Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the United States (U.S.) Securities and Exchange Commission (SEC) on February 24, 2025 (Annual Report). The discussion and analysis below contains forward-looking statements within the meaning of federal securities laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. See "Note Regarding Forward-Looking Statements" preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.

Overview

We are an ophthalmic pharmaceutical and medical technology company focused on developing novel, dropless platform therapies and commercializing associated products for the treatment of glaucoma, corneal disorders, and retinal disease. We first developed Micro-Invasive Glaucoma Surgery (MIGS) as an alternative to the traditional glaucoma treatment paradigm, launching our first MIGS device commercially in 2012. In 2024, we commenced controlled commercial launch activities for iDose TR, an intracameral procedural pharmaceutical implant designed to continuously deliver therapeutic levels of a proprietary formulation of travoprost inside the eye for extended periods of time. We also offer commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016. Beyond our approved products, we continue to develop and advance a robust pipeline of novel, dropless platform technologies designed to advance the standard of care and improve outcomes for patients suffering from chronic eye diseases.

Financial Overview

The most important financial indicators that we use to assess our business are net sales, gross margin, operating expenses, and cash on hand.

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Please see Results of Operations and Liquidity and Capital Resources below for a detailed discussion of each of the above items including analysis of the fluctuations from year to year.

We incurred net losses for the three and nine months ended September 30, 2025 of $16.2 million and $54.0 million, respectively, and incurred net losses of $21.4 million and $112.8 million for the three and nine months ended September 30, 2024, respectively. As of September 30, 2025, we had an accumulated deficit of $799.5 million.

Recent Developments

On October 20, 2025, we announced U.S. FDA approval for Epioxa indicated for the treatment of keratoconus. Epioxa represents an advancement in keratoconus care, offering an incision-free alternative to traditional corneal cross-linking procedures. Epioxa is the first FDA-approved, incision-free, topical drug therapy that does not require removal of the corneal epithelium and is designed to eliminate the pain associated with epithelium removal, streamline the procedure, and minimize recovery. We announced plans to begin commercializing Epioxa in the first quarter of 2026.

In June 2025, we received European Union (EU) Medical Device Regulation (MDR) certification for our iStent family of products, including the iStent infinite and the iStent inject W. We also received certification for our iStent products under the United Kingdom's Medical Device Regulation. We commenced some commercial launch activities in certain of our key EU markets in the third quarter of 2025.

On May 16, 2025, pursuant to a definitive agreement and plan of merger (Mobius Agreement), we acquired all of the outstanding equity interests in Mobius Therapeutics, LLC (Mobius) for $12.4 million, net of cash acquired (Mobius Merger). Pursuant to the Mobius Agreement, we also agreed to pay the former Mobius equityholders contingent consideration in the form of single-digit royalty payments based on net sales of Mobius products for a period of four years, and additional performance-based payments of up to $80.0 million in aggregate upon the achievement of certain net sales milestones with respect to such Mobius products. Mobius' lead product, Mitosol, is the only FDA-approved ophthalmic formulation of mitomycin-C, which is often utilized as an adjunct in late-stage glaucoma filtration procedures.

On April 4, 2025, we purchased certain real property consisting of an approximately 40,000 square foot, two-story building, located in Aliso Viejo, California (Aliso Building) and adjacent to our existing Aliso Viejo, California corporate headquarters (Aliso Facility). We paid a purchase price of $16.6 million for the Aliso Building, which is currently occupied by several tenants whose leases, which were assumed by us, run through 2029. The Aliso Building provides us with future expansion opportunities and potentially reduces future capital expenditures associated with construction of an additional building as part of the Aliso Facility.

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Market and Business Update

Impact of the Current Global Economic Environment

As a result of the ongoing macroeconomic conditions, global and regional economies have continued to experience varying levels of inflation, supply shortages or delays, changes in supply and demand, foreign exchange rate fluctuations, new or increased tariffs, and other conditions that have led to disruptions in commerce and pricing stability. Additionally, some of our vendors are continuing to experience supply challenges, both in the acquisition of raw materials as well as due to labor shortages and other disruptions. These challenges have occasionally led to longer lead times and delays of certain components needed for the manufacture of our products, in some cases requiring us to find alternative sources for materials. As a result of these supply chain challenges and ongoing inflationary pressures, we have experienced higher costs for certain components and raw materials. While these supply challenges have generally stabilized over the course of 2025, if these supply issues persist or worsen in the future, they could impact our gross margins, our ability to ship some of our products to our customers, or bring some of our pipeline products to market, in a timely manner.

