(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~143,515,338~~ 28,741,475 shares of the registrant’s common stock, $0.001 par value, outstanding as of ~~October~~April 30, ~~2020.~~2021.

	September 30,			December 31,			March 31,			December 31,
	2020			2019			2021			2020
Assets
Current assets:
Cash and cash equivalents	$	28,726		$	22,214		$	138,579		$	44,909
Accounts and other receivables, net		9,392			11,368			12,332			9,453
Prepaid expenses and other current assets		5,832			5,997			2,856			3,419
Inventory		3,642			2,138			5,586			5,337
Total current assets		47,592			41,717			159,353			63,118
Property and equipment, net		492			357			559			630
Operating lease right-of-use assets		2,733			3,078			2,484			2,610
Intangible assets, net		25,824			27,669			24,594			25,209
Restricted cash		150			150			150			150
Total assets	$	76,791		$	72,971		$	187,140		$	91,717
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	5,185		$	4,192		$	5,855		$	4,811
Accrued expenses		6,845			6,832			5,915			8,445
Deferred revenue		300			15			973			945
Other current liabilities		597			481			698			687
Total current liabilities		12,927			11,520			13,441			14,888
Long-term debt		50,775			47,223			38,124			37,977
Deferred revenue - noncurrent								15,349			15,616
Operating lease liabilities - noncurrent		2,483			2,898			2,172			2,330
Other long-term liabilities		3,012			3,000			2,347			2,365
Total liabilities		69,197			64,641			71,433			73,176
Contingencies (Note 14)
Contingencies (Note 13)
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding		0			0			—			—
Common stock, $.001 par value, 300,000,000 and 150,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 131,421,846 and 109,417,322 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		131			109
Common stock, $.001 par value, 300,000,000 shares authorized at March 31, 2021 and December 31, 2020; 28,741,475 and 18,139,981 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively								29			18
Additional paid-in capital		501,834			472,667			637,797			528,362
Accumulated deficit		(495,211	)		(465,286	)		(522,960	)		(510,680	)
Accumulated other comprehensive income		840			840			841			841
Total stockholders' equity		7,594			8,330			115,707			18,541
Total liabilities and stockholders' equity	$	76,791		$	72,971		$	187,140		$	91,717

													Three Months Ended
	Three Months Ended						Nine Months Ended						March 31,
	September 30,						September 30,						2021			2020
	2020			2019			2020			2019
Revenues:
Product sales, net	$	5,758		$	1,009		$	14,151		$	8,941		$	6,802		$	4,687
License and collaboration agreement		9,535			1,054			11,590			1,125			341			2,020
Royalty income		402			446			1,565			1,666			180			782
Total revenues		15,695			2,509			27,306			11,732			7,323			7,489
Operating expenses:
Cost of sales, excluding amortization of acquired intangible assets		1,882			327			3,363			1,363			1,390			980
Research and development		4,090			3,484			12,219			11,237			5,479			4,853
Sales and marketing		5,269			7,778			19,483			22,373			5,659			8,125
General and administrative		5,796			4,365			14,949			13,790			5,115			4,360
Amortization of acquired intangible assets		615			615			1,845			1,845			615			615
Total operating expenses		17,652			16,569			51,859			50,608			18,258			18,933
Loss from operations		(1,957	)		(14,060	)		(24,553	)		(38,876	)		(10,935	)		(11,444	)
Other income (expense):
Interest and other income, net		(4	)		183			58			692			1			54
Interest expense		(1,840	)		(1,770	)		(5,430	)		(4,389	)		(1,346	)		(1,784	)
Loss on extinguishment of debt		0			0			0			(3,810	)
Total other expense, net		(1,844	)		(1,587	)		(5,372	)		(7,507	)		(1,345	)		(1,730	)
Net loss	$	(3,801	)	$	(15,647	)	$	(29,925	)	$	(46,383	)	$	(12,280	)	$	(13,174	)
Net loss per share - basic and diluted	$	(0.03	)	$	(0.15	)	$	(0.24	)	$	(0.45	)	$	(0.50	)	$	(1.14	)
Weighted average shares outstanding - basic and diluted		127,945			106,938			122,768			102,900			24,735			11,553

Net loss	$	(3,801	)	$	(15,647	)	$	(29,925	)	$	(46,383	)	$	(12,280	)	$	(13,174	)
Foreign currency translation adjustments		0			0			0			1
Comprehensive loss	$	(3,801	)	$	(15,647	)	$	(29,925	)	$	(46,382	)	$	(12,280	)	$	(13,174	)

											Accumulated					Common Stock				Additional						Accumulated Other		Total
	Common Stock				Additional						Other		Total
	Number of		Par Value		Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at June 30, 2019		106,297,792	$	106	$	466,493		$	(439,229	)	$	840	$	28,210
Net loss		—		—		—			(15,647	)		—		(15,647	)
Issuance of stock, net of issue cost		1,707,995		2		2,410			—			—		2,412
Vesting of stock units		23,457		—		(14	)		—			—		(14	)
Stock-based compensation		—		—		977			—			—		977
Balance at September 30, 2019		108,029,244	$	108	$	469,866		$	(454,876	)	$	840	$	15,938

Balance at June 30, 2020		125,197,899	$	125	$	494,633		$	(491,410	)	$	840	$	4,188
Net loss		—		—		—			(3,801	)		—		(3,801	)
Issuance of stock, net of issue costs		6,029,465		6		4,705			—			—		4,711
Employee stock purchase plan		175,315		—		107			—			—		107
Vesting of stock units		19,167		—		—			—			—		—
Stock-based compensation		—		—		2,389			—			—		2,389
Balance at September 30, 2020		131,421,846	$	131	$	501,834		$	(495,211	)	$	840	$	7,594

											Accumulated
	Common Stock				Additional						Other		Total
	Number of		Par Value		Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at January 1, 2019		95,372,236		95		445,192			(408,493	)		839		37,633
Net loss		—		—		—			(46,383	)		—		(46,383	)
Other comprehensive income		—		—		—			—			1		1
Issuance of stock, net of issue cost		12,234,495		12		20,743			—			—		20,755
Exercise of stock options		166,760		1		307			—			—		308
Vesting of stock units		255,753		—		(87	)		—			—		(87	)
Stock-based compensation		—		—		3,711			—			—		3,711
Balance at September 30, 2019		108,029,244	$	108	$	469,866		$	(454,876	)	$	840	$	15,938
																Number of Shares		Par Value Amount		Paid-In Capital			Accumulated Deficit			Comprehensive Income		Stockholders’ Equity
Balance at January 1, 2020		109,417,322	$	109	$	472,667		$	(465,286	)	$	840	$	8,330			10,941,659	$	11	$	472,765		$	(465,286	)	$	840	$	8,330
Net loss		—		—		—			(29,925	)		—		(29,925	)		—		—		—			(13,174	)		—		(13,174	)
Issuance of stock, net of issue costs		21,029,465		21		24,680			—			—		24,701			1,500,000		15		19,975			—			—		19,990
Employee stock purchase plan		336,975		1		293			—			—		294			16,166		1		186			—			—		187
Vesting of stock units		638,084		—		(90	)		—			—		(90	)		16,285		—		(19	)		—			—		(19	)
Stock-based compensation		—		—		4,284			—			—		4,284			—		—		1,160			—			—		1,160
Balance at September 30, 2020		131,421,846	$	131	$	501,834		$	(495,211	)	$	840	$	7,594
Balance at March 31, 2020																	12,474,110	$	27	$	494,067		$	(478,460	)	$	840	$	16,474

Balance at January 1, 2021																	18,139,981	$	18	$	528,362		$	(510,680	)	$	841	$	18,541
Net loss																	—		—		—			(12,280	)		—		(12,280	)
Issuance of stock, net of issue costs																	10,513,538		11		108,392			—			—		108,403
Employee stock purchase plan																	27,713		—		173			—			—		173
Exercise of stock options																	827		—		10			—			—		10
Vesting of stock units																	59,416		—		(128	)		—			—		(128	)
Stock-based compensation																	—		—		988			—			—		988
Balance at March 31, 2021																	28,741,475	$	29	$	637,797		$	(522,960	)	$	841	$	115,707

	Nine Months Ended						Three Months Ended
	September 30						March 31,
	2020			2019			2021			2020
Cash flows from operating activities:
Net loss	$	(29,925	)	$	(46,383	)	$	(12,280	)	$	(13,174	)
Adjustments to reconcile net loss to cash flows used in operating activities:
Amortization of intangible assets		1,845			1,845			615			615
Depreciation of property and equipment		135			109			72			33
Amortization of debt discount		534			430			147			171
Non-cash interest expense		977			728			0			323
Loss on extinguishment of debt		—			3,810
Stock-based compensation		4,284			3,711			988			1,160
Changes in operating assets and liabilities:
Accounts receivable and other current assets		2,494			(10,681	)		(2,317	)		(2,320	)
Inventory		(1,503	)		(2,280	)		(248	)		(1,221	)
Accounts payable and accrued expenses		589			3,481			(1,798	)		(1,944	)
Right-of-use assets and operating lease liabilities		(45	)		47			(38	)		(3	)
Deferred revenue		285			(30	)		(240	)		15
Net cash used in operating activities		(20,330	)		(45,213	)		(15,099	)		(16,345	)
Cash flows from investing activities:
Purchases of property and equipment		(170	)		(207	)		0			(16	)
Net cash used in investing activities		(170	)		(207	)		0			(16	)
Cash flows from financing activities:
Proceeds from issuance of stock, net of issuance costs		24,802			20,755			108,732			20,285
Proceeds under paycheck protection program loan		2,041			—
Proceeds from issuance of long-term debt		—			50,000
Payment of debt issue costs		—			(1,341	)
Payment of long-term debt principal		—			(20,000	)
Payment of extinguishment of debt costs		—			(2,716	)
Net settlement of stock units to satisfy statutory tax withholding		(90	)		(87	)		(128	)		(19	)
Proceeds from exercise of stock options and employee stock purchase plan		294			308
Payment of contingent development milestone		—			(15,000	)
Proceeds from exercise of stock options								183			187
Principal payments on finance lease obligations		(35	)		—			(18	)		(7	)
Net cash provided by financing activities		27,012			31,919			108,769			20,446
Net increase (decrease) in cash, cash equivalents and restricted cash		6,512			(13,501	)		93,670			4,085
Cash, cash equivalents and restricted cash at beginning of period		22,364			45,411
Cash, cash equivalents and restricted cash at end of period	$	28,876		$	31,910
Cash, cash equivalents and restricted cash at beginning of year								45,059			22,364
Cash, cash equivalents and restricted cash at end of year							$	138,729		$	26,449
Supplemental cash flow information:
Cash interest paid	$	3,910		$	3,574		$	1,195		$	1,290
Supplemental disclosure of non-cash investing and financing activities:
Accrued term loan exit fee		—			3,000
Stock issuance costs								329			295
Principal portion of finance lease liabilities								12			7

The accompanying condensed consolidated financial statements of EyePoint Pharmaceuticals, Inc. ~~and~~, a Delaware corporation (together with its subsidiaries, ~~(collectively,~~ the “Company”), as of ~~September 30, 2020~~March 31, 2021 and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ are unaudited. Certain information in the footnote disclosures of these financial statements has been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. In the opinion of management, these statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, ~~2019,~~2020, and include all adjustments, consisting only of normal recurring adjustments, that are necessary for the fair presentation of the Company’s financial position, results of operations, comprehensive loss and cash flows for the periods indicated. The preparation of financial statements in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires management to make assumptions and estimates that affect, among other things, (i) reported amounts of assets and liabilities; (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and (iii) reported amounts of revenues and expenses during the reporting period. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year or any future period.

The Company is a pharmaceutical company committed to developing and commercializing innovative ~~ophthalmic products for~~therapeutics to help improve the ~~treatment~~lives of patients with serious eye disorders. The Company’s pipeline leverages its proprietary Durasert^® technology for extended intraocular drug delivery including EYP-1901, a potential twice-yearly sustained delivery intravitreal anti-VEGF treatment initially targeting wet age-related macular degeneration (“wet AMD”), the leading cause of vision loss among people 50 years of age and older in the United States. The Company’s product candidate pipeline also includes YUTIQ50, a potential twice-yearly treatment for non-infectious uveitis affecting the posterior segment of the eye, one of the leading causes of blindness. The Company also has ~~2 products,~~two commercial products: YUTIQ^®, a once every three-year treatment for chronic non-infectious uveitis affecting the posterior segment of the eye, and DEXYCU^®, a single dose treatment for postoperative inflammation following ocular surgery.

Local drug delivery for treating ocular diseases is a significant challenge due to the effectiveness of the blood-eye barrier. This barrier makes it difficult for systemically-administered drugs to reach the eye in sufficient quantities to have a beneficial effect without causing unacceptable adverse side effects to other organs. The Company’s validated Durasert technology, which ~~were~~has already been included in 4 products approved for marketing by the U.S. Food and Drug Administration (“FDA”) ~~in 2018.~~

~~YUTIQ (fluocinolone acetonide intravitreal implant) 0.18 mg for intravitreal injection, was launched directly in the U.S. in February 2019. YUTIQ~~, is ~~indicated for the treatment~~designed to provide consistent, sustained delivery of ~~chronic~~ ~~non-infectious~~ ~~uveitis affecting the posterior segment~~small molecule drugs over a period of the eye, which affects between 60,000 to 100,000 people in the U.S. each year and causes approximately 30,000 new cases of blindness annually, making it the third leading cause of blindness. Injected into the vitreous humor during a physician office visit, YUTIQ delivers a micro-dose of a corticosteroid on a sustained constant (zero order release) basis for up to 36 months. YUTIQ is based on the Company’s proprietary Durasert^® ~~sustained-release drug delivery technology that can deliver drug for predetermined periods of time ranging from~~ months to ~~years.~~

~~DEXYCU (dexamethasone intraocular suspension) 9%,~~ ~~for intraocular administration, was launched directly in the U.S. in March 2019. Indicated for the treatment of post-operative ocular inflammation, DEXYCU~~ ~~is administered locally as~~years through a single ~~dose at the conclusion~~intravitreal injection.

The Company’s lead product candidate, EYP-1901, combines a bioerodible formulation of ~~ocular surgery and is the first long-acting intraocular product approved by the FDA for this indication. DEXYCU utilizes the Company’s~~its proprietary ~~Verisome~~^® ~~drug-delivery~~Durasert sustained-release technology ~~that allows for a single intraocular injection that releases dexamethasone, a corticosteroid, over time. There were approximately 3.8 million cataract surgeries performed during 2018 in the U.S.~~and the Company launched DEXYCU with a primary focus on its use following cataract surgery. The Company acquired DEXYCU in connection with its acquisition of Icon Bioscience, Inc. (“Icon”) in March 2018 (the “Icon Acquisition”).

~~ILUVIEN~~^® for diabetic macular edema (“DME”), the Company’s licensed product, is sold directly in the U.S. and several European Union (“EU”) countries by Alimera Sciences, Inc. (“Alimera”) under a license agreement with the Company. In July 2017, the Company expanded the Alimera license agreement to include the uveitis indication for Europe, the Middle East and Africa (“EMEA”). European regulatory approval of ILUVIEN for the uveitis indication was granted in March 2019, subject to obtaining pricing and reimbursement in each applicable country. The Company receives royalty payments from Alimera for its sales of ILUVIEN.

EYP-1901 is being developed by the Company as a potential 6-month intravitreal treatment for wet age-related macular degeneration (“wAMD”). EYP-1901 utilizes the Company’s bioerodible Durasert technology combined with vorolanib, ~~an anti-VEGF~~a tyrosine kinase inhibitor (“TKI”). ~~Vorolanib has previously been studied~~The Company is currently evaluating EYP-1901 in ~~human~~a Phase 1 clinical trial as a potential twice-yearly sustained delivery intravitreal treatment for wet AMD. Current approved treatments for wet AMD require monthly or bi-monthly eye injections in a physician’s office, which can cause inconvenience and discomfort and often lead to reduced compliance and poor outcomes. In two prior clinical trials of vorolanib as an orally delivered ~~therapy.~~therapy, vorolanib had a strong clinical signal with no significant ocular adverse events. The Company ~~completed~~expects initial ~~animal pharmacokinetic and toxicology studies and initiated a GLP toxicology study in March 2020 to support~~data from the ~~anticipated filing of an Investigational New Drug (“IND”) application with the FDA by the end of 2020. A~~ Phase 1 clinical trial ~~is expected to follow upon acceptance~~in the fourth quarter of ~~the IND~~ 2021.

~~by the FDA.~~The Company ~~believes EYP-1901 has potential~~ ~~for additional~~

~~indications in diabetic retinopathy (“DR”) and retinal vein occlusion (“RVO”).~~

~~YUTIQ50~~ is ~~being developed by the Company~~also developing YUTIQ50 as a potential ~~6-month~~twice-yearly intravitreal treatment for chronic non-infectious uveitis affecting the posterior segment of the eye. The Company has consulted with the FDA and identified a clinical pathway for a supplemental new drug application (“sNDA”) filing that ~~involves~~the Company expects will involve a clinical trial of a small ~~study, randomized 2:1.~~population. The Company is currently ~~evaluating~~preparing for clinical trial initiation for YUTIQ50 later this year.

