Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38150 KALA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 27-0604595 (State or othe ...

Financial Data and Key Metrics Changes - As of June 30, 2021, the company's cash position was $149.6 million, a decrease from $153.5 million as of December 31, 2020, primarily due to cash used in operations [34] - Net product revenues for Q2 2021 were $3.1 million, consisting of $1.7 million from EYSUVIS and $1.4 million from INVELTYS, compared to $800,000 from INVELTYS in Q2 2020 [35] - The net loss for Q2 2021 was $36.5 million, or $0.57 per share, compared to a net loss of $23.3 million, or $0.42 per share, for the same period in 2020 [37] Business Line Data and Key Metrics Changes - EYSUVIS prescriptions increased by 93% in Q2 2021, totaling 15,632 prescriptions, while INVELTYS prescriptions rose to over 41,000, an 11% increase from Q1 2021 [18][28] - EYSUVIS achieved a market share of approximately 6% for new-to-therapy prescriptions, surpassing Cequa to become the third most prescribed dry eye product [21] - INVELTYS's net revenues decreased by $200,000 compared to Q1 2021, primarily due to a reserve for product returns related to COVID-19 restrictions [35] Market Data and Key Metrics Changes - EYSUVIS has secured coverage for approximately 56% of commercial lives, representing about 96 million total lives, and Medicare Part D coverage for 7% of the Medicare population, equating to 3.2 million covered lives [24][25] - The company estimates that around 75% of the total addressable market for dry eye disease patients, approximately 13 million diagnosed patients, are currently untreated with prescription therapy [15] - The overall dry eye market is experiencing a seasonal slowdown, but EYSUVIS is reportedly the only dry eye product showing growth during this period [42] Company Strategy and Development Direction - The company aims to establish EYSUVIS as the first-line prescription therapy for the short-term treatment of dry eye disease, focusing on educating eye care professionals about the acute dry eye market [11][17] - The expansion of the sales force from 91 to 105 representatives is intended to enhance market penetration and support the launch of EYSUVIS [23] - The company is actively pursuing broader payer coverage and anticipates that improved market access will drive prescription growth [26][99] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of elective ocular surgeries and the potential for INVELTYS prescriptions and revenues to grow over time [29] - The company believes that demand for EYSUVIS is higher than reported prescriptions due to reimbursement issues, and as market access improves, prescription fill rates are expected to increase [49][63] - Management highlighted the importance of creating a new treatment paradigm for dry eye disease, which has historically been viewed as a chronic condition [102] Other Important Information - The company reported a significant increase in SG&A expenses to $28 million in Q2 2021, primarily due to costs associated with the EYSUVIS launch [36] - The company is in discussions with CVS Caremark for potential formulary inclusion, which could significantly enhance commercial access [97] Q&A Session Summary Question: What are the key requirements to see a reacceleration of EYSUVIS growth? - Management noted that EYSUVIS is currently the only dry eye product growing, and seasonal trends typically affect script volume during summer months [41] Question: Can you help bridge the recorded sales versus the underlying script trends for EYSUVIS? - Management explained that revenue was slightly up due to working through initial inventories from the launch, indicating improvements in gross to net [44] Question: What is the expected split between commercial and Medicare usage over time? - Currently, over 75% of prescriptions are for commercial patients, with expectations to align more closely with established products like Xiidra and Cequa in the future [74] Question: What percentage of new scripts have patient assistance programs attached? - Historically, about half of prescriptions have been filled with some type of patient assistance program [78] Question: How has the response been to the expanded salesforce? - The new representatives have just begun their training and are expected to impact sales positively as they engage with eye care professionals [85]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements for Q1 2021, including balance sheets, statements of operations, equity, and cash flows, with notes detailing policies, debt, and a significant May 2021 refinancing [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$229.8 million** from **$221.6 million**, while liabilities slightly decreased and stockholders' equity rose to **$109.8 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | | March 31, 2021 ($ in thousands) | December 31, 2020 ($ in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $179,065 | $171,379 | | **Total Assets** | $229,827 | $221,606 | | **Total Current Liabilities** | $19,989 | $22,225 | | **Total Liabilities** | $120,035 | $121,611 | | **Total Stockholders' Equity** | $109,792 | $99,995 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net loss widened to **$30.4 million** in Q1 2021 due to increased SG&A expenses for **EYSUVIS** launch, despite growth in net product revenues Q1 2021 vs Q1 2020 Statement of Operations (in thousands) | | Three Months Ended March 31, 2021 ($ in thousands) | Three Months Ended March 31, 2020 ($ in thousands) | | :--- | :--- | :--- | | **Product revenues, net** | $3,266 | $1,071 | | **Total costs and expenses** | $31,580 | $21,196 | | *Selling, general and administrative* | $27,699 | $15,408 | | *Research and development* | $3,126 | $5,434 | | **Loss from operations** | $(28,314) | $(20,125) | | **Net loss** | $(30,412) | $(21,955) | | **Net loss per share** | $(0.49) | $(0.54) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$32.6 million**, offset by **$48.0 million** from investing and **$35.3 million** from financing, resulting in a **$50.7 million** cash increase Q1 2021 vs Q1 2020 Cash Flow Summary (in thousands) | | Three Months Ended March 31, 2021 ($ in thousands) | Three Months Ended March 31, 2020 ($ in thousands) | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(32,640) | $(19,880) | | **Net cash provided by (used in) investing activities** | $48,031 | $(292) | | **Net cash provided by financing activities** | $35,315 | $131,181 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details commercial products **EYSUVIS** and **INVELTYS**, liquidity expectations for twelve months, and a significant May 2021 debt refinancing - The company's two commercial products are **EYSUVIS**®, for the short-term treatment of dry eye disease, and **INVELTYS**®, for post-operative inflammation and pain following ocular surgery. The full promotional launch of **EYSUVIS** commenced in early January 2021[21](index=21&type=chunk)[22](index=22&type=chunk) - Management expects that cash, cash equivalents, and short-term investments as of March 31, 2021, along with anticipated net revenue, will be sufficient to fund operations for at least twelve months from the issuance date of the financial statements[25](index=25&type=chunk) - On May 4, 2021, the company entered into a new loan agreement for up to **$125 million** with **Oxford Finance LLC** and used the initial **$80 million** tranche to repay and terminate its existing **$75 million Athyrium Credit Facility**[92](index=92&type=chunk)[96](index=96&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses financial performance driven by **EYSUVIS** launch, increased SG&A, COVID-19 impact, and a major debt refinancing, with capital expected to fund operations for two years [Results of Operations](index=37&type=section&id=MD%26A%20-%20Results%20of%20Operations) Net product revenues increased to **$3.3 million** due to **EYSUVIS** launch, but net loss widened to **$30.4 million** primarily from higher SG&A expenses Q1 2021 vs Q1 2020 Operations Summary (in thousands) | | Three Months Ended March 31, 2021 ($ in thousands) | Three Months Ended March 31, 2020 ($ in thousands) | Change ($ in thousands) | | :--- | :--- | :--- | :--- | | **Product revenues, net** | $3,266 | $1,071 | $2,195 | | **Selling, general and administrative** | $27,699 | $15,408 | $12,291 | | **Research and development** | $3,126 | $5,434 | $(2,308) | | **Net loss** | $(30,412) | $(21,955) | $(8,457) | - The increase in product revenues was driven by sales of **EYSUVIS**, which launched in late December 2020, and a higher per-unit gross selling price and increased volume for **INVELTYS**[129](index=129&type=chunk) - The increase in SG&A expenses was primarily due to a **$5.5 million** increase in external sales and marketing costs for the **EYSUVIS** launch and a **$4.2 million** increase in employee-related expenses from increased headcount[132](index=132&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) Company holds **$156.0 million** in cash, raised **$34.7 million** from ATM offering, secured a new **$125 million** debt facility, and expects to fund operations for two years - In May 2021, the company entered into a new loan agreement with **Oxford Finance LLC** for up to **$125.0 million** and used the initial **$80.0 million** tranche to repay its **$75.0 million Athyrium Credit Facility**[140](index=140&type=chunk)[141](index=141&type=chunk) - During Q1 2021, the company sold **4,746,072 shares** of common stock under its ATM Offering, resulting in net proceeds of **$34.7 million**[145](index=145&type=chunk) - The company anticipates that its cash, cash equivalents and short-term investments as of March 31, 2021, along with anticipated revenue, will enable it to fund its operations for at least two years[151](index=151&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate risk, with a new floating rate loan introducing future exposure, though investments are short-term fixed-income securities - As of March 31, 2021, the company's **$75.0 million** debt facility bore a fixed interest rate of **9.875%**[161](index=161&type=chunk) - On May 4, 2021, the company entered a new loan agreement with a floating interest rate, thereby introducing exposure to interest rate changes[161](index=161&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[162](index=162&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[163](index=163&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company is not currently subject to any material legal proceedings[164](index=164&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) Outlines risks including financial losses, product commercial success, COVID-19 impact, competition, reliance on third-party manufacturers, intellectual property, and regulatory landscape - The company has a history of significant operating losses, with an accumulated deficit of **$430.2 million** as of March 31, 2021, and expects to incur additional losses[166](index=166&type=chunk) - The COVID-19 pandemic has adversely impacted the market for **INVELTYS** due to moratoria on elective ocular surgeries and could disrupt the launch and commercialization of **EYSUVIS**[197](index=197&type=chunk)[198](index=198&type=chunk) - The company relies on third-party contract manufacturers, including Woodstock Sterile Solutions, for the commercial supply of **EYSUVIS** and **INVELTYS**, which poses risks related to supply chain disruption and quality control[226](index=226&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) - The company's technology and products, including **EYSUVIS** and **INVELTYS**, are protected by patents exclusively licensed from third parties like The Johns Hopkins University (JHU), and the loss of these licenses could harm its competitive position[282](index=282&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2021, the company issued **56,700 stock options** to new employees as inducement grants, unregistered under the Securities Act of 1933 - In Q1 2021, the company granted stock options to purchase **56,700 shares** of common stock to new employees as inducement grants outside of its main equity plan[369](index=369&type=chunk) [Exhibits](index=83&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including the new Loan and Security Agreement and CEO/CFO certifications - Key exhibits filed include the new Loan and Security Agreement with **Oxford Finance LLC** and CEO/CFO certifications under Sarbanes-Oxley[375](index=375&type=chunk)

