PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) The company presents unaudited financial statements showing a net loss of $45.3 million and a significant increase in assets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $128,023 | $85,449 | | Total current assets | $197,024 | $105,484 | | Total assets | $245,510 | $154,323 | | Total liabilities | $116,567 | $124,631 | | Total stockholders' equity | $128,943 | $29,692 | Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Product revenues, net | $833 | $1,904 | | Total costs and expenses | $22,113 | $43,309 | | Loss from operations | $(21,280) | $(41,405) | | Net loss | $(23,312) | $(45,267) | | Net loss per share | $(0.42) | $(0.94) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Account | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(39,134) | $(51,596) | | Net cash used in investing activities | $(57,450) | $(943) | | Net cash provided by financing activities | $139,160 | $19 | [Nature of Business and Liquidity](index=9&type=section&id=1.%20NATURE%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) The biopharmaceutical company faces significant losses and COVID-19 impacts but believes cash is sufficient for one year - The company's lead product candidate, EYSUVIS™, has a Prescription Drug User Fee Act (PDUFA) goal date of **October 30, 2020**, for its NDA review by the FDA[19](index=19&type=chunk) - As of June 30, 2020, the company had an accumulated deficit of **$340.7 million**, having incurred significant losses since inception[22](index=22&type=chunk) - Management believes that existing cash, cash equivalents, and short-term investments as of June 30, 2020, will be **sufficient to fund planned operating expenses for at least the next twelve months**[23](index=23&type=chunk)[24](index=24&type=chunk) - The **COVID-19 pandemic has adversely affected the market for INVELTYS** due to moratoria on elective ocular surgeries, resulting in a significant reduction in demand[25](index=25&type=chunk) [Revenue & Accounts Receivable, Net](index=16&type=section&id=5.%20REVENUE%20%26%20ACCOUNTS%20RECEIVABLE%2C%20NET) The company recognizes revenue from INVELTYS sales upon delivery, with net sales reflecting various deductions and reserves - Revenue from product sales is recognized at the point the customer obtains control of the product, which occurs upon delivery[45](index=45&type=chunk) Activity in Product Revenue Provisions and Allowances (in thousands) | Category | Balance at Dec 31, 2019 | Provision for H1 2020 Sales | Payments/Credits in H1 2020 | Balance at June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Trade Discounts, Allowances and Chargebacks | $1,783 | $1,060 | $(2,450) | $398 | | Product Returns | $180 | $0 | $(1) | $64 | | Rebates and Incentives | $10,044 | $6,770 | $(11,103) | $5,570 | [Debt](index=23&type=section&id=9.%20DEBT) The company holds a $75.0 million term loan at a fixed rate, secured by company assets and requiring a minimum cash balance - On October 1, 2018, the company entered into the Athyrium Credit Facility and borrowed the full **$75.0 million principal amount** of the Term Loan A[65](index=65&type=chunk) - The loan bears a fixed interest rate of **9.875% per annum**, with principal payments starting on the fourth anniversary of the loan (October 2022)[66](index=66&type=chunk) Carrying Value of Debt (in thousands) | Component | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Principal loan balance | $75,000 | $75,000 | | Unamortized debt discount and issuance cost | $(3,559) | $(3,999) | | Cumulative accretion of exit fee | $256 | $183 | | **Long-term debt, net** | **$71,697** | **$71,184** | [Equity Financings](index=26&type=section&id=11.%20EQUITY%20FINANCINGS) The company raised over $137 million in net proceeds from equity offerings in H1 2020 and established new financing facilities - In Q1 2020, the company raised net proceeds of **$12.5 million** by issuing 2,352,671 shares through its at-the-market (ATM) offering[77](index=77&type=chunk) - In March and April 2020, the company sold 16,979,371 shares in an underwritten offering, resulting in total net proceeds of **$125.4 million**[78](index=78&type=chunk)[80](index=80&type=chunk) - In May 2020, the company filed a new **$350.0 million shelf registration statement** and entered into a new amended and restated sales agreement for up to **$75.0 million** of common stock under an ATM offering[81](index=81&type=chunk)[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses financial performance, highlighting COVID-19's impact on revenue and improved liquidity from recent capital raises - The company's primary focus is on the commercialization of INVELTYS and the development and potential launch of EYSUVIS, which has a PDUFA goal date of **October 30, 2020**[111](index=111&type=chunk)[115](index=115&type=chunk) - The **COVID-19 pandemic has adversely impacted INVELTYS sales** by reducing elective ocular surgeries and has restricted sales force activities, leading to lower-than-expected revenue[124](index=124&type=chunk)[125](index=125&type=chunk)[129](index=129&type=chunk) - As of June 30, 2020, the company had **$128.0 million in cash and cash equivalents** and **$56.5 million in short-term investments**, sufficient to fund operations into at least Q2 2022[8](index=8&type=chunk)[183](index=183&type=chunk)[222](index=222&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) This section details how decreased product