0001558370-24-004326 | 10-K | XBRL Viewer

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Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Income tax expense	$ 0	$ 0
Change in valuation allowance	7,325	(2,727)
Research and development tax credit carryforwards	1,154	0
Annual limitation amount of tax credit carryforward		222
Uncertain tax positions	0	0
Interest or penalties recorded	0	0
Federal
Net operating loss carryforwards	369,337	349,378
State
Net operating loss carryforwards	$ 413,711	$ 390,607

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Lease

12 Months Ended

Dec. 31, 2023

Lease

Lease

Note 10: Lease

Operating leases

Menlo Park, California Office Lease

In April 2023, Combangio entered into a lease agreement with Menlo Prepi I, LLC, pursuant to which Combangio leases approximately 6,135 square feet of office, laboratory and research and development space in Menlo Park, California. The Company entered into a guaranty of lease agreement guarantying the obligations of Combangio under the lease agreement. The initial term of the lease is for 62 months which commenced on the lease commencement date of July 1, 2023, unless earlier terminated pursuant to the terms of the lease. The lease provides Combangio with an

option to extend the lease for an additional five-year term. Combangio was required to make a payment in the amount of $144, as a security deposit pursuant to the lease during the year ended December 31, 2023, which is included in other long-term assets on the consolidated balance sheet as of December 31, 2023. Upon the lease commencement, the Company recorded a right-of-use asset of $2.2 million and corresponding $2.1 million of lease liability.

As of December 31, 2023, the Company recognized $2.0 million of right-of-use asset and a corresponding $2.1 million of lease liability (current and non-current) by calculating the present value of lease payments, discounted at 13.1%, the Company’s estimated incremental borrowing rate, over the expected term of the lease. As of December 31, 2023, the remaining lease term on the lease was 4.7 years. Variable lease expense for the lease, includes real estate taxes, common area maintenance, and management fees.

Terminated Vehicle Fleet Lease

During the year ended December 31, 2019, the Company entered into a master fleet lease agreement (the “Vehicle Fleet Lease”), pursuant to which it leased vehicles. The Vehicle Fleet Lease commenced upon the delivery of the initial vehicles in March 2019 and had been subject to modifications as the number of leased vehicles had increased or decreased. During the year ended December 31, 2022, in connection with the closing of the Alcon Transaction, the Company terminated the Vehicle Fleet Lease and, as of December 31, 2022, there was no remaining right-of-use asset or corresponding lease liability. In connection with the Vehicle Fleet Lease, the Company issued a letter of credit for $450 which was released in September 2022. As of December 31, 2022, the Company had a receivable of $775 due from the vendor for the sale of used vehicles following the lease termination, which was included within prepaid expenses and other current assets on the consolidated balance sheet. The remaining receivable from the vendor as of December 31, 2023 is de minimis.

The components of lease expense and related cash flows were as follows:


	Year Ended
	December 31,
	2023		2022
Lease cost
Operating lease cost	$	314	$	414
Short-term lease cost		161		173
Variable lease cost		98		758
Total lease cost	$	573	$	1,345

Operating cash outflows from operating leases	$	203	$	1,318

The weighted average remaining lease term and weighted average discount rate of operating leases are as follows:


	December 31,	December 31,
	2023	2022
Weighted average remaining lease term	4.7 years	0.5 years
Weighted average discount rate	13.1%	10.4%

As of December 31, 2023, the Company’s future minimum lease payments will become due and payable as follows:


Years Ending December 31,
2024	$	581
2025		601
2026		622
2027		644
2028		440
Less: interest		(755)
Total	$	2,133

Debt - Future Annual Principal Payments (Details) - Loan Agreement - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	May 21, 2022
Maturities of long-term debt
2025	$ 23,970
2026	9,987
Total	$ 33,957	$ 43,303	$ 80,000

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Prepaid Expenses and Other Current Assets (Tables)

12 Months Ended

Dec. 31, 2023

Prepaid Expenses and Other Current Assets

Schedule of prepaid expenses and other current assets


	December 31,		December 31,
	2023		2022

Insurance	$	675	$	698
Prepaid research and development		555		—
Non-trade receivables		119		908
Trade receivables, net		117		195
Due from Alcon		—		5,394
Other		509		657
Prepaid expenses and other current assets	$	1,975	$	7,852

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 50,895	$ 70,495
Prepaid expenses and other current assets (Note 7)	1,975	7,852
Current assets held for sale (Note 4)	0	7,595
Total current assets	52,870	85,942
Non-current assets:
Property and equipment, net	753	400
Right-of-use assets	2,025	16
Restricted cash and other long-term assets	301	462
Total assets	55,949	86,820
Current liabilities:
Accounts payable	919	2,832
Accrued expenses and other current liabilities	6,018	8,910
Deferred gain on sale of commercial business		4,189
Deferred grant income	1,075
Current portion of lease liabilities	334	13
Current portion of long-term debt		5,000
Current portion of contingent consideration		4,146
Current portion of deferred purchase consideration		595
Total current liabilities	8,346	25,685
Long-term liabilities:
Long-term lease liabilities	1,799
Long-term debt	34,190	37,937
Long-term contingent consideration	4,110	4,224
Total long-term liabilities	40,099	42,161
Total liabilities	48,445	67,846
Commitments and Contingencies (Note 17)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of December 31, 2023 and 2022; 51,246 and 53,144 shares of Series E Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2023 and 2022, respectively, and 2,928 and 0 shares of Series F Convertible Non-Redeemable Preferred Stock issued and outstanding as of December 31, 2023 and 2022, respectively
Common stock, $0.001 par value; 120,000,000 shares authorized as of December 31, 2023 and 2022; 2,759,372 and 1,706,971 shares issued and outstanding as of December 31, 2023 and 2022, respectively	3	2
Additional paid-in capital	636,910	606,182
Accumulated deficit	(629,409)	(587,210)
Total stockholders' equity	7,504	18,974
Total liabilities and stockholders' equity	$ 55,949	$ 86,820

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY(Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Offering costs	$ 458	$ 29
Private Placement
Issuance costs		3
Series E preferred shares \| Securities Purchase Agreement, Tranche One
Issuance costs		43
Series E preferred shares \| Securities Purchase Agreement Tranche Two
Issuance costs		$ 194
Stock Issuance Costs with Series F preferred stock
Payment of deferred offering costs	$ 35

Summary of Significant Accounting Policies - Cash, Concentration of Credit Risk and Restricted Cash (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($) Counterparty
Cash and Concentration of Credit Risk
Number of counterparties \| Counterparty		3
Product revenues, net	$ 0	$ 3,892
Restricted Cash
Long-term restricted cash	0	250
Allowance for doubtful accounts	$ 0	$ 0
First customer
Cash and Concentration of Credit Risk
Percent of total revenue		47.00%
Second customer
Cash and Concentration of Credit Risk
Percent of total revenue		28.00%
Third customer
Cash and Concentration of Credit Risk
Percent of total revenue		21.00%

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Dec. 31, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Debt

12 Months Ended

Dec. 31, 2023

Debt

Debt

Note 11: Debt

Loan and Security Agreement

On May 4, 2021, the Company entered into the Loan Agreement with Oxford Finance, in its capacity as lender (in such capacity, the “Lender”), and in its capacity as collateral agent (in such capacity, the “Agent”), pursuant to which a term loan of up to an aggregate principal amount of $125,000 was available to the Company, consisting of a tranche A term loan that was disbursed on the closing date in the aggregate principal amount of $80,000 and additional tranches that are no longer available to the Company. The Company utilized substantially all of the proceeds from the tranche A term loan to repay a prior credit facility.

Through June 30, 2023, the term loan bore interest at a floating rate equal to the greater of (i) 30-day LIBOR and (ii) 0.11%, plus 7.89%. Effective July 1, 2023, the term loan bears interest at a floating rate equal to the greater of (i) 8.00% and (ii) the sum of (a) the 1-Month CME Term Secured Overnight Financing Rate, (b) 0.10% and (c) 7.89%. The Loan Agreement, prior to the Second Loan Amendment and Third Loan Amendment (as defined below), provided for interest-only payments until December 1, 2024 if neither the tranche B term loan nor the tranche C term loan are made, and until June 1, 2025 if either the tranche B term loan or the tranche C term loan is made (the “Amortization Date”). The aggregate outstanding principal balance of the term loans were required to be repaid in monthly installments starting on the Amortization Date based on a repayment schedule equal to (i) 18 months if neither the tranche B term loan nor the tranche C term loan is made and (ii) 12 months if either the tranche B term loan or the tranche C term loan is made. All unpaid principal and accrued and unpaid interest with respect to each term loan was due and payable in full on May 1, 2026 (the “Maturity Date”).

The Company paid a facility fee of $400 on the closing date of the Loan Agreement and agreed to pay a facility fee of $100 upon closing of the tranche B term loan and a $125 facility fee upon the closing of the tranche C term loan. The Company will be required to make a final payment fee of 7.00% of the original principal amount of any funded term loan payable on the earlier of (i) the prepayment of the term loan in full or (ii) the Maturity Date. At the Company’s option, the Company may elect to make partial repayments of the term loan to the Lender, subject to specified conditions, including the payment of applicable fees and accrued and unpaid interest on the principal amount of the term loan being repaid.

In connection with its entry into the Loan Agreement, the Company granted the Agent a security interest in substantially all of the Company’s personal property owned or later acquired, including intellectual property and the Commercial Business. The Loan Agreement also contains customary representations and warranties and affirmative and negative covenants, as well as customary events of default. Certain of the customary negative covenants limit the ability of the Company and certain of its subsidiaries, among other things, to incur future debt, grant liens, make investments, make acquisitions, distribute dividends, make certain restricted payments and sell assets, subject in each case to certain exceptions.

The Loan Agreement includes features requiring (i) additional interest rate upon an event of default accrued at an additional 5%, and (ii) the Lender’s right to declare all outstanding principal and interest immediately payable upon an event of default. These two features were analyzed and determined to be embedded derivatives to be valued as separate financial instruments. These embedded derivatives were bundled and valued as one compound derivative in accordance with the applicable accounting guidance for derivatives and hedging transactions. The Company determined that, due to the unlikely event of default, the embedded derivatives have a de minimis value as of December 31, 2023. The derivative liability will be remeasured at fair value at each reporting date, with changes in fair value being recorded as other income (expense) in the consolidated statements of operations and comprehensive loss.

On May 21, 2022, in connection with its entry into the Asset Purchase Agreement with Alcon, the Company entered into an amendment to the Loan Agreement (the “Second Loan Amendment”). Pursuant to the Second Loan Amendment, the Lender and Agent consented to the entry by the Company into the Asset Purchase Agreement and the sale of the Commercial Business to Alcon and agreed to release its liens on the Commercial Business in consideration for the payment by the Company at the closing of the Alcon Transaction of an aggregate amount of $40,000 (the “Second Amendment Prepayment”) to the Lender and Agent, representing a partial prepayment of principal in the amount of $36,697 of the $80,000 principal amount outstanding under the term loan advanced by the Lender under the Loan Agreement, plus a prepayment fee of $734 and a final payment fee of $2,569. In addition, the Company was required to pay all accrued and unpaid interest on the principal amount of the term loan being repaid.

In addition, under the Second Loan Amendment, the Lender and Agent agreed that, following the closing of the Alcon Transaction and the Second Amendment Prepayment, the Amortization Date would be extended from December 1, 2024 to January 1, 2026, at which time the aggregate principal balance of the term loan then outstanding under the Loan Agreement is required to be repaid in five monthly installments. Pursuant to the Second Loan Amendment, the Company may also make partial prepayments of the term loan to the Lender, subject to specified conditions, including the payment of applicable fees and accrued and unpaid interest on the principal amount of the term loan being repaid.

On July 8, 2022, the Second Amendment Prepayment was paid in connection with the closing of Alcon Transaction, and as such, the Amortization Date was extended to January 1, 2026. The transaction resulted in a loss on extinguishment of debt of $2,583 for the year ended December 31, 2022, consisting of the prepayment premium, a pro-rata portion of the unamortized debt discount and issuance costs and the unaccreted exit fee due upon the Second Amendment Prepayment.

On December 27, 2022, the Company entered into an amendment to the Loan Agreement (the “Third Loan Amendment”). Pursuant to the Third Loan Amendment, the Lender and Agent agreed to amend certain provisions of the Loan Agreement to permit the transfer of the listing of the Company’s common stock from The Nasdaq Global Select Market to The Nasdaq Capital Market. Pursuant to the Third Loan Amendment, the Company agreed (A) to make partial prepayments of the principal amount of the term loan outstanding under the Loan Agreement as follows (the “Third Amendment Prepayments”): (1) a payment of $5,000 on or before June 30, 2023, representing a partial prepayment of principal in the amount of $4,673, plus a final payment fee of $327 and (2) a payment of $5,000 on or before January 31, 2024, representing a partial prepayment of principal in the amount of $4,673, plus a final payment fee of $327 and (B) that the Amortization Date under the Loan Agreement shall be changed from January 1, 2026 to January 1, 2025.

Pursuant to the Third Loan Amendment, in addition to the Third Amendment Prepayments, if the Company makes an additional prepayment under the Loan Agreement equal to $5,000 (inclusive of the final payment fee) on or prior to December 31, 2024 (the “First Extension Prepayment”), the Amortization Date will be automatically changed to July 1, 2025, and the maturity date of the Loan Agreement will be automatically changed from May 1, 2026 to November 1, 2026. If, in addition to the Third Amendment Prepayments and the First Extension Prepayment, the Company makes an additional prepayment under the Loan Agreement equal to $2,500 (inclusive of the final payment

fee) on or prior to June 30, 2025 (the “Second Extension Prepayment”), the Amortization Date will be automatically changed to January 1, 2026, and the maturity date of the Loan Agreement will be automatically changed to May 1, 2027.

Under the Third Loan Amendment, the Lender and Agent also agreed to waive the prepayment fees for the Third Amendment Prepayments, the First Extension Prepayment, the Second Extension Prepayment and any other prepayments under the Loan Agreement. Pursuant to the Loan Agreement, the Company also will be required to pay all accrued and unpaid interest on the principal amounts of the term loan being repaid at the time of repayment. The Company paid the Third Amendment Prepayments on January 25, 2023, following which the Company became required to repay the Loan Agreement in monthly installments from January 1, 2025 through May 1, 2026. The principal loan balance under the Loan Agreement following the Third Amendment Prepayments was $33,957.

On August 1, 2023, the Company entered into an amendment to the Loan Agreement with Combangio and Oxford Finance (the “Fourth Loan Amendment”). Pursuant to the Fourth Loan Amendment, certain provisions of the Loan Agreement were amended in connection with the change of the Company’s name and the cessation of the U.S. Dollar LIBOR rate. On August 2, 2023, the Company entered into an amendment to the Loan Agreement with Combangio and Oxford Finance (the “Fifth Loan Amendment”). Pursuant to the Fifth Loan Amendment, Oxford Finance consented to the Company’s entry into the CIRM Award and certain provisions of the Loan Agreement were amended in connection therewith.

In addition, in connection with the Loan Agreement, the Company paid certain fees to the Lender and other third-party service providers. The fees paid to the Lender were recorded as a debt discount while the fees paid to other third-party service providers were recorded as debt issuance cost. These costs are being amortized using the effective interest method over the term of the Loan Agreement. The amortization of debt discount and debt issuance cost is included in interest expense within the consolidated statements of operations and comprehensive loss. As of December 31, 2023, the effective interest rate was 17.22%, which takes into consideration the non-cash accretion of the exit fee and the amortization of the debt discount and issuance costs.

During the year ended December 31, 2023, the Company recognized interest expense of $5,814 for the Loan Agreement. This consisted of amortization of debt discount of $274, accretion of the final payment fee of $979 and the contractual coupon interest expense of $4,561. During the year ended December 31, 2022, the Company recognized interest expense of $7,280 for the Loan Agreement. This consisted of amortization of debt discount of $342, accretion of the final payment fee of $1,083 and the contractual coupon interest expense of $5,855.

The components of the carrying value of the debt as of December 31, 2023 and 2022 are detailed below:


	December 31,		December 31,
	2023		2022
Principal loan balance	$	33,957	$	43,303
Unamortized debt discount and issuance cost		(532)		(806)
Cumulative accretion of exit fee		765		440
Total debt	$	34,190	$	42,937
Less: current portion of long-term debt		—		(5,000)
Long-term debt, net	$	34,190	$	37,937

The annual principal payments due under the Loan Agreement as of December 31, 2023 were as follows:


Years Ending December 31,
2024	$	—
2025		23,970
2026		9,987
2027		—
Total	$	33,957

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
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Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
-Paragraph 1B
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
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-Paragraph 1I
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Loss Per Share - Antidilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Outstanding securities excluded from the computation of diluted weighted average shares outstanding
Outstanding securities excluded from the computation of diluted weighted average shares outstanding (in shares)	6,492,012	1,575,852
Employee Stock Option
Outstanding securities excluded from the computation of diluted weighted average shares outstanding
Outstanding securities excluded from the computation of diluted weighted average shares outstanding (in shares)	549,952	233,231
RSU and PSU
Outstanding securities excluded from the computation of diluted weighted average shares outstanding
Outstanding securities excluded from the computation of diluted weighted average shares outstanding (in shares)	654,907	9,718
Warrants
Outstanding securities excluded from the computation of diluted weighted average shares outstanding
Outstanding securities excluded from the computation of diluted weighted average shares outstanding (in shares)	4,303	4,303
Convertible preferred stock
Outstanding securities excluded from the computation of diluted weighted average shares outstanding
Outstanding securities excluded from the computation of diluted weighted average shares outstanding (in shares)	5,282,850	1,328,600

Debt - Oxford Finance Loan and Security Agreement (Details) $ in Thousands						12 Months Ended
	Jul. 01, 2023	Jun. 30, 2023	Dec. 27, 2022 USD ($)	May 21, 2022 USD ($) installment	May 04, 2021 USD ($)	Dec. 31, 2023 USD ($) item	Dec. 31, 2022 USD ($)
Debt instruments
Effective interest rate						17.22%
Loss on extinguishment of debt							$ (2,583)
Interest expense						$ 5,814	7,266
Number of derivatives \| item						1
Loan Agreement
Debt instruments
Aggregate principal amount					$ 125,000
Floating interest rate (as a percent)		0.11%
Facility fees paid					$ 400
Percentage of final payment fees					7.00%
Debt repayments				$ 40,000
Partial prepayment				36,697
Amount of principal outstanding				80,000		$ 33,957	43,303
Prepayment fees paid				734
Final prepayment fee				$ 2,569
Number of monthly installments \| installment				5
Accretion of final prepayment fee						979	1,083
Interest expense						5,814	7,280
Amortization of debt discount						274	342
Contractual coupon interest						$ 4,561	$ 5,855
Additional interest rate upon an event of default accrued (as a percent)					5.00%
Loan Agreement \| Neither the tranche B term loan nor the tranche C term loan is made
Debt instruments
Duration of periodic monthly payment installments under a scenario					18 months
Loan Agreement \| Either tranche B term loan nor tranche C term loan is made
Debt instruments
Duration of periodic monthly payment installments under a scenario					12 months
Loan Agreement \| Payment on or before June 30, 2023
Debt instruments
Debt repayments			$ 5,000
Partial prepayment			4,673
Final prepayment fee			327
Loan Agreement \| Payment on or before January 31, 2024.
Debt instruments
Debt repayments			5,000
Partial prepayment			4,673
Final prepayment fee			327
Loan Agreement \| Payment on or prior to December 31, 2024
Debt instruments
Debt repayments			5,000
Loan Agreement \| Payment on or prior to June 30, 2025
Debt instruments
Debt repayments			$ 2,500
Loan Agreement \| Minimum
Debt instruments
Floating interest rate (as a percent)	8.00%
Loan Agreement \| 30-day LIBOR
Debt instruments
Spread on variable rate		7.89%
Loan Agreement \| 1- Month CME Term SOFR
Debt instruments
Floating interest rate (as a percent)	0.10%
Spread on variable rate	7.89%
Tranche A term loan
Debt instruments
Aggregate principal amount					$ 80,000
Tranche B term loan
Debt instruments
Facility fees paid					100
Tranche C term loan
Debt instruments
Facility fees paid					$ 125

Lease - Menlo Park, CA Office Lease (Details) $ in Thousands	1 Months Ended	12 Months Ended
	Apr. 30, 2023 USD ($) ft²	Dec. 31, 2023 USD ($)
Leases
Long-term lease liabilities		$ 1,799
Menlo Park, California Office Lease
Leases
Leased square footage \| ft²	6,135
Lease term	62 months
Existence of option to extend	true
Renewal term	5 years
Estimated incremental borrowing rate		13.10%
Remaining lease term		4 years 8 months 12 days
Menlo Park, California Office Lease \| Restricted cash and other long-term assets
Leases
Security deposit	$ 144

Nature of Business

12 Months Ended

Dec. 31, 2023

Nature of Business

Nature of Business

Note 1: Nature of Business

Nature of Business— KALA BIO, Inc. (the “Company”) was incorporated on July 7, 2009, and is a clinical-stage biopharmaceutical company dedicated to the research, development and commercialization of innovative therapies for rare and severe diseases of the front and back of the eye. On August 2, 2023, the Company changed its name from Kala Pharmaceuticals, Inc. to Kala Bio, Inc.

