to deliver medications to the back of the eye.

Cross Section of Eye		Tear Drainage System

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Front of the EyeFront-of-the-Eye Diseases and Conditions

Ocular Inflammation and Pain

Ocular inflammationPain and Inflammation

Ocular pain and inflammation are common conditions caused by a variety of factors, including ophthalmic surgery, allergic conjunctivitis and dry eye disease.

Post-surgical

Post-Surgical Ocular InflammationPain and PainInflammation

Ocular inflammationpain and paininflammation are common side effects following ophthalmic surgery. Frequently performed ophthalmic surgeries include cataract, refractive, vitreoretinal, cornea, and glaucoma procedures. Physicians prescribe anti-inflammatory drugs, such as corticosteroids, which are typically administered through eye drops multiple times per day, following ocular surgery as the standard of care. These drugs improve patient comfort and also accelerate recovery through disruption of the inflammatory cascade resulting in decreased inflammation and reduced activity of the immune system. Physicians also frequently prescribe non-steroidal anti-inflammatory drugs, or NSAIDs, as adjunctive or combination therapy to supplement the use of corticosteroids. If left untreated, inflammation of the eye may result in further ocular complications, including pain, scarring and vision loss. Market Scope has estimated that approximately 55.6 million ocular surgeries wouldwere to be performed in the United States in 2014.2017.

Allergic Conjunctivitis

Allergic conjunctivitis is an inflammatory disease of the conjunctiva resulting primarily from a reaction to allergy-causing substances such as pollen or pet dander. The primary sign of this inflammation is redness and the primary symptom is acute itching. Allergic conjunctivitis ranges in clinical severity from relatively mild, common forms to more severe forms that can cause impaired vision. According to a study on the management of seasonal allergic conjunctivitis published in 2012 in the peer-reviewed journalActa Ophthalmologica, allergic conjunctivitis affects 15% to 40% of the U.S. population. The first line of defense against allergic conjunctivitis is avoidance of the allergen. If this is not successful, physicians typically prescribe a combination of a topical mast cell stabilizer or antihistamine.and anti-histamine. These treatments act to reduce the signs and symptoms of the early phase allergic reaction. For the subset of patients with chronic or more severe forms of allergic conjunctivitis, antihistaminesanti-histamines and mast cell stabilizers are often not sufficient to treat their signs and symptoms. These refractory patients are frequently treated with topical corticosteroids administered by eye drops.

Dry Eye Disease

Dry eye disease affects the ocular surface and is characterized by dryness, inflammation, pain, discomfort and irritation. The current standard of care for moderate to severe dry eye disease is the use of artificial tears and topical anti-inflammatory and immune modulating drugs administered by eye drops. The anti-inflammatory and immune modulating prescription drug market for the treatment of moderate to severe dry eye disease consists of Restasis for increasing tear production, marketed by Allergan, lifitegrast, for the treatment of the signs and symptoms of dry eye disease, marketed by Shire under the brand name Xiidra and off-label use of corticosteroids and NSAIDs. Restasis is an ophthalmic formulation of the immune modulating drug cyclosporine. Restasis is a topical immunomodulator indicated to increase tear production in patients whose tear production is presumed to be suppressed due to ocular inflammation associated with keratoconjunctivitis sicca.corticosteroids. Based on our review of industry sources, we estimate that approximately 20 million people in the United States have dry eye disease, including approximately five million people who suffer from moderate to severe dry eye disease.

Market Data

According to IMS Health data, approximately 1922.0 million prescriptions were filled in the United States in 20132017 for anti-inflammatory drugs administered by eye drops for ocular diseases and conditions, resulting in sales of approximately $2.2$3.8 billion. ThisThese prescriptions consisted of approximately 8.19.3 million prescriptions and $466$755 million in sales for single-agent corticosteroids, 3.6 million prescriptions and $303$351 million in sales for NSAIDs, 4.34.9 million

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prescriptions and $354$270 million in sales for corticosteroid and antibiotic combination products and approximately 3.04.3 million prescriptions and $1$2.4 billion in sales of Restasis and Xiidra for dry eye disease. According to IMS Health data, approximately 6.77.6 million anti-allergy eye drop prescriptions were filled in the United States in 2013,2017, resulting in sales of approximately $792$667 million. The steroid market for eye drops to treat ocular diseases and conditions consists of both branded and generic products. Branded steroids include Lotemax and Alrex (loteprednol etabonate) marketed by Bausch & Lomb and Durezol (difluprednate) marketed by Alcon. Commonly used generic steroids include prednisolone, dexamethasone and fluorometholone.

Glaucoma

Glaucoma is a progressive and highly individualized disease in which elevated levels of intraocular pressureIOP are associated with damage to the optic nerve, which results in irreversible vision loss. According to the World Health Organization, glaucoma is the second leading cause of blindness in the world. Ocular hypertension is characterized by elevated levels of intraocular pressureIOP without any optic nerve damage. Patients with ocular hypertension are at high risk of developing glaucoma.

In a healthy eye, fluid is continuously produced and drained to maintain pressure equilibrium and provide nutrients to the ocular tissue. Excess fluid production or insufficient drainage of fluid in the front of the eye or a combination of these problems causes increased intraocular pressure.IOP. The increased intraocular pressureIOP associated with uncontrolled glaucoma results in degeneration of the optic nerve in the back of the eye.eye and loss of peripheral vision. Once glaucoma develops, it is a chronic condition that requires life-long treatment. According to the Glaucoma Research Foundation, approximately 2.23.0 million people in the United States suffer from glaucoma. Open-angle glaucoma, in which the space between the iris and the cornea through which fluid drains is relatively wide, is the most common form of glaucoma. According to the Glaucoma Research Foundation, open-angle glaucoma accounts for at least 90% of all glaucoma cases.

In order to

To lower intraocular pressure,IOP, physicians typically initiate treatment by prescribing drugs administered as eye drops. These drugs either decrease fluid production or enhance fluid drainage. The classes of topical drugs used to treat glaucoma include prostaglandin analogs, or PGAs, beta-blockers, alpha-adrenergic agonists and carbonic anhydrase inhibitors. PGAs are the most widely prescribed class of drugs for glaucoma and are considered first-line glaucoma treatment. PGAs reduce intraocular pressureIOP by enhancing the clearance and drainage of ocular fluid. The most frequently prescribed PGA is once-daily latanoprost, although travoprost, unoprostone and bimatoprost are also frequently used in the management of open-angle glaucoma. In cases where glaucoma is not easily managed by a drug regimen, surgical or laser treatments may be undertaken.

Market Data

According to IMS Health data, approximately 3136.1 million prescriptions were filled in the United States in 20132017 for drugs administered by eye drops for the treatment of glaucoma, resulting in sales of approximately $2.1$2.8 billion. A typical prescription provides approximately one month of treatment. We expect prescription volume to grow, in large part as a result of the aging population. According to IMS Health, PGAs accountaccounted for approximately half of the prescription volume in the glaucoma market.market in 2017. The market for drugs administered by eye drops for the treatment of glaucoma consists of both branded and generic products. Branded products have maintained premium pricing and

significant market share. These products include Travatan Z (travoprost) marketed by Alcon and Lumigan (bimatoprost) marketed by Allergan. The relevant patents covering travoprost expired in December 2014. Commonly used generic drugs include latanoprost and timolol.

Bacterial Infection

Bacterial conjunctivitis is one of the most common forms of ocular infection. It is an inflammatory disease of the eye caused by infection with bacteria such asHaemophilus influenzae,Streptococcus pneumoniae orStaphylococcus aureus. While bacterial conjunctivitis typically resolves on its own over time, it is often treated with antibiotics which can speed recovery, reduce relapse and potentially prevent important sight-threatening complications.

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Ophthalmic bacterial infections are treated with a range of antibiotics, both branded and generic. One such example is moxifloxacin, a fourth generation fluoroquinolone marketed by Alcon under the brand names Vigamox and Moxeza. Fourth generation fluoroquinolones are favored because they offer the highest potency against gram-positive organisms while maintaining the gram-negative efficacy of previous generation antibiotics. In addition, the increased lipophilicity, or solubility in fatty tissue, of moxifloxacin allows for improved performance in ophthalmic tissue penetration studies compared to other fluoroquinolones. The relevant patents covering moxifloxacin expired in March 2014.

Market Data

According to IMS Health data, approximately 1718.4 million prescriptions were filled in the United States in 20132017 for ophthalmic antibiotics administered by eye drops, resulting in sales of approximately $670$560 million.

The Use of Eye Drops and their Limitations

Eye drops are widely used to deliver medications directly to the ocular surface and to intraocular tissue in the front of the eye. Eye drops are administrable by the patient or care provider, inexpensive to produce and treat the local tissue. However, eye drops have significant limitations, especially when used for chronic diseases or when requiring frequent administration, including:

As a result of these limitations, eye drops are often suboptimal as a therapeutic option for the treatment of many diseases and conditions of the front of the eye.

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Back of the EyeBack-of-the-Eye Diseases and Conditions

There are a range of back of the eyeback-of-the-eye diseases and conditions that adversely affect vision. One of the principal back of the eyeback-of-the-eye conditions is wet AMD, a serious disease of the central portion of the retina, known as the macula that is responsible for detailed central vision and color perception. Wet AMD is characterized by abnormal new blood vessel formation, referred to as neovascularization, which results in blood vessel leakage and retinal distortion. If untreated, neovascularization in wet AMD patients typically results in formation of a scar under the macular region of the retina. The current standard of care for wet AMD are drugs that target VEGF, one of several proteins involved in neovascularization.

Wet AMD is the leading cause of blindness in people over the age of 55 in the United States and the European Union. According to a study on the burden of AMD published in 2006 in the peer-reviewed journalCurrent Opinion in Ophthalmology, approximately 1.2 million people in the United States suffer from wet AMD. In addition, AMD Alliance International reports that approximately 200,000 new cases of wet AMD arise each year in the United States. The incidence of wet AMD increases substantially with age, and we expect that the number of cases of wet AMD will increase with growth of the elderly population in the United States. The anti-VEGF market for the treatment of wet AMD consists predominantly of two drugs that are approved for marketing and primarily prescribed for the treatment of wet AMD, Lucentis marketed in the United States by Genentech and Eylea marketed in the United States by Regeneron, and off-label use of the cancer therapy Avastin. In 2013,2016, sales of Lucentis and Eylea totaled approximately $3.2$4.7 billion in the United States.States and $8.4 billion globally.

Because eye drops are unable to carry effective drug concentrations to the back of the eye,back-of-the-eye, intravitreal injections or oral medications are used to deliver medications to this location. However, the frequency of intravitreal injectionsinjection can be a significant burden on patients, caregivers and clinicians. For example, the current treatment protocol for wet AMD involves monthly or bi-monthly injections. Intravitreal injections can lead to patient discomfort, a transient increase in intraocular pressure,IOP, and ocular inflammation and infection. Although serious adverse event rates after treatment with anti-VEGF compounds are low, intravitreal injections can result in severe complications and damage to the retina and other structures of the eye, such as ocular hemorrhage and tears in the retinal pigment epithelium.

Ocular Wound Closure

According to the World Health Organization, cataracts are the leading cause of visual impairment eventually progressing to blindness. According to the American Academy of Ophthalmology Cataract and Anterior Segment Panel’s 2011 Preferred Practice Pattern Guidelines, cataract extraction is the most commonly performed eye surgery in the United States. Market Scope has estimated that in 20142017 there wouldwere to be approximately 3.654.0 million cataract extractions performed in the United States.

A cataract is a clouding of the lens inside the front of the eye. During cataract surgery, a patient’s cloudy natural lens is removed and replaced with a prosthetic intraocular lens. Clear corneal incisionsincision that allowallows entry to the eye areis the preferredtypical method for performing cataract surgery. The most common post-surgical approach is to allow the incisions to self-seal, or close, through normal biological processes. However, self-sealing incisions can open spontaneously, especially within 12 to 24 hours following surgery, when intraocular pressureIOP fluctuates or as a result of the application of external pressure or manipulation. In addition, incisions that are left to self-seal are often associated with fluid leakage,may leak, which can sometimes result in complications. Complications from fluid leakage include the development of hypotony, or low intraocular pressure,IOP, which can lead to corneal decompensation and vision loss, as well as the potential for infection. The implanted intraocular lens also may shift in position due to hypotony, leading to poorreduced visual outcomes following surgery.

Sutures are the most widely used alternative method of wound closure. However, sutures do not completely prevent fluid leakage, are time-consuming to place and have been associated with patient discomfort, corneal distortion, and corneal distortion.shallowing of the interior chamber. An additional visit may be required to remove sutures, thus adding time, inconvenience and expense to the surgical process. Sutures may also lead to astigmatism, a distortion of the cornea that can result from

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improper suture technique.cornea. These shortcomings limit the use of sutures in ophthalmic surgery. In a 2012 survey of ophthalmologists in the United States conducted by Lachman Consulting LLC, a healthcare consulting firm, respondents indicated that they use sutures in approximately 14% of cataract surgeries.

The Ocular Therapeutix Approach

Our Hydrogel Technology Platform

We apply our expertise with an established bioresorbable hydrogel technology to the development of products for sustained delivery of known, FDA approvedFDA-approved therapeutic agents for a variety of ophthalmic diseases and conditions and to ophthalmic wound closure. Our founders and management team have previously used this same hydrogel technology to develop FDA approvedFDA-approved and currently marketed medical products for other companies such as DuraSeal Dural Sealant® (marketed by Integra Lifesciences, Inc.), a sealant for cranial and spine surgery, and Mynx® (marketed by Cardinal Health), a sealant for femoral artery punctures after angiography and angioplasty.