The Company also has 2 commercial products, YUTIQ^® and DEXYCU^®, that are being sold directly in the ~~timeline~~U.S.

YUTIQ^® (fluocinolone acetonide intravitreal implant) 0.18 mg for intravitreal injection, is a non-erodible intravitreal implant containing fluocinolone acetonide (“FA”) lasting for up to 36 months and ~~investment requirements~~is indicated for the ~~initiation~~treatment of ~~this trial.~~chronic non-infectious uveitis affecting the posterior segment of the eye. This disease affects between

60,000 to 100,000 people each year in the U.S. causes approximately 30,000 new cases of blindness every year and is the third leading cause of blindness. YUTIQ utilizes the Company’s proprietary Durasert^® sustained-release drug delivery technology platform.

DEXYCU^® (dexamethasone intraocular suspension) 9%, for intraocular administration, is indicated for the treatment of post-operative ocular inflammation, with the Company’s primary focus on its use immediately following cataract surgery as a single dose treatment. DEXYCU utilizes the Company’s proprietary Verisome^® drug-delivery technology.

The Company is also seeking to enhance its long-term growth potential by expanding EYP-1901 beyond wet AMD into diabetic retinopathy (“DR”) and retinal vein occlusion (“RVO”), both large and growing ocular disease areas. The Company also plans to potentially identify and advance additional product candidates through clinical and regulatory development. This may be accomplished through internal discovery efforts, potential research collaborations and/or in-licensing arrangements with partner molecules and potential acquisitions of additional ophthalmic products, product candidates or technologies that complement the Company’s current product portfolio.

The ~~outbreak of the~~ ongoing COVID-19 ~~Coronavirus Pandemic~~coronavirus pandemic (the “Pandemic”) ~~in March 2020~~ has had, and will likely continue to have, a material and adverse impact on the Company’s business, including as a result of measures that the Company, other businesses, and ~~government~~governments have taken and will likely continue to take. This includes a significant impact on cash flows from expected revenues due to the closure of ambulatory surgery centers for DEXYCU and a significant reduction in physician office visits impacting YUTIQ. These closures precipitated the restructuring of the Company’s commercial organization that was announced on April 1, 2020 along with a reduction in planned spending for the calendar year. Due to the continuedThe ongoing Pandemic ~~these factors~~ continued to have an adverse impact on the Company’s revenues, financial condition and cash flows in the ~~third~~first quarter of ~~2020. Although customer demand for~~2021 and into the ~~Company’s products resumed by~~second quarter of 2021. Further, the ~~third quarter, the extent and duration~~future progression of the ~~impact~~Pandemic and its effects on the Company’s business ~~is uncertain at this time.~~and operations are uncertain. The Company is monitoring the Pandemic and its potential effect on the Company’s financial position, results of operations and cash flows. This uncertainty could have an impact in future periods on certain estimates used in the preparation of the Company’s ~~quarterly~~periodic financial results, including reserves for variable consideration related to product sales, realizability of certain receivables, assessment for excess or obsolete inventory, and impairment of long-lived ~~assets~~.assets. Uncertainty around the extent and duration of the Pandemic, and any future related financial impact cannot be reasonably estimated at this time.

The Company had cash and cash equivalents of $138.6 million at March 31, 2021.The Company has a history of operating losses and has not had significant recurring cash inflows from revenue. The Company’s operations have been financed primarily from sales of its equity securities, issuance of debt and a combination of license fees, milestone payments, royalty income and other fees received from its collaboration partners. In the first quarter of 2019, the Company commenced the U.S. launch of its first two commercial products, YUTIQ and DEXYCU. However, the Company has not received sufficient revenues from its product sales to fund operations and the Company does not expect revenues from its product sales to generate sufficient funding to sustain its operations in the near-term. ~~As of September 30, 2020, the Company has had recurring operating losses since its inception and has an accumulated deficit of approximately $495.2 million and working capital of $34.7 million.~~ The Company ~~had cash and cash equivalents of $28.7 million at September 30, 2020.~~

~~Accordingly, the foregoing conditions, taken together, continue to raise substantial doubt about the Company’s ability~~expects to continue ~~as a going concern for one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.~~

~~The Company’s plans that are intended to mitigate those conditions include continuing to fulfill~~fulfilling its funding needs through cash inflows from revenue of YUTIQ and DEXYCU product sales, licensing and research collaboration transactions, ~~at-the-market facility (the “ATM Facility”)~~ ~~financing,~~ additional equity capital raises and other arrangements. ~~The Company’s plans also include the continuation of expense reductions to conserve cash in response to a continued adverse impact on the Company’s~~ ~~revenue of YUTIQ and DEXYCU product sales due to the continued Pandemic, slower recovery in product demand associated with phased reopening of customer facilities,~~ ~~elective surgical procedures and physician office visits in response to the Pandemic.~~ ~~During October 2020, the Company received net proceeds of $5.7 million through its~~ ~~ATM Facility~~ ~~financing. At October 31, 2020, the Company had cash and cash equivalents of $30.5 million.~~ The Company believes that its cash and cash equivalents of ~~$30.5~~$138.6 million at ~~October~~March 31, ~~2020 and~~2021 coupled with expected cash inflows from its product sales ~~royalty agreements, and ATM Facility financing, coupled with cash conservation activities~~ will enable the Company to fund its current and planned operations ~~into 2021.~~ for There can be no assurance that the Company will receive the additional funding from any of these potential resources and, even if such cash proceeds are received, that such proceeds would be sufficient to support the Company’s current operating plan forat least the next twelve months from the date ~~of issuance of~~ these consolidated financial ~~statements.~~statements were issued. Actual cash requirements could differ from management’s projections due to many factors, including the continued effect of the Pandemic on the Company’s business and the medical community, the timing and results of the Company’s clinical trials for EYP-1901, additional investments in research and development programs, the success of commercialization for YUTIQ and DEXYCU, the actual costs of these commercialization efforts, ~~the continued effect of the Pandemic on our business and the medical community, additional~~ ~~investments~~ in

~~research and development programs,~~ competing technological and market developments and the costs of any strategic acquisitions and/or development of complementary business opportunities.

New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective dates. Unless otherwise disclosed below, the Company believes that recently issued and adopted ~~accounting~~ pronouncements will not have a material impact on the Company’s financial position, results of operations and cash flows or do not apply to the Company’s operations.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. ~~This standard will be effective for the~~The Company ~~in the first quarter of its fiscal year ending December 31,~~adopted ASU 2019-12 on January 1, 2021. The ~~Company is~~ ~~currently evaluating the impact the~~ adoption of this ~~update will~~standard did not have a material impact on ~~its~~the Company’s consolidated financial ~~statements.~~statements.

Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company performs the following five steps: (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 applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.

Product sales, net — The Company sells YUTIQ and DEXYCU to a limited number of specialty distributors and specialty pharmacies (collectively the “Distributors”) in the U.S., with whom the Company has entered into formal agreements, for delivery to physician practices for YUTIQ and to hospital outpatient departments and ambulatory surgical centers for DEXYCU. The Company recognizes revenue on sales of its products when Distributors obtain control of the products, which occurs at a point in time, typically upon delivery. In addition to agreements with Distributors, the Company also enters into arrangements with healthcare providers, ambulatory surgical centers, and payors that provide for government mandated and/or privately negotiated rebates, chargebacks, and discounts with respect to ~~their~~the purchase of the Company’s products from Distributors.

Reserves for variable consideration — Product sales are recorded at the wholesale acquisition costs, net of applicable reserves for variable consideration. Components of variable consideration include trade discounts and allowances, provider chargebacks and discounts, payor rebates, product returns, and other allowances that are offered within contracts between the Company and its Distributors, payors, and other contracted purchasers relating to the Company’s product sales. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified either as reductions of product revenue and accounts receivable or a current liability, depending on how the amount is to be settled. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the estimates, the Company adjusts these estimates, which would affect product revenue and earnings in the period such variances become known.

Distribution fees — The Company compensates its Distributors for services explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product sale is recognized.

Provider chargebacks and discounts — Chargebacks are discounts that represent the estimated obligations resulting from contractual commitments to sell products at prices lower than the list prices charged to the Company’s Distributors. These Distributors charge the Company for the difference between what they pay for the product and the Company’s contracted selling price. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Reserves for chargebacks consist of amounts that the Company expects to pay for units that remain in the

distribution channel inventories at each reporting period-end that the Company expects will be sold under a contracted selling price, and chargebacks that Distributors have claimed, but for which the Company has not yet settled.

Government rebates — The Company is subject to discount obligations under state Medicaid programs and Medicare. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period.

Payor rebates — The Company contracts with certain private payor organizations, primarily insurance companies, for the payment of rebates with respect to utilization of its products. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.

Co-Payment assistance — The Company offers co-payment assistance to commercially insured patients meeting certain eligibility requirements. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue.

Product returns — The Company generally offers a limited right of return based on its returned goods policy, which includes damaged product and remaining shelf life. The Company estimates the amount of its product sales that may be returned and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as reductions to trade receivables, net on the condensed consolidated balance sheets.

License and collaboration agreement revenue — The Company analyzes each element of its license and collaboration arrangements to determine the appropriate revenue recognition. The terms of the license agreement may include payment to the Company of non-refundable up-front license fees, milestone payments if specified objectives are achieved, and/or royalties on product sales. The Company recognizes revenue from upfront payments at a point in time, typically upon fulfilling the delivery of the associated intellectual property to the customer.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

The Company recognizes sales-based milestone payments as revenue upon the achievement of the cumulative sales amount specified in the contract in accordance with ASC 606-10-55-65. For those milestone payments which are contingent on the occurrence of particular future events, the Company determines that these need to be considered for inclusion in the calculation of total consideration from the contract as a component of variable consideration using the most-likely amount method. As such, the Company assesses each milestone to determine the probability and substance behind achieving each milestone. Given the inherent uncertainty associated with these future events, the Company will not recognize revenue from such milestones until there is a high probability of occurrence, which typically occurs near or upon achievement of the event.

When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and

when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of ~~September 30, 2020.~~March 31, 2021.

Royalties — The Company recognizes revenue from license arrangements with its commercial partners’ net sales of products. Such revenues are included as royalty income. In accordance with ASC 606-10-55-65, royalties are recognized when the subsequent sale of the commercial partner’s products occurs. The Company’s commercial partners are obligated to report their net product sales and the resulting royalty due to the Company typically within 60 days from the end of each quarter. Based on historical product sales, royalty receipts and other relevant information, the Company recognizes royalty income each quarter and subsequently determines a true-up when it receives royalty reports and payment from its commercial partners. Historically, these true-up adjustments have been immaterial.

Sale of Future Royalties — The Company has sold its rights to receive certain royalties on product sales. In the circumstance where the Company has sold its rights to future royalties under a royalty purchase agreement and also maintains limited continuing involvement in the arrangement (but not significant continuing involvement in the generation of the cash flows that are due to the purchaser), the Company defers recognition of the proceeds it receives for the sale of royalty streams and recognizes such unearned revenue as revenue under the units-of-revenue method over the life of the underlying license agreement. Under the units-of-revenue method, amortization for a reporting period is calculated by computing a ratio of the proceeds received from the purchaser to the total payments expected to be made to the purchaser over the term of the agreement, and then applying that ratio to the period’s cash payment.

Estimating the total payments expected to be received by the purchaser over the term of such arrangements requires management to use subjective estimates and assumptions. Changes to the Company’s estimate of the payments expected to be made to the purchaser over the term of such arrangements could have a material effect on the amount of revenues recognized in any particular period.

Research Collaborations— The Company recognizes revenue over the term of the statements of work under any funded research ~~collaborations (including feasibility study agreements).~~collaborations. Revenue recognition for consideration, if any, related to a license option right is assessed based on the terms of any such future license agreement or is otherwise recognized at the completion of the research ~~collaborations (including feasibility study agreements).~~collaborations.

Please refer to Note 3 for further details on the license and collaboration agreements into which the Company has entered and corresponding amounts of revenue recognized during the current and prior year periods.

Cost of sales, excluding amortization of acquired intangible assets — Cost of sales, excluding amortization of acquired intangible assets, consist of costs associated with the manufacture of YUTIQ and DEXYCU, certain period costs, ~~for DEXYCU product revenue,~~ product shipping and, as applicable, royalty expense. The inventory costs for YUTIQ include purchases of various components, the active pharmaceutical ingredient (“API”) and ~~direct~~internal labor and overhead for the product manufactured in the Company’s Watertown, MA facility. The inventory costs for DEXYCU include purchased components, the API and third-party manufacturing and assembly. ~~Capitalization of inventory costs begins after FDA approval of a product. Prior thereto, inventory costs of products~~

For the three months ended March 31, 2021 and ~~product candidates are recorded as research and development expense, even if this inventory may later be sold as commercial product.~~

~~The~~2020, the Company accrued DEXYCU product revenue-based royalty expense of ~~$1.2 million~~$455,000 and ~~$97,000 for the three months ended September 30, 2020 and 2019, respectively, and $1.9 million and $195,000 for the nine months ended September 30, 2020 and 2019,~~$517,000, respectively, as a component of cost of ~~sales. $908,000~~sales, of which $0 and ~~$1.3 million of accrued revenue-based royalty expense during the three and nine months ended September 30, 2020~~$400,000, respectively, were related to the earn-out payment equal to 20% of the $2 million upfront license fee received from Ocumension in February 2020 (See Note 3), as the payment of the partnering income in connection with the Company’s acquisition of Icon Bioscience, Inc. in March ~~2018.~~2018 (the “Icon Acquisition”).

The Company’s product revenues have been primarily from sales of YUTIQ and DEXYCU in the U.S., which it began shipping to its customers in February 2019 and March 2019, respectively.

Net product revenues by product for ~~each of~~ the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019, respectively,~~ were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended		Three Months Ended
	2020		2019		2020		2019		March 31, 2021		March 31, 2020
YUTIQ(A)	$	3,466	$	55	$	9,920	$	7,303	$	3,029	$	3,575
DEXYCU(B)		2,292		954		4,231		1,638		3,773		1,112
Total product sales, net	$	5,758	$	1,009	$	14,151	$	8,941	$	6,802	$	4,687

The following table summarizes activity in each of the product revenue allowance and reserve categories for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019, respectively~~ (in thousands):

													Chargebacks, Discounts			Government and Other
													and Fees			Rebates			Returns			Total
Beginning balance at January 1, 2021													$	574		$	535		$	603		$	1,712
Provision related to sales in the current year														1,041			679			171			1,891
Adjustments related to prior period sales														(50	)		(22	)		(100	)		(172	)
Deductions applied and payments made														(809	)		(473	)		(184	)		(1,466	)
Ending balance at March 31, 2021													$	756		$	719		$	490		$	1,965

	Chargebacks, Discounts			Government and Other									Chargebacks, Discounts			Government and Other
	and Fees			Rebates			Returns			Total			and Fees			Rebates			Returns			Total
Beginning balance at January 1, 2020	$	1,618		$	271		$	352		$	2,241		$	1,618		$	271		$	352		$	2,241
Provision related to sales in the current year		1,464			479			690			2,633			612			175			261			1,048
Adjustments related to prior period sales		(387	)		—			50			(337	)		(267	)		—			50			(217	)
Deductions applied and payments made		(1,899	)		(400	)		(523	)		(2,822	)		(639	)		(262	)		(195	)		(1,096	)
Ending balance at September 30, 2020	$	796		$	350		$	569		$	1,715

	Chargebacks, Discounts			Government and Other
	and Fees			Rebates			Returns			Total
Beginning balance at January 1, 2019	$	0		$	0		$	0		$	0
Provision related to sales in the current year		833			161			367			1,361
Adjustments related to prior period sales		—			—			—			—
Deductions applied and payments made		(178	)		(105	)		(171	)		(454	)
Ending balance at September 30, 2019	$	655		$	56		$	196		$	907
Ending balance at March 31, 2020													$	1,324		$	184		$	468		$	1,976

Returns are recorded as a reduction of accounts receivable on the condensed consolidated balance sheets. Chargebacks, discounts and fees and rebates are recorded as a component of accrued expenses on the condensed consolidated balance sheets (See Note 6).

Pursuant to a licensing and development agreement, as amended (the “Amended Alimera Agreement”), Alimera Sciences, Inc. (“Alimera”) has a worldwide exclusive license to develop, make, market and sell ILUVIEN in return for royalties based on sales and patent fee reimbursements. ~~Royalty~~Royalties income was ~~$402,000~~$0 and ~~$446,000~~$782,000 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $1.6 million and $1.4 million for the nine months ended September 30, 2020 and 2019,~~ respectively.

Total revenue was ~~$437,000~~$13,000 and ~~$475,000~~$817,000 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $1.6 million and $1.5 million~~respectively.