On November 15, 2021, the Company and its newly formed, direct wholly owned subsidiary, Ceres Merger Sub, Inc. (the “Merger Subsidiary”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Combangio, Inc. (“Combangio”) and Fortis Advisors LLC, solely in its capacity as Combangio Equityholder Representative in connection with the Merger Agreement, pursuant to which on November 15, 2021, the Merger Subsidiary merged with and into Combangio with Combangio surviving such merger and becoming a direct wholly owned subsidiary of the Company (the “Combangio Acquisition”). In connection with the Combangio Acquisition, the Company acquired Combangio’s mesenchymal stem cell secretomes (“MSC-S”) platform, including its lead product candidate for the treatment of persistent corneal epithelial defects (“PCED”), which the Company refers to as KPI-012. PCED is a rare disease of impaired corneal healing. The Company submitted an investigational new drug application, (“IND”) to the U.S. Food and Drug Administration, (“FDA”), which was accepted in December 2022. In February 2023, the Company dosed its first patient in the CHASE (“Corneal Healing After SEcretome therapy”) Phase 2b clinical trial of KPI-012 for PCED in the United States. KPI-012 has received both Orphan Drug and Fast Track designations from the FDA for the treatment of PCED. The Company expects to commercialize in the United States any of its product candidates that receive marketing approval. In connection with the determination to focus its research and development efforts on KPI-012, in 2022, the Company ceased the development of its preclinical pipeline programs that are unrelated to its MSC-S platform.

The Company previously developed and commercialized two marketed products, EYSUVIS^® (loteprednol etabonate ophthalmic suspension) 0.25%, for the short-term (up to two weeks) treatment of the signs and symptoms of dry eye disease, and INVELTYS^® (loteprednol etabonate ophthalmic suspension) 1%, a topical twice-a-day ocular steroid for the treatment of post-operative inflammation and pain following ocular surgery. Both products applied a proprietary mucus-penetrating particle drug delivery technology, which the Company referred to as the AMPPLIFY^® Drug Delivery Technology. On July 8, 2022, the Company closed the transaction (the “Alcon Transaction”), contemplated by the asset purchase agreement, dated as of May 21, 2022 (the “Asset Purchase Agreement”), by and between the Company, Alcon Pharmaceuticals Ltd. and Alcon Vision, LLC (together referred to as “Alcon”), pursuant to which Alcon purchased the rights to manufacture, sell, distribute, market and commercialize EYSUVIS and INVELTYS and to develop, manufacture, market and otherwise exploit the Company’s AMPPLIFY Drug Delivery Technology (collectively, the “Commercial Business”). Alcon also assumed certain liabilities with respect to the Commercial Business at the closing of the Alcon Transaction. See Note 3, “Acquisitions and Divestitures” for additional information about the Alcon Transaction and the Combangio Acquisition.

The Company’s success is dependent upon its ability to develop, obtain regulatory approval for and commercialize KPI-012 and any other product candidate it may develop in the future, the success of its research and development efforts, whether it receives any commercial-based sales milestone payments from Alcon, its ability to raise additional capital when needed and, ultimately, attain profitable operations.

Reverse Stock Split— On October 20, 2022, the Company effected a 1-for-50 reverse stock split of the Company’s shares of common stock either issued and outstanding or held by the Company as treasury stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every 50 shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number. The number of authorized shares of common stock under the Company’s Restated Certificate of Incorporation, as amended, remained

unchanged at 120,000,000 shares. All historical share and per share amounts reflected throughout these financial statements have been adjusted to reflect the Reverse Stock Split. Proportionate adjustments were made to the per share exercise price and the number of shares of common stock that may be purchased upon exercise of outstanding stock options and warrants, and the number of shares of common stock reserved for future issuance under the Company’s 2017 Equity Incentive Plan and Employee Stock Purchase Plan.

Recent Equity Financings— On May 7, 2020, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on May 19, 2020 (the “2020 Shelf Registration”). Under the 2020 Shelf Registration, the Company may offer and sell up to $350,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities or units during the three-year period that commenced upon the 2020 Shelf Registration becoming effective. In connection with the filing of the 2020 Shelf Registration, the Company entered into an amended and restated sales agreement (the “Amended and Restated Sales Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which the Company could issue and sell, from time to time, up to an aggregate of $75,000 of its common stock in an at-the-market equity offering through Jefferies, as a sales agent. During the year ended December 31, 2022, the Company issued and sold an additional 148,461 shares of its common stock under its at-the-market offering pursuant to the terms of the Amended and Restated Sales Agreement, resulting in net proceeds of $1,036. From January 1, 2023 to January 10, 2023, the Company sold 245,887 shares of its common stock pursuant to the terms of the Amended and Restated Sales Agreement, resulting in net proceeds of $9,994. On January 10, 2023, the Amended and Restated Sales Agreement terminated in accordance with its terms when the Company completed the sale of $75,000 of its shares of common stock thereunder. As of the date of termination of the Amended and Restated Sales Agreement, the Company had sold an aggregate of 565,974 shares of its common stock under such agreement for aggregate gross proceeds of $75,000.

On January 19, 2023, the Company entered into an Open Market Sale Agreement with Jefferies (the “Open Market Sale Agreement”), pursuant to which the Company may issue and sell, from time to time, shares its common stock under an at-the-market equity offering. The Company filed a prospectus supplement relating to the Open Market Sale Agreement under its 2020 Shelf Registration (the “2020 Shelf ATM Prospectus Supplement”), pursuant to which the Company could offer and sell shares of common stock having an aggregate offering price of up to $40,000 under the Open Market Sale Agreement. From January 19, 2023 to May 11, 2023, the Company sold 229,378 shares of its common stock under its at-the-market offering pursuant to the Open Market Sale Agreement under the 2020 Shelf ATM Prospectus Supplement, resulting in net proceeds of $4,899.

On March 3, 2023, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on May 11, 2023 (the “2023 Shelf Registration”). Under the 2023 Shelf Registration, the Company may offer and sell up to $350,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities, subscription rights or units after such time as the shelf registration statement is declared effective by the SEC. In accordance with the terms of the Open Market Sale Agreement, the Company may issue and sell, from time to time, up to $40,000 of its common stock in an at-the-market equity offering through Jefferies, as sales agent. Upon effectiveness of the 2023 Shelf Registration, the Company ceased any further offers or sales of its common stock pursuant to the 2020 Shelf ATM Prospectus Supplement and the 2020 Shelf Registration. During the year ended December 31, 2023, the Company sold 256,256 shares of its common stock under its at-the-market offering pursuant to the 2023 Shelf Registration for total net proceeds of $3,642.

During the year ended December 31, 2023, the Company sold an aggregate of 731,521 shares of its common stock pursuant to (1) the Amended and Restated Sales Agreement and the Open Market Sale Agreement under the 2020 Shelf Registration and (2) the Open Market Sale Agreement under the 2023 Shelf Registration, for total net proceeds of $18,536.

On November 28, 2022, the Company entered into a Securities Purchase Agreement (the “2022 Securities Purchase Agreement”) with certain institutional investors named therein, pursuant to which the Company agreed to issue

and sell, in a private placement priced at-the-market under Nasdaq rules, shares of common stock and shares of Series E Convertible Non-Redeemable Preferred Stock, par value $0.001 per share, of the Company (the “Series E Preferred Stock”), in two tranches for aggregate gross proceeds of up to $31,000 (collectively, the “2022 Private Placement”). Pursuant to the 2022 Securities Purchase Agreement, on December 1, 2022, the Company issued and sold to the purchasers at the first closing of the 2022 Private Placement, (i) 76,813 shares of common stock, at a price per common share equal to $5.75 and (ii) 9,666 shares of Series E Preferred Stock, at a price per share equal to $575.00, for aggregate gross proceeds of approximately $6,000. On December 27, 2022, following the certification by the Chief Executive Officer of the Company that the FDA accepted the Company’s IND for KPI-012, the Company issued and sold to the purchasers at a second closing of the 2022 Private Placement a total of 43,478 shares of Series E Preferred Stock, at a price per share equal to $575.00, for aggregate gross proceeds of approximately $25,000. Costs incurred in connection with the 2022 Private Placement were $240, which were recorded as a reduction to additional paid-in capital.

On December 21, 2023, the Company entered into a Securities Purchase Agreement (the “2023 Securities Purchase Agreement”) with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell, in a private placement priced at-the-market under Nasdaq rules, shares of Series F Convertible Non-Redeemable Preferred Stock, par value $0.001 per share, of the Company (the “Series F Preferred Stock”), for aggregate gross proceeds of approximately $2,000 (the “2023 Private Placement”). Pursuant to the 2023 Securities Purchase Agreement, the Company issued and sold to the purchasers at the closing of the 2023 Private Placement, 2,928 shares of Series F Preferred Stock, at a price per preferred share equal to $683.00. Costs incurred in connection with the 2023 Private Placement were $35, which were recorded as a reduction to additional paid-in capital.

On March 25, 2024, the Company entered into a Securities Purchase Agreement (the “2024 Securities Purchase Agreement”) with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell, in a private placement priced at-the-market under Nasdaq rules, shares of Series G Convertible Non-Redeemable Preferred Stock, par value $0.001 per share, of the Company (the “Series G Preferred Stock”), for aggregate gross proceeds of approximately $8,600 (the “2024 Private Placement”). Pursuant to the 2024 Securities Purchase Agreement, the Company issued and sold to the purchasers at the closing of the 2024 Private Placement, 10,901 shares of Series G Preferred Stock, at a price per preferred share equal to $788.90.

Refer to Note 11, “Debt” for a discussion of debt financing activity.

Acquisitions and Divestitures (Details) $ in Thousands		12 Months Ended
Acquisitions and Divestitures (Details) $ in Thousands	Jul. 08, 2022 USD ($) Milestone	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Dispositions disclosures
Number of milestone payments \| Milestone	1
Deferred gain on sale of Commercial Business			$ 4,189
Due from Alcon			5,394
Due from third parties			26
Due to third parties			2,244
Non-operating income
Dispositions disclosures
Net impact of remaining inventory and deferred gain on sale of business		$ 3,355
Accounts payable
Dispositions disclosures
Due to third parties		0	1,737
Transition Service Agreement
Dispositions disclosures
Due to third parties		0	3,981
Net receivables		0	1,439
Transition Service Agreement \| Non-operating income
Dispositions disclosures
Collaborative arrangement other income (expense)		157
Transition Service Agreement \| Other income
Dispositions disclosures
Collaborative arrangement other income (expense)		$ 0
Transition Service Agreement \| Accrued expenses and other current liabilities
Dispositions disclosures
Due to third parties			2,244
Transition Service Agreement \| Accounts payable
Dispositions disclosures
Due to third parties			$ 1,737
Commercial Business Sale to Alcon \| Disposed of by sale not discontinued operations
Dispositions disclosures
Upfront payment	$ 60,000
Number of commercial-based sales milestone payments \| Milestone	4
Proceeds from inventory transfer	$ 5,027
Deferred gain on sale of Commercial Business	4,189
Commercial Business Sale to Alcon \| Disposed of by sale not discontinued operations \| Achievement of $50,000 or more in aggregate worldwide net sales
Dispositions disclosures
Amount receivable upon the achievement of specified commercial sales-based milestones	25,000
Sales based milestone achievement	50,000
Commercial Business Sale to Alcon \| Disposed of by sale not discontinued operations \| Achievement of $100,000 or more in aggregate worldwide net sales
Dispositions disclosures
Amount receivable upon the achievement of specified commercial sales-based milestones	65,000
Sales based milestone achievement	100,000
Commercial Business Sale to Alcon \| Disposed of by sale not discontinued operations \| Achievement of $175,000 or more in aggregate worldwide net sales
Dispositions disclosures
Amount receivable upon the achievement of specified commercial sales-based milestones	75,000
Sales based milestone achievement	175,000
Commercial Business Sale to Alcon \| Disposed of by sale not discontinued operations \| Achievement of $250,000 or more in aggregate worldwide net sales
Dispositions disclosures
Amount receivable upon the achievement of specified commercial sales-based milestones	160,000
Sales based milestone achievement	$ 250,000

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands		1 Months Ended		12 Months Ended
	Nov. 15, 2021	Mar. 31, 2023	Feb. 28, 2023	Dec. 31, 2023	Dec. 31, 2022	Jan. 31, 2024
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Settled liability				$ 365	$ 7,935
(Gain) loss on fair value remeasurement of deferred purchase consideration				(230)	638
Contingent milestone consideration paid in shares value				2,354
Loss (gain) on fair value remeasurement of contingent consideration				(740)	$ 288
Shares not issued until escrow release date of March 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Number of shares					19,350
Combangio, Inc.
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Number of shares	155,664
Combangio, Inc. \| Shares Issued on January 3, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Number of shares	136,314
Combangio, Inc. \| Shares not issued until escrow release date of March 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Number of shares	19,350
Combangio, Inc. \| First patient dosed with any product in phase 2 clinical trial, dosing milestone
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Contingent milestone consideration				$ 105,000		$ 146
Contingent milestone consideration paid			$ 2,500
Contingent milestone consideration paid in shares value			$ 2,354
Contingent milestone consideration paid in shares		105,038	105,038
Combangio, Inc. \| First patient dosed with any product in phase 2 clinical trial, dosing milestone \| Subsequent Events
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Contingent milestone consideration						$ 146
Combangio, Inc. \| Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Contingent milestone consideration	$ 105,000

Debt (Tables)

12 Months Ended

Dec. 31, 2023

Debt

Schedule of carrying value of debt


	December 31,		December 31,
	2023		2022
Principal loan balance	$	33,957	$	43,303
Unamortized debt discount and issuance cost		(532)		(806)
Cumulative accretion of exit fee		765		440
Total debt	$	34,190	$	42,937
Less: current portion of long-term debt		—		(5,000)
Long-term debt, net	$	34,190	$	37,937

Schedule of maturities of long-term debt

The annual principal payments due under the Loan Agreement as of December 31, 2023 were as follows:


Years Ending December 31,
2024	$	—
2025		23,970
2026		9,987
2027		—
Total	$	33,957

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2023

Summary of Significant Accounting Policies

Principles of Consolidation

Principles of Consolidation—The accompanying consolidated financial statements include the accounts of KALA BIO, Inc. and its wholly owned subsidiaries, Kala Pharmaceuticals Security Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities, and Combangio, Inc. All intercompany transactions and balances have been eliminated.

Basis of Presentation

Basis of Presentation—The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company generated only limited revenues from product sales prior to the sale of the Commercial Business to Alcon in July 2022 and has incurred recurring losses and negative cash flows from operations, including a net loss of $42,199 and $44,822, for the years ended December 31, 2023 and 2022, respectively, and used cash in operations of $27,927 and $78,908, in the years ended December 31, 2023 and 2022, respectively. The Company has financed its operations to date primarily through proceeds from the sale of the Commercial Business to Alcon, its initial public offering of common stock, follow-on public offerings of common stock and sales of its common stock under its at-the-market offering facility, private placements of common stock and preferred stock (including the Company’s 2022 Private Placement, 2023 Private Placement and 2024 Private Placement), borrowings under credit facilities and the Loan and Security Agreement with Oxford Finance LLC (the “Loan Agreement”), convertible promissory notes and warrants. In August 2023, following entry into the award agreement with the California Institute for Regenerative Medicine

(“CIRM”), Combangio received an initial $5,900 disbursement from CIRM, and the balance of the total $15,000 award is payable to Combangio upon the achievement of specified milestones (see Note 6, “Grant Income” for further information about the CIRM Award (as defined below)). The Company has devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials, and, prior to the sale of the Commercial Business to Alcon in July 2022, engaging in activities to launch and commercialize EYSUVIS and INVELTYS. As a result of the Combangio Acquisition and the sale of the Commercial Business to Alcon, the Company is devoting substantial financial resources to the research and development and potential commercialization of KPI-012 for PCED and any other indications the Company determines to pursue, including Limbal Stem Cell Deficiency. The Company has no revenue-generating commercial products and, as a result of the Combangio Acquisition, may be required to pay certain milestones and royalty payments to former equityholders of Combangio. Although the Company is eligible to receive up to $325,000 in payments from Alcon based upon the achievement of specified commercial sales-based milestones with respect to EYSUVIS and INVELTYS, there can be no assurance when the Company may receive such milestone payments or of the amount of milestone payments the Company may receive, if any. The Company cannot be certain that it will achieve the milestones within the timeframe required by the CIRM Award, or at all, and as such the Company may never receive the remaining $9,100 under the award. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future, including in connection with its continued development, regulatory approval efforts and commercialization, if any, of KPI-012. The Company may never achieve or maintain profitability. Net losses may fluctuate significantly from quarter-to-quarter and year-to-year.

The Company expects that its cash and cash equivalents as of December 31, 2023, together with the $8,600 of gross proceeds received from the sale of shares of Series G Preferred Stock in March 2024, will enable it to fund its operating expenses, lease and debt service obligations and capital expenditure requirements for at least 12 months from the date these consolidated financial statements were issued. This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the consolidated financial statements are issued. To the extent these conditions or events change, the Company could deplete its available capital resources sooner than it currently expects.

Use of Estimates

Use of Estimates— The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expense, and related disclosures. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. Estimates and assumptions relied upon in preparing these consolidated financial statements relate to, but are not limited to, the present value of lease liabilities and the corresponding right-of-use assets, the fair value of warrants, stock-based compensation, accrued expenses, contingent consideration, grant income and deferred grant income, the valuation of embedded derivatives and the recoverability of the Company’s net deferred tax assets and related valuation allowance. Actual results may differ from these estimates under different assumptions or conditions.

Grant Income

Grant Income— Grant income consists of amounts earned from incurring costs to support the CHASE Phase 2b clinical trial of KPI-012 for PCED, as well as product process characterization and analytical development from the program due to the receipt of the CIRM Award. The grant between the Company and CIRM is subject to a co-funding requirement and generally provides for the Company to meet certain milestones in order for funds to be provided. The Company accounts for grants received to perform research and development activities in accordance with Accounting Standards Codification (“ASC”) Topic 730-20, Research and Development Arrangements, which requires an assessment, at the inception of the grant, of whether the grant is a liability or a contract to perform research and development activities. If the Company is obligated to repay the grant funds to the grantor regardless of the outcome of the research and development activities, then the Company is required to estimate and recognize that liability. Alternatively, if the Company is not required to repay, or if it is required to repay the grant funds to the grantor only if the research and development activities are successful, then the grant agreement is accounted for as a contract to perform research and development activities, in which case, grant income is recognized as the related research and development

expenses are incurred. Costs of grant income are recorded as a component of research and development expenses in the Company’s consolidated statements of operations and comprehensive loss as opposed to grant revenue.