Our bioresorbable hydrogel technology is based on the use of a proprietary form of PEG. Our technical capabilities include a deep understanding of the polymer chemistry of PEG basedPEG-based hydrogels and the design of the highly specialized manufacturing processes required to achieve a reliable, preservative free and pure product. We tailor the hydrogel to act as a vehicle for sustained drug delivery to the eye and as an ocular tissue sealant. We have used bioresorbable hydrogels to engineer each of our punctum plugintracanalicular insert product candidates, our intracameral implant product candidates, ReSure Sealant and our intravitreal hydrogel depot.implant product candidates.

We create our hydrogels by cross-linking PEG molecules to form a network that resembles a three-dimensional mesh on a molecular level. Our PEG molecules are branched, with four to eight branches or arms. Each arm bears a reactive site on its end. Our cross-linking chemistry uses a second molecule with four arms, bearing complimentary reactive sites on each end, such that when combined with the PEG molecules, a network spontaneously forms. When swollen with water, this molecular network forms a hydrogel. We design these hydrogels to slowly degrade in the presence of water, a process called hydrolysis, by inserting a biodegradable linkage between the PEG molecule and the cross-linked molecule. By appropriately selecting the number of arms of the PEG molecule and the biodegradable linkage, we can design hydrogels with varying mechanical properties and bioresorption rates. Because the body has an abundance of water at a constant temperature and pH level, hydrolysis provides a predictable and reproducible degradation rate. Our technology enables us to make hydrogels that can bioresorb over days, weeks or several months. The figure below depicts the formation and bioresorption of the hydrogel for ReSure Sealant.

Punctum Plug Based Drug Delivery

Intracanalicular Insert-Based Sustained-Release Therapies for Front of the EyeFront-of-the-Eye Diseases and Conditions

A punctum is a natural opening located in the inner portion of the eyelid near the nose. There is a punctum in each of the lower eyelids and the upper eyelids. The puncta open into nasolacrimal ducts, which collect and

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drain tears produced by the eyes’ lacrimal glands. Tears produced in the lacrimal glands sweep across the eye surface and drain through the puncta to the nasal cavity. The section of the nasolacrimal duct immediately beyond the puncta is called the

vertical canaliculus. Punctum plugsIntracanalicular inserts that do not contain an active drug are commonly used for treatment of dry eye disease by physically blocking tear drainage. Because punctum plugsintracanalicular inserts stay in contact with the tear film, they are well suited for sustained delivery of drug to the eye.

Punctum plug

Intracanalicular insert shown positioned in the vertical canaliculus

Our punctum plugsintracanalicular inserts utilize our proprietary hydrogel technology and are embedded with an active drug. Following insertion through the punctum, our plugsinserts swell in tear fluid to fill the vertical canaliculus, which secures the plugsinserts in place. We design our plugsinserts to release drug in a sustained fashion, tailored to each disease state, back through the punctum to the surface of the eye. Over time the plugsinserts liquefy and are cleared through the nasolacrimal duct. If necessary due to excessive tearing, discomfort or improper placement, a healthcare professional can easily remove a punctum plugan intracanalicular insert by a simple process of pushing the soft pluginsert back through the punctum.

Our plugsinserts allow incorporation of a variety of drugs with a controllable range of delivery durations and delivery rates. For acute conditions, such as post-surgical ocular inflammationpain and paininflammation and allergic conjunctivitis, we have designed our punctum plugsintracanalicular inserts to provide a sustained release of therapeutic levels of drug for the duration of treatment. For chronic diseases, such as glaucoma, we have designed our punctum plugsintracanalicular inserts for repeat administration with extended dosing periods. We are concentrating our initial development efforts on plugsintracanalicular inserts incorporating active pharmaceutical ingredients that are approved by the FDA for the targeted indication and that satisfy other specific selection criteria that we have developed.

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We manufacture our punctum plugsintracanalicular inserts from dried PEG basedPEG-based hydrogel formed into tiny rods that hold an active pharmaceutical ingredient in a preservative freepreservative-free formulation. We embed the active pharmaceutical ingredient in the pre-hydrogel liquid formulation, which then solidifies to form a hydrogel containing the drug within. The relative size of one of our punctum plugsintracanalicular inserts is shown in the figure below.

We provide the punctum plugintracanalicular insert as a thin dry rod to facilitate insertion through the narrow punctal opening. Upon hydration with tear fluid, the pluginsert swells, softens, and conforms to roughly the size and shape of the vertical canaliculus, to secure it in place. We incorporate the active pharmaceutical ingredient in the form of micronized particles embedded directly in the hydrogel or as bioresorbable microspheres.

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We have included a fluorescent label, or marker, in our punctum plugintracanalicular insert hydrogel to serve as a visualization aid for the healthcare professional and patient to confirm the plug’sinsert’s presence. The viewer applies a blue hand heldhandheld  light and a clear yellow filter aid to see the pluginsert in the eyelid as shown in the figure below.

Because punctum plugsintracanalicular inserts stay in contact with the tear film, other companies have pursued the development of intracanalicular punctum plugs containing active drugs for sustained release to the ocular surface. However, these earlier plugproduct designs had significant limitations with respect to drug capacity, drug release kinetics and patient comfort. The earlier plug designscomfort and used non-degradable punctum plugs with a clear silicone hard rubber shell containing only a core with active drug. These plugs typically extended outside of the punctal opening and secured themselves in place with an external cap. The external cap was in constant contact with the surface of the eye, causingwhich may cause irritation and discomfort in some cases. In addition, some prior designs resorted to plugging both the upper and lower puncta, which could cause excessive tearing and patient discomfort. These designs did not incorporate a visualization agent to allow the patient and physician to assess the presence of the plug.

In contrast to these prior approaches, we have designed our punctum plugsintracanalicular inserts to:

We select the active pharmaceutical ingredients for our punctum plugsustained-release drug delivery product candidates, including our intracanalicular inserts, based on criteria we have developed through our extensive experience with hydrogel depotinsert systems. Our active pharmaceutical ingredient selection criteria include:

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Anticipated Benefits of Our Punctum PlugsIntracanalicular Inserts Compared to Eye Drops

We believe our punctum plugintracanalicular insert product candidates may offer a range of favorable attributes as compared to eye drops, including:

Intravitreal Hydrogel Depot InjectionImplants for Back of the EyeBack-of-the-Eye Diseases and Conditions

We are engaged in preclinicalthe clinical development of anour hydrogel administered via intravitreal hydrogel depotinjection to address the large and growing markets for diseases and conditions of the back of the eye. Our initial development efforts are focused

on the use of our intravitrealextended-delivery hydrogel depot in combination with anti-angiogenic drugs such as protein-based anti-VEGF compoundsdrugs or small molecule drugs, such as TKIs for the treatment of back of the eyeretinal diseases, and conditions such as wet AMD.AMD, retinal vein occlusion and diabetic macular edema. Our initial goal for this intravitreal hydrogel depotthese programs is to provide sustained releaseextended delivery of an anti-VEGF compounda protein-based large molecule or small molecule TKI drug targeting VEGF and other targets over a four to six month period following administration of a bioresorbable hydrogel incorporating the drug by an injection into the vitreous humor, thereby reducing the frequency of the current monthly or bi-monthly intravitreal injection regimen for wet AMD. We believe less frequent injections will be more convenient for patients and clinicians and may reduce the risk of infectionAMD and other potential side effects associated with each injection.

15We are pursuing a multi-pronged strategy to seek to maximize the potential of this technology.

Our intravitreal hydrogel depotimplant consists of a PEG basedPEG-based hydrogel suspension, which contains embedded micronized protein particles of an anti-VEGFanti-angiogenic compound. We designed the intravitreal hydrogel depotimplant to be injected and retained in the vitreous humor, as depicted in the figure below, to provide sustained intravitreal delivery of anti-VEGF compounds.

We have designed our intravitreal hydrogel depotimplant for delivery using ordinarytypically available syringes and fine gauge needles compatible with the current standard of care. Once in the vitreous humor, the hydrogel is designed to retain theproperties of TKI and anti-VEGF compoundcompounds until it isthey are released. We have designed the hydrogel to liquefy, dissolve and be cleared from the eye through hydrolysis over time. We design our hydrogels to control the hydrogel biodegradation rate and, as a result, the timing of TKI and anti-VEGF compound release.

ReSure Sealant for Ocular Wound Closure

ReSure Sealant is our bioresorbable hydrogel product for wound closure following cataract surgery. This product received marketing approval from the FDA in January 2014. We began the commercial launch of ReSure Sealant in February 2014 on a region-by-region basis in the United States through a network of independent distributors. A surgeon applies ReSure Sealant as a liquid painted onto the corneal incision. Within about 15 seconds, the sealant cross-links and transforms into a smooth, lubricious hydrogel that seals the wound. ReSure Sealant dissipates as healing progresses and does not require removal. In the pivotal clinical trials that formed the basis for FDA approval, ReSure Sealant provided superior wound closure and a better safety profile than sutured closure. However,

We commercially launched ReSure Sealant in February 2014 on a region-by-region basis in the United States through a network of independent distributors. In early 2017, we terminated these distributors and hired a contract sales force of four representatives to sell ReSure Sealant. In July 2017, in connection with a broader reduction in force, we terminated these representatives.  At this time, we have no sales support provided to ReSure Sealant, and we have no plans to hire a sales force to focus on this product.  We also believe that the market opportunity for a surgical sealant following cataract surgery may be modest because sutures are used in only approximately 14% of cataract surgeries.

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Development Pipeline and Marketed Product

The following table summarizes important information about our key product development programs and our marketed product, ReSure Sealant. We hold worldwide commercial rights to each of our product candidates and ReSure Sealant.

Dexamethasone Punctum Plug (OTX-DP)Intracanalicular Insert

Our OTX-DPDEXTENZA (sustained-release dexamethasone) intracanalicular insert product candidate incorporates the corticosteroid dexamethasone as an active pharmaceutical ingredient in our proprietary punctum plug.hydrogel insert. We are developing OTX-DPDEXTENZA for the treatment of post-surgical ocular inflammationpain and pain,inflammation, allergic conjunctivitis and inflammatory dry eye disease. We have designed OTX-DPDEXTENZA to

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provide a sustained release deliver therapeutic levels of dexamethasone over a period of approximately 30 days. We recentlyhave reported topline results from three Phase 3 clinical trials for the firsttreatment of ourpost-surgical ocular pain and inflammation and two Phase 3 clinical trials for this indication and expect to report topline results from our second Phase 3 clinical trial by the endtreatment of March 2015. If the aggregate results of these two Phase 3 clinical trials are favorable, we expect to submit an NDA to the FDA for OTX-DP for post-surgical ocular inflammation and pain in the second quarter of 2015.allergic conjunctivitis.

We selected dexamethasone as the active pharmaceutical ingredient for OTX-DPDEXTENZA because it:

Embedded within our OTX-DP punctum plugDEXTENZA intracanalicular insert are dexamethasone drug particles that gradually erode and release the drug in a sustained fashion until the drug is depleted. As the dexamethasone drug particles erode and the hydrogel degrades by hydrolysis, the punctum plugintracanalicular insert softens, liquefies and is cleared through the nasolacrimal duct. We provide OTX-DPthe DEXTENZA drug product in a preservative-free formulation in a sterile, single use package without any added preservatives.package.

The standard regimen for dexamethasone eye drops following cataract surgery is an initial administration of four to six times daily for one week, with a gradual tapering in the number of eye drops over a four week period. Such a regimen is often confusing to patients as they must remember to taper the number of times per day they administer the steroid, while also taking multiple drops of other drugs, such as antibiotics and NSAIDs. We believe that sustained delivery of drug to the eye may result in better control of ocular inflammationpain and paininflammation as compared to eye drops and that a low dose amount may provide enhanced safety by eliminating spikes in intraocular pressureIOP associated with high dose steroid eye drops.

Although dexamethasone is clinically effective in the treatment of late-phase inflammatory allergic reactions, the safety limitations associated with eye drop administration, including the potential to generate spikes in intraocular pressureIOP due to the high levels of drug, have limited its widespread adoption as a treatment for this condition.the treatment of allergic conjunctivitis. These spikes in intraocular pressureIOP can lead to drug-induced glaucoma.drug induced glaucoma, although the incidence is low. Further, use of oral anti-histamine medications as well as anti-histamine eye drops for allergic conjunctivitis may dry out the eye and exacerbate the discomfort to some patients. We believe, based on our clinical trial results to date, that periodic use of the OTX-DPDEXTENZA for allergic conjunctivitis will create a low, tapered, consistent dose of dexamethasone, potentially minimizing or eliminating side effects associated with the eye drop formulation, while retaining the drug’s anti-inflammatory effects.

One of the causes of dry eye disease is inflammation. Topical anti-inflammatory drugs are used as one of several therapies to treat dry eye disease and are administered by eye drops. As the understanding of dry eye disease, specifically the inflammatory components of dry eye disease, has evolved, the use of corticosteroids has become a standard to offer short-term relief of signs and symptoms of the disease. Physicians typically prescribe a topical corticosteroid for a period of two to four weeks, tapered over the course of delivery as the inflammation and symptoms subside. As with allergic conjunctivitis, there are safety limitations associated with the use of corticosteroids for inflammatory dry eye disease that have limited wide spread adoption. We believe that OTX-DPDEXTENZA has potential as a short-term therapy for more severe cases of dry eye caused by inflammation, followed by the delivery of an immune modulatingimmunosuppressant drug such as cyclosporine after the inflammation has been reduced.