On December 17, 2020, the Company entered into a royalty purchase agreement (the “RPA”) with SWK Funding LLC (“SWK”). Under the RPA, the Company sold its right to receive royalty payments on future sales of products subject to the Amended Alimera Agreement for an upfront cash payment of $16.5 million. Except for the ~~nine~~rights to the royalties, the Company retains all rights and obligations under the Amended Alimera Agreement, pursuant to which, Alimera owns worldwide rights to the Company’s Durasert technology in ILUVIEN for diabetic

macular edema (“DME”) and rights for ILUVIEN (currently marketed by the Company as YUTIQ in the U.S.) for non-infectious posterior uveitis in Europe, the Middle East, and Africa (“EMEA”). Alimera has the sole rights to utilize the intellectual property developed under the Amended Alimera Agreement. There has been no intellectual property developed jointly by Alimera and the Company as part of the Amended Alimera Agreement. The Company cannot utilize the intellectual property for the indication licensed to Alimera in order to manufacture and sell ILUVIEN.

The Company’s ongoing efforts under the Amended Alimera Agreement will consist of continuing to maintain and enforce its patents as well as providing safety data and regulatory support as necessary. None of these obligations require significant efforts on the part of the Company with respect to the generation of sales in the market. The Company will only be required to expend more extensive efforts if litigation were to arise that requires the Company to protect its patents rights pursuant to the terms of the Amended Alimera Agreement. Historically, such a defense has not been required. Similarly, regulatory support and safety data is only provided on an ad-hoc basis depending on the regulatory requests, which has been minimal historically. It remains Alimera’s sole responsibility to manufacture, actively market and promote the products under the Amended Alimera Agreement to generate the sales, which ultimately generate the royalties to be paid to SWK.

The Company classified the proceeds received from SWK as deferred revenue, to be recognized as revenue under the units-of-revenue method over the life of the RPA because of the Company’s limited continuing involvement in the Amended Alimera Agreement. SWK has no recourse and the Company assumes no credit risk in event that Alimera fails to make a royalty payment. The Company must only forward all material correspondence from Alimera to SWK, including royalty reports, notices and any other correspondence with respect to royalties to SWK. SWK has the right to audit and inspect the books and records pertaining to net sales and royalties under the Amended Alimera Agreement. Neither the Company nor SWK has the unilateral ability to cancel the transaction. There is no cap or limitation on the royalties to be received by SWK in the future and its return will reflect all royalties paid by Alimera. Because the transaction was structured as a non-cancellable sale, the Company does not have significant continuing involvement in the generation of the cash flows due to SWK and there is no limitation on the rates of return to SWK, the Company recorded the total proceeds of $16.5 million as deferred revenue under royalty sale agreement. The deferred revenue is being recognized as revenue over the life of the RPA under the "units-of-revenue" method. Under this method, amortization for a reporting period is calculated by computing a ratio of the proceeds received from SWK to the payments expected to be made by Alimera to SWK over the term of the Amended Alimera Agreement, and then applying that ratio to the period’s cash payment.

The Company recognized $180,000 of royalty revenue related to the RPA for the three months ended ~~September 30,~~March 31, 2021 in connection with the royalty payment of $583,000 in the first quarter of 2021 from Alimera to SWK, pursuant to the Amended Alimera Agreement. NaN revenue was recognized related to the RPA for the three months ended March 31, 2020. As of March 31, 2021, the Company had $973,000 and $15.3 million as current and non-current deferred revenue recognized under royalty sale agreement, respectively. As of December 31, 2020, the Company classified $885,000 and ~~2019,~~$15.6 million as current and non-current deferred revenue recognized under royalty sale agreement, respectively.

In November 2018, the Company entered into an exclusive license agreement with Ocumension Therapeutics (“Ocumension”) for the development and commercialization of its three-year micro insert using the Durasert technology for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye (YUTIQ in the U.S.) in Mainland China, Hong Kong, Macau and Taiwan. The Company received a one-time upfront payment of $1.75 million from Ocumension and is eligible to receive up to (i) $7.25 million upon the achievement by Ocumension of certain prescribed development and regulatory milestones, and (ii) $3.0 million commercial sales-based milestones. In addition, the Company is entitled to receive mid-single digit sales-based royalties. Ocumension has also received a special approval by the Hainan Province People's Government to market this product for chronic, non-infectious posterior segment uveitis in the Hainan Bo Ao Lecheng International Medical Tourism Pilot Zone (“Hainan Pilot Zone”). In March 2019, the Company entered into a Memorandum of Understanding (“2019 MOU”), pursuant to which, the Company will supply product for the clinical trials and Hainan Pilot Zone use. Paralleling to Ocumension’s normal registration process of the product with the Chinese Regulatory Authorities, the 2019 MOU modified the Company’s entitlement to the development and regulatory milestones of up to $7.25 million under the license agreement to product supply milestones or development milestones, whichever comes first, totaling up to $7.25 million.In August 2019, the Company began shipping this product to Ocumension.

The Company was required to provide a fixed number of hours of technical assistance support to Ocumension at no cost, which support has been completed and no future performance obligation exists. Ocumension is responsible for all development, regulatory and commercial costs, including any additional technical assistance

requested. Ocumension has a first right of negotiation for an additional exclusive license to the Company’s shorter-duration line extension candidate for this indication.

In August 2019, the Company received a $1.0 million development milestone payment from Ocumension triggered by the approval of its Investigational New Drug (“IND”) in China for this program. The IND allows the importation of finished product into China for use in a clinical trial to support regulatory filing.

In January 2020, the Company entered into an exclusive license agreement with Ocumension for the development and commercialization in Mainland China, Hong Kong, Macau and Taiwan of DEXYCU for the treatment of post-operative inflammation following ocular surgery. Pursuant to the terms of the license agreement, the Company received upfront payments of $2.0 million from Ocumension in February 2020 and will be eligible to receive up to (i) $6.0 million upon the achievement by Ocumension of certain prescribed development and regulatory milestones, and (ii) $6.0 million commercial sales-based milestones. In addition, the Company is entitled to receive mid-single digit sales-based royalties. In exchange, Ocumension will receive exclusive rights to develop and commercialize DEXYCU in Mainland China, Hong Kong, Macau and Taiwan, at its own cost and expense with the Company supplying product for clinical trials and commercial sale. In addition, Ocumension will receive a fixed number of hours of technical assistance support from the Company at no cost.

In August 2020, the Company entered into a Memorandum of Understanding (“2020 MOU”), pursuant to which, the Company received a one-time non-refundable payment of $9.5 million (the “Accelerated Milestone Payment”) from Ocumension as a full and final payment of the combined remaining development, regulatory and sales milestone payments under the Company’s license agreements with Ocumension for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye and for the treatment of post-operative inflammation following ocular surgery, respectively. Upon payment of the Accelerated Milestone Payment, the remaining $11.75 million in combined remaining development and sales milestone payments under the Company’s original license agreement with Ocumension upon the achievement by Ocumension of (i) remaining development and regulatory milestones of $6.25 million and commercial sales-based milestones of $3.0 million for the development and commercialization of its three-year micro insert using the Durasert technology for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye; and (ii) $6.0 million upon the achievement by Ocumension of certain prescribed development and regulatory milestones, and $6.0 million commercial sales-based milestones for the development and commercialization in Mainland China, Hong Kong, Macau and Taiwan of DEXYCU for the treatment of post-operative inflammation following ocular surgery,, totaling up to $21.25 million, were permanently extinguished and will no longer be due and owed to the Company. In exchange, Ocumension also received exclusive rights to develop and commercialize YUTIQ and DEXYCU products under its own brand names in South Korea and other jurisdictions across Southeast Asia in Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam, at its own cost and expense with the Company supplying product for clinical trials and commercial sale. The Company continues to be entitled to royalties on future product sales by Ocumension. In April 2021, Ocumension filed a New Drug Application (“NDA”) for YUTIQ under Ocumension’s distinct name to Chinese regulatory authorities and it is under review. Ocumension has been granted approval to have its NDA submission reviewed based on the U.S. NDA data and the real world data Ocumension has collected from marketing the product in Hainan Pilot Zone.

Other than a fixed number of hours of technical assistance support to be provided at no cost by the Company, Ocumension is responsible for all development, regulatory and commercial costs, including any additional technical assistance requested. All technical assistance was provided during 2020. The Chief Executive Officer of Ocumension became a director of the Company starting December 31, 2020, pursuant to a Share Purchase Agreement pursuant to which the Company sold to Ocumension 3,010,722 shares of common stock, at which time, Ocumension became a related party of the Company.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, the Company recognized ~~$9.5 million~~$268,000, related to additional technical assistance, and approximately ~~$11.5~~$2 million of license and collaboration revenue, ~~respectively.~~ Asrespectively, in addition to $5,000 and $0 of ~~September 30, 2020 and December 31, 2019, 0 deferred~~ revenue ~~was recorded for this agreement,~~from product sales, respectively.

The Company ~~recorded~~recognized $0 and $400,000 of accrued sales-based royalty expense ~~of $908,000 and $1.3 million, respectively,~~ during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~with respect~~respectively, related to ~~partnering income~~the earn-out payment equal to 20% of ~~DEXYCU share of~~ the ~~Accelerated Milestone Payment~~$2 million upfront license fee received ~~in August 2020 and upfront payment received~~from Ocumension in February 2020, ~~from Ocumension,~~as the payment of the partnering income in

The Company from time to time enters into funded agreements to evaluate the potential use of its technology systems for sustained release of third-party partner drug ~~candidates in the treatment of various diseases or conditions.~~candidates. Consideration received is generally recognized as revenue over the term of the research ~~collaborations (including feasibility study agreements).~~collaborations. Revenue recognition for consideration, if any, related to a license option right is assessed based on the terms of any such future license agreement or is otherwise recognized at the completion of the research ~~collaborations (including feasibility study agreements). Revenue~~collaborations. Revenues under research collaborations ~~(including feasibility study agreements) was $0~~totaled $60,000 and ~~$25,000~~$15,000 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $15,000 and $25,000 for the nine months ended September 30, 2020 and 2019,~~ respectively. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, $300,000~~2020, $0 and ~~$15,000~~$60,000 deferred revenue was recorded for the research collaborations, ~~(including~~ ~~feasibility study agreements),~~ respectively.

	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
Raw materials	$	776	$	1,476	$	2,773	$	2,664
Work in process		1,058		346		512		747
Finished goods		1,808		316		2,301		1,926
Total inventory	$	3,642	$	2,138	$	5,586	$	5,337

The reconciliation of intangible assets for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ was as follows (in thousands):

	September 30,			September 30,			March 31,			March 31,
	2020			2019			2021			2020
Patented technologies
Gross carrying cost at beginning of period	$	68,322		$	68,322
Gross carrying cost at end of period		68,322			68,322
Gross carrying amount at beginning of period							$	68,322		$	68,322
Gross carrying amount at end of period								68,322			68,322
Accumulated amortization at beginning of period		(40,653	)		(38,193	)		(43,113	)		(40,653	)
Amortization expense		(1,845	)		(1,845	)		(615	)		(615	)
Accumulated amortization at end of period		(42,498	)		(40,038	)		(43,728	)		(41,268	)
Net book value at end of period	$	25,824		$	28,284		$	24,594		$	27,054

The Company amortizes intangible assets with finite lives on a straight-line basis over their respective estimated useful lives. Amortization of intangible assets totaled $615,000 ~~and $1.8 million~~ for each of the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019, respectively.~~2020.

In connection with the Icon Acquisition, ~~in March 2018,~~ the initial purchase price was attributed to the DEXYCU product intangible asset. This finite-lived intangible asset is being amortized on a straight-line basis over its expected remaining useful life of ~~10.5~~10 years at the rate of approximately $2.5 million per year. Amortization expense was reported as a component of cost of sales for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019, respectively.~~2020.

Accrued expenses consisted of the following at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in thousands):

	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Personnel costs	$	3,463	$	3,263	$	2,330	$	5,686
Clinical trial costs						50		0
Professional fees						685		647
Sales chargebacks, rebates and other revenue reserves		1,146		1,889		1,475		1,109
Professional fees		739		700
Clinical trial costs		0		345
Accrued restructuring charges		270		0
Other		1,227		635		1,375		1,003
	$	6,845	$	6,832	$	5,915	$	8,445

On May 17, 2018, the Company amended the lease for its headquarters in Watertown, Massachusetts. The original five-year lease for approximately 13,650 square feet of combined office and laboratory space was set to expire in April ~~2019~~.2019. Under the amendment, the Company leased an additional 6,590 square feet of rentable area of the building, with a commencement date of September 10, 2018. The amendment extended the term of the lease for the combined space through May 31, 2025. On April 5, 2021, the Company further amended the lease to include an additional 1,409 square feet of rentable area of the building, through May 31, 2025. The Company expects the lease with respect to the additional space to commence in the second quarter of 2021. The landlord agreed to provide the Company a construction allowance of up to $670,750 to be applied toward the aggregate work completed on the total space. The Company has an option to further extend the term of the lease for one additional five-year period. Per the terms of the lease agreement, the Company does not have a residual value guarantee. The Company previously provided a cash-collateralized $150,000 irrevocable standby letter of credit as security for the Company’s obligations under the lease, which was extended through the period that is four months beyond the expiration date of the amended lease. The Company will also be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts.

In July 2017,, the Company leased approximately 3,000 square feet of office space in Basking Ridge, New Jersey under a lease term extending through June 2022,, with 2 five-year renewal options at 95% of the then-prevailing market rates. In addition to base rent, the Company is obligated to pay its proportionate share of building operating expenses and real estate taxes in excess of base year amounts. In June 2018, the Company subleased an additional 1,381 square feet of adjoining space from Caladrius Biosciences, Inc. (“Caladrius”) through May 2022. The Chief Executive Officer of Caladrius was a director of the Company through June 2020. Per the terms of the lease and sublease agreements, the Company does not have any residual value guarantees.

The Company identified and assessed the following significant assumptions in recognizing its right-of-use (“ROU”) assets and corresponding lease liabilities:

As of ~~September 30, 2020,~~March 31, 2021, the weighted average remaining term of the Company’s operating leases was ~~4.5~~4 years and the lease liabilities arising from obtaining ROU assets reflect a weighted average discount rate of 12.5%.

Supplemental balance sheet information related to operating leases as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 are as follows (in thousands):

	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Other current liabilities - operating lease current portion	$	545	$	481	$	592	$	568
Operating lease liabilities – noncurrent portion		2,483		2,898		2,172		2,330
Total operating lease liabilities	$	3,028	$	3,379	$	2,764	$	2,898

Operating lease expense recognized ~~was $213,000~~ related to ROU assets was $213,000, excluding $9,000 of variable lease costs, ~~during~~for each of the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $640,000 related to ROU assets, excluding $27,000 of variable lease costs, during each of the nine months ended September 30, 2020 and 2019, respectively,~~ and were included in general and administrative expense in the Company’s statement of comprehensive loss. Cash paid for amounts included in the measurement of operating lease liabilities ~~were $216,000~~was $221,000 and ~~$210,000~~$215,000, respectively, for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019, and $646,000 and $593,000 for the nine months ended September 30, 2020 and 2019, respectively.~~2020.

The Company is a party to a2 finance ~~lease~~leases for laboratory equipment. The equipment ~~lease expires on~~leases expire in December ~~18, 2021.~~2021 and December 2022, respectively.

Supplemental balance sheet information related to the finance lease as of ~~September 30,~~March 31, 2021 and December 31, 2020 isare as follows (in thousands):

	September 30,			March 31,			December 31,
	2020			2021			2020
Property and equipment, at cost	$	100		$	239		$	239
Accumulated amortization		(39	)		(84	)		(52	)
Property and equipment, net	$	61		$	155		$	187

Other current liabilities – finance lease current portion	$	52		$	106		$	119
Other long-term liabilities		12			53			71
Total finance lease liabilities	$	64		$	159		$	190

The components of finance lease expense recognized during the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 related to ROU assets ~~were $13,000~~was $32,000 and ~~$39,000, respectively. Interest~~interest on lease liabilities was $6,000. Cash paid for amounts included in the measurement of finance lease liabilities were ~~$2,000~~operating cash flows of $6,000 and ~~$7,000, respectively, during~~financing cash flows of $18,000 for the three ~~and nine~~ months ended ~~September 30, 2020.~~ March 31, 2021. Cash paid for amounts included in the measurement of finance lease liabilities were operating cash flows of $2,000 and ~~$7,000 during the three and nine months ended September 30, 2020, and~~ financing cash flows of ~~$15,000 and $35,000 during~~$7,000 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020. ~~The Company has 0 finance lease in 2019.~~

As of ~~September 30, 2020,~~March 31, 2021, the weighted average remaining term of the Company’s finance lease was ~~1.2~~1.5 years and the lease liabilities arising from obtaining ROU assets reflect a weighted average discount rate of 12.5%.

The Company’s total future minimum lease payments under non-cancellable leases at ~~September 30, 2020~~March 31, 2021 were as follows (in thousands):

	Operating Leases			Finance Leases			Operating Leases			Finance Leases
Remainder of 2020	$	221		$	14
2021		889			55
Remainder of 2021							$	668		$	98
2022		849			—			849			75
2023		815			—			815			0
2024 and beyond		1,176			—
2024								830			0
2025								346			0
Total lease payments	$	3,950		$	69		$	3,508		$	173
Less imputed interest		(922	)		(5	)		(744	)		(14	)
Total	$	3,028		$	64		$	2,764		$	159

On April 8, 2020, the Company applied to Silicon Valley Bank (the “SVB”) for a Paycheck Protection Program Loan (the “PPP Loan”) of $2.0 million that is administered by the U.S. Small Business Administration (the “SBA”), under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). On April 22, 2020, the PPP Loan was approved and the Company received the PPP Loan proceeds.