Financial Data and Key Metrics Changes - As of March 31, 2021, the company's cash position was $156 million, an increase from $153.5 million as of December 31, 2020, primarily due to net proceeds of $34.7 million from sales of common stock [31] - Net product revenues for Q1 2021 were $3.3 million, with $1.63 million from INVELTYS and $1.64 million from EYSUVIS, marking an increase of approximately $500,000 in INVELTYS sales compared to Q1 2020 [33] - The net loss for Q1 2021 was $30.4 million, or $0.49 per share, compared to a net loss of $22 million, or $0.54 per share, for the same period in 2020 [36] Business Line Data and Key Metrics Changes - EYSUVIS has filled over 11,600 prescriptions written by more than 2,000 unique prescribers since its launch in early January 2021 [14] - Approximately 50% of EYSUVIS prescriptions are for treatment-naive patients who had not previously been on prescription therapy for dry eye disease [15][52] - INVELTYS prescriptions totaled approximately 37,000 in Q1 2021, down from 41,000 in Q4 2020, reflecting the ongoing impact of the pandemic on the ocular surgery market [25] Market Data and Key Metrics Changes - The company has secured coverage for approximately 43% of commercial lives, totaling around 69 million lives, for EYSUVIS within four months of its launch [17] - The company anticipates that elective ocular surgeries are returning to pre-COVID levels, which is expected to positively impact INVELTYS sales [10] Company Strategy and Development Direction - The company is focused on ensuring the commercial success of EYSUVIS and INVELTYS while advancing a pipeline of innovative new chemical entities (NCE) targeting front and back of the eye diseases [10][11] - A new credit facility of up to $125 million has been established, enhancing the company's cash runway and allowing for continued investment in operations and product development [12][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the early feedback from the EYSUVIS launch and the anticipated growth in elective ocular surgeries as vaccination rates increase [10][40] - The company expects to fund operations for at least the next two years based on current cash resources and anticipated revenues from EYSUVIS and INVELTYS [30] Other Important Information - The company plans to expand its sales force from 91 to approximately 105 representatives by the start of Q3 2021, with further expansion to about 125 representatives by the end of 2021 [23] - The company is actively working to secure additional payer coverage for EYSUVIS, which is seen as a key driver for prescription growth [44] Q&A Session Summary Question: Trends in cataract surgeries and confidence in recovery - Management noted that surgical volume is currently around 80% of pre-COVID levels, with expectations for a return to full capacity by year-end due to vaccine rollouts [40] Question: Confidence in EYSUVIS contracting and payer coverage - Management expressed confidence in securing additional contracts and expanding commercial coverage throughout the year, which is crucial for prescription growth [44] Question: Breakdown of prescriptions between ophthalmologists and optometrists - Approximately 55% of prescriptions are generated by optometrists, with 45% from ophthalmologists, reflecting the treatment patterns for dry eye patients [50][84] Question: Impact of COVID on new patient starts for EYSUVIS - Management indicated that there has been a gradual recovery in new patient starts for EYSUVIS, with improved access to eye care professionals as vaccination rates increase [83] Question: Usage of the patient access program and co-pay card - About half of the prescriptions are being filled using the co-pay card, indicating a significant uptake of the patient access program [72]

Innovation In Ophthalmology Corporate Overview March 2021 NOT FOR PROMOTIONAL USE Disclaimers and Notices This presentation contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that involve substantial risks and uncertainties, including statements regarding Company's products, EYSUVISTM, for the short term (up to two weeks) relief of the signs and symptoms of dry eye disease, INVELTYS®, the first and only topical twice-daily ocular corticosteroid fo ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38150 KALA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 27-0604595 (State or other ju ...

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Kala Pharmaceuticals, Inc. (NASDAQ:KALA) Q3 2020 Earnings Conference Call November 5, 2020 8:00 AM ET Company Participants Niranjan Kameswaran - SVP, Strategy Mary Reumuth - CFO Mark Iwicki - Chairman, President and CEO Kim Brazzell - Chief Medical Officer Todd Bazemore - COO Hongming Chen - Chief Scientific Office Conference Call Participants Liana Moussatos - Wedbush Securities Christopher Neyor - JPMorgan François Brisebois - Oppenheimer Yi Chen - H.C. Wainwright Operator Good morning, and welcome to the ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38150 KALA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 27-0604595 (State or ...

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