Overview of OTX-DPDEXTENZA Clinical Development

We are conducting clinical development of OTX-DPDEXTENZA for the treatment of post-surgical ocular inflammationpain and pain,inflammation, allergic conjunctivitis, and inflammatory dry eye disease. Because OTX-DP incorporates an active

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pharmaceutical ingredient already approved by the FDA for the treatment of ocular inflammation and pain, we did not need to conduct Phase 1 clinical trials for this product candidate. The following summarizes our clinical development to date for OTX-DP.DEXTENZA.

Clinical Trials for Post-surgicalPost-Surgical Ocular Pain and Inflammation and Pain

Completed Phase 2 Clinical Trial

In 2013, we completed a prospective, randomized, parallel-arm, vehicle controlled,vehicle-controlled, multicenter, double-masked Phase 2 clinical trial evaluating the safety and efficacy of OTX-DPDEXTENZA for the treatment of ocular inflammationpain and paininflammation following cataract surgery. We conducted this trial in 60 patients at four sites in the United States pursuant to an effective investigational new drug application, or IND. We randomized patients in a 1:1 ratio to receive either OTX-DPDEXTENZA or a placebo vehicle control punctum plugintracanalicular insert without active drug. One patient randomized into the OTX-DPDEXTENZA group was excluded from the trial because the investigator was unable to insert the plug,insert, resulting in 29 patients in the OTX-DPDEXTENZA group and 30 patients in the vehicle control group. We evaluated patients in this trial at days 1, 4, 8, 11, 14 and 30 following surgery.

One of our goals for this trial was to determine the appropriate primary endpoints for a subsequent Phase 3 clinical development program. The two primary efficacy measures in this trial were absence of inflammatory cells in the anterior chamber of the study eye and absence of pain in the study eye. When viewed with a slit lamp biomicroscope, these inflammatory cells, referred to as cells in a slit lamp examination, appear like dust specks floating in a projected light beam. The presence of these cells in the anterior chamber indicates inflammation. In this trial, absence of pain was based on a patient reported score of zero on a scale from zero to ten of ocular pain assessment. The first primary efficacy endpoint was the difference in the proportion of patients in each treatment group with absence of cells in the anterior chamber of the study eye at day 8 following surgery. The second primary efficacy endpoint was the difference in the proportion of patients in each treatment group with absence of pain in the study eye at day 8 following surgery.

One of our goals for this trial was to determine appropriate primary endpoints for a subsequent Phase 3 clinical development.

We evaluated as secondary measures the absence of flare in the anterior chamber of the study eye at each evaluation date, absence of inflammatory cells in the anterior chamber of the study eye and absence of pain in the study

eye at each evaluation date other than day 8 and pluginsert retention and visualization. Flare is a scattering of light in the aqueous humor when viewed during a slit lamp biomicroscopic examination. Flare occurs when the protein content of the aqueous humor increases due to intraocular inflammation.

We enrolled patients in this trial who were at least 21 years of age undergoing unilateral clear corneal cataract surgery. We excluded patients from the trial if, among other reasons, they had intraocular inflammation or ocular pain in the study eye at screening or had glaucoma or ocular hypertension.

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Efficacy: In this trial, OTX-DPDEXTENZA met the primary efficacy endpoint with statistical significance for absence of pain compared to the vehicle control at day 8 (p<0.0001). We determined statistical significance based on a widely used, conventional statistical method that establishes the p-value of clinical results. Typically, a p-value of 0.05 or less represents statistical significance. The differences between OTX-DPDEXTENZA and the vehicle control for absence of pain also were statistically significant at each other evaluation date (p<0.0002). These results are shown in the graph below. In this graph and other graphs appearing further below, we use the abbreviation “N” to reference the number of patients in each group.

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In this trial, OTX-DPDEXTENZA did not meet the primary efficacy endpoint with statistical significance for absence of cells in the anterior chamber compared to the vehicle control at day 8. However, there was a trend of improved absence

of anterior chamber cells at each evaluation date, with statistical significance at day 14 (p<0.0027) and day 30 (p< 0.0002). These results are shown in the graph below. The primary efficacy endpoint for inflammation in our Phase 3 clinical trials will measure the absence of anterior chamber cells at day 14. Pivotal clinical trials for other ophthalmic steroid drugs approved by the FDA for marketing in the United States also have evaluated this endpoint at day 14.

OTX-DP met the secondary efficacy endpoint with

Based on post hoc analysis, DEXTENZA showed statistical significance for absence of flare compared to vehicle control at each evaluation date. These results are shown in the graph below.

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Safety: In this trial, there were three serious adverse events, none of which was considered related to the study treatment. The trial investigator determined the relatedness of the serious adverse events to study treatment based on his or her professional medical judgment and in accordance with the study protocol, which required the investigator to determine that a reasonable possibility did not exist that the study treatment caused the adverse event. None of the three serious adverse events, fainting,events: syncope, intracranial hemorrhage and bacterial skin infection,cellulitis of the arm, were ocular in nature. In addition, there were a variety of adverse events in both the OTX-DPDEXTENZA group and the vehicle control group, with the adverse

events in the vehicle control group outnumbering the adverse events in the OTX-DPDEXTENZA group. In the OTX-DPDEXTENZA group, the only adverse event that occurred more than once was reduced visual acuity, which occurred twice. The most common adverse events in the vehicle control group were reduced visual acuity, conjunctival hyperemia and corneal edema. Overall, 19 adverse events were noted in the OTX-DPDEXTENZA group and 30 adverse events were noted in the vehicle control group. All adverse events were transient in nature and completely resolved by the end of the trial.

Completed Phase 3 Clinical ProgramTrials

In 2014, we initiated a pivotal clinical trial program that consisted of two prospective, randomized, parallel-arm, vehicle controlled,vehicle-controlled, multicenter, double-masked Phase 3 clinical trials evaluating the safety and efficacy of OTX-DPDEXTENZA for the treatment of ocular inflammationpain and paininflammation following cataract surgery. We initiated the first of these Phase 3 clinical trials which we refer to as the Phase 3a clinical trial, in February 2014 and the second trial, which we refer to as the Phase 3b clinical trial in April 2014. Patient enrollment was completed in September 2014, and the topline efficacy data from the first of these two clinical trials was reported in March and April 2015. We expect to haveinitiated a third Phase 3 clinical trial in the October 2015.  Patient enrollment in the third Phase 3 clinical trial was completed in May 2016 and the topline efficacy data fromwas reported in November 2016.

We enrolled 247 patients at 16 sites in the first Phase 3 clinical trial, 241 patients at 16 sites in the second Phase 3 clinical trial for this indication by the end of March 2015.

We conducted these trials in an aggregate of 487and 438 patients at 3421 sites in the third Phase 3 clinical trial in the United States pursuant to our effective IND. We randomized patients in a 2:1 ratio in the first two Phase 3 clinical trials and in a 1:1 ratio in the third Phase 3 clinical trial to receive either OTX-DPDEXTENZA or a placebo vehicle control punctum plugintracanalicular insert without active drug. We enrolled 247 patients at 16 sites in the Phase 3a clinical trial. 15 patients randomized into the OTX-DP group and 9 patients randomized into the vehicle control group were excluded from the Phase 3a clinical trial because either the investigator was unable to insert the plug or there were deviations from the study protocol as a result of patients being prescribed prohibited medications or having cataract surgery scheduled in their other eye within two weeks of the study procedure, resulting in a total of 149 patients in the OTX-DP group and 74 patients in the vehicle control group. We evaluated patients at days 2, 4, 8, 14, 30 and 60 following surgery.surgery in the first two Phase 3 trials and at days 2, 4, 8, 14, and 30 in the third Phase 3 clinical trial.

The two primary efficacy measures in these trials were absence of inflammatory cells in the anterior chamber of the study eye when measured with a slit lamp biomicroscope and absence of pain in the study eye. To meet the efficacy end point for absence of inflammatory cells, there needed to be a complete absence of inflammatory cells. In these trials, absence of pain was based on a patient reported score of zero on a scale from zero to ten of ocular pain assessment. The first primary efficacy endpoint for these trials iswas the difference in the proportion of patients in each treatment group with absence of inflammatory cells in the anterior chamber of the study eye at day 14 following surgery. Pivotal clinical trials for other ophthalmic steroid drugs approved by the FDA for marketing in the United States also have evaluated this endpoint at day 14. The second primary efficacy endpoint for these trials iswas the difference in the proportion of patients in each treatment group with absence of pain in the study eye at day 8 following surgery.  For clarification of the endpoints, the day of surgery and insertion of DEXTENZA or the placebo is considered to be day 1.

We believe that the FDA will require that we demonstrate a statistically significant difference between treatment groups for each of these two primary efficacy endpoints to receive marketing approval for OTX-DP for the treatment of post-surgical ocular inflammation and pain.

We evaluated as secondary efficacy measures the absencelevel of flare, an indicator of inflammation in the anterior chamber of the study eye at each evaluation date until day 30 and absence of inflammatory cells in the anterior chamber of the study eye and absence of pain in the study eye at each evaluation date other than the day used for the primary efficacy measure. Flare is a scattering of light in the aqueous humor when viewed during a slit lamp biomicroscopic examination. Flare occurs when the protein content of the aqueous humor increases due to intraocular inflammation.measure until day 30. The secondary analyses on primary endpoints arewere intended to be exploratory assessments that can be used to support the results from the primary endpoints. If we obtain favorable results from any secondary endpoints showing effectiveness of OTX-DP at

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earlier time points for absence of cells or absence of pain, we will consider seeking to expand the planned labeling for OTX-DP as part of our NDA submission or following any marketing approval that we may receive. We enrolled patients in these two trials who were at least 18 years of age undergoing unilateral clear corneal cataract surgery. We excluded patients from these trials if, among other reasons, they havehad intraocular inflammation or ocular pain in the study eye at screening or havehad glaucoma or ocular hypertension.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and intraocular pressure,IOP, along with any adverse events.

Efficacy: In the first Phase 3a3 clinical trial, OTX-DPDEXTENZA met the primary efficacy endpoint with statistical significance for absence of pain compared to the vehicle control at day 8. 76.1% of patients receiving OTX-DP reported absence of pain in the study eye on day 8 following insertion of the drug product, compared to 36.1% of those receiving placebo vehicle control punctum plug (p< 0.0001). OTX-DP also met the primary efficacy endpoint with statistical significance for absence of cells in the anterior chamber compared to the vehicle control at day 14. 33.7%33.1% of OTX-DP-treatedDEXTENZA treated patients showed an absence of inflammatory cells in the anterior chamber of the study eye on day 14 following drug product insertion, compared to 14.6%14.5% of those receiving placebo vehicle control punctum plugintracanalicular inserts (p=0.0015)0.0018). DEXTENZA also met the primary efficacy endpoint with statistical significance for absence of pain compared to the vehicle control at day 8. 80.4% of patients receiving DEXTENZA reported absence of pain in the study eye on day 8 following insertion of the drug product, compared to 43.4% of those receiving placebo vehicle control intracanalicular inserts (p< 0.0001).

In the second Phase 3 clinical trial, DEXTENZA met the primary efficacy endpoint for absence of pain at day 8 with statistical significance but did not meet the primary efficacy endpoint for absence of inflammatory cells at day 14.

In the second Phase 3 clinical trial, 77.5% of patients receiving DEXTENZA reported an absence of pain in the study eye on day 8 following insertion of the drug product, compared to 58.8% of those receiving placebo vehicle control intracanalicular inserts, a difference which was statistically significant (p=0.0025). However, 39.4% of DEXTENZA treated patients showed an absence of inflammatory cells in the anterior chamber of the study eye on day 14 following drug product insertion, compared to 31.3% of those receiving placebo vehicle control intracanalicular inserts, a difference which was not statistically significant (p=0.2182).

In the third Phase 3 clinical trial, DEXTENZA met the primary efficacy endpoint with statistical significance for the absence of cells in the anterior chamber compared to the vehicle control at day 14. 52.1% of DEXTENZA treated patients showed an absence of inflammatory cells in the anterior chamber of the study eye on day 14 following drug product insertion compared to 31.2% of those receiving placebo vehicle control intracanalicular inserts (p< 0.0001). DEXTENZA also met the primary efficacy endpoint with statistical significance for absence of pain compared to the vehicle control at day 8. 79.3% of patients receiving DEXTENZA reported absence of pain in the study eye on day 8 following insertion of the drug product, compared to 61.3% of those receiving placebo vehicle control intracanalicular inserts (p< 0.0001).

Secondary analyses on primary endpoints for the three Phase 3 clinical trials were also completed. In the first Phase 3 clinical trial, statistically significant differences were seen for absence of pain at all time points (days 2, 4, 8, 14, 30 and 60) in the DEXTENZA treatment group compared to the vehicle control group. Statistically significant differences were seen for the absence of inflammatory cells at day 30 in the DEXTENZA treatment group compared to the vehicle control group, and there were no statistically significant differences seen at the other time points. Statistically significant differences between the DEXTENZA treatment group and the vehicle control group were seen for flare at days 8, 14 and 30.

In the second Phase 3 clinical trial, statistically significant differences were seen for absence of pain at days 2, 4, 14 and 30 in the DEXTENZA treatment group compared to the vehicle control group. A similar proportion of patients in the DEXTENZA treatment group and the vehicle control group were observed to have an absence of inflammatory cells at days 2, 4, 8, and 30. A statistically significant difference between treatment groups was not seen for the absence of inflammatory cells until the day 60 visit, at which time a greater proportion of patients in the DEXTENZA treatment group compared to the vehicle control group were observed to have an absence of inflammatory cells at day 60 (p=0.0012). Statistically significant differences between the DEXTENZA treatment group and the vehicle control group were seen for flare at days 14, 30 and 60.