The U.S. government recently announced tariffs on product imports from certain countries, including higher tariff levels on those imported from Canada, Mexico and China. These actions have resulted, and are expected to further result, in retaliatory measures on U.S. goods by those countries and others. While we believe our exposure to these tariffs and the potential escalation of trade disputes is limited as we primarily source our raw materials and product components from the U.S., these tariffs, or the introduction of new or higher tariffs in other countries, could pose a risk to our business, or the businesses of our customers, that could affect our net sales and cost of sourcing materials. In addition, the U.S. government shutdown that started on October 1, 2025 and continues as of the date of this report has impacted certain regulatory agencies, such as the U.S. FDA. Significant changes to operations at or the funding of such regulatory agencies could cause decreases in staff who are able to provide reimbursement services or changes in policy and enforcement priorities. Hospitals, ambulatory surgery centers and other health care providers may not purchase our products if they do not receive adequate reimbursement from third-party payors for procedures using our products. We have not yet experienced an adverse impact on our business operations due to this shutdown, but if it continues for a prolonged period of time, or if a widespread freeze on federal funding occurs, it could significantly

impact the ability of the FDA to timely review and process our regulatory submissions or negatively affect sales of our products. We will continue to evaluate the impacts of tariffs and government shutdowns on our business and results of operations.

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The effects of foreign currency fluctuations are most notably experienced in our international glaucoma business. Our annual growth rate of net sales of our international glaucoma franchise for the three and nine months ended September 30, 2025 were positively affected by approximately 330 and 120 basis points, respectively, primarily related to the Euro and Japanese yen. For the three and nine months ended September 30, 2024, net sales of our international glaucoma business were negatively impacted by approximately 20 and 210 basis points, respectively, primarily related to the Japanese Yen.

Developments Impacting Reimbursement Rates and Coverage

In the U.S., healthcare providers use separate billing codes to report the provision of medical procedures and use of supplies to third-party payors, such as government programs or private insurance, and seek reimbursement for all or a portion of those costs. Physician fee payment rates for procedures covered by temporary Current Procedural Terminology (CPT) codes in the Medicare Fee for Service setting, such as a standalone trabecular micro-bypass procedure utilizing the iStent infinite, along with the procedural component of iDose TR, are set by the multi-state, regional contractors, or Medicare Administrative Contractors (MACs), of which there are currently seven, that are responsible for administering Medicare claims. MACs have in the past, and may in the future, change coverage terms, and there can be no assurance that coverage and adequate reimbursement will be obtained from, or maintained by, the MACs.

In October and November 2023, five of the seven MACs released final local coverage determinations (LCDs) confirming reimbursement coverage of the standalone procedure utilizing the iStent infinite, which received FDA clearance in August 2022. These LCDs also indicated that surgical MIGS procedures should not be performed in combination with certain other MIGS procedures. In December 2023, prior to their respective effective dates, those five MACs rescinded the final LCDs and determined there would be no change in the current status of coverage for MIGS. In April 2024, the same five MACs released new draft LCDs that would confirm reimbursement coverage of the standalone procedure utilizing the iStent infinite, and that would confirm non-coverage for surgical MIGS procedures in combination with other surgical MIGS procedures (but did not prohibit coverage for use of a procedural pharmaceutical such as our iDose TR, in combination with surgical MIGS procedures). These draft LCDs were finalized and took effect in November 2024. The other two MACs have taken preliminary steps to assess coverage of iStent infinite through temporary local coverage article (LCA) updates in which coverage of the iStent infinite is currently determined on a case-by-case basis.

The unique, permanent Healthcare Common Procedure Coding System (HCPSC) J-code for iDose TR, indicated for the reduction of intraocular pressure in patients with open-angle glaucoma or ocular hypertension, J7355, became effective July 1, 2024. J-codes are used by U.S. government and commercial payers, to streamline the billing and reimbursement process for procedural pharmaceuticals administered by a healthcare professional, such as iDose TR. In addition to the J-code, on March 21, 2024, CMS assigned the temporary CPT codes that are designed to be used to cover the procedural component of iDose TR, 0660T and 0661T, to ambulatory payment classification 5492 (Level 2 Intraocular Procedures), retroactively effective as of January 1, 2024. As of September 30, 2025, the professional fees associated with an iDose TR procedure have been published by four of the seven MACs.