Grant funds received in advance are recorded as deferred grant income on the consolidated balance sheets. Management has determined that the Company is the principal participant under the Company’s CIRM Award, and accordingly, the Company records amounts earned under this arrangement as grant income on the consolidated statements of operations and comprehensive loss.

Product Revenues, Net

Product Revenues, Net— Following the sale of its Commercial Business to Alcon in July 2022, the Company no longer has any commercial products in its portfolio. The Company sold EYSUVIS for the short-term (up to two weeks) treatment of the signs and symptoms of dry eye disease, and INVELTYS, its topical twice-a-day ocular steroid for the treatment of post-operative inflammation and pain following ocular surgery, primarily to wholesalers in the United States (“Customers”). These Customers subsequently resold the Company’s products to specialty and other retail pharmacies. In addition to agreements with Customers, the Company entered into arrangements with third-party payors that provided for government-mandated and/or privately-negotiated rebates, chargebacks and discounts for the purchase of its products.

The Company accounted for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods or services. The Company performed the following five steps to recognize revenue under ASC Topic 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognized revenue when it was probable that it would collect the consideration to which it was entitled in exchange for the goods or services that would be transferred to the customer.

Performance Obligations

The Company determined that performance obligations were satisfied and revenue was recognized when a customer took control of the Company’s products, which occurred at a point in time. This generally occurred upon delivery of the products to customers, at which point the Company recognized revenue and recorded accounts receivable. Payment was typically received 70 to 90 days after satisfaction of the Company’s performance obligations.

Transaction Price and Variable Consideration

Revenue was measured as the amount of consideration the Company expected to receive in exchange for transferring products to a customer (“transaction price”). The transaction price for product sales included variable consideration related to chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns. The Company estimated the amount of variable consideration that should have been included in the transaction price. These estimates took into consideration a range of possible outcomes that were probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. These provisions reflected the Company’s best estimates of the amount of consideration to which it was entitled based on the terms of the contract. The amount of variable consideration that was included in the transaction price may be constrained and was included in net sales only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized would not occur in a future period. In general, performance obligations did not include any estimated amounts of variable consideration that were constrained. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

The following table summarizes activity in each of the Company’s product revenue provision and allowance categories for the years ended December 31, 2023 and 2022:


	Trade Discounts,
	Allowances and				Rebates and
	Chargebacks (1)		Product Returns (2)		Incentives (3)
Balance as of January 1, 2022	$	2,672	$	1,140	$	11,280
Provision related to current period sales		5,005		291		28,915
Changes in estimate related to prior period sales		(47)		(24)		(200)
Credit/payments made		(7,619)		(889)		(39,223)
Balance as of December 31, 2022	$	11	$	518	$	772
Changes in estimate related to prior period sales		(9)		1,355		(240)
Credit/payments made		(2)		(224)		(522)
Balance as of December 31, 2023	$	—	$	1,649	$	10

(1)

Trade discounts, allowances and chargebacks included fees for distribution service fees, prompt pay and other discounts, and chargebacks. Estimated trade discounts, allowances and chargebacks were deducted from gross revenue at the time revenues were recognized and were recorded as a reduction to accounts receivable on the Company’s consolidated balance sheets.

(2)	Estimated provisions for product returns were generally deducted from gross revenues at the time revenues were recognized and are included in accrued expenses and other current liabilities on the Company’s consolidated balance sheets.

(3)

Rebates and incentives included managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances. Estimated provisions for rebates and discounts were deducted from gross revenues at the time revenues were recognized and are included in accrued expenses and other current liabilities on the Company’s consolidated balance sheets.

As of December 31, 2023 and 2022, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial.

Accounts Receivable, net

Accounts Receivable, net—Accounts receivable are reported on the consolidated balance sheets at outstanding amounts due from customers for product sales. The Company deducts sales discounts for prompt payments and other discounts, contractual fees for service arrangements, and chargebacks from accounts receivable. The Company evaluates the collectability of accounts receivable on a regular basis, by reviewing the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. An allowance for doubtful accounts is recorded when a receivable is deemed to be uncollectible.

The Company recorded no allowance for doubtful accounts as of December 31, 2023 and 2022. The Company recorded an allowance of $11 for expected sales discounts, related to prompt pay discounts and other discounts, contractual fee for service arrangements and chargebacks, to wholesalers and distributors as of December 31, 2022 and did not record any allowance for expected sales discounts as of December 31, 2023.

Contingent Consideration

Contingent Consideration—In addition to upfront consideration and Deferred Purchase Consideration (as defined below) (see Note 3), the Company’s asset acquisitions may also include contingent consideration payments to be made for future milestone events. The Company assesses whether such contingent consideration is required to be recorded at fair value on the date of the acquisition and subsequently remeasured to fair value at each reporting date. Contingent consideration payments in an asset acquisition not required to be accounted for at fair value are recognized when the contingency is resolved, and the consideration is paid or becomes payable. Changes to contingent consideration obligations can result from changes to discount rates, accretion of the liability due to the passage of time,

changes in the Company’s estimates of the likelihood or timing of achieving certain milestones. Any changes in the fair value of these contingent consideration liabilities are included in loss from operations in the consolidated statements of operations and comprehensive loss.

Derivative Instruments

Derivative Instruments—ASC 815, Derivatives and Hedging, (“ASC 815”) requires companies to bifurcate certain conversion options and redemption features from their host instruments and account for them as free-standing derivative financial instruments should certain criteria be met. The Company evaluates its financial instruments, including its debt arrangements, to determine whether such instruments are derivatives or contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract and the features of the derivatives. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations and comprehensive income each period. Bifurcated embedded derivatives are classified with the related host contract in the Company’s consolidated balance sheet.

Cost of Product Revenues

Cost of Product Revenues—The cost of product revenues consists primarily of materials, third-party manufacturing costs, freight and distribution costs, royalty expense, allocation of labor, quality control and assurance, reserves for defective inventory as well as excess or obsolete inventory, and other manufacturing overhead costs. The Company recorded the cost of product revenues related to INVELTYS as research and development expenses prior to regulatory approval and recorded the cost of product revenues related to EYSUVIS as research and development expenses prior to the determination that FDA approval was probable and before the future economic benefit of the drug was expected to be realized.

Cash and Concentration of Credit Risk

Cash and Concentration of Credit Risk—Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments, if any, and accounts receivable. Periodically, the Company maintains cash, cash equivalents, short-term investments in accredited financial institutions in excess of federally insured limits. The Company deposits its cash, cash equivalents, short-term investments, if any, in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company’s accounts receivable balance as of December 31, 2023 and 2022 were de minimis. The Company had no revenue during the year ended December 31, 2023. Three customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2022. These Customers comprised 47%, 28% and 21% of revenue, respectively. The Company has no financial instruments with off-balance sheet risk of loss.

Cash Equivalents

Cash Equivalents—The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents.

Restricted Cash

Restricted Cash— As of December 31, 2023, the Company had no long-term restricted cash. As of December 31, 2022, the Company had long-term restricted cash of $250.

Investments

Investments—The Company determines the appropriate classification of its investments at the time of purchase. The Company’s investments are classified as available-for-sale in accordance with ASC Topic 320, Investments—Debt and Equity Securities. The Company classifies investments available to fund current operations as current assets on its consolidated balance sheets. Investments are classified as long-term assets on the consolidated balance sheets if (i) the Company has the intent and ability to hold the investments for a period of at least one year and (ii) the contractual maturity date of the investments is greater than one year.

Available-for-sale investments are recorded at fair value, with unrealized gains or losses included in comprehensive loss on the consolidated statements of operations and comprehensive loss and in accumulated other comprehensive income or loss on the consolidated balance sheets. Realized gains and losses, interest income earned on the Company’s cash, cash equivalents and investments, and amortization or accretion of discounts and premiums on investments are included within other income (expense).

The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. The Company did not record any such impairments during the years ended December 31, 2023 or 2022.

Assets Held for Sale

Assets Held for Sale—The Company classifies its long-lived assets to be sold as held for sale, as specified by ASC 360, Property, Plant, and Equipment, in the period (i) it has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation and amortization expense on long-lived assets. The Company assesses the fair value of a long-lived asset less any costs to sell at each reporting period and until the asset is no longer classified as held for sale.

There were no assets held for sale as of December 31, 2023. As of December 31, 2022, certain assets, including EYSUVIS and INVELTYS inventory, met the criteria to be classified as held for sale. Fair value was determined based on the estimated proceeds from the sale of the assets. The Company reclassified the inventory and property and equipment, which had a combined net realizable value of $7,595, to current assets held for sale on the consolidated balance sheet as of December 31, 2022. See Note 4, “Assets Held for Sale”, for additional information.

Leases

Leases—At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one-year or less. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to

non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases had lease and non-lease components which the Company has elected to use the practical expedient and account for each lease component and related non-lease component as one single component. The lease component resulted in a right-of-use asset being recorded on the consolidated balance sheets and amortized as lease expense on a straight-line basis to the consolidated statements of operations and comprehensive loss.

Property and Equipment, net

Property and Equipment, net—Property and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. Depreciation expense is included in loss from operations on the consolidated statements of operations and comprehensive loss. Laboratory equipment and office and computer equipment is depreciated over three to five years. Leasehold improvements are depreciated over the shorter of their useful life or the life of the lease. Major additions and upgrades are capitalized; maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in loss from operations on the consolidated statements of operations and comprehensive loss.

Patent Costs

Patent Costs—Costs to secure and defend patents are expensed as incurred and are classified as selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss.

Advertising Costs

Advertising Costs—Advertising costs are expensed as incurred. The Company incurred no advertising costs for the year ended December 31, 2023 and incurred $11,249 of advertising costs for the year ended December 31, 2022, which were included in selling, general and administrative expenses in the accompanying consolidated statement of operations and comprehensive loss.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets—Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, the assets are recorded at the lesser of the carrying value or fair value. The Company recorded no impairment charges for the year ended December 31, 2023 and impairment charges recorded for the year ended December 31, 2022 were de minimis.

Segment Information

Segment Information—Operating segments are identified as components of an enterprise about which separate discrete financial information is made available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The CODM is the Company’s Chief Executive Officer. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s singular focus is on the development and commercialization of innovative therapies for diseases of the eye. All of the Company’s tangible assets are held in the United States. To date, all of the Company’s revenue has been generated in the United States.

Research and Development Costs

Research and Development Costs—Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, an allocation of facilities expenses, overhead expenses and other outside expenses. Research and development costs are expensed as incurred. The Company expenses costs relating to the production of inventory for its product candidates as research and development expenses within its consolidated statements of operations and comprehensive loss in the period incurred, until the point the Company believes regulatory approval and subsequent commercialization of the product candidate is probable and it expects the future economic benefit from sales of the drug to be realized. Research and development costs that are paid in advance of performance, including nonrefundable prepayments for goods or services, are deferred and capitalized as a prepaid expense. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered.

Accrued Expenses

Accrued Expenses— The Company accrues for variable consideration related to rebates, sales incentives and allowances, and returns. Such estimates are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of the accrued expense. The Company also accrues expenses related to development activities performed by third parties based on an evaluation of services received and efforts expended pursuant to the terms of the contractual arrangements. Payments under some of these contracts depend on clinical trial milestones. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of expenses. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual or prepaid expense accordingly.

Stock-Based Compensation

Stock-Based Compensation—The Company accounts for all stock-based awards granted as compensation expense at fair value. The Company generally issues stock-based awards with the measurement date for awards as the date of grant. Stock-based compensation costs are recognized as expense over the employees’ requisite service period, which is the vesting period, on a straight-line basis. For performance awards whose vesting is contingent upon a specified event, the Company recognizes stock-based compensation expense over the derived service period, based on the probability of achievement of the specified event. The Company recognizes compensation expense for the portion of awards that have vested. Forfeitures are recorded as they occur. Stock-based compensation is classified in the accompanying consolidated statements of operations and comprehensive loss based on the function to which the related services are provided, or capitalized with inventory until related expense is recognized.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The Company previously lacked sufficient company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies in addition to its own historical volatility. Beginning in the second half of 2023, the Company determined it had adequate historical data regarding the volatility of its own traded stock price and began exclusively using its own historical volatility. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. The fair value of restricted stock units (“RSUs”) and performance stock units (“PSUs”) are equal to the closing sale price of the Company’s common stock on the date of grant.

Income Taxes

Income Taxes—Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Company’s consolidated financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the consolidated financial statement carrying amounts and the tax basis of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As a result, reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present.

Net Loss per Share Attributable to Common Stockholders

Net Loss per Share Attributable to Common Stockholders—The Company follows the two-class method when computing net income (loss) per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The two-class method is not applicable during periods with a net loss, as the holders of the convertible preferred stock have no contractual obligation to share in losses. For all periods presented, the two-class method was not applicable.

Basic net loss per share attributable to common stockholders is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants, the issuance of unvested RSUs and PSUs and convertible preferred stock using the if-converted method.

The weighted average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, warrants, unvested RSUs and PSUs and convertible preferred stock using the if-converted method. Common stock equivalent shares are excluded from the computation of diluted net loss per share attributable to common stockholders if their effect is antidilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2023 and 2022. (See Note 15).

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on our company’s consolidated financial statements.

Nature of Business (Details) $ / shares in Units, $ in Thousands					12 Months Ended
	Aug. 02, 2023 USD ($)	Oct. 20, 2022 shares	Oct. 19, 2022 $ / shares shares	Nov. 15, 2021 USD ($)	Dec. 31, 2023 USD ($) shares	Dec. 31, 2022 USD ($) shares	Sep. 30, 2022 shares	Aug. 18, 2022
Acquisition of Combangio, Inc
Reverse stock split		0.02
Common stock, shares issued \| shares		1	50		2,759,372	1,706,971
Common stock, shares outstanding \| shares		1	50		2,759,372	1,706,971
Common stock, authorized \| shares		120,000,000			120,000,000	120,000,000
Net loss					$ (42,199)	$ (44,822)
Cash used in operations					(27,927)	(78,908)
Accumulated deficit					$ 629,409	$ 587,210
Combangio, Inc. \| Award agreement \| California Institute for Regenerative Medicine (CIRM)
Acquisition of Combangio, Inc
Restricted grant	$ 15,000
Grant disbursement	$ 5,900
Series D redeemable preferred stock
Acquisition of Combangio, Inc
Shares Issued \| shares							73,208
Shares Outstanding \| shares						0	73,208
Redeemable preferred stock dividend declared ratio								0.001
Aggregate dividends paid during the period for each whole share of redeemable preferred stock outstanding \| $ / shares			$ 0.10
Number of shares in whole shares \| shares			100
Series E preferred shares
Acquisition of Combangio, Inc
Shares Outstanding \| shares					51,246	53,144
BLA Approval Milestone
Acquisition of Combangio, Inc
Contingent milestone consideration payable in cash				$ 12,500
Combangio, Inc.
Acquisition of Combangio, Inc
Equity interest issuable, value				16,123
Upfront payment				$ 5,000
Minimum percentage of post-closing stock				19.90%
Cash cap for contingent cash consideration payable				$ 2,500
Combangio, Inc. \| First patient dosed with any product in phase 2 clinical trial, dosing milestone
Acquisition of Combangio, Inc
Contingent milestone consideration payable in cash				5,000
Combangio, Inc. \| Commercialization Milestone
Acquisition of Combangio, Inc
Contingent milestone consideration payable in cash				17,500
Combangio, Inc. \| Net Sales Milestone Payments
Acquisition of Combangio, Inc
Contingent milestone consideration payable in cash				$ 65,000

Stock-based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Number of Shares
Outstanding at the beginning of the period (in shares)	206,221
Granted, options (in shares)	666,962	83,221
Forfeited options (in shares)	(203,119)
Outstanding at the end of the period (in shares)	670,064	206,221
Vested and expected to vest (in shares)	670,064
Options exercisable (in shares)	2,892
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 260.00
Granted (in dollars per share)	14.57
Forfeited (in dollars per share)	259.25
Outstanding at the end of the period (in dollars per share)	15.93	$ 260.00
Vested and expected to vest (in dollars per share )	15.93
Options exercisable (in dollars per shares)	$ 329.92
Weighted Average Remaining Contractual Term
Weighted average period	9 years 4 months 24 days	6 years 2 months 12 days
Vested and expected to vest	9 years 4 months 24 days
Options exercisable	3 years 3 months 18 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period (in dollars)	$ 203
Outstanding at the end of the period (in dollars)		$ 203

Commitments and Contingencies - Future minimum obligations (Details) - Stanford License Agreement $ in Thousands	Dec. 31, 2023 USD ($)
Minimum obligations due under its license agreements
2024	$ 30
2025	65
2026	65
2027	65
2028	65
Thereafter	325
Total minimum license payments	$ 615

Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

Note 16: Income Taxes

The Company has had no income tax expense due to operating losses incurred for the years ended December 31, 2023 and 2022. The Company has also not recorded any income tax benefits for the net operating losses incurred in each period due to its uncertainty of realizing a benefit from those items. All of the Company’s losses before income taxes were generated in the United States.

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:


	Year Ended
	December 31,
	2023		2022
Federal statutory income tax rate	21.0	%	21.0	%
Effect of:
State income taxes, net of federal benefit	7.6		5.4
Research and development tax credits	2.4		—
Stock-based compensation	(15.0)		(4.6)
Change in valuation allowance	(15.3)		7.5
Losses and Credits Limited by Section 382 & Section 383	—		(28.8)
Other	(0.7)		(0.5)
Effective income tax rate	—	%	—	%

Net deferred tax assets as of December 31, 2023 and 2022 consisted of the following:


	December 31,
	2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	108,919	$	102,565
Capitalized research and development and start-up expenditures		12,153		8,230
Stock-based compensation		1,195		7,243
Research and development tax credit carryforwards		1,154		—
Lease liabilities		672		4
Rebates, incentives, trade discounts and allowances		522		223
Deferred gain on sale of Commercial Business		—		1,145
Other		4,754		2,000
Total deferred tax assets	$	129,369	$	121,410
Deferred tax liabilities:
Right-of-use assets		(638)		(4)
Total deferred tax liabilities	$	(638)	$	(4)
Valuation allowance	$	(128,731)	$	(121,406)
Net deferred tax assets	$	—	$	—

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2023 and 2022. The valuation allowance increased by $7,325 and decreased by $2,727 during the years ended December 31, 2023 and 2022, respectively. The current year increase is primarily the result of an increase in federal net operating losses and the generation of federal and state research and development tax credits. The prior year decrease is primarily the result of a material reduction to the net operating loss carryforward and the research and development tax credits deferred tax assets caused by limitations under Section 382 and Section 383 of the Internal Revenue Code of 1986, thus lowering the valuation allowance required. Management reevaluates the positive and negative evidence at each reporting period.

As of December 31, 2023 and 2022, the Company had federal net operating loss carryforwards of $369,337 and $349,378, respectively, which may be available to offset future federal tax liabilities and expire at various dates beginning in 2030. As of December 31, 2023 and 2022, the Company had state net operating loss carryforwards of $413,711 and $390,607, respectively, which may be available to offset future state income tax liabilities and expire at various dates beginning in 2024. As of December 31, 2023, the Company had $1,154 federal and state research and

development credit carryforwards and as of December 31, 2022, the Company had no federal and state research and development credit carryforwards.

Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of Section 382 of the Internal Revenue Code of 1986, certain substantial changes in the Company’s ownership, including a sale of the Company, or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards, which could be used annually to offset future taxable income. The Company completed an analysis as of December 31, 2022 and determined that an ownership change occurred during December 2022 as a result of the Company’s entry into the 2022 Securities Purchase Agreement which materially limited the net operating loss carryforwards and research and development tax credits. As a result of this most recent ownership change, the utilization of the Company’s net operating loss carryforwards is subject to an annual limitation of $222, which is reflected in the numbers presented above. The Company has not completed an analysis as of December 31, 2023 but does not expect any change would further limit the net operating loss carryforwards.

The Company files its corporate income tax returns in the United States and various states. All tax years since the date of incorporation remain open to examination by the major taxing jurisdictions (state and federal) to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (‘‘IRS’’) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax year.

As of December 31, 2023 and 2022 the Company had no uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2023 and 2022.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
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+ Details

Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Stock-based compensation
Weighted average grant date fair value of options granted	$ 12.82	$ 40.40
Employee Stock Option
Stock-based compensation
Unrecognized compensation expense	$ 7,346
Weighted average expense recognition period	3 years 4 months 2 days

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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Reference 20: http://www.xbrl.org/2003/role/disclosureRef
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Reference 26: http://www.xbrl.org/2003/role/disclosureRef
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Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
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-Section 50
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Reference 28: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2: Summary of Significant Accounting Policies

Performance Obligations

Transaction Price and Variable Consideration

The following table summarizes activity in each of the Company’s product revenue provision and allowance categories for the years ended December 31, 2023 and 2022:


	Trade Discounts,
	Allowances and				Rebates and
	Chargebacks (1)		Product Returns (2)		Incentives (3)
Balance as of January 1, 2022	$	2,672	$	1,140	$	11,280
Provision related to current period sales		5,005		291		28,915
Changes in estimate related to prior period sales		(47)		(24)		(200)
Credit/payments made		(7,619)		(889)		(39,223)
Balance as of December 31, 2022	$	11	$	518	$	772
Changes in estimate related to prior period sales		(9)		1,355		(240)
Credit/payments made		(2)		(224)		(522)
Balance as of December 31, 2023	$	—	$	1,649	$	10

(1)

(2)	Estimated provisions for product returns were generally deducted from gross revenues at the time revenues were recognized and are included in accrued expenses and other current liabilities on the Company’s consolidated balance sheets.

(3)

Cash Equivalents—The Company considers all short-term, highly liquid investments with original maturities of 90 days or less at acquisition date to be cash equivalents.

Restricted Cash— As of December 31, 2023, the Company had no long-term restricted cash. As of December 31, 2022, the Company had long-term restricted cash of $250.

Recent Accounting Pronouncements

Stock-based Compensation - Fair Value Assumptions (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Assumptions used in determining fair value of the stock options granted
Expected volatility (minimum)	108.40%	72.90%
Expected volatility (maximum)	123.10%	87.00%
Risk-free interest rate (minimum)	3.55%	1.43%
Risk-free interest rate (maximum)	4.43%	4.19%
Expected dividend yield	0.00%	0.00%
Minimum
Assumptions used in determining fair value of the stock options granted
Expected term (in years)	5 years 6 months	5 years 6 months
Maximum
Assumptions used in determining fair value of the stock options granted
Expected term (in years)	6 years 1 month 6 days	6 years 1 month 6 days

Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2023

Loss Per Share

Schedule of computation of basic and diluted net loss per share


	Year Ended
	December 31,
	2023		2022
Numerator:
Net loss attributable to common stockholders	$	(42,199)	$	(44,822)
Denominator:
Weighted-average common shares outstanding, basic and diluted(1)		2,432,008		1,520,611

Net loss per share attributable to common stockholders, basic and diluted	$	(17.35)	$	(29.48)

(1)

Included in the weighted-average common shares outstanding, basic and diluted for the year ended December 31, 2022 is an aggregate of 19,350 shares of common stock that were held back by the Company as partial security for the satisfaction of indemnification obligations and other payment obligations of the Combangio Equityholders and were issued in March 2023.

Schedule of outstanding securities excluded from the computation of diluted weighted average shares outstanding as they would have been anti-dilutive


	Year Ended
	December 31,
	2023		2022
Options to purchase shares of common stock		549,952		233,231
Unvested RSUs and PSUs		654,907		9,718
Unexercised warrants		4,303		4,303
Convertible preferred stock (as converted to common stock)		5,282,850		1,328,600
		6,492,012		1,575,852

Pay vs Performance Disclosure - USD ($) $ in Thousands	12 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (42,199)	$ (44,822)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/exampleRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Assets Held for Sale - Major Categories of Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Jul. 08, 2022
Major categories of assets that have been reclassified to held for sale on the condensed consolidated balance sheet
Inventories		$ 7,544
Property and equipment, net		51
Current assets held for sale	$ 0	7,595
Deferred gain on sale of Commercial Business		4,189
Commercial Business Sale to Alcon \| Disposed of by sale not discontinued operations
Major categories of assets that have been reclassified to held for sale on the condensed consolidated balance sheet
Inventories		$ 8,915
Deferred gain on sale of Commercial Business			$ 4,189

Summary of Significant Accounting Policies - Performance Obligations (Details)	12 Months Ended
	Dec. 31, 2023
Summary of Significant Accounting Policies
Minimum period in which payment is typically received	70 days
Maximum period in which payment is typically received	90 days

Acquisitions and Divestitures - Acquisition of Combangio, Inc. (Details) - USD ($) $ in Thousands		1 Months Ended		12 Months Ended
	Nov. 15, 2021	Mar. 31, 2023	Feb. 28, 2023	Dec. 31, 2023	Dec. 31, 2022	Jan. 31, 2024
Acquisition of Combangio, Inc
Contingent milestone consideration paid in shares value				$ 2,354
Shares not issued until escrow release date of March 2023
Acquisition of Combangio, Inc
Number of shares					19,350
BLA Approval Milestone
Acquisition of Combangio, Inc
Contingent milestone consideration payable in cash	$ 12,500
Combangio, Inc.
Acquisition of Combangio, Inc
Upfront payment	$ 5,000
Number of shares	155,664
Equity interest issuable, value	$ 16,123
Minimum percentage of post-closing stock	19.90%
Cash cap for contingent cash consideration payable	$ 2,500
Combangio, Inc. \| Shares Issued on January 3, 2022
Acquisition of Combangio, Inc
Number of shares	136,314
Combangio, Inc. \| Shares not issued until escrow release date of March 2023
Acquisition of Combangio, Inc
Number of shares	19,350
Combangio, Inc. \| First patient dosed with any product in phase 2 clinical trial, dosing milestone
Acquisition of Combangio, Inc
Contingent milestone consideration				$ 105,000		$ 146
Contingent milestone consideration paid			$ 2,500
Contingent milestone consideration paid in shares value			$ 2,354
Contingent milestone consideration paid in shares		105,038	105,038
Contingent milestone consideration payable in cash	$ 5,000
Combangio, Inc. \| Commercialization Milestone
Acquisition of Combangio, Inc
Contingent milestone consideration payable in cash	17,500
Combangio, Inc. \| Net Sales Milestone Payments
Acquisition of Combangio, Inc
Contingent milestone consideration payable in cash	65,000
Combangio, Inc. \| Maximum
Acquisition of Combangio, Inc
Contingent milestone consideration	$ 105,000

Loss Per Share

12 Months Ended

Dec. 31, 2023

Loss Per Share

Loss Per Share

Note 15: Loss Per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows for the years ended December 31, 2023 and 2022:


	Year Ended
	December 31,
	2023		2022
Numerator:
Net loss attributable to common stockholders	$	(42,199)	$	(44,822)
Denominator:
Weighted-average common shares outstanding, basic and diluted(1)		2,432,008		1,520,611

Net loss per share attributable to common stockholders, basic and diluted	$	(17.35)	$	(29.48)

(1)

The following potential common stock equivalents were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect. The share amounts presented below represent the average of the quarters’ incremental shares:


	Year Ended
	December 31,
	2023		2022
Options to purchase shares of common stock		549,952		233,231
Unvested RSUs and PSUs		654,907		9,718
Unexercised warrants		4,303		4,303
Convertible preferred stock (as converted to common stock)		5,282,850		1,328,600
		6,492,012		1,575,852

Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Numerator:
Net loss attributable to common stockholders	$ (42,199)	$ (44,822)
Denominator:
Weighted average common shares outstanding - basic (in shares)	2,432,008	1,520,611
Weighted average common shares outstanding -diluted (in shares)	2,432,008	1,520,611
Net loss per share attributable to common stockholders, basic	$ (17.35)	$ (29.48)
Net loss per share attributable to common stockholders, diluted	$ (17.35)	$ (29.48)
Shares not issued until escrow release date of March 2023
Denominator:
Number of shares		19,350

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

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+ Details

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Compensation and benefits	$ 2,616	$ 3,334
Accrued revenue reserves (1)	1,659	807
Development costs	837	446
Professional services	515	948
Commercial costs	33	271
Contract manufacturing	11	453
Due to third parties in connection with Transition Agreement (2)		2,244
Other	347	407
Accrued expenses and other current liabilities	6,018	8,910
Accounts payable
Accrued revenue reserves (1)	0	483
Due to third parties in connection with Transition Agreement (2)	$ 0	$ 1,737

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash flows from operating activities:
Net loss	$ (42,199)	$ (44,822)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	303	537
Non-cash operating lease cost	171	439
Gain on sale of commercial business		(46,995)
Loss on extinguishment of debt		2,583
(Gain) loss on fair value remeasurement of deferred purchase consideration	(230)	638
Loss (gain) on fair value remeasurement of contingent consideration	740	(288)
Amortization of debt discount and other non-cash interest	1,253	1,425
Stock-based compensation	7,463	7,008
Other non-cash (gains) losses, net	(4,323)	76
Change in operating assets and liabilities:
Accounts receivable	78	15,138
Prepaid expenses and other current assets	5,756	(2,009)
Inventory and assets held for sale	7,544	1,708
Other long-term assets	(144)
Accounts payable	(1,904)	(2,076)
Accrued expenses and other current liabilities	(2,422)	(11,926)
Lease liabilities and other long-term liabilities	(13)	(344)
Net cash used in operating activities	(27,927)	(78,908)
Cash flows from investing activities:
Proceeds from sale of commercial business, net of transaction costs		62,908
Purchases of property and equipment and other assets	(610)	(313)
Proceeds from sale of property and equipment	47	114
Purchases of short-term investments	(9,866)	(4,992)
Proceeds from sales or maturities of short-term investments	10,000	5,000
Net cash (used in) provided by investing activities	(429)	62,717
Cash flows from financing activities:
Payment of principal, prepayment premium and final payment fee on debt	(10,000)	(40,000)
Proceeds from issuance of common stock and Series E preferred stock, net of issuance costs of $240		30,760
Proceeds from issuance of Series F preferred stock, net of issuance costs of $35	1,965
Proceeds from common stock offerings, net of offering costs	18,536	1,036
Contingent consideration related to Combangio acquisition	(2,041)
Payment of principal on finance lease		(39)
Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan	46	301
Net cash provided by (used in) financing activities	8,506	(7,942)
Net decrease in cash, cash equivalents and restricted cash:	(19,850)	(24,133)
Cash, cash equivalents and restricted cash at beginning of period	70,745	94,878
Cash, cash equivalents and restricted cash at end of period	50,895	70,745
Reconciliation of cash, cash equivalents and restricted cash:
Cash, cash equivalents, and restricted cash at end of period	50,895	70,745
Less restricted cash		(250)
Cash and cash equivalents at end of period	50,895	70,495
Non-cash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued expenses		9
Issuance of common stock to satisfy deferred purchase consideration in additional paid-in capital	365	7,936
Issuance of common stock to satisfy contingent consideration in additional paid-in capital	2,354
Supplemental disclosure:
Cash paid for interest	4,620	5,958
Right-of-use assets obtained in exchange of operating lease obligations	$ 2,180	$ 424

Summary of Significant Accounting Policies - Basis of Presentation (Details) - USD ($) $ in Thousands		1 Months Ended		12 Months Ended
	Jan. 10, 2023	Mar. 31, 2024	Aug. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Product information
Net loss				$ (42,199)	$ (44,822)
Cash used in operations				(27,927)	$ (78,908)
Gross proceeds	$ 75,000			$ 1,965
Payment of commercial sales-based milestones			$ 325,000
Series G Preferred Stock
Product information
Gross proceeds		$ 8,600
Award agreement \| California Institute for Regenerative Medicine (CIRM)
Product information
Initial disbursement from California Institute for Regenerative Medicine ("CIRM")			5,900
Award payable for achievement of specified milestones			15,000
Amount that may not be received if specific milestones are not met			$ 9,100

Stock-based Compensation - RSUs Activity (Details) - RSU - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Shares
Unvested and outstanding balance at beginning of period (in shares)	4,887
Granted, other than options (in shares)	824,190	824,190
Vested (in shares)	(2,202)
Forfeited (in shares)	(1,877)
Unvested and outstanding balance at end of period (in shares)	824,998	4,887
Vested and deferred (in shares)	2,660
Weighted Average Grant Date Fair Value
Unvested and outstanding balance at beginning of period (in dollars per share)	$ 230.29
Granted (in dollars per share)	21.73
Vested (in dollars per share)	248.11
Forfeited (in dollars per shares)	43.75
Unvested and outstanding balance at end of period (in dollars per share)	$ 22.31	$ 230.29

Fair Value of Financial Instruments - Fair Value Measurement Levels (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
Settlements	$ (365)	$ (7,935)
Level 3 \| Deferred purchase consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
Beginning balance	595	7,892
Fair value adjustments	(230)	638
Settlements	(365)	(7,935)
Ending balance		595
Level 3 \| Contingent consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
Beginning balance	8,370	8,658
Fair value adjustments	740	(288)
Settlements	(4,854)
Reclassification to accrued expenses and other current liabilities	(146)
Ending balance	$ 4,110	$ 8,370

Stock-based Compensation - Compensation expense - INVELTYS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Mar. 14, 2023	Jan. 31, 2022
Stock-based compensation
Stock based compensation expense	$ 7,463	$ 7,008
Exercise of stock options	$ 0	$ 3
Number of shares outstanding	670,064	206,221
Employee Stock Option
Stock-based compensation
Number of shares outstanding	0
Employee Stock Option \| Executive Officer
Stock-based compensation
Number of common stock issuable upon exercise of rights under equity compensation plans			3,960
Inventories \| INVELTYS
Stock-based compensation
Stock based compensation expense	$ 0	$ 190
Maximum \| Employee Stock Option \| Executive Officer
Stock-based compensation
Number of common stock issuable upon exercise of rights under equity compensation plans				14,850

Fair Value of Financial Instruments - Recurring and Nonrecurring Fair value Measurements Within Hierarchy (Details) - Recurring - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Level 1
Fair Value Assets Measured on Recurring and Non recurring Basis
Financial assets by level within fair value hierarchy	$ 44,639	$ 31,587
Level 1 \| Cash equivalents
Fair Value Assets Measured on Recurring and Non recurring Basis
Financial assets by level within fair value hierarchy	44,639	31,587
Level 3
Fair Value Liabilities Measured on Recurring and Non recurring Basis
Financial liabilities by level within fair value hierarchy	4,110	8,965
Level 3 \| Deferred purchase consideration
Fair Value Liabilities Measured on Recurring and Non recurring Basis
Financial liabilities by level within fair value hierarchy		595
Level 3 \| Contingent consideration
Fair Value Liabilities Measured on Recurring and Non recurring Basis
Financial liabilities by level within fair value hierarchy	4,110	8,370
Fair Value
Fair Value Assets Measured on Recurring and Non recurring Basis
Financial assets by level within fair value hierarchy	44,639	31,587
Fair Value Liabilities Measured on Recurring and Non recurring Basis
Financial liabilities by level within fair value hierarchy	4,110	8,965
Fair Value \| Deferred purchase consideration
Fair Value Liabilities Measured on Recurring and Non recurring Basis
Financial liabilities by level within fair value hierarchy		595
Fair Value \| Contingent consideration
Fair Value Liabilities Measured on Recurring and Non recurring Basis
Financial liabilities by level within fair value hierarchy	4,110	8,370
Fair Value \| Cash equivalents
Fair Value Assets Measured on Recurring and Non recurring Basis
Financial assets by level within fair value hierarchy	$ 44,639	$ 31,587

Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2023

Acquisitions and Divestitures

Acquisitions and Divestitures

Note 3: Acquisitions and Divestitures

Sale of Commercial Business to Alcon

On July 8, 2022, the Company closed the Alcon Transaction contemplated by the Asset Purchase Agreement, pursuant to which Alcon purchased the Commercial Business and assumed certain liabilities with respect to the Commercial Business. Alcon paid to the Company an upfront cash payment of $60,000 upon the closing of the Alcon Transaction. In addition, pursuant to the Asset Purchase Agreement, the Company is eligible to receive from Alcon up to four commercial-based sales milestone payments as follows: (1) $25,000 upon the achievement of $50,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (2) $65,000 upon the achievement of $100,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2028, (3) $75,000 upon the achievement of $175,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029 and (4) $160,000 upon the achievement of $250,000 or more in aggregate worldwide net sales of EYSUVIS and INVELTYS in a calendar year from 2023 to 2029. Each milestone payment will only become payable once, if at all, upon the first time such milestone is achieved, and only one milestone payment will be paid with respect to a calendar year. In the event that more than one milestone is achieved in a calendar year, the higher milestone payment will become payable and the lower milestone payment will become payable only if the corresponding milestone is achieved again in a subsequent calendar year.

Pursuant to the Asset Purchase Agreement, on July 8, 2022, the Company entered into supply and commercial agreements under which the Company agreed to supply EYSUVIS and INVELTYS to Alcon and distribute EYSUVIS and INVELTYS to third-party customers of the Commercial Business on behalf of Alcon for a period of six months following the closing of the Alcon Transaction. In addition, the Company entered into a transition services agreement under which the Company provided certain transition services to Alcon on a cost-plus pricing arrangement for six months following the closing of the Alcon Transaction. Pursuant to the supply agreement, Alcon purchased from the Company, at the closing of the Alcon Transaction, $5,027 of EYSUVIS and INVELTYS inventory on-hand at the Company. Together, the supply, commercial and transition services agreements are referred to herein as the “Transition Agreement.”

The Company has determined that the disposition of these assets does not qualify for reporting as a discontinued operation as it was not considered a component of an entity that comprises operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company. During the year ended December 31, 2022, the Company recognized a net gain on the sale of the Commercial Business as follows:


Gross consideration from the sale of the Commercial Business	$	65,027
Closing and transaction costs		2,119
Net proceeds from the sale of the Commercial Business		62,908
Book value of assets transferred
Inventories		8,915
Prepaid expenses and other current assets		556
Property and equipment, net		1,819
Other long-term assets		434
Total book value of assets transferred		11,724
Gain on sale of Commercial Business		51,184
Deferred gain on sale of Commercial Business		4,189
Net gain on sale of Commercial Business	$	46,995

The Company deferred a portion of the gross consideration related to the discounted pricing on any remaining inventory owned by the Company (the “Remaining Inventory”) that Alcon could have purchased. The deferred gain on the sale of the Commercial Business of $4,189 was recorded on the consolidated balance sheet as of the transaction date as deferred gain on sale of Commercial Business. The Remaining Inventory and deferred gain on the sale of the Commercial Business were written off during the year ended December 31, 2023, and the net impact of $3,355 is recorded in the other (expense) income, net line item in the consolidated statements of operations and comprehensive loss.

The Company collected cash on behalf of Alcon for revenue generated by sales of EYSUVIS and INVELTYS from July 8, 2022 through the transition period and the Company transferred all cash generated by such sales to Alcon as of December 31, 2022.

