Exhibit 99.1

Unaudited Pro Forma Financial Information

On July 8, 2022 (the “Closing Date”), Kala Pharmaceuticals, Inc. (“Kala”, the “Company” “we” or “us”) completed the previously announced transaction (the “Transaction”), pursuant to which, Alcon Pharmaceuticals Ltd. and Alcon Vision, LLC (together “Alcon”) agreed to (1) purchase (a) the Company’s rights to (i) manufacture, sell, distribute, market and commercialize EYSUVIS® (loteprednol etabonate ophthalmic suspension) 0.25% and INVELTYS® (loteprednol etabonate ophthalmic suspension) 1% and (ii) develop, manufacture, market and otherwise exploit its proprietary AMPPLIFY® Drug Delivery Technology, which, among other applications, is incorporated into EYSUVIS and INVELTYS and (b) certain assets used by the Company in connection with the foregoing (collectively, the “Commercial Business”), and (2) assume certain liabilities with respect to the Commercial Business.

Pursuant to the Asset Purchase Agreement dated May 21, 2022 (the “Asset Purchase Agreement”), by and between the Company and Alcon, Alcon acquired the Commercial Business for (i) an upfront cash payment of $60.0 million and (ii) up to four commercial-based sales milestone payments as follows: (1) $25.0 million upon the achievement of $50.0 million or more in aggregate worldwide net sales from the Commercial Business in a calendar year from 2023 to 2028, (2) $65.0 million upon the achievement of $100.0 million or more in aggregate worldwide net sales from the Commercial Business in a calendar year from 2023 to 2028, (3) $75.0 million upon the achievement of $175.0 million or more in aggregate worldwide net sales from the Commercial Business in a calendar year from 2023 to 2029 and (4) $160.0 million upon the achievement of $250.0 million or more in aggregate worldwide net sales from the Commercial Business in a calendar year from 2023 to 2029. Each milestone payment will only become payable once, if at all, upon the first time such milestone is achieved, and only one milestone payment will be paid with respect to a calendar year. In the event that more than one milestone is achieved in a calendar year, the higher milestone payment will become payable, and the lower milestone payment will become payable only if the corresponding milestone is achieved again in a subsequent calendar year.

In connection with the Asset Purchase Agreement, the Company and Alcon also entered into supply and commercial agreements at the closing of the Transaction under which the Company agreed to supply EYSUVIS and INVELTYS to Alcon and their affiliates and distribute EYSUVIS and INVELTYS to third party customers of the Commercial Business on behalf of Alcon and their affiliates for a period of six months following the closing of the Transaction, subject to early termination. In addition, the Company entered into a transition services agreement under which the Company agreed to provide agreed upon transition services to Alcon on a cost-plus pricing arrangement for up to six months following the closing of the Transaction.

Under the supply agreement (the “Supply Agreement”), Alcon agreed to purchase a minimum of $5.0 million of specified EYSUVIS and INVELTYS inventory from the Company on the Closing Date. Such payment for the inventory purchase was in addition to the upfront cash payment of $60.0 million that was paid to the Company by Alcon on the Closing Date pursuant to the Asset Purchase Agreement. For any remaining inventory (“Remaining Inventory”) owned by the Company, Alcon has the right (but not the obligation) to purchase the Remaining Inventory at an agreed upon price. If Alcon does not choose to purchase the Remaining Inventory, the Company will have no further obligation to Alcon with respect to the Remaining Inventory, and the Company shall, at its cost, promptly destroy such Remaining Inventory.

The following unaudited pro forma condensed consolidated financial statements are derived from, and should be read in conjunction with, the Company’s historical financial statements and the notes thereto, as presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 3, 2023.

The Transaction does not meet the criteria requiring discontinued operations presentation in accordance with U.S. Generally Accepted Accounting Principles as the Commercial Business does not meet the definition of a component. The Transaction is considered a disposition of a significant business under Item 2.01 of Form 8-K. As a result, the unaudited pro forma condensed consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022 gives effect to the Transaction as if it had occurred as of January 1, 2022.

The unaudited pro forma condensed consolidated financial statements reflect the following transaction accounting adjustments for the sale of the Commercial Business:

●

the elimination of product revenues, cost of product revenues and operating expenses related to the Commercial Business;

●

the gain on the Transaction; and

●

the Company’s use of proceeds from the sale of the Commercial Business to repay a portion of its outstanding debt with Oxford Finance LLC.