Now that Epioxa, our new CXL procedure, has been approved by the U.S. FDA, reimbursement will mostly involve updates to third-party commercial insurance policies as the vast majority of patients who are diagnosed with, and then treated for, keratoconus are below the Medicare age. Therefore, the procedural component of Epioxa will be covered by a temporary Category III CPT code, 0402T. Next, we will apply for a permanent HCPCS J-Code for Epioxa and we will seek coverage by third-party commercial payers. The professional fees associated with the CXL procedure will be determined by each payer. Coverage and reimbursement can differ significantly from payer to payer, and payers can change or deny coverage for new or existing products without notice.

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On July 14, 2025 and July 15, 2025, the U.S. Centers for Medicare & Medicaid Services' (CMS') published its proposed rules on 2026 Medicare physician fee and facility fee payment rates (2026 Proposed Rules), respectively. The 2026 Proposed Rules reflected a modest increase with respect to facility fee payment rates in both the ASC and hospital outpatient setting over the 2025 Medicare facility fee payment rates with respect to procedures using our glaucoma

products. The 2026 Proposed Rule also reflected reductions with respect to physician fee payment rates over the 2025 Medicare physician payment rates with respect to several Category I CPT codes across ophthalmology, including for cataract and surgical MIGS procedures specifically. The physician fee rules contained in the 2026 Proposed Rules do not affect the physician fees paid under temporary CPT codes for iDose TR and iStent infinite, because as explained above, those rates are determined on a MAC-by-MAC basis.

We estimate that approximately 80% of procedures utilizing our iStent family of products in the U.S. have been performed in the ASC setting and the remaining estimated 20% of procedures have been performed in the hospital.

Business Outlook

As discussed above, establishment of reimbursement for the iDose TR and its associated procedure has been an ongoing effort since its commercial launch in the first quarter of 2024. As reimbursement for the iDose TR procedure continues to become a more timely and consistent process across all MACs, we anticipate utilization of iDose TR by our customers will increase accordingly.

CMS physician fee payment rate decreases, along with the finalization in late 2024 of recent LCDs issued by five of the seven MACs, have disrupted traditional customer ordering patterns and may have resulted in certain of our customers' utilization of competitive products, which has reduced U.S. Glaucoma sales volumes of our iStent family of products used in conjunction with cataract surgery in each of the three and nine months ended September 30, 2025 and September 30, 2024. Additionally, the royalty income we received pursuant to a settlement agreement entered into during 2021 with Ivantis, Inc. (acquired by Alcon in 2022) relating to sales of the Hydrus® Microstent contractually expired on April 26, 2025.

Our corneal health net sales have experienced sporadic headwinds in recent years due to U.S. commercial payer volatility, as well as the impact of revenue adjustments related to the Company's entry into the Medicaid Drug Rebate Program (MDRP) in the first quarter of 2024.

The approval of Epioxa provides keratoconus patients and the ophthalmic community with the first FDA-approved, surgery free, topical drug therapy catalyzed by oxygen and light that does not require the removal of the corneal epithelium, the outermost layer of the front of the eye. Because Epioxa is designed to preserve the corneal epithelium, streamline the procedure, improve patient comfort and shorten recovery time, we anticipate some potential disruption within our U.S. Corneal Health franchise as the market transitions from Photrexa to Epioxa following its approval and as we prepare for our planned controlled commercial launch in the first quarter of 2026.

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Additionally, we have received a Prescription Drug User Fee Act (PDUFA) date of January 2026 relating to our supplemental new drug application (NDA) filed with the FDA for the re-administration of iDose TR to patients who have previously received an iDose TR implant. There can be no assurance that we will receive approval of this supplemental NDA.

For additional information, see the section titled Risks Related to Our Business within Item 1A. Risk Factors of this Quarterly Report on Form 10-Q.

Components of Results of Operations

Net Sales

Our net sales are generated primarily from sales of iDose TR, our iStent family of products, Photrexa and other associated drug formulations, and our proprietary bioactivation systems. Customers are primarily comprised of ambulatory surgery centers, hospitals, and physician private practices, with independent distributors being used in certain international locations where we currently do not have a direct commercial presence. We currently operate in one operating and reportable segment and our primary business activity is the development and commercialization of therapies across several end markets within ophthalmology.

We sell the majority of our products through a direct sales organization in the United States. Internationally, we sell our products primarily through direct sales subsidiaries and through independent distributors in certain countries

in which we do not have a direct presence or only maintain a modest commercial presence. The primary end-user customers for our products are surgery centers, hospitals and physician private practices.

Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration to which we expect to be entitled in exchange for those products or services, which includes estimates of reductions to revenue for commercial and governmental rebates owed, variable consideration for product returns and warranty replacements and other discounts and incentives.

Cost of Sales

Cost of sales reflects the aggregate costs to manufacture our products and includes raw material costs, labor costs, manufacturing overhead expenses and the effect of changes in the balance of reserves for excess and obsolete inventory.

Due to the relatively low production volumes of our iStent family of products, iDose TR and our KXL systems compared to our potential capacity for those products, a significant portion of our per unit costs is comprised of manufacturing overhead expenses. These expenses include quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management.

Cost of sales includes amortization of the $252.2 million and $17.8 million developed technology intangible assets recorded as a result of our acquisitions of Avedro, Inc. (Avedro) and Mobius, respectively, and our sales agreement with Celanese Canada ULC (Celanese Agreement). For the three months ended September 30, 2025 and September 30, 2024, the amortization expense was $6.1 million and $5.5 million, respectively, and for the nine months ended September 30, 2025 and September 30, 2024, amortization expense was $17.5 million and $16.6 million, respectively.

Our future gross profit as a percentage of net sales, or gross margin, will be impacted by numerous factors including commencement of sales of new products currently in our pipeline, or any other future products, which may have higher pricing, or conversely, higher product costs. Our gross margin will also be affected by manufacturing or supply chain costs, disruptions or inefficiencies that we may experience as we attempt to manufacture our products on a larger scale, manufacture new products and change our manufacturing capacity, processes, or output. Additionally, our gross margin will continue to be affected by amortization of Avedro and Mobius developed technology and Celanese Agreement intangible assets, the impact of rebates and allowances associated with government and commercial programs and by royalty expenses on current or future products associated with various licensing agreements. Our gross margin in future periods may also be impacted by other factors adversely affecting our net sales in future periods such as the impact of government pricing programs and reductions of payment rates for certain of our products and related services, and inflationary pressures.

Selling, General and Administrative

Our selling, general and administrative (SG&A) expenses primarily consist of personnel-related expenses, including salaries, sales commissions, bonuses, fringe benefits and stock-based compensation for our executive, sales, marketing, market access, financial, legal, and other administrative functions. Other significant SG&A expenses include marketing programs; advertising; post-approval clinical studies; conferences and congresses; travel expenses; costs associated with obtaining and maintaining our patent portfolio; professional fees for accounting, auditing, consulting and legal services; costs associated with our global enterprise systems and information systems; and allocated facility expenses.

SG&A expenses also included amortization of the $14.1 million and $0.4 million customer relationships intangible assets recorded as a result of our acquisitions of Avedro, Inc. (Avedro) and Mobius, respectively, as well as the $0.7 million in-place lease intangible asset from the Aliso Building acquisition. During the three months ended September 30, 2025, amortization expense was $0.3 million. The Avedro intangible asset was fully amortized as of December 31, 2024, and such amortization expense was $0.7 million and $2.1 million for the three and nine months ended September 30, 2024.

We expect SG&A expenses to continue to grow as we increase our infrastructure for our global sales and marketing functions, commercial support organizations, and general administration departments. We also expect other non-employee-related costs, including sales and marketing program activities for new products, market access efforts, outside services, accounting services and general legal costs to increase as our overall operations grow. The timing of

these increased expenditures and their magnitude are primarily dependent on the commercial success and sales growth of our products, as well as on the timing of any new product launches and other potential business and operational activities.

Research and Development

Our research and development (R&D) activities primarily consist of new product development projects, pre-clinical studies, Investigational New Drug studies, and clinical trials. Our R&D expenses primarily consist of personnel-related expenses, including salaries, fringe benefits and stock-based compensation for our R&D employees; research materials; supplies and services; in-licenses, including event-based milestones; and the costs of conducting clinical studies, which include payments to investigational sites and investigators, clinical research organizations, consultants, and other outside technical services; and the costs of materials, supplies and travel. We expense R&D costs as they are incurred. We expect our R&D expenses to continue to increase as we initiate and advance our development programs, including our expanding pharmaceutical development efforts and clinical trials across the glaucoma, corneal health and retinal disease spectrums.

Costs for our clinical development programs include expenses for all activities necessary for obtaining regulatory approvals. Our research programs vary significantly for each current and future product candidate and completion dates are difficult to predict. As a result, while we expect our R&D costs to continue to increase for the foreseeable future, we cannot estimate with any degree of certainty the timing or the amount of costs we will incur in connection with the development of our product candidates. We anticipate we will make determinations as to which programs and product candidates to pursue and how much funding to direct to each program and product candidate on an ongoing basis in response to the scientific success of early research programs, results of ongoing and future clinical trials, the availability of funding resources, as well as ongoing assessments as to each current or future product candidate's commercial potential and our likelihood of obtaining necessary regulatory approvals. We are not currently able to fully track expenses by product candidate.