revenue from COVID-19 was offset by lower SG&A and R&D operating expenses - The decrease in product revenue was primarily driven by a reduction in total units sold, attributed to the **decline in elective surgeries resulting from COVID-19 restrictions**[145](index=145&type=chunk)[154](index=154&type=chunk) - The decrease in R&D expenses was mainly due to a **$1.9 million reduction in external spending** on the STRIDE 3 clinical trial for EYSUVIS, which concluded in March 2020[150](index=150&type=chunk) Comparison of Results for the Three Months Ended June 30 (in thousands) | Account | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Product revenues, net | $833 | $2,057 | $(1,224) | | Selling, general and administrative | $15,301 | $17,007 | $(1,706) | | Research and development | $6,053 | $7,108 | $(1,055) | | Net loss | $(23,312) | $(23,825) | $513 | Comparison of Results for the Six Months Ended June 30 (in thousands) | Account | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Product revenues, net | $1,904 | $3,443 | $(1,539) | | Selling, general and administrative | $30,709 | $35,243 | $(4,534) | | Research and development | $11,487 | $14,067 | $(2,580) | | Net loss | $(45,267) | $(49,213) | $3,946 | [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company raised $137.9 million from stock offerings in H1 2020, ensuring sufficient liquidity into at least Q2 2022 - In H1 2020, the company raised **$125.4 million from an underwritten offering** and **$12.6 million from an ATM offering**, for total net proceeds of $139.2 million from financing activities[167](index=167&type=chunk)[170](index=170&type=chunk)[179](index=179&type=chunk) - Management estimates that existing cash, cash equivalents, and short-term investments of **$184.6 million** as of June 30, 2020, will fund operations into at least the second quarter of 2022[183](index=183&type=chunk)[222](index=222&type=chunk) - **Net cash used in operating activities decreased to $39.1 million** in H1 2020 from $51.6 million in H1 2019, reflecting lower operating expenses[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk is low, with investments in short-term government securities and fixed-rate debt - The company's cash, cash equivalents, and short-term investments of **$184.6 million** are held in short-term U.S. Government securities, with low sensitivity to a 10% change in interest rates[196](index=196&type=chunk) - The **$75.0 million outstanding debt** under the Athyrium Credit Facility has a fixed interest rate of 9.875%, posing no risk from interest rate fluctuations[197](index=197&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes during the quarter - Based on an evaluation as of June 30, 2020, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective** at the reasonable assurance level[198](index=198&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, such controls[199](index=199&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings.) The company reports that it is not currently subject to any material legal proceedings - The company is **not currently subject to any material legal proceedings**[200](index=200&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including a history of losses, product dependency, COVID-19 impacts, and IP reliance - The company has a history of significant losses (**$340.7M accumulated deficit** as of June 30, 2020) and expects to incur further losses, requiring substantial additional funding[203](index=203&type=chunk)[218](index=218&type=chunk) - The business is **highly dependent on the commercial success of INVELTYS** and obtaining marketing approval for its lead product candidate, EYSUVIS[238](index=238&type=chunk) - The **COVID-19 pandemic has adversely impacted operations** and the market for INVELTYS due to reduced elective surgeries and may continue to adversely affect the business[259](index=259&type=chunk)[260](index=260&type=chunk) - The company **relies on third-party manufacturers** like Catalent for commercial supply, which increases risks related to production issues, regulatory compliance, and supply chain disruptions[294](index=294&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - A substantial portion of the company's patent portfolio, including for INVELTYS and EYSUVIS, is **in-licensed from The Johns Hopkins University (JHU)**, making the company dependent on this agreement[348](index=348&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=150&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued unregistered inducement stock options to new employees in accordance with Nasdaq listing rules - On April 15, 2020, the company granted stock options to purchase **8,000 shares of common stock** to two new employees as an inducement grant[459](index=459&type=chunk) - These options were granted outside of the company's 2017 Equity Incentive Plan, in accordance with **Nasdaq Listing Rule 5635(c)(4)**[459](index=459&type=chunk) [Exhibits](index=152&type=section&id=Item%206.%20Exhibits) This section lists key filed exhibits, including sales and license agreements, and required CEO/CFO certifications - Key exhibits filed include the Amended and Restated Sales Agreement with Jefferies LLC and the Fifth Amendment to the Exclusive License Agreement with The Johns Hopkins University[464](index=464&type=chunk) - The filing also includes **CEO and CFO certifications** pursuant to Sarbanes-Oxley Act Sections 302 and 906[464](index=464&type=chunk)