The PPP Loan bears interest at a fixed rate of 1.0% per annum and has a two-year term that matures on April 21, 2022. Monthly principal and interest ~~payments will commence~~are payable commencing on November 21, ~~2020. The PPP Loan may~~2020, subject to possible partial or full forgiveness and principal and interest payments can be ~~forgiven partially or fully~~deferred as described below, if the PPP Loan proceeds are used for covered payroll costs, rent and utility costs and the maintenance of employee and compensation levels.

The Paycheck Protection Program Flexibility Act of 2020 (the “PPP Flexibility Act”), enacted on June 5, 2020, amended the Paycheck Protection Program, among others, as follows: (i) extended the covered period from 8 weeks to the earlier of 24 weeks from the date the PPP Loan is originated and December 31, 2020, during which PPP funds needed to be expended in order to be ~~forgiven~~.forgiven. A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan – including before the end of the covered period – if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness; ~~(ii~~)(ii) at least 60% of PPP funds must be spent on payroll costs, with the remaining 40% available to spend on other eligible expenses; (iii) payments are deferred until the date on which the amount of forgiveness determined is remitted to the lender. If a borrower fails to seek forgiveness within 10 months after the last day of its covered period, then payments will begin on the date that is 10 months after the last day of the covered period. In addition, the PPP Flexibility Act modified the CARES Act by increasing the maturity date for loans made after the effective date from two years to a minimum maturity of five years from the date on which the borrower applies for loan forgiveness. Existing PPP loans made before the new legislation retain their original two-year term, but may be renegotiated between a lender and a borrower to match the 5-year term permitted under the PPP Flexibility Act.

The Company used all of the loan proceeds from the PPP Loan to pay expenses during the covered period that the Company believes were for eligible purposes. On September 25, 2020, the Company submitted an application to the SBA through SVB for full loan forgiveness. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part. As of the date of this filing, the application for the PPP Loan forgiveness is still ~~pending review.~~under review by the SBA.

The PPP Loan proceeds of $2.0 million were recorded as a loan in accordance with ASC 470, Debt, and included in long-term debt in the Company’s balance sheet as of ~~September 30, 2020.~~March 31, 2021. Accrued interest expense based on the stated interest rate of 1% per annum was $5,000 ~~and $9,000~~ for the three months ~~and year-to-date~~ ended ~~September 30, 2020.~~March 31, 2021.

On February 13, 2019 (the “CRG Closing Date”), the Company entered into the CRG Loan Agreement among the Company, as borrower, CRG Servicing LLC, as administrative agent and collateral agent (the “Agent”), and the lenders party thereto from time to time (the “Lenders”), providing for a senior secured term loan of up to $60 million (the “CRG Loan”). On the CRG Closing Date, $35 million of the CRG Loan was advanced (the “CRG Initial

Advance”). The Company utilized the proceeds from the CRG Initial Advance for the repayment in full of all outstanding obligations under its prior credit agreement (the “SWK Credit Agreement”) with SWK Funding LLC (“SWK”). In April 2019, the Company exercised its option to borrow an additional $15 million of the CRG Loan (the “CRG Second Advance”). The Company did 0t draw any additional funds under the CRG Loan by the final draw deadline of March 31, 2020.

The CRG Loan is due and payable on December 31, 2023 (the “Maturity Date”). The CRG Loan bears interest at a fixed rate of 12.5% per annum payable in arrears on the last business day of each calendar quarter. The Company is required to make quarterly, interest only payments until the Maturity Date. So long as no default has occurred and is continuing, the Company may elect on each applicable interest payment date to pay 2.5% of the 12.5% per annum interest as Paid In-Kind (“PIK”), whereby such PIK amount would be added to the aggregate principal amount and accrue interest at 12.5% per annum. ~~Through September 30, 2020, total~~During the three months ended March 31, 2021, 0 PIK amounts ~~of $977,000 have~~had been added to the principal balance of the CRG Loan. In addition, the Company is required to pay an upfront fee of 1.5% of amounts borrowed under the CRG Loan (excluding any paid-in-kind amounts), which is payable as amounts are advanced under the CRG Loan. The Company will also be required to pay an exit fee equal to 6% of (i) the aggregate principal amounts advanced and (ii) PIK amounts issued, under the CRG Loan Agreement. In connection with the CRG Initial Advance, a 1.5% financing fee of $525,000 and an expense reimbursement of $350,000 were deducted from the net borrowing proceeds. In connection with the CRG Second Advance, a 1.5% financing fee of $225,000 was deducted from the net borrowing proceeds.

Upon the occurrence of a bankruptcy-related event of default, all amounts outstanding with respect to the CRG Loan become due and payable immediately, and upon the occurrence of any other Event of Default (as defined in the CRG Loan Agreement), all or any amounts outstanding with respect to the CRG Loan may become due and payable upon request of the Agent or majority Lenders. Subject to certain exceptions, the Company is required to make mandatory prepayments of the CRG Loan with the proceeds of assets sales and in the event of a change of control of the Company. In addition, the Company may make a voluntary prepayment of the CRG Loan, in whole or in part, at any time. All mandatory and voluntary prepayments of the CRG Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs on or prior to December 31, 2019, an amount equal to 10% of the aggregate outstanding principal amount of the CRG Loan being prepaid, (ii) if prepayment occurs after December 31, 2019 and on or prior to December 31, 2020, 5% of the aggregate outstanding principal amount of the CRG Loan being prepaid, which was waived on December 17, 2020 when the Company paid $15.0 million against the CRG Loan obligations in connection with the consummation of the RPA agreement (see Note 3), and ~~(ii)~~(iii) if prepayment occurs after December 31, 2020 and on or prior to December 31, 2021, an amount equal to 3% of the aggregate outstanding principal amount of the CRG Loan being prepaid. NaN prepayment premium is due on any principal prepaid after December 31, 2021. Certain of the Company’s existing and future subsidiaries are guaranteeing the obligations of the Company under the CRG Loan Agreement. The obligations of the Company under the CRG Loan Agreement and the guarantee of such obligations are secured by a pledge of substantially all of the Company’s and the guarantors’ assets.

The CRG Loan Agreement contains affirmative and negative covenants customary for financings of this type, including limitations on our and our subsidiaries’ abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the CRG Loan Agreement contains the following financial covenants requiring the Company and the Guarantors to maintain:

In November 2019, CRG waived the financial covenant associated with the Company’s revenue derived from sales of its products, DEXYCU and YUTIQ, for the twelve-month period ending December 31, 2019. In October 2020, CRG (i) waived the financial covenant associated with the Company’s revenue derived from sales of its products, DEXYCU and YUTIQ, for the twelve-month period ending December 31, 2020 and (ii) amended the financial

covenant associated with the Company’s minimum product revenue to ~~$45~~$45 million from $80 million, for the twelve-month period ending December 31, 2021. In May 2021, CRG further amended the financial covenant associated with the Company’s minimum product revenue to $25 million from $45 million, for the twelve-month period ending December 31, 2021. There were no other material changes to the CRG Loan Agreement and the Company incurred 0 incremental charges for the issuance of the waivers.

The total debt discount related to the CRG ~~Loan~~Initial Advance was approximately ~~$4.3~~$3.2 million and consisted of (i) the accrual of a ~~$3.0~~$2.1 million exit fee; (ii) the ~~$750,000~~$525,000 upfront fee; and (iii) $591,000 of legal and other transaction costs. This amount is being amortized as additional interest expense over the term of the ~~CRG~~ Loan using the effective interest rate method.

Amortization of debt discount under the CRG Loan totaled $186,000 and $160,000 for the three months ended September 30, 2020 and 2019, respectively, and $534,000 and $346,000 for the nine months ended September 30, 2020 and 2019, respectively.

On March 28, 2018(the “SWK Closing Date”), the Company entered into the SWK Credit Agreement among the Company, as borrower, SWK, as agent, and the lenders party thereto from time to time, providing for a senior secured term loan of up to $20 million (the “SWK Loan”). On the SWK Closing Date, $15 million of the SWK Loan was advanced (the “SWK Initial Advance”). The remaining $5 million of the SWK Loan was advanced on June 26, 2018 (the “SWK Additional Advance”).

In connection with the SWK Loan, the Company issued a warrant (the “SWK Warrant”) to the Agent to purchase (a) 409,091 shares of Common Stock (the “Initial Advance Warrant Shares”) at an exercise price of $1.10 per share and (b) 77,721 shares of Common Stock (the “Additional Advance Warrant Shares”) at an exercise price of $1.93 per share (see Note 10). The SWK Warrant is exercisable (i) with respect to the Initial Advance Warrant Shares, any time on or after the SWK Closing Date until the close of business on the 7-year anniversary of the SWK Initial Advance and (ii) with respect to the Additional Advance Warrant Shares, any time on or after the closing of the SWK Additional Advance until the close of business on the 7-year anniversary of the SWK Additional Advance. The Agent may exercise the SWK Warrant on a cashless basis at any time. In the event the Agent exercises the SWK Warrant on a cashless basis, the Company will not receive any proceeds.

The Additional Advance Warrant Shares were recorded as a liability at the Closing Date and were remeasured at fair value at each reporting period until the date of the SWK Additional Advance. The aggregate fair value of the Additional Advance Warrant Shares at the Closing Date was $69,000. The Initial Advance Warrant Shares were recorded as equity on the Company’s balance sheet at their relative fair value of $284,000. The remaining $14.6 million of the proceeds received were allocated to the SWK Initial Advance term loan. Upon the closing of the SWK Additional Advance in June 2018, the Additional Advance Warrant Shares were ~~re-valued~~ ~~at $87,000 and reclassified to equity.~~

The total debt discount related to the ~~SWK Initial~~CRG Second Advance was ~~$2.1~~approximately $1.1 million and ~~was comprised~~consisted of ~~(1) $1.8 million, which included~~(i) the accrual of a ~~1.5%~~$900,000 exit fee; and (ii) the $225,000 upfront fee, a 6% exit fee (the “Exit Fee”) and legal and other transaction costs, which were ratably allocated to each of the 2 tranches of the SWK Loan based upon the total principal amount available to the Company under each tranche and (2) $353,000 related to the aggregate fair value of the Initial Advance Warrant Shares and the Additional Advance Warrant Shares.fee. This amount ~~was~~is being amortized as additional interest expense over the term of the ~~SWK~~ Loan using the effective interest rate method.

The total debt issue costs related to the SWK Additional Advance was $299,000 and was comprised of the allocated portions of the 1.5% upfront fee and the Exit Fee. This amount was recorded as a prepaid expense to be amortized ratably from the SWK Closing Date throughOn December 31, 2018. Through the date of the SWK Additional Advance, $97,000 was amortized and the remaining balance of $202,000 was reclassified to debt discount in June 2018. Together with the 6% Exit Fee on the SWK Additional Advance and other transaction costs, total debt discount of $652,000 associated with the SWK Additional Advance was to be amortized over the remaining life of the SWK Additional Advance portion of the SWK Loan using the effective interest rate method.

~~The SWK Loan was originally scheduled to mature on March 27, 2023 and bore interest at a per annum rate of the three-month LIBOR rate (subject to a 1.5% floor) plus 10.50%. On February 13, 2019,~~17, 2020, the Company ~~repaid~~paid $15.0 million against the ~~SWK~~CRG Loan obligations in connection with the consummation of the RPA agreement (see Note 3). This payment included (i) a $13.8 million principal portion of the CRG Loan ~~Agreement. In addition to repayment of the $20 million principal balance, the Company paid (i) a $1.2 million prepayment penalty,~~ (ii) the ~~$1.2 million~~$828,000 Exit Fee, and (iii) accrued and unpaid interest of ~~$664,000~~$378,000 through that ~~date and (iv) an additional make-whole interest payment of $306,000 covering the additional period through what would have been the first anniversary of the SWK Loan.~~ date. In connection with the partial prepayment of the ~~SWK~~CRG Loan, the Company recorded a loss on partial extinguishment of debt of ~~$3.8 million~~$905,000 in the ~~three months~~year ended ~~March~~December 31, ~~2019. In addition to the prepayment penalty and make-whole interest payment amounts, the loss on extinguishment of debt included~~2020, associated with the write-off of the remaining balance of unamortized debt discount related to the partial prepayment of ~~approximately $2.3 million.~~the CRG Loan.

Amortization of debt discount under the ~~SWK~~CRG Loan totaled ~~$84,000 in~~$147,000 and $171,000 for the ~~first quarter of 2019 through the SWK loan extinguishment date.~~three months ended March 31, 2021 and 2020, respectively.

In February 2021, the Company sold 10,465,000 shares of its common stock in an underwritten public offering at a price of $11.00 per share, including the exercise in full by the underwriters of their option to purchase up to 1,365,000 additional shares of the Company’s common stock. The gross proceeds of the offering to the Company were approximately $115.1 million. Underwriter discounts and commissions and other share issue costs totaled approximately $7.2 million.

In August 2020, the Company entered into an at-the-market facility (the “ATM Facility”) with Cantor Fitzgerald & Co (“Cantor”). Pursuant to the ATM Facility, ~~under a Form~~ ~~S-3~~ ~~shelf registration statement that was declared effective by the SEC in December 2018,~~ the Company may, at its option, offer and sell shares of its ~~Common Stock~~common stock from time to time for an aggregate offering price of up to $25.0 million. The Company will pay Cantor a commission of 3.0% of the gross proceeds from any future sales of such shares.

During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company sold ~~6,029,465~~48,538 shares of its ~~Common Stock~~common stock at a weighted average price of ~~$0.81~~$11.37 per share for gross proceeds of approximately ~~$4.9 million.~~$552,000. Share issue costs, including sales agent commissions, totaled ~~$250,000~~approximately $53,000 during the reporting period.

In February 2020, the Company sold ~~15,000,000~~1,500,000 shares of the Company’s common stock in an underwritten public offering at a price of ~~$1.45~~$14.50 per share for gross proceeds of $21.75 million. Underwriter discounts and commissions and other share issue costs totaled approximately $1.8 million.

At the Annual Meeting of Stockholders (the “Annual Meeting”) held on June 23, 2020, the Company’s stockholders approved the adoption of an amendment to the Company’s Certificate of Incorporation, to increase the number of authorized shares of its Common Stock from 150,000,000 shares to 300,000,000 shares. The Company filed the Certificate of Amendment on June 23, 2020.

~~In January 2019, the Company entered into an at-the-market program (the “ATM Program”) with B. Riley FBR Inc. Pursuant to the ATM Program, under a Form~~ ~~S-3~~ shelf registration statement that was declared effective by the SEC in December 2018, the Company may, at its option, offer and sell shares of its Common Stock from time to time for an aggregate offering price of up to $20.0 million. The Company will pay the sales agent a commission of up to 3.0% of the gross proceeds from any future sales of such shares. On July 30, 2020, the Company notified B. Riley FBR Inc. ~~that it was terminating the ATM Program in accordance with its terms, effective as of August 4, 2020.~~

During the three and nine months ended September 30, 2019, the Company sold 1,707,995 shares of its Common Stock at a weighted average price of $1.50 per share for gross proceeds of approximately $2.6 million. Share issue costs, including sales agent commissions, totaled $151,000 during the reporting period.

In April 2019, the Company sold 10,526,500 shares of common stock in an underwritten public offering at a price of $1.90 per share for gross proceeds of $20.0 million. Underwriter discounts and commissions and other share issue costs totaled approximately $1.7 million.

The following table provides a reconciliation of fixed price warrants to purchase shares of the Company’s ~~Common Stock~~common stock for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019, respectively:~~2020:

	Nine Months Ended September 30,								Three Months Ended March 31,
	2020				2019				2021				2020
			Weighted				Weighted				Weighted				Weighted
			Average				Average				Average				Average
	Number of		Exercise		Number of		Exercise		Number of		Exercise		Number of		Exercise
	Warrants		Price		Warrants		Price		Warrants		Price		Warrants		Price
Balance at beginning of period		486,812	$	1.23		486,812	$	1.23		48,683	$	12.33		48,683	$	12.33
Expired		0		0		0		0
Balance and exercisable at end of period		486,812	$	1.23		486,812	$	1.23		48,683	$	12.33		48,683	$	12.33

Pursuant to a credit agreement, the Company issued ~~the~~a warrant to SWK ~~Warrant~~Funding LLC to purchase (i) ~~409,091 Initial Advance Warrant Shares~~40,910 shares of the Company’s common stock on March 28, 2018 at an exercise price of ~~$1.10~~$11.00 per share with a seven-year term and (ii) ~~77,721 Additional Advance Warrant Shares~~7,773 shares of the Company’s common stock on June 26, 2018 at an exercise price of ~~$1.93~~$19.30 per share with a seven-year term. At ~~September 30, 2020,~~March 31, 2021, the weighted average remaining life of the ~~warrants~~warrant was approximately ~~4.53~~4.03 years.