Acquired In-Process Research and Development

Our acquired in-process research and development (IPR&D) expenses generally relate to acquisitions of technologies that management determines are not a business combination and do not have any alternative future uses. Future costs to develop these assets are expensed as R&D when incurred. We may have ongoing milestone and royalty payment obligations depending on the success, development, regulatory approval and commercialization of the proprietary technologies we have acquired.

Non-Operating Income (Expense), Net

Non-operating expense, net primarily consists of interest expense associated with our finance lease for our Aliso Facility and for our previously outstanding 2.75% convertible notes due 2027 (Convertible Notes), interest income derived from our short-term investments, and unrealized gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar, primarily related to intercompany loans.

Income Taxes

Our tax provision is primarily comprised of state and foreign income taxes, offset by release of uncertain tax positions for which the statute of limitations has expired. Our net deferred tax liability of $6.9 million at September 30, 2025 primarily represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets. We continue to provide a full valuation allowance against our other net deferred tax assets.

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We record reserves for uncertain tax positions where we believe the ability to sustain the tax position does not reach a more likely than not threshold.

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Results of Operations

Comparison of Three Months Ended September 30, 2025 and September 30, 2024 (in thousands):

Net Sales

Net sales for the three months ended September 30, 2025 and September 30, 2024 were $133.5 million and $96.7 million, respectively, increasing by approximately 38% primarily related to the factors listed below.

Net sales of glaucoma products in the United States were $80.8 million and $51.6 million for the three months ended September 30, 2025 and September 30, 2024, respectively, increasing by 57%. This increase is primarily due to higher volume of sales of iDose TR, which has a higher net sales price than our other products, partially offset by lower volumes sold of our iStent family of products primarily due to the MIGS restrictions associated with the final LCDs issued by the five MACs as described above in the Market and Business Update section.

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International sales of glaucoma products for the three months ended September 30, 2025 and September 30, 2024 were $29.4 million and $24.5 million, respectively, increasing by 20%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, primarily the United Kingdom, Japan, France, and Germany, the dollar-based results of which were modestly affected by favorable foreign exchange rates, primarily related to the Euro and Japanese Yen, during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

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Net sales of corneal health products were $23.3 million and $20.6 million for the three months ended September 30, 2025 and September 30, 2024, respectively, increasing by 13%. Of the $2.7 million increase in net sales generated by our corneal health products, $2.4 million related to U.S. net sales of Photrexa using direct sales operations, which was positively impacted by higher realized average sales prices of Photrexa along with slight increases in sales to existing customers and new account starts, partially offset by accrued rebates related to the impact of our participation in MDRP. Our net sales of iLink devices in the U.S. remained consistent for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. Our international corneal health sales increased $0.5 million during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Cost of Sales

Cost of sales for the three months ended September 30, 2025 and September 30, 2024 were $28.8 million and $22.6 million, respectively, reflecting an increase of approximately $6.2 million that is generally proportionate to the increase in net sales for the corresponding period, as well as from contributions from increased iDose TR production volumes and iDose TR net sales. Our gross margin was 78% for three months ended September 30, 2025 and 77% for the three months ended September 30, 2024.

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Selling, General and Administrative Expenses

SG&A expenses for the three months ended September 30, 2025 and September 30, 2024 were $83.0 million and $64.0 million, respectively, reflecting an increase of $19.0 million or 30%.

Of the total $19.0 million increase in SG&A expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, $4.1 million related to increased compensation and related employee costs, the majority of which was associated with stock-based compensation related to certain performance equity awards that were achieved during the quarter. The residual increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.

The remaining increase of $14.6 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities, and allocated expenses; as well as reserves for accounts receivable, which are objectively calculated based on our accounts receivable reserve methodology.

Research and Development Expenses

R&D expenses for the three months ended September 30, 2025 and September 30, 2024 were $38.1 million and $34.7 million, respectively, reflecting an increase of $3.3 million or 10%.