The effects of recording certain adjustments associated with contingent consideration related to EYSUVIS and INVELTYS have been excluded as the Company has made a policy election to account for these amounts when the contingency has been resolved in accordance with Accounting Standards Codification 450, Contingencies.

The unaudited pro forma condensed consolidated financial statement information is presented for informational purposes only and is based upon estimates by the Company’s management, which are based upon available information and certain assumptions that the Company’s management believes are reasonable as of the date of this filing. The unaudited pro forma condensed consolidated financial statements are not intended to be indicative of the actual financial position or results of operations that would have been achieved had the Transaction been consummated as of the periods indicated, nor does it purport to indicate results which may be attained in the future. Actual amounts could differ materially from these estimates.

The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022 should be read in conjunction with the notes thereto.

Kala Pharmaceuticals, Inc.

Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2022

(unaudited)

(In thousands, except share and per share amounts)


			Transaction
			Accounting			Other Pro Forma			Pro
	Kala Historical		Adjustments		Notes	Adjustments		Notes	Forma
Product revenues, net	$	3,892	$	(3,892)	(a)	$	—		$	—
Costs and expenses:
Cost of product revenues		2,560		(2,560)	(a)		—			—
Selling, general and administrative		65,035		(38,298)	(a)		—			26,737
Research and development		17,653		(1,368)	(a)		—			16,285
Loss on fair value remeasurement of deferred purchase consideration		638		—			—			638
Gain on fair value remeasurement of contingent consideration		(288)		—			—			(288)
Total costs and expenses		85,598		(42,226)			—			43,372
Loss from operations		(81,706)		38,334			—			(43,372)
Other income (expense):
Interest income		664		—			—			664
Interest expense		(7,266)		—			1,988	(c)		(5,278)
Loss on extinguishment of debt		(2,583)		—			—			(2,583)
Gain on sale of Commercial Business		46,995		—			—			46,995
Other income (expense), net		(926)		—			—			(926)
Total interest and other income (expense)		36,884		—			1,988			38,872
Net loss	$	(44,822)	$	38,334	(b)	$	1,988	(b)	$	(4,500)
Net loss per share—basic and diluted	$	(29.48)	$	—		$	—		$	(2.96)
Weighted average shares outstanding—basic and diluted		1,520,611		—			—			1,520,611

Kala Pharmaceuticals, Inc.

Notes to the Pro Forma Condensed Consolidated Financial Statements

(unaudited)

The unaudited pro forma condensed consolidated financial statements reflect the following adjustments:

(a)

Reflects the elimination of product revenues, cost of product revenues and operating expenses related to the Commercial Business. In connection with the Transaction, we recorded a gain on the disposal of the Commercial Business, which is calculated as follows: $65.0 million representing the cash proceeds from the Asset Purchase Agreement and Supply Agreement that were paid to the Company on the Closing Date less (i) the net assets of the disposed Commercial Business of $11.7 million; (ii) direct transaction costs of $2.1 million; and (iii) deferred gain on the sale of $4.2 million. The gain on the disposal is non-recurring.

(b)

Given the Company’s historic net operating loss carryforwards, associated valuation allowance and the positive and negative evidence upon the realization of its deferred tax assets, management recorded an annual effective income tax rate of 0%. Therefore, the pro forma adjustments to the unaudited pro forma condensed consolidated statements of operations resulted in no additional income tax expense or benefit.

(c)

Upon the partial repayment of $36.7 million of debt principal, which was required based on the terms of the Company’s loan agreement with Oxford Finance LLC, the prepayment premium of $0.7 million, unaccreted amount of the final payment fee due of $1.1 million and a pro-rata portion of the debt discount of $0.8 million were recorded as loss on extinguishment of debt for the year ended December 31, 2022. The loss on extinguishment of debt is non-recurring. The estimated reduction to interest expense of $2.0 million for the year ended December 31, 2022, which includes amortization of deferred debt issuance costs and debt discount and accretion of the final payment fees, is reflected as if the repayment of $36.7 million of debt principal on July 8, 2022, which was required based on the terms of the Company’s loan agreement with Oxford Finance LLC, was repaid on January 1, 2022.