In the third Phase 3 clinical trial, statistically significant differences were seen for absence of pain at all time points (days 2,4, 14, and 30) in the DEXTENZA treatment group compared to the vehicle control group. Statistically significant differences were seen for the absence of inflammatory cells at days 4, 8, and 30 but not seen at day 2.  Statistically significant differences between the DEXTENZA treatment group and the vehicle control group were seen for flare at all measured time points (days 2, 4, 8, 14, and 30).

Safety: There were no ocular or treatment-related serious adverse events in the DEXTENZA treatment group in either of the first two completed Phase 3 clinical trials. There was one ocular serious adverse event in the vehicle control group in the first two completed Phase 3 clinical trials: hypopyon, or inflammatory cells in the anterior chamber. There were two patients with three serious adverse events in the DEXTENZA treatment group in the first Phase 3 clinical trial (1.2% incidence), compared with two patients with four serious adverse events in the vehicle control group (2.4% incidence). There were two serious adverse events in the DEXTENZA treatment group in the second Phase 3 clinical trial (1.3% incidence), compared with three serious adverse events in the vehicle control group (3.8% incidence). There were three serious adverse events in the DEXTENZA treatment group in the third Phase 3 clinical trial (1.4% incidence), compared with two serious adverse events in the vehicle control group (0.9% incidence).  One serious adverse event in the DEXTENZA group was ocular in nature (retinal detachment).  None of the serious adverse events in either group were deemed to be treatment-related. 

Patients were randomized in a 2:1 ratio in the first two Phase 3 clinical trials and in a 1:1 ratio in the third Phase 3 clinical trial between the treatment group and the vehicle control group. In the first Phase 3 clinical trial, 98 adverse events were noted in the DEXTENZA group and 59 adverse events were noted in the vehicle control group. In the second Phase 3 clinical trial, 74 adverse events were noted in the DEXTENZA group and 47 adverse events were noted in the vehicle control group. In the third Phase 3 clinical trial, 91 adverse events were noted in the DEXTENZA group and 109 adverse events were noted in the vehicle control group. All adverse events were either resolved or considered

chronic/stable at the time of subject exit from the study. We expect to have the topline efficacy data from the Phase 3b clinical trial for this indication by the end of March 2015.

We expectbe able to haveuse the safety data and data on secondary endpointsfrom these Phase 3 trials to support our other DEXTENZA clinical development programs, including for allergic conjunctivitis.

Regulatory Pathway

In September 2015, we submitted to the FDA an NDA for DEXTENZA for the treatment of post-surgical ocular pain. In July 2016, we received a CRL from the Phase 3a clinical trial by the end of March 2015FDA regarding our NDA for DEXTENZA pertaining to deficiencies in manufacturing process and expect to have the safety data and data on secondary endpoints on the Phase 3b clinical trial in April 2015.

Regulatory Pathway

controls identified during a pre-NDA approval inspection.  We expect to finalize the clinical study report forresubmitted our pivotal Phase 3 OTX-DP clinical program for ocular inflammation and pain following cataract surgery and submit an NDA to the FDA in January 2017. Following a re-inspection of manufacturing operations by the FDA which was completed in May 2017, we received an FDA Form 483 containing inspectional observations focused on manufacturing processes and analytical testing related to the manufacture of drug product for OTX-DPcommercial production.  In July 2017, we received a CRL from the FDA regarding our NDA for DEXTENZA for the treatment of post-surgical ocular pain, which states that the FDA has determined that it cannot approve the NDA in its present form.  In May 2017, we submitted our initial response to the Form 483 and, in November 2017, we submitted our responses to the FDA’s remaining inspectional observations in an effort to close out the items identified in the second quarterForm 483. 

Subject to satisfactorily addressing the FDA inspectional observations and demonstrating consistency in our commercial stage manufacturing process, we plan to resubmit our NDA for DEXTENZA for the treatment of 2015.post-surgical ocular pain in the first half of 2018. Adequate resolution of the outstanding Form 483 inspectional observations and the final decision as to the adequacy of our manufacturing processes are determined by the FDA with input from the Office of Process and Facilities within CDER as part of the NDA review process and are necessary prior to NDA approval.  Subject to receiving approval for the pain indication pursuant to the NDA resubmission, we plan to submit an sNDA for DEXTENZA for the treatment of post-surgical ocular inflammation. If we receive timely approval of the sNDA for post-surgical ocular inflammation, we expect to expand the labeling to include this indication.  We expect that we would submit this NDAthe sNDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or FDCA. See “—Government Regulation—Section 505(b)(2) NDAs” for additional information. Although we conducted our Phase 3 clinical trials of OTX-DPDEXTENZA in patients who have undergone cataract surgery, these trials are intended to support a label for all post-surgical ocular inflammation and pain.surgeries.

Clinical Trials for Allergic Conjunctivitis

Completed Phase 2 Clinical Trial

In November 2014, we completed a prospective, randomized, parallel-arm, vehicle controlled,vehicle-controlled, multicenter, double-masked Phase 2 clinical trial evaluating the safety and efficacy of OTX-DPDEXTENZA for the treatment of allergic conjunctivitis. We conducted this trial using a modified version of a controlled exposure model commonly used to assess anti-allergy medications known as the Conjunctival Allergen Challenge model, or CACTM, which is a proprietary model owned by ORA, Inc., the clinical research organization we used to manage the trial. The modified CAC achieves a very high transient dose exposure by placing allergen directly into the space between the eyelid and the surface of the eye of the patient. We initially exposed patients to specified allergens to determine which allergens resulted in an allergic response for the patients. If patient was responsive to a particular allergen, we continued to expose the patient to that same allergen prior to each evaluation.

We enrolled 6068 patients at two sites in the United States pursuant to our effective IND.States. We randomized patients in a 1:1 ratio to receive either OTX-DPDEXTENZA or a placebo vehicle control punctum plugintracanalicular insert without active drug. We evaluated patients using three allergen challenges in series for each of the two efficacy measures at days 14, 28 and 42 days following punctum plug insertion.placement of the intracanalicular insert.

The primary efficacy measures for this trial were ocular itching graded by the patient and conjunctival redness graded by the trial investigator, in each case based on a five point scale from zero to four. The primary efficacy measures were differences between treatment groups of at least 0.5 units on the five point scale on day 14 for all three time points measured in a day for both ocular itching and conjunctival redness and differences between treatment groups of at least 1.0 unit for the majority of the three time points measured on day 14 days post insertion for both ocular itching and conjunctival redness. The secondary endpoints for this trial were similar to the primary efficacy endpoints, except that each variable was assessed at 28 days 28 and 42 days following insertionplacement of the punctum plug.

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We enrolled patients in this trial who were at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to a perennial allergen and a seasonal allergen. We excluded patients from this trial if, among other reasons, they had an active ocular infection or itching or conjunctival redness at screening.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and intraocular pressure,IOP, along with any adverse events.

Efficacy: In this trial, there was a statistically significant mean difference (p<0.05) between the OTX-DPDEXTENZA treatment group and the vehicle group for both ocular itching and conjunctival redness at all three time points measured on days 14, 28, and 42 days following insertionplacement of the punctum plug. OTX-DPintracanalicular insert. DEXTENZA met one of the two primary efficacy measures.endpoints. The OTX-DPDEXTENZA treatment group achieved a mean difference compared to the vehicle control group of more than 0.5 units on a five point scale onat 14 days post insertion for all three time points measured in a day 14 for both ocular itching and conjunctival redness. The OTX-DPDEXTENZA group did not achieve a mean difference compared to the vehicle control group of 1.0 unit for the majority of the three time points measured on day 14 days post insertion for either ocular itching or conjunctival redness. However, in a pre-specified analysis group of patientsa second site in the clinical trial, in which OTX-DP punctum plugsDEXTENZA intracanalicular inserts were inserted 24placed 48 to 4872 hours following exposure to the allergen, rather than on the same day, we observed a mean difference in ocular itching between the OTX-DPDEXTENZA group and the vehicle control group of approximately 1.0 unit for the majority of three time points measured on day 14.14 days.

The results of this trial for each of the three time points on day 14 following the insertion of the intracanalicular insert for the OTX-DPDEXTENZA group and the vehicle control group are shown in the table below:

Safety: In this trial, there was one serious adverse event in the treatment arm, which was depression. The trial investigator determined the relatedness of the serious adverseThis event was not suspected to study treatment based on his or her professional medical judgment and in accordance with the study protocol, which required the investigatorbe related to determine that a reasonable possibility did not exist that the study treatment caused the adverse event.treatment. The serious adverse event was not ocular in nature. In addition, there were a variety of adverse events in both the OTX-DPDEXTENZA group and the vehicle control group, with nine ocular related adverse events and two non-ocular related adverse events in the OTX-DPDEXTENZA group and eight ocular adverse events and two non-ocular adverse events in the vehicle control group. In the OTX-DPDEXTENZA group, the only adverse eventevents that occurred more than once waswere reduction in visual ocuityacuity and increased intraocular pressure,IOP, both of which occurred twice. The most common adverse events in the vehicle control group were erytheraerythema of the eyelid, discharge from the eye and an increase in lacrimation, all of which occurred twice. All adverse events were transient in nature and completely resolved by the end of the trial.

Planned

Phase 3 Clinical Program

We met with the FDA in December 2014 to review the Phase 2 clinical trial results of OTX-DPDEXTENZA for the treatment of allergic conjunctivitis and to discuss our planned Phase 3 clinical development program. Based on

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these discussions, we plan to initiatehave initiated and completed two prospective, randomized parallel-arm, vehicle controlled, multicenter, double-maskedPhase 3 clinical trials.

First Phase 3 Clinical Trial

We initiated the first of these two planned Phase 3 clinical trials in the middle ofJune 2015, to evaluate the safety and we reported topline efficacy of OTX-DP for the treatment of allergic conjunctivitis. We plan to conduct this trial using the CAC model. We plan to enroll 72 patientsresults in each of theOctober 2015. This first Phase 3 clinical trialstrial was a prospective, randomized, parallel-arm, vehicle-controlled,

multicenter, double-masked trial. A total of 73 patients were enrolled in this trial and randomize patientswere randomized in a 1:1 ratio to receive either OTX-DPDEXTENZA or a placebo vehicle control punctum plugintracanalicular insert without active drug. This trial was conducted using the modified CAC model. We plan to evaluateevaluated patients using three allergen challenges in series for each of two efficacy measures at days 7, 14 and 28 following punctum plug insertion.

We expect that the primary efficacy measures forplacement of intracanalicular insert as described below. In this trial will be ocular itching graded by the patient and conjunctival redness graded by the trial investigator, in each case based on a five point scale from zero to four. We expect that the primary efficacy endpoints will be differences between the treatment group and the vehicle group of at least 0.5 units on the five point scale on day 7 for both ocular itching and conjunctival redness and differences of at least 1.0 unit for the majority of the three time points measured on day 7 for both ocular itching and conjunctival redness. We expect that the secondary endpoints for this trial will be similar to the primary efficacy endpoints, except that each variable will be assessed at day 28 following insertion of the punctum plug. In our Phase 3 clinical trials,trial, we plan to insertplaced the punctum plugsintracanalicular inserts 48 to 72 hours after exposure to the allergen. In our completed Phase 2 clinical trial, we obtained better efficacy results with this design protocol as noted in the description of the Phase 2 efficacy results above.

The primary efficacy measures for this trial were ocular itching graded by the patient and conjunctival redness graded by the trial investigator, in each case based on a five point scale from zero to four. The primary efficacy endpoints were the differences between the treatment group and the vehicle group of at least 0.5 units on the five point scale measured on 7 days post-insertion of the intracanalicular insert for all three time points measured for both ocular itching and conjunctival redness and differences of at least 1.0 unit for the majority of the three time points measured on 7 days post-insertion of the intracanalicular insert for both ocular itching and conjunctival redness. The secondary endpoints were similar to the primary efficacy endpoints except that each variable was assessed at day 14 and day 28 following insertion of the intracanalicular insert. The primary efficacy measure of conjunctival redness is typically included in Phase 3 trials for allergic conjunctivitis but has not been required for FDA approval of drugs for allergic conjunctivitis. Most commercially available prescription medications for the treatment of allergic conjunctivitis have an ocular itching indication only. As described below, ocular itching is the only primary efficacy endpoint in the second Phase 3 trial of DEXTENZA for the treatment of allergic conjunctivitis, with conjunctival redness being moved to a secondary efficacy endpoint.

We planenrolled patients in this trial who were at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to enrolla perennial allergen and a seasonal allergen. We excluded patients from this trial if, among other reasons, they had an active ocular infection or itching or conjunctival redness at screening.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and IOP, along with any adverse events.

Efficacy: In this trial, there was a statistically significant mean difference (p<0.0001) between the DEXTENZA treatment group and the placebo vehicle group for ocular itching at all three time points measured on 7 days post-placement of the intracanalicular insert. DEXTENZA also met the primary efficacy endpoint for ocular itching. The DEXTENZA treatment group achieved a mean difference compared to the vehicle group of greater than 0.5 units on a five point scale on 7 days post-insertion at each time point and greater than 1.0 unit at a majority of the time points on 7 days post-insertion for ocular itching. There was a statistically significant mean difference (p=0.01 or less) between the DEXTENZA treatment group and the placebo vehicle group for conjunctival redness at all three time points measured on 7 days post-placement of the intracanalicular insert. However, the DEXTENZA group did not achieve the pre-specified primary efficacy endpoints on 7 days post-insertion with respect to conjunctival redness.