During the three months ended September 30, 2025, we incurred $26.9 million in core R&D expenses and $11.2 million in clinical expenses, comprised of $22.3 million in compensation and related employee expenses with the remaining $15.5 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generation iDose products; Epioxa; and our earlier stage programs for glaucoma, corneal, retinal and other therapeutic investments. For the three months ended September 30, 2024, we incurred $22.3 million in core R&D expenses and $12.4 million in clinical expenses, comprised of $20.4 million in compensation and related employee expenses with the remaining $14.3 million spent on the above-mentioned programs.

Non-Operating Income (Expense), Net

We had non-operating income, net of $0.4 million and $3.4 million for the three months ended September 30, 2025 and September 30, 2024, respectively. The change primarily relates to a change in unrealized foreign currency amounts recognized of approximately $4.2 million due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the three months ended September 30, 2024, partially offset by a decrease of $0.5 million in interest expense on our Convertible Notes.

Income Tax Provision

Our effective tax rate for the third quarter of 2025 and 2024 was (1.46)% and (0.83)%, respectively. For each of the three months ended September 30, 2025 and September 30, 2024, we recorded a provision for income taxes of $0.2 million which was primarily comprised of state and foreign income tax expense, offset by release of uncertain tax positions for which the statute of limitations has expired.

Comparison of Nine Months Ended September 30, 2025 and September 30, 2024 (in thousands):

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Net Sales

Net sales for the nine months ended September 30, 2025 and September 30, 2024 were $364.3 million and $278.0 million, respectively, increasing by approximately 31% primarily related to the factors listed below.

Net sales of glaucoma products in the United States were $212.2 million and $143.3 million for the nine months ended September 30, 2025 and September 30, 2024, respectively, increasing by 48%. This increase is primarily due to higher volumes sold of iDose TR, which has a higher net sales price than our other products, partially offset by lower volumes sold of our iStent family of products primarily due to the MIGS restrictions associated with the final LCDs issued by the five MACs as described above in the Market and Business Update section.

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International sales of glaucoma products for the nine months ended September 30, 2025 and September 30, 2024 were $89.7 million and $75.8 million, respectively, increasing by 18%. The increase in international sales reflects continued broad-based growing volume in many key international markets for glaucoma procedures, most notably from France, Japan, and the United Kingdom, the dollar-based results of which were modestly affected by favorable foreign exchange rates, primarily related to the Euro and Japanese Yen, during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

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Net sales of corneal health products were $62.4 million and $58.8 million for the nine months ended September 30, 2025 and September 30, 2024, respectively, increasing by 6%. Of the $3.6 million increase in net sales generated by our corneal health products, $3.8 million related to an increase in U.S. net sales of Photrexa using direct sales operations, which was positively impacted by higher realized average sales prices of Photrexa along with increases in sales to existing customers and new account starts, partially offset by accrued rebates related to the impact of our participation in the MDRP. Our sales of iLink devices decreased $0.2 million during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Cost of Sales

Cost of sales for the nine months ended September 30, 2025 and September 30, 2024 were $80.0 million and $65.4 million, respectively, reflecting an increase of approximately $14.7 million that is proportionate to the increase in net sales for the corresponding period, as well as from contributions from increased iDose TR production volumes. Our gross margin was 78% and 76% for the nine months ended September 30, 2025 and September 30, 2024, respectively.

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Selling, General and Administrative Expenses

SG&A expenses for the nine months ended September 30, 2025 and September 30, 2024 were $237.0 million and $192.2 million, respectively.

Of the total $44.9 million increase in SG&A expenses for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, $17.1 million related to increased compensation and related employee costs, with $6.0 million of the incremental amount related to an increase in stock-based compensation expense. This increase primarily relates to enhancements of various customer and patient support functions, our business intelligence function, and growth in our commercial infrastructure in glaucoma and corneal health, along with increased travel, meetings and accompanying costs as business activities have expanded.

The remaining increase of $27.5 million primarily relates to discretionary expenses supporting the above personnel growth as well as our ongoing administrative operations, inclusive of information technology, facilities and allocated expenses, as well as reserves on our accounts receivable.

Research and Development Expenses

R&D expenses for the nine months ended September 30, 2025 and September 30, 2024 were $107.0 million and $99.9 million, respectively.

During the nine months ended September 30, 2025, we incurred $75.6 million in core R&D expenses and $31.4 million in clinical expenses, comprised of $67.4 million in compensation and related employee expenses with the remaining $39.3 million spent on the continued research and development, clinical studies, regulatory activities, quality assurance, clinical inventory and supplies for surgical glaucoma product candidates and pharmaceutical projects, such as next generation iDose products; Epioxa; and our earlier stage programs for glaucoma, corneal, retinal and other therapeutic investments. For the nine months ended September 30, 2024, we incurred $60.6 million in core R&D expenses and $39.3 million in clinical expenses, comprised of $59.1 million in compensation and related employee expenses with the remaining $40.8 million spent on the above-mentioned programs.