The Company recorded income from the Transition Agreement of $157, which is presented in other income (expense), net on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2023 and which offset operating expenses related to the Transition Agreement captured within loss from operations. Other than noted above, there was no other income from the Transition Agreement recorded in the year ended December 31, 2023. There were no payables due to third parties related to amounts the Company is obligated to pay on Alcon’s behalf included on the Company’s consolidated balance sheet as of December 31, 2023 and there were no receivables due from Alcon or third parties in connection with the Transition Agreement.

As of December 31, 2022, the Company had total receivables due from Alcon and third parties of $5,394 and $26, respectively, and total payables to third parties related to the Transition Agreement of $3,981 of which $1,737 was included in accounts payable and $2,244 within accrued expenses and other current liabilities related to invoices the Company was obligated to pay on Alcon’s behalf. As of December 31, 2022, the Company had a net receivable due from Alcon and third parties in connection with the Transition Agreement of $1,439.

Acquisition of Combangio, Inc.

In connection with the closing of the Combangio Acquisition on November 15, 2021 (the “Closing”), the Company made an upfront payment of an aggregate of $5,000 in cash to former Combangio stockholders and other equityholders (the “Combangio Equityholders”), subject to customary adjustments, and agreed to issue an aggregate of 155,664 shares (the “Deferred Purchase Consideration”) of the Company’s common stock to the Combangio Equityholders with an aggregate value of approximately $16,123, consisting of (i) an aggregate of 136,314 shares of common stock which were issued on January 3, 2022 (the “Upfront Shares”) and (ii) an aggregate of 19,350 shares of common stock that were initially held back as partial security for the satisfaction of indemnification obligations and other payment obligations of the Combangio Equityholders (the “Holdback Shares”) and that were issued in March 2023 upon escrow release. The aggregate value of the Deferred Purchase Consideration was calculated using the closing price of the Company’s common stock on The Nasdaq Global Select Market on November 12, 2021, the last trading day prior to the Closing.

In addition, pursuant to the Merger Agreement, the Combangio Equityholders are entitled to receive from the Company up to $105,000 in payments that are contingent upon the achievement of specified development, regulatory and commercialization milestones (the “Contingent Consideration”) and are payable in cash and shares of the Company’s common stock, subject to the Share Cap (as defined below). If the issuance of the Deferred Purchase Consideration or any contingent consideration payable in shares of the Company’s common stock (the “Contingent Stock Consideration”) would result in the aggregate number of shares of common stock issued under the Merger Agreement equaling or exceeding 19.9% of the total number of shares of the Company’s common stock issued and outstanding immediately prior to the closing (the “Share Cap”), then the Company will be required to pay the portion of such consideration in excess of the Share Cap in cash. The portion of any payment of Contingent Consideration payable in cash is referred to as “Contingent Cash Consideration”.

Upon dosing of the first patient in the CHASE Phase 2b clinical trial of KPI-012 for PCED in the United States in February 2023 (the “First Dosing Milestone”), in March 2023, the Company paid the former Combangio Equityholders an aggregate of $2,500 in cash and $2,354 in shares of our common stock (representing an aggregate of 105,038 shares of the Company’s common stock). The remaining amount due for the First Dosing Milestone of $146 was paid in cash in January 2024. Upon payment of the First Dosing Milestone, the Company reached the Share Cap and any Contingent Consideration payable under the Merger Agreement in the future will be paid only in cash.

Subject to the terms and conditions of the Merger Agreement, the former Combangio Equityholders, are entitled to receive from the Company the following remaining Contingent Consideration in cash:

●

(i) $5,000 payable upon the first patient dosed with any product candidate whose active ingredient comprises one or more biological factors secreted by MSCs or their progenitors, including KPI-012 (the “Product Candidate”) in a pivotal clinical trial, (ii) $12,500 payable upon regulatory approval by the FDA of marketing and sale of a Product Candidate in the United States, subject to certain specified reductions; (iii) $17,500 payable upon the first commercial sale of a Product Candidate in the United States, subject to certain specified reductions, and (iv) an aggregate of up to $65,000 payable upon the achievement of specified sales milestones;

●

tiered cash royalties at percentage rates in the mid-to-high single digits payable on annual net sales of all Product Candidates; and

●

a cash payment at a percentage rate in the high single digits of all income, including earnout payments, received by the Company or any of its affiliates from a product license granted by the Company to a third party to sell or otherwise commercialize the Product Candidate in countries where neither the Company nor its affiliates conduct sales of such Product Candidate, subject to certain exceptions set forth in the Merger Agreement.

If the aggregate amount of Contingent Cash Consideration payable in any calendar year (after giving effect to the Share Cap) exceeds $2,500 (the “Excess Cash Cap”), such excess portion (“Carry Forward Contingent Cash Consideration”) will be carried forward and, subject to application of the Excess Cash Cap in the following calendar year, become payable on the first business day of the following calendar year. Any Carry Forward Contingent Cash Consideration outstanding on June 1, 2026 is payable in full on June 1, 2026.

For accounting purposes, the transaction was accounted for as an asset acquisition, as substantially all of the fair value of the gross assets acquired was concentrated in a single asset, KPI-012.

Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2023

Accrued Expenses

Schedule of accrued expenses and other current liabilities


	December 31,		December 31,
	2023		2022

Compensation and benefits	$	2,616	$	3,334
Accrued revenue reserves (1)		1,659		807
Development costs		837		446
Professional services		515		948
Commercial costs		33		271
Contract manufacturing		11		453
Due to third parties in connection with Transition Agreement (2)		—		2,244
Other		347		407
Accrued expenses and other current liabilities	$	6,018	$	8,910

(1)	There were additional revenue reserves included in accounts payable of $483 as of December 31, 2022. There were no such amounts included in accounts payable as of December 31, 2023.

(2)	There were additional amounts due to third parties in connection with the Transition Agreement included in accounts payable of $1,737 as of December 31, 2022. There were no such amounts included in accounts payable as of December 31, 2023.

Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value of Financial Instruments

Schedule of assets and liabilities measured at fair value on a recurring basis


	December 31, 2023
	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	44,639	$	44,639	$	—	$	—
Total Assets	$	44,639	$	44,639	$	—	$	—
Liabilities:
Contingent consideration	$	4,110	$	—	$	—	$	4,110
Total Liabilities	$	4,110	$	—	$	—	$	4,110


	December 31, 2022
	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	31,587	$	31,587	$	—	$	—
Total Assets	$	31,587	$	31,587	$	—	$	—
Liabilities:
Deferred purchase consideration	$	595	$	—	$	—	$	595
Contingent consideration		8,370		—		—		8,370
Total Liabilities	$	8,965	$	—	$	—	$	8,965

Schedule of fair values of warrants, using the Black Scholes option pricing model


	Fair Value at
	December 31,				Range
Financial Instrument	2023		Valuation Technique	Unobservable Input	(Average)
Contingent consideration	$	4,110	Probability-adjusted	Period of expected milestone achievement	2025 - 2028 (2027)
			discounted cash flow model	Probabilities of achievement	16.6% - 35.5% (23.4%)
				Discount rate	16.3%


	Fair Value at
	December 31,				Range
Financial Instrument	2022		Valuation Technique	Unobservable Input	(Average)
Deferred purchase consideration	$	595	Option pricing model	Discount for lack of marketability	20%

Contingent consideration	$	8,370	Probability-adjusted	Period of expected milestone achievement	2023 - 2027 (2025)
			discounted cash flow model	Probabilities of achievement	19.9% - 95.0% (44.9%)
				Discount rate	19.0%
				Discount for lack of marketability	20.0%

Schedule of changes in Level 3 fair value measurements


Deferred purchase consideration
Balance at January 1, 2022	$	7,892
Fair value adjustments		638
Settlements		(7,935)
Balance at January 1, 2023	$	595
Fair value adjustments		(230)
Settlements		(365)
Balance at December 31, 2023	$	—

Contingent consideration
Balance at January 1, 2022	$	8,658
Fair value adjustments		(288)
Balance at January 1, 2023	$	8,370
Fair value adjustments		740
Settlements		(4,854)
Reclassification to accrued expenses and other current liabilities		(146)
Balance at December 31, 2023	$	4,110

Summary of Significant Accounting Policies - Product Revenue Provision and Allowance Categories (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Trade Discounts, Allowances and Chargebacks
Product information
Beginning balance	$ 11	$ 2,672
Provision related to current period sales		5,005
Changes in estimate related to prior period sales	(9)	(47)
Credit/payments made	(2)	(7,619)
Ending balance		11
Product Returns
Product information
Beginning balance	518	1,140
Provision related to current period sales		291
Changes in estimate related to prior period sales	1,355	(24)
Credit/payments made	(224)	(889)
Ending balance	1,649	518
Rebates and Incentives
Product information
Beginning balance	772	11,280
Provision related to current period sales		28,915
Changes in estimate related to prior period sales	(240)	(200)
Credit/payments made	(522)	(39,223)
Ending balance	$ 10	$ 772

Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2023

Property and Equipment, Net

Schedule of property and equipment, net


	December 31,		December 31,
	2023		2022

Equipment	$	894	$	391
Computer hardware and software		869		1,204
Furniture and office equipment		—		29
Construction in progress		100		—
Property and equipment—at cost		1,863		1,624
Less: Accumulated depreciation		(1,110)		(1,224)
Property and equipment—net	$	753	$	400

Accrued Expenses

12 Months Ended

Dec. 31, 2023

Accrued Expenses

Accrued Expenses

Note 9: Accrued Expenses

Accrued expenses and other current liabilities consist of the following:


	December 31,		December 31,
	2023		2022

Compensation and benefits	$	2,616	$	3,334
Accrued revenue reserves (1)		1,659		807
Development costs		837		446
Professional services		515		948
Commercial costs		33		271
Contract manufacturing		11		453
Due to third parties in connection with Transition Agreement (2)		—		2,244
Other		347		407
Accrued expenses and other current liabilities	$	6,018	$	8,910

(1)	There were additional revenue reserves included in accounts payable of $483 as of December 31, 2022. There were no such amounts included in accounts payable as of December 31, 2023.

(2)	There were additional amounts due to third parties in connection with the Transition Agreement included in accounts payable of $1,737 as of December 31, 2022. There were no such amounts included in accounts payable as of December 31, 2023.

Grant Income (Details) - USD ($) $ in Thousands		12 Months Ended
Grant Income (Details) - USD ($) $ in Thousands	Aug. 02, 2023	Dec. 31, 2023
Grant Income
Royalty on net sales (as a percent)	0.10%
Royalty on net sales based on of funds utilized by the Company	$ 1,000
Term of royalty from the date of first commercial sale of such product, service or approved drug	10 years
Grant income		$ 4,825
Deferred grant income		1,075
California Institute for Regenerative Medicine (CIRM)
Grant Income
Threshold period for achievement of specified milestones'	4 months
Grant income		4,825
Deferred grant income		$ 1,075
Combangio, Inc. \| California Institute for Regenerative Medicine (CIRM)
Grant Income
Royalty on net sales (as a percent)	1.00%
Threshold sales after which royalty on net sales of funded invention is payable	$ 500,000
Combangio, Inc. \| Award agreement \| California Institute for Regenerative Medicine (CIRM)
Grant Income
Restricted grant	15,000
Grant disbursement	$ 5,900

CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital Securities Purchase Agreement, Tranche One	Additional Paid-in Capital Securities Purchase Agreement Tranche Two	Additional Paid-in Capital	Accumulated Deficit	Series D redeemable preferred stock	Series E preferred shares Securities Purchase Agreement, Tranche One	Series E preferred shares Securities Purchase Agreement Tranche Two	Series E preferred shares	Series F preferred shares	Securities Purchase Agreement, Tranche One	Securities Purchase Agreement Tranche Two	Total
Mezzanine equity:
Issuance of redeemable Series D preferred stock (in shares)						73,208
Redemption of non-controlling Series D preferred stock (in shares)						(73,208)
Balance as of end of period (in shares) at Dec. 31, 2022						0			53,144
Balance as of beginning of period at Dec. 31, 2021	$ 1			$ 559,191	$ (542,388)								$ 16,804
Balance as of beginning of period (in shares) at Dec. 31, 2021	1,322,464
Stockholders' Equity
At the market offering, net of offering costs	$ 1			1,036									1,037
At the market offering, net of offering costs (in shares)	148,461
Exercise of stock options				3									3
Exercise of stock options (in shares)	102
Issuance of common stock for vested restricted stock units (in shares)	9,026
Issuance of common stock to satisfy deferred purchase consideration				7,936									7,936
Issuance of common stock to satisfy deferred purchase consideration (in shares)	136,314
Issuance of convertible Series F preferred stock, net of issuance cost (in shares)									53,144
Issuance of common stock to private placement stockholder, net of issuance cost				438									438
Issuance of common stock to private placement stockholder, net of issuance cost (in shares)	76,813
Issuance of common stock under employee stock purchase plan				298									298
Issuance of common stock under employee stock purchase plan (in shares)	13,791
Issuance of non-redeemable non-controlling Series E preferred stock		$ 5,515	$ 24,807								$ 5,515	$ 24,807
Issuance of non-redeemable non-controlling Series E preferred stock (in shares)							9,666	43,478
Stock-based compensation expense				6,958									6,958
Net Income (Loss)					(44,822)								(44,822)
Balance as of end of period at Dec. 31, 2022	$ 2			606,182	(587,210)								18,974
Balance as of end of period (in shares) at Dec. 31, 2022	1,706,971
Balance as of end of period (in shares) at Dec. 31, 2023									51,246	2,928
Stockholders' Equity
At the market offering, net of offering costs	$ 1			18,535									18,536
At the market offering, net of offering costs (in shares)	731,521
Exercise of stock options													0
Issuance of common stock for vested restricted stock units (in shares)	3,002
Issuance of common stock to satisfy deferred purchase consideration				365									365
Issuance of common stock to satisfy deferred purchase consideration (in shares)	19,350
Issuance of common stock to satisfy contingent consideration				2,354									2,354
Issuance of common stock to satisfy contingent consideration (in shares)	105,038
Issuance of convertible Series F preferred stock, net of issuance cost				1,965									1,965
Issuance of convertible Series F preferred stock, net of issuance cost (in shares)										2,928
Issuance of common stock under employee stock purchase plan				46									46
Issuance of common stock under employee stock purchase plan (in shares)	3,690
Issuance of common stock upon conversion of Series E Preferred Stock (in shares)	189,800								(1,898)
Stock-based compensation expense				7,463									7,463
Net Income (Loss)					(42,199)								(42,199)
Balance as of end of period at Dec. 31, 2023	$ 3			$ 636,910	$ (629,409)								$ 7,504
Balance as of end of period (in shares) at Dec. 31, 2023	2,759,372

Fair Value of Financial Instruments - Fair Value Measurement Transfer Levels (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Fair Value of Financial Instruments
Transfer from level 1 to level 2, Assets	$ 0	$ 0
Transfer from level 2 to level 1, Assets	0	0
Transfer from level 1 to level 2, Liability	0	0
Transfer from level 2 to level 1, Liability	0	0
Transfer into level 3, Assets	0	0
Transfer out of level 3, Assets	0	0
Transfer into level 3, Liability	0	0
Transfer out of level 3, Liability	$ 0	$ 0

Commitments and Contingencies - Guarantees and Indemnifications (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Indemnification obligations
Indemnification obligations	$ 0	$ 0

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies

Schedule of minimum obligations due

The Company’s minimum obligations due under the Stanford License Agreement as of December 31, 2023, are as follows:


Years Ending December 31,
2024	$	30
2025		65
2026		65
2027		65
2028		65
Thereafter		325
Total minimum license payments	$	615

Assets Held for Sale (Tables)

12 Months Ended

Dec. 31, 2023

Assets Held for Sale

Schedule of the major categories of assets that have been reclassified to held for sale


	December 31,
	2022
Inventories	$	7,544
Property and equipment, net		51
Current assets held for sale	$	7,595

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

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+ Details

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2023

Summary of Significant Accounting Policies

Schedule of product revenue provision and allowance categories


	Trade Discounts,
	Allowances and				Rebates and
	Chargebacks (1)		Product Returns (2)		Incentives (3)
Balance as of January 1, 2022	$	2,672	$	1,140	$	11,280
Provision related to current period sales		5,005		291		28,915
Changes in estimate related to prior period sales		(47)		(24)		(200)
Credit/payments made		(7,619)		(889)		(39,223)
Balance as of December 31, 2022	$	11	$	518	$	772
Changes in estimate related to prior period sales		(9)		1,355		(240)
Credit/payments made		(2)		(224)		(522)
Balance as of December 31, 2023	$	—	$	1,649	$	10

(1)

(2)	Estimated provisions for product returns were generally deducted from gross revenues at the time revenues were recognized and are included in accrued expenses and other current liabilities on the Company’s consolidated balance sheets.

(3)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($)
Series F preferred shares
Payment of deferred offering costs	$ 35

Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Prepaid Expenses and Other Current Assets
Insurance	$ 675	$ 698
Prepaid research and development	555
Non-trade receivables	119	908
Trade receivables, net	117	195
Due from Alcon		5,394
Other	509	657
Prepaid expenses and other current assets	$ 1,975	$ 7,852

Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2023

Acquisitions and Divestitures

Schedule of dispositions of business


Gross consideration from the sale of the Commercial Business	$	65,027
Closing and transaction costs		2,119
Net proceeds from the sale of the Commercial Business		62,908
Book value of assets transferred
Inventories		8,915
Prepaid expenses and other current assets		556
Property and equipment, net		1,819
Other long-term assets		434
Total book value of assets transferred		11,724
Gain on sale of Commercial Business		51,184
Deferred gain on sale of Commercial Business		4,189
Net gain on sale of Commercial Business	$	46,995

Commitments and Contingencies - Contingencies Related to Stanford and Merger Agreement (Details) - USD ($) $ in Thousands	1 Months Ended		12 Months Ended
	Mar. 31, 2023	Feb. 28, 2023	Dec. 31, 2023	Jan. 31, 2024	Nov. 15, 2021
Other Commitments
Contingent milestone consideration paid in shares value			$ 2,354
CHASE Phase 2b clinical trial of KPI-012
Other Commitments
Contingent upon specified development, regulatory and commercialization milestones			175
Combangio, Inc.
Other Commitments
Contingent upon specified development, regulatory and commercialization milestones					$ 40,000
Combangio, Inc. \| Achievement of sales based milestone relating to KPI-012 product
Other Commitments
Potential maximum payout for contingent consideration					$ 65,000
Combangio, Inc. \| First patient dosed with any product in phase 2 clinical trial, dosing milestone
Other Commitments
Contingent milestone consideration paid		$ 2,500
Contingent milestone consideration paid in shares value		$ 2,354
Contingent milestone consideration paid in shares	105,038	105,038
Contingent milestone consideration			$ 105,000	$ 146
Combangio, Inc. \| First patient dosed with any product in phase 2 clinical trial, dosing milestone \| Subsequent Events
Other Commitments
Contingent milestone consideration				$ 146

Common and Preferred Stock

12 Months Ended

Dec. 31, 2023

Common and Preferred Stock

Common and Preferred Stock

Note 13: Common and Preferred Stock

Preferred Stock

The Company was authorized to issue up to 5,000,000 shares of preferred stock as of December 31, 2023 and 2022. As of December 31, 2023, the Company designated 2,928 shares of preferred stock as Series F Preferred Stock, all of which were outstanding as of December 31, 2023. As of December 31, 2022, the Company designated 54,000 shares of preferred stock as Series E Preferred Stock of which 51,246 and 53,144 shares were outstanding as of December 31, 2023 and 2022, respectively.