The results of this trial for each of the three time points on day 7 following placement of the intracanalicular insert for the DEXTENZA group and the vehicle control group are shown in the table below:

Safety: There were no serious adverse events reported in this trial.  There were a variety of adverse events in both the DEXTENZA group and the vehicle control group, with three patients in the DEXTENZA treatment group with a total of three ocular adverse events and one non-ocular adverse event and four patients in the vehicle control group with a total of six ocular adverse events and one non-ocular adverse events. The most common ocular adverse event was increased lacrimation, which was experienced by one patient in the DEXTENZA group and two patients in the vehicle control group. Other treatment-related ocular adverse events included increased IOP in the DEXTENZA group, and blepharospasm in the vehicle control group.

Second Phase 3 Clinical Trial

We initiated the second Phase 3 clinical trial of DEXTENZA for the treatment of allergic conjunctivitis in November 2015, and we reported topline efficacy results in June 2016. This second Phase 3 clinical trial was a prospective, randomized, parallel-arm, vehicle-controlled, multicenter, double-masked trial. A total of 72 patients were enrolled in this trial and randomized in a 1:1 ratio to receive either DEXTENZA or a placebo vehicle control intracanalicular insert without active drug. This trial was conducted using the modified CAC model. Patients were evaluated using three allergen challenges in series for each of two efficacy measures at days 7, 14 and 28 following insertion of the intracanalicular insert. In this Phase 3 clinical trial, we placed the intracanalicular inserts 48 to 72 hours after exposure to the allergen.

The single primary efficacy measure for this trial was ocular itching graded by the patient based on a five point scale from zero to four. The primary efficacy endpoints were the differences between the treatment group and the vehicle group of at least 0.5 units on the five point scale 7 days post-insertion of the intracanalicular insert for all three time points measured for ocular itching and differences of at least 1.0 unit for the majority of the three time points measured 7 days post-insertion of the intracanalicular insert for ocular itching. The secondary endpoints for ocular itching were similar to the primary efficacy endpoints except that each variable was assessed at day 14 and day 28 following placement of the intracanalicular insert. The secondary endpoints for conjunctival redness were the differences between the treatment group and the vehicle group of at least 0.5 units on the five point scale 7 days post-insertion of the intracanalicular insert for all three time points measured and differences of at least 1.0 unit for the majority of the three time points measured 7 days post-insertion of the intracanalicular insert.

We enrolled patients in this trial who are at least 18 years of age with a positive history of ocular allergies and a positive skin test reaction to a perennial allergen and a seasonal allergen. We plan to excludeexcluded patients from this trial if, among other reasons, they havehad an active ocular infection or itching or conjunctival redness at screening.

We plan to evaluateevaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity and intraocular pressure,IOP, along with any adverse events.

Efficacy: In this trial, DEXTENZA did not meet the primary efficacy endpoint of ocular itching at the three time points measured on day 7  post-placement of the intracanalicular insert. The mean difference in ocular itching in the

DEXTENZA treatment group compared to the placebo group measured 7 days following insertion of the inserts, at 3, 5, and 7 minutes was -0.18, -0.29, and -0.29 units, respectively, on a five point scale and did not achieve statistical significance. In addition, the trial did not achieve the requirement of at least a 0.5 unit difference at all three time points 7 days following insertion of the inserts and at least a 1.0 unit difference at a majority of the three time points between the treatment group and the placebo group 7 days following insertion of the inserts.

The trial also assessed conjunctival redness as a secondary endpoint. The differences in the mean scores in conjunctival redness between the DEXTENZA treatment group and the placebo group 7 days following insertion of the inserts at 7, 15 and 20 minutes were -0.35, -0.39 and -0.42, respectively.

The results of this trial for each of the three time points on day 7 following placement of the intracanalicular insert for the DEXTENZA group and the vehicle control group are shown in the table below:

Safety:  There were no serious adverse events reported in this trial.  There were a variety of adverse events in both the DEXTENZA group and the vehicle control group, with six patients in the DEXTENZA treatment group with a total of six ocular and one non-ocular adverse events and 11 patients in the vehicle control group with a total of nine ocular and eight non-ocular adverse events. The lower rate of ocular adverse events in the DEXTENZA group could potentially be due to the presence of an anti-inflammatory active pharmaceutical ingredient. Ocular adverse events reported more than one patient in either treatment group included increased IOP, which was experienced by two patients in the DEXTENZA group, as well as dacryostenosis acquired and dacryocanaliculitis, each experienced by two patients in the vehicle control group. Both cases of IOP increased were considered treatment related, as were both cases of dacrycanaliculitis and a single case of dacryostenosis. All other ocular adverse events were reported by single patients in either the DEXTENZA or vehicle control group, with most in the PV group considered treatment related.

Regulatory Pathway

We reviewed our Phase 2 results with the FDA during a meeting in December 2014 and based on these discussions expect to initiatehave completed two Phase 3 clinical trials evaluating OTX-DPDEXTENZA for the treatment of allergic conjunctivitis.   Based on the results from the second Phase 3 clinical trial in which we failed to meet the primary efficacy endpoints, we may conduct a third Phase 3 clinical trial.  Subject to receiving approval for DEXTENZA for the treatment of post-surgical ocular pain pursuant to the NDA that has been submitted to the FDA and obtaining favorable results from any such Phase 3 clinical trial, we plan to submit an sNDA to the FDA for DEXTENZA for the treatment of allergic conjunctivitis infor only the middle of 2015. If we obtain favorable results, we plan to submit an NDA supplement, or sNDA, to the FDA for OTX-DP for thisocular itching indication. We expect that we would submit this sNDA under Section 505(b)(2) of the FDCA. See “—Government Regulation—Section 505(b)(2) NDAs” for additional information. Based on discussions with the FDA, we expect to use safety results from our Phase 3 clinical trials of OTX-DPDEXTENZA for the treatment of post-surgical ocular inflammationpain and paininflammation to support the sNDA for OTX-DPDEXTENZA for the treatment of allergic conjunctivitis.

Clinical Trial for Inflammatory Dry Eye

Phase 2 Clinical Trial

In January 2015, we initiated a prospective, randomized, parallel-arm, vehicle controlled,vehicle-controlled, multicenter, bilateral, double-masked Phase 2 feasibility study evaluating the safety and efficacy of OTX-DPDEXTENZA for the treatment of inflammatory dry eye disease. We plan to enroll 40enrolled 43 patients and evaluate up to 80evaluated 86 eyes at two sites in the United States pursuant to our effective IND. The clinical trial was not powered for statistical significance. We expect to randomizerandomized patients in a 1:1 ratio to receive either OTX-DPDEXTENZA or a placebo vehicle control punctum plugintracanalicular insert without active drug.

Designed as a serial phase exploratory study, patients arewere initially administered a placebo vehicle plugcontrol intracanalicular insert for 3045 days to establish a baseline for the investigational drug treatment. Patients who respond responded

to the placebo pluginsert in treatment of their dry eye disease arewere excluded from the trial. Patients who continuecontinued to exhibit symptoms of dry eye disease during the initial 3045 days, areas indicated by a minimum threshold of signs of corneal staining, were qualified for enrollment in the treatment phase of the trial. Qualified patients arewere then randomized to receive either OTX-DPDEXTENZA or a placebo vehicle plug.control intracanalicular insert. Primary efficacy measures includeincluded corneal and

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conjunctival staining, tear osmolarity, tear film break-up time, presence of the plug,insert, ease of product use and visualization, and resorption of the pluginsert following therapy. We expect to completereported topline results for this clinical trial in the second halfDecember 2015.

In this exploratory Phase 2 clinical trial, patients were selected for a minimum threshold of 2015signs of corneal staining and assess the future direction of the clinical development of this product candidatewere randomized to either treatment with DEXTENZA or a placebo vehicle insert. Patients were stratified into groups based on these results.the level of National Eye Institute aggregate corneal fluorescein staining score improvement and were then randomized into the treatment or placebo vehicle insert group per a pre-determined randomization list to maintain masking. DEXTENZA treated patients showed clinically meaningful benefits compared to patients receiving a placebo vehicle control intracanalicular insert, with improvement in total and inferior corneal staining as well as conjunctival staining. Total corneal staining at day 30 following randomization was significantly decreased from baseline in the DEXTENZA group (-3.14) compared to placebo (-1.10) (p=0.018). Inferior staining showed clinically significant differences in the change from baseline in the DEXTENZA treatment group compared to the placebo group (-0.44 and -0.45 at day 15 and day 30, respectively). Corneal staining is a primary endpoint that has been used in recent Phase 3 dry eye clinical trials for dry eye disease conducted by other ophthalmology companies. Supportive analyses of lissamine green staining also demonstrated a clinically significant change in favor of DEXTENZA, where total staining was more than 1 point improved for the DEXTENZA group compared to the placebo group.

This clinical trial was designed to evaluate a range of objective and subjective measures (signs and symptoms, respectively) for DEXTENZA and was intended to explore which measures would be appropriate to include in the design of future clinical trials of DEXTENZA or other molecules in a sustained-release product as a potential therapy for dry eye disease. Our long term strategy for the treatment of dry eye may be to use OTX-DPDEXTENZA as an initiala mode of therapy to reduce inflammation followed by a punctum plugin patients with acute dry eye conditions and pursue the development of an intracanalicular insert containing an immunosuppressant drug such as cyclosporine. For morecyclosporine to treat chronic dry eye.

There was one serious adverse event in the DEXTENZA treatment group, myocardial infarction, that was not deemed to be treatment related.  There were 17 adverse events in the DEXTENZA group and 11 adverse events in the vehicle control group. Eight patients in the DEXTENZA group reported 12 ocular related adverse events, and 4 patients in the vehicle control group reported 5 ocular related adverse events. Four patients in the DEXTENZA group reported 5 non-ocular related adverse events, and 5 subjects in the vehicle control group reported 6 non-ocular related adverse events. The most frequently reported ocular treatment related ocular adverse event was increased lacrimation, which was reported in 4 patients in the DEXTENZA group and 1 subject in the vehicle control group. Three patients, all from the DEXTENZA group, had a mild reduction in best corrected visual acuity, of dry eye, we continue to conduct early stage research to identify product candidates that would be suitable for this multifactorial disease.which 2 were considered treatment related and 1 of these was not resolved during the trial.

Travoprost Punctum PlugIntracanalicular Insert (OTX-TP)

Our OTX-TP product candidate incorporates the prostaglandin analogPGA travoprost as an active pharmaceutical ingredient in our proprietary punctum plug.intracanalicular insert. We are developing OTX-TP for the treatment of glaucoma and ocular hypertension. We have completed a Phase 2a clinical trial of OTX-TP, and initiatedwe reported topline efficacy results of a Phase 2b clinical trial of OTX-TP in the United States in November 2014.October 2015.  We are currently conducting the first of two Phase 3 trial of OTX-TP.  In the first Phase 3 trial, we expect to enroll approximately 550 patients at 50 sites in the United States.

Travoprost is a synthetic prostaglandin analogPGA that reduces intraocular pressureIOP by enhancing the clearance and drainage of ocular fluid.

We selected travoprost as the active pharmaceutical ingredient for OTX-TP because it:

We have designed OTX-TP to provide a sustained release ofdeliver therapeutic levels of travoprost for up to three months. We have tested versions of OTX-TP that are capable of sustained delivery over a one-month, a two-month and a three-month period. The retention time of our punctum plugsintracanalicular inserts varies from patient to patientpatient-to-patient due to various physiological factors and particular stressesanatomical factors to which the punctum plugsintracanalicular inserts may be subjected. We have conducted a series of non-significant risk, or NSR, investigational device exemption, or IDE, studies with improved product designs and placement procedures with the goal of achieving higher retention rates. We have achieved successive improvements in retention, with as high as a 92% retention rate at day 90.90 in one of these NSR studies. Our completed pilot studies evaluated one-month and two-month versions of OTX-TP. In our Phase 2a clinical trial, we evaluated two-month and three-month versions of OTX-TP. In our Phase 2b clinical trial, we are evaluatingevaluated an improved three-month version of OTX-TP. In our pilot studies, the OTX-TP plugsinserts we evaluated were violet to provide a visual assessment of pluginsert position. In our subsequent Phase 2 clinical trials, we switched to a fluorescent yellow color to improve visibility and are using this same fluorescent marker in our Phase 2b clinical trial.

In addition to the PEG basedPEG-based hydrogel, OTX-TP contains bioresorbable microparticles which contain encapsulated travoprost. We designed OTX-TP to provide a sustained release ofdeliver travoprost at therapeutic levels for the duration of therapy as the microparticles degrade. We provide OTX-TP in a sterile, single use package without any added preservatives.

Overview of OTX-TP Clinical Development

We are conducting clinical development of OTX-TP for glaucoma and ocular hypertension. Because OTX-TP incorporates an active pharmaceutical ingredient already approved by the FDA for the treatment of glaucoma and ocular hypertension, we did not need to conduct Phase 1 clinical trials for this product candidate. However, we did conduct two pilot studies to assess safety and to obtain initial efficacy data. The following summarizes our clinical development to date for OTX-TP.