Acquired In-process Research and Development

During the nine months ended September 30, 2024, we issued $5.0 million of our common stock and paid approximately $5.1 million in cash, in connection with the asset acquisition of 100% of the outstanding equity interests in a clinical stage biopharma company focused on developing novel therapeutics for ophthalmic diseases, including all related patents and patent applications, technology and know-how. Also included in IPR&D for the nine months ended September 30, 2024 is $1.3 million of contingent consideration related to our Sales Agreement with Celanese and our $2.5 million upfront payment related to a prior year license agreement, pursuant to which we obtained an exclusive, worldwide license to develop and commercialize drug products incorporating certain proprietary technology.

Non-Operating Income (Expense), Net

We had non-operating income, net of $6.5 million and non-operating expense, net of $18.2 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. The change primarily relates to a decrease of $18.0 million of expense related to our June 2024 Convertible Notes exchange, a decrease of $5.0 million in interest expense on our Convertible Notes, and a change in unrealized foreign currency amounts recognized of approximately $1.4 million due to intercompany loan balances denominated in, and impacted by, changes in foreign currency exchange rates, as compared to the three months ended September 30, 2024.

Income Tax Provision

Our effective tax rate for the nine months ended September 30, 2025 and September 30, 2024 was (1.52)% and (0.79)%, respectively. For the nine months ended September 30, 2025 and September 30, 2024, we recorded a provision for income taxes of $0.8 million and $0.9 million, respectively, which was primarily comprised of state and foreign income tax expense, offset by release of uncertain tax positions for which the statute of limitations has expired.

Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash, cash equivalents and short-term investments, and generally cash generated from operating, financing and investing activities. Our primary uses of cash have been for commercial activities, acquired in-process research and development, clinical and research and development programs, general and administrative expenses, and capital expenditures.

The following table summarizes our cash and cash equivalents, short-term investments and selected working capital data as of September 30, 2025 and December 31, 2024 (in thousands):

Main Sources of Liquidity

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We plan to fund our operations, commitments for capital expenditures and other short and long-term known contractual and other obligations using existing cash and investments and, to the extent available, cash received from commercial operations as well as cash generated from employee stock option exercises.

We may seek to obtain additional financing in the future through other debt or equity financings. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, or at all and although we have been profitable for certain periods in our operating history, there can be no assurance that we will be profitable or generate cash from operations.

Cash, Cash Equivalents, Short-term Investments and Restricted Cash

As of September 30, 2025, our cash, cash equivalents and short-term investments totaled approximately $273.7 million and our restricted cash totaled approximately $3.8 million.

Cash Flow used in Operations

For the nine months ended September 30, 2025, our operating activities used $21.6 million in net cash.

Short-term Liquidity Requirements

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Our short-term liquidity requirements primarily consist of regular operating costs, R&D project funding, capital expenditures as we continue the development of our manufacturing facilities and office spaces, operating and financing lease obligations, government rebate obligations, and other firm purchase commitments. As of September 30, 2025, we had net working capital of $367.3 million, which indicates that our current assets are sufficient to cover our short-term liabilities.

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Long-term Liquidity Requirements

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Our long-term liquidity requirements primarily consist of capital expenditures for the continued development of our manufacturing facilities and office spaces, potential future payments related to our licensing agreements and acquisitions, and firm purchase commitments. As demand grows for our products, we will continue to expand global operations to meet demand through investments in our manufacturing capabilities. To that end, we entered into agreements with the city of Huntsville, Alabama that provide the opportunity to develop a new 200,000 square foot R&D and manufacturing facility, which is anticipated to result in more than $80.0 million in capital expenditures over the multi-year project. We expect construction to begin in 2026.

Cash Flows

Our historical cash outflows have primarily been associated with cash used for operating activities such as the expansion of our commercial and R&D activities; purchase of and growth in inventory; accounts receivable and other working capital needs; the acquisition of intellectual property and businesses; and expenditures related to property, equipment and improvements used to increase our manufacturing capacity and improve our manufacturing efficiency and for overall facility expansion.

The following table is a condensed summary of our cash flows for the periods indicated:

At September 30, 2025, our cash and cash equivalents were held for working capital purposes. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity.

Operating Activities

In the nine months ended September 30, 2025 and September 30, 2024, our operating activities used $21.6 million and $61.8 million of net cash, respectively.