The 2016 Long-Term Incentive Plan (the “2016 Plan”), approved by the Company’s stockholders on December 12, 2016 (the “Adoption Date”), provides for the issuance of up to ~~3,000,000~~300,000 shares of the Company’s ~~Common Stock~~common stock reserved for issuance under the 2016 Plan plus any additional shares of the Company’s ~~Common Stock~~common stock that were available for grant under the 2008 Incentive Plan (the “2008 Plan”) at the Adoption Date or would otherwise become available for grant under the 2008 Plan as a result of subsequent termination or forfeiture of awards under the 2008 Plan. At the Company’s Annual Meeting of Stockholders held on June 25, 2019, the Company’s stockholders approved an amendment to the 2016 Plan to increase the number of shares authorized for issuance by ~~11,000,000~~1,100,000 shares. At ~~September 30, 2020,~~March 31, 2021, a total of approximately ~~6,140,153 million~~443,000 shares were available for new awards.

Certain inducement awards, although not awarded under the 2016 Plan or the 2008 Plan, are subject to and governed by the terms and conditions of the 2016 Plan or 2008 Plan, as applicable.

The following table provides a reconciliation of stock option activity under the Company’s equity incentive plans and for inducement awards for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

Weighted

Weighted

Average

Average

Remaining

Aggregate

Number

Exercise

Contractual

Intrinsic

of Options

Price

Life

Value

(in years)

(in thousands)

Outstanding at January 1, 2020

10,909,800

$
2.52

Granted

3,971,397

1.24

Exercised

—

—

Forfeited

(592,353
)

1.79

Expired

(967,875
)

3.44

Outstanding at September 30, 2020

13,320,969

$
2.10

7.66

$
—

Exercisable at September 30, 2020

6,369,131

$
2.60

6.75

$
—

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number			Exercise		Contractual		Intrinsic
	of Options			Price		Life		Value
						(in years)		(in thousands)
Outstanding at January 1, 2021		1,338,880		$	20.86
Granted		120,427			12.94
Exercised		(827	)		11.65
Forfeited		(16,427	)		16.01
Outstanding at March 31, 2021		1,442,053		$	20.26		7.50	$	205
Exercisable at March 31, 2021		774,404		$	24.38		6.44	$	3

In January 2019, the Company expanded the terms of its annual stock option grants to include vesting ratable monthly over four years, or with 25% vesting after one year followed by ratable monthly vesting over three years.

Previously, the Company’s option grants generally had ratable annual vesting over three years, or 1-year cliff vesting. Nonemployee awards are granted similar to the Company’s employee awards. All option grants have a 10-year term. Options to purchase a total of ~~2,169,834~~72,453 shares of the Company’s ~~Common Stock~~common stock vested during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. Starting February 2021, the Company (i) ceased vesting ratable monthly over four years and (ii) retained 25% vesting after one year followed by ratable monthly vesting over the remaining three years.

In determining the grant date fair value of option awards during the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the Company applied the Black-Scholes option pricing model based on the following key assumptions:

The following table summarizes information about employee, non-executive director and external consultant stock options for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 (in ~~thousands, except per share amount)~~thousands):

			Three Months
	Nine Months Ended		Ended
	September 30, 2020		Mar 31, 2021
Weighted-average grant date fair value per share	$	0.73	$	8.26
Total cash received from exercise of stock options		—		10
Total intrinsic value of stock options exercised		—		2

Time-vested restricted stock unit awards (“RSUs”) issued to date under the 2016 Plan generally vest on a ratable annual basis over 3 years. The related stock-based compensation expense is recorded over the requisite service period, which is the vesting period. The fair value of all time-vested RSUs is based on the closing share price of the Company’s ~~Common Stock~~common stock on the date of grant.

The following table provides a reconciliation of RSU activity under the 2016 Plan for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

				Weighted					Weighted
	Number of			Average		Number of			Average
	Restricted			Grant Date		Restricted			Grant Date
	Stock Units			Fair Value		Stock Units			Fair Value
Nonvested at January 1, 2020		786,899		$	1.83
Nonvested at January 1, 2021							149,004		$	13.85
Granted		1,437,750			1.22		56,055			13.09
Vested		(697,505	)		1.53		(68,465	)		14.00
Forfeited		(92,467	)		1.78		(605	)		11.68
Nonvested at September 30, 2020		1,434,677		$	1.44
Nonvested at March 31, 2021							135,989		$	13.47

At ~~September 30, 2020,~~March 31, 2021, the weighted average remaining vesting term of the RSUs was ~~0.95~~1.53 years.

There were 0 non-vested deferred stock units (“DSUs”) issued and outstanding to the Company’s non-executive directors at each of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Each DSU vests one year from the date of grant. Subsequent to vesting, the DSUs will be settled in shares of the Company’s ~~Common Stock~~common stock upon the earliest to occur of (i) each director’s termination of service on the Company’s Board of Directors and (ii) the occurrence of a change of control as defined in the award agreement. At ~~September 30, 2020,~~March 31, 2021, there were ~~25,834~~1,916 vested DSUs that have not been settled in shares of the Company’s ~~Common Stock.~~common stock.

On June 25, 2019, the Company’s stockholders approved the adoption of the EyePoint Pharmaceuticals, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”) and authorized up to ~~1,100,000~~110,000 shares of ~~Common Stock~~common stock reserved for issuance to participating employees. The ESPP allows qualified participants to purchase the Company’s ~~Common Stock~~common stock twice a year at 85% of the lesser of the average of the high and low sales price of the Company’s ~~Common Stock~~common stock on (i) the first trading day of the relevant offering period and (ii) the last trading day of the relevant offering period. The number of shares of the Company’s ~~Common Stock~~common stock each employee may purchase under this plan, when combined with all other employee stock purchase plans, is limited to the lower of an aggregate fair market value of $25,000 during each calendar year, or ~~50,000~~5,000 shares of the Company’s ~~Common Stock~~common stock in any one offering period. The ~~first six month~~Company has maintained consecutive six-month offering ~~period under the ESPP began on~~periods since August 1, 2019 ~~and ended on January 31, 2020.~~. As of ~~September 30, 2020, 336,975~~March 31, 2021, 27,713 shares of the Company’s ~~Common Stock~~common stock were issued pursuant to the ESPP.

The Company estimated the fair value of the option component of the ESPP shares at the date of grant using a Black-Scholes valuation model. During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the compensation expense from ESPP shares was ~~immaterial, respectively.~~immaterial.

The Company’s consolidated statements of comprehensive loss included total compensation expense from stock-based payment awards for ~~each of~~ the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2020		2019		2020		2019		2021		2020
Compensation expense included in:
Research and development	$	881	$	210	$	1,096	$	874	$	484	$	263
Sales and marketing		331		189		724		512		263		252
General and administrative		1,177		578		2,464		2,325		241		645
	$	2,389	$	977	$	4,284	$	3,711	$	988	$	1,160

At ~~September 30, 2020,~~March 31, 2021, there was approximately ~~$4.1~~$3.7 million of unrecognized compensation expense related to outstanding equity awards under the 2016 Plan, the 2008 Plan, the inducement awards and the ESPP that is expected to be recognized as expense over a weighted-average period of approximately ~~1.35~~1.65 years.

In February 2020, the Company entered into an Exclusive License Agreement with Equinox Science, LLC (“Equinox”), pursuant to which Equinox granted usthe Company an exclusive, sublicensable, royalty-bearing right and license to certain patents and other Equinox intellectual property to research, develop, make, have made, use, sell, offer for sale and import the compound vorolanib and any pharmaceutical products comprising the compound for the prevention or treatment of age-related macular degeneration, diabetic retinopathy and retinal vein occlusion using our proprietary localized delivery technologies, in each case, throughout the world except China, Hong Kong, Taiwan and Macau.

In consideration for the rights granted by Equinox, the Company (i) made a one time, non-refundable, non-creditable upfront cash payment of $1.0 million to Equinox in February 2020, and (ii) agreed to pay milestone payments totaling up to $50 million upon the achievement of certain development and regulatory milestones, consisting of (a) completion of a Phase II clinical trial for the ~~Compound~~compound or a ~~Licensed Product,~~licensed product, (b) the filing of a new drug application or foreign equivalent for the ~~Compound~~compound or a ~~Licensed Product~~licensed product in the United States, European Union or United Kingdom and (c) regulatory approval of the ~~Compound~~compound or a ~~Licensed Product~~licensed product in the United States, European Union or United Kingdom.

The Company also agreed to pay Equinox tiered royalties based upon annual net sales of ~~Licensed Products~~licensed products in the ~~Territory.~~specified territory. The royalties are payable with respect to a ~~Licensed Product~~licensed product in a particular country in the ~~Territory~~specified territory on a country-by-country and ~~Licensed Product-by-Licensed Product~~licensed product-by-licensed product basis until the later of (i) twelve years after the first commercial sale of such ~~Licensed Product~~licensed product in such country and (ii) the first day of the

month following the month in which a generic product corresponding to such ~~Licensed Product~~licensed product is launched in such ~~country (collectively,~~

~~the “Royalty Term”).~~country. The royalty rates range from the high-single digits to low-double digits depending on the level of annual net sales. The royalty rates are subject to reduction during certain periods when there is no valid patent claim that covers a ~~Licensed Product~~licensed product in a particular country.

The Company recorded ~~$0 and~~ $1.0 million of R&D expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 ~~for this license.~~

On April 1, 2020, the Company committed to and announced a restructuring plan (the “Plan”) with regard to its commercial operations. The Plan is a result of decline in product demand associated with shut-downs of customer facilities and postponements of elective surgical procedures in response to the Pandemic. In connection with the Plan, the Company, among other things, downsized its current workforce, with reductions coming primarily from its external DEXYCU sales force and supporting commercial operations, as cataract surgery is considered a non-essential procedure due to the ~~Pandemic. The Company~~early stage of its preclinical drug development studies. NaN additional charge was recorded ~~$0 and approximately $590,000 of~~ ~~external DEXYCU sales force personnel and~~ ~~employee severance~~ for ~~discretionary termination benefits during~~ the three ~~and nine~~ months ended ~~September 30, 2020, upon notification of the affected~~ ~~external DEXYCU sales force personnel and~~ ~~employees in accordance with ASC 420,~~ ~~Exit or Disposal Cost Obligations. The charges of $590,000 were recognized in the Company’s operating results, of which $542,000 and $48,000 were included in~~ ~~sales and marketing expense and general and administrative expense, respectively.~~ ~~The Company expects the implementation of the Plan will be substantially completed by the end of fiscal 2020.~~March 31, 2021.

The following tables summarize the Company’s assets carried at fair value measured on a recurring basis at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 by valuation hierarchy (in thousands):

	September 30, 2020								March 31, 2021
			Quoted prices in		Significant other		Significant				Quoted prices in		Significant other		Significant
	Total Carrying		active markets		observable inputs		unobservable inputs		Total Carrying		active markets		observable inputs		unobservable inputs
Description	Value		(Level 1)		(Level 2)		(Level 3)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	26,538	$	26,538	$	0	$	0	$	134,543	$	134,543	$	0	$	0
	$	26,538	$	26,538	$	0	$	0	$	134,543	$	134,543	$	0	$	0

	December 31, 2019								December 31, 2020
			Quoted prices in		Significant other		Significant				Quoted prices in		Significant other		Significant
	Total Carrying		active markets		observable inputs		unobservable inputs		Total Carrying		active markets		observable inputs		unobservable inputs
Description	Value		(Level 1)		(Level 2)		(Level 3)		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	19,976	$	19,976	$	0	$	0	$	23,538	$	23,538	$	0	$	0
	$	19,976	$	19,976	$	0	$	0	$	23,538	$	23,538	$	0	$	0

Financial instruments that potentially subject the Company to concentrations of credit risk have historically consisted principally of cash and cash equivalents. At ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, substantially all of the Company’s interest-bearing cash equivalent balances were concentrated in one U.S. Government institutional money market fund that has investments consisting primarily of U.S. Government Agency debt, U.S. Treasury Repurchase Agreements and U.S. Government Agency Repurchase Agreements. These deposits may be redeemed upon demand and, therefore, generally have minimal risk. The Company’s cash equivalents are classified within Level 1 on the basis of valuations using quoted market prices.

The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short-term maturity.

The fair value of the Company’s CRG Loan is determined using a discounted cash flow analysis based on market rates for observable similar instruments as of the condensed consolidated balance sheet dates. Accordingly, the fair value of the CRG Loan is categorized as Level 2 within the fair value hierarchy. ~~The~~At March 31, 2021, the fair value of the CRG Loan was approximately $38.2 million, and the carrying value of the CRG Loan ~~at September 30, 2020~~ was approximately ~~$51.7~~ $38.4million, and consisted of ~~$48.7~~ $36.1million of its carrying amount as reported in long-term debt, and ~~$3.0~~$2.3 million of debt exit fee as reported in other long-term liabilities of the condensed consolidated balance sheet, respectively. ~~The~~At December 31, 2020, the fair value of the CRG Loan was approximately ~~$51.6~~$38.0 million, ~~at September 30, 2020.~~ and the carrying value of the CRG Loan was approximately $38.3million, and consisted of $36.0million of its carrying amount as reported in long-term debt, and $2.3 million of debt exit fee as reported in other long-term liabilities of the condensed consolidated balance sheet, respectively.

The fair value of the ~~CRG~~PPP Loan approximated its carrying value of $2.0 million at each of March 31, 2021 and December 31, ~~2019.~~2020.

The Company is subject to various other routine legal proceedings and claims incidental to its business, which management believes will not have a material effect on the Company’s financial position, results of operations or cash flows.

OnThe Company previously disclosed that on May 14, 2020 ~~the Company~~it had received a subpoena from the Division of Enforcement of the SEC seeking production of certain documents and information on topics including product sales and demand, revenue recognition and accounting in relation to product sales, product sales and cash projections, and related financial reporting, disclosure and compliance matters. ~~The~~On May 4, 2021, the Company ~~is cooperating fully in connection with this investigation. Based~~was advised by the SEC Division of Enforcement that it has concluded its investigation of the Company and that, based on ~~procedures performed~~the information it has to date, ~~in relation~~the Enforcement Division does not intend to recommend an enforcement action against the Company’s revenue recognition practices, the Company has not identified any accounting items that are not in accordance with GAAP. At this time, the Company is unable to predict the duration, scope or outcome of this matter or whether it could have a material impact on the Company’s financial condition, results of operations or cash flow.Company.

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. For periods in which the Company reports net income, diluted net income per share is determined by adding to the basic weighted average number of common shares outstanding the total number of dilutive common equivalent shares using the treasury stock method, unless the effect is anti-dilutive. Potentially dilutive shares were not included in the calculation of diluted net loss per share for each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019, respectively,~~ as their inclusion would be anti-dilutive.

Potential common stock equivalents excluded from the calculation of diluted earnings per share ~~for each of the three and nine months ended September 30, 2020 and 2019, respectively,~~ because the effect would have been anti-dilutive were as follows:

During October 2020, pursuant to the ATM Facility, the Company sold 12,093,492 shares of its Common Stock at a weighted average price of $0.49 per share for gross proceeds of approximately $5.9 million. Share issue costs, including sales agent commissions, totaled approximately $266,000.

Various statements made in this Quarterly Report on Form 10-Q are forward-looking and involve risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements give our current expectations or forecasts of future events and are not statements of historical or current facts. These statements include, among others, statements about:

Forward-looking statements also include statements other than statements of current or historical fact, including, without limitation, all statements related to any expectations of revenues, expenses, cash flows, earnings or losses from operations, cash required to maintain current and planned operations, capital or other financial items; any statements of the plans, strategies and objectives of management for future operations; any plans or expectations with respect to product research, development and commercialization, including regulatory approvals; any other statements of expectations, plans, intentions or beliefs; and any statements of assumptions underlying any of the foregoing. We often, although not always, identify forward-looking statements by using words or phrases such as “likely”, “expect”, “intend”, “anticipate”, ~~“believe”~~“believe��, “estimate”, “plan”, “project”, “forecast” and “outlook”.

The following are some of the factors that could cause actual results to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements: ~~uncertainties with respect to: the~~

We cannot guarantee that the results and other expectations expressed, anticipated or implied in any forward-looking statement will be realized. The risks set forth under Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019 and the supplementary risks set forth under Item 1A of this Quarterly Report on Form 10-Q~~2020 describe major risks to our business, and you should read and interpret any forward-looking statements together with these risks. A variety of factors, including these risks, could cause our actual results and other expectations to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements. Should known or unknown risks materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected in the forward-looking statements. You should bear this in mind as you consider any forward-looking statements.

Our forward-looking statements speak only as of the dates on which they are made. We do not undertake any obligation to publicly update or revise our forward-looking statements even if experience or future changes makes it clear that any projected results expressed or implied in such statements will not be realized.