The trial design for the two Phase 3 clinical trials includes an OTX-TP treatment arm and a placebo-controlled comparator arm using a non-drug-eluting insert. No timolol comparator or validation arm will be required in the study design and no eye drops, placebo or active, are being administered in either arm. We expect that the FDA will require that OTX-TP show both a statistically superior reduction of IOP, when compared to the placebo, as a primary efficacy endpoint, and a clinically meaningful reduction of IOP in the absolute. The primary efficacy endpoint will be evaluated at 2 weeks, 6 weeks and 12 weeks at 8am, 10am and 4pm at each of the three timepoints.

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Clinical Trials for Glaucoma and Ocular Hypertension

Completed Singapore Pilot Study

In 2012, we completed a prospective, single arm, open label pilot study evaluating the initial safety and efficacy of the one-month version of OTX-TP for the treatment of glaucoma and ocular hypertension. We conducted this trial in 17 patients, and in 26 eyes, at two sites in Singapore.

We enrolled patients in this trial who were at least 21 years of age with a documented diagnosis of ocular hypertension or open-angle glaucoma, baseline intraocular pressureIOP within a specified range and a specified minimum level of visual acuity in each eye. The trial protocol provided that if the participant’s intraocular pressureIOP was high despite treatment with OTX-TP, rescue medication would be made available to the patient. For patients who were currently under treatment for ocular hypertension or glaucoma, we required a drug washout period for these medications between screening and first visit.

We evaluated patients at days 3, 10, 20 and 30 following insertion of the pluginsert and made the following assessments:

We assessed intraocular pressureIOP at multiple time points on each evaluation date because intraocular pressureIOP naturally varies over the course of the day.

For patients who are affected bilaterally, if both eyes met all eligibility criteria, both eyes were treated, but only the eye with the higher mean intraocular pressureIOP at baseline was included in the efficacy analysis.

Efficacy:On day 10, 100% of the plugsinserts were retained,visualized, on day 20, 88% of the plugsinserts were retained,visualized, and on day 30, 79% of the plugsinserts were retained.

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We observed a clinically meaningful reduction in mean intraocular pressureIOP over the 30 day trial period. For eyes that retained the plug,insert, from a mean baseline intraocular pressureIOP of 27.2 mmHg, the mean intraocular pressureIOP during treatment was maintained at or below 22 mmHg at each evaluation date and time point. The mean reduction in intraocular pressureIOP from baseline ranged from 5.3 mmHg (20%) to 8.2 mmHg (30%) across all evaluation dates and time points. In studies conducted by third parties, a sustained 5.0 mmHg reduction in intraocular pressureIOP reduced risk of disease progression by approximately 50%. The results for change in mean intraocular pressureIOP from baseline at 8:00 a.m. on each evaluation date are set forth in the graph below.

Safety: In this trial, there were no serious adverse events or unanticipated adverse events. There was only one adverse event, bilateral epiphora, or excess tearing of both eyes, which was transient in nature and completely resolved after pluginsert removal. There were no significant changes in hyperemia scores from baseline through day 30. There were no notable observations of clinical relevance among the slit lamp biomicroscopy assessments.

Completed South Africa Pilot Study

In 2012, we completed a prospective, single arm, open label pilot study evaluating the initial safety and efficacy of the two-month version of OTX-TP for the treatment of glaucoma and ocular hypertension. We conducted this trial in 20 patients, and in 36 eyes, at two sites in South Africa.

Enrollment criteria were comparable to our Phase 1 Singapore trial described above, except that the minimum patient age was 18.

We evaluated patients at days 3, 15, 30, 45 and 60 following insertion of the pluginsert and made the same assessments with respect to mean intraocular pressure,IOP, change in mean intraocular pressureIOP from baseline and retention of the pluginsert in the canaliculus at each evaluation date following day 3 as in our Phase 1 Singapore trial described above.

Efficacy: On day 15, 97% of the plugsinserts were retained, on day 30, 92% of the plugsinserts were retained,visualized, on day 45, 78% of the plugsinserts were retained, and on day 60, 59% of the plugsinserts were retained. Because of the limitations of the visualization of the violet color through pigmented eyelids, it is possible that punctum plugsintracanalicular inserts identified as not being retained were in fact retained but not visible, particularly given the sustained reduction in intraocular pressureIOP through day 60 described below. We have since eliminated the violet colorant in favor of a fluorescent PEG hydrogel, resulting in greatly improved visualization.

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We observed a clinically meaningful reduction in mean intraocular pressureIOP over the 60 day trial period. For eyes that retained the plug,insert, from a mean baseline intraocular pressureIOP of 28.7 mmHg, the mean intraocular pressureIOP during treatment was maintained at or below 22.0 mmHg beginning on day 15 and at all subsequent evaluation dates. The mean reduction in intraocular pressureIOP from baseline ranged from 5.0 mmHg (18%) to 7.1 mmHg (25%) across all evaluation dates and time points. The results for change in mean intraocular pressureIOP from baseline at 8:00 a.m. on each evaluation date are set forth in the graph below for patients who retained the pluginsert on such date.

There were only two cases in which intraocular pressureIOP remained high even though the pluginsert was confirmed to be present. In each of these cases, the investigator prescribed rescue medication at the end of the visit. It is possible that this elevated intraocular pressureIOP was the result of the participants not responding to travoprost.

Safety: In this trial, there were no serious adverse events or unanticipated adverse events. The most common adverse event was inflammatory reaction, which was noted in three patients. All adverse events were transient in nature and completely resolved by the end of the trial. There were no significant changes in hyperemia scores from baseline through day 60. There were no notable observations of clinical relevance among the slit lamp biomicroscopy assessments.

Completed South Africa Phase 2a Clinical Trial

In May 2014, we completed a prospective, randomized, multi-arm, active controlled,active-controlled, multicenter, double masked Phase 2 clinical trial evaluating the safety and efficacy of two versions of OTX-TP for the treatment of glaucoma and ocular hypertension. The OTX-TPa version was intended to release travoprost over a two-month period, and the OTX-TPb version was intended to release travoprost at a slower rate over a three-month period. Based onin vitro testing, the OTX-TPa version had an average daily drug delivery rate of 3.5 micrograms per day and the OTX-TPb version had an average daily drug delivery rate of 2.8 micrograms per day. We conducted this trial in 41 patients at four sites in South Africa. In this trial, we randomized 11 patients for treatment with OTX-TPa and placebo eye drops, 17 patients for treatment with OTX-TPb and placebo eye drops and 13 patients for treatment with a placebo vehicle control punctum plugintracanalicular insert without active drug and timolol eye drops. One patient randomized into the timolol group was excluded from the trial because the investigator was unable to insert the plug.insert. We randomized more patients in the OTX-TPb group than in the OTX-TPa group because we ceased enrolling patients in the OTX-TPa group during the trial based on an amendment to our trial protocol intended to facilitate the completion of the trial and to allow us to evaluate a larger number of patients being treated with a three-month version of the plug.insert. Timolol is the most commonly prescribed non-PGA drug for the treatment of glaucoma and has been used as a comparator drug in pivotal clinical trials for other approval glaucoma products.

The primary efficacy endpoints in this trial are differences between treatment groups in:

We designed our Phase 2a clinical trial to assess clinically meaningful response to treatment, and did not power the trial to measure any efficacy endpoints with statistical significance. We expect that our planned Phase 3 clinical trials for OTX-TP described below will be the first clinical trials for OTX-TP to be powered with an appropriate number of patients to allow us to measure with statistical significance the non-inferiority of OTX-TP compared to a vehicle control punctum plug plus timolol eye drops for the treatment of glaucoma and ocular hypertension based on the primary efficacy endpoint. We are also evaluatingevaluated retention of the pluginsert as a secondary endpoint.

We enrolled patients in this trial who were at least 18 years of age with a documented diagnosis of ocular hypertension or open-angle glaucoma, baseline intraocular pressureIOP within a specified range and a specified minimum level of visual acuity in each eye. We excluded patients from this trial if, among other reasons, they had a history of inadequate response to treatment with prostaglandins or beta-blockers. For patients who were currently under treatment for ocular hypertension or glaucoma, we required a drug washout period for these medications between screening and first visit.

We evaluated patients at days 3, 15, 30, 45, 60, 75 and 90 following insertion of the pluginsert and made the following assessments:

For patients who are affected bilaterally, if both eyes met all eligibility criteria, both eyes were treated, but only the eye with the higher mean intraocular pressureIOP at baseline was included in the primary efficacy analysis.

We evaluated safety in all patients at each study visit with an assessment of general eye conditions, including visual acuity, along with any adverse events.

Efficacy:In the timolol group, for eyes that retained the plug,insert, from a mean baseline intraocular pressureIOP of 26.1 mmHg, the mean intraocular pressureIOP during treatment was maintained at or below 21.321.4 mmHg beginning on day 15 and at all subsequent evaluation dates and time points. The mean reduction in intraocular pressureIOP from baseline ranged from 3.2 mmHg (13%) to 6.4 mmHg (25%) across all evaluation dates and time points through day 75.

In the OTX-TPa group, for eyes that retained the plug,insert, from a mean baseline intraocular pressureIOP of 25.8 mmHg, the mean intraocular pressureIOP during treatment was maintained at or below 21.121.0 mmHg beginning on day 15 and at all subsequent evaluation dates and time points through day 75. The OTX-TPa formulation, originally intended to deliver drug over a two-month period, exceeded our expectations, delivering drug for 75 days. The mean reduction in intraocular pressureIOP from baseline ranged from 3.2 mmHg (19%(14%) to 6.0 mmHg (23%(24%) across all evaluation dates and time points through day 75.

In OTX-TPb group, for eyes that retained the plug,insert, from a mean baseline intraocular pressureIOP of 26.4 mmHg, the mean intraocular pressureIOP during treatment was maintained at or below 23.422.2 mmHg beginning on day 15 and at all subsequent evaluation dates and time points. The mean reduction in intraocular pressureIOP from baseline ranged from 2.0 mmHg (8%(9%) to 5.4 mmHg (20%) across all evaluation dates and time points.

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The results for change in mean intraocular pressureIOP for patients in the OTX-TPa group, for patients in the OTX-TPb group and for patients in the timolol group from baseline at 8:00 a.m. on each applicable evaluation date are set forth in the graph below, in each case for patients who retained the pluginsert on such date. We believe that the lower average daily drug delivery rate in the OTX-TPb group may have resulted in less reduction of mean intraocular pressureIOP in this group as compared to the OTX-TPa group. As discussed below, we plan to evaluateevaluated an improved three-month version of OTX-TP in our Phase 2b clinical trial.

Safety: In this trial, there were no serious adverse events. The most common adverse event was inflammatory reaction, which was noted in five patients. All adverse events were transient in nature and resolved by the end of the trial. There were no significant changes in hyperemia scores from baseline through day 90. There were no notable observations of clinical relevance among the slit lamp biomicroscopy assessments.

Ongoing

Completed U.S. Phase 2b Clinical Trial

In November 2014, we initiated a prospective, randomized, parallel-arm, active controlled,active-controlled, multicenter, double-masked Phase 2b clinical trial to evaluate the safety and efficacy of OTX-TP for the treatment of glaucoma and ocular hypertension after submitting an IND to the FDA for this indication. We plan to conduct this trial in 80treated 73 patients and in up to 160 eyes, at 1011 sites in the United States pursuant to our effective IND. As of March 12, 2015, we had enrolled 53 patients in this Phase 2b clinical trial. We are randomizingrandomized patients in a 1:1 ratio to receive either OTX-TP and placebo eye drops or a placebo vehicle control punctum plugintracanalicular insert without active drug and eye drops containing timolol. Patients are beingwere instructed to use the placebo drops or timolol drops twice daily for the duration of the trial. Based on the results of our completed Phase 2a clinical trial, we designed the OTX-TP pluginsert for use in our Phase 2b clinical trial to deliver drug over a 90 day period at the same daily rate as the OTX-TPa pluginsert used in the Phase 2a clinical trial. To achieve this, we modified the design of the OTX-TP pluginsert to enlarge it in order to enable the pluginsert to carry a greater amount of drug. We previously evaluated in our Phase 1 clinical trial of OTX-MP in patients following cataract surgery a plugan insert of similar lengthsize to the pluginsert we are using in our Phase 2b clinical trial. These structural changes were previously evaluated in NSR studies that we describe below.

The primary efficacy endpoint in this trial iswas the difference between treatment groups in the mean change in intraocular pressureIOP from baseline at day 60 following insertion of the punctum plug,intracanalicular insert, calculated by averaging the change from baseline across the three time points at day 60.the assessment date, which is known as diurnal IOP. The secondary efficacy endpoints in this trial arewere the difference between treatment groups in the mean change in intraocular pressure from baseline in average diurnal IOP at day 90, the difference between treatment groups in the mean change from baseline in IOP at each individual time point onat day 60 and day 90, following insertion of the punctum plug.difference between treatment groups in the mean change in average diurnal IOP and IOP at each individual time point at day 60 and day 90, and the difference between treatment groups in the mean percent change from baseline in average diurnal IOP and IOP at each individual time point at day 60 and 90. We are designingdesigned our Phase 2b clinical trial to assess clinically meaningful response to treatment, and willdid not be poweringpower the trial to measure any efficacy endpoints with statistical significance.

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We are enrollingenrolled patients in this trial who are at least 18 years of age with a documented diagnosis of ocular hypertension or open-angle glaucoma, baseline intraocular pressureIOP within a specified range and a specified minimum level of visual acuity in each eye. We are excludingexcluded patients from this trial if, among other reasons, they havehad a history of inadequate response to treatment with prostaglandins or beta-blockers. For patients under treatment for ocular hypertension or glaucoma, we are requiringrequired a drug washout period for these medications between screening and first visit. We also evaluated the effect of a four week versus a five week washout duration on the change in 8:00 a.m. IOP in both groups.