Kala Pharmaceuticals, Inc. (NASDAQ:KALA) Q1 2020 Earnings Conference Call May 7, 2020 8:00 AM ET Company Participants Niranjan Kameswaran - Senior Vice President, Strategy Mary Reumuth - Chief Financial Officer Mark Iwicki - Chairman, President and Chief Executive Officer Kim Brazzell - Chief Medical Officer Todd Bazemore - Chief Operating Officer Conference Call Participants Chris Neyor - JP Morgan Liana Moussatos - Wedbush Securities Biren Amin - Jefferies LLC Yi Chen - H.C. Wainwright & Co. Tazeen Ahmad ...

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 March 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 oth ...

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, 2019 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 ...

Financial Data and Key Metrics Changes - As of December 31, 2019, the company's cash position was $85.4 million, down from $170.9 million as of December 31, 2018 [32] - For Q4 2019, INVELTYS net revenue was reported at $1.2 million, while the full-year 2019 net revenue was $6.1 million [33] - The net loss for Q4 2019 was $22 million, or $0.63 per share, compared to a net loss of $25.2 million, or $0.76 per share for the same period in 2018 [37] Business Line Data and Key Metrics Changes - INVELTYS prescriptions grew to over 144,000 since its launch, with approximately 47,000 prescriptions reported in Q4 2019, representing a 17% increase over Q3 2019 [11][23] - The company achieved an 11.2% NRx share in the branded steroid market and an 18.8% NRx branded market share among eye care professionals [24] - EYSUVIS is expected to target a market of approximately 33 million patients with dry eye disease in the U.S., with an estimated total addressable market potential exceeding $8 billion annually [19][20] Market Data and Key Metrics Changes - The branded steroid market and prescriptions were down by 16.5% between Thanksgiving and Christmas holidays, yet INVELTYS showed positive growth [23] - The company has achieved unrestricted access for approximately 80% of all commercial lives and about 23% of Medicare Part D lives [26] Company Strategy and Development Direction - The company aims to position EYSUVIS as the preferred first-line prescription therapy for dry eye flares, with launch preparations already underway [28] - The sales force is expected to grow from 57 to between 75 and 100 representatives to effectively cover 75% to 85% of all dry eye prescriptions if EYSUVIS is approved [27][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upcoming top-line results from the STRIDE 3 trial and the potential for EYSUVIS to meet a significant unmet need in the dry eye market [54] - The company anticipates a stable operating expense situation in 2020, with a reduction in R&D expenses expected following the completion of the STRIDE 3 trial [56][73] Other Important Information - The company plans to resubmit its NDA for EYSUVIS in Q2 2020, expecting a Class II designation which would entail a six-month review period [10][48] - The company reported that the weighted average number of shares outstanding at the end of 2019 was 35.5 million [74] Q&A Session Summary Question: Differences in patient characteristics in STRIDE trials - Management explained that changes in STRIDE 3 aimed to exclude patients with unstable symptom profiles during the run-in phase, which could improve statistical outcomes [42][43] Question: Update on INVELTYS prescriber growth - The company reported that over 3,300 physicians have prescribed INVELTYS, achieving about 50% penetration of the target universe of 6,000 to 7,000 physicians [47] Question: Confidence in EYSUVIS filing timeline - Management reiterated confidence in the six-month filing timeline for EYSUVIS based on previous experiences with similar resubmissions [48] Question: 2020 priorities in light of EYSUVIS results - Management expressed excitement about the STRIDE 3 trial results and the potential market need for EYSUVIS, indicating readiness to launch if results are positive [52][54] Question: R&D expense expectations post-STRIDE 3 - Management confirmed expectations for reduced R&D expenses in 2020, particularly related to clinical trial work [73] Question: Shares outstanding and 10-K filing - The company confirmed 35.5 million shares outstanding at the end of 2019 and indicated that the 10-K would be filed within the week [74]