Series D Convertible Redeemable Preferred Stock

On August 18, 2022, the Board of Directors (the “Board”) declared a dividend of one one-thousandth of a share of the Company’s Series D Preferred Stock (“Series D Preferred Stock”), for each outstanding share of the Company’s common stock held of record as of 5:00 p.m. Eastern Time on August 29, 2022. The Certificate of Designation of Series D Preferred Stock was filed with the Delaware Secretary of State and became effective on August 19, 2022. The dividend was based on the number of outstanding shares of common stock prior to the Reverse Stock Split. The outstanding shares of Series D Preferred Stock were entitled to vote together with the outstanding shares of common stock, as a single class, exclusively with respect to a proposal giving the Board the authority, as it determined appropriate, to implement a reverse stock split within twelve months following the approval of such proposal by the Company’s stockholders (the “Reverse Stock Split Proposal”), as well as any proposal to adjourn any meeting of stockholders called for the purpose of voting on the Reverse Stock Split Proposal (the “Adjournment Proposal”).

The Company held a special meeting of stockholders on October 19, 2022 (the “Special Meeting”) for the purpose of voting on the Reverse Stock Split Proposal and an Adjournment Proposal. All shares of Series D Preferred Stock that were not present in person or by proxy at the Special Meeting were automatically redeemed by the Company immediately prior to the opening of the polls at Special Meeting (the “Initial Redemption”). All shares that were not redeemed pursuant to the Initial Redemption were redeemed automatically upon the approval by the Company’s stockholders of the Reverse Stock Split Proposal at the Special Meeting (the “Subsequent Redemption” and, together with the Initial Redemption, the “Redemption”). Each share of Series D Preferred Stock was entitled to receive $0.10 in cash for each 100 whole shares of Series D Preferred Stock immediately prior to the Redemption. As of September 30, 2022, there were 73,208 shares of Series D Preferred Stock issued and outstanding. As of December 31, 2022, both the Initial Redemption and the Subsequent Redemption have occurred. As a result, no shares of Series D Preferred Stock remain outstanding.

On November 28, 2022, the Company filed a Certificate of Elimination of Number of Shares of Preferred Stock Designated as Series D Preferred Stock with the Secretary of State of the State of Delaware which, effective upon filing, eliminated all matters set forth in the Certificate of Designation of Series D Preferred Stock previously filed by the Company and all shares of Preferred Stock previously designated as Series D Preferred Stock resumed their status as undesignated shares of preferred stock of the Company.

Series E and Series F Convertible Non-Redeemable Preferred Stock

Pursuant to the Company’s Certificate of Designations, Preferences and Rights of Series E Convertible Non-Redeemable Preferred Stock and the Company’s Certificate of Designations, Preferences and Rights of Series F Convertible Non-Redeemable Preferred Stock, each filed with the Secretary of State of the State of Delaware, the Company designated 54,000 and 2,928 shares of its authorized and unissued preferred stock as Series E Preferred Stock and Series F Preferred Stock, respectively, and established the rights, preferences and privileges of the Series E Preferred Stock and Series F Preferred Stock. As discussed more fully in Note 1, “Nature of Business,” on December 21, 2023, the Company entered into the 2023 Securities Purchase Agreement pursuant to which it issued 2,928 shares of Series F

Preferred Stock at a per share price of $683.00. In December 2022, the Company entered into the 2022 Securities Purchase Agreement pursuant to which it issued 53,144 shares of Series E Preferred Stock at a per share price of $575.00. Each share of Series E Preferred Stock and Series F Preferred Stock has a par value of $0.001.

Series E Preferred Stock and Series F Preferred Stock

Conversion

Each share of Series E Preferred Stock and Series F Preferred Stock is initially convertible into 100 shares of common stock (subject to adjustment as provided in the applicable Certificate of Designations) at any time at the option of the holder, provided that the holder will be prohibited, subject to certain exceptions, from converting its shares of Series E Preferred Stock and/or Series F Preferred Stock for shares of common stock to the extent that immediately prior to or following such conversion, the holder, together with its affiliates and other attribution parties, would own in excess of 9.99% of the total number of shares of common stock of the Company then issued and outstanding after giving effect to such conversion, which percentage may be changed at the holder’s election to a lower percentage at any time or to a higher percentage not to exceed 19.99% upon 61 days’ notice to the Company (collectively, the “Beneficial Ownership Limitation”).

Voting

Shares of Series E Preferred Stock and shares of Series F Preferred Stock will generally have no voting rights, except to the extent provided by applicable law, and except that (i) the consent of the holders of a majority of the outstanding Series E Preferred Stock will be required to waive any provisions of the Series E Certificate of Designations and (ii) the consent of the holders of a majority of the outstanding Series F Preferred Stock will be required to waive any provisions of the Series F Certificate of Designations.

Dividends

Shares of Series E Preferred Stock and Series F Preferred Stock will be entitled to receive dividends equal to (on an as-if-converted-to-common stock basis), and in the same form and manner as, dividends actually paid on shares of common stock.

Liquidation Rights

Upon any dissolution, liquidation or winding up of the Company, whether voluntary or involuntary (“Dissolution”), subject to any superior rights of holders of senior securities, if any, holders of Series E Preferred Stock and holders of Series F Preferred Stock will be entitled to receive, on a pari passu basis, as applicable (A) an amount per share of Series E Preferred Stock equal to the greater of (i) $575.00 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of Series E Preferred Stock been converted into common stock (without regard to any restrictions on conversion, including the Beneficial Ownership Limitation) immediately prior to such Dissolution and (B) an amount per share of Series F Preferred Stock equal to the greater of (i) $683.00 (as adjusted for stock splits, combinations, reorganizations and the like) plus any dividends declared but unpaid thereon or (ii) such amount per share as would have been payable had all shares of Series F Preferred Stock been converted into common stock (without regard to any restrictions on conversion, including the Beneficial Ownership Limitation) immediately prior to such Dissolution, in each case, before any distributions shall be made to holders of common stock or any series of preferred stock ranked junior to the Series E Preferred Stock and the Series F Preferred Stock. If, upon any such Dissolution, the assets of the Company are insufficient to pay the holders of shares of the Series E Preferred Stock and the holders of shares of Series F Preferred Stock the full amount required under the preceding sentence, the holders of shares of Series E Preferred Stock and the holders of shares of Series F Preferred Stock will share in any distribution of the assets

available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares of Series E Preferred Stock and the Series F Preferred Stock held by them upon such distribution if all amounts payable on or with respect to such shares of were paid in full.

Common Stock

The Company was authorized to issue up to 120,000,000 shares of common stock with a $0.001 par value per share as of December 31, 2023 and 2022. The Company had 2,759,372 and 1,706,971 shares of common stock issued and outstanding as of December 31, 2023 and 2022, respectively.

Holders of the Company’s common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Each election of directors by the Company’s stockholders will be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by the Company’s Board of Directors, subject to any preferential dividend rights of any preferred stock that the Company may issue in the future.

In the event of the Company’s Dissolution, whether voluntary or involuntary, the holders of its common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of the Series F Preferred Stock, the Series E Preferred Stock and any preferred stock that the Company may issue in the future. Holders of the Company’s common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of the Company’s common stock are subject to and may be adversely affected by the rights of the holders of Series F Preferred Stock, the Series E Preferred Stock and shares of any series of its preferred stock that the Company may designate and issue in the future.

Reserved Shares

As of December 31, 2023 and 2022, the Company has reserved the following shares of common stock for issuance upon exercise of rights under warrants, under the Amended and Restated 2017 Employee Stock Purchase Plan (the “ESPP”), upon the exercise of stock options, upon the vesting of RSUs and PSUs, upon the issuance of the Deferred Purchase Consideration in connection with the Combangio Acquisition (see Note 5), upon conversion of the Series E Preferred Stock and upon conversion of the Series F Preferred Stock:


	December 31,	December 31,
	2023	2022
Warrant rights to acquire common stock	4,303	4,303
ESPP	28,927	15,548
Outstanding inducement stock option awards	14,180	11,080
2009 Plan	26	32,642
2017 Plan	1,596,113	248,221
Deferred Purchase Consideration	—	19,350
Series E Preferred Stock (as converted to common shares)	5,124,600	5,314,400
Series F Preferred Stock (as converted to common shares)	292,800	—
Total	7,060,949	5,645,544

Second Closing Right

The Company determined that the common stock and the Series E Preferred Stock issued on December 1, 2022 and the Series E Preferred Stock issued on December 27, 2022 (the “Second Closing Right”) pursuant to the 2022 Securities Purchase Agreement, each represented separate freestanding financial instruments and were not within the scope of ASC 480, Distinguishing Liabilities from Equity, (“ASC 480”). The instruments did not contain any embedded derivatives required to be bifurcated from the Series E Preferred Stock and the instruments were each equity classified within permanent equity. The Company determined that the relative fair value of the Second Closing Right was de minimis.

The Series F Preferred Stock issued on December 22, 2023 pursuant to the 2023 Securities Purchase Agreement was not within the scope of ASC 480, the instrument did not contain any embedded derivatives required to be bifurcated from the Series F Preferred Stock and the instrument was equity classified within permanent equity.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
-Section 50
-Paragraph 13
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Warrants

12 Months Ended

Dec. 31, 2023

Warrants.

Warrants

Note 12: Warrants

The Company has issued warrants in connection with debt transactions that were completed in 2018 and prior.

The following table summarizes the common stock warrants outstanding as of December 31, 2023 and 2022, each exercisable into the number of shares of common stock set forth below as of the specified dates:


					Shares Exercisable at
	Exercise		Expiration	Exercisable	December 31,	December 31,
Issued	Price Per Share		Date	From	2023	2022
2014	$	375.00	November 2024	July 2017	320	320
2016	$	413.50	October 2026	September 2017	290	290
2018	$	609.23	October 2025	October 2018	3,693	3,693
					4,303	4,303

Defined Contribution Plan (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Defined Contribution Plan
Matching contribution by employer	$ 142	$ 396

Common and Preferred Stock - Reserved Shares (Details) - shares	Dec. 31, 2023	Dec. 31, 2022
Common stock and preferred stock
Common stock shares reserved for future issuance	7,060,949	5,645,544
Warrants
Common stock and preferred stock
Common stock shares reserved for future issuance	4,303	4,303
Employee and Non-Employee Stock Options
Common stock and preferred stock
Common stock shares reserved for future issuance	28,927	15,548
Employee Stock Option
Common stock and preferred stock
Common stock shares reserved for future issuance	14,180	11,080
2009 stock option plan
Common stock and preferred stock
Common stock shares reserved for future issuance	26	32,642
2017 stock option plan
Common stock and preferred stock
Common stock shares reserved for future issuance	1,596,113	248,221
Deferred Purchase Consideration
Common stock and preferred stock
Common stock shares reserved for future issuance		19,350
Series E preferred shares
Common stock and preferred stock
Common stock shares reserved for future issuance	5,124,600	5,314,400
Series F preferred shares
Common stock and preferred stock
Common stock shares reserved for future issuance	292,800

Warrants (Details) - $ / shares	12 Months Ended
Warrants (Details) - $ / shares	Dec. 31, 2023	Dec. 31, 2022
Warrants
Shares Exercisable	4,303	4,303
Warrants 2014
Warrants
Exercise Price Per Share	$ 375.00
Shares Exercisable	320	320
Warrants 2016
Warrants
Exercise Price Per Share	$ 413.50
Shares Exercisable	290	290
Warrants 2018
Warrants
Exercise Price Per Share	$ 609.23
Shares Exercisable	3,693	3,693

Stock-based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Stock-based compensation
Stock based compensation expense	$ 7,463	$ 7,008
Cost of product revenues
Stock-based compensation
Stock based compensation expense		166
Research and development
Stock-based compensation
Stock based compensation expense	2,110	1,292
Selling, general and administrative
Stock-based compensation
Stock based compensation expense	$ 5,353	$ 5,550

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Debt- Carrying Value (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	May 21, 2022
Debt instruments
Less: current portion of long-term debt		$ (5,000)
Long-term debt, net	$ 34,190	37,937
Loan Agreement
Debt instruments
Principal loan balance	33,957	43,303	$ 80,000
Unamortized debt discount and issuance cost	(532)	(806)
Cumulative accretion of exit fee	765	440
Total debt	34,190	42,937
Less: current portion of long-term debt		(5,000)
Long-term debt, net	$ 34,190	$ 37,937

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1F

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1F

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (b)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1F

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1F

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2023	Mar. 28, 2024	Jun. 30, 2023
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2023
Document Transition Report	false
Entity File Number	001-38150
Entity Registrant Name	KALA BIO, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-0604595
Entity Address, Address Line One	1167 Massachusetts Avenue
Entity Address, City or Town	Arlington,
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02476
City Area Code	781
Local Phone Number	996-5252
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	KALA
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
ICFR Auditor Attestation Flag	false
Entity Public Float			$ 34.1
Entity Common Stock, Shares Outstanding		2,816,454
Entity Central Index Key	0001479419
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Firm ID	34
Auditor Name	Deloitte & Touche LLP
Auditor Location	Boston, Massachusetts
Document Financial Statement Error Correction [Flag]	false

Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2023

Stock-based Compensation

Summary of option activity


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
				(Years)	(in thousands)
Outstanding as of January 1, 2023	206,221	$	260.00	6.2	$	203
Granted	666,962		14.57
Exercised	—		—
Forfeited	(203,119)		259.25
Outstanding as of December 31, 2023	670,064	$	15.93	9.4	$	—
Vested or expected to vest as of December 31, 2023	670,064	$	15.93	9.4	$	—
Options exercisable as of December 31, 2023	2,892	$	329.92	3.3	$	—

Schedule of assumptions used in determining fair value of the stock options granted


	Year Ended December 31,
	2023			2022
Expected volatility	108.4%	–	123.1%	72.9%	–	87.0%
Risk-free interest rate	3.55%	–	4.43%	1.43%	–	4.19%
Expected dividend yield		0%			0%
Expected term (in years)	5.50	–	6.10	5.50	–	6.10

Schedule of stock based compensation expense


	Year Ended
	December 31,
	2023		2022
Cost of product revenues	$	—	$	166
Research and development		2,110		1,292
Selling, general and administrative		5,353		5,550
Total	$	7,463	$	7,008

Summary of the outstanding RSUs


			Weighted Average
			Grant Date
	Shares		Fair Value
Unvested and outstanding balance as of January 1, 2023	4,887	$	230.29
Changes during the period:
Granted	824,190		21.73
Vested	(2,202)		248.11
Forfeited	(1,877)		43.75
Unvested and outstanding balance as of December 31, 2023	824,998	$	22.31
Vested and deferred balance as of December 31, 2023	2,660

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2023	Dec. 31, 2022	Nov. 28, 2022	Oct. 20, 2022	Oct. 19, 2022
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	5,000,000	5,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	120,000,000	120,000,000		120,000,000
Common stock, shares issued	2,759,372	1,706,971		1	50
Common stock, shares outstanding	2,759,372	1,706,971		1	50
Series E preferred shares
Redeemable preferred stock, outstanding	51,246	53,144
Preferred stock, par value	$ 0.001		$ 0.001
Preferred stock, authorized	54,000	54,000
Preferred stock, shares issued	51,246	53,144
Preferred stock, shares outstanding	51,246	53,144
Series F Convertible Non-Redeemable Preferred Stock
Redeemable preferred stock, outstanding	2,928
Preferred stock, par value	$ 0.001
Preferred stock, authorized	2,928
Preferred stock, shares issued	2,928	0
Preferred stock, shares outstanding	2,928	0

Nature of Business - Recent Equity Financings (Details) $ / shares in Units, $ in Thousands									1 Months Ended	4 Months Ended	12 Months Ended
	Mar. 25, 2024 $ / shares shares	Dec. 21, 2023 USD ($) $ / shares shares	Jan. 10, 2023 USD ($) shares	Jan. 10, 2023 USD ($) shares	Dec. 27, 2022 USD ($) $ / shares shares	Dec. 01, 2022 USD ($) $ / shares shares	Nov. 28, 2022 USD ($) tranche $ / shares	May 07, 2020 USD ($)	Mar. 31, 2024 USD ($) $ / shares	May 11, 2023 USD ($) shares	Dec. 31, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares	Jan. 19, 2023 USD ($)
Equity Offerings
Stock offering, net of issuance cost and underwriting fees			$ 75,000								$ 1,965
Common stock, par value \| $ / shares											$ 0.001	$ 0.001
Preferred stock, par value \| $ / shares											0.001	$ 0.001
Series E preferred shares
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares												53,144
Stock offering, net of issuance cost and underwriting fees							$ 31,000
Preferred stock, par value \| $ / shares							$ 0.001				$ 0.001
Number of tranches \| tranche							2
Series F preferred shares
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares											2,928
Preferred stock, par value \| $ / shares											$ 0.001
Series G Preferred Stock
Equity Offerings
Stock offering, net of issuance cost and underwriting fees									$ 8,600
Series G Preferred Stock \| Subsequent Events \| 2024 Securities Purchase Agreement
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares	10,901
Aggregate gross proceeds of convertible preferred stock									$ 8,600
Share price (in dollars per share) \| $ / shares	$ 788.90
Preferred stock, par value \| $ / shares									$ 0.001
2020 Shelf Registration
Equity Offerings
Additional authorized value of securities								$ 75,000
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares			565,974
Stock offering, net of issuance cost and underwriting fees			$ 75,000
Registration period								3 years
2020 Shelf Registration \| Maximum
Equity Offerings
Additional authorized value of securities								$ 350,000
Shelf 2023 Underwritten Offering \| Maximum
Equity Offerings
Additional authorized value of securities										$ 350,000
ATM
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares				245,887						229,378	256,256	148,461
Net proceeds				$ 9,994						$ 4,899	$ 3,642	$ 1,036
ATM \| Maximum
Equity Offerings
Additional authorized value of securities										$ 40,000
Share authorized value (shelf)													$ 40,000
Securities Purchase Agreement \| Common Stock
Equity Offerings
Transaction costs												240
Securities Purchase Agreement, Tranche One
Equity Offerings
Stock offering, net of issuance cost and underwriting fees						$ 6,000
Securities Purchase Agreement, Tranche One \| Common Stock
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares						76,813
Share price (in dollars per share) \| $ / shares						$ 5.75
Securities Purchase Agreement, Tranche One \| Preferred Stock
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares						9,666
Share price (in dollars per share) \| $ / shares						$ 575.00
Securities Purchase Agreement, Tranche One \| Series E preferred shares
Equity Offerings
Transaction costs												43
Securities Purchase Agreement Tranche Two \| Preferred Stock
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares					43,478
Stock offering, net of issuance cost and underwriting fees					$ 25,000
Share price (in dollars per share) \| $ / shares					$ 575.00
Offering costs					$ 240
Securities Purchase Agreement Tranche Two \| Series E preferred shares
Equity Offerings
Transaction costs												$ 194
Securities Purchase Agreement 2023 \| Series F preferred shares
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares		2,928
Stock offering, net of issuance cost and underwriting fees		$ 2,000
Share price (in dollars per share) \| $ / shares		$ 683.00
Preferred stock, par value \| $ / shares		$ 0.001
Offering costs		$ 35
Amended and Restated Sales Agreement and the Open Market Sale Agreement in aggregate
Equity Offerings
Stock offering, net of issuance cost and underwriting fees (in shares) \| shares											731,521
Net proceeds											$ 18,536