We evaluateevaluated patients at days 4,3, 15, 30, 45, 60, 75 and 90 following(with insertion of the pluginsert on day 1) and makemade the following assessments:

We also collected data on intracanalicular insert presence along with visualization of the insert by both the study patient and change in mean intraocular pressure from baseline at 8:00 a.m., 12:00 p.m.the investigator. The patients were instructed to assess insert presence on a daily basis and 4:00 p.m. at days 30, 60report the absence of an insert immediately. This data has provided a method for us to assess the accuracy of patient self-examination for insert presence, and 90.

prolonging its retention on the ocular surface. Several peer-reviewed medical journals have reported studies in which an additional IOP lowering effect of 1.32 to 1.80 mmHg was observed in patients taking timolol eye drops in combination with a non-drug eluting punctum plug by bothcompared to those patients only taking timolol eye drops. These include studies reported in September 2011 in Clinical and Experimental Optometry, February 1989 in the American Journal of Ophthalmology and August 1996 in Acta Ophthalmologica Scandinavica. The expected design for our Phase 3 clinical trials of OTX-TP for the treatment of glaucoma and ocular hypertension is addressed below under “—Regulatory Pathway”.

In the timolol group, the mean IOP at day 30, 60 and 90 at all time points ranged from 18.9 mmHg to 20.7 mmHg. The mean reduction in IOP from baseline at day 30, 60 and 90 at all time points ranged from 5.3 mmHg to 7.3mmHg.

In the OTX-TP group, the mean IOP at day 30, 60 and 90 at all time points ranged from 21.0 mmHg to 22.3 mmHg. The mean reduction in IOP from baseline at day 30, 60 and 90 at all time points ranged from 2.3 mmHg to 5.2 mmHg.

In our completed South Africa Phase 2a clinical trial in which OTX-TP intracanalicular inserts were inserted in 36 eyes in 20 patients with no placebo eye drops used, on day 30 we observed a reduction in IOP of 6.1 mmHg at 8:00 a.m., 5.1 mmHg at 12:00 p.m. and 5.6 mmHg at 4:00 p.m. following insertion of the intracanalicular insert. In this trial, on day 60 we observed a reduction in IOP of 6.7 mmHg at 8:00 a.m., 5.1 mmHg at 12:00 p.m. and 4.3 mmHg at 4:00 p.m. following insertion of the intracanalicular insert. The diurnal averages of the reduction in the IOP were 5.6 mmHg at day 30 and 5.4 mmHg at day 60 in this trial. We believe that the higher IOP reduction observed in this trial may be due in part to the lack of placebo eye drops.

We performed additional post-hoc analyses that were not pre-specified in the trial protocol for the Phase 2b glaucoma clinical trial to provide further insight on the performance of OTX-TP. Although post-hoc analyses performed using an unlocked clinical trial database can result in the introduction of bias, we believe that these analyses provide important information regarding our OTX-TP product candidate and are helpful in determining the study patientpopulation and inclusion and exclusion criteria for future clinical trials. When we excluded patients on more than one glaucoma medication and used the baseline of five weeks of washout for comparisons of the OTX-TP group and the investigator. Thetimolol group, the differences in mean reduction in IOP between the OTX-TP treatment group and the timolol group at the 8:00 a.m. time point on day 30, 60 and 90 narrowed to an average of 1.1 mmHg from an average of 2.2 mmHg based on the pre-specified criteria. These results are shown in the table below:

In this trial, inserts were found to be retained in 91% of patients are instructed to assess plug presence on a daily basisat day 60, 88% of patients at day 75 and report the absence48% of a plug immediately. This provides a method to assess the accuracy of patient self-examination for plug presence. In addition, if the investigator confirms the plug is no longer presentpatients at any time prior to day 90, a new plug will be inserted. We expect thatreflecting the corresponding absorption and clearance of the inserts with the duration of drug release.

Safety: In this will maximizetrial, there were no serious adverse events. Adverse events noted to date including punctal stenosis, punctal trauma and canaliculitis. The most common adverse event was inflammatory reaction of the consistencylacrimal punctum and/or canaliculus, which was noted in five patients. These adverse events were transient in nature and resolved by the end of dosing.the trial. There were no significant changes in hyperemia scores from baseline through day 90 and there were no hyperemia related adverse events. There were no notable observations of clinical relevance among the slit lamp biomicroscopy assessments.

Non-Significant Risk Retention Studies

We conduct medical device NSR IDE studies on an ongoing basis for the purpose of refining our punctum plugintracanalicular insert product and placement procedure. We conduct these NSR studies under FDA IDE regulations, although no

specific FDA approval is required. We are able to conduct NSR studies because punctum plugsintracanalicular inserts without active drug are well established ophthalmic medical devices. The NSR study process allows us to make relatively quick evaluations of our punctum plugintracanalicular insert design and placement procedure in human subjects.

In a series of completed NSR studies, we have effected compositional and dimensional adjustments to our punctum plugintracanalicular insert to optimize retention. We have also used these studies to evaluate punctum plugintracanalicular insert placement, as well as removal and repeat placements.placements and have seen a range of results in NSR studies to date, with the most recent study achieving a retention rate of approximately 85-90% at day 90.

As discussed above, we

We are using an intracanalicular insert design in our Phase 3 clinical trials of OTX-TP for the treatment of glaucoma and ocular hypertension that is slightly smaller than the plug design used in the Phase 2b clinical trial. We also plan to conduct additional NSR studies on different versionsuse an intracanalicular insert design in these trials that has a rapidly dissolvable tip that enables greater ease of our punctum plug in an effort to improve plug retention rates andinsertion of the placement procedure over time. In recent studies we have seen retention rates as high as 92% at day 90.insert.

We believe that with the current level of retention with our punctum plugintracanalicular insert design and given the ability of patients to assess the presence of the pluginsert as a result of the fluorescent label, our current product design offers a potentially significant improvement over the current standard of care with patients receiving prostaglandin analogs.PGAs. The compliance rate with prostaglandin analogPGA eye drops has been shown to be only approximately 50% after six months of therapy due to the challenges of administration and side effects including hyperemia, or red eye.

Regulatory Pathway

We anticipate that

Based on feedback following discussions with the resultsFDA in the second quarter of 2016, we are using a protocol design for our Phase 2b clinical trial of OTX-TP will provide important information to inform the design of later stage3 clinical trials that focuses on a comparison of the OTX-TP arm against a vehicle placebo arm. We are not required to use placebo drops in this product candidate.trial or include a timolol reference arm. We will be required to successfully complete two well controlled Phase 3 clinical trials of OTX-TP conducted under an IND to obtain marketing

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approval from the FDA. The FDA has indicated that we will needWe expect to study 500enroll 550 patients at up to 50 sites in our first Phase 3 clinical trial for an exposure duration of three months in these pivotal clinical trials, with 300months.  A number of these patients will be studied further up to six months and with 100 of these patients studiedfor up to 12 months for safety evaluations. Patients will be randomized in a 3:2 ratio to receive either OTX-TP or a placebo vehicle control intracanalicular insert without active drug. There is no timolol comparator or validation arm required in the study design and no eye drops, placebo or active, are being administered in either arm. We expect that the FDA will require that OTX-TP show both a statistically superior reduction of IOP, when compared to the placebo, as a primary efficacy endpoints for these pivotal clinical trialsendpoint, and a clinically meaningful reduction of IOP in the absolute. The primary efficacy endpoint will be similar to our ongoingevaluated at 2, 6 and 12 weeks at 8 a.m., 10 a.m. and 4 p.m. at each of the three timepoints.  We initiated the first Phase 2b3 clinical trial as described above. However, unlike ourin September 2016.  We do not intend to initiate the second Phase 2b3 clinical trial until we expect thatreceive data from the pivotalfirst Phase 3 clinical trials will be adequately poweredtrial and may determine to discuss the results of this first Phase 3 clinical trial with an appropriate number of patientsthe FDA prior to measure with statistical significance the non-inferiority of OTX-TP compared toinitiating a vehicle control punctum plug plus timolol eye drops based on the primary efficacy endpoint. second Phase 3 clinical trial.

If we obtain favorable results from these pivotalPhase 3 clinical trials, we would plan to submit an NDA to the FDA for marketing approval of OTX-TP for the treatment of glaucoma.glaucoma and ocular hypertension. We expect that we would submit this NDA under Section 505(b)(2) of the FDCA. See “—Governmental Regulation—Section 505(b)(2) NDAs” for additional information.

Intracameral Glaucoma (OTX-TIC) Product

We are conducting preclinical development of OTX-TIC, our product candidate, for the treatment of patients with moderate to severe glaucoma and ocular hypertension. OTX-TIC (extended-delivery travoprost) is a bioresorbable hydrogel implant incorporating travoprost that is designed to be an intracameral injection into the anterior chamber of the eye with an initial target duration of drug release of four to six months. Preclinical studies to date have demonstrated clinically meaningful IOP lowering and good pharmacokinetics in the aqueous humor.  We initiated a pilot clinical study outside the United States in the third quarter of 2017 to assess safety and obtain initial efficacy data, but have not enrolled any patients in this clinical trial as of February 28, 2018. The study is expected to be a prospective, single-center study to evaluate the safety, efficacy, durability and tolerability of OTX-TIC compared to topical travoprost (eye drops) in up to 20 patients with open-angle glaucoma or ocular hypertension.  We submitted an IND in the first quarter of 2018 and expect to initiate a second Phase 1 trial in the United States in the first half of 2018. 

Moxifloxacin Punctum PlugIntracanalicular Insert (OTX-MP)

Our OTX-MP product candidate incorporates the antibiotic moxifloxacin as an active pharmaceutical ingredient. We have completed a Phase 1 clinical trial of OTX-MP evaluating safety and pharmacokinetics in patients following cataract surgery. Although we believe that OTX-MP has potential to treat bacterial conjunctivitis and corneal ulcers, we are currently prioritizing our allocation of resources to the clinical development of our OTX-DPDEXTENZA and OTX-TP clinical development programs and do not have plans currently to allocate clinical development resources to later stage clinical testing of OTX-MP. We will continue to assess our strategy and, if resources are available to fund this program, we would expect to initiate additional clinical trials to evaluate OTX-MP for a particular ocular infection indication. If we determine to proceed with later stage clinical testing of OTX-MP, we expect to select the specific indication for clinical development based on our assessment of clinical and regulatory pathways, including the relative expected costs and availability of our resources.

We selected moxifloxacin as the active pharmaceutical ingredient for OTX-MP because it:

Completed Phase 1 Clinical Trial

In 2010, we completed a prospective, single center, single arm, open label Phase 1 clinical trial evaluating the initial safety and pharmacokinetics of OTX-MP in post-cataract surgery patients. We conducted the trial in 10 patients at one site in Singapore.

We enrolled patients in this trial who were at least 21 years of age undergoing clear corneal cataract surgery. We evaluated patients at days 1, 3, 7, 10, 20 and 30 following insertion of the pluginsert and made the following assessments:

Efficacy: We have designed our OTX-MP product candidate to provide for the release of moxifloxicanmoxifloxacin over a period of up to two weeks and to be fully resorbed by day 30. In this trial, the pluginsert was present in 100% of eyes

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through day 10 and 0% of eyes at day 30. This indicates the pluginsert functioned as designed for retention and for resorption. The mean concentration level of moxifloxacin in tear fluid at each post-surgical evaluation date through day 10 was above the MIC₉₀ potency threshold. The MIC₉₀ measurement establishes the concentration of a drug needed to inhibit the growth of 90% of a panel of bacterial strains isolated from patients. OTX-MP was able to maintain effective

concentration levels of moxifloxacin in the tear fluid over the target 7 to 10 day period, as shown in the chart below. No drug was detectable at day 30.

The investigator who administered the OTX-MP rated the product as “easy” to use for nine of 10 (90%) cases and as “difficult” to use in one (10%) of the cases.

Safety: There were no serious adverse ocular events or other significant adverse ocular events in this trial.

Regulatory Pathway

If we were to advance the clinical development of our OTX-MP product candidate for the treatment of a particular ocular infection indication, we would expect to initiate a Phase 2 clinical trial to evaluate OTX-MP for such indication. We would then be required to successfully complete two well controlled Phase 3 clinical trials conducted under an IND to obtain marketing approval from the FDA. At least one of the Phase 3 clinical trials would be conducted in the United States. If we were to obtain favorable results from these two pivotal clinical trials, we would plan to submit an NDA to the FDA for marketing approval of OTX-MP for such indication. We expect that we would submit this NDA under Section 505(b)(2) of the FDCA. See “—Government Regulation—Section 505(b)(2) NDAs.”

Intravitreal Hydrogel DepotImplants for the Treatment of Back-of-the-Eye Diseases

We are engaged in a preclinical development program of anour sustained-release hydrogel administered via intravitreal hydrogel depotinjection to address the large and growing markets for use indiseases and conditions of the treatment of back of the eye diseases and conditions. Weeye. Our current development efforts are currently focused on the developmentuse of our intravitrealsustained-release hydrogel depotin combination with anti-angiogenic compounds, including anti-VEGF compounds, for the treatment of wet AMD. Our intravitreal hydrogel depot consists of a PEG based hydrogel suspension,initial implants have delivered both small and large molecule anti-VEGF compounds in vitro over our targeted four to six month period, which contains embedded micronized protein particles of an anti-VEGF compound. We designedwe believe could make it possible to reduce the injection to be delivered to the vitreous chamberfrequency of the eye using ordinary syringes and fine gauge needles.current monthly or bi-monthly intravitreal injection regimen for wet AMD. In addition, our preclinical studies have demonstrated a sustained pharmacodynamic effect in vivo of up to six months with a small molecule tyrosine kinase inhibitor (TKI). The wet hydrogel is soft and flowable, allowing it to be easily injected throughtwo strategies being pursued are as follows:

We are currently conducting preclinical testingthese small and large molecule sustained delivery programs in collaboration with four pharmaceutical companies with anti-VEGF compounds to explore the feasibility of delivering their compounds using our intravitreal hydrogel depot. These feasibility programs include formulation development, protein-formulation compatibility studies,parallel.