For the nine months ended September 30, 2025, our net cash used in operating activities reflected our net loss of $54.0 million, adjusted for non-cash items of $78.3 million, primarily consisting of stock-based compensation expense of $45.9 million, depreciation of $8.2 million, amortization of intangible assets of $17.8 million, noncash lease expense of $3.2 million, other liabilities of $1.1 million, allowance for doubtful accounts of $7.3 million, and amortization of premium on short-term investments of $2.7 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $45.9 million, which resulted primarily from an increase in accounts receivable of $42.8 million primarily due to increased iDose TR sales during the nine months ended September 30, 2025 given iDose TR sales have extended terms, an increase in accounts payable and accrued liabilities of $7.0 million, an increase in inventory of $3.7 million, an increase in other assets of $1.3 million, and an increase in prepaid expenses and other current assets of $5.8 million.

For the nine months ended September 30, 2024, our net cash used in operating activities reflected our net loss of $112.8 million, adjusted for non-cash items of $92.3 million, primarily consisting of inducement expense related to the Convertible Notes exchange of $17.4 million, stock-based compensation expense of $36.9 million, depreciation of $8.2 million, amortization of intangible assets of $18.7 million, noncash lease expense of $3.2 million, amortization of debt issuance costs of $0.7 million, other liabilities of $5.0 million, amortization of premium on short-term investments of $3.2 million and IPR&D acquired through issuance of common stock of $5.0 million. Additionally, changes in operating assets and liabilities resulted in a net use of cash of $41.4 million, which resulted primarily from an increase in inventory of $18.2 million, an increase in accounts receivable of $16.5 million, an increase in other assets of $2.0 million, a decrease in accounts payable and accrued liabilities of $4.4 million, partially offset by a decrease in prepaid expenses and other current assets of $0.3 million.

Investing Activities

In the nine months ended September 30, 2025 and September 30, 2024 our investing activities used $61.7 million and provided $36.0 million of net cash, respectively.

For the nine months ended September 30, 2025, we used cash of approximately $192.1 million for purchases of short-term investments, approximately $16.6 million related to the purchase of certain real property consisting of land, a building and certain assumed leases, approximately $12.4 million related to the Mobius Merger, approximately $4.8 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; approximately $4.0 million related to investments in company-owned life insurance, and $0.8 million in other investing activities and we received cash of approximately $169.0 million from sales and maturities of short-term investments.

For the nine months ended September 30, 2024, we used cash of approximately $123.1 million for purchases of short-term investments, approximately $4.6 million for purchases of property and equipment, primarily related to our facilities in Aliso Viejo, California; and San Clemente, California; and approximately $3.2 million related to investments in company-owned life insurance, and we received cash of approximately $166.9 million from sales and maturities of short-term investments.

We expect levels of our capital expenditures to be higher in 2025 than in 2024 as we upgrade certain manufacturing facilities and continue investing in R&D equipment needed to advance our pipeline.

Financing Activities

In the nine months ended September 30, 2025 and September 30, 2024, our financing activities provided $9.5 million and $31.4 million of net cash, respectively.

For the nine months ended September 30, 2025, we received $18.2 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $7.9 million for payment of employee taxes related to restricted stock unit vesting and paid $0.8 million in principal on our finance lease.

For the nine months ended September 30, 2024, we received $36.9 million from the exercises of stock options and purchases of our common stock by employees pursuant to our Employee Stock Purchase Plan, used $4.8 million for payment of employee taxes related to restricted stock unit vesting and paid $0.7 million in principal on our finance lease.

We do not have any off-balance sheet arrangements.

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Material Cash Requirements

With the exception of the cash used for the property and building purchase, and the business combination, both previously described in "Recent Developments", there have been no significant changes to our material cash requirements, including commitments for capital expenditures and known contractual and other obligations, as of September 30, 2025 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 24, 2025.

We believe that cash from operating, financing and investing activities, together with our cash and investment balances, will be sufficient to meet ongoing operations, capital expenditures, commitments, working capital requirements and other known contractual and other obligations and satisfy our liquidity requirements for at least the next 12 months and the foreseeable future.

Critical accounting policies and significant estimates

Management's discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the condensed consolidated financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to our financial position and results of operations.

Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Estimates" included in Part II, Item 7 of our Annual Report.

There have been no material changes to our critical accounting policies and estimates as disclosed therein, during the three and nine months ended September 30, 2025, as compared with those disclosed in our Annual Report.