We are a pharmaceutical company committed to developing and commercializing innovative ~~ophthalmic products for~~therapeutics to help improve the ~~treatment~~lives of patients with serious eye ~~diseases.~~ disorders. Our pipeline leverages our proprietary Durasert^®~~We have two products that were approved by~~technology for extended intraocular drug delivery including EYP-1901, a potential twice-yearly sustained delivery intravitreal anti-VEGF treatment initially targeting wet age-related macular degeneration (“wet AMD”), the leading cause of vision loss among people 50 years of age and older in the United ~~States (“U.S.”) Food and Drug Administration (“FDA”) in 2018 and commercially launched~~States. Therapies for wet AMD have a market size in the U.S. ~~during the first quarter~~ of ~~2019. We also are developing a pipeline of product candidates utilizing our proprietary Durasert technology.~~

~~YUTIQ~~^® ~~(fluocinolone acetonide intravitreal implant) 0.18 mg for intravitreal injection, was approved~~approximately $6 billion and growing, primarily driven by the ~~FDA in October 2018 and we commercially launched YUTIQ in the U.S. in February 2019. YUTIQ is indicated~~aging baby boomer population. Our product candidate pipeline also includes YUTIQ50, a potential twice-yearly treatment for ~~the treatment of chronic~~ non-infectious uveitis affecting the posterior segment of the eye, ~~which affects between 60,000 to 100,000 people each year in~~one of the ~~U.S.,~~leading causes ~~approximately 30,000 new cases of blindness every year and is the third leading cause~~ of blindness. We also have two commercial products: YUTIQ is^®, a non-erodible intravitreal implant containing 0.18 mg fluocinolone acetonide (“FA”), designed to release FA at an initial rate of 0.25 mcg/day, and lasting for up to 36 months. Injected into the eye during a physician office visit, YUTIQ delivers a micro-dose of a corticosteroid to the back of the eye on a sustained nearly constant (zero order release) basis. YUTIQ utilizes our proprietary Durasert^® ~~sustained-release drug delivery technology that can deliver drugs for predetermined periods of time ranging from months to years.~~

~~DEXYCU~~^® (dexamethasone intraocular suspension) 9%, for intraocular administration, was approved by the FDA in February 2018 for the treatment of post-operative ocular inflammation and commercially launched in the U.S. in March 2019 with a primary focus on its use immediately following cataract surgery. DEXYCU is administered as a single dose directly into the surgical site at the end of ocular surgery and is the first long-acting intraocular product approved by the FDA for the treatment of post-operative inflammation. DEXYCU utilizes our proprietary Verisome^® drug-delivery technology, which allows for a single intraocular injection that releases dexamethasone, a corticosteroid, for up to 22 days. In 2018, there were approximately 3.8 million cataract surgeries performed in the U.S.

EYP-1901 is being developed by the us as a potential 6-month intravitreal treatment for wet age-related macular degeneration (“wAMD”). EYP-1901 utilizes our bioerodible Durasert technology combined with vorolanib, an anti-VEGF tyrosine kinase inhibitor (“TKI”). Vorolanib has previously been studied in human clinical trials as an orally delivered therapy. We completed initial animal pharmacokinetic and toxicology studies and initiated a GLP toxicology study in March 2020 to support the anticipated filing of an Investigational New Drug (“IND”) application with the FDA by the end of 2020. A ~~Phase 1 clinical trial is expected to follow upon acceptance of the IND~~ ~~by the FDA.We believe EYP-1901 has potential for~~ ~~additional indications in diabetic retinopathy (“DR”) and retinal vein occlusion (“RVO”).~~

~~YUTIQ50 is being developed by us as a potential 6-month intravitreal~~once every three-year treatment for chronic non-infectious uveitis affecting the posterior segment of the eye. We have consulted with the FDA and identified a clinical pathway for an sNDA filing that involves a clinical trial of a small study of patients, randomized 2:1. We are currently evaluating the timeline and investment requirements for the initiation of this trial.

We are entitled to royalties pursuant to license and collaboration agreements utilizing our Durasert technology platform. These include ILUVIEN® for the treatment of diabetic macular edema (“DME”), and pursuant to EMEA regulatory approval received in March 2019, ILUVIEN for uveitis, licensed to Alimera Sciences, Inc. (“Alimera”).

We also earn revenues from research collaborations, license agreements and other arrangements, that include upfront fees, research funding and development funding, milestone payments and royalties. These include license agreements and, from time to time, funded feasibility study agreements. These agreements include (i) an exclusive license with OncoSil Medical Ltd for the development and commercialization of a product candidate for the treatment of pancreatic cancer and (ii) exclusive license agreements with Ocumension Therapeutics (“Ocumension”) for the development and commercialization in Mainland China, Hong Kong, Macau and Taiwan of (a) our Durasert three-year treatment of non-infectious uveitis affecting the posterior segment of the eye, and (b) DEXYCU, for the treatment of post-operative ocular inflammation . We also undertake research agreements with collaborators which include formulation, clinical and non-clinical manufacturing and other pre-clinical studies designed to evaluate the

use of our Durasert technology platform, or potentially in the future our Verisome technology platform, for the delivery of third-party proprietary compounds for various eye diseases or other indications.

DEXYCU^®, ~~YUTIQ~~^® ~~and Durasert™ are our trademarks. Retisert~~^® ~~is Bausch & Lomb’s trademark. ILUVIEN~~^® ~~is Alimera’s trademark. Verisome~~^® is Ramscor, Inc.’s trademark. Information with respect to ILUVIEN, including regulatory and marketing information, and Alimera’s plans and intentions, reflects information publicly disclosed by Alimera.a single dose treatment for postoperative inflammation following ocular surgery.

The preparation of consolidated financial statements in conformity with GAAP requires that we make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates, judgments and assumptions on historical experience, anticipated results and trends, and on various other factors that we believe are reasonable under the circumstances at the time. By their nature, these estimates, judgments and assumptions are subject to an inherent degree of uncertainty. Actual results may differ from our estimates under different assumptions or conditions. In our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, we set forth our critical accounting policies and estimates, which included revenue recognition, reserves for variable consideration associated with our commercial revenue and recognition of expense in outsourced clinical trial agreements. ~~In the first quarter of 2019, we began selling commercial products and consider reserves for variable consideration related to product sales to be a critical accounting estimate.~~ See Note 2 of the notes to our unaudited condensed consolidated financial statements contained in this quarterly report on Form 10-Q for a description of our accounting policies and estimates for reserves for variable consideration related to product sales.

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~September 30, 2019:~~March 31, 2020:

	Three Months Ended												Three Months Ended
	September 30,						Change						March 31,						Change
	2020			2019			Amounts			%			2021			2020			Amounts			%
	(In thousands except percentages)												(In thousands except percentages)
Revenues:
Product sales, net	$	5,758		$	1,009		$	4,749			471	%	$	6,802		$	4,687		$	2,115			45	%
License and collaboration agreement		9,535			1,054			8,481			805	%		341			2,020			(1,679	)		(83	)%
Royalty income		402			446			(44	)		(10	)%		180			782			(602	)		(77	)%
Total revenues		15,695			2,509			13,186			526	%		7,323			7,489			(166	)		(2	)%
Operating expenses:
Cost of sales, excluding amortization of acquired intangible assets		1,882			327			1,555			476	%		1,390			980			410			42	%
Research and development		4,090			3,484			606			17	%		5,479			4,853			626			13	%
Sales and marketing		5,269			7,778			(2,509	)		(32	)%		5,659			8,125			(2,466	)		(30	)%
General and administrative		5,796			4,365			1,431			33	%		5,115			4,360			755			17	%
Amortization of acquired intangible assets		615			615			—		na				615			615			—		na
Total operating expenses		17,652			16,569			1,083			7	%		18,258			18,933			(675	)		(4	)%
Loss from operations		(1,957	)		(14,060	)		12,103			86	%		(10,935	)		(11,444	)		509			4	%
Other income (expense):
Interest and other income		(4	)		183			(187	)		(102	)%		1			54			(53	)		(98	)%
Interest expense		(1,840	)		(1,770	)		(70	)		(4	)%		(1,346	)		(1,784	)		438			25	%
Loss on extinguishment of debt		—			—			—		na
Other expense, net		(1,844	)		(1,587	)		(257	)		(16	)%		(1,345	)		(1,730	)		385			22	%
Net loss	$	(3,801	)	$	(15,647	)	$	11,846			76	%	$	(12,280	)	$	(13,174	)	$	894			7	%

Product sales, net represents the gross sales of ~~DEXYCU~~YUTIQ and ~~YUTIQ~~DEXYCU less provisions for product sales allowances. Product sales, net increased by ~~$4.7~~$2.1 million to ~~$5.8~~$6.8 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$1.0~~$4.7 million for the three months ended September 30, 2019. This increase in revenue was primarily attributable to an increase in underlying customer demand and Distributor purchases of both products. Although we did see a modest return of customer demand for both products beginning in late Q2 2020, we expect this demand level to continue at decreased levels through the duration of the Pandemic until restrictions on elective surgeries and office visits are removed. Please see the Recent Development section for more information on the impact of the Pandemic on, among other things, our product sales.

License and collaboration agreement revenues increased by $8.5 million for the three months ended September 30, 2020 compared to $1.1 million for the three months ended September 30, 2019. This increase was

March 31, 2020. ~~attributable primarily to the recognition of $9.5 million under our Ocumension~~ ~~2020 MOU entered into in August 2020 (see Note 3)~~.

Royalty income decreased by $44,000, or 10%, to $402,000 for the three months ended September 30, 2020 compared to $446,000 for the three months ended September 30, 2019. The decrease was attributable primarily to lower ILUVIEN net sales under the Amended Alimera Agreement. Alimera indicated in their second quarter earning’s press release that their sales were, and will continue to be, negatively impacted by the Pandemic.

Cost of sales, excluding amortization of acquired intangible assets, increased by $1.6 million, or 476%, to $1.9 million for the three months ended September 30, 2020 from $327,000 for the three months ended September 30, 2019. This increase was primarily attributable to (i) an increase in royalty expense primarily due to the one-time $9.5 million recognition of revenue under the 2020 MOU with Ocumension and (ii) higher costs associated with higher product sales, primarily costs of goods and distribution fees.

Research and development expenses increased by $606,000, or 17%, to $4.1 million for the three months ended September 30, 2020 from $3.5 million for the same period in the prior year. This increase was attributable primarily to (i) approximately $335,000 in personnel and related expenses, primarily stock based compensation and (ii) approximately $170,000 in preclinical studies and testing expenses, primarily for EYP-1901.

Sales and marketing expenses decreased by $2.5 million, or 32%, to $5.3 million for the three months ended September 30, 2020 from $7.8 million for the same period in the prior year. This decrease was attributable primarily to (i) approximately $1.8 million of net contract sales organization expenses due to the reduction in DEXYCU KAMs as per our previously announced restructuring plan, including severance and (ii) approximately $900,000 in decreased marketing expenses.

General and administrative expenses increased by $1.4 million, or 33%, to $5.8 million for the three months ended September 30, 2020 from $4.4 million for the same period in the prior year. This increase was attributable primarily to (i) $484,000 in legal, audit and other professional fees, (ii) $421,000 in personnel and related expenses, primarily stock based compensation, (iii) $227,000 in consulting expenses and (iv) $199,000 in insurance expense, primarily our D&O policy.

Amortization of acquired intangible assets totaled $615,000 for both the three months ended September 30, 2020 as well as the same period in the prior year. This amount is attributable to the DEXYCU product intangible asset that resulted from the Icon Acquisition (see Note 5).

Interest expense totaled $1.8 million for the three months ended September 30, 2020, which included $186,000 of amortization of debt discount and $330,000 of non-cash payment-in-kind interest expense all related to the CRG Debt. Interest expense in the three months ended September 30, 2019 was $1.8 million which included $160,000 of amortization of debt discount and $322,000 of non-cash payment-in-kind interest expense.

Interest income from amounts invested in an institutional money market fund decreased to $1,000 for the three months ended September 30, 2020 compared to $183,000 in the prior year quarter, due primarily to higher interest-bearing assets and higher money market interest rates in the prior year quarter.

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019:~~

Nine Months Ended

September 30,

Change

2020

2019

Amounts

%

(In thousands except percentages)

Revenues:

Product sales, net

$
14,151

$
8,941

$
5,210

58
%
License and collaboration agreement

11,590

1,125

10,465

930
%
Royalty income

1,565

1,666

(101
)

(6
)%
Total revenues

27,306

11,732

15,574

133
%
Operating expenses:

Cost of sales, excluding amortization of acquired
intangible assets

3,363

1,363

2,000

147
%
Research and development

12,219

11,237

982

9
%
Sales and marketing

19,483

22,373

(2,890
)

(13
)%
General and administrative

14,949

13,790

1,159

8
%
Amortization of acquired intangible assets

1,845

1,845

—

na

Total operating expenses

51,859

50,608

1,251

2
%
Loss from operations

(24,553
)

(38,876
)

14,323

37
%
Other income (expense):

Interest and other income

58

692

(634
)

(92
)%
Interest expense

(5,430
)

(4,389
)

(1,041
)

(24
)%
Loss on extinguishment of debt

—

(3,810
)

3,810

na

Other expense, net

(5,372
)

(7,507
)

2,135

28
%
Net loss

$
(29,925
)

$
(46,383
)

$
16,458

35
%

Product sales net represents the gross sales of DEXYCU and YUTIQ less provisions for product sales allowances. Product sales, net increased by $5.2 million to $14.2 million for the nine months ended September 30, 2020 compared to $8.9 million for the nine months ended September 30, 2019. We commenced U.S. commercial sales of YUTIQ in February 2019 and DEXYCU in March 2019. Product sales for the nine-months ended September 30,during 2020 were negatively impacted due to shutdowns associated with the Pandemic in the U.S. Although we did see a modest return of customer demand for both products in ~~late Q2~~the third and fourth quarters of 2020, we expect ~~this~~ demand ~~level~~ to continue at ~~current~~ decreased levels through the duration of the Pandemic until restrictions on elective surgeries and office visits are removed. Customer demand has a direct impact on product orders from our specialty distributors that we record as net product sales. Net product revenue represents product purchased by our distributors whereas customer demand represents purchases of product by physician practices and ASCs from our distributors. Please see the Recent Development section for more information on the impact of the Pandemic on, among other things, our product sales. Currently, the pass-through reimbursement for DEXYCU is set to expire on March 31, 2022, if not otherwise extended.

License and collaboration agreement revenues ~~increased~~decreased by ~~$10.5~~$1.7 million, or 83%, to $341,000 for the three months ended March 31, 2021 compared to $2.0 million for the ~~nine~~three months ended ~~September 30, 2020 compared to $1.1 million for the nine months ended September 30, 2019.~~March 31, 2020. This ~~increase~~decrease was attributable primarily to the recognition of ~~$9.5 million under our Ocumension~~ ~~2020 MOU entered into August 2020 (see Note 3) as well as~~ approximately $2.0 million from Ocumension upon signing a license agreement for DEXYCU in China ~~compared with $1.0 million recognized in 2019 from Ocumension upon achieving their first development milestone for YUTIQ.~~during the three months ended March 31, 2020.

Royalty income decreased by ~~$101,000,~~$602,000, or 6%77%, to ~~$1.6 million~~$180,000 for the ~~nine~~three months ended ~~September 30, 2020 from $1.7 million~~March 31, 2021 compared to $782,000 for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The decrease was attributable ~~primarily~~ to ~~lower ILUVIEN net sales~~the impact of the royalty monetization agreement with SWK Holdings that grants to SWK all future royalty payments under the Amended Alimera Agreement beginning with the fourth quarter of 2020 for a one-time payment of $16.5 million. Due to the accounting treatment for this agreement (see Revenue Recognition section), we recognize a non-cash portion of deferred revenue as Alimera pays royalties to SWK beginning in the ~~second~~first quarter of ~~2020. Alimera indicated in their second quarter earning’s press release that their sales were, and will continue to be, impacted by the Pandemic. Royalty income was also impacted by recognizing no~~2021 (see Note 3).

We expect lower royalty revenue ~~after the quarter ended March 31, 2019 for Retisert royalty as the licensee, Bausch and Lomb informed us in early 2019 that they consider this agreement to have ended due~~related to the ~~expiration of certain patents.~~royalty monetization agreement in 2021 and future periods, compared to 2020.

Cost of sales, excluding amortization of acquired intangible assets, increased by ~~$2.0 million,~~$410,000, or ~~147%~~42%, to ~~$3.4 million for the nine months ended September 30, 2020 from~~ $1.4 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2021 from $980,000 for the three months ended March 31, 2020. This increase was primarily attributable to (i) approximately $1.3 million of royalty expense associated with the $9.5 million received from Ocumension under the 2020 MOU as well as $2 million received from the Ocumension Dexycu signing payment received and (ii) higherincreased costs associated with higher product sales, primarily costs of goods and distribution fees.

Research and development expenses increased by ~~$982,000,~~$626,000, or 9%13%, to ~~$12.2~~$5.5 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 from ~~$11.2~~$4.9 million for the same period in the prior year. This increase was attributable primarily to (i) $1.5 million in increased clinical costs, primarily related to our EYP-1901 Phase 1 clinical trial and (ii) approximately $247,000 of personnel related costs for incremental new hires, partially offset by a decrease of approximately $300,000 in investigator-initiated studies and other medical affairs related costs. The first quarter of 2020 also included a one-time $1.0 million payment ~~to Equinox~~ for the licensing of ~~Vorolanib, (ii) approximately $702,000 of increased expense~~vorolanib for pre-clinical studies, (iii) approximately $300,000 in lab and clinical supplies expense primarily for support of the EYP-1901 initiatives and (iv) approximately $258,000 in increased FDA user fee expenses related to DEXYCU and YUTIQ, partially offset by approximate decreases of (i) $646,000 in consulting expenses, (ii) $546,000 in stability and other testing and (iii) $172,000 in personnel and related expenses.EYP-1901.