In Vitro and Preclinical results

To date, in in vitro testing tests and preclinical tolerability and pharmacokinetic testing.

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To date, inin-vitro tests,studies, we have been able to incorporate antibody anti-VEGF drugs within our hydrogels, and our collaborators have been testing release rates and the integrity and activity of their compounds. We have demonstratedin-vitroachieved in vitro release over a four to six month duration. The released proteins have been stable, with no chemical or functional changes observed. In preclinical animal models, we

Our hydrogel implants have observed delivery of anti-VEGF drugs up to three months, with studies ongoing. In preclinical testing, our hydrogel depot has shown initial tolerability and acceptable pharmacokinetics. We conducted an in vivo study to measure ocular tissue concentrations of bevacizumab after injection with and without our sustained-release hydrogel. The injection of a bevacizumab formulation without our hydrogel resulted in a first-order rate of drug clearance, as expected.  In addition, bevacizumab concentrations decreased in the ocular tissues with distance from the intravitreal injection site. The injection of our hydrogel implant containing bevacizumab showed the same decrease of tissue concentration of bevacizumab in successively distant tissues. However, the injection of our hydrogel implant containing bevacizumab resulted in a sustained level of drug over the course of the 30 day study. Further,  after injection of our hydrogel implant containing bevacizumab, we observed levels of drug in ocular tissues over the course of the study that were consistent with our in vitro release data. After two weeks, the drug concentrations of the implant exceeded those of bevacizumab injected without our hydrogel. More recently, we have conducted a pharmacodynamic study in a rabbit model, achieving activity against an intravitreal VEGF challenge injection after study duration of four months, compared to less than six weeks for a 1.25 mg (human dose) bevacizumab intravitreal injection. Tolerability of bevacizumab-loaded implants in rabbit eyes has been demonstrated through four months.  In addition, there were no anti-drug antibodies detected in these rabbits, even though bevacizumab is a recombinant humanized monoclonal antibody and therefore might be expected to elicit an immune response in rabbits.  This early feasibility study has provided us with initial encouraging data for our sustained-release hydrogel implant with bevacizumab and its potential capability of delivering active drug to ocular tissues in a sustained fashion and informs the additional preclinical activities we plan to pursue. Although these results have been encouraging, we will need to further optimize our hydrogels for the particular anti-VEGF moleculesaflibercept in our collaboration with which we are working.Regeneron. We are currently conducting additional studies with Regeneron to confirm these results and more consistently demonstrate sustained delivery and tolerability.tolerability of aflibercept. We believe we have demonstrated initial feasibility sufficient to support the continuing preclinical development of this program and, if we obtain additional favorable preclinical results, advancement into Phase 1 clinical trials.

We have conducted in vivo pharmacokinetic and pharmacodynamic studies with hydrogels loaded with a small molecule anti-angiogenic TKI compound injected intravitreally. Pharmacokinetic data showed retinal tissue drug concentrations in excess of 3,000 times published IC50 after six months and pharmacodynamic results show sustained efficacy for six months. Additional dose ranging and tolerability studies are currently in progress.

We plan to continue working with our current pharmaceutical company collaboratorscollaboration partner Regeneron on our protein-based anti-VEGF program for our backthe treatment of the eye program, with the goal of confirming the initial results that we have observed.back-of-the-eye diseases.  We are also conductingcontinue to conduct our own internal preclinical development program and have seen encouraging results to date. We expect to complete our preclinical feasibility programs in the first half of 2015. If we successfully complete our preclinical feasibility programs, we plan to explore a broader development and commercialization collaboration with one of the pharmaceutical companies we are currently working with or advance our internal development efforts through additional preclinical development and initial clinical trials. Given the initial positive results in feasibility studies with our intravitreal hydrogel depot containing anti-VEGF drugs for the treatment of back of the eye diseases, including wet AMD, and the size of the market opportunity, we plan to commit additional resources to this program.using TKIs. We also believe there are other opportunities for targets beyond anti-VEGF drugsVEGF-related targets to utilize our hydrogel depot for back of the eyeback-of-the-eye diseases, and we are conducting early exploratorymay pursue opportunities through internal research initiatives on certain of these opportunities.or in partnership with pharmaceutical companies.

ReSure Sealant

ReSure Sealant is a topical liquid hydrogel that creates a temporary, adherent, soft and lubricious sealant to prevent post-surgical leakage from clear corneal incisions that are made during cataract surgery. The main components of ReSure hydrogel are water and PEG. ReSure hydrogel is completely synthetic, with no animal or human derived

components. The FDA granted marketing approval for ReSure Sealant in January 2014. We commercially launched ReSure Sealant in the United States in February 2014 through a network of ophthalmology focused distributors.2014.

We previously commercialized in Europe an earlier version of ReSure Sealant that was approved and marketed as an ocular bandage. However, we ceased our commercialization of the product in 2012 to focus on the ongoing clinical development of ReSure Sealant pursuant to FDA requirements after the FDA requested that we withdraw an application for the earlier version of ReSure Sealant that we had submitted under Section 510(k) of the FDCA because the FDA believed that the technical characteristics of the earlier version of ReSure Sealant were not substantially equivalent to a predicate device. After withdrawing our 510(k) application, we filed an IDE application to conduct a pivotal clinical trial to support approval of ReSure Sealant as an ocular sealant and subsequently received premarket approval, or PMA, from the FDA.

Product Design

A surgeon forms ReSure Sealant hydrogel by combining three components: PEG, a cross-linker and a diluent buffer solution. The cross-linker interacts with the PEG molecules to form a molecular network that comprises the hydrogel. The components are mixed to initiate the cross-linking reaction to form a biocompatible, resorbable hydrogel. The hydrogel is approximately 90% water and is blue in color to help the surgeon visualize the sealant during application. The surgeon applies the sealant to the corneal incision as a liquid using a soft foam-tipped applicator. The sealant forms a conformal coating that adheres to the ocular tissue through mechanical interlocking of the hydrogel with the tissue surfaces. The blue color fades within a few hours

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following surgery. The soft, pliable hydrogel remains on the corneal surface during the critical wound healing period of one to three days and provides a barrier to fluid leakage. ReSure Sealant softens over time, detaches and is sloughed off in the tears as a liquid or extremely soft gel pieces. ReSure Sealant is designed to completely liquefy over a five to seven day duration. Complete epithelial healing takes place over this time period, providing long-term wound closure.

We provide ReSure Sealant in a sterile, single patient use package. The package contains a tray with two elongated mixing wells. Each well contains dried deposits of reactants, separated within the well. The package also contains one plastic dropper bottle filled with diluent solution and two applicators. The device is stored at room temperature for easy access.

Commercial Strategy

Our goals for ReSure Sealant are to provide a novel means of definitive wound closure in situations in which the surgeon would otherwise use sutures and to increase the number of procedures in which surgeons close the wound following cataract surgery, instead of leaving the wound to self-seal. In a 2012 survey of ophthalmologists in the United States conducted by Lachman Consulting LLC, a healthcare consulting firm, respondents indicated that they use sutures in approximately 14% of cataract surgeries. As a result, the market opportunity for a surgical sealant following cataract surgery may be modest. However, we believe ReSure Sealant offers important benefits over sutures, including superior wound closure, a better safety profile and less follow-up. WeWhile ReSure Sealant remains commercially available in the United States, there is no sales support provided to the product at this time, but if DEXTENZA is approved for marketing, we expect to be able to sell ReSure Sealant through a network of independent medical device distributors across the United States.with DEXTENZA with any sales force we establish for DEXTENZA.  ReSure Sealant is not separately reimbursed when used as part of a cataract surgery procedure.

We believe that the key factors affecting commercial demand for ReSure Sealant will be:

ReSure Sealant Clinical Development

We conducted a pivotal clinical trial evaluating the safety and effectiveness of ReSure Sealant compared to sutures for preventing incision leakage from clear corneal incisions. In connection with FDA approval of ReSure

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Sealant in January 2014, we have agreed to conduct two post-approval studies. The first post-approval registry study iswas designed to confirm whether ReSure Sealant can be used safely by physicians in a standard cataract surgery practice and to confirm the incidence of pre-specified adverse ocular events in eyes treated with ReSure Sealant. The second post-approval study is designed to ascertain the incidence of endophthalmitis in patients treated with ReSure Sealant.

Pivotal Clinical Trial

In 2013, we completed a prospective, randomized, parallel arm,parallel-arm, controlled, multicenter, subject-masked pivotal clinical trial evaluating the safety and effectiveness of ReSure Sealant. In this trial, we enrolled 488 patients at 24 sites across the United States. One patient was excluded prior to treatment because the surgeon was unable to achieve a dry ocular surface for application of ReSure Sealant. As a result, we randomized 304 patients for treatment with ReSure Sealant and 183 patients for treatment with sutures. Based on the trial protocol, 295 patients treated with the ReSure Sealant and 176 patients treated with sutures completed study follow-up without a significant protocol deviation that directly affected the primary efficacy endpoint.

The primary efficacy endpoint was non-inferiority of ReSure Sealant to sutures for preventing incision leakage from clear corneal incisions within the first seven days following cataract surgery. A non-inferiority determination requires that the test product is not worse than the comparator by more than a small pre-specified margin. The non-inferioritynon-

inferiority margin for the ReSure Sealant pivotal clinical trial was a percentage difference in leak rates between ReSure Sealant and sutures of 5%.

We randomized patients in a 5:3 ratio to receive either ReSure Sealant or sutures. All patients received a standardized self-sealing incision.

Surgeons assessed incision leakage during the operation and during follow-up visits on days 1, 3, 7 and 28 after the procedure. During the pre-randomization intraoperative evaluation, the surgeons assessed whether there was any leakage based on a standard test called a Seidel test in conjunction with an application of force near the incision using a standardized tool and technique. The surgeon slowly applied force using the standardized tool that we provided until a leak was observed or until a pre-specified maximum force of one ounce of force was reached. In the assessments conducted during the operation, approximately 50% of leaks occurred spontaneously without application of force and 76% of leaks occurred with the application of 0.25 ounces of force or less.

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Based on assessments conducted immediately following surgery, using the same standardized leak testing tool and technique, eyes receiving sutures leaked more frequently than eyes sealed with ReSure Sealant by a statistically significant margin of more than 8 to 1 (p<0.0001). In this trial, ReSure Sealant demonstrated both non-inferiority and superiority relative to the suture control based on the proportion of eyes with leakage within the first seven days after surgery. These results are shown in the figures below.

ReSure Sealant treated patients had significantly lower adverse event and device-related adverse event rates than patients treated with suture wound closure. We determined statistical significance based on a widely used, conventional statistical method that establishes the p-value of clinical results. Typically, a p-value of 0.05 or less represents statistical significance. In adverse events related to the study device, ReSure Sealant had a lower occurrence rate by a statistically significant margin of 1.6% for ReSure Sealant compared to 30.6% for sutures (p<0.0001). There were no significant or clinically relevant differences in the other safety endpoints, including slit lamp examination findings, between ReSure

Sealant and suture patients, thus indicating that ReSure Sealant is well tolerated. Only one ReSure Sealant treated patient out of 299 (0.3%) had a wound healing assessment characterized as outside of normal limits at the day 7 assessment due to the presence of mild stromal edema. No ReSure Sealant treated subjects were outside of normal limits at the day 28 assessment. In this trial, surgeons rated ReSure Sealant as “easy” or “very easy” to use for 94.1% of patients treated with ReSure Sealant.

Post-Approval Studies

ReSure Sealant is classified in the United States as a class III medical device subject to the rules and regulation of premarket approval by the FDA. Following our submission of a PMA application to the FDA for review and during the review process, the FDA completed compliance audits of our manufacturing facility and several of our pivotal clinical trial sites. Before granting approval of the PMA application, the FDA sought input from the Ophthalmic Devices Advisory Committee, a panel of physicians charged with reviewing results from our pivotal clinical trial. Upon the Advisory Committee’s favorable recommendation, theThe FDA approved our PMA application for ReSure Sealant in January 2014. The FDA included two post-approval studies as a condition of the PMA application approval. We are required to provide periodic reports to the FDA on the progress of each post-approval study over the next four to five years.

The first post-approval study, is a prospective multicenter observational registry study that we will conduct at up to 40 centers inidentified as the United States. We are required to enroll at least 598 patients treated with ReSure Sealant. We may enroll a maximum of 120 patients at any one site. The goals of this study areClinical PAS, is to confirm that ReSure Sealant can be used safely by physicians in a standard cataract surgery practice and to confirm the incidence in eyes treated with ReSure Sealant of the most prevalent adverse ocular events identified in our pivotal study of ReSure Sealant in eyes treated with ReSure Sealant. The FDA has approved the pivotal study. Enrollment in this post-approval study wasprotocol for the Clinical PAS, and we initiated enrollment in December 2014.