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Product revenues, net	$ 0	$ 3,892
Costs and expenses:
Cost of product revenues		2,560
Selling, general and administrative	20,567	65,035
Research and development	18,586	17,653
(Gain) loss on fair value remeasurement of deferred purchase consideration	(230)	638
Loss (gain) on fair value remeasurement of contingent consideration	740	(288)
Total costs and expenses	39,663	85,598
Loss from operations	(39,663)	(81,706)
Other income (expense):
Interest income	2,711	664
Interest expense	(5,814)	(7,266)
Grant income	4,825
Loss on extinguishment of debt		(2,583)
Gain on sale of commercial business		46,995
Other (expense) income, net	(4,258)	(926)
Total other (expense) income	(2,536)	36,884
Net loss	$ (42,199)	$ (44,822)
Net loss per share attributable to common stockholders-basic (in dollar per share)	$ (17.35)	$ (29.48)
Net loss per share attributable to common stockholders-diluted (in dollar per share)	$ (17.35)	$ (29.48)
Weighted average shares outstanding-basic (in shares)	2,432,008	1,520,611
Weighted average common shares outstanding -diluted (in shares)	2,432,008	1,520,611
Statement of Comprehensive Loss
Net loss	$ (42,199)	$ (44,822)
Other comprehensive income:
Total comprehensive loss	$ (42,199)	$ (44,822)

Stock-based Compensation - Stock Incentive Plans (Details)				12 Months Ended
	Jan. 01, 2024 shares	Jun. 22, 2023 USD ($) shares	May 01, 2023 USD ($) person shares	Dec. 31, 2023 shares	Dec. 31, 2022 shares
Stock-based compensation
Common stock available for future grant				7,060,949	5,645,544
Granted, options (in shares)				666,962	83,221
Employee Stock Option
Stock-based compensation
Common stock available for future grant				14,180	11,080
Granted, options (in shares)				13,920	2,800
Employee and Non-Employee Stock Options
Stock-based compensation
Common stock available for future grant				28,927	15,548
Options expiry term				10 years
Vesting period				4 years
2017 Equity Incentive Plan
Stock-based compensation
Number of additional shares authorized for issuance under share-based payment arrangement	327,070	1,250,000
Shares authorized		7,738,761
Annual limit on non-employee director compensation for incumbent directors \| $		$ 750,000
Annual limit on non-employee director compensation for director's first year of service \| $		$ 1,000,000
Common stock available for future grant				112,597
Options expiry term		10 years
Annual increase in the number of shares (as a percent)				4.00%
Incremental compensation cost as a result of modification \| $			$ 1,210,000
Eligible Holders \| Employee Stock Option
Stock-based compensation
Number of participants \| person			36
Number of common stock issuable for Option Exchange Program			182,251

Income Taxes - Reconciliation of the U.S. federal statutory income tax rate (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes
Federal statutory income tax rate	21.00%	21.00%
State income taxes, net of federal benefit	7.60%	5.40%
Research and development tax credits	2.40%
Stock-based compensation	(15.00%)	(4.60%)
Change in valuation allowance	(15.30%)	7.50%
Losses and Credits Limited by Section 382 & Section 383		(28.80%)
Other	(0.70%)	(0.50%)

Summary of Significant Accounting Policies - PPE, Asset Impairment and Tax Incentives (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Selling, general and administrative expenses
Advertising Costs
Advertising expenses	$ 0	$ 11,249
Laboratory equipment \| Minimum
Property and Equipment, net
Useful life (in years)	3 years
Laboratory equipment \| Maximum
Property and Equipment, net
Useful life (in years)	5 years
Office equipment \| Minimum
Property and Equipment, net
Useful life (in years)	3 years
Office equipment \| Maximum
Property and Equipment, net
Useful life (in years)	5 years
Computer hardware and software \| Minimum
Property and Equipment, net
Useful life (in years)	3 years
Computer hardware and software \| Maximum
Property and Equipment, net
Useful life (in years)	5 years

Common and Preferred Stock (Details)				12 Months Ended
Common and Preferred Stock (Details)	Mar. 25, 2024 shares	Oct. 20, 2022 shares	Oct. 19, 2022 $ / shares shares	Dec. 31, 2023 Vote $ / shares shares	Dec. 31, 2022 $ / shares shares	Mar. 31, 2024 $ / shares	Nov. 28, 2022 $ / shares	Sep. 30, 2022 shares	Aug. 18, 2022
Common stock and preferred stock
Preferred stock, authorized				5,000,000	5,000,000
Common stock, authorized		120,000,000		120,000,000	120,000,000
Common stock, par value \| $ / shares				$ 0.001	$ 0.001
Common stock, shares issued		1	50	2,759,372	1,706,971
Common stock, shares outstanding		1	50	2,759,372	1,706,971
Preferred stock, par value \| $ / shares				$ 0.001	$ 0.001
Reverse stock split		0.02
Series D redeemable preferred stock
Common stock and preferred stock
Redeemable preferred stock dividend declared ratio									0.001
Aggregate dividends paid during the period for each whole share of redeemable preferred stock outstanding \| $ / shares			$ 0.10
Number of shares in whole shares			100
Redeemable preferred stock, issued								73,208
Redeemable preferred stock, outstanding					0			73,208
Common stock.
Common stock and preferred stock
Number of votes entitled to each share held \| Vote				1
Series E preferred shares
Common stock and preferred stock
Preferred stock, authorized				54,000	54,000
Preferred stock, shares issued				51,246	53,144
Preferred stock, shares outstanding				51,246	53,144
Liquidation rights (in dollars per share) \| $ / shares				$ 575.00
Issuance of stock					53,144
Price per share \| $ / shares					$ 575.00
Preferred stock, par value \| $ / shares				$ 0.001			$ 0.001
Common stock issued upon conversion				100
Percentage of holding on total number of shares issued and outstanding upon conversion				9.99%
Maximum beneficial ownership percent				19.99%
Period for sending notice				61 days
Redeemable preferred stock, outstanding				51,246	53,144
Series F preferred shares
Common stock and preferred stock
Preferred stock, authorized				2,928
Preferred stock, shares issued				2,928	0
Preferred stock, shares outstanding				2,928	0
Liquidation rights (in dollars per share) \| $ / shares				$ 683.00
Issuance of stock				2,928
Price per share \| $ / shares				$ 683.00
Preferred stock, par value \| $ / shares				$ 0.001
Common stock issued upon conversion				100
Percentage of holding on total number of shares issued and outstanding upon conversion				9.99%
Maximum beneficial ownership percent				19.99%
Period for sending notice				61 days
Redeemable preferred stock, outstanding				2,928
Series G Preferred Stock
Common stock and preferred stock
Common stock issued upon conversion				100
Percentage of holding on total number of shares issued and outstanding upon conversion				9.99%
Maximum beneficial ownership percent				19.99%
Period for sending notice				61 days
Series G Preferred Stock \| Subsequent Events \| 2024 Securities Purchase Agreement
Common stock and preferred stock
Issuance of stock	10,901
Preferred stock, par value \| $ / shares						$ 0.001

Assets Held for Sale

12 Months Ended

Dec. 31, 2023

Assets Held for Sale

Assets Held for Sale

Note 4: Assets Held for Sale

No assets held for sale remained on the consolidated balance sheet as of December 31, 2023. The Remaining Inventory and deferred gain on the sale of the Commercial Business were written off and recognized during the year ended December 31, 2023 and included in other (expense) income, net on the consolidated statements of operations and comprehensive loss. As of December 31, 2022, the Company presented assets to be disposed of that met the criteria as held for sale as a single asset in its consolidated financial statements. The EYSUVIS and INVELTYS product inventory classified as held for sale represented the net realizable value of the Remaining Inventory which Alcon, and solely Alcon, had the right to purchase. The Company deferred a portion of the gain on the sale of the Commercial Business related to the discounted pricing on the Remaining Inventory of $4,189.

The following is a summary of the major categories of assets that were reclassified to held for sale on the consolidated balance sheet as of December 31, 2022:


	December 31,
	2022
Inventories	$	7,544
Property and equipment, net		51
Current assets held for sale	$	7,595

See Note 3, “Acquisitions and Divestitures”, for further information on the sale of the Commercial Business.

Acquisitions and Divestitures - Net Gain on Sale of Commercial Business (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Book value of assets transferred
Inventories	$ 7,544
Net gain on sale of Commercial Business	46,995
Commercial Business Sale to Alcon \| Disposed of by sale not discontinued operations
Dispositions disclosures
Gross consideration from the sale of the Commercial Business	65,027
Closing and transaction costs	2,119
Net proceeds from the sale of the Commercial Business	62,908
Book value of assets transferred
Inventories	8,915
Prepaid expenses and other current assets	556
Property and equipment, net	1,819
Other long-term assets	434
Total book value of assets transferred	11,724
Gain on sale of Commercial Business	51,184
Deferred gain on sale of Commercial Business	4,189
Net gain on sale of Commercial Business	$ 46,995

Lease - Future minimum payments (Details) $ in Thousands	Dec. 31, 2023 USD ($)
Future minimum commitments due
2024	$ 581
2025	601
2026	622
2027	644
2028	440
Less: interest	(755)
Total	$ 2,133

Income Taxes - Net deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Income Taxes
Net operating loss carryforwards	$ 108,919	$ 102,565
Capitalized research and development and start-up expenditures	12,153	8,230
Stock-based compensation	1,195	7,243
Research and development tax credit carryforwards	1,154	0
Lease liabilities	672	4
Rebates, incentives, trade discounts and allowances	522	223
Deferred gain on sale of Commercial Business		1,145
Other	4,754	2,000
Total deferred tax assets	129,369	121,410
Right-of-use assets	(638)	(4)
Total deferred tax liabilities	(638)	(4)
Valuation allowance	$ (128,731)	$ (121,406)

Property and Equipment, Net

12 Months Ended

Dec. 31, 2023

Property and Equipment, Net

Property and Equipment, Net

Note 8: Property and Equipment, Net

Property and equipment, net, consists of the following:


	December 31,		December 31,
	2023		2022

Equipment	$	894	$	391
Computer hardware and software		869		1,204
Furniture and office equipment		—		29
Construction in progress		100		—
Property and equipment—at cost		1,863		1,624
Less: Accumulated depreciation		(1,110)		(1,224)
Property and equipment—net	$	753	$	400

Depreciation expense for the years ended December 31, 2023 and 2022 was $248 and $421, respectively.

Fair Value of Financial Instruments - Quantitative Information and Assumptions (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Fair Value Measurements
(Gain) loss on fair value remeasurement of deferred purchase consideration	$ (230)	$ 638
Business Combination, Contingent Consideration, Liability, Valuation Technique [Extensible Enumeration]		Option pricing model
Business Combination, Contingent Consideration, Liability, Measurement Input [Extensible Enumeration]		Discount for lack of marketability
Level 3 \| Deferred purchase consideration
Fair Value Measurements
Financial liabilities by level within fair value hierarchy		$ 595
Level 3 \| Deferred purchase consideration \| Option pricing model \| Discount for lack of marketability \| Minimum
Fair Value Measurements
Measurement input		0.20
Level 3 \| Contingent consideration
Fair Value Measurements
Financial liabilities by level within fair value hierarchy	$ 4,110	$ 8,370
Level 3 \| Contingent consideration \| Discounted cash flow model \| Discount for lack of marketability
Fair Value Measurements
Measurement input		0.200
Level 3 \| Contingent consideration \| Discounted cash flow model \| Probabilities of achievement \| Minimum
Fair Value Measurements
Measurement input	0.166	0.199
Level 3 \| Contingent consideration \| Discounted cash flow model \| Probabilities of achievement \| Maximum
Fair Value Measurements
Measurement input	0.355	0.950
Level 3 \| Contingent consideration \| Discounted cash flow model \| Probabilities of achievement \| Average
Fair Value Measurements
Measurement input	0.234	0.449
Level 3 \| Contingent consideration \| Discounted cash flow model \| Discount rate
Fair Value Measurements
Measurement input	0.163	0.190

Property and Equipment, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property and Equipment, net
Property and equipment-at cost	$ 1,863	$ 1,624
Less: Accumulated depreciation	(1,110)	(1,224)
Property and equipment-net	753	400
Depreciation	248	421
Computer hardware and software
Property and Equipment, net
Property and equipment-at cost	869	1,204
Equipment
Property and Equipment, net
Property and equipment-at cost	894	391
Furniture and office equipment
Property and Equipment, net
Property and equipment-at cost		$ 29
Construction in progress
Property and Equipment, net
Property and equipment-at cost	$ 100

Defined Contribution Plan

12 Months Ended

Dec. 31, 2023

Defined Contribution Plan

Defined Contribution Plan

Note 18: Defined Contribution Plan

The Company has a 401(k) defined contribution plan (the “401(k) Plan”) for substantially all of its employees. Eligible employees may make pretax contributions to the 401(k) Plan up to statutory limits.

The Company made discretionary matching contributions of $142 and $396 to the 401(k) Plan during the years ended December 31, 2023 and 2022, respectively.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 70
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480794/715-70-50-1

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 17
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480482/715-20-55-17

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iv)(03)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (q)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (l)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//715/tableOfContent

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)(iii)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (o)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (p)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (r)(1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (r)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480506/715-20-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 20
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480126/715-20-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
-SubTopic 60
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480266/715-60-50-3

+ Details

Stock-based Compensation - Employee Stock Purchase Plan (Details) - 2017 Employee Stock Purchase Plan		12 Months Ended
	Jan. 01, 2024 shares	Dec. 31, 2023 period shares	Dec. 31, 2022 shares	Dec. 31, 2018 shares
Stock-based compensation
Shares authorized				4,466
Number of additional shares authorized for issuance under share-based payment arrangement	27,593
Number of offering periods \| period		2
Employee basic pay holding period		6 months
Percentage of market value at which employee may purchase stock		85.00%	85.00%
Issuance of common stock under employee stock purchase plan (in shares)		3,690	13,791
Maximum
Stock-based compensation
Shares authorized		17,868
Threshold percentage of share available to grant		1.00%

Warrants (Tables)

12 Months Ended

Dec. 31, 2023

Warrants.

Schedule of outstanding warrants


					Shares Exercisable at
	Exercise		Expiration	Exercisable	December 31,	December 31,
Issued	Price Per Share		Date	From	2023	2022
2014	$	375.00	November 2024	July 2017	320	320
2016	$	413.50	October 2026	September 2017	290	290
2018	$	609.23	October 2025	October 2018	3,693	3,693
					4,303	4,303

Stock-based Compensation - RSUs and PSUs (Details)	1 Months Ended			12 Months Ended
Stock-based Compensation - RSUs and PSUs (Details)	Oct. 31, 2022	Oct. 31, 2021	Jun. 30, 2020 shares	Dec. 31, 2023 USD ($) shares	Dec. 31, 2022 shares
RSU
Stock-based compensation
Granted, other than options (in shares)				824,190	824,190
Outstanding balance at end of period (in shares)				824,998	4,887
Vested and deferred (in shares)				2,660
RSU and PSU
Stock-based compensation
Outstanding balance at end of period (in shares)				827,658
Unvested outstanding balance at end of period (in shares) \| $				824,998
Vested and deferred (in shares)				2,660
Unamortized stock-based compensation expense \| $				$ 13,343,000
Weighted average expense recognition period				2 years 1 month 28 days
Executive Officer \| RSU \| First anniversary
Stock-based compensation
Granted, other than options (in shares)				6,910	6,910
Vesting percentage				33.00%	33.00%
Vesting period				3 years	3 years
Executive Officer \| PSU \| First anniversary
Stock-based compensation
Granted, other than options (in shares)			13,854
Vesting percentage		50.00%
Executive Officer \| PSU \| Second anniversary
Stock-based compensation
Vesting percentage	50.00%

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2023

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Note 5: Fair Value of Financial Instruments

ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and its own assumptions (unobservable inputs). The hierarchy consists of three levels:

●

Level 1—Quoted prices in active markets for identical assets or liabilities.

●

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s financial instruments as of December 31, 2023 and 2022 consisted primarily of cash equivalents and contingent consideration. Cash equivalents and contingent consideration are reported at their respective fair values on the Company’s consolidated balance sheets.

As discussed in Note 3, “Acquisitions and Divestitures”, the Company acquired Combangio in November 2021 and in connection with the closing of the Combangio Acquisition, the Company agreed to issue Deferred Purchase Consideration for which the Company established liabilities for these considerations. The Deferred Purchase Consideration related to the Combangio Acquisition was measured at fair value each reporting period using Level 3 unobservable inputs. The fair value of the Deferred Purchase Consideration was based on the fair value of the underlying stock and a discount for lack of marketability. Any change in the fair value of the Deferred Purchase Consideration was included in loss from operations in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2022, the Company settled $7,935 of the liability upon issuance of the Upfront Shares and during the year ended December 31, 2023, the Company settled the remaining liability of $365 upon the issuance of the Holdback Shares. During the years ended December 31, 2023 and 2022, the change in the fair value of the Deferred Purchase Consideration was a gain of $230 and a loss of $638, respectively, primarily due to the change in the fair value of the underlying stock price and was recognized as the (gain) loss on fair value remeasurement of deferred purchase consideration in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2023 and 2022.

Additionally, the purchase price in connection with the Combangio Acquisition included potential future payments of up to $105,000 that are contingent upon the achievement of specified development, regulatory and commercialization milestones and are required to be recorded at fair value. To date, of the $105,000 in contingent milestone payments, the Company has paid to the Combangio Equityholders an aggregate of $2,500 in cash and $2,354 in shares of the Company’s common stock (representing an aggregate of 105,038 shares of the Company’s common stock) upon achieving the First Dosing Milestone in February 2023 and paid the remaining amount due in connection

with the First Dosing Milestone of $146 in cash in January 2024, which was included within accrued expenses and other current liabilities on the consolidated balance sheet as of December 31, 2023. Contingent consideration liabilities related to acquisitions are measured at fair value each reporting period using Level 3 unobservable inputs. The fair values of the contingent consideration liabilities were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements. Changes in these estimates and assumptions could have a significant impact on the fair value of the contingent consideration liabilities. Any changes in the fair value of these contingent consideration liabilities are included in loss from operations in the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2023, the change in the fair value of the contingent consideration liabilities was a loss of $740, primarily due to changes in discount rates, as well as changes in the expected timing and probability of payment, partially offset by the passage of time, and was recognized as a loss on fair value remeasurement of contingent consideration in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023. During the year ended December 31, 2022, the change in the fair value of the contingent consideration liabilities was a gain of $288, primarily due to changes in discount rates, partially offset by the passage of time, and was recognized as a gain on fair value remeasurement of contingent consideration in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022.

The following tables set forth the fair value of the Company’s financial instruments by level within the fair value hierarchy as of December 31, 2023 and 2022:


	December 31, 2023
	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	44,639	$	44,639	$	—	$	—
Total Assets	$	44,639	$	44,639	$	—	$	—
Liabilities:
Contingent consideration	$	4,110	$	—	$	—	$	4,110
Total Liabilities	$	4,110	$	—	$	—	$	4,110


	December 31, 2022
	Fair Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	31,587	$	31,587	$	—	$	—
Total Assets	$	31,587	$	31,587	$	—	$	—
Liabilities:
Deferred purchase consideration	$	595	$	—	$	—	$	595
Contingent consideration		8,370		—		—		8,370
Total Liabilities	$	8,965	$	—	$	—	$	8,965

The following tables summarize quantitative information and assumptions pertaining to the fair value measurement of the Level 3 inputs as of December 31, 2023 and 2022:


	Fair Value at
	December 31,				Range
Financial Instrument	2023		Valuation Technique	Unobservable Input	(Average)
Contingent consideration	$	4,110	Probability-adjusted	Period of expected milestone achievement	2025 - 2028 (2027)
			discounted cash flow model	Probabilities of achievement	16.6% - 35.5% (23.4%)
				Discount rate	16.3%


	Fair Value at
	December 31,				Range
Financial Instrument	2022		Valuation Technique	Unobservable Input	(Average)
Deferred purchase consideration	$	595	Option pricing model	Discount for lack of marketability	20%

Contingent consideration	$	8,370	Probability-adjusted	Period of expected milestone achievement	2023 - 2027 (2025)
			discounted cash flow model	Probabilities of achievement	19.9% - 95.0% (44.9%)
				Discount rate	19.0%
				Discount for lack of marketability	20.0%

The following table summarizes the changes in the Deferred Purchase Consideration and contingent consideration liabilities measured at fair value using Level 3 inputs for the year ended December 31, 2023:


Deferred purchase consideration
Balance at January 1, 2022	$	7,892
Fair value adjustments		638
Settlements		(7,935)
Balance at January 1, 2023	$	595
Fair value adjustments		(230)
Settlements		(365)
Balance at December 31, 2023	$	—

Contingent consideration
Balance at January 1, 2022	$	8,658
Fair value adjustments		(288)
Balance at January 1, 2023	$	8,370
Fair value adjustments		740
Settlements		(4,854)
Reclassification to accrued expenses and other current liabilities		(146)
Balance at December 31, 2023	$	4,110

During the years ended December 31, 2023 and 2022, there were no transfers between Level 1, Level 2, and Level 3.