Sales and marketing expenses decreased by ~~approximately $2.9~~$2.5 million, , or ~~13%~~30%, to ~~$19.5~~$5.7 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 from ~~$22.4~~$8.1 million for the same period in the prior year. This decrease was primarily attributable to (i) approximately ~~$2.7~~$2.0 million of net ~~contract sales organization (CSO)~~personnel related expenses, primarily due to the reduction in DEXYCU KAMs ~~as per our previously announced restructuring plan, including severance~~that occurred in the second quarter of 2020 and (ii) ~~$1.3~~$1.2 million in marketing and related expenses in conjunction with reduced spending due to the Pandemic, partially offset by ~~(i) an approximate $1.0 million~~a $570,000 increase in ~~personnel and related expenses, primarily from the full year~~commission due to ~~date impact of prior year additions and (ii) approximately $264,000 in increased expenses related to~~ImprimisRx, our ~~HUB, an outsourced firm that performs benefit investigations on behalf of patients~~commercial partner for ~~providers, and other market access initiatives.~~DEXYCU.

General and administrative expenses increased by ~~$1.2 million~~$755,000, or 8%17%, to ~~$14.9~~$5.1 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 from ~~$13.8~~$4.4 million for the same period in the prior year. This increase was attributable primarily to (i) ~~$838,000~~$367,000 in consulting, investor relations and other spending initiatives and (ii) $320,000 in legal, audit and other professional fees, (ii) $556,000 in insurance expense, primarily our D&O policy and (iii) $452,000 in consulting expenses, partially offset by approximately $731,000 of decreased personnel and related expenses, primarily stock-based compensation and recruiting fees.services.

Amortization of acquired intangible assets totaled ~~$1.8 million~~$615,000 for both the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 as well as the same period in the prior year. This amount was attributable to the DEXYCU product intangible asset that resulted from the Icon Acquisition (see Note 5).

Interest expense totaled ~~$5.4~~$1.3 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, which included ~~$534,000~~$147,000 of amortization of debt discount and ~~$977,000 of~~no non-cash payment-in-kind interest expense all related to the CRG ~~Debt.~~Loan. We incurred lower interest expense due to the $13.7 million partial principal paydown in the fourth quarter of 2020 on the CRG Loan. Interest expense in the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$4.4~~$1.8 million which included ~~$346,000~~$171,000 of amortization of debt discount and ~~$728,000~~$323,000 of non-cash payment-in-kind interest expense. ~~During the prior year period, we extinguished the SWK Loan and established a new term loan facility with CRG (see Note 8).~~

Interest income from amounts invested in an institutional money market fund decreased to ~~$58,000~~$1,000 for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$692,000~~$54,000 in the prior year quarter, due primarily to ~~higher interest-bearing assets and~~ higher money market interest rates in the prior ~~year.~~year quarter. At the start of the Pandemic, money market rates fell substantially beginning March 2020, and current interest earned is therefore low, despite our increased cash balance.

We have had a history of operating losses and an absence of significant recurring cash inflows from revenue, and at ~~September 30, 2020~~March 31, 2021 we had a total accumulated deficit of ~~$495.2~~$523.0 million. Our operations have been financed primarily from sales of our equity securities, issuance of debt and a combination of license fees, milestone payments, royalty income and other fees received from collaboration partners. In the first quarter of 2019, we commenced the U.S. launch of our first two commercial products, YUTIQ and DEXYCU. However, we have not received sufficient revenues from our product sales to fund operations and we do not expect revenues from our product sales to generate sufficient funding to sustain our operations in the near-term.Accordingly, the foregoing conditions, taken together, continue to raise substantial doubt about our ability to continue as a going concern for one year from the issuance of the financial statements included in this report. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our total cash and cash equivalents were ~~$28.7~~$138.6 million at ~~September 30, 2020.~~March 31, 2021. During the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, we ~~received~~recorded net ~~cash~~ proceeds of ~~$20.0~~$107.9 million ~~on February 25, 2020~~ from the issuance of shares of our common stock (“Common Stock”) in an underwritten public offering (see Note 9). ~~In addition, on April 8, 2020, we submitted an application through Silicon Valley Bank for the Paycheck Protection Program Loan (the “PPP Loan”) pursuant to the~~ ~~Coronavirus Aid, Relief and Economic Security Actadministered by the U.S. Small Business Administration (the “SBA”).~~ ~~On April 22, 2020, we received PPP Loan proceeds of $2.0 million~~. Under the terms of the PPP Loan, the Company is prohibited from changing ownership without the consent of the SBA and Silicon Valley Bank (“SVB”) in certain scenarios, which may include the sale or issuance of our equity securities. In October 2020, the SBA issued guidance defining change of ownership as, among other things, at least 20% of the common stock or other ownership interest of a borrower (including a publicly traded entity) isWe also sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the company. For purposes of determining a change of ownership, all sales and other transfers occurring since the date of approval of the PPP Loan must be aggregated to determine whether the relevant threshold has been met. But the SBA guidance noted that, for publicly traded borrowers, only sales or other transfers that result in one person or entity owning at least 20% of the ownership interest of the borrower are aggregated. During the three and nine months ended September 30, 2020, we sold ~~6,029,465~~ shares of our ~~common stock (“~~Common ~~Stock”) utilizing~~Stock under our at-the-market facility ~~(“ATM”) at a weighted average price of $0.81 per share for~~during the three months ended March 31, 2021 and recorded net proceeds of approximately ~~$4.9 million (See Note 9).~~$499,000.

The CRG Loan is due and payable on December 31, 2023 (the “Maturity Date”). The CRG Loan bears interest at a per annum rate (subject to increase during an event of default) equal to 12.5%, of which 2.5% may be paid in-kind at ~~the~~our election, ~~of the Company,~~ so long as no default or event of default under the CRG Loan Agreement has occurred and is continuing. ~~The Company is~~We are required to make interest only payments on a quarterly basis until the Maturity Date. ~~The Company~~We will also be required to pay an exit fee equal to 6% of the aggregate principal amounts advanced (including any paid-in-kind amounts) under the CRG Loan Agreement. to certain exceptions, we are required to make mandatory prepayments of the CRG Loan with the proceeds of assets sales and in the event of a change of control of our Company. In addition, we may make a voluntary prepayment of the CRG Loan, in whole or in part, at any time. All mandatory and voluntary prepayments of the CRG Loan are subject to the payment of prepayment premiums, ~~as follows: (i) if prepayment occurs after December 31, 2019 and on or prior to December 31, 2020, 5% of the aggregate outstanding principal amount of the CRG Loan being prepaid and (ii)~~ if prepayment occurs after December 31, 2020 and on or prior to December 31, 2021, in an amount equal to 3% of the aggregate outstanding principal amount of the CRG Loan being prepaid. No prepayment premium is due on any principal prepaid after December 31, 2021.

Certain of ~~the Company’s~~our existing and future subsidiaries, including the Guarantors, are guaranteeing ~~the~~our obligations ~~of us~~ under the CRG Loan Agreement. Our obligations under the CRG Loan Agreement and the guarantee of such obligations are secured by a pledge of substantially all of our and the Guarantors’ assets.

On May 3, 2021, we entered into a waiver to the CRG Loan Agreement (the “Waiver”), pursuant to which CRG reduced the financial covenant associated with our revenue derived from sales of YUTIQ and DEXYCU for the twelve-month period ended December 31, 2021 from $45 million to $25 million. On October 8, 2020, we entered into a Waiver to the CRG Loan Agreement (the “Waiver”) pursuant to which CRG waived the financial covenant associated with our revenue derived from sales of ~~DEXYCU~~YUTIQ and ~~YUTIQ~~DEXYCU for the twelve-month period ended December 31, 2020 and reduced the revenue covenant for the ~~twelve month~~twelve-month period ending December 31, 2021 from $80 million to $45 million. On November 19, 2019, we entered into a Waiver to the CRG Loan Agreement (the “Waiver”) pursuant to which CRG waived the financial covenant associated with our revenue derived from sales of ~~DEXYCU~~YUTIQ and ~~YUTIQ~~DEXYCU for the twelve-month period ended December 31, 2019. If we do not maintain compliance with all of the continuing covenants and other terms and conditions of the CRG Loan or secure a waiver for any non-compliance, then the Lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding, plus penalties and interest, including an exit fee and any prepayment fees, and foreclose on the collateral granted to them to secure such indebtedness. Such repayment would have a material adverse effect on our business and financial condition.

38On December 17, 2020, we paid $15.0 million against the CRG Loan obligations in connection with the consummation of the RPA agreement (see Note 3). In addition to repayment of the $13.8 million principal portion of the CRG Loan, we paid (i) the $828,000 Exit Fee, and (ii) accrued and unpaid interest of $378,000 through that date. CRG waived the financial covenant in the CRG Loan associated with the payment of prepayment premiums if prepayment occurred after December 31, 2019 and on or prior to December 31, 2020.As of March 31, 2021, our outstanding balance, including principal and the exit fee, under the CRG Loan was approximately $40.3 million, and

consisted of approximately $38.4 million of carrying value (see Note 12), and $2.1 million of the remaining balance of unamortized debt discount related to the CRG Loan.

InAt March 31, 2021, we had cash and cash equivalents of $138.6 million. We expect that our cash and cash equivalents combined with anticipated net cash inflows from product sales will fund our operating plan through December 31, 2022, under current expectations regarding (i) the ~~first quarter of 2019, we commenced the U.S. launch~~timing and outcomes of our ~~first two commercial products, YUTIQ~~Phase 1 clinical trial for EYP-1901 for the treatment of wet AMD, and ~~DEXYCU. To date, management does not yet have sufficient historical evidence~~(ii) initiation of our Phase 2 clinical trials for EYP-1901 for the treatment of wet AMD. Due to ~~assert~~the difficulty and uncertainty associated with the design and implementation of clinical trials, we will continue to assess our cash and cash equivalents and future funding requirements. However, there is no assurance that ~~it is probable~~additional funding will be achieved and that we will ~~receive sufficient revenues~~succeed in our future operations.

Actual cash requirements could differ from ~~our~~management’s projections due to many factors, including cash generation from sales of YUTIQ and DEXYCU, ~~to generate cash to fund operations.~~additional investments in research and development programs, clinical trial expenses for EYP-1901, competing technological and market developments and the costs of any strategic acquisitions and/or development of complementary business opportunities. In addition, the Pandemichas had, and will likely continue to have, a material and adverse impact on our business, including as a result of preventive and precautionary measures that we, other businesses, and governments are taking. Due to these impacts and measures, we have experienced and will likely continue to experience significant and unpredictable reductions in the demand for our commercial products as customers have shut down their facilities and non-essential surgical procedures have been postponed in an effort to promote social distancing and to redirect medical resources and priorities towards the treatment of COVID-19. As

The amount of ~~September 30, 2020, we had recurring operating losses since our inception and have an accumulated deficit of approximately $495.2 million and working capital of $34.7 million.~~ During October 2020, the Company received net proceeds of $5.7 million through its at-the-market facility (the “ATM Facility”) financing. At October 31, 2020, the Company had cash and cash equivalents of $30.5 million. We have not received sufficient revenues from our product sales to fund operations and we do not expect revenues from our product sales to generate sufficient funding to sustain our operations in the near-term.

~~Our plans that are intended to mitigate those conditions include continuing to fulfill our funding needs through cash inflows from revenue of YUTIQ and DEXYCU product sales, licensing~~ ~~and research collaboration transactions~~, additional capital raises and other arrangements. Our plans also include the continuation of expense reductions to conserve cash in response to a material adverse impact on our revenues due to a significant decline in product demand associated with shut down of customer facilities and postponements of elective surgical procedures and physician office visits in response to the Pandemic. We believe that our cash and cash equivalents of $30.5 million at October 31, 2020 and expected cash inflows from our product sales and royalty agreements, and ATM Facility, coupled with cash conservation activities will enable us to fund our current and planned operations into 2021. There can be no assurance, that we will ~~receive the additional funding from any of these potential resources and even if cash proceeds are received, that such proceeds would~~require will be sufficient to support our current operating plan for the next twelve months from the date of issuance of these financial statements. Actual cash requirements could differ from management’s projections due to many factors, including the success of commercialization for YUTIQ and DEXYCU, the actual costs of these commercialization efforts, additional investments in research and development programs, competing technological and market developments and the costs of any strategic acquisitions and/or development of complementary business opportunities.

~~Actual cash requirements may differ from projections and will depend on~~influenced by many factors, including, but not limited to:

We do not know ~~whether~~if additional capital will be available ~~if and~~ when needed or on terms favorable to us or our stockholders. Collaboration, licensing or other agreements may not be available on favorable terms, or at all. We do not know the extent to which we will receive funds from the commercialization of YUTIQ or DEXYCU. If we seek to sell our equity securities, ~~in an offering,~~ we do not know whether and to what extent we will be able to do so, or on what terms. Further, the continued spread of COVID-19 has also led to severe disruption and volatility in the global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. If available, additional equity financing may be dilutive to stockholders, debt financing may involve restrictive covenants or other unfavorable terms and dilute our existing stockholders’ equity, and funding through collaboration, licensing or other commercial agreements may be on unfavorable terms, including requiring us to relinquish rights to certain of our technologies or products. If adequate financing is not available if and when needed, we may delay, reduce the scope of, or eliminate research or development programs, independent commercialization of YUTIQ and DEXYCU, or other new products, if any, postpone or cancel the pursuit of product candidates, ~~including pre-clinical and clinical trials and new business opportunities, reduce staff and operating costs,~~ or otherwise significantly curtail our operations to reduce our cash requirements and extend our capital. ~~Additionally, we may never become profitable, or if we do, we may not be able to sustain profitability on a recurring basis.~~

Our consolidated statements of historical cash flows are summarized as follows (in thousands):

	Nine Months Ended									Three Months Ended
	September 30,									March 31,
	2020			2019			Change			2021			2020			Change
Net loss:	$	(29,925	)	$	(46,383	)	$	16,458		$	(12,280	)	$	(13,174	)	$	894
Changes in operating assets and liabilities		1,820			(9,463	)		11,283			(4,641	)		(5,487	)		846
Other adjustments to reconcile net loss to cash flows from operating activities		7,775			10,633			(2,858	)		1,822			2,316			(494	)
Net cash used in operating activities	$	(20,330	)	$	(45,213	)	$	24,883		$	(15,099	)	$	(16,345	)	$	1,246
Net cash used in investing activities	$	(170	)	$	(207	)	$	37		$	-		$	(16	)	$	16
Net cash provided by financing activities	$	27,012		$	31,919		$	(4,907	)	$	108,769		$	20,446		$	88,323

Operating cash outflows for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 totaled ~~$20.3~~$15.1 million, primarily due to our net loss of ~~$29.9~~$12.3 million, reduced by ~~$7.8~~$1.8 million of non-cash expenses, which included ~~$4.3 million~~$988,000 of stock-based compensation, ~~$1.8 million~~$615,000 of amortization of the DEXYCU finite-lived intangible asset, and ~~$1.5 million~~$147,000 of ~~non-cash interest and~~ amortization of debt discount.

Operating cash outflows for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 totaled ~~$45.2~~$16.3 million, primarily due to our net loss of ~~$46.4~~$13.2 million, reduced by ~~$10.6~~$2.3 million of non-cash expenses, which included ~~a $3.8 million loss on extinguishment of our SWK Loan, $3.7~~$1.2 million of stock-based compensation, ~~and $1.8 million~~$615,000 of amortization of the DEXYCU finite-lived intangible asset, and ~~$1.2 million~~$494,000 of non-cash interest and amortization of debt discount.

For the three months ended March 31, 2021, there was no net cash used in investing activities. Net cash used in investing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 consisted of ~~$170,000 of purchases of property and equipment. Net cash used in investing activities for the nine months ended Sept 30, 2019 consisted of $207,000~~$16,000 of purchases of property and equipment.

Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 totaled ~~$27.0~~$108.8 million and consisted of the following:

Net cash provided by financing activities for the three months ended March 31, 2020 totaled $20.5 million and consisted of the following:

~~Net cash provided by financing activities for the nine months ended September 30, 2019 totaled $31.9 million and consisted of the following:~~

We had no off-balance sheet arrangements as of ~~September 30, 2020~~March 31, 2021 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to investors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September 30, 2020.~~March 31, 2021. The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their desired objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~September 30, 2020,~~March 31, 2021, our principal executive officer and our principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

During the quarter ended ~~September 30, 2020,~~March 31, 2021, there ~~have been~~were no changes in our internal control over financial reporting that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Due to the ~~continued~~ Pandemic, certain employees of the Company continued working remotely ~~during~~through the ~~quarter.~~quarter ended March 31, 2021. As a result of the continued remote working environment, the Company has not identified any material changes in the Company’s internal control over financial reporting. The Company is continually monitoring and assessing the Pandemic situation to determine any potential impacts on the design and operating effectiveness of our internal controls over financial reporting.

OnWe are subject to various routine legal proceedings and claims incidental to our business, which management believes will not have a material effect on our financial position, results of operations or cash flows.