Corporate Highlights & Financial Status - As of December 31, 2019, Kala had $85.4 million in cash [2] - Kala expects existing cash resources, along with projected INVELTYS revenue, to fund operations at least through 1Q2021 [2] INVELTYS Performance & Market - INVELTYS was approved by the FDA in August 2018 and launched in the US in January 2019 [3] - In 2019, INVELTYS generated over 127,000 total prescriptions (TRxs) and achieved an 8.6% branded new prescription (NRx) market share [3] - INVELTYS has approximately 75% commercial coverage and 23% Medicare Part D coverage [3, 24] - The US ocular surgery market is estimated at approximately 8.6 million procedures in 2019 and is projected to grow at a CAGR of 3.5% [16, 17] EYSUVIS Development & Market Potential - STRIDE 3 Phase 3 trial for EYSUVIS is expected to be fully enrolled with topline data expected in 1Q2020 [2, 50, 52] - Approximately 80-90% of dry eye disease (DED) patients experience flares [29, 39] - The addressable US market opportunity for DED flares is estimated to be over $8 billion [39] - Approximately 3% of steroid prescriptions are for dry eye, representing approximately 255,000 prescriptions [38] AMPPLIFY Technology - AMPPLIFY technology increases Loteprednol Etabonate (LE) penetration to corneal and aqueous humor by more than 3x [5, 7]

Corporate Highlights - Kala is well capitalized with cash of $976 million as of September 30, 2019[2] - The company expects existing cash resources, together with projected INVELTYS revenue, to fund operations through the next 18 months[2] INVELTYS (for post-surgical inflammation and pain) - INVELTYS was launched in the U S in January 2019[2,9] - The Wholesale Acquisition Cost (WAC) price of INVELTYS is $245 per prescription[9] - Eye care professionals report prescribing steroids in greater than 90% of cataract, glaucoma and refractive surgeries[17] - In 2018, there were approximately 82 million ocular surgery procedures in the U S, with a projected Compound Annual Growth Rate (CAGR) of 41%[20,59] - Branded products account for approximately 25% of prescriptions and approximately 60% of gross sales in the ocular surgery market, which is estimated to be valued at approximately $17 billion[20] EYSUVIS (for Dry Eye Disease) - Approximately 80-90% of all Dry Eye Disease (DED) patients suffer from flares[29] - Approximately 82% of patients on artificial tears suffer from flares[29] - Approximately 17 million people in the U S are diagnosed with DED[37] - Only 3% of steroid prescriptions are for Dry Eye, representing approximately 255,000 prescriptions[40,41] - The addressable U S market for DED flares is estimated to be greater than $8 billion[42]

Kala Pharmaceuticals, Inc. (NASDAQ:KALA) Q3 2019 Earnings Conference Call November 7, 2019 8:00 AM ET Company Participants Niranjan Kameswaran - Vice President, Strategy Mary Reumuth - Chief Financial Officer Mark Iwicki - Chairman, President & Chief Executive Officer Kim Brazzell - Chief Medical Officer Todd Bazemore - Chief Operating Officer Conference Call Participants Chris Neyor - JPMorgan Kambiz Yazdi - Wedbush Securities Faizzan Ahmad - H.C. Wainwright Operator Good morning and welcome to Kala Pharma ...

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, 2019 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 ...

☐ 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. 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, 2019 OR (Exact name of registrant as specified in its charter) Delaware 27-0604595 (State or othe ...