The carrying value reported on the accompanying consolidated balance sheets of cash, restricted cash, accounts receivable, accounts payable and accrued expenses approximate their fair value due to their short-term nature. Management believes that the Company’s long-term debt (see Note 11) bears interest at the prevailing market rate for instruments with similar characteristics and, accordingly, the carrying value of long-term debt, also approximates its fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Grant Income

12 Months Ended

Dec. 31, 2023

Grant Income

Grant Income

Note 6: Grant Income

CIRM Award

On August 2, 2023, Combangio, a wholly owned subsidiary of the Company, entered into an award agreement with CIRM for a $15,000 grant (the “CIRM Award”) to support Combangio’s KPI-012 program for the treatment of PCED. The award includes funding for the CHASE Phase 2b clinical trial of KPI-012 for PCED, as well as product and process characterization and analytical development for the program. The CIRM Award is subject to a co-funding requirement under which Combangio is obligated to spend a specified minimum amount on the development of KPI-012 to obtain the full award amount. Upon entry into the CIRM Award, Combangio received an initial $5,900 disbursement from CIRM, and the balance of the award is payable to Combangio upon the achievement of specified milestones that are primarily related to Combangio’s progress in conducting the CHASE Phase 2b clinical trial. CIRM may permanently cease disbursements if the milestones are not met within four months of the scheduled completion dates. Additionally, if CIRM determines, in its sole discretion, that Combangio has not complied with the terms and conditions of the CIRM Award, CIRM may suspend or permanently cease disbursements. Under the terms of the CIRM Award, Combangio is obligated to pay a royalty on net sales of any product, service or approved drug resulting in whole or in part from the CIRM Award in the amount of 0.1% per $1,000 of funds utilized by the Company until the earlier of ten years from the date of first commercial sale of such product, service or approved drug and such time as nine times the amount of funds awarded by CIRM has been paid in royalties (the “Base Royalty”). In addition, following the satisfaction of the Base Royalty, Combangio is obligated to pay a 1.0% royalty on net sales of any CIRM-funded invention in excess of $500,000 per year until the last to expire patent covering such invention expires.

During the year ended December 31, 2023, the Company recognized $4,825 of grant income related to the CIRM Award on its consolidated statement of operations. As of December 31, 2023, the Company had deferred grant income of $1,075 on its consolidated balance sheet.

Stock-based Compensation

12 Months Ended

Dec. 31, 2023

Stock-based Compensation

Stock-based Compensation

Note 14: Stock-based Compensation

Stock Incentive Plans

On June 22, 2023, the Company’s stockholders approved the Company’s Amended and Restated 2017 Equity Incentive Plan, which amended and restated the Company’s 2017 Equity Incentive Plan, as amended (the “2017 Plan”), to (i) increase the number of shares of common stock authorized for issuance thereunder by 1,250,000 shares; (ii) limit the number of incentive stock options that can be granted under the plan to 7,738,761 shares of common stock; (iii) add an annual limit on non-employee director compensation, including cash and the value of equity awards, of $750,000 for incumbent directors and $1,000,000 in a director’s first year of service; and (iv) extend the term of the plan (including the duration of the evergreen) to 10 years from June 22, 2023, the date that stockholders approved the plan. As of December 31, 2023, there were 112,597 shares of common stock available for grant under the Amended and Restated 2017 Equity Incentive Plan. In addition, the Amended and Restated 2017 Equity Plan provides for an annual increase to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2024 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2033, equal to the lower of (i) 4% of the sum of (I) the number of outstanding shares of common stock on such date and (II) the number of shares of common stock issuable upon conversion of any outstanding shares of convertible preferred stock of the Company on such date (without giving effect to any restrictions or limitations on conversion) and (ii) an amount determined by the Company’s board of directors. On January 1, 2024, 327,070 shares of common stock were added and were available for grant under the Amended and Restated 2017 Equity Incentive Plan.

Under the plans, the Board determines the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards. The exercise price of incentive stock options cannot be less than the fair value of the common stock on the date of grant. Stock options awarded under the plans expire 10 years after the grant date, unless the Board sets a shorter term. Options granted under the plans generally vest over a four-year period. A portion of the unvested stock options will vest upon the sale of all or substantially all of the stock or assets of the Company.

Stock Option Awards

On May 1, 2023, the Company commenced a one-time stock option exchange program (the “Option Exchange Program”), under which the Company’s eligible executive officers, other employees and non-employee directors (collectively, “Eligible Holders”) were given the opportunity to exchange outstanding options to purchase shares of the Company’s common stock held by them for an equal number of RSUs that are subject to vesting conditions. The Option Exchange Program expired on May 30, 2023. A total of 36 Eligible Holders participated in the Option Exchange Program. Pursuant to the terms and conditions of the Option Exchange Program, the Company accepted for exchange

options to purchase a total of 182,251 shares of the Company’s common stock. All surrendered options were cancelled effective as of the expiration of the Option Exchange Program, and immediately thereafter, in exchange therefor, the Company granted a total of 182,251 RSUs pursuant to the terms of the Option Exchange Program and the 2017 Plan. A de minimis number of eligible options were not surrendered for exchange and remain outstanding. Based upon the modification guidance under ASC 718, the Company is required to record an incremental compensation expense of $1,210, which will be recorded, along with the unrecognized compensation cost as of the date of the modification, over the remaining service period of the modified awards.

During the year ended December 31, 2023, the Company granted options for the purchase of 666,962 shares of common stock, including options to directors and inducement grant options to purchase 13,920 shares of common stock to new employees made outside of the 2017 Plan in accordance with Nasdaq Listing Rule 5635(c)(4). During the year ended December 31, 2022, the Company granted options for the purchase of 83,221 shares of common stock, including options with performance criteria as described below, options to directors and inducement grant options to purchase 2,800 shares of common stock to new employees made outside of the 2017 Plan in accordance with Nasdaq Listing Rule 5635(c)(4).

A summary of option activity is as follows:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
				(Years)	(in thousands)
Outstanding as of January 1, 2023	206,221	$	260.00	6.2	$	203
Granted	666,962		14.57
Exercised	—		—
Forfeited	(203,119)		259.25
Outstanding as of December 31, 2023	670,064	$	15.93	9.4	$	—
Vested or expected to vest as of December 31, 2023	670,064	$	15.93	9.4	$	—
Options exercisable as of December 31, 2023	2,892	$	329.92	3.3	$	—

The Company records stock-based compensation related to stock options granted at fair value. The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of stock option grants and to determine the related compensation expense. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The assumptions used in determining fair value of the stock options granted during the years ended December 31, 2023 and 2022 are as follows:


	Year Ended December 31,
	2023			2022
Expected volatility	108.4%	–	123.1%	72.9%	–	87.0%
Risk-free interest rate	3.55%	–	4.43%	1.43%	–	4.19%
Expected dividend yield		0%			0%
Expected term (in years)	5.50	–	6.10	5.50	–	6.10

The Company derived the risk-free interest rate assumption from the U.S. Treasury rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. The Company based the expected dividend yield on its expectation of not paying dividends in the foreseeable future. The Company calculated the expected term of options using the simplified method, as the Company lacks relevant historical data due to the Company’s limited operating experience. The expected volatility is based upon the historical volatility of the Company as well as the volatility of comparable companies with publicly available share prices. The impact of forfeitures on compensation expense is recorded as they occur.

The weighted average grant-date fair value of options granted during the years ended December 31, 2023 and 2022, was $12.82 and $40.40, respectively. The fair value is being expensed over the vesting period of the options on a straight-line basis as the services are being provided. As of December 31, 2023, there was $7,346 of unrecognized compensation cost related to the stock options granted, which is expected to be expensed over a weighted-average period of 3.34 years. Stock-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows:


	Year Ended
	December 31,
	2023		2022
Cost of product revenues	$	—	$	166
Research and development		2,110		1,292
Selling, general and administrative		5,353		5,550
Total	$	7,463	$	7,008

There were no stock-based compensation costs capitalized into inventory in the year ended December 31, 2023. Stock-based compensation costs capitalized into inventory totaled $190 for the year ended December 31, 2022. Capitalized stock-based compensation was recognized as an expense in cost of product revenues when the related product was sold or in selling, general and administrative expense when the related product was designated as a sample.

There were no stock options exercised during the year ended December 31, 2023. Cash proceeds received from the exercise of stock options were de minimis during the year ended December 31, 2022. The total intrinsic value of options exercised for the year ended December 31, 2022, was de minimis.

In January 2022, the Company granted stock options to purchase up to 14,850 shares of common stock to certain executives tied to certain performance criteria. On March 14, 2023, the Compensation Committee of the Company’s Board determined that certain of the performance conditions were achieved at specific levels of achievement, resulting in vesting of options to purchase an aggregate of 3,960 shares of common stock. All outstanding stock options tied to performance criteria were surrendered in the Option Exchange Program and as such, there were none outstanding as of December 31, 2023.

Restricted Stock Units and Performance-Based Restricted Stock Units—In June 2020, the Company issued 13,854 PSUs to certain executives and other employees tied to certain performance criteria, which vested as to 50% of the PSUs in October 2021 on the first anniversary of satisfying the performance criteria and the remaining 50% vested in October 2022 upon the second anniversary of satisfying the performance criteria.

During the years ended December 31, 2023 and 2022, the Company issued 824,190 RSUs (which includes the RSUs issued in connection with the Option Exchange Program) and 6,910 RSUs, respectively, to certain executives and other employees which will vest no sooner than one-third per year over three years on the anniversary of the date of grant.

As of December 31, 2023, a total of 827,658 RSUs were outstanding, consisting of 824,998 unvested shares and 2,660 vested and deferred shares by directors. This results in unrecognized stock-based compensation of $13,343 to be recognized as stock-based compensation expense over the remaining weighted-average vesting period of 2.16 years.

A summary of activity for RSUs for the year ended December 31, 2023 is as follows:


			Weighted Average
			Grant Date
	Shares		Fair Value
Unvested and outstanding balance as of January 1, 2023	4,887	$	230.29
Changes during the period:
Granted	824,190		21.73
Vested	(2,202)		248.11
Forfeited	(1,877)		43.75
Unvested and outstanding balance as of December 31, 2023	824,998	$	22.31
Vested and deferred balance as of December 31, 2023	2,660

Employee Stock Purchase Plan—In 2017, the Company approved the 2017 Employee Stock Purchase Plan, which was amended and restated in December 2018 (as amended, the “ESPP”). The ESPP reserved an aggregate of 4,466 shares of common stock and provides for an annual increase on the first day of each fiscal year, beginning on January 1, 2019 and ending on December 31, 2029, in an amount equal to the lowest of: (1) 17,868 shares of the Company’s common stock; (2) 1% of the total number of shares of the Company’s common stock outstanding on the first day of the applicable fiscal year; and (3) an amount determined by the Company’s board of directors. On January 1, 2024, 27,593 shares of common stock were added and were available for grant under the ESPP.

The ESPP provides for two six-month offering periods each year: the first offering period begins on the first trading day on or after each January 1 and the second offering period begins on the first trading day on or after each July 1. Under the ESPP, participating employees can authorize the Company to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of the Company’s common stock. At the conclusion of the period, participating employees can purchase shares of the Company’s common stock at 85% of the lesser of the closing price of the common stock on (i) the first business day of the plan period or (ii) the exercise date. The fair value of the purchase rights granted under the ESPP was estimated on the date of grant, using the Black-Scholes option-pricing model. During the years ended December 31, 2023 and 2022, employees of the Company purchased an aggregate of 3,690 and 13,791 shares, respectively under the ESPP.

Summary of Significant Accounting Policies - Assets Held for Sale (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Summary of Significant Accounting Policies
Total assets held for sale	$ 0	$ 7,595

Lease (Details) - USD ($) $ in Thousands	12 Months Ended
Lease (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022	Apr. 30, 2023	Dec. 31, 2019
Leases
Right-of-use assets	$ 2,025	$ 16
Lease liability	2,133
Lease cost
Operating lease cost	314	414
Short-term lease cost	161	173
Variable lease cost	98	758
Total lease cost	573	1,345
Operating cash outflows from operating leases	$ 203	$ 1,318
Weighted average remaining lease term	4 years 8 months 12 days	6 months
Weighted average discount rate	13.10%	10.40%
Menlo Park, California Office Lease
Leases
Right-of-use assets	$ 2,000		$ 2,200
Lease liability	$ 2,100		$ 2,100
Lease cost
Remaining lease term	4 years 8 months 12 days
Vehicle Fleet Lease
Leases
Amount borrowed				$ 450
Vehicle Fleet Lease \| Prepaid expenses and other current assets
Leases
Due from vendor		$ 775
Watertown Lease
Leases
Right-of-use assets		$ 0

Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies

Commitments and Contingencies

Note 17: Commitments and Contingencies

Stanford License Agreement — In October 2019, Combangio entered into a license agreement with The Board of Trustees of The Leland Stanford Junior University (“Stanford”), which was amended in February 2020 and subsequently transferred to the Company by operation of law upon the Combangio Acquisition. Pursuant to the license agreement with Stanford (the “Stanford Agreement”), the Company has a worldwide, exclusive, sublicensable license under certain patent rights (“licensed patents”), directed to methods to promote eye wound healing, to make, have made, use, import, offer to sell and sell products (“licensed products”) that are covered by the licensed patents for use in all fields. Under the Stanford Agreement, the Company is required to pay Stanford annual license maintenance fees and milestone payments upon the achievement of specified development, regulatory and sales milestones, as well as tiered royalties on net sales of licensed products that are covered by a valid claim of a licensed patent. During the year ended December 31, 2023, the Company paid Stanford a $175 milestone payment which was triggered by the commencement of the CHASE Phase 2b clinical trial of KPI-012 for PCED in the United States. Additional amounts paid to Stanford in the years ended December 31, 2023 and 2022 were de minimis.

The Company’s minimum obligations due under the Stanford License Agreement as of December 31, 2023, are as follows:


Years Ending December 31,
2024	$	30
2025		65
2026		65
2027		65
2028		65
Thereafter		325
Total minimum license payments	$	615

Contingencies related to the Merger Agreement— In connection with the Combangio Acquisition, the Company agreed to make additional payments based on the achievement of certain milestone events related to KPI-012. The Company recognized certain contingent consideration liabilities at fair value on the acquisition date, and revalues the remaining obligations each reporting period. The total potential maximum payout for the milestone payments, which have been recorded as liabilities at fair value, is $40,000 and the milestone payments are contingent upon the achievement of specified development, regulatory and commercialization milestones. Following the achievement of the First Dosing Milestone in February 2023, the Company paid an aggregate of $2,500 in cash and $2,354 in shares of the Company’s common stock (representing an aggregate of 105,038 shares of the Company’s common stock) to the former Combangio Equityholders in March 2023. The Company paid the remaining amount due in connection with the First Dosing Milestone of $146 in cash in January 2024. Additionally, pursuant to the Merger Agreement, the Company could trigger potential future sales-based milestone payments of up to $65,000. Because the achievement of these sales-based milestones related to KPI-012 was not considered probable as of December 31, 2023 or December 31, 2022, such contingencies have not been recorded in the Company’s consolidated financial statements. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory or commercial milestones.

Litigation—The Company is not currently subject to any material legal proceedings.

Guarantees and Indemnifications—The Company’s Certificate of Incorporation authorizes the Company to indemnify and advance expenses to its officers and directors and agents to the fullest extent permitted by law.

The Company’s equity agreements and certain other arrangements include standard indemnifications against claims, actions, or other matters that may arise in connection with these arrangements.

As of December 31, 2023 and 2022, the Company had not experienced any losses related to these indemnification obligations, and no claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and has no amount accrued related to these contingencies. The Company does not expect these indemnifications to have a material adverse effect on these consolidated financial statements.

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Taxes

Schedule of income tax reconciliation based on federal statutory rate


	Year Ended
	December 31,
	2023		2022
Federal statutory income tax rate	21.0	%	21.0	%
Effect of:
State income taxes, net of federal benefit	7.6		5.4
Research and development tax credits	2.4		—
Stock-based compensation	(15.0)		(4.6)
Change in valuation allowance	(15.3)		7.5
Losses and Credits Limited by Section 382 & Section 383	—		(28.8)
Other	(0.7)		(0.5)
Effective income tax rate	—	%	—	%

Schedule of net deferred tax assets


	December 31,
	2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	108,919	$	102,565
Capitalized research and development and start-up expenditures		12,153		8,230
Stock-based compensation		1,195		7,243
Research and development tax credit carryforwards		1,154		—
Lease liabilities		672		4
Rebates, incentives, trade discounts and allowances		522		223
Deferred gain on sale of Commercial Business		—		1,145
Other		4,754		2,000
Total deferred tax assets	$	129,369	$	121,410
Deferred tax liabilities:
Right-of-use assets		(638)		(4)
Total deferred tax liabilities	$	(638)	$	(4)
Valuation allowance	$	(128,731)	$	(121,406)
Net deferred tax assets	$	—	$	—

Lease (Tables)

12 Months Ended

Dec. 31, 2023

Lease

Schedule of lease cost


	Year Ended
	December 31,
	2023		2022
Lease cost
Operating lease cost	$	314	$	414
Short-term lease cost		161		173
Variable lease cost		98		758
Total lease cost	$	573	$	1,345

Operating cash outflows from operating leases	$	203	$	1,318

Schedule of weighted average remaining lease term and weighted average discount rate of operating leases


	December 31,	December 31,
	2023	2022
Weighted average remaining lease term	4.7 years	0.5 years
Weighted average discount rate	13.1%	10.4%

Schedule of future minimum lease payments


Years Ending December 31,
2024	$	581
2025		601
2026		622
2027		644
2028		440
Less: interest		(755)
Total	$	2,133

Common and Preferred Stock (Tables)

12 Months Ended

Dec. 31, 2023

Common and Preferred Stock

Schedule of reserved common stock shares upon exercise of rights under equity compensation plans


	December 31,	December 31,
	2023	2022
Warrant rights to acquire common stock	4,303	4,303
ESPP	28,927	15,548
Outstanding inducement stock option awards	14,180	11,080
2009 Plan	26	32,642
2017 Plan	1,596,113	248,221
Deferred Purchase Consideration	—	19,350
Series E Preferred Stock (as converted to common shares)	5,124,600	5,314,400
Series F Preferred Stock (as converted to common shares)	292,800	—
Total	7,060,949	5,645,544

Prepaid Expenses and Other Current Assets

12 Months Ended

Dec. 31, 2023

Prepaid Expenses and Other Current Assets

Prepaid Expenses and Other Current Assets

Note 7: Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets, consists of the following:


	December 31,		December 31,
	2023		2022

Insurance	$	675	$	698
Prepaid research and development		555		—
Non-trade receivables		119		908
Trade receivables, net		117		195
Due from Alcon		—		5,394
Other		509		657
Prepaid expenses and other current assets	$	1,975	$	7,852