We previously disclosed that on May 14, 2020 we had received a subpoena from the Division of Enforcement of the SEC seeking production of certain documents and information on topics including product sales and demand, revenue recognition and accounting in relation to product sales, product sales and cash projections, and related financial reporting, disclosure and compliance matters. ~~We are cooperating fully in connection with this investigation. Based~~On May 4, 2021, we were advised by the SEC Division of Enforcement that it has concluded its investigation of us and that, based on ~~procedures performed~~the information it has to date, ~~in relation~~the Enforcement Division does not intend to our revenue recognition practices, we have not identified any accounting items that are not in accordance with GAAP. In addition, we believe our public statements regarding our business, including with respect to product sales and demand, have been and are in compliance with federal securities laws. At this time, we are unable to predict the duration, scope or outcome of this matter or whether it could have a material impact on our financial condition, results of operations or cash flow.recommend an enforcement action against us.

There have been no material changes to the risk factors previously disclosed in ~~Item~~Part I, “Item 1A, ~~of Part I~~Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2019 (the “Annual Report”). The following risk factor supersedes the corresponding risks described in the Annual Report and should be read together~~2020, which was filed with the ~~other risk factors disclosed in the Annual Report. In addition to the other information in this Quarterly Report~~SEC on Form 10-Q, all of the risk factors should be carefully considered in evaluating us and our common stock. Any of these risks, many of which are beyond our control, could materially and adversely affect our financial condition, results of operations or cash flows, or cause our actual results to differ materially from those projected in any forward-looking statements. We may also face other risks and uncertainties that are not presently known, are not currently believed to be material, or are not identified below because they are common to all businesses. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. For more information, see “Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

We received a subpoena from the SEC Enforcement Division requesting documents and information in an investigation relating to product sales and demand, revenue recognition and accounting. If the SEC commences an enforcement action against us, the resolution of such an enforcement action could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, we have expended and expect to continue to expend significant financial and managerial resources responding to the SEC subpoena, which could also have a material adverse effect on our business, financial condition, results of operations and cash flows.

In May 2020, we received a subpoena from the SEC Enforcement Division requesting documents and information on topics including product sales and demand, revenue recognition and accounting in relation to product sales, ~~sales~~ and cash guidance, and related financial reporting, disclosure and compliance matters. We have cooperated and continue to cooperate with the SEC’s investigation. We cannot predict the outcome of the investigation, but there can be no assurance that the SEC will not commence an enforcement action against us, or as to what the ultimate outcome of any such investigation might be. Under applicable law, the SEC has the ability to impose sanctions on companies which are found to have violated the provisions of applicable federal securities laws, including civil monetary penalties, cease and desist orders, and other remedies. The resolution of any such enforcement action, should there be one, could have a material adverse effect on our business, financial condition, results of operations and cash flows. We have expended and expect to continue to expend significant financial and managerial resources in connection with the investigation, which also could have a material adverse effect on our business, financial condition, results of operations and cash flow.

~~The ongoing novel coronavirus (COVID-19) pandemic has had and will likely continue to have a material and adverse impact on our business.~~

The novel coronavirus (COVID-19) pandemic has had, and will likely continue to have, a material and adverse impact on our business, including as a result of preventive and precautionary measures that we, other businesses, and governments are taking. Due to these impacts and measures, we have experienced and will likely continue to experience significant and unpredictable reductions in the demand for our products as customers have shut down their facilities and non-essential surgical procedures have been postponed in an effort to promote social distancing and to redirect medical resources and priorities towards the treatment of COVID-19.March 12, 2021.

As a result, on April 1, 2020, we committed to and announced a restructuring plan (the “Plan”) with respect to our commercial operations. The Plan includes the cancellation or deferral of planned spending to conserve cash. We have also commenced downsizing our workforce, with reductions coming primarily from our external DEXYCU sales force and supporting commercial operations, as cataract surgery is considered a non-essential procedure due to the Pandemic. The workforce reduction may have an adverse impact on our operations.

In addition, the Pandemic has and will likely continue to result in social, economic and labor instability in the countries in which we or the third parties with whom we engage operate. For example, we have licensed DEXYCU and Durasert FA to Ocumension for Mainland China, Hong Kong, Macau and Taiwan. Ocumension’s ability to conduct clinical trials may be materially and adversely affected due to COVID-19, which could have the result of, among other things, delaying the enrollment of patients in clinical trials, causing delays in the delivery of product supply for clinical trials and affecting the ability of clinical investigators, contract research organizations and other third-party service providers to devote sufficient time and resources to the clinical development programs.

While we cannot presently predict the future scope and severity of current or any potential business shutdowns or disruptions related to COVID-19, if we or any of the third parties with whom we engage, including the suppliers, manufacturers and other third parties in our global supply chain, clinical trial sites, regulators, surgeons, ASCs, potential business development partners and other third parties with whom we conduct business, were to experience prolonged shutdowns or other business disruptions~~, including the imposition of restrictions on the export or import of our key supplies from countries outside of the United States, our~~ ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively impacted. In addition, the pandemic’s ongoing impact on the medical community and the global economy could have a prolonged adverse impact on our product sales and royalty income on products we license to third parties such as Alimera if, for example, fewer uveitis or DME procedures are performed than we or Alimera previously anticipated or if the performance of elective surgeries such as cataract surgery do not resume to pre-pandemic levels in the near term. Further, any sustained disruption in the capital markets from the Pandemic could negatively impact our ability to raise capital.

To the extent the Pandemic continues to adversely affect our business, results of operations, financial condition and cash flows, it may also heighten many of the other risks described in the “Risk Factors” section of our Annual Report. The ultimate impact of the Pandemic on our business, results of operations, financial condition and cash flows is dependent on future developments, which are still highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, as well as the timing and phasing of business reopening, including the resumption of the performance of elective surgical procedures such as cataract surgeries.

~~Our loan under the Paycheck Protection Program may not be forgiven or may subject us to challenges and investigations regarding qualification for the loan.~~

On April 22, 2020, we received a PPP Loan, which was established under the CARES Act in the principal amount of $2.0 million. Pursuant to Section 1106 of the CARES Act we may apply for and be granted forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for qualifying expenses, which include payroll costs, rent, and utility costs over the allowable measurement period following receipt of the loan proceeds.

The SBA continues to develop and issue new and updated guidance regarding the PPP Loan application and forgiveness process, including guidance regarding required borrower certifications and requirements for forgiveness of loans made under the program. Given the evolving nature of the guidance and depending upon our ability to use the loan proceeds for qualifying expenses, we cannot give any assurance that our PPP Loan will be forgiven in whole or in part.

Additionally, the PPP Loan application required us to certify that the current economic uncertainty made the PPP Loan request necessary to support our ongoing operations. While we made this certification in good faith after analyzing, among other things, our financial situation and access to alternative forms of capital, and believe that we satisfied all eligibility criteria for the PPP Loan and that our receipt of the PPP Loan is consistent with the broad objectives of the Paycheck Protection Program of the CARES Act, the certification described above does not contain any objective criteria and is subject to interpretation. In addition, the SBA has stated that it is unlikely that a public

company with substantial market value and access to capital markets will be able to make the required certification in good faith. The lack of clarity regarding loan eligibility under the program has resulted in significant media coverage and controversy with respect to public companies applying for and receiving loans. If, despite our good faith belief that we satisfied all eligibility requirements for the PPP Loan, we are found to have been ineligible to receive the PPP Loan or in violation of any of the laws or regulations that apply to us in connection with the PPP Loan, including the False Claims Act, we may be subject to penalties, including significant civil, criminal and administrative penalties and would be required to repay the PPP Loan. In the event that we seek forgiveness of all or a portion of the PPP Loan, we will also be required to make certain certifications which will be subject to audit and review by governmental entities and could subject us to significant penalties and liabilities if found to be inaccurate, including being required to repay the PPP loan. In addition, our receipt of the PPP Loan may result in adverse publicity and damage to our reputation, and a review or audit by the SBA or other government entity or claims under ~~the False Claims Act could consume significant financial and management resources. Any of these events could materially harm our business, results of operations and financial condition.~~

If we are unable to regain compliance with the listing requirements of the Nasdaq Global Market, our common stock may be delisted from the Nasdaq Global Market which could have a material adverse effect on our financial condition and could make it more difficult for you to sell your shares.

Our common stock is listed on the Nasdaq Global Market, and we are therefore subject to its continued listing requirements, including requirements with respect to the market value of publicly-held shares, market value of listed shares, minimum bid price per share, and minimum stockholders' equity, among others, and requirements relating to board and committee independence. If we fail to satisfy one or more of the requirements, we may be delisted from the Nasdaq Global Market.

On June 12, 2020, we received a letter (the “Letter”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that our common stock did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1) based on the closing bid price of our common stock for the 30 consecutive business days prior to the date of the Letter. The Letter has no effect at this time on the listing of our common stock, which will continue to trade on the Nasdaq Global Market under the symbol “EYPT”.

Under Nasdaq Listing Rule 5810(c)(3)(A), if during the 180 calendar day period following the date of the Letter the closing bid price of our common stock is at or above $1.00 for a minimum of 10 consecutive business days, we will regain compliance with the minimum bid price requirement and our common stock will continue to be eligible for listing on the Nasdaq Global Market, absent noncompliance with any other requirement for continued listing. On April 16, 2020, Nasdaq announced it was providing temporary relief from continued listing bid price requirements through June 30, 2020. Under the relief we will have additional time to regain compliance with the listing bid price requirements, with the compliance period beginning July 1, 2020. As such, our compliance period will expire on December 28, 2020.

If we do not regain compliance by December 28, 2020, we may be eligible for an additional 180 calendar day grace period if we meet the continued listing requirement for market value of publicly held shares ($1.0 million) and all other Nasdaq initial listing standards which require, among other things, that we have at least $5.0 million of stockholders’ equity or at least $4.0 million of stockholders’ equity and $50.0 million market value of listed shares. If we fail to regain compliance during the applicable period, we will receive notification from Nasdaq that our common stock is subject to delisting. At that time, we may then appeal the delisting determination to a Hearings Panel. Such notification will have no immediate effect on our listing on the Nasdaq Global Market, nor will it have an immediate effect on the trading of our common stock pending such hearing. There can be no assurance, however, that we will be able to regain compliance with Nasdaq’s minimum bid price requirement. If we regain compliance with Nasdaq’s minimum bid price requirement, there can be no assurance that we will be able to maintain compliance with the continued listing requirements for the Nasdaq Global Market or that our common stock will not be delisted from the Nasdaq Global Market in the future. In addition, we may be unable to meet other applicable listing requirements of the Nasdaq Global Market, including maintaining minimum levels of stockholders’ equity or market values of our common stock in which case, our common stock could be delisted notwithstanding our ability to demonstrate compliance with the minimum bid price requirement.

Delisting from the Nasdaq Global Market may adversely affect our ability to raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investors to trade our

securities and may negatively affect the value and liquidity of our common stock. Delisting also could have other negative results, including the potential loss of employee confidence, the loss of institutional investors or interest in business development opportunities.

If we are delisted from Nasdaq and we are not able to list our common stock on another exchange, our common stock could be quoted on the OTC Bulletin Board or in the “pink sheets.” As a result, we could face significant adverse consequences including, among others:

~~If our common stock becomes subject to the penny stock rules, it would become more difficult to trade our shares.~~

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain our listing on the Nasdaq Global Market and if the price of our common stock is less than $5.00, our common stock may be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock, and therefore stockholders may have difficulty selling their shares.

~~None.~~On May 3, 2021, we entered into Amendment No. 3 and Waiver to the Term Loan Agreement (the “Amendment”), among us, as borrower, EyePoint Pharmaceuticals US, Inc. and Icon Bioscience, Inc., as subsidiary guarantors (the “Guarantors”), to our existing debt facility, dated February 13, 2019, and as amended or otherwise modified from time to time, (the “Loan Agreement”), with CRG Servicing LLC (“CRG”) as administrative agent and collateral agent, and the lenders party to the Loan Agreement.

45Pursuant to the Amendment, CRG amended the financial covenant associated with our minimum product revenue under the Term Loan Agreement to $25 million from $45 million for the twelve-month period ending December 31, 2021. There were no other material changes to the Loan Agreement.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Large accelerated filer	☐	Accelerated filer	☒☐
Non-accelerated filer	☐☒	Smaller reporting company	☒
~~Emerging growth company~~	☐		Emerging growth company	☐

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Unaudited Financial Statements

	Condensed Consolidated Balance Sheets – ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020	3

	Condensed Consolidated Statements of Comprehensive Loss – Three months ended March 31, 2021 and ~~Nine Months Ended September 30,~~ 2020 ~~and 2019~~	4

	Condensed Consolidated Statements of Stockholders’ Equity – Three months ended March 31, 2021 and ~~Nine Months Ended September 30,~~ 2020 ~~and 2019~~	5

	Condensed Consolidated Statements of Cash Flows – ~~Nine Months Ended September 30,~~Three months ended March 31, 2021 and 2020 ~~and 2019~~	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4134

Item 4.	Controls and Procedures	4134

PART II: OTHER INFORMATION

Item 1.	Legal Proceedings	4235

Item 1A.	Risk Factors	4235

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4535

Item 3.	Defaults Upon Senior Securities	4535

Item 4.	Mine Safety Disclosures	4535

Item 5.	Other Information	4535

Item 6.	Exhibits	4636

Signatures		4838

Certifications

Option life (in years)		~~5.5-6.02~~4.75 - 6.08
Stock volatility		~~63.85%-69.65%~~72.47% - 78.09%
Risk-free interest rate		~~0.371%-2.51%~~0.42% - 1.15%
Expected dividends		0.0%

	Three and Nine Months Ended September 30,
	2020		2019
Stock options		13,320,969		10,612,258
ESPP		104,303		54,895
Warrants		486,812		486,812
Restricted stock units		1,434,677		812,347
Performance stock units		0		56,666
		15,346,761		12,022,978

		Incorporated by Reference to SEC Filing
Exhibit No.	Exhibit Description	Form	SEC Filing Date	Exhibit No.

1.1	Controlled Equity Offering^SM Sales Agreement, dated August 5, 2020, by and between EyePoint Pharmaceuticals, Inc. and Cantor Fitzgerald & Co.	8-K	08/05/20	1.1
3.1	Certificate of Incorporation of pSivida Corp.	8-K12G3	06/19/08	3.1

3.2	Certificate of Amendment of the Certificate of Incorporation of pSivida Corp.	10-K	09/13/17	3.2

3.3	Certificate of Amendment of the Certificate of Incorporation of pSivida Corp.	8-K	04/02/18	3.1

3.4	Certificate of Amendment of Certificate of Incorporation, as amended, of EyePoint Pharmaceuticals, Inc.	8-K	06/27/18	3.1

3.5	Certificate of Amendment of the Certificate of Incorporation, as amended, of EyePoint Pharmaceuticals, Inc.	8-K	6/23/20	3.1

3.6	Bylaws of EyePoint Pharmaceuticals, Inc.	10-K	09/18/18	3.5

3.7	Amendment No. 1 to the By-Laws of EyePoint Pharmaceuticals, Inc.	8-K	11/06/18	3.1

4.1	Form of Specimen Stock Certificate for Common Stock	8-K12G3	06/19/08	4.1

4.2	Warrant to Purchase Common Stock of pSivida Corp., issued March 28, 2018, to SWK Funding, LLC	8-K	3/29/18	4.1

4.3	Registration Rights Agreement, dated as of March 28, 2018, by and among pSivida Corp. and EW Healthcare Partners, L.P. and EW Healthcare Partners-A, L.P.	8-K	3/29/18	10.3

4.4	Second Registration Rights Agreement, dated as of June 25, 2018, by and among EyePoint Pharmaceuticals, Inc. and EW Healthcare Partners, L.P. and EW Healthcare Partners-A, L.P. and each other person identified on the signature pages thereto	8-K	06/27/18	10.1

10.1*#	Commercial Alliance Agreement, dated as of August 1, 2020 between EyePoint Pharmaceuticals, Inc. and ImprimisRx, LLC.

31.1*	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	Employee Severance and Benefits			Total
Beginning balance at March 31, 2020	$	0		$	0
Restructuring charge		590			590
Cash payments		(320	)		(320	)
Ending balance at September 30, 2020	$	270		$	270


•	~~the expected costs associated~~our expectations regarding our partnership with ~~termination benefits and the financial impact of the April 2020 restructuring Plan and reduction in force;~~ImprimisRx;


32.1**		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	Inline XBRL Instance Document (– the instance document does not appear in the Interactive Data File because ~~its~~ XBRL tags are embedded within the Inline XBRL ~~document)~~.document.

101.SCH	Inline XBRL Taxonomy Extension Schema ~~Document.~~Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document.~~Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase ~~Database.~~Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document.~~Document

104		Cover Page Interactive Data File (~~Embedded~~(embedded within the ~~Inline~~inline XBRL document and included in Exhibit ~~101~~).101)

	EyePoint Pharmaceuticals, Inc.

Date: ~~November 6, 2020~~May 5, 2021	By:	/s/ Nancy Lurker
	Name:	Nancy Lurker
	Title:	President and Chief Executive Officer (Principal Executive Officer)